Mediation has been gaining momentum both domestically in Ukraine and internationally. Clients from a number of industries seek assistance through mediation, which applies to intellectual property, too. As the law develops, and so does the use of alternative dispute resolution tools, we are happy to share our perspective on how mediation in IP has become a game changer.

Background

Mediation serves as an alternative to conventional dispute resolution (practised out-of-court and on court’s own initiative). It offers confidential, time- and cost-efficient dispute management enabling parties to safeguard their business relations and name.

In Ukraine, the year 2019 has proved busy for mediation, with a growing demand for mediation services.

Due to IP expansion overseas, IP-related disputes arising in relation to trademarks, patents and industrial designs can take place in many jurisdictions. In these cases, mediation can help save on legal fees in all relevant jurisdictions where clients’ rights and interests have been breached. However, to ensure effective use of this remedy, we recommend familiarising with some of is quirks and features.

Mediation developments in Ukraine

Ukrainian laws do not prohibit mediation per se. It is provisioned inter alia in the Civil Code and the Law of Ukraine “On Free Legal Aid”, and yet is based on a caveat with ambiguous wording, “subject to applicable laws”.

Back in 2015, pro-mediation attempts were made, followed with an introduction of a draft law on mediation No. 3665 that was later rejected. Although being relatively balanced, the law had certain drawbacks. For starters, it failed to include a clear and feasible procedure for recognition and enforcement of settlement agreements concluded upon mediation but merely declared their binding nature conferring a right on parties to legal remedy “in accordance with the procedure established by law”. It further introduced an age cap (at least 30 years old) for those could be eligible to apply to practice mediation.

Another initiative to adopt mediation laws was reflected in a draft law No. 10425 later in 2019 that was not supported by the Parliament. The law had little in common with best mediation practices and posed a burden on mediation professional service industry. Among others, it retained the minimum age limit of 30 and proposed to establish a self-governing body vesting the latter with certification and control authorities.  It also suggested that mediation should be binding.

In practice, the lack of mediation regulation has posed uncertainty. This pertains to recognition and enforcement of mediation agreements and to types of matters that, in cases of disputes, can be resolved through mediation.

Nonetheless, we believe that full potential of mediation has not yet been unlocked. As it currently stands, mediation in Ukraine mainly replaces the term of “pre-trial negotiations”, allowing parties to appeal against mediation agreements in court, and has little to do with mediation practices in developed legal jurisdictions.

At the same time, Ukraine has made a little but right step in a mediation saga by signing the United Nations Convention on International Settlement Agreements Resulting from Mediation on August 7, 2019. The Convention seeks enforcement of international mediation agreements over commercial disputes, without courts’ assistance.

The Convention is indeed a forward-looking international instrument, but its validity remains an issue. It will enter into force six months after deposit of the third instrument of ratification, acceptance, approval or accession, and for Ukraine – after its ratification by the Ukrainian Parliament.

Background and realities

In the early 1990s, the World Intellectual Property Organization (WIPO), whose mission has been to develop a balanced and effective international intellectual property system, began to develop a mechanism for rendering services on alternative resolution of intellectual property disputes between private individuals. Presently, WIPO Arbitration and Mediation Centre, established in 1994, advises parties and their lawyers on methods to resolve IP disputes, as well as provides access to alternative dispute resolution procedures, including mediation.

Nowadays, mediation becomes an increasingly popular alternative of IP disputes resolution due to the following:

  1. A success of mediation depends on parties’ continuous efforts and involvement in the process.
  2. A confidentiality of the process contributes to its openness and transparency.
  3. In mediation, parties focus on their business interests, which affects not only past relations but also future interactions.
  4. Mediaton enables quick resolution of an IP dispute without harming parties’ reputation.
  5. The mediation process takes place under the guidance of an impartial third party, a mediator, whose role is not to resolve a dispute but to help parties do so on their own.

It should be noted that not all IP disputes are subject to mediation. In cases of intentional, unfair infringement of intellectual property rights, piracy practices, parties’ cooperation seems unlikely. Mediation may also be quite inappropriate in cases where a party believes that there are good chances to win the case in court, or where parties seek an independent opinion regarding the conflict, or where the purpose is to create a precedent, or to seek public justification.

On the other hand, mediation serves as an attractive alternative in cases where parties seek the following:

  • reduction of dispute resolution costs;
  • control of dispute settlement;
  • quick settlement;
  • confidentiality of the dispute subject matter and other details;
  • maintenance or development of parties’ business relations.

WIPO Arbitration and Mediation Centre provides specialized services on settlement of IP disputes, that is, disputes relating to intellectual property and its commercial use. These would include patent licensing, know-how, trademarks, franchising contracts, computer contracts (i.e. agreements encompassing full range of contracts for purchase, sale, lease and licensing of hardware and software), multimedia contracts, R&D contracts, mergers and acquisitions that relate to intellectual property rights, and many other matters.

To start a mediation, parties should submit a mediation request and conclude a mediation agreement, The next key point is to select a mediator. A task of a mediator is to use correctly both the effective tools, already tested on practice, and clear but flexible mediation process, which provides a high probability of working out of a mutually beneficial solution. Сurrently, there are several organizations in Ukraine that train professional mediators, who are ready to effectively participate in all types of mediation.

Conclusion

IP is an innovative field that contributes not only to the progress, but also to an economic development. Commercial risks emerging from IP breaches can cause significant damages to clients’ businesses. Mediation proves to be a financially attractive alternative to litigation and provides quick settlement of the IP related disputes. Besides, given the recent signing of the United Nations Convention on International Settlement Agreements Resulting from Mediation and provided its prompt ratification in Ukraine, there are good prospects for efficient use of mediation in the near future.

Serhiy Yaroshenko, senior associate, and Anastasiya Sinitsa, patent attorney, exclusively for “Yurist & Zakon”