Resolving Patent and Trademark Disputes: The Mediation Perspective

 

 

I. Introduction 

Intellectual property disputes pose unique difficulties for the  traditional court system. Many such disputes are complex, sometimes  involving several parties from different jurisdictions claiming separate  legal interests in the intellectual property at issue. In addition, the  strict legal outcomes of the court process do not necessarily reflect the  underlying business relationships of the disputing parties:¹ “intellectual property is increasingly seen as an essential business  asset… that is exploited on an increasingly international level in  various forms of collaborative arrangements such as licenses,  technology transfer agreements and R&D agreements… [P]arties  increasingly looked for dispute resolution mechanisms that matched  their business requirements: private procedures which would provide  efficient, flexible and less costly means of settling international  disputes without disrupting commercial relationships.” 

Owing to the largely appealing and cordial nature of the  mediation process, WIPO founded the WIPO Arbitration and  Mediation Center in the year 1994, which serves as a neutral, global  dispute resolution provider, offering cost efficient and inexpensive  ADR choices to parties in order to resolve their intellectual property  disputes outside Courts. WIPO Center, as it is often called, caters to a  

  

¹ Mediation of Intellectual Property Disputes: A Critical Analysis - http://cedires.com/index_files/Corbett%20S_2011_Mediation%20of%20IPR.pdf

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wide range of disputes, and is particularly beneficial in the settlement  of transnational intellectual property disputes. As per a survey  conducted by them in 2010, around 91% of respondents had  concluded agreements on intellectual property and technology related  transactions with parties from other jurisdictions, which confirms the  international nature of such transactions and the need for more  efficient forms of dispute settlement.² 

ADR embraces various ways of resolving disputes between two  or more parties without resorting to conventional court litigation. For  most intellectual property (IP) and technology-related disputes, one or  more types of ADR – such as mediation, arbitration and expert  determination – may be suitable. If well managed, ADR can save time  and money as well as provide a range of additional benefits.³ 

II. What is Mediation? 

Mediation is a voluntary, binding process in which an impartial  and neutral mediator facilitates disputing parties in reaching a  settlement. A mediator does not impose a solution but creates a  conducive environment in which disputing parties can resolve all their  disputes. Mediation is tried and tested alternative method of dispute  resolution.⁴ 

  

² Mediation In Cases Of Intellectual Property Right Disputes - https://imwpost.com/mediation-in-cases-of intellectual-property-right-disputes/#_ednref7 

³ Guide to WIPO Mediation - https://www.wipo.int/edocs/pubdocs/en/wipo_pub_449_2018.pdf ⁴ Mediation and Conciliation Project Committee Supreme Court of India. - https://main.sci.gov.in/pdf/mediation/Brochure%20-%20MCPC.pdf

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III. Principal Characteristics of Mediation⁵ 

∙ Mediation is a non-binding procedure controlled by the parties A party to a mediation cannot be forced to accept an  

outcome that it does not like. Unlike an arbitrator or a judge,  the mediator is not a decision-maker. The mediator's role is,  rather, to assist the parties in reaching a settlement of the  dispute. 

Indeed, even when the parties have agreed to submit a  

dispute to mediation, they are free to abandon the process at any  time after the first meeting if they find that its continuation does  not meet their interests. 

However, parties usually participate actively in  

mediations once they begin. 

If they decide to proceed with the mediation, the parties  

decide on how it should be conducted with the mediator. 

∙ Mediation is a confidential procedure 

In a mediation, the parties cannot be compelled to  

disclose information that they prefer to keep confidential. If, in  order to promote resolution of the dispute, a party chooses to  disclose confidential information or make admissions, that  information cannot, under the WIPO Mediation Rules, be  provided to anyone - including in subsequent court litigation or  arbitration - outside the context of the mediation. 

  

⁵ What is Mediation? - https://www.wipo.int/amc/en/mediation/what-mediation.html

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Under the WIPO Mediation Rules, the existence and  outcome of the mediation are also confidential. 

Mediation's confidentiality allows the parties to negotiate  more freely and productively, without fear of publicity. 

∙ Mediation is an interest-based procedure 

In court litigation or arbitration, the outcome of a case is  determined by the facts of the dispute and the applicable law. In  a mediation, the parties can also be guided by their business  interests. As such, the parties are free to choose an outcome that  is oriented as much to the future of their business relationship  as to their past conduct. 

When the parties refer to their interests and engage in  dialogue, mediation often results in a settlement that creates  more value than would have been created if the underlying  dispute had not occurred. 

Because mediation is non-binding and confidential, it  involves minimal risk for the parties and generates significant  benefits. Indeed, one could say that, even when a settlement is  not achieved, mediation never fails, as it causes the parties to  define the facts and issues of the dispute, thus in any event  preparing the ground for subsequent arbitration or court  proceedings.

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IV. What are the Benefits of Mediation? 

The Benefits of Mediation are as follows: 

∙ Quick and responsive. 

∙ Economical. 

∙ There is no extra cost. 

∙ Harmonious settlement. 

∙ Creating solutions and remedies. 

∙ Confidential and informal. 

∙ Parties controlling the proceedings. 

The plaintiff is entitled to refund of full court fees as per Section 16 of  the Court Fees Act, 1870 if the dispute is settled through the process  of mediation. ⁶ 

V. Principal Steps in A Mediation 

∙ Commencement Request for Mediation 

∙ Appointment of the Mediator 

∙ Initial Contacts between the Mediator and the Parties 

∙ Set up the first meeting 

∙ Agree on preliminary exchange of documents, if any 

∙ First and Subsequent Meetings 

∙ Agree on ground rules of the process 

∙ Gather information and identify issues 

∙ Explore the interests of the parties 

  

⁶ Mediation and Conciliation Project Committee Supreme Court of India. - https://main.sci.gov.in/pdf/mediation/Brochure%20-%20MCPC.pdf

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∙ Develop options for settlement 

∙ Evaluate options 

∙ Conclusion ⁷ 

VI. What is Intellectual Property? 

Intellectual property (IP) refers to creations of the mind, such as  inventions; literary and artistic works; designs; and symbols, names  and images used in commerce. 

IP is protected in law by, for example, patents, copyright and  trademarks, which enable people to earn recognition or financial  benefit from what they invent or create. By striking the right balance  between the interests of innovators and the wider public interest, the  IP system aims to foster an environment in which creativity and  innovation can flourish.⁸ 

VII. Types of Intellectual Property 

∙ Patents 

∙ Copyright 

∙ Trademarks 

∙ Industrial Designs 

∙ Geographical Indications 

∙ Trade Secrets ⁹ 

  

⁷India: Mediation of Intellectual property Disputes - https://www.mondaq.com/india/intellectual property/43996/mediation-of-intellectual-property-disputes 

⁸ What is Intellectual Property? - https://www.wipo.int/about-ip/en/ 

⁹ Types of intellectual property - https://www.wipo.int/about-ip/en/

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VIII. Types of IP Disputes 

Types of IP disputes that may be considered suitable for settlement  by mediation include: 

∙ Disputes about the licensing of IP rights; 

∙ Disputes concerning the infringement of IP rights; 

∙ Trade mark opposition and invalidation proceedings on relative  grounds; 

∙ Disputes over patent entitlement, e.g. whether co-inventor was  employee or consultant; 

∙ Disputes over patent/trade mark ownership, e.g. whether  employee developed invention 

∙ in their own or Company time; or 

∙ Disputes over patent inventorship, e.g. the significant  contribution made by a third party.¹⁰ 

IX. Why Refer Intellectual Property Disputes to Mediation? 

Alternative Dispute Resolution (ADR) proceedings offer  several advantages for the resolution of intellectual property disputes.  Mediation, specifically, is an attractive option for parties that place a  premium on the preservation or enhancement of their relationship,  seek to maintain control over the dispute settlement process, value  confidentiality, or want to reach a speedy settlement without damage  to their reputations. 

  

¹⁰ India: Mediation of Intellectual property Disputes - https://www.mondaq.com/india/intellectual property/43996/mediation-of-intellectual-property-disputes

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Parties to contracts or relationships involving the exploitation  of intellectual property often share these goals when a dispute arises.  Common examples of such contracts include patent, know how and  trademark licenses, franchises, computer contracts, multimedia  contracts, distribution contracts, joint ventures, research and  development contracts, technology-sensitive employment contracts,  mergers and acquisitions where intellectual property assets assume  importance, sports marketing agreements, and publishing, music and  film contracts. ¹¹ 

X. Mediation in cases of Patent Disputes. 

There are primarily two kinds of disputes that arise in relation  to patents, which include, patent validity claims and patent  infringement issues. Mediation of patent disputes, however, are  usually settled in less than a year, thereby not consuming a lot of the  patent’s 20-year term, which serves favourably to the patent holder in  the dispute. Mediation of patent infringement cases is beneficial to  plaintiffs, as their rights over their patent would remain intact. 

One of the great advantages of opting for mediation to resolve  patent disputes is that the mediator, unlike judges and the jury in cases  of litigation, would have technical expertise in the area of patents and  would be able to understand the issues involved in the matter at a  much greater level. 

  

¹¹ Why Refer Intellectual Property Disputes to Mediation? - https://www.wipo.int/amc/en/mediation/why mediation.html

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The mediators are chosen by the parties on a consensual basis,  thereby allowing complete neutrality and impartiality, allowing the  dispute to be settled on merit and in a conciliatory manner. Mediation  of patent disputes also enables parties to the matter to bring out their  interests and desires, allowing for more personalized settlement,  leading to greater satisfaction. Mediation ensures creative and  innovative remedies and solutions arrived at by the parties, with the  guidance of the mediator, which may include research collaborations,  licensing agreements, cross licensing, etc. Mediation is highly sought  after by parties to patent disputes due to the high degree of  confidentiality that comes with it.¹² 

XI. Mediation in cases of Trademark disputes 

Trademarks serve as the identity of an enterprise and their  goodwill and reputation depend on their recognition by the customers,  and a large part of their business thrives on it. Mediation is especially  suitable in two scenarios related to trademark disputes. 

Firstly, when parties have an existing commercial relationship  with one another and would like to preserve the same. In such cases,  mediation would prove extremely useful in providing a platform  where both parties could amicably settle their dispute on mutually  beneficial terms. Also, creative solutions like shared rights, consent to  use agreements, royalties, etc. could be explored and given effect to  by the parties themselves. Usually in trademark disputes, parties have  

  

¹² Mediation In Cases Of Intellectual Property Right Disputes - https://imwpost.com/mediation-in-cases of-intellectual-property-right-disputes/#_ednref7

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a clear goal in mind, and mediation helps such parties to meet those  goals in the most innovative and reasonable way possible. 

Secondly, mediation is suitable where trademark infringement  occurs as a result of ‘expanding brands’. This happens when an  enterprise ventures into new lines or categories of products or  services, in new markets under their trademark, and in doing so, they  invariably infringe upon another enterprise’s trademark, who in return  want to save their customer base and goodwill from the competition  created by the other brand. In such cases, mediation is increasingly  helpful to parties as it saves expenses of litigation, limits the scope of  discovery and saves time, builds commercial relationships, leads to  flexible and creative solutions, and finally avoids any unfavourable or  extreme outcomes that may possibly have arisen in litigation. ¹³ 

XII. Pre-litigation Mediation in India. 

In 2018, the Commercial Courts Act, 2015 was amended to  incorporate various changes for the smooth functioning of commercial  courts with minimum pending cases. One major amendment was the  insertion of Section 12A with the aim and objective to ensure that  before a commercial dispute is filed before the court, an alternative  means of dispute resolution is adopted so that only matter which  needs the court’s urgent attention, are adjudicated by the court. The 

  

¹³ Mediation In Cases Of Intellectual Property Right Disputes - https://imwpost.com/mediation-in-cases of-intellectual-property-right-disputes/#_ednref7

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legislative intent was to place more reliance on alternative methods of  dispute resolution in commercial disputes as well for speedy redressal. 

Section 12 – A: Pre-institution mediation and settlement 

(1)A suit, which does not contemplate any urgent interim relief under  this Act, shall not be instituted unless the plaintiff exhausts the  remedy of pre-institution mediation in accordance with such  manner and procedure as may be prescribed by rules made by the  Central Government. 

(2)The Central Government may, by notification, authorise the  authorities constituted under the Legal Services Authorities Act,  19879, for the purposes of pre-institution mediation. 

(3)Notwithstanding anything contained in the Legal Services  Authorities Act, 1987 (39 of 1987), the Authority authorised by the  Central Government under sub-section (2) shall complete the  process of mediation within a period of three months from the date  of application made by the plaintiff under sub-section (1): 

Provided that the period of mediation may be extended for a  further period of two months with the consent of the parties: 

Provided further that, the period during which the parties remained  occupied with the pre-institution mediation, such period shall not  be computed for the purpose of limitation under the Limitation  Act, 1963 (36 of 1963). 

(4)If the parties to the commercial dispute arrive at a settlement, the  same shall be reduced into writing and shall be signed by the  parties to the dispute and the mediator.

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(5)The settlement arrived at under this section shall have the same  status and effect as if it is an arbitral award on agreed terms under  sub-section (4) of section 30 of the Arbitration and Conciliation  Act, 1996 (26 of 1996). 

This provision, by introducing the word “shall”, made the  pre-suit institution mediation proceeding mandatory only with  reference to plaintiffs who do not contemplate urgent interim  relief. As per the Act, mediation under Section 12-A is a time 

bound process to be conducted by the respective State Legal  Services Authorities (Authority), constituted under the Legal  Services Authorities Act, 1987. The period for conducting such  mediation has also been expressly excluded by the Legislature  under the Limitation Act, 1963. 

After Section 12-A was introduced; a difference of opinion arose among the courts with regard to the nature of the section being  mandatory or merely directory. The courts had to consider whether  plaints instituted without recourse to mandatory pre-institution  mediation ought to be rejected upon an application being filed  under Order 7 Rule 11 of the Code of Civil Procedure, 1908  (CPC). 

In the case of Patil Automation Private Limited and  Others v. Rakheja Engineers Private Limited, 2022 (SCC  Online SC 1028), the Supreme Court put this controversy to rest.  The Court has held that the requirement of exhausting pre institution mediation under Section 12-A of the Act is mandatory  and that any suit instituted “violating the mandate of Section 12-A 

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must be visited with the rejection of the plaint under Order 7 Rule  11”. 

In the case of Chandra Kishore Chaurasia v. RA  Perfumery Works Private Ltd, (Del) 1016, the division bench  consisting of Justice Vibhu Bakhru and Justice Amit Mahajan, via  judgment dated October 27, 2022, observed that – the question as  to whether a suit involves any urgent interim relief is to be  determined solely on the basis of nature of pleadings and relief as  sought by the plaintiff. It was further observed that if a plaintiff  seeks any urgent interim relief, the suit cannot be dismissed on the  ground that such a plaintiff has not exhausted the pre-institution  remedy of mediation as contemplated under Section 12-A of the  Act. Only in cases where urgent interim relief is not sought, such  remedy of pre-institution mediation is made mandatory by the  courts.¹⁴ 

In the case of Bawa Masala Co vs. Bawa Masala Co. Pvt.  Ltd ¹⁵ where a huge amount of legal disputes were resolved  through alternate dispute resolution. These were Intellectual  Property based cases and Delhi High Court issued an order for  adoption of a process known as early neutral evaluation, in an  intellectual property based litigation suit. The Court in this case,  under the aegis of section 89 of the Civil Procedure Code, 1908  presented for the inclusion of such procedures for amicable  

  

¹⁴ Pre-Litigation mediation in Intellectual Property matters in India - https://selvams.com/blog/pre litigation-mediation-in-intellectual-property-matters-in-india/ 

¹⁵ AIR 2007 Delhi 284

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resolution of disputes. The Court further said that the early neutral  evaluation procedure shares the “same features as a mediation  process…the difference is that in case of mediation the solutions  normally emerge from the parties and the mediator makes an duty  to find the most acceptable solution” whereas “in case of early  neutral evaluation, the evaluator acts as a neutral person to assess  the strengths and weakness of each of the parties and discusses the  same with the parties jointly or in caucuses, so that the parties are  aware of the independent evaluation of the merits of their case.”¹⁶ 

XIII. Conclusion 

Mediation can be a beneficial process for certain categories of  intellectual property linked disputes. While the features of the  mediation method itself may differ, in general mediation in one way or other and is likely to be preferred to litigation in disputes as the  field is still in growth where the parties desire to preserve endless 

business relationships or are ready to reflect some kind of joint  ownership or licensing arrangement of the intellectual property in  question. Mediation will not, however, be suitable in all cases. In  specific, the confidentiality of mediation means there is no body of  precedent established and no public deterrent. If mediation is to be  offered, it must be elective and the manner in which it functions must  be very cautiously prearranged. Statute-based mediation processes can  make available the most horrible of both worlds — presenting enough 

  

¹⁶ Mediation In Cases Of Intellectual Property Rights - https://imwpost.com/mediation-in-cases-of intellectual-property-rights/

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formality to intimidate feebler parties but not providing a reasoned  and impartial decision. 

Research by Shivani Gaikwad

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