Tuesday, 2 November 2010

The PCC Page, no.4: ADR -- waste of space or chance of success?

Having opted for trial before the Patents
County Court, Cautious Co was no longer
tempted by other forms of dispute
To recap: the PCC Pages is a series of Tuesday features on the new regime for litigation before the recently revamped Patents County Court (PCC) for England and Wales, hosted by PatLit but furnished by the Chartered Institute of Patent Attorneys (CIPA). In this episode, CIPA President Alasdair Poore explains that the PCC does not exist in a vacuum and how its procedures can be complemented by Alternative Dispute Resolution.

Cautious Co., whom readers first met here, is quite keen on using the Patents County Court. The company's boss is however impatient to press on and asks:
"PCC: low costs, high speed; why do we need Alternative Dispute Resolution (ADR)? I just want the PCC to decide against my competitor!"
Is this not a good point? Doesn’t ADR just delay the final result? ADR is one of those widely misunderstood terms in the litigation lexicon. Most forms of alternative dispute resolution don’t resolve the dispute unless the parties agree that it can do so. But plenty of them could be helpful. They range from plain settlement negotiations, through conciliation and mediation (assisted negotiations), using Intellectual Property Office (IPO) opinions and early neutral evaluation (eg a trusted practitioner makes an independent assessment) to adjudication and arbitration – see ADR Now for a description of ADR processes, and CEDR, IPO, and the IPO’s list of providers for some mediation links.

Annex A 2.2(2) of the Practice Direction on Pre-Action Conduct suggests the parties should “set out the form of ADR (if any) that the claimant considers the most suitable and invite the defendant to agree to this”. And under the “old rules” His Honour Judge Fysh used to ask parties to add a preamble to the Case Management Order, confirming they had considered ADR.

But, bearing in mind lower costs and faster procedures under the new rules, and in the light of my warnings last week about the risks of forum shopping, does ADR have any place?

Beechwood House Publishing v Guardian Products [2010] EWPCC 12, just decided by His Honour Judge Birss QC and noted here, perhaps shows just why ADR could still be useful, but also highlights some problems. This case was a typical small intellectual property dispute – not a lot of money at stake; talk of settling for £3,000; but what about a “victory”?  The parties spent rather a lot of time on getting towards settlement, but did not quite make it to the finishing line– at least in the claimant’s view.

The first lesson was flexibility (both of the Court and the parties). The old rules applied (see Technical Fibre Products v David Walton Bell [2010] EWPCC 11, noted here – old rules still (mostly) apply to old cases). The hearing was on an application for summary judgment on (a) whether a settlement had been reached, and (b) infringement of database right.

Judge Birss immediately showed the flexibility of the PCC. Having observed that a full trial on such a dispute would be an “unedifying prospect” (para 12), all agreed that the settlement issue be decided on the merits on the papers before the judge – just the sort of determination envisaged more generally for the PCC (to avoid a summary judgment, it would have been enough to show only a real prospect of success.) This is a victory for good sense.

Secondly, to take the case forward, although it was under the old rules, the judge steered the parties towards thinking of expedited procedures such as those under the new rules, with a heavy emphasis on proportionality (para 77).

The issues on settlement were also significant. In IP disputes, ADR is often ruled out on the grounds that an owners want a VICTORY and the publicity which goes with it. One of the reasons the settlement fell apart here was the defendant’s desire for confidentiality. Judge Birss stated “This approach [no confidentiality] by holders of IP rights is a common one and is in my judgment entirely fair.” (para 21)

Consequently, sticking to ones rights while seeking settlement is perfectly sensible and supportable. You can attempt to settle AND ask for a public admission of liability. But you need to make sure that there really is a settlement. ADR can also be valuable in reducing the issues (see the current Patents Court and Patents County Court User Guide para 10 (and in practice probably did so here), even if there is not settlement; and clearly in a case such as this, where the amounts in issue are small, ADR still makes good sense, even after proceedings have been started.

However, the other warning should stand out. If you want to use ADR, make sure it is within firm defined and controlled constraints – time-limited, cost-effective and preferably final. Beechwood House Publishing v Guardian Products [2010] EWPCC 12 can show you how long it could otherwise take take.

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