This is Part of Greg Wood's Series on Why to Choose Early Mediation in Intellectual Property Cases

Resolving disputes through litigation is expensive, time-consuming, emotionally and physically draining. The unique characteristics of IP cases make mediation ideal. Here's why.

IP Trials are Extraordinarily Expensive, and the Cost is Rising

 

The financial cost of civil litigation is prohibitive. IP trials are extraordinarily so.   The average cost of a civil trial is approximately $63,000. [1] The average cost of an IP trial, is exponentially higher.  According to the American Intellectual Property Law Association, the cost of an average patent lawsuit in 2011 was $2.8 million. Approximately $1.2 million of that amount related to trial and post-trial activity. [2] In 2013, according to Orrick, Herrington and Sutcliff IP partner Alex Chachkes, costs are still rising. [3]

While other forms of IP litigation are less expensive than patent cases, their costs are still much higher than run-of-the-mill litigation.   Trademark claims with the same amount at stake cost approximately $1.1 million, Copyright claims cost $1 million, and Trade Secret claims cost about $1.6 million to litigate. [4]

In contrast, even an involved mediation with an experienced practitioner costs thousands, not millions.   This huge savings represents a strong reason to embrace early mediation as a means of resolving IP disputes. Through early mediation, the mounting costs of litigation can either be avoided altogether or stopped at an early stage.

Some neutrals counsel against mediating ‘too early,’ fearing that parties will not have enough information to resolve the conflict. But given the high costs of litigation, and the comparatively tiny costs of mediation, early mediation is the way to go.  In the first session, parties can a) explore whether they have the information needed to move forward, and b) agree on procedures to exchange that data (such as sales figures) without litigation.  Because the information would come out in discovery anyway, early disclosure that achieves settlement is a costless way to save money.

By Greg Wood

ENDNOTES

[1] In 2012 dollars. See FN 11, "The True Cost of Unresolved Litigation.”

[2] Neumeyer, Chris.  

[3] Chachkes, Alex,  Small Claims Won't Fix Rising Patent Litigation Costs," published in both Corporate Counsel and The Recorder, 2013  (now available only through Lexis-Nexis.

[4] AIPLA 2013 Report of the Economic Survey @ 2013 Intellectual Property Insurance Services Corporation at www.patentinsurance.com (accessed July 5, 2014).

Drawing on an engineering background, thirty five years as an advocate in commercial, intellectual property and e-discovery disputes, twenty years serving as an arbitrator, 200+ mediations and 400+ hours of formal ADR training, Greg is “all in” in assisting parties in the speedy and economic resolution of disputes whether as a negotiation or settlement counselor, a mediator or an arbitrator. While Greg is available for mediation and arbitration of various disputes, his focus remains on complex commercial and intellectual property matters including e-discovery disputes. Greg can be reached at greg.wood@agencydr.com