Professional Documents
Culture Documents
2-25
IP LITIGATION
COSTS
SPECIAL EDITION
26
WIPO’S NEW
TOP MANAGEMENT
New Parties to WIPO
Administered Treaties in 2009
During 2009, 68 instruments of accession or ratification of treaties administered by WIPO were
deposited with the Director General of WIPO. The treaties and new adherents are as follows:
Patent Cooperation Treaty (PCT) (1970) – Chile, Peru and Thailand (3), bringing the total number
of States to 142.
The Madrid System for the International Registration of Marks (Madrid Agreement (1891) and
Madrid Protocol (1989)) – Egypt, Liberia and Sudan (3) adhered to the Madrid Protocol, bringing the total
number of States/IGOs to 81.
Trademark Law Treaty (TLT) (1994) – Morocco, Nicaragua and Peru (3), bringing the total number of
States to 45.
Singapore Treaty on the Law of Trademarks (2006) – Estonia, France, Liechtenstein, Mali, Netherlands
(The Netherlands will become bound by the Treaty three months after the deposit of the instruments of
ratification of Belgium and Luxembourg), Poland, Russian Federation and Spain (8), bringing the total number
of States to 17.
Strasbourg Agreement Concerning the International Patent Classification (1971) – Serbia and
Ukraine (2), bringing the total number of States to 61.
Patent Law Treaty (PLT) (2000) – France, Liechtenstein and Russian Federation (3), bringing the total
number of States to 22.
WIPO Copyright Treaty (WCT) (1996) – Austria, Bosnia and Herzegovina, Denmark, Estonia, European
Union, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain,
Sweden, Tajikistan, United Kingdom and Uruguay (20), bringing the total number of States/IGOs to 88.
WIPO Performances and Phonograms Treaty (WPPT) (1996) – Austria, Bosnia and Herzegovina,
Denmark, Estonia, Finland, France, Germany, Greece, European Union, Ireland, Italy, Luxembourg,
Malta, Netherlands, Portugal, Spain, Sweden and United Kingdom (18), bringing the total number of
States/IGOs to 86.
CONTENTS
IP LITIGATION COSTS – AN INTRODUCTION
2
U.S. CONTINGENCY FEES – A LEVEL PLAYING FIELD?
3
THE UK: CAN A HIGH-COST COUNTRY
6
CHANGE ITS WAYS?
IP LITIGATION IN AFRICA
14
RESOLVING IP DISPUTES IN JAPAN – COUNTING THE
16
COST
A COST-EFFECTIVE ALTERNATIVE
19
KEEP IT CHEAP – TEN TIPS FOR MINIMIZING COSTS
23
IP LITIGATION COSTS –
AN INTRODUCTION
The settlement of the famous 2006 “The Lion lution models (see “A Cost-Effective Alternative” on
Sleeps” copyright case – with its happy ending for page 19) or simplified procedures, especially in the
the heirs of the author – was widely reported in the field of border enforcement. Emphasis was placed
press and celebrated as an example of successful on mechanisms to reduce litigation costs for par-
use of the intellectual property (IP) system in ensur- ties in need, including legal aid, or provision for liti-
ing remuneration of creators.1 It should, however, gation on a pro-bono basis. In that regard, refer-
be kept in mind that this case was exceptional in ence was made to South Africa where the bar
many respects, including the funding of the litiga- association requires its practicing members to con-
tion. Given the song’s popularity and its cultural im- duct a certain number of pro-bono cases per year,
portance, the institution of the case benefited from thereby supporting public interests and certain
significant financial sponsoring. In reality, for most provisions of the Bill of Rights.
litigants, one of the greatest obstacles associated
with IP litigation is high, if not excessive, costs. Another approach suggested was the conducting
of litigation on a contingency basis (see “U.S.
To what extent does the situation prevent right Contingency Fees: A Level Playing Field?” on page
holders from taking legal steps against infringe- 3). Obviously, such a model could only be attractive
ment? Do high litigation costs fuel a perception, in the case of litigation seeking monetary payment,
more generally, that the IP system only benefits as opposed to injunctive relief. With that in mind,
wealthy or large companies equipped with expen- another suggestion was proposed: establishing
sive legal expertise? And, against that background, state-administered funds for instituting IP litigation.
in what possible ways could high litigation costs be Such funds, it was argued, could be derived from
addressed in the broader context of an enabling registration fees. More broadly, the Committee
environment within which IP rights are respected? looked at pre-emptive measures as a possible
means of controlling enforcement costs. The sug-
These were among the thorny questions addressed gestions in that respect touched on defining trade
at the November 2009 session of the WIPO policies and business models – so as to diminish
Advisory Committee on Enforcement (ACE). The the demand for counterfeit goods – and bringing
Committee, composed of WIPO Member States prices into a more balanced alignment.
and accredited observer organizations, focused its
discussions on “Contributions of, and costs to, right The ACE, an advisory body with no norm-setting
holders in enforcement, taking into consideration mandate, is a forum for exchanging information and
Recommendation No. 45 of the WIPO Development does not work towards binding solutions on any of
Agenda.” The Committee discussed issues, based on the matters it addresses. Discussions nevertheless
expert analysis presented, including the reasons for clearly revealed that overly expensive IP litigation is a
1 For details of the case the high costs of IP litigation, especially for litigants serious concern in many countries, and is perceived
and the settlement in developing countries, and looked at suggestions to have negative effects on effective law enforce-
agreement see WIPO
Magazine 2/2006 for making the system more accessible.2 ment and the acceptance of the IP system in general.
“Copyright in the
Courts: The Return of High attorneys’ fees were viewed with concern. At This issue of the WIPO Magazine on IP Litigation
the Lion”
2 Working documents of
the same time, at least in certain areas of IP dis- Costs addresses the aforementioned challenges in
the meeting, as well as putes, they were seen in the context of the high IP litigation and looks in particular at the costs and
the chair’s conclusions, level of specialization required for directing such particularities of IP dispute resolution in jurisdictions
are available at
cases. The often costly evidential burden (see “The such as Africa (page 14), Europe (page 6 and 12),
www.wipo.int/meetings/
en/details.jsp?meeting_i UK: Can a high-cost country change its way?” on Japan (page 16) and the U.S. (page 3). The WIPO
d=17445. page 6) was also raised. It was suggested that Arbitration and Mediation Center, co-editor of this
greater use of presumptions could be worth further issue, explains the benefits of Alternative Dispute
analysis, especially in civil cases. Resolution (page 19), which appears to be an effi-
cient way out of costly and complex IP litigation.
The ACE discussed in some detail suggestions for Finally, a range of useful practical tips are provided
alleviating the financial burden on parties – for in- for minimizing IP dispute settlement costs (page 23).
stance, through the use of alternative dispute reso-
3
U.S. CONTINGENCY
FEES – A LEVEL PLAYING
FIELD?
This article by William R. Towns, a partner and General Counsel at Novak Druce + Quigg LLP, focuses on
contingency fee arrangements in the context of patent litigation in the U.S. Mr. Towns is a seasoned at-
torney and mediator whose litigation and dispute resolution practice concentrates on IP matters. He is a
WIPO Approved Neutral and has served as a WIPO Domain Name Dispute Resolution Panelist since 2003.
Photo: iStockphotos
A study of the results of patent litigation at the ly to the efforts of
appellate level revealed that patentees only won lawyers working on a
some 25 percent of infringement cases from 2002 contingency fee basis
to 2004.1 While these statistics might seem to to increase the return
suggest that the scales are tipped in favor of de- on their investment.
fendants, the eye-popping cost of patent litiga- Detractors of contin-
tion in the United States – on average $3 to $10 gency fees decry the
million – can deter many accused infringers from oft-stated goal of im-
fighting cases in court; it may just be less expen- proving access to the
sive to pay a licensing fee or royalties than to legal system as mis-
challenge a patent in court. At the same time, leading, claiming that contingency fee arrange- The eye-popping cost of
patent litigation in the U.S.
plaintiffs increasingly have turned to contingency ments are motivated by greed and encourage ex- – on average $3-$10
fee arrangements to spread the risk of such esca- cessive, speculative or frivolous litigation. After all, million – can deter many
lating patent litigation costs, a development that contingency fee arrangements also finance litiga- from fighting cases in
court.
has led some to assert that the scales are now tion of upper-income and business clients that
tipped decidedly in favor of plaintiffs. could easily afford to pay on an hourly basis.
Contingency fee arrangements have become a Controversial or not, there is no question that the
standard practice in the U.S. for financing certain use of contingency fee arrangements in U.S. civil
types of civil lawsuits. Under such arrangements, ligation has become widespread, expanding well
attorneys’ fees are determined by the success of beyond the confines of tort law. In a number of
the claim, and usually are calculated as a percent- other contexts, contingency fee arrangements
age of the client’s recovery. A fee is charged only have proven an effective means of spreading risk,
if the lawsuit is successful or is favorably settled not only for litigants with resource or liquidity
out of court – a “no win, no fee” arrangement. constraints, but also for the well-financed. This in-
cludes IP matters, and particularly patent in-
Often used in personal injury, medical malprac- fringement lawsuits, where the substantial litiga-
1 Paul M. Janicke,
tice and commercial collection cases, contin- tion costs for both sides may be as significant an University of Houston
gency fees have been widely associated with influence on the outcome of the case as the mer- Law Center and Lilan
large jury awards and recoveries and, as a result, its of the claim itself. Ren, University of
Houston, “Who Wins
have become a focal point for advocates of tort Patent Infringement
reform. But they have actually been around for at The high cost of patent Cases?,” American
least 100 years, long before the onset of the cur- litigation Intellectual Property
Law Association
rent liability crisis. Significantly, U.S. jurisdictions Quarterly Journal,
generally eschew “loser pays” systems that permit The high cost of patent litigation in the U.S. is a Vol. 34, p. 1, 2006
successful litigants to recover attorneys’ fees from major factor contributing to the use of contin- 2 See, e.g., Economic
Analysis of the Law 615
the losing party. Proponents of contingency fee gency fee arrangements. According to a 2009
(7th ed. 2007), Richard
arrangements observe, inter alia, that they im- economic survey commissioned by the American A. Posner
prove access to the legal system by enabling Intellectual Property Law Association (AIPLA), in
plaintiffs with limited financial means to obtain patent infringement cases where the amount in
legal services they could not otherwise afford. 2 dispute is between $1 million and $25 million, to-
tal litigation costs average in excess of $3 million,
Critics of contingency fee arrangements, on the roughly 60 percent of which is incurred during
other hand, often attribute the recent “litigation discovery. In cases where the amount in dispute
explosion”– the expansion of tort liability – large- exceeds $25 million, average total litigation costs >>>
4 FEBRUARY 2010
IP LITIGATION COSTS
are roughly doubled. And in smaller cases where Do contingency fees level
the amount in dispute is less than $1 million, the the playing field?
AIPLA survey indicates that total litigation costs in
some cases may exceed the amount at stake, with Proponents of contingency fee contracts argue
costs through the end of discovery remaining that they protect the rights of inventors and serve
roughly 60 percent of the total litigation costs. to level the playing field in what are sometimes
termed “David and Goliath” battles with big busi-
The case for contingency ness – perhaps a fitting analogy in cases of small
fee arrangements inventors with limited means attempting to en-
force their rights against well-funded corpora-
In light of escalating patent litigation costs, con- tions. Contingency fee arrangements may indeed
tingency fee arrangements can be seen as im- level the playing field in such situations, thereby
proving access to the judicial system for the “little promoting not only the interests of small inven-
guy” – in this case small inventors and others who tors but also those of the justice system and, ar-
otherwise lack the means to enforce their IP guably, society at large.
rights against larger, better-fi-
nanced corporate defendants. Outside of this situation, how-
ever, it is questionable whether
Bob MacNeil
find itself at a decided disadvantage, notwith- patent reexaminations before the USPTO is con-
standing the merits (or lack thereof ) of the siderable and increasing.
patent claims asserted against it.
A chief advantage of challenging the validity of a
Patent reexaminations patent by reexamination before the USPTO is the
and alternative fee decidedly lower administrative costs compared
arrangements to the costs of validity challenges in patent litiga-
tion. When coupled with the possibility of obtain-
Even though the evidence is largely anecdotal, ing a stay of litigation, the strategic use of reex-
the conclusion that contingency fees have al- amination has changed the patent litigation
tered the patent litigation landscape seems un- landscape as significantly as have contingency
avoidable. Whether or not there is any correlation fee arrangements. In fact, there appears to be a
between the rise of contingency fee arrange- strong correlation in time among the use of con-
ments and steadily escalating legal costs in tingency fee arrangements, the emergence of
patent lawsuits, there is no question that patent patent trolls and the substantial increase in third-
defendants are looking increasingly to control the party requests for ex parte and inter partes reexam-
significant legal costs of fighting patent claims. inations before the USPTO.
High-cost countries certainly can change their spent £2.4 million against Cook's £1.5 million in a
ways! But before looking at how, it is worth pausing recent case on medical devices. There are no reli-
to ask, first, whether the legal systems for resolving able data on the "average cost" of patent litiga-
IP disputes are indeed, in some countries, "high- tion, if indeed there is such a thing as an "aver-
cost" and, second, whether they should change. age" patent dispute. However, the cost of legal
representation and experts in most patent dis-
Counting the cost in putes conducted in the U.K. is unlikely to be esti-
the U.K. mated at less than £350,000.
Patent litigation in the U.K. is often said to be ex- Maybe the cost is
pensive. Part of the expense is undoubtedly due warranted?
to the rigorous procedure and associated fees for
legal services. However, the country’s reputation It is worth bearing in mind that there are only
for being a "high-cost" jurisdiction is also proba- about 25 patent trials in the U.K. each year, com-
bly due to its "loser pays" system under which the pared to the 50,000 or so patents granted annu-
losing party is ordered to pay the winning party's ally by the European Patent Office (EPO). The dis-
legal costs, at least in relation to those issues on putes that go to trial are of considerable
which the winner was successful. In apportioning commercial value as well as technical (and some-
costs, courts increasingly make deductions for is- times legal) complexity. At least one party in a tri-
sues on which the winning party was not suc- al considers the costs (both its own and the risk
cessful (e.g., certain pieces of prior art or an insuf- of having to pay the other side's costs) to be
ficiency attack). If the parties cannot agree on the worthwhile. Presumably the defendant also con-
amount to be paid, the costs are assessed by a siders that the benefit of defending the case out-
specialist costs judge in a detailed examination weighs the cost.
that is often more costly than the amount in dis-
pute. Fortunately, such detailed assessment pro- In considering whether high-cost countries
cedures are relatively rare. As a rule, the winning should change their ways, and the implicit criti-
party usually recovers from two-thirds to three- cisms in this article’s title, one must acknowledge
quarters of its total costs for the issues on which that the type of litigation currently conducted in
it was successful. the specialist Patents Court of the High Court of
England and Wales1 – with its rigorous procedure
The winning party often seeks and is awarded an and associated expenses – appears to be attrac-
immediate interim payment of a proportion (usu- tive, at least to those with complex, valuable dis-
ally 50 percent) of the costs it is likely to recover. putes. The cost might also be about right.
As a result, interesting information on costs
1 Patent infringement
actions in Scotland are
reaches the public domain through such hear- Access to justice
brought in the Court of ings, though they tend to fall at the more extreme
Session in Edinburgh. end of the scale. For example, Research in Motion The true test may be whether justice is accessible,
(RIM) spent about £6 million on its recent litiga- not only for those aiming to enforce rights but al-
tion with Visto, who by comparison "only" spent so for those seeking to defend themselves, chal-
£1.6 million. Johnson & Johnson spent £3.7 mil- lenge rights or request a declaration to the effect
lion compared with CIBA's costs of £2.3 million in that certain rights do not cover a product or
a recent case about contact lenses, and Edwards process they wish to market.
7
Put another way, one must consider cost in con- fers the views of an experienced patent examiner,
text, in relation to the quality of the dispute reso- on written application, in relation to validity
lution process. Or, as Mr. Tom Sanchez of RIM said and/or infringement issues. Parties can use these
at a recent conference on international patent lit- non-binding opinions to help resolve their dis-
igation, "the best value for the money spent is putes without recourse to litigation. The IPO re-
when the Court comes to the right answer more cently delivered its 100th opinion since launching
often than not." In a cost-benefit analysis, many the service in October 2005.
critics are all too keen to focus on the cost with-
out fully considering the other half of that analy- Even were one to assume that the current patent
sis – the benefit. We need to be mindful of the litigation system in the U.K. meets cost-benefit
critic who knows the price of everything but the expectations for those that use it, there is no
value of nothing. doubt that a significant number of cases are not
litigated because of the high cost involved. This
Mr. Sanchez identified some good reasons for cannot be good. It is, therefore, worthwhile to
bringing a patent suit in the U.K. He observed that consider the potential benefits of a less costly
litigating in the U.K. is less expensive than in some patent litigation system.
other jurisdictions, such as the U.S., and may cost
only a fraction of the settlement of a global litiga- Patents are a government-sponsored facet of the
tion. He also pinpointed the following attributes economy, justified as providing further incentive
of U.K. patent litigation: for innovation. Patent offices around the world re-
timely, high-quality decisions by judges with view applications to determine which inventions
strong technical backgrounds; deserve this special protection; however, their re-
civil procedure rules provide that a testifying sources are limited and workloads high. While no
expert has an overriding duty to assist the criticism is intended, they unavoidably do an im-
court, which helps to ensure objective consid- perfect job, that being the nature of the system in
eration of the issues; place. However, the system provides that if those
cross-examination of experts improves the ex- imperfectly granted rights become commercially
pert evidence. Experts tend to be more careful, important, there will be an opportunity to review
because they will have to defend their state- whether a specific patent should have been
ments before a judge; granted in the first place.
trying all issues in one case (infringement and
validity) helps to prevent contradictory, self- The EPO opposition procedure arguably offers
serving arguments; and one level of such protection. It is simpler and less
significant limitations on documentary disclosure costly than national litigation, especially given
and the production of a product process descrip- that it covers all European countries in one pro-
tion (PPD) save considerable time and cost. cedure. However, the fact that the procedure
takes three to six years to complete is unsatisfac-
Other options tory and inefficient. In the course of reform dis-
cussions, significant industry feedback was pro-
It is also important to keep in mind other options for vided about situations in which not only are right
resolving disputes. European countries benefit from owners hindered in enforcing their rights by the
an effective customs regulation that can be called costs and risks inherent in litigation, but compa-
upon in seizing shipments of infringing goods nies have taken licenses and paid considerable
when they first enter the European Economic Area. royalties although they considered the underly-
The threat of litigation (and its cost) also plays a ing rights invalid because the cost of challenging
significant part in helping to produce commercial them was unaffordable.
out-of-court resolutions to potential disputes.
Changing their ways?
Mediation plays an increasingly important role in
helping parties to resolve their disputes without The European Commission (EC) is moving ahead
resorting to litigation, and often results in com- with a proposal for a Unified Patent Litigation
mercial solutions that extend beyond the right or System, under which there would be a single
product in dispute. Arbitration can be used suc- Europe-wide jurisdiction for patent disputes (see
cessfully in relation to global disputes, avoiding the article “A single patent court for Europe: Dream
the need to litigate in several countries in parallel. or Reality?” on page 12). A pan-European court
The U.K. Intellectual Property Office (IPO) has in- would potentially offer a more cost-effective and
troduced a non-binding opinion service that of- efficient system for litigation. However, the quality >>>
8 FEBRUARY 2010
IP LITIGATION COSTS
of the procedure and operation of the Court in This proposal would create a truly differentiated
practice will ultimately determine whether the forum for litigating patents in lower cost cases.
new system will indeed improve access to justice There are many points yet to be addressed, and
within Europe that is cost-benefit balanced. much will depend on how the procedure is put
into practice and the extent to which robust case
The U.K. is examining the cost of IP litigation as management is actually applied. In that regard,
part of a more general enquiry into the costs of the new system’s success will hinge on how well
civil litigation. This is being undertaken by a com- judges manage and hear individual cases. The
mittee headed by Lord Justice Jackson that has sole judge presiding over the PCC, The Honorable
just delivered its final report at the end of a year- Judge Fysh, is due to retire in the summer of 2010.
long review of civil litigation costs – including IP He will be a hard act to follow, and finding a suit-
litigation. The Jackson Committee investigated able replacement for a position that offers a rela-
the costs of the type of litigation already taking tively modest salary will not be easy.
AN EU COMPETITION
LAW PERSPECTIVE ON
REVERSE PAYMENTS
The issues reviewed in this article by Sean-Paul Brankin, Counsel, Crowell & Moring, are considered in
greater depth in an article by the author in the Journal of Intellectual Property Law and Practice, Volume 5,
Issue 1 (Jan 2010), entitled “Patent Settlements and Competition Law: Where Is the European
Commission Going?”
absent proof of other offsetting considerations, it On the face of it, the above three concerns ap-
is logical to conclude that the quid pro quo for the pear to justify the position of the U.S. courts that
payment was an agreement by the generic to de- reverse payment settlements should generally be
fer entry beyond the date that represents an oth- treated as lawful. However, the FTC has a poten-
erwise reasonable compromise.” This argument is, tial response to at least some of these concerns.
however, problematic. As the FTC recognized in Under the Hatch-Waxman Act, the first company
the Schering-Plough dispute, in some cases the to file with the U.S. Federal Drug Administration
parties may not settle at all absent a reverse pay- for generic approval obtains a 180-day exclusivity
ment. Indeed, the U.S. Court of Appeal for the period during which other generic companies
11th Circuit described the FTC’s counterfactual cannot enter the market. As originally drafted, the
analysis in that case as “untenable.” 180-day period would begin only once the first
filer launched its product. As a result, a settlement
The FTC now argues that if no settlement could in which the first filer agreed to delay the launch
be reached then continued litigation would “yield of its product would effectively extend the exclu-
a greater prospect of competition.”3 But this is al- sivity period and exclude all third party generic
so problematic. The existence of a reverse pay- entry during that time. Such a settlement is po-
ment shows only that the patent holder believes tentially substantially anti-competitive. However,
3 FTC v. Cephalon, FTC there is some risk that the patent will be held in- in 2003, the Hatch-Waxman Act was amended so
pleadings available at: valid or not infringed. It does not show that the that the first filer may forfeit its exclusivity period
http://www.ftc.gov/os/c
risk is greater than 50 percent. If the risk is less if, among others, it fails to launch its product
aselist/ 0610182080213
complaint.pdf than 50 percent, then applying the balance of promptly. The FTC argues that this amendment
4 Michael Kades, Ibid. probabilities standard of proof in civil cases, the has not been effective and settlements can, in
5 Anne Layne-Farrar, counterfactual argument would be that the principle, still be used to extend the exclusivity
Reversing the Trend?
The Possibility that Rule patent is valid and infringed. In that case, the set- period and blockade third party entry.4 Other
Changes may Lead to tlement will have no adverse effect on competi- commentators appear to take the view that the
Fewer Reverse Payments tion (unless generic entry is excluded beyond the amendment has removed the concern.5
in Pharma Settlements,
Competition Policy
lifetime or scope of the patent) since the patent
International, Volume 5, entitles its owner to exclude the generic regard- The EU context
No. 2, Autumn 2009. less of the settlement.
6 Case 65/86 Bayer v.
The EU context differs from that in the U.S. in at
Süllhöfer [1988] ECR
5249. The third concern relates to the extent to which least two important respects. First, EU competi-
an individual settlement significantly restricts tion law contains no equivalent to the U.S. rule
competition. As mentioned, if the patent is valid, a that settlements are not generally unlawful even
settlement that delays generic entry within its if they may have some adverse effect on compe-
scope and duration should have no anti-competi- tition. Instead, the European Court of Justice has
tive impact. Importantly, the position may be sim- held that settlements should be treated in the
ilar if the patent is invalid or likely to be so. As the same way as other types of agreements.6
11
Second, there is no equivalent under EU rules to claims and other relevant factors surrounding the
the Hatch-Waxman Act or the 180-day exclusivity parties’ negotiations.” 9
period for the first generic challenger. As a result,
the FTC’s potential response to concerns regard- This proposal raised concerns regarding the abili-
ing its proposed presumption of illegality is not ty of courts or competition authorities to make
available in the EU context. any assessment absent a full trial on the merits
and has not been pursued in the U.S. However,
Overall, therefore, while EU competition law may there is some precedent for such an approach un-
seem to weigh in favor of a presumption of ille- der EU law. In assessing the compatibility of
gality, the differing EU regulatory context weighs trademark delimitation agreements with EU com-
against it. petition rules, the Commission has previously
made its own assessment of the ability of relevant
The European marks to co-exist.10 Whether an
Photo: US Federal Government
A SINGLE PATENT
COURT FOR EUROPE
Dream or Reality?
Alejandro I. Garcia, Associate, Bird & Bird, U.K., practices law in England and Wales, New York and Chile,
concentrating on international arbitration and cross-border litigation of disputes involving IP, informa-
tion technology, telecommunications and complex commercial issues. In this article Mr. Garcia discusses
the imminence of a single patent court for Europe.
Unifying European patent One of the main reasons for supporting the adop-
courts tion of the UPLS is economic. According to a re-
port published on February 26, 2009, by 2013,
The EPLA users of a unified European patent system would
Considering the limitations of the above meas- save €148 to €289 million per year, compared to
ures, it might appear that resolving the issue of the costs of piecemeal litigation.6 Such reductions
multi-jurisdictional patent litigation would re- in legal costs could allow many SMEs to enforce
quire legislative action. That is the approach be- their patent rights in all EU and EPC countries.
ing pursued in Europe. Since 1999, an alternative
agreement to the EPC that would provide for the Hurdles to adopting the
creation of a unified court system has been under UPLS
consideration within the framework of the
European Patent Organization. Nevertheless, the UPLS has yet to overcome cer-
tain legal hurdles. In April 2009, the EU Presidency
In November 2003, the Working Party on Litigation (Czech Republic), in accordance with the wishes
published a draft European Patent Litigation of the majority of its member states, requested
Agreement (EPLA), providing for the creation of that the European Court of Justice (ECJ) issue an
such a system. But in February 2007, an interim le- opinion on the compatibility of the UPLS with the
gal opinion by the European Parliament’s Legal EC Treaty.7 The ECJ would have to decide two spe-
Service caused a major setback when it concluded cific issues: (a) whether an international organiza-
that the EPLA touched on issues under the exclu- tion may render decisions on Community issues;
sive jurisdiction of the European Community (EC) and (b) whether the patent court would be al-
and, consequently, would breach, prima facie, lowed to refer issues to the ECJ (as proposed un-
Article 292 of the EC Treaty. der the UPLS). It may take the ECJ up to 18
months to provide its opinion.
The UPLS
The European Commission has made significant The UPLS, being connected to the establishment
efforts to resolve the issues arising from piece- of a Community patent, may still be hindered in
meal patent litigation. In its April 2007 communi- its progress by certain concerns, particularly in re-
cation entitled “Enhancing the Patent System in lation to the language(s) of legal proceedings. In
Europe,” the Commission recommended creating December 2009, the Competitiveness Council
a single European Patent Court whose decisions met to discuss “political issues” in relation to the
concerning disputes over patents granted by the UPLS. A press release by the Swedish Ministry of
EPO would have effect in all EU member states. Foreign Affairs (Sweden then held the EU
Following subsequent discussions, a proposal for Presidency) claimed, “the Competitiveness
the possible structure of a European Patent Court Council […] reached a unanimous agreement on
was prepared in October of that year. 4 the general focus of the European patent regula-
tion and Council conclusions on a common
In late 2007 and 2008, it became clear that EU European Patent Court.”8 However, issues related 4 http://register.
consilium.europa.eu/pdf
member states disagreed as to whether such a to the language of proceedings and translation
/en/07/st14/st14492.
court would constitute an international entity or requirements were not resolved. en07.pdf
an EC body. In the first half of 2009, the 5 http://www.epo.org/
Commission recommended to the European More dream than reality patents/law/legislative-
initiatives/community-
Council the negotiation and adoption of an agree- patent.html
ment creating a Unified Patent Litigation System Although the establishment of a unified patent 6 http://ec.europa.eu/
(UPLS). A compromise solution, that system would system in Europe might seem to be near, some of internal_market/indprop/
docs/patent/studies/litig
be a hybrid between an international organization the issues that caused the EPLA to fail in 2007 re- ation_system_en.pdf
and a full EU body.5 The patent court system would main. As such, it is uncertain whether piecemeal 7 http://register.
have the following main features under the UPLS: patent litigation in Europe will become a thing of consilium.europa.eu/
pdf/en/09/st09/st09076.
jurisdiction over European and Community the past. For now, to the disappointment of many
en09.pdf
patents (once granted) for infringement and patentees – who might well share Lord Esher’s 8 http://www.regeringen.
revocation actions; trepidations – a single patent court for Europe is se/sb/d/12407/a/136614
decisions would have effect in all countries in more dream than reality.
which the patents at issue are in force (i.e., EU
and non-EU countries); and
it would provide for a single judiciary com-
posed of specialist judges, following standard-
ized procedures.
14 FEBRUARY 2010
IP LITIGATION COSTS
IP LITIGATION
IN AFRICA
This article by Darren Olivier, Head of Brand Enforcement, Bowman Gilfillan, South Africa, highlights
some of the more recent IP dispute developments across the African continent. Mr. Olivier is a co-founder
of the Afro-IP blog, which publishes regular articles and updates on IP in Africa.
Africa, a continent of 54 countries, with a popula- to generate future wealth for the country.
tion of around one billion, produces relatively few According to the settlement, Ethiopia will select
reported cases of IP-related disputes. Apart from a the global distributors for its coffee and set the
steady stream of IP decisions emanating from conditions for sale. Ethiopia charges no royalty fees
South Africa, there is a dearth of information from for coffee distribution licenses but, in return, asks
the rest of the continent and such information, if distributors to market each type of coffee under its
and when available, tends to reach only those in particular brand name. (See “Making the Origin
the know. Most IP practitioners are, therefore, un- Count: Two Coffees,” WIPO Magazine 5/2007.)
aware of how IP is enforced on the continent. As a
consequence, IP investment in Africa has been South Africa – Trademarks
treated with some apprehension, or there has been on the front line
an assumption that effective IP rights enforcement
is not a prerequisite for doing business there. No less than four trademark cases reached the
However, there is evidence that this is changing. Supreme Court of Appeal, South Africa’s high-
est commercial court, in 2009, and a significant
Courtesy EIPO
Courtesy USAid
Online media, such as Afro-IP, World Trade Mark In 2010, the country will be hosting the FIFA
Review, Managing Intellectual Property and the World Cup football tournament, whose revenues
WIPO Magazine, have stepped up efforts to facili- directly depend on the country’s ability to ade-
tate access to information on the IP situation in quately protect the IP rights of its official spon-
Africa. The cases below are but a few of those that sors. There have already been a number of cases
have recently come to light. Whether it is that of international brand owners effectively enforc-
more is now known about African IP rights en- ing the ambush marketing provisions of the
forcement or that its effectiveness is improving is Merchandise Marks Act 1943, as amended. (See
not altogether clear. However, one thing is certain “Defending its turf: FIFA combats Ambush
– that IP dispute resolution is alive and well in most Marketing,” WIPO Magazine 4/2009.)
economically vibrant economies on the continent.
No passing off in
Ethiopia’s coffee Namibia
In an IP dispute with Starbucks over U.S. registra- The strength of Namibia’s IP system was tested
tion and use of trademarks for its premium coffee recently in the passing off case of Guido-Dirk
beans, Ethiopia recognized an opportunity to ne- Gonschorek and Others v Asmus and Another
gotiate with the company and settled the dispute (SA 11/2007) [2008] NASC 3 (15 April 2008). The
in an innovative way that may have long-term case arose after Asmus sold part of its ASCO
benefits for its people. Instead of attempting to ex- branded business (car hire, panel-beating, prop-
tract cash in the form of royalty payments, the set- erties and yacht chartering) to Gonschorek.
tlement aimed to increase Ethiopia’s brand recog- Asmus sued successfully both on the grounds of
nition and the demand for its coffee beans in a bid passing off and under the Close Corporation Act
15
RESOLVING IP
DISPUTES IN JAPAN
Counting the Cost
John A. Tessensohn, Board Member and Shusaku Yamamoto, founder-owner, Shusaku Yamamoto, Japan,
are co-authors of this article detailing Japan’s mechanism for the resolution of IP disputes.
Japan is known to be one of the world’s most ex- An appeal mechanism against IPHCJ decisions is
pensive countries, with Osaka and Tokyo regular- available through the Supreme Court, Japan’s
ly topping the rankings as the world’s priciest highest appellate court. The Supreme Court rarely
cities. This high-cost perception has clouded the overturns the IPHCJ’s decisions as appeals are re-
surprisingly refreshing truth that Japan is in fact a stricted to reviewing the legal reasoning behind
relatively affordable and reliably expeditious IP the decision, not the facts of the case. It has the
dispute resolution venue. discretion to accept or decline to review an appeal.
Photo: Wikipedia
JPO decisions can be appealed in the Intellectual Property High Court which can, in turn, have its decisions appealed in the
Supreme Court, but only on points of law, so it is rather rare.
abolished in 2004. Foreign clients should never- ments, as well as securing expert opinions where
theless be able to negotiate billing arrangements applicable. Each party bears its own attorney’s
that suit their respective circumstances. fees. Although JPO invalidation decisions con-
clude by ordering the losing party to bear the
Even so, IP attorneys’ fees are generally lower in costs of the Appeal proceedings “under Section
Japan than in the U.S., because there are no dis- 61 of the Code of Civil Procedure mutatis mutandis
covery procedures or deposition practices which in Sec. 169(2) of the Patent Law,” such costs do not
largely make up the high cost of U.S.2 patent liti- include the losing party’s attorney’s fees and the
gation (see “U.S. Contingency Fees – A Level recoverable amount is so nominal that no one
Playing field,” page 3). However, all court-filed seeks to recover them.
documents must be in Japanese, meaning that
foreign litigants usually incur sizeable translation Patent infringement
costs for patent litigation. action
Each party generally bears its own costs in patent Each party bears its own costs for IPHCJ appellate
infringement actions, but courts have the discre- proceedings, and attorney’s fees can range from
tion to order the losing party to pay costs to the US$75,000 to US$250,000 (or more) depending
winner. But a successful litigant is unlikely to re- on the complexity of the case – complex cases
cover all or even a substantial portion of its attor- sometimes last longer than the average eight-
ney’s fees. Judges assess the costs after either par- month pendency period.
ty makes a petition to fix the amount of costs.
Stamp fees, including the official filing fee, and Supreme Court Appeal
other costs allowed under the rules of the court Costs
could be covered, but not the actual attorney’s
fees borne by the parties. The IPHCJ decision can be further appealed to
the Supreme Court of Japan but such cases are
In patent and other IP right cases, the plaintiff can very rare and limited to points of law. The esti-
add a certain portion of the attorney’s fees as part mated cost of preparing a petition to the
of the damages suffered. In practice, courts usual- Supreme Court depends on the case’s complexity
ly allow up to 10 percent of damages to cover at- (and ranges from US$5,000 to US$25,000). If the
torney’s fees, and they consider factors such as Supreme Court accepts to hear the appeal, the
the degree of difficulty of the case, total damages cost of briefing and attending the hearing could
awarded, file history and conduct of the litigation. be between US$15,000 and US$25,000 (again de-
pending on complexity).
IPHCJ appeals
Conclusion
Either party, dissatisfied with a JPO or District
Court decision, can appeal to the IPHCJ. Today’s technology-centric, globalized economy
Proceedings in the IPHCJ are similar to those in provides many opportunities for right holders to
the District Court. In 2008, the average pendency maximize the value of their IP portfolios through
period for IPHCJ proceedings was 7.7 months.5 enforcement and licensing activities that could
have a significant impact on competitors.
The IPHCJ may convene a technical presentation, Competitive imperatives give potential defen-
during which the parties may use multimedia dants and licensees an incentive to challenge
aids to explain the technology concerned in the such asserted patent and other IP rights interna-
patent dispute. As in the district courts, the IPHCJ tionally. Given the rapidity of resolution of IP in-
judge is briefed by technical advisors. validation (9.5 months at the JPO) and infringe-
ment (13.7 months in first instance courts)
During the appeals of both infringement and JPO proceedings and the relative affordability of con-
decisions, the IPHCJ gives litigants wide latitude tentious IP proceedings, Japan is an extremely
to introduce new evidence, but not new issues, to compelling and attractive market for IP dispute
5 Administrative Bureau support issues previously pleaded. This can in- resolution.
of Supreme Court of
clude new expert opinions, experimental results,
Japan statistics at
www.ip.courts.go.jp/eng/ references and any other evidence, provided that Litigants in Japan can count on reasonable costs
documents/statistics.html it does not change the gist of the issues previ- for protecting their IP in the world’s second-
ously pleaded. For example, if obviousness was largest free-market economy. Japan’s cost-friend-
argued in the original JPO invalidation proceed- ly and expeditious IP dispute resolution system
ing, it is possible to introduce new obviousness should therefore play a central role in any global,
prior art references to the IPHCJ. It is not permis- IP-centered business strategy.
sible to introduce a novelty argument and/or pri-
or art reference at this stage: the challenger
19
A COST-EFFECTIVE
ALTERNATIVE
The growing number of international IP trans- The WIPO Arbitration
actions has substantially changed the ways in and Mediation Center
which cross-border disputes are resolved
worldwide. Due to the significant length, Established in 1994, the WIPO Arbitration
costs and complexity of IP court litigation, and Mediation Center (the WIPO Center) of-
parties increasingly employ alternative dis- fers ADR options for the resolution of inter-
pute resolution (ADR) mechanisms, often national commercial disputes between pri-
seen as more efficient. vate parties. The WIPO Center is recognized
as an international and neutral forum espe-
As portrayed in the previous articles in this WIPO cially appropriate for cross-border and
Magazine, IP litigation before national courts can cross-cultural disputes. It has developed
undeniably be very expensive and lengthy. The different types of ADR procedures that are
table1 below describes the average length and conducted under the WIPO Mediation,
costs of patent litigation in various jurisdictions. Expedited Arbitration, Arbitration and
Expert Determination Rules ( WIPO Rules).
The WIPO Rules contain specific provisions partic- by patents registered in several jurisdictions, in-
ularly suitable for IP, technology and entertain- stead of filing multiple costly court proceedings
ment disputes, such as those concerning confi- in all relevant jurisdictions. Other benefits of ADR
dentiality and technical evidence. The WIPO include flexibility, neutrality, finality, confidentiality
Center makes available, in different languages, and, very importantly, the expertise of the neutral.
model clauses and agreements that parties may
use as a basis for submitting disputes to WIPO. WIPO Mediation
Mediation is an informal procedure in which a
Photo: iStockphotos
Experience has shown that the neutral intermediary, the mediator, assists the
effectiveness of ADR depends parties in reaching a dispute settlement by facili-
largely on the quality of the me- tating dialogue and helping the parties to identi-
diator, arbitrator or expert. The fy their interests. Unlike an arbitrator or judge, the
WIPO Center maintains a data- mediator does not render a decision on the mer-
base of over 1,500 qualified its of the dispute. Settlements in mediation pro-
neutrals from 70 countries with ceedings are reflected in an enforceable contract
further candidates added ac- between the parties.
The effectiveness of ADR
depends largely on the
cording to case needs. The candidates on the WIPO
quality of the mediator, List of Neutrals range from seasoned dispute reso- Because of its less adversarial nature, mediation is
arbitrator or expert. The lution generalists to highly specialized practition- an efficient and cost-effective means of dispute
WIPO Center maintains a
database of over 1,500 ers and experts in the different areas of IP. The settlement. It allows parties to explore workable
qualified neutrals from WIPO Center assists parties in the appointment of and interest-based solutions, to determine the
70 countries. neutrals so that each procedure under the WIPO outcome of the procedure according to their
Rules is decided by neutrals who share the Center’s business needs, and to preserve the relationship
commitment to time and cost-effectiveness. in the long term.
The WIPO Center operates on a non-profit basis. There are two sets of fees for WIPO mediation pro-
Fees for ADR procedures – payable to the Center cedures. First, the WIPO Center’s administration
and the mediator, arbitrator or expert – are calcu- fee, which amounts to 0.10 percent of the value in
lated in accordance with a schedule of fees based dispute, up to a maximum of US$10,000 where
on the amount in dispute and in consultation that amount is US$10 million or more. Where no
with the parties and neutrals. The Center believes disputed amount is indicated, as in most cases,
effective dispute resolution must be affordable the administration fee is US$1,000. Second, the
and is committed to providing ADR mechanisms mediator’s fees, which are negotiated at the time
that save time and costs. the mediator is appointed. Those fees are usually
calculated on an hourly or daily basis, at a rate tak-
ADR procedures offered ing into account the circumstances of the dispute,
by the WIPO Center such as its complexity and economic importance,
as well as the experience of the mediator. The
ADR allows parties to solve their disputes outside WIPO Center takes an active role in negotiating
of court with the assistance of a qualified neutral reasonable mediator fees. The Schedule of Fees for
intermediary of their choice. It affords parties the the WIPO Mediation Rules sets out indicative
opportunity to exercise greater control over the hourly and daily rates for mediators’ fees. Based on
way the dispute is resolved than would be possi- the Center’s experience, WIPO mediation costs av-
ble in court litigation. This increased autonomy erage between US$6,000 and US$60,000.
can result in a faster process and cost savings, as
parties are free to choose the most efficient pro- Mediation proceedings are often settled rapidly
cedure for their dispute. For instance, they can re- and therefore minimize the cost exposure nor-
solve globally – through a single procedure – dis- mally associated with dispute resolution. In WIPO
putes relating to the same technology protected mediation, 73 percent of cases have settled with-
21
A North American company requested mediation in a dispute with two Italian companies and one Spanish company, based
on a mediation agreement the parties had reached under the WIPO Mediation Rules. The goal of mediation was to help the
parties avoid confusion and misappropriation of their similar trademarks and to regulate future use of the marks.
The Center proposed potential mediators with specific expertise in European trademark law and fluency in English and Italian.
The parties selected an Italian mediator with a trademark practice. The mediator conducted an initial telephone conference
with the parties’ lawyers, during which he set the timing of mediation and agreed on the procedure.
Two months later, the mediator met with the parties in a two-day session in Milan. The meeting was held in joint session with
the exception of two brief caucuses. At the end of the second day the parties – with the assistance of the mediator – drafted
and signed a settlement agreement covering all pending issues in dispute. The total cost of mediation amounted to
US$15,000.
in one to seven months, including some very Statistics show that 82 percent of the costs in-
complex patent and information technology dis- volved in arbitration relate to the parties’ lawyers
putes. Most settlements occur during the media- fees and expenses in connection with the presen-
tion phase, consistent with the parties’ intent in tation of their case. 2 If well managed, arbitration
using that mechanism and with the role of the can save the parties time and money. One option
mediator, although a certain number of WIPO is to use the WIPO Expedited Arbitration Rules.
cases also settle after completion of the media- WIPO Expedited Arbitration provides for a sole ar-
tion. By enabling the parties to identify their in- bitrator and is carried out in a shortened time
terests and better understand the dispute, medi- frame at reduced cost. The time limits that apply
ation can provide a sound basis for direct to the various stages of arbitral proceedings are
negotiation between the parties after mediation. shorter and the fees lower than those related to
arbitration conducted under the WIPO Arbitration
In light of the undeniable advantages of media- Rules (as shown in the WIPO Arbitration Schedule
tion and the comparatively low costs involved, a of Fees available at www.wipo.int/amc/en/arbitra-
number of disputes pending before national tion/ fees/index.html).
courts are being referred to WIPO mediation in or-
der to increase the chances of settlement. Limiting the amount of evidence parties may pro-
duce during arbitration also helps to reduce the
WIPO Arbitration and Expedited Arbitration duration of arbitration proceedings and related
Arbitration is a private procedure in which parties costs. In a recent case, a U.S. company that sup-
submit a dispute to one or more chosen arbitra- plies data processing software and services com-
tors for a formal decision based on the parties’ menced a WIPO expedited arbitration proceeding
2 “Techniques for
rights and obligations. The award rendered is final against an Asian bank, claiming infringement of Controlling Time and
and enforceable internationally under the 1958 an agreement regarding the provision of account Costs in Arbitration”,
New York Convention on the Recognition and processing services. The contract between the Report from the ICC
Commission on
Enforcement of Foreign Arbitral Awards. Unlike parties included a WIPO Expedited Arbitration
Arbitration available at
court decisions, which can generally be contest- clause, indicating that New York would be the www.iccwbo.org/upload
ed through one or more rounds of litigation, arbi- place of arbitration, and that no discovery would edFiles/TimeCost_E.pdf
tral awards are not normally subject to appeal be permitted. The parties agreed upon a sole ar-
and can therefore result in time and cost savings. bitrator who held a two-day hearing. The parties
and arbitrator agreed to use the WIPO Center’s
The cost-effectiveness of arbitration proceedings electronic case communication facility “WIPO
depends largely on the quality of the arbitration ECAF,” which allows for secure filing, storing and
clause and how the procedure is conducted. retrieval of case-related submissions in an elec- >>>
22 FEBRUARY 2010
IP LITIGATION COSTS
tronic docket.3 Three months after the request for Expedited Arbitration Rules for AGICOA – a proce-
expedited arbitration, the arbitrator rendered a fi- dure for certain audiovisual disputes – tailored to
nal award finding partial infringement of the the specific needs of AGICOA right holders.4
agreement and granting damages to the U.S.
company. The total costs of this expedited arbi- More recently, the WIPO Center launched the WIPO
tration amounted to approximately US$50,000. Mediation and Expedited Arbitration Rules for Film
and Media, specifically tailored to resolve potential
Another cost-effective dispute resolution option disputes in the film and media sectors, such as
is to use escalation clauses that provide for a first those arising out of co-production, distribution,
phase of mediation followed by arbitration or ex- broadcasting, copyright, music synchronization,
pedited arbitration, or to use mediation at differ- artist and talent or new media agreements. For
ent stages of arbitration in order to maximize the such disputes, the Center’s administration fee and
chance of settlement. Parties to WIPO proceed- mediators’ and arbitrators’ fees have been reduced
ings have elected to use escalation clauses in 20 in order to adapt them to the typical features of the
percent of cases. disputes in the relevant sectors.
3 For more information WIPO Arbitration cases cover a broad range of As shown in the above diagrams, the WIPO
on WIPO ECAF, see:
www.wipo.int/amc/en/e
disputes, including complex patent licenses, Mediation and Expedited Arbitration Rules for
caf/index.html trademark and IT disputes. The amounts claimed Film and Media provide for a mediation proce-
4 See “Collective range from the thousands to millions of dollars. dure and expedited arbitration procedure that
Management of
WIPO Arbitration proceedings generally last from can either be combined or used independently at
Audiovisual Works,”
WIPO Magazine 5/2009 3 to 14 months. the parties’ discretion. These rules take into ac-
count the specific needs of those in the media
Other tailored ADR procedures and film sectors seeking an expedited procedure.
In addition to administering disputes under stan- The time limits in the WIPO Arbitration Rules that
dard WIPO mediation and arbitration procedures, apply to the various stages of the proceedings are
the WIPO Center develops tailor-made dispute res- shorter in order to expedite the chosen dispute
olution procedures for specific types of recurrent IP resolution mechanism.
disputes. For example, the Center developed WIPO
23
KEEP IT CHEAP
TEN TIPS FOR
MINIMIZING IP DISPUTE
SETTLEMENT COSTS
IPKat blogmeister Jeremy Phillips is once again contributing a list of top ten recommendations to the WIPO
Magazine. Last time his advice was for businesses trying to use their IP to attract financing (see “IP Financing:
the Ten Commandments” in issue 5/2008), this time he advises on how to save money in IP disputes.
Some things are so obvious they are easily over- ching truth that emerged came from readers of
looked. One of them is the contrast between IP common and civil law backgrounds and from
laws and the rules that govern the resolution of both developing and developed economies –
disputes involving IP rights. that is, that anyone contemplating IP litigation,
arbitration or another form of dispute resolution
For more than a century, nations have worked to should think carefully before they act. The word
harmonize their IP laws, making IP law one of the “carefully” is mine. I was initially skeptical as to
biggest and longest-lasting areas of cooperation whether careful thought would help to reduce
between countries and resulting in national laws dispute settlement costs, as it could encourage
that give citizens and businesses of other coun- would-be disputants to bring proceedings they
tries the same rights and benefits as they accord otherwise might not have. However, on the basis
to their own. In contrast, every country in the that careful analysis (i) might persuade disputants
world has a dispute resolution system that re- to drop a claim not worth bringing and (ii) might
flects its culture, historical roots and political ide- more easily result in an early and satisfactory con-
ology. Those national characteristics are deep- sensual settlement thus cutting out courts or oth-
rooted, often cherished and tenaciously er arbitral costs, it deserved to be included.
defended whenever talk of reform is in the air.
Consequently, while IP rights are increasingly The 10 tips
comparable the world over, the cost and effec-
tiveness of their enforcement reflect each nation’s Here, then, are my 10 tips for minimizing IP dis-
economic and cultural DNA. pute settlement costs everywhere – or almost
everywhere:
The quest for global
truths 1. Think carefully before entering an IP dispute.
This is not merely for the reasons given above, but
This contrast raises the question: if IP enforce- because some IP disputes can be solved more
ment mechanisms and costs are different every- cheaply or easily by treating them as business
where, is it possible to point to any general truths problems rather than as legal ones. For example,
that hold universally, and that can be applied in in the case of lookalike products or packaging, a
the litigation-happy U.S. and court-shy Japan, in business that has few or weak IP rights might find
industrial economies such as Germany and in de- it cheaper to redesign its own product around
veloping nations where enforcement of rights stronger IP rights and use that as the basis of a re-
and the protection of legitimate interests may be launch rather than press ahead with expensive lit-
viewed as a matter for tribal loyalties and local igation of which the outcome is highly uncertain.
custom rather than – or as well as – the remote
application of arbitrary rules? 2. Identify the best and worst possible outcomes
of the dispute. If even the best outcome will not
Before answering this question myself, I sought get an IP owner what it wants or if the worst pos-
the advice of readers of my weblog, who are sible outcome is intolerable, the IP owner should
drawn from nearly 150 countries. The one overar- hesitate before committing to a dispute. >>>
24 FEBRUARY 2010
IP LITIGATION COSTS
3. Keep accurate, up-to-date and accessible busi- to make its own informed decision as to how to
ness records. Small and medium-sized businesses proceed. It is unfair for a business to ask a lawyer
are often poor record-keepers, and this can add to decide whether or not it is worthwhile to con-
to the expense and inconvenience of IP dispute tinue with a legal dispute. That is fundamentally a
resolution in many ways. For example, in disputes business decision, just as choosing a new com-
with a former employee over IP that a business puter system is a business decision. A lawyer in
claims for itself, it is imperative to have at hand private practice would not have the same infor-
copies of the employment contract and miscella- mation or knowledge as does the client regarding
neous instructions, memos or e-mails amending its the potential consequences of such a decision,
terms or the employee’s duties. Likewise, in an in- including the repercussions for the client’s share-
fringement claim relating to damages for loss of holders, employees, suppliers and distributors.
profits, it is a rare judge or arbitrator who will order Also, legal representatives will be aware that they
payment of a sum in the absence of evidential are open to being accused of recommending
guidance as to what those profits might have that the client sue merely out of self-interest.
been. Also, where works are commissioned from
independent designers, software writers or the 6. Talk to your representative about likely and
like, has a document recording an assignment actual cost. “How much will this cost me?” is not
been executed? If so, in whose cupboard is it hid- a question that can usually be answered accu-
den? The cost of finding one’s own evidence, in rately in advance of a dispute, particularly if the
terms of stress and disruption to the workplace if losing party appeals or the IP owner is faced
not in actual financial terms, cannot be ignored. with counterclaims and attacks on the validity
of its IP rights. That said, it is important to ask
what the likely costs will be and what might
Photo: iStockphotos
4. Seek specialist
advice. Specialist happen in cases where the losing party pays
IP professionals are some or all of the winner’s costs. The final
not available every- amount is not the only issue: timing is every-
where, but a legal thing for any business that watches its cash-
representative fa- flow. Do I pay up front or later? Can I have regu-
miliar with copy- lar statements of the expense incurred and clear
right, trademark or and timely warnings whenever actual costs
patent law should jump above the estimated budget?
be better able to
give advice based 7. Remember that your IP representatives are not
on experience than a clerical service. Not everything that lawyers and
Save money by one who is not. To IP attorneys do can be described as a legal serv-
photocopying and many laypersons, a lawyer is a lawyer, and it doesn’t ice. There is a lot of routine activity that goes on,
bundling documents to
be sent to other
matter what sort of lawyer they get. But that is not such as photocopying and bundling documents
participants in the the thinking vis-à-vis other professions: a gynecol- to be sent to other participants in the dispute as
dispute. ogist and a brain surgeon may both be medically well as judges, arbitrators or mediators. It is more
qualified, but rarely would a patient consider the expensive for law firms to do this than for the
one to be an acceptable substitute for the other. client to do it properly itself, and a lot of money
Additionally, while IP specialists may charge high- can be saved this way (it was once unkindly re-
er rates, the cost of obtaining their advice may be marked of a law firm that its photocopiers earned
lower in the long term than if one were to consult more revenue in a year than one of its lawyers).
a general legal practitioner who charged less but Likewise, lawyers are not a postal service, storage
took longer. facility or secretarial back-up system for their
clients. So remember to ask what you can do
5. Keep control of the decision-making process. yourself rather than having your representative
A good professional representative will give clear, do it more expensively.
comprehensible advice but leave it to the client
25
8. Watch the calendar, watch the clock. Almost as 10. Don’t turn a business dispute into a matter of
inevitable as rain and sunshine is the phenome- principle. Courts almost everywhere bear silent
non of the missed deadline. Disputants fail to file testimony to the phenomenon of a dispute pur-
responses, evidence, fees or other vital items sued beyond the boundaries of business reason
within the period laid down by and good commercial sense by
Photo: McDonald's
9. Act in a firm, consistent manner. Where a dis- Good practice in IP dispute cost management
pute arises, one side having a clearly-stated, does not consist of ticking each box and then
identifiable and consistent policy often enables moving on to the next issue, but of re-evaluating
the other side to take an early decision as to one’s position. Factors that emerge after a dispute
whether, and to what end, it is worth persisting breaks out – such as the addition of further parties,
with the dispute or better to settle sooner and at the applicability of new laws or the reinterpreta-
less expense. Examples of clearly and consistent- tion of old ones, and the insolvency of a disputant
ly applied dispute resolution policies may be or its merger with another entity – may make it
found in the enforcement activities of critical to revisit the suggestions listed above.
McDonald’s – in relation to its fast-food services
and products in nearly 120 countries – and those The 10 items here are the author’s personal selec-
of the easy Group whose brands, prefaced with tion. Readers may have favorites of their own
the word “easy-”, are found in some 60 countries. (whether generally applicable or focused on par-
While these businesses’ vigorous pursuit of their ticular countries or types of dispute resolution).
enforcement policies has met with some criti- Since the cost of litigating IP will continue to trou-
cism and unfavorable media publicity, there is no ble both IP owners and those with whom they are
doubt that their deterrent effect has reduced not in dispute, one can never have too many helpful
only their own litigation spending but that of tips. It would be good to see more of them in a
others who might otherwise wish to contest IP subsequent issue of the WIPO Magazine.
issues with them.
26 FEBRUARY 2010
INTRODUCING THE
NEW TOP
MANAGEMENT TEAM
WIPO welcomed its new top management team on December 1, 2009, when the four Deputy Directors
General and three Assistant Directors General took up their appointments following the completion of
the term of the outgoing team. The appointments, which include three WIPO insiders and four newcom-
ers to the Organization, were approved by WIPO’s Member States at the Coordination Committee meet-
ing in June 2009, on the basis of proposals submitted by Director General Francis Gurry.
The seven Deputy and Assistant Directors General, together with the Executive Director of the Office of
the Director General (Chief of Staff ), formally comprise the Senior Management Team of the
Organization. The Team is responsible for assisting the Director General in providing the strategic direc-
tion of WIPO’s programs, managing the budgets, activities and human and financial resources of their re-
spective Sectors in accordance with agreed work plans, and ensuring delivery of results in line with the
Organization’s nine strategic goals.
Mr. Geoffrey Onyeama, Mr. Onyeama notes that most developing coun-
Deputy Director General, tries now have modern IP laws, functional IP of-
Cooperation for Development fices, respected research institutions and dy-
namic creative industries. And all have a wealth
Mr. Onyeama (Nigeria) has had a of resourceful entrepreneurs, inventive minds,
Photo: WIPO/Migliore
Mr. Onyeama assumes responsibility for the Under the strategic goal of “facilitating the use
Cooperation for Development Sector. This of IP for development,” Mr. Onyeama describes
now incorporates WIPO’s programs on the main challenges as partnering effectively
Development Agenda Coordination; coopera- with developing countries to design IP policies
tion with African, Arab, Asia and the Pacific, and strategic plans that provide a coherent
Latin America and the Caribbean countries; framework for WIPO’s cooperation with the
least developed countries (LDCs); and the countries; and, within that framework, elabo-
WIPO Academy. The Sector’s key objective is to rating and executing projects with clear time-
facilitate greater participation by developing lines and concrete, measurable deliverables
countries and LDCs in the benefits of innova- which address, meaningfully, the development
tion and the knowledge economy. goals of the countries.
27
Photo: WIPO
Photo: WIPO
Photo: WIPO
Sector will play in establishing a corporate culture
focused on performance and customer service, Chief of Staff
and ensuring that core administrative and man-
agement processes are efficient, responsive, serv- The Senior Management Team in-
ice-oriented and cost-effective. cludes the Executive Director of
the Office of the Director General
Mr. Yoshiyuki Takagi, (Chief of Staff ), Mr. Naresh Prasad
Photo: WIPO/Migliore
For more information contact Visit the WIPO website at: or its New York Office at:
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WIPO Publication No. 121(E) ISSN 1020-7074 (print) ISSN 1564-7854 (online)