ALTERNATIVE DISPUTE RESOLUTION: THE IDEAL SOLUTION TO ARDUOUS TECHNOLOGY LITIGATION?
Author: Vellayan K, IV year of B.B.A.,LL.B.(Hons.) from School of Excellence in Law, The Tamilnadu Dr Ambedkar Law University
Co-author: Saradha Devi A, IV year of B.B.A.,LL.B.(Hons.) from School of Excellence in Law, The Tamilnadu Dr Ambedkar Law University
In today’s world, businesses are reliant on technology to run their operations and achieve their desired objectives leading to the emergence of a large number of technical disputes more than before. Technology dispute litigation can be devastating as it imposes an extreme financial burden on the parties and is tedious. Additionally, specialized knowledge and expertise are required for the fair settlement of technology disputes. A survey conducted in 2016 revealed an inclination towards ADR to settle technology disputes. In this regard, the article seeks to examine the capacity of ADR mechanisms to alleviate the difficulties in resolving technology disputes.
Keywords: ADR, Technology litigation, Arbitration, Mediation, Technology disputes
Much of today’s global business environment and economy is driven by technology and, naturally, a lot of disputes pertaining to technology are emerging more than before. ‘Technology litigation’ is often construed narrowly as relating only to patents but it is substantially more complex and dynamic. It encompasses an array of disputes relating to agreements, use of data, material failure, infringement of IP rights, etc. specialized technical knowledge is often required to deal with such disputes. In light of this, it is becoming increasingly difficult to resolve technological disputes conventionally, i.e., in courtrooms, due to their complex nature.
The arduous nature of technology litigation has led to the rapid evolution of ADR in this sphere as it facilitates more efficient resolution of such disputes by appointing persons of expertise. This article endeavours to analyse the capacity of ADR mechanisms to mitigate the difficulties in resolving technology disputes.
CHALLENGES IN LITIGATING TECHNOLOGY DISPUTES
It is imperative to comprehend the challenges involved in the litigation of technology suits to examine how ADR mechanisms could conceivably help overcome them. The nature of technology disputes is predominantly of the following two types:
Pure intellectual property disputes; and
Pure intellectual property disputes usually arise between parties with no previous relationship as opposed to contractual disputes.[ii] IP suits form a significant portion of technology disputes as intellectual property substantially influences the market value of companies today.[iii] Technology licenses often grant rights to utilise intellectual property or technical information.[iv] Thiscould potentially lead to disputes on the validity of existing rights as well as the determination of the ownership of new developments or works arising from those rights. The determination of the scope of protection and rights usually requires the knowledge of a person of ordinary skill in the art as it is usually abstract. In Ungar v Sugar[v], the expensive and tedious nature of patent litigation was observed by Lord Esher:
“Why, that a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, then have a dispute about a patent. His patent is swallowed up, and he is ruined… it is the fault of the mode of conducting the law in a patent case”[vi]
The view holds true even today as the situation is practically the same. Similarly, software litigation mainly involves elusive copyright elements. Furthermore, the scope of protection conferred by IP rights is generally territorial[vii] while dealings among corporates occur across territories and the disputes thus arising out of such relationships usually tend to have an international character. This adds to the difficulty in the adjudication of these disputes as there is a tendency for the scope of protection offered by the same subject matter to be interpreted differently in different jurisdictions.[viii]
On the other hand, contractual disputes are mainly regarding the terms of the contract and they do not necessarily involve an element of intellectual property. Contractual disputes usually involve disputes on infringements that have taken place in the past.[ix] These continue to the instant of the suit as against other commercial disputes which mostly relate to infringements made in the past.[x] Therefore, the remedies for such breach of contracts emphasised mainly on the present rather than monetary compensation for the past.
There is no international obligation for establishing specialized IP courts[xi] and most countries with limited resources do not possess such courts as the cost of their establishment is highly disadvantageous. Since most technology disputes have an international character and as their settlement requires special knowledge and requisite skills or technical know-how, there is a higher probability that the legal experts of the jurisdiction involved might possess very little to no knowledge or expertise on the subject matter of such suits, which further complicates their adjudication. Additionally, technology suits are expensive (costing about USD 2 million)[xii] and are time-consuming, making tech litigation highly challenging.
ADR: AN ADVANTAGEOUS ALTERNATIVE TO TECHNOLOGY LITIGATION?
ADR mechanisms like arbitration and mediation are less adversarial, allowing the parties to have considerable control over the dispute resolution process and its outcome as it promotes direct communication between the principals with regard to the point of the dispute. In this regard, in addition to offering agreeable solutions, ADR also helps organizations to maintain or improve existing business relationships, or even create new relationships. Furthermore, ADR mechanisms also facilitate confidentiality and are highly cost-efficient.
A survey conducted by the Queen Mary University of London in 2016 revealed that the two chiefly preferred methods of ADR for resolving technology disputes are arbitration and mediation.[xiii] They are distinctly analysed below as to how they are an advantageous alternative to technology litigation:
Arbitration permits the parties to appoint an arbitrator with high technical expertise. This makes ADR more feasible for technology disputes than litigation. It is imperative to take into account the 2019 amendment made to Section 43(j) of the arbitration and conciliation act,1996[xiv], which laid down the qualification, eligibility, and norms for accreditation, along with the exhaustive list of qualifications required. It is mandatory to have at least 10 years of experience in the field of technical or scientific stream to hold the position of an arbitrator[xv]. Additionally, the parties can select a particular law to govern the dispute irrespective of their jurisdiction and conflict of law provisions while arbitrating. The parties may also select and make amends with a law different from the one in the underlying contract.
Yet another important advantage of arbitrating technology disputes is confidentiality as they usually involve elements which could not be disclosed. Except where the law requires otherwise, the details of the proceedings and any settlement reached thereof shall remain confidential as opposed to litigation. This gives the parties protection against possible detrimental disclosures to be made while litigating a technology suit.
Arbitration of technology disputes is comparatively cost efficient than their litigation.[xvi]
Mediation involves a direct negotiation between the parties to a dispute for a mutually beneficial solution with the help of a trained neutral third party. Mediation is opportune for technology disputes due to the following reasons:
Besides providing confidentiality, mediating technology disputes is highly cost efficient and time saving, enabling the parties to the dispute to be at pace with the fast-moving world of technology.
Well-trained mediators familiar with the industry jargons and procedures could be appointed.
Technology disputes are generally multi-faceted and mediation is well-suited for setting a myriad of disputes together as opposed to litigation.
Mediating technology disputes also prevents antagonistic tendencies from arising between the parties to the dispute and does not put much strain on the organizations enabling better productivity than while litigating the dispute.
RECENT DEVELOPMENTS IN ADR AND THEIR RELEVANCE IN TECHNOLOGY DISPUTES
The conventional methods of arbitration and mediation are not without shortcomings. There have been numerous developments in the recent times that are well-suited to resolve technology disputes. A few of them have been discussed below:
I. UDRP (UNIFORM- DOMAIN DISPUTE RESOLUTION POLICY)
In the current technology driven world, one of the crucial steps for every online business is to establish their name on an internet domain to build their business globally. To resolve disputes with respect to registering internet domain names, a process was established by ICANN- Internet Corporation for Assigned Names and Numbers called Uniform Domain-Name Dispute-Resolution Policy. WIPO along with ICANN drafted a policy to resolve these domain related disputes and that is now known as Uniform Dispute Resolution Policy (UDRP). It provides a cheap, rapid and a streamlined mechanism to resolve domain related conflicts. Furthermore, it sets out a legal framework and procedures for these kind of domain related disputes with respect to third party abusing the generic top-level domains. WIPO Arbitration and Mediation Centre handle these domain name disputes.
II. HYBRID ADR MODELS
Hybrid ADR models combine two or more traditional dispute resolution processes into one. Hybrid ADR methods have a wider scope and can provide an efficient final solution without compromising on the quality and confidentiality aspects and are hence, highly efficient in resolving technological disputes. Alternative Dispute Resolution (ADR) offers reasonable solutions that often allows technology disputes to be resolved with productivity and experience that is not always possible in a court trial. Hybrids have been developed, to combine the best of both worlds. Hybrid ADR processes may also incorporate features found in court room setting or adjudication-like presentation of arguments and proofs with negotiation. Therefore, hybrids are intended at combining advantages of ADR methods, whilst attempting to minimize or eliminate any plausible disadvantages. Considering the confidential and sensitive nature of technological disputes hybrid ADR are the best mode of dispute resolution for these technical and complex problems.
III. ONLINE DISPUTE RESOLUTION
Online Dispute Resolution uses technology to resolve disputes by means of arbitration, mediation and conciliation. This has become pertinent due to the ongoing pandemic as it facilitates the efficient settlement of disputes virtually. Due to the international nature of technological disputes, ODR is the most viable option as it brings together people from different corners of the world at any time. The technological world is fast paced and ODR promotes a faster settlement of technology disputes. However, it is in its inception and concerns on privacy, cyber security, the control of the platforms, bandwidth and establishment of standardized protocols are being dealt with. ODR stipulates a promising future for settling technology disputes.[xvii]
A survey conducted by the Queen Mary University of London in 2016, revealed an inclination towards mediation followed by arbitration for resolving disputes in the domains of technology, media and telecoms with over 92 per cent[xviii] of the respondents deeming international arbitration as highly appropriate for settling such disputes while litigation was the least preferred.
Although the aforementioned survey revealed that the most preferred ways to resolve technology, media and telecom disputes are mediation and arbitration, there is also a finding that in practice, the most used method is litigation mainly due to the drawbacks as aforementioned. However, in 2018, 81% of the respondents were certain that the use of international arbitration would increase in the future for settling technology disputes. In this regard, taking advantage of the fact that there is an inclination towards ADR in the resolution of technology disputes, the following suggestions are being made to overcome the hindrances in the widespread practical application of ADR mechanisms to technology disputes:
Most long-standing contracts in operation do not include provisions for settling disputes through ADR mechanisms. Therefore, such contracts must be suitably altered to provide for the settlement of disputes through arbitration or mediation, considering the many advantages of the same. Furthermore, it must be ensured that contracts in the future contain arbitration clauses.
Technology disputes are largely IP oriented and tend to have a multi-faceted nature. They tend to fall under the authority of multiple jurisdictions which lead to ambiguity and difficulty in the present era of globalisation. The World Intellectual property organisation recommends the establishment of a uniform, specialized arbitration and intellectual property institutions[xix] and active efforts must be encouraged worldwide.
Arbitrators and mediators must be offered specialized training to enhance the confidence of the parties in their capabilities to resolve complex technological disputes.
The arbitral awards and decisions arrived at must be given more certainty with the help of uniform and efficient e-document management and e-disclosures which in turn would lead to greater enforceability. However, the impediments posed by privacy concerns and ambiguities surrounding the jurisdiction to control the platforms of e-documentation should be overcome.
Due to the chiefly international character of technology disputes among corporates, online dispute resolution should be developed for more affluent arbitration and mediation proceedings.
A reluctance in resorting to ADR mechanisms for settling technology disputes especially through arbitration exists, due to the lack of assurance, certainty and confidence to the extent that is offered by litigation. However, litigation of technology suits poses its own challenges rendering it inefficacious. Arbitration and mediation help overcome major difficulties posed by the litigation of technology suits proving to be highly advantageous methods of resolving technology disputes. Emerging commercial technical advances present a new venture for practitioners to opt technology dispute resolution as a profession. Therefore, resolving technology disputes with ADR tools looks like a more viable option considering the volume and complexity of technology disputes. In this regard, the role of ADR is soaring in technology disputes and new avenues are emerging.
Hence, ADR has greater prospects against cumbersome litigation and indeed offers a potential and efficient solution with minimal hardships to demanding technology suits.
[i]Norton Rose Fulbright, Technology Disputes, Global| Publication| October, 2017, (Jan.20, 2022, 10.04 PM IST), https://www.nortonrosefulbright.com/en-in/knowledge/publications/3e08910f/technology-disputes [ii] Id. [iii]Christine Greenhalgh and Mark Rogers, The value of intellectual property rights to firms and society, OXFORD REVIEW OF ECONOMIC POLICY, Vol. 23, No. 4, INTELLECTUAL PROPERTY (WINTER 2007) [iv]WIPO, Successful Technology Licensing, IP ASSETS MANAGEMENT SERIES, p.2 (Feb.08, 2022, 10.32 PM IST), https://www.wipo.int/edocs/pubdocs/en/licensing/903/wipo_pub_903.pdf [v](1892) 9 RPC 113 at 116-117 [vi] Id. [vii]Lydia Lundstedt, Territoriality in Intellectual Property Law, STOCKHOLM UNIVERSITY, 2016, p. 91. [viii]Dietmar Harhoff, Challenges affecting the use and enforcement of Intellectual property Rights, ECONOMIC VALUE OF INTELLECTUAL PROPERTY FORUM, 2009, p. 11 [ix]Supra note. 1 [x] Id. [xi]Jacques de Werra, A closer look at specialized intellectual property courts, WIPO MAGAZINE (Jan.17, 2022, 11.15 AM IST) https://www.wipo.int/wipo_magazine/en/2019/03/article_0005.html [xii]2003 survey, American IP lawyers’ association “The average cost of bringing a patent litigation is almost US$2 million.” Playing “Patentopoly”, PAT. WORLD, Sept. 2004. [xiii]Lexis Nexis in partnership with CMS, Using arbitration to resolve TMT Disputes, Lexis Nexis UK, (Jan.20, 2022, 12.53 AM IST) https://www.lexisnexis.co.uk/legal/guidance/using-arbitration-to-resolve-tmt-disputes [xiv]THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2019 NO. 33 OF 2019 [xv]Id. (Ref. 8th schedule) [xvi]Tucker Arsenberg attorneys, The Advantages and Disadvantages of Arbitration vs. Court Litigation, ARTICLES (Feb.09, 2022 at 9.38 PM IST) https://www.tuckerlaw.com/2015/02/13/advantages-disadvantages-arbitration-vs-court-litigation/#:~:text=Arbitration%20often%20is%20less%20costly,completion%20of%20discovery%20and%20trial.&text=The%20judge%20is%20assigned%20by,whereas%20court%20litigation%20does%20not. [xvii] Id. [xviii]Supra note 6 [xix]Supra note 11