Mediation In Cases Of Intellectual Property Rights

THEME: Mediation and Commercial Law

This article is authored by Maitreyee Bhardwaj from Symbiosis Law School, Pune.

ABSTRACT

This essay focuses primarily on mediation as an alternative dispute resolution in settlement of Intellectual Property Rights. Mediation can be an efficient way of solving a dispute when compared with other ways of dispute resolution. WIPO solves most of the cases expeditiously and in a confidential manner and it is not strictly limited to a particular industry only. It spans widely through various industries and various types of products. This essay shows that mediation processes are fairly effective when it comes to solving cases of IPR and hence the coming generation of creators might get an easier relief in case their work gets stolen.

INTRODUCTION

WHAT ARE INTELLECTUAL PROPERTY RIGHTS?

Intellectual Property Rights (IPR) are a set of rights related to establishments of the human mind. An yield of the human mind may be attached with intellectual property rights. These are like any other property, the only difference being that these are the brain child of creators and the law gives creator the rights to use the same to gain financially from their intellectual work. Primarily IPR covers laws related to copyrights, patents and trademarks and geographical indications. While laws for these varies internationally or from country to country, they follow the international legal instruments. World Intellectual Property Organization (WIPO) has set up the significance of IPR for the economic growth of nations in the creative world.

“IPR covers literary, artistic and scientific works; performances of performing artists, phonograms, and broadcasts; inventions in all fields of human endeavour; scientific discoveries; industrial designs; trademarks, service marks, and commercial names and designations; protection against unfair competition; and any other rights resulting from intellectual efforts.” [1]

Laws related to Intellectual Property Rights are Copyright Act 1957, Trade and Merchandise Marks Act, 1958 (now Trade Marks Act, 1999), The Patents (Second Amendment) Act 2002, The Designs Act, 2000, Geographical Indication of Goods (Registration and Protection) Act, 1999.[2]

Some recent developments in IPR in India includes the definition of “trade mark” now includes graphic representations, shapes, packagings and combinations of colours, thereby widening IPR protection, broadening of the definition of trademark infringement to give protection beyond the use of identical/deceptively similar marks in relations to goods for which they are registered, enactment of Geographical Indications of Goods (Registration and Protection) Act, 1999 to protect unique Indian products like Basmati Rice, Darjeeling Tea, Alphonso Mangoes, Malabar Pepper, Cardamom and Hyderabad grapes which are reputed in Indian and international market, modification of copyrights and patent law is now more aligned with TRIPS.[3]

WHAT IS MEDIATION?

Section 89 of Civil Procedure Court states that

“Settlement of disputes outside the Court. (1)Where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for a) arbitration; b) conciliation; c) judicial settlement including settlement through Lok Adalat; or d) mediation

(2) Where a dispute has been referred

(d) for mediation, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.” [4]

Mediation is described by the Cambridge Dictionary as “the process of talking to two separate people or groups involved in a disagreement to try to help them to agree or find a solution to their problems.”[5] In legal terms as WIPO describes mediation,

“it is the procedure, in which a neutral intermediary, the mediator, helps the parties to reach a mutually satisfactory settlement of their dispute. Any settlement is recorded in an enforceable contract.”[6] It is a form of Alternative Dispute Resolution which involves arbitration, mediation, conciliation, judicial proceedings and lok adalats.

Mediation is a non-binding process that are controlled by the parties that means a mediator unlike a judge or arbitrator is not a decision maker, his mediations will not be binding, he will only be a negotiator and the decisions will be reached by the parties themselves. It is a confidential and interest based procedure and is the reason why mediation involves minimal risk for the parties and generates significant benefits. According to WIPO, “even when a settlement is not achieved, mediation never fails, as it causes the parties to define the facts and issues of the dispute, thus in any event preparing the ground for subsequent arbitration or court proceedings.”

THE NEED OF INTELLECTUAL PROPERTY RIGHTS AND MEDIATION

Whether it is the pharmaceutical industry, entertainment industry or IT industry, every industry demands intellectual property for its uniqueness, growth and development. The significance of intellectual property can be easily understood by looking at the example of a song. The process of recording a song mainly involves songwriting, arrangement, vocal production, mixing and mastering. During any of these above-mentioned processes, a problem of copyright could arise where there has been copying of someone else’s music sample or after the song is completed and published, some other artist has copied their music and embedded in their song. Intellectual Property Rights help the original creators of the song from protecting their piece of work, copyright laws prevent the musicians or recording studios from being robbed of their artistic work. With piracy being prevalent in this particular industry, copyright laws help the songwriters from protecting their lyrics and producers from copying their music. However, litigation in these cases might take a long time to settle a dispute therefore the courts needs to consider alternative dispute resolutions as mentioned above to settle the disputes amicably. European Courts usually use arbitration and mediation for settlement of complex, expensive and mostly uncertain multinational patent disputes.[7] It is observed that “court proceedings are not always the optimum way to resolve such a dispute, because decisions can only be made within the framework of legal possibilities of the respective national and international rules. Thus, they are inherently narrow and do not offer a solution on an international scale.”

MEDIATION- AN EFFICIENT WAY TO SETTLE A DISPUTE

With more than 3 crore pending cases in India[8], the burden of Indian courts is increasing every day. Litigation is often considered as the preferred way or the default approach to settle a dispute. However, litigation is a lengthy process which can take years to resolve. There are almost 28.5 lakh pending cases that are over 10 years old.[9] Not only litigation takes up a few years to settle cases, it is also very expensive and not only from the client’s point of view. According to a survey[10], it was observed that litigants in India spend Rs. 30,000 crores in a year just to attend court hearings. A litigant spends Rs. 519 per day to attend court and loses Rs. 873 of his productivity every day. This productivity loss of litigants amounts to 0.48 per cent of India’s GDP. These figures are disappointing yet the truth of our judicial system. One way to tackle this problem is through Alternative Dispute Resolution (ADR). Not only ADR is less time consuming when compared to litigation, it is also economical and efficient. Unlike litigation, ADR is less formal and participants are more comfortable while resolving their dispute. ADR can involve arbitration, mediation, conciliation, Lok Adalats and judicial settlements.

Mediation, as a form of Alternative Dispute Resolution, is convenient when parties are unsure of facts or law, when they are ones with very strong emotions i.e. they are so angry that their rage might affect their behaviour in court, when they crave to be heard by the opposing party, when the lawyers can no longer negotiate without the help of a dexterous mediator, when the communication barrier or there exists a conflict between the parties and their lawyers or when the parties themselves are not skillful mediators and they need a specific structure in order to settle their dispute.[11] The work of a mediator is to act as a facilitator in helping the parties to reach a negotiated settlement of their dispute. The mediator makes no decisions and does not impose his view of what a fair settlement should be.[12]

In the context of Intellectual Property Rights also, Indian judicial system has disheartened the innovators. It was found in a survey that 98 percent of the patent granted in 2015 were 5 or more than 5 years old where the United Kingdom or the United States of India takes about 2-3 years for the same.[13] Recently, Supreme Court asked Delhi High Court to send data for pending Intellectual Property cases which suggests that the apex court is taking cognizance of the pending cases in the particular field.[14] World Intellectual Property Rights Organisation (WIPO) recommends settlement of intellectual property disputes through mediation as[15]

it is a non-binding process so parties will negotiate on their terms but there will be a professional mediator to help them guide through
reduces the costs incurred in settling the dispute
an expeditious settlement
the advantage of confidentiality to protect reputation of the business
preservation of a business relationship that was hampered by filing a dispute.
mediation can be used at any stage of dispute

“Parties to contracts or relationships involving the exploitation of intellectual property often share these goals when a dispute arises. Common examples of such contracts include patent, know-how and trademark licenses, franchises, computer contracts, multimedia contracts, distribution contracts, joint ventures, research and development contracts, technology-sensitive employment contracts, mergers and acquisitions where intellectual property assets assume importance, sports marketing agreements, and publishing, music and film contracts.”[16]

USE OF MEDIATION IN CASES OF INTELLECTUAL PROPERTY RIGHTS IN GLOBAL AND INDIAN CONTEXT

Globally, mediation is becoming the desired way to settle Intellectual Property disputes as WIPO’s Arbitration and Mediation Centre has seen 73% settlement rate when compared to 58% settlement rate in mediation.[17] It is observed that “court proceedings are not always the optimum way to resolve such a dispute, because decisions can only be made within the framework of legal possibilities of the respective national and international rules. Thus, they are inherently narrow and do not offer a solution on an international scale.”[18]

World Intellectual Property Organisation (WIPO) provides some example of cases it settled through mediation in various sectors that shows how mediation is successful and feasible for all the parties. The names of the parties have been obscured keeping in mind the confidentiality of the mediation process by WIPO with an exception of one proceeding where the names were available.

Patent Mediation

“A technology consulting company holding patents on three continents disclosed a patented invention to a major manufacturer in the context of a consulting contract. The contract neither transferred nor licensed any rights to the manufacturer. When the manufacturer started selling products which the consulting company alleged included the patented invention, the consulting company threatened to file patent infringement court proceedings in all jurisdictions in which the consulting company was holding patents. The parties started negotiating a patent license with the help of external experts but failed to agree on the royalty as the multimillion dollar damages sought by the consulting company significantly exceeded the amount the manufacturer was willing to offer. The parties submitted their dispute to mediation under the WIPO Rules. The WIPO Arbitration and Mediation Centre suggested to the parties potential mediators with specific expertise in patents and the relevant technology. The parties chose one of those mediators, who conducted a two-day meeting in which the parties eventually reached a settlement that not only covered the royalty issue, but also included agreement on future consulting contracts. The mediation was thus instrumental in transforming a hostile situation in which the parties were preparing to engage in prolonged and expensive litigation into one in which they were able to conclude an arrangement which suits the business interests of both parties and ensures the profitable use of the technology in the service of those interests.”[19]

“A Dutch company concluded a copyright license with a French company regarding the publication of a technical publication. The license agreement includes a WIPO mediation clause. The licensee became insolvent and defaulted on the royalties due under the license. When the licensor requested the mediation procedure, the Center, after consultation with the parties, and with approval of the court appointed liquidator, appointed an intellectual property specialist as the mediator. Following two meetings between the parties and the mediator, a settlement agreement was concluded.”

Mediation of an IT/Telecom dispute

“A software developer based in the United States licensed software applications to a European provider of telecommunications services. The agreement included a clause submitting disputes to WIPO Mediation, followed, in the absence of a settlement, by WIPO expedited arbitration. A controversy arose as to whether the licensee was entitled to let certain affiliated parties have access to the software, and whether additional license fees were due in respect of those third parties. The dispute was submitted to WIPO mediation. Taking into account the criteria identified by the parties, the Center proposed as mediator several candidates with experience in the area of software licensing and appointed a mediator in accordance with the parties’ preferences. Mediation sessions were held at a location that was convenient to both parties. The parties developed a mutually acceptable framework for the mediation process and solved a number of the issues in dispute. Using some of the options developed during the mediation, direct negotiations between the parties continued after the termination of the mediation to solve their remaining issues.”[20]

IT Mediation

“A European airline entered into an agreement with a US software company concerning the development of a worldwide platform for the management of ticket sales. This was followed by a professional services agreement, which contained a more detailed description of the project as well as the support services to be delivered by the software company. The latter agreement included a WIPO mediation followed by WIPO expedited arbitration clause. The airline paid several million USD for the application. Some years later, the airline terminated the agreement. In response, the software company asserted that, with the termination, the airline’s rights in the application had lapsed and requested the software to be returned. The airline was of the position that it was entitled to retain the software application and initiated mediation. The result of the mediation was a new license between the parties.”[21]

Trademark Co-existence Dispute

“After a dispute arose between them, a North American company requested mediation with two Italian companies and one Spanish company on the basis of an agreement which the parties had reached for mediation under the WIPO Mediation Rules. The goal of the mediation was to help the parties avoid confusion and misappropriation of their similar trademarks and to regulate future use of their marks. After a dispute arose between them, a North American company requested mediation with two Italian companies and one Spanish company on the basis of an agreement which the parties had reached for mediation under the WIPO Mediation Rules. The goal of the mediation was to help the parties avoid confusion and misappropriation of their similar trademarks and to regulate future use of their marks.”[22]

Mediation of a Software/IT Dispute

“A public research center based in Europe and a technology company also based in Europe signed a research and development agreement aimed at developing technological improvements to a phonetic recognition software. The agreement included a mediation clause under the WIPO Rules.After several years, the technology company stopped complying with the agreed payment schedule alleging that the research center had not met the targets set and took unilateral decisions, including hiring other research groups outside the relationship while the contract with the research center was still in force.The research center initiated mediation claiming damages. The Center proposed as mediator a lawyer with experience in technology contracts. After several months of intense negotiations facilitated by the mediator, the parties concluded a settlement agreement.”[23]

Mediation in the Area of Research and Development

“A major European research institute and a French company entered into a license agreement. The agreement related to a technology in the area of building materials with an application for patent filed with the European Patent Office. The parties included in their contract a multi-tier dispute resolution clause providing for WIPO mediation, followed by court litigation. Three years after the conclusion of the agreement the company alleged the invalidity of the license agreement and requested a refund of royalty payments in light of the rejection of the patent application by the European Patent Office. The research institute commenced mediation proceedings requesting payment of the royalty rates. At the end of the mediation session the parties were able to conclude a settlement agreement. This settlement agreement included options for the amendment of the license agreement and payment of royalty rates, based on future decisions on the patent application, and the additional option to conclude a research and development agreement between the parties. Thus, the mediation settled within less than three months after its commencement and enabled further extended collaboration between the parties.”[24]

These examples of cases settled by WIPO’s mediation process prove that mediation settles disputes in an efficient manner without disturbing the relationship of the parties. Since WIPO is an international organisation, the disputes that it settled spans all across the continent and is not restricted to few specific countries. In an interesting case where one Suravit Kongmebhol of Thailand and Aftershokz, LLC were in a trademark dispute regarding the same name for headphones “Aftershokz”, with the latter manufacturing its product first, five years prior to the former. Four trademark infringements were filed against Mr. Kongmebhol. Mr. Kongmebhol submitted a unilateral request for mediation to the WIPO Centre. Aftershokz LLC agreed to mediation and the mediation was settled in Singapore within 20 hours, that is less than a day.[25] If this case would have gone to litigation, it would have taken months or ma ybe even years considering this was an international case involving two countries and included four copyrights infringements. The brand image of both the companies was protected, the companies were satisfied and maintained an amicable relationship but the most important factor to consider is that this quick mediation proceeding did not hinder the business activities of both the parties. This would have never been the case if it were a litigation proceeding.

In India, mediation still has a long way to go before it becomes the favoured method of dispute resolutions. Most people in India do not even consider alternatives of litigation, in order for it to gain popularity it needs to be promoted. Indian Bar Association provides few ways to promote alternatives to litigation such as preparation of a comprehensive plan, conducting proper seminars and workshops spreading awareness among people, change in attitude of the disputants, lawyers must try to settle the dispute in amicable ways, basic legal education in regards to dispute settlements other than litigation, proper training but be given to the mediators, active participation of lawyers, judges, law students and volunteers. By adopting mediation, arbitration and other dispute resolutions.[26]

Although few cases have been settled through mediation like procedure called early neutral evaluation or ENE. One such case of Bawa Masala Co vs. Bawa Masala Co. Pvt. Ltd[27]. where a huge amount of legal disputes were resolved through alternate dispute resolution. These were Intellectual Property based cases and Delhi High Court issued an order for adoption of a process known as early neutral evaluation, in an intellectual property based litigation suit. The Court in this case, under the aegis of section 89 of the Civil Procedure Code, 1908 presented for the inclusion of such procedures for amicable resolution of disputes. The Court further said that the early neutral evaluation procedure shares the “same features as a mediation process…the difference is that in case of mediation the solutions normally emerge from the parties and the mediator makes an duty to find the most acceptable solution” whereas “in case of early neutral evaluation, the evaluator acts as a neutral person to assess the strengths and weakness of each of the parties and discusses the same with the parties jointly or in caucuses, so that the parties are aware of the independent evaluation of the merits of their case.” A recent example of mediation settlement might serve as a precedent for the future of Intellectual Property Rights cases. A designer, Vashali Shadgule alleged that Sanjay Garg of Raw Mango had copied her designed and she accused him of plagiarism. Sanjay Garg filed a suit of defamation against her for the same in the Delhi High Court but what could have been a long process of litigation was settled within four days through mediation and the parties settled amicably.[28] The Supreme Courts in one case held that mediation proceedings are confidential in nature.[29]

The Supreme Court, in the case mentioned above, had referred a matter for mediation to the Mediation Centre at Chandigarh. The mediator submitted the asked report of mediation proceedings before the Apex Court. After examining the report, the Supreme court observed that mediation proceedings are totally confidential proceedings unlike proceedings in an open court. The Court held that “in the event mediation is successful, the mediator should simply send the executed agreement between the parties to the court.”

India has an enormous scope of Intellectual Property Rights disputes that could easily be settled through mediation, therefore it is suggested that mediation should be a favoured approach when it comes to settle these artistic and innovative cases.

REASON OF CHOOSING MEDIATION AND IPR AS A TOPIC

My main reason to choose Intellectual Property Disputes was my interest in this section of law. I once made a video on YouTube that received a copyright infringement from a music label company. This introduced me to the world of Intellectual Property Rights and since then this sector of law has increased my interest in the legal universe. As I am an animator, I would never want someone to steal my hard work and determination and in order to avoid that I need to know my rights and as an upcoming lawyer I need to know how to protect other creators like myself from infringement of our artistic work.

Mediation grabbed my attention while I was interning in a civil court. There was a case of divorce where the court suggested mediation as a way of negotiation and division of property among the husband and wife. This case was an interesting one because the wife wanted divorce and her belongings back but her husband had destroyed all of it. There were also various allegations of adultery being thrown around in the court. It had reached up to the point where the husband provoked the wife enough for her to throw her sandal at him in the court. Assessing the situation, the judge suggested mediation as a way to amend or break the marriage. The marriage ended up in divorce and the woman got Rs. 12 lakhs of her belongings back. This case was going on for more than two years and through mediation it was settled within a day.

SCOPE OF MEDIATION IN IPR DISPUTES

The scope of mediation in Intellectual Property Rights is unlimited. IPR presents creators with the ability to produce their brain child and mediation shows the way that in case of its infringement it will be protected. The protection will not be expensive or time consuming and it will be beneficial for all parties i.e. businesses and artists. Since they will reach to a conclusion on their own with the help from a skilful mediator, their business relations will not get bitter either. Although right now, the scope of mediation might seem dull in India, in coming years mediation along with other alternatives to litigation will grow. Mediation has attractive features such as cost efficiency, confidentiality, speedy process etc. Once it is promoted in a rightful manner, it will attract a wider range of people towards itself. And since, there are new developments every day, the number of artistic works scientific inventions will also increase on a daily basis. An increase in inventions will lead to an increase in trademark, copyright and patent disputes and hence mediation will serve as a saviour that will protect the rights and hard work of creators and artists. Companies that spend millions on research and development can easily mediate in case their work has been stolen. Therefore, mediation shows a ray of sunshine for solving the disputes of upcoming artists who are involved in intellectual property disputes.

[1] Nehaa Chaudhari, Varun Baliga, Intellectual Property Rights, 5 (2015)

[2] Dharmendra Rautray, intellectual property laws of india – an overview articles on all regions including law, accountancy, management consultancy issues (2003), http://www.mondaq.com/india/x/23429/Trademark/Intellectual Property Laws of India An Overview

[3] Diljeet Titus, Rai S Mittal, Recent developments in intellectual property laws in India- Part 2, The Economic Times (June 23, 2015), https://economictimes.indiatimes.com/small-biz/legal/recent-developments-in-intellectual-property-laws-in-india-part-2/articleshow/47780087.cms?from=mdr

[4] Civil Procedure Code (1908), Section 89

[5] MEDIATION: definition in the Cambridge English Dictionary, https://dictionary.cambridge.org/us/dictionary/english/mediation

[6] World Intellectual Property Rights (WIPO), What is Mediation? https://www.wipo.int/amc/en/mediation/what-mediation.html

[7] FRIEDERIKE FRHECKMANN, The Use of Mediation in Settling Patent Disputes, 11 1–3.

[8] Welcome to NJDG – National Judicial Data Grid, https://njdg.ecourts.gov.in/njdgnew/?p=main

[9] Id.

[10] Harish Narasappa, Kavya Murthy, Suryaprakash B.S., Yashas C. Gowda, Daksh Access to Justice Survey, (2015-16)

[11] Paula Young, The “What” of Mediation: When Is Mediation the Right Process Choice? Mediate.com – Find Mediators – World’s Leading Mediation Information Site, https://www.mediate.com/articles/young18.cfm#16

[12] William Sheffield, Judge, Supreme Court of California (Ret.), Disputes among Business Partners should be Mediated or Arbitrated, Not Litigated published in book “Alternative Dispute Resolution – What it is and how it works” Edited by P. C. Rao and William Sheffield, page No.291

[13] IndiaSpend Team, How patent delays are threatening ‘Make In India’ Business Standard (2016), https://www.business-standard.com/article/specials/how-patent-delays-are-threatening-make-in-india-116011200523_1.html

[14] Abhinav Garg, IPR cases pending in high court: SC seeks data: Delhi News – Times of India The Times of India, https://timesofindia.indiatimes.com/city/delhi/IPR-cases-pending-in-high-court-SC-seeks-data/articleshow/62090265.cms

[15] WIPO, Mediation, https://wipo.int/amc/en/mediation/

[16] WIPO, Why Refer Intellectual Property Disputes to Mediation?, https://www.wipo.int/amc/en/mediation/why-mediation.html

[17] Jeremy Lack, The Growing Need for ADR in IP disputes, Intellectual Property Magazine, 4

[18] FRIEDERIKE FRHECKMANN, The Use of Mediation in Settling Patent Disputes, 11 1–3.

[19] WIPO Mediation Case Examples, , https://www.wipo.int/amc/en/mediation/case-example.html

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] IPOS, Mediation Success at IPOS, (2019) https://www.ipos.gov.sg/docs/default-source/protecting-your-ideas/hearings-mediation/mediation-success-at-ipos-(emps).pdf

[26] Kaviraj Singh, How to promote Arbitration and Mediation in India? Indian National Bar Association (2016), https://www.indianbarassociation.org/how-to-promote-arbitration-and-mediation-in-india

[27] Bawa Masala Co. vs Bawa Masala Co. Pvt. Ltd. And Anr., AIR 2007 Delhi 284

[28] Divya Kaushik, Designer Vaishali S accuses Sanjay Garg of plagiarism – Times of India ► The Times of India (2018), https://timesofindia.indiatimes.com/life-style/designer-vaishali-s-accuses-sanjay-garg-of-plagiarism/articleshow/64794105.cms.

[29] Moti Ram v. Ashok Kumar, (2011) 1 SCC 466