Firstly, mediation of patent disputes must encourage the general aims of the patent system. Secondly, it must promote the general aims of the judicial system.
Therefore, mediation of patent disputes must adhere to the following two values:
- Benefit all the parties to a patent dispute, by generating opportunities for a jointly agreeable resolution of their claims, partly or wholly.
- Post litigation patent mediation should be for the sake of a consensual and prompt resolution, which is also economical.
It is very normal for a patent dispute to involve complicated legal and technical issues. It is very normal for adjudicatory proceedings to go on and on. For example, a patent dispute involving GSM technology. An adjudicatory process can easily go on for a period of time, which is much longer than the relevant life of the said technology. Commercially speaking, there’s no point in securing a relief, like say, damages when the technology has become outdated.
Nowadays, patent disputes between manufacturers of electronic devices dot the patent litigation landscape. Standard Essential Patents (“SEPs”) have received a lot of attention.
Standards are technical requirements or specifications that seek to provide a common design for a product or process. The A4 size for sheets of paper, is a standard. The common mobile phone charger, is also a standard.
Broadly speaking, patents which are essential to a standard and have been adopted by a Standard Setting Organization (“SSO”) are known as SEPs.
SEPs are patents, which are essential to enforce a particular industry standard. To make electronic devices like say, smartphones, their manufacturers must use technologies which are covered by one or more SEPs.
Such exclusivity given by a patent to a patentee, might dilute the object of making standards available to all. Therefore, most SSOs have defined policies. SSO members have to license their SEPs on terms and conditions which are Fair, Reasonable and Non-Discriminatory (“FRAND”). These commitments are meant to protect technology implementers. They also ensure that patentees continue to be rewarded for their investment in research and development initiatives.
An SEP can be licensed. It follows as a logical corollary that, such a prospect plays a significant role in a patentee’s inducement to:
- Make investments in standardisation activities.
- Direct the standard development in the direction of technological answers where the patentee’s strength lies.
- Offer specific services or infrastructure.
The SSO-SEP structure bestows substantial power on a SEP holder. If an entity wishes to use a technological standard, it must obtain the SEP holder’s permission. The SEP holder may choose to withhold the same, by refusing to license its SEP to that entity.
FRAND Terms endeavour to balance inequalities, in order to ensure that an entity should have the right to obtain a license to desired technology on FRAND Terms. However, thrashing out an agreement on FRAND Terms is difficult. It is also difficult to compute a royalty amount, which is as per FRAND Terms.
Licensing SEP on FRAND Terms is a voluntary contract between the SSO and the SEP holder. However, what would be FRAND, has not been defined by SSOs. Thus, what would be FRAND depends upon the nature of the transactions between the SEP holder and the SEP implementer. Mediation being a voluntary process, is very suitable for matters pertaining to license an SEP on FRAND Terms. Facilitated negotiation between an SEP holder and an SEP implementer can best take care of their interests, instead of a protracted adjudicatory battle.
- Whether to mediate or not, is a crucial question in patent disputes. The element of public interest which is involved in the patent subject matter needs to be weighed cautiously. In order to make mediation the preferred alternative dispute resolution (“ADR”) mechanism, it is important, to keep a patent dispute outside the scope of mediation, where mediation is practically not possible. For example, one that involves the validity of patents. Why? The answer is simple. One cannot convince a patentee that its patent is invalid.
- The stage at which a patent dispute is referred to mediation is very critical. For example, just before the trial starts, the parties are more likely to be receptive to give mediation a try. Similarly, after conclusion of the trial and before the judgment is pronounced, the parties might think of giving mediation a try.
- Selection of a mediator is of primary importance. Patent disputes present peculiarities, which can be best appreciated by a mediator, who has a background in the relevant technology. It is better to have 2 mediators; one mediator with a technology background and another mediator with a strong relevant commercial background.
As per The Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), member states have to provide a minimum of 20 years of patent protection. Thus, a patent is a time bound right. During the subsistence of this right, a patentee would want to recover the expenses incurred by it in inventing the subject matter of the patent and to reap profits from the same. A typical patent dispute would be faced with these problems. Probably, that’s why an ADR mechanism as amicable as mediation, has not really been explored in patent disputes. As much as mediation is not very common in patents, there is scope.
Arjun Natarajan is certified to be a mediator by Indian Institute of Corporate Affairs under the aegis of Ministry of Corporate Affairs – Government of India. He is an alumnus of V.M. Salgaocar College of Law, Panaji, Goa. He is a Delhi/NCR based litigator. He practises commercial law, with sectoral focus on telecommunication, broadcasting, information technology and aviation. Regulation of broadcasting, information and films particularly interests him. Additionally, he practises litigation and ADR, with special focus on consensual dispute resolution (CDR) mechanisms like strategic negotiation, mediation and conciliation. Arjun practices negotiation and mediation, including deal mediation under IIAM Mediator’s Code of Professional Conduct. Arjun is an empanelled mediator with National Company Law Tribunal. Arjun is the founder and publishing editor of the blog https://onthesidelinesofgpcseriesindia2017.wordpress.com