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WIPO Arbitration and Mediation Center: The WIPO Rules; WIPO FRAND ADR

Chiara Accornero, Ignacio de Castro, Heike Wollgast

This article was prepared by Ignacio de Castro, Heike Wollgast and Chiara Accornero, WIPO Arbitration and Mediation Center. Information about the authors can be found at http://www.wipo.int/amc/en/contact/.

PAROLE CHIAVE: WIPO - arbitrato - mediazione

The WIPO Arbitration and Mediation Center makes available tailored model submission agree­ments that parties may use to refer a dispute concerning the determination of fair, reasonable and non-discriminatory (FRAND) terms to WIPO Mediation, WIPO Arbitration or WIPO Expedited Arbitration. The WIPO rules seek to ensure a cost- and time-effective FRAND determination and have been developed further to a series of consultations conducted by the WIPO Center with leading patent law, standardization and arbitration experts from a number of jurisdictions.

Sommario:

I. Introduction - II. WIPO Arbitration and Mediation Center - A. WIPO ADR Procedures - B. The Role of the WIPO Center - III. The WIPO Mediation, Arbitration and Expert Determination Rules - A. Joinder - B. Consolidation - C. List procedure - D. Preparatory Conference - E. Emergency Relief - IV. WIPO ADR for FRAND Disputes - A. Scope - B. Procedural Schedule - C. Arbitral Tribunal - D. Confidentiality - E. Interim Measures - V. Conclusion - NOTE


I. Introduction

The use of alternative dispute resolution (ADR) procedures to settle disputes between private parties outside the courts has a long tradition in legal systems around the world. While traditionally ADR options have not been widely used to settle intellectual property (IP) and related disputes, such procedures are gaining increasing international consideration. With the globalization of trade and the increasingly international creation and exploitation of IP, IP disputes often span multiple jurisdictions and involve highly technical matters, complex laws and sensitive information. Using ADR for the resolution of IP disputes, rather than recourse to litigation before national courts, has distinct advantages. ADR allows parties to resolve their di­spute through a single neutral procedure which can be customized to their needs, and enable parties to control the time and cost of proceedings, compared to potential parallel litigation in several jurisdictions. ADR also offers, to a large extent, the advantage of keeping the proceedings and outcomes confidential. This article illustrates the ADR procedures offered by the WIPO Arbitration and Mediation Center (WIPO Center) for resolving IP and technology disputes, including the latest WIPO (Expedited) Arbitration Rules. It also explains the WIPO Center’s experience in the design of tailored ADR options for specific parties’needs and industry sectors, including the recently develo­ped dispute resolution scheme for disputes concerning patent standards, and in particular the determination of fair, reasonable and non-discriminatory (FRAND) licensing terms.

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II. WIPO Arbitration and Mediation Center

The WIPO Center was established in 1994 as part of the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations with 191 member states dedicated to developing a balanced and accessible international IP system. The role of the WIPO Center is to facilitate the time and cost-effective re­solution of IP and related disputes through ADR mechanisms such as mediation, arbitration and expert determination [2]. Developed by leading experts in cross-border dispute settlement, the ADR procedures offered by the WIPO Center are recognized as particularly appropriate for cross-border IP and technology disputes. The WIPO Center is also the leading provider of time- and cost-efficient mechanisms to resolve internet domain name disputes, without the need for court litigation. This service includes the WIPO-initiated Uniform Domain Name Dispute Resolution Policy (UDRP), under which the WIPO Center has processed over 40,000 cases [3].

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A. WIPO ADR Procedures

Through its offices in Geneva and Singapore, the WIPO Center administers disputes globally and offers clauses, rules and neutrals for the following ADR procedures: -   Mediation: an informal procedure, in which parties ask a neutral intermediary, the mediator, to assist them in reaching a settlement of the dispute. Any settlement which parties achieve is enforceable as a contract between them. -   Arbitration: a procedure in which the dispute is submitted to one or more independent arbitrators who render a binding decision, the arbitral award, which is normally final and not subject to appeal. Expedited Arbitration is an arbitration procedure that is carried out in a short time and at a reduced cost. -   Expert Determination: a procedure in which a specific matter is submitted to one or more experts who make a determination on the issue referred to them. It is particularly appropriate for technical or specific issues, such as the determination of a royalty amount. The determination is binding unless the parties have agreed otherwise. The WIPO ADR procedures are organized to create positive opportunities for party settlement. To date, 70% of WIPO Mediation cases and 40% of WIPO Arbitration cases have concluded in a settlement between the parties. The WIPO Center has, to date, administered over 530 mediation, arbitration and expert determination cases, most of which were filed in the last five years. These cases have involved disputes on a wide range of IP and related matters such as (in alphabetical order) art marketing agreements, copyright issues, information technology related agreements, joint venture agreements, patent infringements, patent licenses, R&D agreements, technology transfer agreements, telecommunications related agreements, trademark issues as well as TV distribution rights. In addition to IP related cases, the WIPO Center also administers commercial cases where no IP elements are in dispute. In fact, some 15% of the WIPO Center’s total caseload covers more general commercial areas such as distribution, franchising, marketing, construction, employment and insurance [4]. The WIPO ADR services have been used by multinational corporations, SMEs, artists and inventors, R&D centers and universities and collecting societies from more than 40 jurisdictions in the world [5]. It should be noted that over 70% of WIPO cases are international in scope. Amounts in [continua ..]

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B. The Role of the WIPO Center

In its role [6] as an administering institution, the WIPO Center advises parties on the types of clauses to resolve future disputes for insertion in a contract and also provides procedural guidance to facilitate the submission of an existing dispute to WIPO ADR. For this purpose, the WIPO Center makes available recommended mediation, arbitration and expert determination contract clauses and submission agreements which parties may use as basis for submitting their dispute to the WIPO Center [7], as well as an online Clause Generator that proposes additional elements based on the WIPO Center’s case experience [8]. Once a case is submitted to the WIPO Center, the WIPO Center engages in active case management by, inter alia, assisting in the identification and appointment of neutrals, facilitating communication between parties and neutrals, enforcing timelines, coordinating finance-related issues, and arranging meeting and other support services, including interpretation or secretarial services. Notably, the WIPO Center maintains a detailed database of over 1,500 dispute resolution practitioners and experts covering the legal and technical spectrum of IP globally and available to act as mediators, arbitrators and experts [9]. The WIPO Center also raises awareness and promotes the use of ADR in different IP-related sectors. This includes offering ADR related information to interested private and public entities, as well as training through workshops and conferences [10], and provision of resources, such as relevant publications [11], working documents and research tools. The WIPO Center also develops operational and legal frameworks for tailored dispute resolution procedures in a number of areas [12], such as R&D and Technology Transfer [13], Information and Communication Technology (ICT) [14] including the determination of FRAND licensing terms [15], IP Offices [16], Life Sciences [17]. Art and Cultural Heritage [18]. Film and Media [19]and Trade Fairs [20]. Such procedures may concern disputes arising in a specific industry sector, or a specific subject matter. In that capacity, the WIPO Center collaborates with stakeholders from relevant sectors, and provides targeted adaptations of the standard WIPO Rules, specific model clauses and fees, as well as separate lists of neutrals with expertise in the concerned [continua ..]

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III. The WIPO Mediation, Arbitration and Expert Determination Rules

The WIPO Rules contain provisions that seek to address the specific requirements of IP disputes, for instance on technical and experimental evidence and confidentiality. Articles 51, 52 and 53 WIPO Arbitration Rules (Articles 45, 46, 47 WIPO Expedited Arbitration Rules) give some guidance to the arbitral tribunal and to the parties as to the manner in which technical and experimental evidence (including experiments, site visits and agreed primers and methods) can be presented in the most efficient way. Confidentiality can also assume particular importance in IP disputes, either because trade secrets and other confidential information are involved in the dispute or because the parties wish the proceedings to be conducted on a wholly confidential basis, in which neither the existence of the proceedings nor any of the disclosures occurring within it will be disclosed to the public. The WIPO (Expedited) Arbitration Rules contain detailed confidentiality provisions, providing for the confidentiality of the existence of the arbitration, of disclosures made during the arbitration and of the award itself; similar standards are included in the WIPO Mediation Rules. The WIPO (Expedited) Arbitration Rules also contain comprehensive provisions in relation to the protection of confidential information. Under both sets of rules, the protection of confidential information against the opposing party in the arbitration can be guaranteed through the issuance of confidentiality protective orders (Article 54 WIPO Arbitration Rules and Article 48 WIPO Expedited Arbitration Rules). Further particularities of the WIPO procedures making them appropriate for all commercial cases relate to the WIPO Rules’strong focus on time- and cost-efficiency [21], competitive fees and the international neutrality of the WIPO Center. The WIPO Arbitration Rules, first promulgated in 1994 and last updated in 2014 [22] have proven a well-functioning framework for the WIPO Center’s steadily growing caseload, including in complex procedural circumstances. The 2014 revision mainly updated selected provisions in line with developments in international arbitration law, including taking account of the 2010 revision of the UNCITRAL Arbitration Rules. In addition, the 2014 Rules offer guidance to parties on WIPO Center practice that has emerged over the years, while underscoring the WIPO Center’s commitment to time and cost [continua ..]

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A. Joinder

Disputes that involve multiple parties play a growing role in the WIPO Center’s caseload, for example in the area of R&D and technology transfer [23]. To that effect, new provisions have been introduced in the 2014 WIPO (Expedited) Arbitration Rules that address the joinder of additional parties to proceedings. Reflecting WIPO Center practice, Article 46 WIPO Arbitration Rules (Article 40 WIPO Expedited Arbitration Rules) confirms that the arbitral tribunal may order a joinder, subject to agreement by all parties involved, including the additional party. In the interest of time and cost, parties shall address a request for joinder as early as possible in the (expedited) arbitration proceedings. In situations where a party acquires knowledge of relevant circumstances at a later stage of the (expedited) arbitration, it may request a joinder within 15 days after acquiring such knowledge. The arbitral tribunal, prior to ordering any joinder, shall take account of all relevant circumstances, including the stage reached in the proceedings so as to prevent unnecessary delays. Unless otherwise agreed by all parties, the party being joined must also agree to any appointments of arbitrators already made in the proceedings.

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B. Consolidation

Once again with a view to multi-party proceedings, the 2014 WIPO (Expedited) Arbitration Rules formalize the WIPO Center’s power to order, under certain conditions, the consolidation of a new (expedited) arbitration with pending proceedings. In line with the practice of the WIPO Center in such cases, certain conditions must be fulfilled before the arbitral tribunal may order consolidation: Article 47 WIPO Arbitration Rules (Article 41 WIPO Expedited Arbitration Rules) requires agreement by all parties and any appointed arbitral tribunal. Also, both the new and the pending proceedings must relate to a substantially related subject matter or the parties involved in both proceedings must be identical. The WIPO Center must also take into account all relevant circumstances, including the stage of the proceedings.

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C. List procedure

The 2002 WIPO Arbitration Rules already made available a “list procedure” for the appointment of the sole or presiding arbitrator by the WIPO Center in cases where such appointment had not been made by the parties. The list procedure foresees that, in such scenario, the WIPO Center establishes a list of candidates, taking into account particular qualifications that the parties may have agreed. In selecting the candidates, the WIPO Center can draw on its list of neutrals [24]. Under the list procedure, parties are then invited to number these candidates in order of preference, and return the marked lists to the WIPO Center. In principle, the WIPO Center will appoint a person from the list, taking account of the preferences and objections expressed by the parties. In the WIPO Center’s practice, the list procedure is an effective and well-balanced framework for the appointment of neutrals, and the WIPO Center made it available to parties also in mediations and expedited arbitrations. In line with this practice, Article 6 WIPO Mediation Rules and Article 14(b) WIPO Expedited Arbitration Rules now confirm the application of the list procedure in such proceedings.

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D. Preparatory Conference

In WIPO (expedited) arbitrations, the preparatory conference has proven to be an important catalyst for the time and cost efficiency of proceedings. To reinforce its role, the preparatory conference becomes a mandatory stage of the proceedings under Article 40 WIPO Arbitration Rules (Article 34 WIPO Expedited Arbitration Rules). In accordance with the WIPO Center’s experience, within 30 (15 in WIPO expedited arbitration) days after its establishment, the arbitral tribunal must conduct a preparatory conference with the parties for the purpose of organizing and scheduling the subsequent proceedings in a time and cost efficient manner. The Rules provide that the preparatory conference may be held in any suitable format and is usually conducted by telephone conference.

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E. Emergency Relief

Pursuant to Article 48 WIPO Arbitration Rules (Article 42 WIPO Expedited Arbitration Rules), the arbitral tribunal is empowered to issue provisional orders or take other interim measures it deems necessary. In line with emerging standards in national and international institutional arbitration rules, the 2014 WIPO (Expedited) Arbitration Rules make available an emergency relief procedure prior to the establishment of the arbitral tribunal. The party seeking urgent interim relief before the arbitral tribunal is established needs to submit such request to the WIPO Center. The request for emergency relief needs to set out the reasons why the relief is needed on an emergency basis. The WIPO Center will inform the other party of the receipt of the request and, upon proof of payment of the initial deposit [25], will promp­tly (normally within two days) appoint the emergency arbitrator. While Article 49 WIPO Arbitration Rules (Article 43 WIPO Expedited Arbitration Rules) does not establish a strict timeline for the emergency arbitrator to order an interim measure, the emergency arbitrator is requested to conduct the proceedings in an appropriate manner, taking due account of the urgency of the proceedings. Article 49(g) WIPO Arbitration Rules (Article 43(g) WIPO Expedited Arbitration Rules) recalls that each party shall be given a fair opportunity to present its case, but make clear that proceedings can be conducted by telephone or on the basis of written submissions as alternatives to an in-person hearing. Emergency relief proceedings seek to fill a vacuum in situations where a party cannot await the constitution of the arbitral tribunal. Therefore, emergency relief proceedings are to be terminated by the emergency arbitrator if (expedited) arbitration is not commenced within 30 days from the initiation of the emergency relief proceedings. Generally, the emergency arbitrator’s po­wers come to an end with the establishment of the arbitral tribunal in the proceedings. If requested by a party, the arbitral tribunal may modify or revoke any measure ordered by an emergency arbitrator.

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IV. WIPO ADR for FRAND Disputes

In its case experience, the WIPO Center has noted that specific areas of IP transactions can benefit from targeted adaptations of the standard WIPO ADR framework, for example in relation to rules, neutrals, fees and clauses. As seen above, the WIPO Center has designed tailored ADR schemes in a number of areas, including ICT and the determination of FRAND licensing terms. With up to 35% of all patents filed worldwide since 1990 relating to smart­phones and smartphone standard-essential patents on the rise [26], technical standards play an increasing role in today’s economy. Technical and standard-setting organizations (SSOs) typically require their members to license standard-essential patents (SEPs) on terms that are FRAND. FRAND terms are not specified and are subject to negotiation between the SEP owner and the standard implementer. In recent years, courts in several jurisdictions have dealt with the determination of FRAND licensing terms under different applicable laws, and have developed different approaches and methodologies. If negotiation fails, arbitration and other ADR mechanisms offer flexible, accessible options for parties wishing to conclude a FRAND agreement, including SMEs. This has been recognized by some standard development organizations (SDOs) that include ADR procedures in their IP policies [27]. ADR, including WIPO ADR, also has been identified by courts and authorities in the US and Europe as a suitable option to facilitate the determination of FRAND licensing terms [28]. To facilitate submission of FRAND disputes to WIPO ADR, the WIPO Center makes available the Guidance on WIPO FRAND ADR, which aims at helping parties and neutrals to understand and make use of procedural options that may foster time– and cost-efficiency of the proceedings [29]. The document also includes tailored model submission agreements that parties may use to refer a dispute concerning the determination of FRAND terms to WIPO Mediation, Arbitration or Expedited Arbitration. Developed in consultation with the European Telecommunication Standards Institute (ETSI), patent law, standar­dization and arbitration experts from a number of jurisdictions, and taking into consideration the WIPO Center’s experience in complex patent arbitrations, the WIPO model submission agreements build on the standard WIPO Mediation, Arbitration and Expedited Arbitration Rules and propose a set of optional FRAND-specific features. In [continua ..]

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A. Scope

In view of the complexity and variety of FRAND disputes, especially where large SEP portfolios are involved, a clear definition of the scope of subject matter referred to WIPO ADR will be crucial. The WIPO FRAND model agreements give parties the option to submit to WIPO ADR specific SEPs, a collection of SEPs, an entire SEP-portfolio, or a “sample” of representative patents (consensually) chosen from a SEP-port­folio. If parties refer an entire patent portfolio to WIPO ADR, a selection of patents (“sampling”), a preliminary claim construction process or the conduct of the proceedings in several stages may be agreed by the parties, usually in the context of the preparatory conference [35]. For expedited arbitrations, the WIPO FRAND model agreements suggest limiting the proceedings to a small number of SEPs to ensure that the envisaged time and cost efficiency of this procedure can be achieved. Parties further have the option to agree that the scope of the ADR proceedings shall include patents on a reciprocity basis (cross-licensing). Parties may agree to submit to ADR a determination of FRAND licensing terms globally, or to limit such determination to certain jurisdictions or markets selected by them. In the interest of time and cost-efficiency of the proceedings, parties may also agree to limit claims or defenses that they may bring in the ADR proceedings, including patent essentiality, validity, infringement, and enforceability. They may for example agree in an arbitration that such arguments may be heard but no binding decision regarding these issues may be taken by the arbitral tribunal, or that such arguments may not be heard or decided upon by the arbitral tribunal.

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B. Procedural Schedule

The model agreements propose detailed schedules for the proceedings, guided by WIPO patent arbitration experience. For FRAND arbitrations, the following is suggested:   TABELLA   The schedule envisages that a final award in a WIPO FRAND Arbitration would normally be issued within 14-16 months, and of a WIPO FRAND Expedited Arbitration within 6-8 months. The periods of time may be reduced or extended in the course of the (expedited) arbitration by the parties or the WIPO Center in accordance with the WIPO Rules. In the interest of time, the model agreements encourage the use of the WIPO Electronic Case Facility (WIPO ECAF) [36]. WIPO ECAF, which the WIPO Center makes available to parties at no additional cost, allows parties and all other actors in a case under WIPO Rules to submit communications electronically into an online docket. In addition to facilitating online communication and storage, WIPO ECAF also provides a summary of case information, a search facility, an overview of timelines, contact information for all parties, and the finance status of the case.

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C. Arbitral Tribunal

For arbitrations, the model agreement proposes that the arbitral tribunal consists of three arbitrators. In line with the WIPO Arbitration Rules, each party will be requested to appoint one arbitrator; the two arbitrators thus appointed will then appoint the presiding arbitrator. In making any default appointment under Article 19 WIPO Arbitration Rules, including proposing candidates to the parties in accordance with Article 19(b) WIPO Arbitration Rules, the WIPO Center will to the extent possible draw on its special list of neutrals for patents in standards. To expedite the establishment of the arbitral tribunal, the periods of time relating to the appointment of the arbitrators in Articles 17(b) and 18(b) WIPO Arbitration Rules have been shortened to 15 days. In expedited arbitrations, there will be a sole arbitrator, in line with the WIPO Expedited Arbitration Rules. The sole arbitrator will be appointed jointly by the parties or, if such appointment is not made, the WIPO Center shall propose candidates to the parties from its special list of neutrals for patents in standards. In WIPO Expedited Arbitrations, parties benefit from fixed arbitrator’s fees [37].

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D. Confidentiality

Under the WIPO (Expedited) Arbitration Rules, unless otherwise agreed by the parties or required by law, the existence of the arbitration, information on disclosures made during the arbitration, and the arbitral award itself enjoy high standards of confidentiality protection [38]. Similar standards are included in the WIPO Mediation Rules [39]. Following commencement of the arbitration, the WIPO (Expedited) Arbitration Rules give the arbitral tribunal the power to issue protective orders as may be appropriate during the proceedings. For example, when requests for the production of documents relate to comparable licenses of SEPs, such licenses may contain confidentiality/non-disclosure obligations. The WIPO (Expedited) Arbitration Rules provide mechanisms for addressing such issues including by, where appropriate, special measures of protection such as an attorneys-eyes-only designation or the appointment of a confidentiality advisor [40]. Noting public interest in having access to information concerning methodologies used by arbitral tribunals to determine FRAND terms, parties could potentially wish to agree disclosing such specific information, while otherwise maintaining the confidentiality offered by the WIPO Rules. Such party agreement could be made at any stage of the arbitration proceedings. In any event, to the extent necessary to comply with a legal requirement imposed on a party, or in connection with a court action relating to the award or as otherwise required by the law, the parties, the arbitrator and the WIPO Center can disclose the award under the WIPO (Expedited) Arbitration Rules [41].

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E. Interim Measures

Under the WIPO (Expedited) Arbitration Rules the arbitral tribunal may issue any provisional order it deems necessary [42]. The WIPO FRAND model submission agreements propose limiting the arbitral tribunal’s power concerning interim injunctions in FRAND arbitrations, unless otherwise agreed by the parties [43]. At the same time, the model WIPO FRAND agreements confirm that the arbitral tribunal may order that a party provide security for the claim or counter-claim in an escrow account.

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V. Conclusion

In light of the increasing internationalization and complexity of IP transactions, the WIPO Center has experienced a considerable increase in IP and related commercial cases in recent years, together with a continued rise in demand for adapted ADR services in specific industry sectors. Notably, business sectors such as telecommunications, life sciences and R&D experience speci­fic recurring types of disputes with particular features and needs that can best be addressed by specially tailored ADR services. At the same time, a growing number of national procedural laws and legal authorities encourage, or even require, the use of ADR to release pressure from national courts, which may not always be sufficiently equipped to deal with the technical and legal complexity and increasing volume of IP disputes. Faced with the limitations of national litigation in an increasingly international context, the success of ADR for the resolution of IP and technology disputes evidences the potential of ADR to accommodate the specific characteristics of such disputes, and the legal and business needs of the area. The standard WIPO Mediation, Arbitration and Expert Determination Rules provide particularly appropriate procedures for IP and technology disputes. At the same time, the WIPO Center endeavors to promote further efficiency gains through dedicated ADR dispute resolution schemes at the cutting edge of IP dispute resolution needs and techniques.

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NOTE

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