IP and ADR:

Using Mediating to Successfully Resolve Intellectual Property

Disputes

Erica Bristol, Esq.

Erica Bristol

Disclaimer

This presentation does not constitute legal advice, does not create an attorney-client relationship and should not be considered a substitute for professional legal advice.

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Erica Bristol

Topics Covered

• WHAT IS MEDIATION?

• BENEFITS VS. LIMITATIONS

• MEDIATION CONFIDENTIALITY/PRIVILEGE: STATE VS. FEDERAL

• DRAFTING CONSIDERATIONS

• ELEMENTS OF A MEDIATION SESSION: BEFORE, DURING, AFTER

• TIPS FOR SUCCESSFUL MEDIATIONS

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WHAT IS MEDIATION?

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Definition of Mediation

• CA Evidence Code §1115: “a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement.”

• One method of alternative dispute resolution (ADR)

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Mediation Compared to Other Forms of ADR

• Mediation– Out of court– Informal– Mediator has no decision-making power– Parties control outcome, cost, attendees– Confidential

• Arbitration– Out of court– Informal discovery rules– Parties control cost– Arbitrator has decision-making power

• Binding or Non-Binding

• Early Neutral Evaluation– Strength/weakness assessment– Evaluation of possible outcome in court– Recommendations persuasive but not binding

• Fact Finding, Mini-Trial

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What Kind of IP Disputes Can Be Resolved Using Mediation?

• Patent• Copyright • Trademark• Trade Secret• Licensing

– Accounting/royalty calculation/audit provisions– Determination of license grant– Term, territory, rights, limitations, exclusivity– Subcontractor performance– Use beyond license grant

• Infringement matters

• Breach of Contract• Vague, ambiguous terms• Damages (VIP)

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BENEFITS VS. LIMITATIONS

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Benefits of Mediation

• Less Expensive than litigation– Parties control cost

• Less time (session can be scheduled quickly)• Confidential• Parties control outcome• Solutions not available in litigation/arbitration• In Person or “Virtual”

– Conference call, web conference, Skype™ • Saves travel/lodging costs

– Depends on dispute

• Good success rate (if parties want to settle)

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Limitations of Mediation

• No decision binding on parties

• Parties don’t have to settle

• May end up in arbitration/litigation anyway

– Longer time frame for resolution

• Confidentiality restrictions

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How Much Does Mediation Cost?

• Varies

• Hourly, Half Day, Full Day

• $300/hr.+

• Admin Fees

• Include mediation costs in legal budget

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Who Should Attend?

• Parties

• Counsel– Knowledge of case, good negotiation skills

• Other Attendees (discretionary)– Witnesses

– Consultants

– Experts

– Translators

– Insurance Representatives

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When Does Mediation Take Place?

• Before lawsuit/arbitration

• During litigation

• Pursuant to contract

– Informal attempt to resolve (aka “negotiation”)

– Mediation

– Arbitration/Litigation

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Voluntary vs. Involuntary Mediation

Voluntary: by contract (oral or written)

– Usually prior to arbitration/litigation

– Parties can spontaneously agree

Involuntary: court-ordered mediation

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Court-Ordered Mediation

• Litigated cases• Federal and state courts

– State courts: mediation statutes, California Rules of Court– Federal courts: local rules

• Typically 6-12 months from filing complaint• Mediator selected by

– Parties (from court panel)• First 3 hours free

– Court randomly selects– Parties hire private mediator (fee)

• Sometimes too early

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California Rules of Court

Court-connected mediation in civil cases

– 3.850, et. seq. (mediator rules of conduct)

– 3.865, et. seq. (complaint procedures)

– 3.894 (serve participant list 5 days before session; must appear in person unless excused by mediator)

– 3.1385 (notify mediator of settlement 2 days before session or possible fines)

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Selecting a Mediator

• Panel vs. Individual

• Attorney vs. Non-Attorney

• Experience

• Skills

• Referral

• Location

• Fees

• Conflict check

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MEDIATION CONFIDENTIALITY AND

PRIVILEGE:

CA VS. FEDERAL

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California’s Mediation Laws:Evidence Code §703.5, §§1115-1128

Confidentiality

Admissibility

Communications

Documents/Materials

Mediator testimony, competency

Conclusion of Mediation (by Law)

Enforceability of mediated settlement agreements

– oral and written

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Confidential and Privileged Communications, Writings

1119(a): Statements and admissions in mediation inadmissible, not subject to discovery, disclosure can’t be compelled in non-criminal action

1119(b): Writings prepared in connection with mediation inadmissible, not subject to discovery, disclosure can’t be compelled in non-criminal action

1119(c): All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

Ok for criminal?20

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Confidentiality Continues after Mediation Ends

1126: Communications and writings remain inadmissible, protected from disclosure, and confidential to the same extent after the mediation ends.

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What about the Mediator’s Findings, Recommendations?

1121: Inadmissible, unless all parties agree in writing (or orally per Section 1118)

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Mediators Incompetent to TestifyEvidence Code §703.5

Exceptions:

Statement or conduct that could

– (a) give rise to civil or criminal contempt,

– (b) constitute a crime,

– (c) be the subject of investigation by the State Bar or Commission on Judicial Performance, or

– (d) give rise to disqualification proceedings under paragraph (1) or (6) of subdivision (a) of Section 170.1 of the Code of Civil Procedure

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Subpoenaing Mediator Testimony/ Production

1127: no subpoenaing mediators to testify or produce a writing

If testimony/writing found to be inadmissible or protected from disclosure, court/administrative body shall award reasonable attorneys’ fees and costs to the mediator

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Reference to Mediation During Trial

1128: Reference to mediation during subsequent trial is an Irregularity per CCP 657

Grounds for vacating or modifying the decision in that proceeding, in whole or in part, and granting a new or further hearing on all or part of the issues, if the reference materially affected the substantial rights of the party requesting relief.

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Evidence Otherwise Admissible

1120: Evidence otherwise admissible or subject to discovery outside of a mediation or a mediation consultation shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation or a mediation consultation.

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Communications/WritingsRelated to Mediation Admissible If:

1122:

• All participants agree in writing (or orally per section 1118)

• Communication/writing was prepared by/on behalf of less than all participants:

– those participants expressly agree in writing (or orally per Section 1118) to its disclosure, and

– the communication/writing does not disclose anything said or done or any admission made in the mediation.

• If mediator expressly agrees to disclosure, that binds mediator’s assistants

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Are Mediated Settlement Agreements Enforceable?

1123: yes, if:• Signed by parties• Says it’s admissible/subject to disclosure/words to that effect;

or• States it’s enforceable/binding/words to that effect; or• All parties to agreement expressly agree in writing (or orally

per Section 1118) to its disclosure; or• Agreement is used to show fraud, duress, or illegality relevant

to an issue in dispute.

Admissibility of oral agreements: Section 1124

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Are Oral Agreements in Mediation Binding on Parties?

• 1118: yes, if:

– (a) Recorded by court reporter or reliable means of audio recording

– (b) Terms put on record in presence of parties/mediator and parties state on record they agree to terms

– (c) Parties state on record agreement is enforceable/binding/words to that effect.

– (d) Recording is reduced to writing and signed by parties within 72 hours after recorded.

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When Does a Mediation End (by Law)?

(For purposes of confidentiality)

• No communication between mediator and any of the parties for 10 calendar days

– Mediator and parties may shorten/extend time by agreement

• Parties execute settlement agreement that fully resolves dispute

• Oral agreement under Section 1118 fully resolves dispute

• Mediator gives participants signed writing that states mediation is terminated or words to that effect consistent with Section 1121

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When Does a Mediation End by Law, cont.

• Party provides mediator, participants with signed writing mediation is terminated or words to that effect consistent with Section 1121.

– More than two parties: mediation may continue with remaining parties or terminate

• Partially resolved disputes:

– Parties execute written settlement agreement that partially resolves the dispute

– Oral agreement that partially resolves the dispute is reached per Section 1118

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Cases

• In re Marriage of Eisendrath (2003) 109 Cal. App. 4th 351

• Foxgate Homeowners' Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1

• Cassel vs. Superior Court (2011) 51 Cal.4th 113But, see• Milhouse v. Travelers Commercial Ins. Co.

(C.D.Cal. 2013) 982 F.Supp.2d 1088 – currently on appeal to 9th Circuit (Case No. 13-56959)

• CA Law Commission activity

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Federal Mediation Confidentiality and Privilege

• Confidentiality: Yes (28 U.S.C. § 652(d))

– Local rules

– Parties’ obligations to each other

• Privilege: Court-by-court basis!

– 4th, 9th declined to adopt, federal circuit punted the issue

– Northern District CA: yes; others, no

• Cases– Babasa v. LensCrafters, Inc., (9th Cir. 2007) 498 F.3d 972

– Facebook, Inc. v. Pacific Northwest Software, Inc., (9th Cir. 2011) 640 F.3d 1034

– Kimberly-Clark Worldwide v. First-Quality Baby Products, (2011) No. 2011-1157 (unpublished)

Time for a federal mediation privilege for IP issues?

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DRAFTING CONSIDERATIONS

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Typical Elements of a Mediation Clause

• “Condition Precedent” to arbitration/litigation• Trigger (written notice)• Selection of Mediator• Place

– State, county?– Know rules for jurisdiction (local rules)

• Who pays• Exclusions (certain claims, equitable remedies, e.g. prelim. injunction)• Tolling of SOL while in mediation• Time frame for completion

– What happens if not completed w/in time frame

• Consequences for failing to mediate– No recovery of attorneys’ fees, costs

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Sample Mediation Clauses*

In the event of any dispute arising out of or relating to this Agreement, or the breach thereof, the parties hereto shall use their good faith efforts to settle the dispute through mediation in [specifycity/county, State] [administered by {specify provider organization} in accordance with its mediation rules OR in accordance with the select: CPR Mediation Protocol or similar] in effect as of the date of the request for mediation, as a condition precedent to [select:commencing legal action OR filing a claim in arbitration].

The filing of an action in court for the purpose of obtaining any of the following shall not be a violation of the obligation to mediate: writ of attachment, temporary restraining order, preliminary injunction, receivership, or other provisional remedies.

*© 2009-2012 State Bar of CA. Reproduced with permission of Litigation Section., ADR Committee

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Sample Mediation Clauses, cont.

If a party [select: commences any action or proceeding at law or in equity OR files a claim in arbitration] without first offering to mediate, or if a party fails to respond to a request for mediation within [specify: number of calendar days] after the date of such request, or otherwise refuses to participate in mediation in good faith, then that party shall not be entitled to recover the attorneys fees, if any, to which it would otherwise have been entitled under this Agreement as prevailing party in [select: litigation OR arbitration].

“Good faith” participation shall mean direct participation in the mediation by executives who are authorized to resolve the matter on behalf of the parties whom they represent, and shall not mean that any party is required to come to any agreement.

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Sample Mediation Clauses, cont.

The mediator shall be [specify qualifications, e.g., ‘with substantial training and experience as a mediator’] and shall be selected [specify manner of selection, e.g. in accordance with the afore-mentioned mediation rules, by mutual agreement of the parties, or by mutual selection from a panel of mediators offered by the provider organization {NOTE that in the event one of the two latter alternatives is selected, the provision needs to add a clause as to what happens if parties fail to reach agreement within a certain period of time, for example by naming an appointing authority}]. Mediation fees, including any administrative fee, shall be borne by the parties in equal shares.

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Sample Mediation Clauses, cont.

If and to the extent that, within [specify number] calendar days after the date of the request for mediation, or within [specifynumber] calendar days after the mediator’s notice of acceptance, whichever occurs later, the dispute between the parties has not been fully resolved, then unless both parties have agreed to extend the time for completion of the mediation, [select: either party shall be free to pursue any and all remedies available under this Agreement or at law or in equity OR the unresolved issues shall be finally resolved by binding arbitration pursuant to the terms of Paragraph___ of this Agreement OR the matter shall be finally resolved by judicial reference pursuant to the terms of Paragraph___ of this Agreement].

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ELEMENTS OF A MEDIATION SESSION:

BEFORE, DURING AND AFTER

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Typical Mediation Session

• Before:– Attorneys communicate with mediator– Agenda– Mediation Briefs

• During:– In Person vs. “Virtual”– Joint session vs. caucus– “Mediator’s Proposal”– Settlement: Short/Long Agreement (should be in writing, use

“enforceable” language)• After:

– Long settlement agreement drafted (use enforceable, binding language)

– Try to settle after session/schedule another session– Stay in contact with mediator (confidentiality)– No settlement-proceed to arbitration, litigation

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TIPS FOR SUCCESSFUL MEDIATION SESSIONS

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MEDIATION TIPS

• Prepare!• Set agenda• Manage client expectations

– Ethical duty to explain mediation, confidentiality/privilege?

• Come with the desire to settle– Consider creative settlement options

• Work on settlement agreement ahead of time • Don’t Fear the “Joint Session”• Negotiate, don’t litigate• Know how to calculate damages (VIP!)• Consider “mock mediation”

– Good for new attorneys– Work on skills, weaknesses

• Sometimes, the problem is YOU

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CONCLUSION

• Mediation is a great alternative to litigating intellectual property disputes.

• Helps parties save time, money, reputation.

• Mediated settlement agreements can be enforceable.

• Quick and confidential resolution strengthens client relationships and trust.

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Questions?

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Thank You!

Erica Bristol, Esq.(818) 753-232616133 Ventura Boulevard, 7th FloorEncino, CA 91436www.ebresolution.comericab@ebresolution.com

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