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UNDERSTANDING MEDIATION AND ARBITRATION: THE WIPO FRAND ADR MODEL

INTRODUCTION

Intellectual property (IP) protection is a prerequisite for nurturing the spirit of innovation. One cannot simply enjoy business growth or success if their unique ideas, methods, or inventions are not sufficiently protected. To counter the menace of IP infringement internationally and to preserve the dignity of generated IP, the United Nations has established a global forum for the management of all IP-related activities called the World Intellectual Property Organization (WIPO).

FRAND is an abbreviation for Fair, Reasonable, Non-Discriminatory licensing. WIPO FRAND model refers to the FRAND licensing terms provided for Standard Essential Patents (SEPs). SEPs are crucial patents required for the implementation of a particular industry standard. SEPs enjoy market influence and power, their widespread adoption is necessary for the implementation of technical standards in any industry. SEP owners are required to provide their SEP licenses on FRAND terms to allow fair and non-discriminatory access to their patented technology.

The WIPO FRAND Alternate Dispute Resolution (ADR) model expertly aims to smoothen negotiation proceedings between patent holders and licensing entities to arrive at a mutually agreed FRAND license. The methods used for FRAND ADR are Mediation, Arbitration or Expedited Arbitration and Expert Determination.

Mediation is an informal consensual process in which a neutral intermediary, the mediator, assists the parties in reaching a settlement based on parties’ interests.”

Arbitration is a consensual procedure in which the parties submit their dispute to one or more chosen arbitrators, for a binding and final decision (award) based on the parties’ rights and obligations and enforceable internationally. Arbitration normally forecloses court options.”

Expert Determination is a consensual procedure in which the parties submit a specific matter (e.g., technical question) to one or more experts who decide on the matter, which can be binding unless the parties have agreed otherwise”

Let us analyze the WIPO FRAND ADR model concerning Mediation and Arbitration.

ELEMENTS OF THE FRAND ADR MODEL ARE:

  1. WIPO Center: The WIPO Center means the WIPO Arbitration and Mediation Center. It is the administering institution which is responsible for facilitating organisational support, appointing mediators and arbitrators, and expediting the proceedings.
  2. Mediation: FRAND ADR proceedings initially begin with mediation. A neutral mediator explores the possibility of settlement and assists the parties in reaching a voluntary agreement on FRAND terms. The mediator’s responsibilities are catered towards facilitating negotiations and not imposing his decisions on the parties.
  3. Arbitration: In any event, shall the mediation process fail, the parties can proceed with arbitration to resolve the dispute. An arbitrator, or a panel of arbitrators, is appointed to make a final and binding decision on the FRAND terms. The arbitrator takes into account significant factors such as the economic value of the patented technology, comparable licenses, and industry practices to come to his decision.
  4. Procedural Flexibility: WIPO FRAND ADR model can be uniquely tailored to ensure procedural flexibility. Parties have the right to agree on the applicable rules, language, and location of the mediation or arbitration. Parties may prefer to opt for the entire patent portfolio or any set of patents for dispute resolution. This allows the parties to generate a mutually beneficial dispute resolution environment that satisfies both parties.
  5. Expert Assistance: Experts are specialized neutrals. Experts have to confirm their impartiality and independence before appointment under the WIPO rules. Parties may choose to engage technical and economic experts who can assist in evaluating licensing terms and determining the dispute expeditiously.

COMMENCEMENT OF THE ADR PROCESS:

  1. Initiation of ADR Process: Any party expressing their desire to engage in ADR proceedings may approach the WIPO Center with a Request for Mediation or Arbitration. The request should include relevant information such as names, addresses, communication references, and a brief statement of the nature of the dispute between the parties involved.
  2. Appointment of Mediators or Arbitrators: WIPO Center appoints a mediator or a panel of arbitrators as agreed between the parties. In a normal WIPO Arbitration final award is envisaged in 14-16 months, whereas the schedule for expedited arbitration is 6-8 months.
  3. Preliminary Consultations: Generally at this stage, parties and the mediator/arbitrator hold preliminary consultations to clarify procedural matters of the ADR process and the pre-defined scope is confirmed.
  4. Holding the Mediation: Mediation may be conducted by telephone, video conferencing, or any other online tools as agreed between the parties. The mediator establishes a timetable for the submission of statements, contentions, and other relevant information. The mediator helps the parties explore their interests, identify common ground, and generate settlement options. The mediator shall uphold confidentiality.
  5. Arbitration Phase (If Mediation Fails): Consequently, shall mediation fail, if the parties decide to opt for arbitration, the parties proceed to the arbitration phase. The Arbitrator or panel of arbitrators shall have a final and binding decision for dispute resolution on the FRAND licensing terms. This Model also contains several guidelines for challenging arbitrator appointments, releasing an arbitrator, replacement of an arbitrator, etc.
  6. Settlement Agreement or Arbitration Award: The mediation settlement or arbitration award is documented in a written agreement. This agreement outlines the FRAND licensing terms and may be enforceable under applicable laws. The specific details and timelines of the WIPO FRAND ADR process can vary depending on the circumstances of each case and the agreement of the parties involved. The process aims to provide a fair and efficient mechanism for resolving FRAND-related disputes while considering the interests of both the SEP holder and the implementer.

LIMITATIONS OF THE WIPO FRAND ADR MODEL

  1. Voluntary Nature: Participation by the parties is voluntary, and resultant, if one party is unwilling to participate or engage in good faith, it can hinder the effectiveness of the entire ADR model.
  2. Lack of binding decisions: Since mediation is non-binding, and arbitration is binding, the resolution of dispute despite initially agreed by the parties may not be fruitful if either party does not desire or consent to opt for arbitration.
  3. Limited precedential value: It is observed that the decisions reached by the WIPO FRAND ADR model do not have any direct impact on future disputes. This is alarming because it could lead to inconsistency in the interpretation and application of the FRAND principles.

CONCLUSION

The WIPO FRAND ADR model has the potential for resolving IP disputes efficiently. Considering its approach for having a unilateral request model, expertise towards resolving FRAND-related IP disputes, and tailored approach for combating complex challenges associated with the SEPs, it is a well-structured model.

There is no specified legislative umbrella for resolving SEP and FRAND licensing issues. These types of disputes are mostly resolved by the Indian judiciary based on prevailing statutes and considering the facts of each case. However, both SEPs and FRAND licenses play a fundamental role in technology advancement, the WIPO FRAND ADR model is surely doing a good job at resolving these multifaceted subjects suitably.

Author(s) Name: Kinnari Solanki (Mumbai University ,GJ Advani Law College)