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Other Alternative Dispute Resolution Methods
WORLD INTELLECTUAL PROPERTY ORGANIZATION
Mediation, also known as conciliation in many parts of the world, has a long history in the diplomatic arena. In the commercial world, interest in it has increased sharply in recent years. In part, this growth of interest is attributable to dissatisfaction with the cost, delays and length of litigation in certain jurisdictions. The growth of interest results also, however, from the advantages of mediation, particularly its appeal as a procedure that offers parties full control over both the process to which their dispute will be submitted and the outcome of the process. Where mediation has been used, it has enjoyed very high rates of success in achieving a res ult acceptable to both sides to a dispute. Because it is a relatively unstructured procedure, however, some hesitate to use it for fear of not knowing what to expect. This booklet seeks to allay such fears by explaining simply the main features and advantages of mediation and how mediation under the WIPO Mediation Rules works in practice.
Mediation, also known as conciliation in many parts of the world, has a long history in the diplomatic arena. In the commercial world, interest in it has increased sharply in recent years. In part, this growth of interest is attributable to dissatisfaction with the cost, delays and length of litigation in certain jurisdictions. The growth of interest results also, however, from the advantages of mediation, particularly its appeal as a procedure that offers parties full control over both the process to which their dispute will be submitted and the outcome of the process. Where mediation has been used, it has enjoyed very high rates of success in achieving a result acceptable to both sides to a dispute. Because it is a relatively unstructured procedure, however, some hesitate to use it for fear of not knowing what to expect. This booklet seeks to allay such fears by explaining simply the main features and advantages of mediation and how mediation under the WIPO Mediation Rules works in practice. WHAT IS MEDIATION? Mediation is first and foremost a non-binding procedure. This means that, even though parties have agreed to submit a dispute to mediation, they are not obliged to continue with the mediation process after the first meeting. In this sense, the parties remain always in control of a mediation. The continuation of the process depends on their continuing acceptance of it. The non-binding nature of mediation means also that a decision cannot be imposed on the parties. In order for any settlement to be concluded, the parties must voluntarily agree to accept it. Unlike a judge or an arbitrator, therefore, the mediator is not a decision-maker. The role of the mediator is rather to assist the parties in reaching their own decision on a settlement of the dispute. There are two main ways in which mediators assist parties in reaching their own decision, which correspond to two types or models of mediation practiced throughout the world. Under the first model, facilitative mediation, the mediator endeavors to facilitate communication between the parties and to help each side to understand the other's perspective, position and interests in relation to the dispute. Under the second model, evaluative mediation, the mediator provides a non-binding assessment or evaluation of the dispute, which the parties are then free to accept or reject as the settlement of the dispute. It is up to the parties to decide which of these two models of mediation they wish to follow. The WIPO Arbitration and Mediation Center ("the Center") will assist them in identifying a mediator appropriate for the model that they wish to adopt. Mediation is a confidential procedure. Confidentiality serves to encourage frankness and openness in the process by assuring the parties that any admissions, proposals or offers for settlement will not have any consequences beyond the mediation process. They cannot, as a general rule, be used in subsequent litigation or arbitration. The WIPO Mediation Rules contain detailed provisions directed also at preserving confidentiality in relation to the existence and outcome of the mediation.
The differences between mediation and arbitration all stem from the fact that, in a mediation, the parties retain responsibility for and control over the dispute and do not transfer decision-making power to the mediator. In concrete terms, this means two things principally:
The Nature of the Combined Procedure
Mediation followed, in the absence of a settlement, by arbitration is a combined procedure. The dispute is submitted first to mediation under the WIPO Mediation Rules. Then, if a settlement is not reached within a defined period of time (it is recommended that the parties provide for either 60 or 90 days), or if a party refuses to participate or to continue to participate in the mediation, the dispute is referred for a binding decision through arbitration under the WIPO Arbitration Rules (or, if the parties so agree, through expedited arbitration). The advantage of the combined procedure is the incentive that it offers for a good faith commitment by both parties to the mediation process, since the consequence of a failure to reach an agreed settlement will be more tangibly measurable in terms of the financial and management commitment that would need to be incurred in the subsequent arbitration procedure.
Role and Fees of the Center; Mediator's and Arbitrator's Fees
The role of the WIPO Arbitration and Mediation Center is the same in each part of the combined procedure as described above in the Sections on mediation and arbitration. The same fees are payable to the Center in respect of the mediation component as in a mediation under the WIPO Mediation Rules. Likewise, if the dispute proceeds to arbitration, the same fees are payable to the Center in respect of the arbitration component as in an arbitration under the WIPO Arbitration Rules, except that the Center will credit the registration fee paid for the mediation against the registration fee payable for the arbitration. Similarly, the mediator's fees and the arbitrator's fees are determined in the same way as in a mediation under the WIPO Mediation Rules and an arbitration under the WIPO Arbitration Rules, respectively.
The WIPO Mediation Rules Mediation is a relatively unstructured and informal procedure in which continued participation in the process, as well as the acceptance of any outcome, depends on each party's agreement. Rules thus have a more limited function in mediation than in binding arbitration. What is that function?
By agreeing to submit a dispute to WIPO mediation, the parties adopt the WIPO Mediation Rules as part of their agreement to mediate. Those Rules have the following main functions:
Mediation is not a suitable procedure for settling disputes in all cases. Where deliberate, bad-faith counterfeiting or piracy is involved, mediation, which requires the cooperation of both sides, is unlikely to be appropriate. Similarly, where a party is certain that it has a clear-cut case, or where the objective of the parties or one of them is to obtain a neutral opinion on a question of genuine difference, to establish a precedent or to be vindicated publicly on an issue in dispute, mediation may not be the appropriate procedure.
On the other hand, mediation is an attractive alternative where any of the following are important priorities of either or both of the parties:
The last-mentioned priority, in particular, makes mediation especially suitable where the dispute occurs between parties to a continuing contractual relationship, such as a license, distribution agreement or joint research and development (R&D) contract, since, as mentioned above, mediation provides an opportunity for finding a solution by reference also to business interests and not just to the strict legal rights and obligations of the parties.
Mediation can be used at any stage of a dispute. Thus, it can be chosen as the first step towards seeking a resolution of the dispute after any negotiations conducted by the parties alone have failed. Mediation can also be used at any time during litigation or arbitration where the parties wish to interrupt the litigation or arbitration to explore the possibility of settlement. Another common use of mediation is more akin to dispute prevention than dispute resolution. Parties may seek the assistance of a mediator in the course of negotiations for an agreement where the negotiations have reached an impasse, but where the parties consider it to be clearly in their economic interests to conclude the agreement (for example, negotiations on the royalty rate to apply on the renewal of a license).
The Center offers specialized services for mediation of intellectual property disputes, that is, disputes concerning intellectual property or commercial transactions and relationships involving the exploitation of intellectual property. Common examples of such commercial transactions and relationships are patent, know how and trademark licenses, franchises, computer contracts, multimedia contracts, distribution contracts, joint ventures, R & D contracts, technology-sensitive employment contracts, mergers and acquisitions where intellectual property assets assume importance, and publishing, music and film contracts.
It should be noted, however, that there is no limitation on the competence of mediators appointed under the WIPO Mediation Rules to deal with different classes of subject matter. A mediator appointed under the WIPO Mediation Rules is competent to deal with all aspects of any dispute. It is up to the parties to decide whether they consider the subject matter suitable for WIPO mediation.
The choice of WIPO mediation offers the following advantages:
There are few formalities associated with a mediation. The structure that a mediation follows is decided by the parties with the mediator, who together work out, and agree upon, the procedure that is to be followed.
As mentioned above, the somewhat unstructured nature of a mediation can be disconcerting to those who may be entertaining the idea of submitting a dispute to mediation, but who may not be sure what to expect. For such persons, some guidance is set out in the following paragraphs, which outline the main steps in the conduct of a WIPO mediation. The procedure outlined should, however, be understood as being for guidance only, since the parties may always decide to modify the procedure and to proceed in a different way.
Getting to the Table: The Agreement to Mediate
The starting point of a mediation is the agreement of the parties to submit a dispute to mediation. Such an agreement may be contained either in a contract governing a business relationship between the parties, such as a license, in which the parties provide that any disputes occurring under the contract will be submitted to mediation; or it may be specially drawn up in relation to a particular dispute after the dispute has occurred.
The last section of this Guide contains recommended clauses for both situations, which provide a choice between agreeing to mediation alone or agreeing to mediation followed, in the event that a settlement is not reached through the mediation, by arbitration.
Starting the Mediation
Once a dispute has occurred and the parties have agreed to submit it to mediation, the process is commenced by one of the parties sending to the Center a Request for Mediation. This Request should set out summary details concerning the dispute, including the names and communication references of the parties and their representatives, a copy of the agreement to mediate and a brief description of the dispute. These details are not intended to perform the legal function of defining arguments and issues and limiting the requesting party's case. They are intended simply to supply the Center with sufficient details to enable it to proceed to set up the mediation process. Thus, the Center will need to know who is involved and what the subject matter of the dispute is in order to be able to assist the parties in selecting a mediator appropriate for the dispute.
The Appointment of the Mediator
Following receipt of the Request for Mediation, the Center will contact the parties (or their representatives) to commence discussions on the appointment of the mediator (unless the parties have already decided who the mediator will be). The mediator must enjoy the confidence of both parties and it is crucial, therefore, that both parties be in full agreement with the appointment of the person proposed as mediator.
Typically, the Center would discuss the various matters described in the box opposite in order to be in a position to propose the names of suitable candidates for the consideration of the parties. Following these discussions (which may take place by telephone or in person), the Center will usually propose several names of prospective mediators, together with the biographical details of those prospective mediators, to the parties for their consideration. If necessary, further names can be proposed until such time as the parties agree upon the appointment of a mediator.
At this stage also, the Center will commence discussions with the parties concerning the physical arrangements for the mediation: where it is to take place (which will usually have been specified in the agreement to mediate), a meeting room and any other support facilities needed.
The Center will also fix, in consultation with the mediator and the parties, the fees of the mediator at the stage of the appointment of the mediator.
Initial Contacts Between the Mediator and the Parties
Following appointment, the mediator will conduct a series of initial discussions with the parties, which typically will take place by telephone. The purpose of these initial contacts will be to set a schedule for the subsequent process. The mediator will indicate what documentation, if any, he or she considers should be provided by the parties prior to their first meeting and set the timetable for the supply of any such documentation and the holding of the first meeting.
The First Meeting Between the Mediator and the Parties
At the first meeting, the mediator will establish with the parties the ground rules that are to be followed in the process.
In particular, the mediator will
At the first meeting, the mediator will also discuss with the parties what additional documentation it would be desirable for each to provide and the need for any assistance by way of experts, if these matters have not already been dealt with in the initial contacts between the mediator and the parties.
Depending on the issues involved in the dispute and their complexity, as well as on the economic importance of the dispute and the distance that separates the parties' respective positions in relation to the dispute, the mediation may involve meetings held on only one day, across several days or over a longer period of time. The stages involved in the meetings held after the first meeting between the mediator and the parties would, where the mediator is playing a facilitative role, normally involve the following steps:
Naturally, not all mediations result in a settlement. However, a settlement should be achieved where each party considers that an option for settlement exists which better serves its interests than any alternative option for settlement by way of litigation, arbitration or other means.
Parties' Private Consultations
Throughout the process of the mediation, naturally each party will wish to undertake, at various stages, private consultations with its advisors and experts for the purposes of discussing various aspects of the mediation or of evaluating options. It goes without saying that such private consultations may occur during the mediation process.
The Agreement to Mediate
Commencement: Request for Mediation
Appointment of the Mediator
Initial Contacts Between the Mediator and the Parties
First and Subsequent Meetings
The parties decide the language in which the mediation will take place. They may choose a single language or they may choose to use two languages and to have interpretation, although the latter choice will obviously increase the costs of conducting the process.
Perhaps the most important step in the whole process is the selection of the mediator. What should the parties consider?
One of the principal functions of the WIPO Arbitration and Mediation Center is to assist the parties in identifying and agreeing upon the mediator. The Center does this through consultation with the parties and by supplying them with the names and biographical details of potential candidates for their consideration.
The parties should consider at least the following matters in deciding whom to appoint as mediator:
The Center performs the following functions as administering authority of a mediation:
The parties decide where they would like the mediation to take place. It is not necessary for a mediation conducted under the WIPO Mediation Rules to take place in Geneva.
If the parties do decide to conduct their mediation in Geneva, WIPO will provide them with a meeting room and party retiring rooms free of charge (that is, at no additional cost to the registration fee payable to the WIPO Arbitration and Mediation Center). If the parties choose to conduct their mediation outside Geneva, the Center will assist them in arranging suitable meeting facilities.
Two sets of fees must be paid for a mediation.
The WIPO Mediation Rules (Article 24) provide for the costs of the mediation (the registration fee of the Center, the mediator's fees and all other expenses of the mediation) to be borne in equal shares by the parties. The parties are free to agree to change this allocation of costs.
For those parties for which mediation is a new procedure and which may wonder what benefits mediation offers, two factors can usefully be considered:
The Center has established a recommended contract clause for the reference of future disputes under a contract to mediation under the WIPO Mediation Rules.
The Center has also established a recommended submission agreement for the reference of an existing dispute to mediation under the WIPO Mediation Rules.
The Center organizes training programs for mediators, as well as conferences on various aspects of the resolution of intellectual property disputes. It also has available a number of publications, including the WIPO Mediation Rules, the Guide to WIPO Mediation and the publication of the proceedings of the WIPO Conference on Mediation organized in March 1996.