International Patent Litigation and Mediation - A neutral’s view from Europe

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As many of you may know, mediation is not used as often as it should be to resolve international patent litigation. This has certainly been my experience over a long period as a patent litigator in private practice. But is this also the case within the industry? We have recently been given a rare and most helpful insight:

“Despite being continuously involved in patent disputes in my profession, this is the first time I participated in an attempt at mediation. The benefits of mediation are still not commonly known in the industry, and mediation is rarely made use of for conflicts of that scale, at least in Germany.”

So said Dr. Frank Gerhards, a German patent attorney at Bayer Intellectual Property GmbH, on January 30, 2021, in an interview with Kluwer about a large multinational patent litigation in which Bayer had been a party. I commend to you reading the full interview here.

Why are the benefits of mediation not more widely known? Dr. Gerhards lists some reasons. Two main reasons are a party’s entrenched, overconfident view of its prospects of success and a lack of understanding (and experience) of the mediation process.

In my view, there are also other reasons. One is the fear, on one or both sides, that the mere suggestion of mediation is to indicate weakness, a lack of resolve and/or a lack of confidence in its own case, and therefore must not be risked. Another, certainly in the U.K. (and apparently Scotland as well), is the judges’ reluctance to ask the parties whether they have considered mediation, far less that they should consider it.

Of course, settlement is not appropriate in all cases. Sometimes, for instance, a precedent needs to be established, or an injunction obtained, and no compromise would be sufficient. However, patent litigation is just one branch of commercial litigation. It is started to resolve a business dispute. Lawyers should identify at the earliest opportunity what their clients’ commercial objectives are, and they should regularly be appraised, right up to trial and after. Emotions and the egotism of executives (and lawyers!) have no place in the resolution of business disputes and should be identified and neutralized if possible. This should facilitate a solution. Mediation can help with that.  

There also may be elephants in the room.

One is that some lawyers are reluctant to suggest retaining a mediator. After all, they are trained and experienced lawyers, and it is part of their job, as they see it, to negotiate settlements where appropriate.  They do not want to appear inadequate.

Another is that a party may fear disclosing too much of its case, thereby losing a potential litigation advantage.

Yet a third is that at the heart of commercial litigation are often a dilemma and a conflict for the lawyers. On the one hand, we all have to act in our clients’ best interests, to carry out their instructions and to do our utmost to safeguard them. On the other hand, private practice is a business too. It is there to be successful and to make a profit. Budgets are set (sometimes by those who do not have to achieve them!); partners are under pressure to generate fees; and all lawyers—partners and associates alike—undergo regular performance reviews, a significant part of which is whether their billable hour targets are being met.

There lie the conflict and dilemma. Why suggest a settlement, whether by mediation or otherwise, or even the serious consideration of one, when this could jeopardize meeting their billing targets, and even their livelihoods?

The experience and views of Dr. Gerhards illustrate how these difficulties may be overcome by using mediation. In so doing, the parties can come to a resolution of their dispute, which is under their control and which the lawyers, as well as the mediator, can help craft, to the appreciation of their clients.

Acknowledgements

I wish to thank the Kluwer Arbitration Blog for publishing the interview, Dr. Gerhards for sharing his experiences publicly and my colleague David Perkins for bringing the blog to my attention.

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