Brexit – the end of Pan European Patent Dispute Resolution?

Richard Price, JAMS International mediator and arbitrator

Richard Price, JAMS International mediator and arbitrator

For more than 40 years, resolving European cross-border disputes about patents in one proceeding has been a dream.

Why is this so? Many people, in business, in-house and private practice lawyers around the world and members of the European judiciary, plus civil servants, invested a huge amount of time and thought in producing a pan-European litigation system which had a good chance of working. It would not be suitable for every dispute, but it had excellent prospects of working for many. The reason is that it was a creative and practical blend of the civil law and common law systems which underlie the EU. The national civil law jurisdictions typically have no live witnesses, no cross-examination, no discovery. The national common law systems , or ones like them as in Denmark, have all of those. The genius of the UPC was to introduce fact and expert evidence, cross-examination of witnesses and limited discovery of documents in a targeted way. And to get to trial in 12 months.

A central court would have three divisions: in France, the UK and Germany.  The UK had influence and an ultimate participation in excess of its geographical size: because of its greater experience in forensic litigation which cross-border disputes covering more than 500 million citizens demanded and merited.  The Brexit vote may have put an end to all of this.  The UPC is an EU vehicle. If the UK is out of the EU, it cannot be part of the UPC.

Is there a hope?  There is and this is why:

  1. Brexit may be reversed or watered down – the vote in favor is often described in the media and by politicians as “clear;” but in fact it was relatively tight at 51.9 to 48.1 percent (whereas the vote to join in 1975 had been by 67 percent of the votes cast ). It was also was advisory, not mandatory. Article 50 of the Treaty on European Union (as amended by the Lisbon Treaty of 2007 ) has to be triggered to start the process of withdrawal and to negotiate on what terms. The English High Court ruled (November 3, 2016) that the UK government may not trigger Article 50 without the consent of the UK Parliament. Members of both Houses were heavily in favor of Remain. The appeal to the UK Supreme Court is due to be decided in January 2017.
  2. The UPC may survive – If it is no longer an engine of the EU, but (like the European Patent Office) is created by convention (or treaty), the UK can continue to be a participant.
  3. Pan-European patent disputes may be resolved by arbitration – the week after the Brexit vote I was in Germany. I was expecting a frosty reception from German patent lawyers and others. Not a bit of it. They were dismayed and sad. They regard UK as their strongest collaborator, both in the EU generally and in the planned UPC in particular. Two German lawyers separately said to me that this was a real opportunity for pan-European patent disputes to be resolved by arbitration using, if the parties wished to, procedures similar to those envisaged for the UPC.

Options 1 and 2 could take years. In the meantime, and possibly in any event, option 3 deserves serious consideration by parties who want a resolution across Europe, and beyond.

There has now been a further development in this long-running saga. On November 28, 2016, the UK’s IP Minister, Baroness Lucy Neville-Rolfe, made a statement to the EU Council’s Competitiveness Commission. Before the European unitary patent and the UPC can come into force, 13 EU countries have to ratify the founding Agreement. Of those, France, Germany and the UK must all ratify or the system will not come into operation.

In her statement on November 28, Neville-Rolfe said that the UK is set to ratify the unitary patent and the UPC. However , she did not say when the UK would ratify. Until that happens, the new system will be on hold. In practice it is likely it will be put in the mix with all the other many issues the UK and the EU have to resolve once the negotiations start. Those negotiations will only start once the UK gives notice under Article 50 of the Treaty. Whether or when will depend on the Supreme Court decision expected in January 2017.

While all this is going on, uncertainty continues. For business, this is unsatisfactory. For some parties to patent disputes spread across Europe and indeed beyond, arbitration provides a business solution which may be attractive.

In any event, watch this space!

Richard Price is a panelist with JAMS, based in London. He can be reached at rprice@jamsinternational.com.

Settle Now, Argue Later: Expedited Construction Adjudication Is Coming to North America

Phil Bruner, Mediator and Arbitrator, JAMS Mediation, Arbitration & ADR Services

Phil Bruner, Mediator and Arbitrator

Construction adjudication, the dispute resolution method credited with reducing construction litigation by more than 80 percent in the United Kingdom, is coming to North America. The adjudication method requires disputes arising during construction to be submitted to an adjudicator for a prompt initial decision that is binding until completion of the contract, and subject to challenge in arbitration or litigation only thereafter. Construction participants wryly refer to it as the settle now, argue later approach to final dispute resolution.

Adjudicators with expertise in construction and selected by the parties seek to make their decisions within 30 days of submission of the disputes. Adjudication thus offers a more structured process than the neutral evaluation or expert determination dispute resolution methods. Although parties may challenge the adjudicator’s decision after the contract is completed, British experience is that parties accept the adjudicator’s decision in nearly 85 percent of the cases and thus avoid later litigation altogether. Continue reading

Diversity and Mediation

Hon. Ariel E. Belen (Ret.)

Hon. Ariel E. Belen (Ret.)

Imagine two parties locked in a bitter and acrimonious dispute that has gone through six years of hotly contested litigation. At issue are the ownership and control of at least a dozen commercial and residential properties valued in the tens of millions of dollars.

The litigants in this case were associated for nearly 40 years and had built up this large real estate enterprise from scratch. Unfortunately, they had a major and seemingly irreparable falling out and were no closer to resolving this case than they had been at its commencement. One of the litigants was a Latino immigrant, who felt deeply wronged by his former partner.

It is an axiom of mediation that emotional forces can disrupt communication and produce non-productive, if not outright irrational, decision-making. Although the broad outlines of the settlement should have been apparent to both sides for a long time, what was missing was the ability of a mediator to get beyond the parties’ huge emotional investment. What altered the negotiations was that the mediator almost always spoke in Spanish with this litigant and always listened very carefully to what he said and to what he did not say. This settlement, however, would be a rarity in today’s world of ADR because of the scarcity of Latino ADR practitioners in the United States. Continue reading

An Emerging Structure of ADR in Mass Torts and MDLs

The official statistics provided by the Judicial Panel on Multidistrict Litigation in recent years count Products Liability as nearly one quarter of all pending multidistrict litigations (MDLs), making it the largest category among all classifications.

Many of these Product Liability MDLs, especially pharmaceutical and medical device mass torts, continue to dominate headlines in mainstream and legal media. These mega cases dominate and potentially drain the resources of the courts, counsel and parties to the litigation. The magnitude of these matters, combined with the statistical likelihood of eventual settlement in nearly all of them requires focus on trends that facilitate resolution.

ADR has a longstanding role in resolving some of the largest and most high-profile matters. As with any evolving industry, ADR models were developed to streamline processes for the efficient resolution of disputes. This is certainly true within the context of mass torts, where a cooperative, working model has emerged because all stakeholders buy into its effectiveness. Continue reading