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.

Most Infringement Plaintiffs Have Only Distributive Aims

 

Patentees have two classes of interests in their IP assets: Monetization (licensing or sale of the intellectual property) and exclusion (keeping others from using the asset, because it confers a competitive advantage in the manufacture of a thing or the sale of a product).  Active use of a patent in manufacturing is called “practicing” the patent.  

There has been a great deal of negative press about so called “patent trolls.” [1] Such entities make nothing; they simply collect patents and wait to extract payment from inadvertent or intentional infringers, or potential licensees.  Case law establishes that this practice is perfectly legal, [2] although an exclusive focus on monetization could affect the patent aggregator’s equitable right to a permanent injunction, since money damages are demonstrably adequate. [3]

Patent aggregators currently account for a staggering 40% of patent litigation, [4] which they settle for a fee the great majority of the time. [5] To put it bluntly, patent aggregators are in it for the money.  

This is good news for proponents of mediation, since the process is ideal for establishing who gets what share of some amount of money, or what something is worth (so-called distributive negotiation).

No one goes to mediation unless they are at least potentially prepared to make some concession.  And culturally, we feel pressured to reciprocate when a concession is made to us.  Mediation becomes an exchange of concessions, coupled with an effort to retain what is most important to each party.  These forces predictably drive mediation parties’ demands toward the center. [6]

In other words, money-motivated aggregators will be led to compromise unreasonable demands by the mediation process itself.

By Greg Wood

 

ENDNOTES

[1] The term is banned as a slur from many courts. Courts prefer the more neutral “Non-Practicing Entities, (NPEs) or “patent aggregators.”

[2] See Columbia Motor Car Co. et al. v. C.A. Duerr & Co. et al., 184 F. 893 (2d Cir. 1911). 

[3] See eBay, Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837 (2006).

[4] Jeruss, S., Feldman, R., & Walker, J. (2012). “America Invents Act 500: The n Effects of Patent Monetization Entities on US Litigation. Duke L. & Tech. Rev., 11, 357.

[5] Id. 

[6] In fact, experts in mediation can predict the endpoint of a negotiation at the earliest stages of that process. See Guasco, M. and Robinson, PR Principles of Negotiation: Strategies, Tactics, and Techniques to Reach Agreement (2007), at pp. 40.

 

 

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