Use of ADR in Technology Transactions

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A recent WIPO Survey assessed the use of alternative dispute resolution (ADR) clauses in various technology transactions, and the results make for interesting reading for anyone who is in the business of negotiating technology deals. The goal of the survey was to establish trends in the use of ADR to handle technology-related disputes, and almost 400 participants from 62 different countries participated. A few takeaways:

  • Overall, the use of ADR clauses appears to be on the increase, as compared to the use of litigation in court.
  • Almost all of the respondents (94%) indicated that dispute resolution clauses are the subject of contract negotiations. In other words, negotiators are paying attention to these clauses, and not merely defaulting to the clause that is proposed by the other side, or comes with the precedent agreement.
  • Respondents were asked to estimate the percentage of their technology-related agreements that led to disputes. The results were:
    • License Agreements (25% of Respondents)
    • R&D Agreements (18% )
    • NDAs (Non-Disclosure Agreements) (16%)
    • Settlement Agreements (15%)
    • Assignments (13%), and
    • M&A Agreements (13%).
  • The most common dispute resolution clauses according to respondents were:
  • Court litigation (32%)
  • Arbitration (30%)
  • Mediation (12%)
  • Multi-tier clauses (17% of all clauses) in which mediation is deployed prior to court litigation, arbitration or expert determination.
  • Court litigation (home jurisdiction) took approximately 3 years; and amounted on average to US$475,000
  • Court litigation (foreign jurisdiction) took on average 3.5 years; and amounted to US$850,000.
  • Arbitration was shorter, at 1 year; the cost added to US$400,000.
  • Mediation was shortest, at 8 months, and 91% of Respondents indicated that mediation costs were under US$100,000.
  • Regarding time and cost, the estimates of respondents were as follows, and remember there are averages, and most would involve patent international disputes:

Interestingly, 25% of respondents indicated that “management time of business executives and wasted time of other participants in proceedings, lost productivity and lost business opportunities” represented important factors when assessing the costs of dispute resolution.

See: FULL PDF REPORT: Results of the WIPO Arbitration and Mediation Center International Survey on Dispute Resolution in Technology Transactions

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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