I N T E L L E C T U A L P R O P E R T Y The Case for Arbitrating Intellectual Property Licensing Disputes Intellectual property, particularly the field of BY RICHARD H. SAYLER patent licensing, is rife with the potential for The author is with Jones Day in Cleveland. The views expressed here are the author’s and do not reflect the views disputes. Litigation in this area has led to of Jones Day, its clients, or any other person or entity. some of the most intractable and expensive court cases, some of which have lasted for T his article discusses some partial solu- 10 years or more. It is difficult to see any tions to consider when confronting the advantage to litigating these disputes. Instead, dilemma of enforcing patents and the author urges patent owners to seek faster patent licenses in a timely and affordable and more economical means of enforcing their manner. Unfortunately, one cannot be seri- ously engaged in licensing intellectual prop- patent licenses. An experienced IP practitioner, erty (either as a licensing specialist or licens- he argues that arbitration is ideal, since it ing professional) without becoming involved offers the parties a private process, a quicker in litigation. Whether your organization and less costly resolution, and the ability to owns a large portfolio of IP or a modest one, select experienced experts as arbitrators to it will inevitably be confronted by another resolve these disputes. company that will challenge your organiza- tion's rights in a patent or license, possibly due to the belief that your company is not pre- pared to enforce its contractual rights, or is too small and insignificant to take on a bigger and more powerful challenger. Another rationale behind some companies’ decision to litigate is the belief that the opposing company’s infringement always trumps their own. In my practice as a litigator in trials and appeals of IP mat- term of the patent. These licenses may last for five or 10 ters, I have too often seen business executives with grand years, and have built-in “trigger points” that call for earlier review of the parties’ relationship. This has led to increasing titles and egos blithely rely on such flimsy reasons in deciding amounts of litigation. Indeed, litigation over the terms of IP to commit significant amounts of corporate dollars to long- licenses may come from unexpected quarters. Consider this lived IP litigation. Experience shows that it is simply unrealis- “ripped from the headlines ( à la “Law & Order”)” example. tic to expect decisions about IP—whether about licensing, cross-licensing, litigation or settlement—to be made solely A licensing professional for a company that designs and on the basis of dispassionate, rational, economic analysis. So sells software to guard against personal computer (PC) while you can be reasonably sure that the contract you enter viruses is asked to solve a problem. The problem is cus- into to buy a refrigerator at your local “big box” store will not tomers who share their evaluations of the company’s soft- end up in court, the same cannot be said about a contract to ware with each other and the PC trade press. The licens- license IP. ing professional’s boss says that these bad evaluations are Many patent licensing disputes over the last few years seem always out of date because they deal with problems that the to involve licenses that cover substantially less than the whole company has already solved. The licensing professional Reprinted from the Dispute Resolution Journal , vol. 60, no. 1 (Feb.-April 2005), a publication of the American Arbitration Association, 335 Madison Avenue, New York, NY 10017-4605, 212.716.5800, www.adr.org. D I S P U T E R E S O L U T I O N J O U R N A L 1
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