Editor
Arbitrating Patent Disputes — A Strategic Choice
Most practitioners are aware of mediation as a potential tool for resolving patent disputes. Mediation affords the parties and their counsel many well-known advantages: privacy, informality, an opportunity for a frank evaluation of the merits, and control, including the ability to manage the costs and the risks of litigation as well as the outcome. Many, however, do not consider whether arbitration might make a better strategic choice over litigation for resolving a patent dispute when an adversarial process is called for.
Litigating patent disputes is known to be both time consuming and costly. Patent cases take an average of 2.5 years to resolve according to the PWC 2016 Patent Litigation Study, although only 1.7 percent actually reach trial. The typical cost for litigating a dispute with $10-25 million at risk through the end of discovery is $2.6 million with total costs amounting to $4.5 million. When over $25 million is at risk, these numbers jump to $3.8 million through discovery and $6.2 million respectively. In addition, the disruption to business-as-usual cannot be over estimated with employees engaged in extensive document production, and executives and engineers providing testimony in depositions.
Patent litigation is also not known for its finality. Even after Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, (2015), claim construction still remains a fertile ground for reversal and remand to the district court for further proceedings. According to the PWC Study, appeals were lodged in 80 percent of cases analyzed with 53 percent of appealed cases modified in some regard.
For Certain Matters, Arbitration May be a Better Choice for Patent Disputes

Arbitration’s perceived benefits are readily transferable to patent disputes. In fact, given the characteristics of patent cases, arbitration may well provide a preferred adversarial process depending on the parties’ business goals. Arbitration affords the parties autonomy over many aspects of how their dispute is resolved. First, parties are able to determine the characteristics they want in a decision maker and then choose an arbitrator who meets their needs including, for example, expertise in patent law, a relevant technical background, sufficient time to devote to the matter, and excellent case management skills. Moreover, parties can decide whether they want a sole arbitrator or whether the size and complexity of the matter calls for a panel of three. The parties’ ability to achieve many of the benefits associated with arbitration often depends on the skills of the arbitrator or the panel chosen and their commitment to the process.

The parties also control the timing of their evidentiary hearing and the events leading up to it. At the preliminary hearing, the parties and the arbitrator agree on a schedule which is then set forth in a pre-hearing order. The parties can set as aggressive a timetable as they choose which helps avoid the application of Parkinson’s law - that work expands to fill the time available. And as arbitrations, like trials, tend to settle, an aggressive schedule can lead to an earlier settlement which saves time and money.
The parties are also able to choose to conduct the arbitration under the auspices of a service provider, such as the American Arbitration Association and its attendant rules. The AAA, for example, has supplemental patent rules that include actions relevant to patent disputes such as the content of initial infringement and invalidity disclosures, and the exchange of proposed claim construction terms. And the AAA, like most service providers has rules governing interim relief, and emergency measures of protection. In the event that the parties prefer to conduct their arbitration on an ad hoc basis, without the use of a service provider, they are able to do so.
Discovery, which is frequently credited for the expense of patent litigation, is also subject to the parties’ agreement. Generally, discovery is much more limited in arbitrations than in litigation. And in patent disputes, the parties often need little discovery for claim construction other than the patents, the prosecution file histories, and prior art.
When important intellectual property rights are at stake, keeping the proceedings private can be important. Unlike litigation in state and federal courts, arbitrations are not open to the public. Moreover, the parties can agree that they will not divulge what happens during the course of the arbitration to enhance confidentiality.
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2017 Ⓒ Boston Patent Law Association
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By Merriann Panerella, Independent Arbitrator, Mediator, Consultant
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NEWSLETTER ARCHIVE
Volume 48, Issue 1
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Index
Community Calendar Read more >
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Message from the President Monica Grewal
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Implied In Ink?: How Tattoo Artists Can Claim And Protect Their Copyrights Against An Implied License Defense
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The Passing of a BPLA past president and Founding Partner of Hamilton Brook Smith Reynolds, Leo Reynolds
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Boston Patent Law Association Minutes of The 2016 Annual Meeting
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Members on the Move
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Moot Court Judges Needed
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Arbitrating Patent Disputes — A Strategic Choice
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Officers and Board of Governors
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Trademark Solicitation Scams
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