alternative dispute resolution in life sciences€¦ · · 2017-07-25alternative dispute...

1 Life Science IP Seminar 2017

Dr. Esther Pfaff, LL.M.

Alternative Dispute Resolution in Life

Sciences

Attorney-at-Law | WIPO Mediator Counsel


Introduction on ADR – Facts and Figures

Mediation

Overview on Mediation Process

What difference can this make? – a comment for the skeptic

Mediation as Tool for Contract / Communication Managament

Arbitration

Strategic Considerations

The Patent Mediation and Arbitration Center of the UPC

Hybrid Procedures

ADR in the Life Science Sector



Mediation




Arbitration



Hybrid Procedures



Trend towards ADR in Life Sciences

• Alternative Dispute Resolution has become increasingly popular in the

Life Sciences Sector

• Proceedings are confidential/ Technical expertise of judges preferred

• Disputes are international – exceeding court jurisdictions, multiple

l itigation required

• Frustration about long duration of proceedings, litigation, e.g. including

electronic discovery, increasingly burdensome

• Scepticism towards the UPC

• Mediation more and more encouraged by judges (UK: Wright v. Michael

Wright Supplies Ltd. v. Another [2013] EWCA Civ 234)


WIPO Cases

15% of cases filed with WIPO belong to the Life Sciences Sector



WIPO Cases: Typical Time and Cost*


**Attorny costs not included


WIPO Cases: Settlement Rates



Popular Fora:

• Assist in selection of mediators/

arbitrators

• Provide facilities to administer

proceedings

• „Lend“ their procedural rules


http://www.google.de/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj60tmkvvbSAhVJUBQKHXYtAQEQjRwIBw&url=http://www.crwflags.com/fotw/flags/uno-wipo.html&bvm=bv.150729734,d.d24&psig=AFQjCNF8_0_ph8XVcRHky24nC7Rbh3qFxQ&ust=1490697281837215


Options in case of

conflict:

• Talk to each other

• Talk with a mediator

• Let an arbitrator/expert

decide

• Let the judge decide



WIPO Working Group members advocate an

informed and considerated Process Design for

Conflict Management

• Which mechanisms shall be used for which dispute?

• Which dispute clauses shall be used when agreements are

concluded?

• Considering arbitral insitutions with a preferred case

managment system

• Establish a list of preferred arbitrators or mediators in the

relevant technical sector




Mediation




Arbitration



Hybrid Procedures

12

What is Mediation?

vs.

?

Mediation

Life Science IP Seminar 2017

13

or rather:

Instead of:

Mediation



Mediation is…

…in essence a moderated negotiation

…voluntary

…confidential

…resulting in a settlement by both parties, not a

binding judgment

Mediator acts as a neutral to structure and

facilitate the negotiation

Mediation


„Getting out of the straight-jacket of litigation

towards a business solution“

Life/Dispute Interest 1 Interest 2

Deal

Deal

Deal

Position 1 Position 2

Judgement:

Position 1, 2

or 3

Mediation


When is Mediation a useful tool?

• When the outcome of a legal dispute is not black and white

because

• In a grey area of law

• High complexity, it involves many different legal claims and

positions

• Poses factual/evidential challenges

And/Or

• When it involves some kind of long-term relationship

• Parties are close competitors

• Partners in a long-term project

• Parties to a long-term agreement

• Any element of „can‘t get away from each other“

Mediation


Examples of such cases are:

• Conflicts within R&D projects or their dissolution

• License disputes

• Vindication claims – especially if there is an interest to

preserve relationships with inventors/research partners

• Disputes on employee inventions

• Infringement actions/Opposition/Nullitiy actions – if there is

an interest to preserve relationship with

competitor/potential other benefits from that relationship

• Biosimilar litigation – see above, it‘s a small world!

Mediation


Constituting a Mediation

• Parties agree on a Mediator

• More technically revised – evaluative approach?

• More commercially oriented – facilitative approach?

• Co-mediation – best of both worlds?

• Parties sign a mediation agreement/ Agree on basic procedure

• Shuttle mediation?

• Sessions over the phone?

• Caucus sessions yes or no?

• Determine exchange of information/documents up-front

• The actual mediation session often lasts a single day

Mediation



Mediation




Arbitration



Hybrid Procedures



Mediation Phases

• Preparation

• Opening Session

• Exploration

• Negotiation

• Settlement


Mediation Phases - Preparation

• Pre-talk by mediator with each party

• Filing of one position paper is common

• Find the right balance between „scripting“

and „no preparation at all“

• Explore best possible and worst possible

scenarios(BATNA/WATNA), ideally from the

perspective of both parties – find a counsel

experienced in mediation



Mediation Phases – Opening Session

• Introductory talk by mediator, going over ground

rules for the day

• Setting the tone for the meeting – gestures

matter!

• In US mediation opening sessions are becoming

less common - A lunch or dinner before the

session might be helpful in case of scepticism

towards opening session



Mediation Phases – Exploration

• Each party gets the chance to „venting“ the

dispute

• Collecting all relevant aspects of the case

• Structuring the upcoming negotiations by

prioritizing and categorizing controversial issues

• Ideally: Cause the „Columbo-Moment“, provide

the parties with a new/alternative perspective



Oh Sir, just one more thing…

Oh, sorry Lieutenant I didn't

recognize you. You look

different somehow.

Columbo with new coat:

I've had a haircut.



Mediation Phases – Negotiation

• Matter of timing- negotiations should not start before the

exploration has been exhausted

• Role of the Mediator: Facilitative vs. Evaluative approach?

- usually parties expect a style-drift during the day

• Stress-testing positions

• Guiding parties from analysis to contemplation to

experimentation to acceptance to solution dealmaking



Caucus Sessions – yes or no?

• Disliked in mediation theory - very common in

commercial mediation!

• Often extremely valuable to get to the core of the

matter, resolve a deadlock

• No face saving needed/no need to play a role

• Helpful tool to clarify understanding of the

situation, especially in a cross-cultural context



Mediation Phases – Settlement

• Each session ends with a term sheet to capture

the progress

• Helpful to involve lawyers already in the drafting

• The final settlement is not drafted by the mediator

– Parties are on their own again.




Mediation




Arbitration



Hybrid Procedures



„What difference can this make?“

• There have always been conflicts

• Mediation is a relatively recent phenomenon

Did our conflicts change?

Yes!

• Modes of communication changed

• The business landscape changed


What business relationships used to be like:

International since a long time but:

• Rather long-term, stable

• Build on some kind of personal trust/ relationship,

• Personal meetings/Direct Communication

• “Business Partners“



Business relationships today:

• Global communication is conducted electronically –

personal contacts are the exception

• „Commoditization“– trust is often set in a system or

company rather than in a person

• Relationships and partnerships change rapidly:

„ We have not spoken to the other party in months, Mr. XYZ

knew the tech department but he left the firm last year, and

also, since this year, the other party has been bought by a

Chinese enterprise…“



The Culture Factor – there is more cultural

interaction on many levels:

• Global economy – different ethnic cultures are

concluding deals

• High degree of specialization – more deals

between universities, start-ups, big multi-national

companies, all with their own business culture

Communication has become more challenging!



Consequently:

• There are less established channels of

communication

• Misunderstandings occur easily

• The atmosphere turns hostile and aggressive

relatively quick

• Even simple conflicts are therefore often not

resolved and get out of hand



The Psychology of Conflict

• A party in conflict is under serious stress

• The „driver phenomenon“ – the perception of the

conflicted party is limited

• The mediator takes the parties emotionally off the

driver‘s seat while maintaining maximum party

autonomy




Mediation




Arbitration



Hybrid Procedures


Mediation as a Management Tool

• Mediation can also be used as a preventive tool, to

keep conflicts from escalating

• A neutral can be appointed already when concluding

the agreement to „live with the agreement“ („In Life

Mediator“)

• Acts as a point of contact between the parties and

facilitates negotiations in case of a dispute

• Only if the In-life mediator cannot resolve any dispute,

the dispute clause is triggered

Mediation as Management Tool


Always „Win-Win“?

• Maybe „Pain-Pain“

• But maybe still the best possible solution in the given

circumstances

• Sustainability of the settlement: Mediated conflicts are less

likely to lead to follow-up litigation

• If this got you interested, you may want this on your reading

list:

http://www.jonlang.com/pdf/pocket_mediator.pdf

Mediation as Negotiation Tool


Alternatives

Think the dispute through! What is the way forward

when mediation fails?

• Consider splitting the dispute in a resolved and a

non-resolved part

• Resort to a state court?

• Resort to arbitration?

• Resort to a hybrid procedure?

Mediation as Negotiation Tool



Mediation




Arbitration



Hybrid Procedures


Arbitration

When is arbitration a useful mechanism?

• When a binding decision is required

• Litigation shall remain confidential

• The conflict is global and would require multi-

national litigation

• The dispute is technically complex and shall be

decided by an expert


Arbitration

Examples

• License disputes

• Disputes/dissolution of R&D Agreements

• Multi-national patent disputes (FRAND/patent pool

disputes)

• …



Mediation




Arbitration



Hybrid Procedures


Strategic Advantages

• More time efficient than state courts, Not necessarily

cheaper!

• Procedure can be adapted to the needs of the parties

• Interim injunctions remain possible, consider in advance

whether this would be a relevant aspect!

• One shot – no appeal instance except the parties agree

otherwise

• Internationally enforceable (New York Convention 1958)



„Forum shopping“

• Arbitration rules all follow a similar model

• Costs/fee structures may differ!

• Arbitrator selection procedures may differ!

• Note: Supplemented by the national law governing the

procedure!

• Seek legal consulation on „particularities and pitfalls“

• Mosaic-approach“ often followed in cross-border patent disputes




Mediation




Arbitration



Hybrid Procedures




The Future Patent Mediation and Arbitration

Center

• Hosting Mediation/Arbitration in the context of UPC

litigation with seats in Ljubiljana and Lisboa

• And independent of that - competing with already

existing fora – relevance for commercial arbitration

still unclear, currently more recognized for

mediation in context of UPC litigation

• PMAC awards can exceed UPC territory, would

then be handled and enforced like any other

arbitral award



Mediation




Arbitration



Hybrid Procedures



Hybrid Procedures

Arb/Med - Med/Arb

• Both tools can be combined freely

• Frequently, arbitration is preceded by mediation,

limited by a fixed term

• Parties can revert to a moderated negotiation any

time or give up and ask for a binding decision any

time

• Consider combinations up-front in your dispute

clause!


Hybrid Procedures

Switching hats - The mediator as arbitrator and

vice versa?

Problem: Mediator as Arbitrator

May have obtained confidential information from one party in

caucus

Consider role-changes in the mediation agreement: exclude

caucus sessions?

Exchange in caucus at own risk?

Culture factor: Asian legal culture more open to role changes,

in-camera court hearings with one party not unusual


Can an arbitrator wear two hats?

- Sec. 33 of the Hong Kong Arbitration

Ordinance

Hybrid Procedures


Hybrid Procedures are attractive to save any

ground that has been gained

Sometimes used to make a party walk the „last mile“:

• „Michigan Mediation“

• „Baseball Arbitration“

• Deposit of Arbitral Award

• Expert Determination

Hybrid Procedures


Thank you for your attention!

Dr. Esther Pfaff, LL.M [email protected]

Attorney at Law | WIPO Mediator Counsel

alternative dispute resolution in life sciences€¦ · · 2017-07-25alternative dispute...

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