Geneva, March 28, 2013
An International Survey on Dispute Resolution in Technology Transactions conducted by the WIPO Arbitration and Mediation Center reveals that less than 2% of technology agreements lead to formal dispute proceedings, but that these proceedings are generally costly and time-consuming.
The survey report presents the practices and motivation of almost 400 survey respondents from over 60 countries, and assesses the current use and comparative merits of Alternative Dispute Resolution (ADR) methods for resolving technology-related disputes. The survey report also offers observations on dispute resolution best practices based on analysis of the data compiled and interviews conducted with the survey.
“The survey confirms that parties to technology-related agreements are worried about the high costs and lengthy timelines of disputes, especially in an international context,” said WIPO Director General Francis Gurry. “While court litigation remains the default path, survey responses indicate that ADR offers attractive options in terms of cost and time, as well as enforceability, quality of outcome, and confidentiality,” he said.
The survey conducted by the WIPO Center captured a global assessment of technology disputes and ADR, in particular mediation and arbitration, by comparison to court litigation. The survey respondents are based in Europe, North America, Asia, South America, Oceania, the Caribbean and Central America, and Africa (in order of number of responses received), working for law firms, corporations, research organizations and universities, and government bodies, or self-employed.
Respondents indicated that they spent more time and incurred significantly higher costs in court litigation than in arbitration and mediation. Court litigation in home jurisdictions took on average approximately 3 years and court litigation in another jurisdiction took on average 3.5 years. The legal costs of court litigation in home jurisdictions amounted on average to USD 475,000, and the legal costs of foreign court litigation to slightly over USD 850,000. On the other hand, mediation took on average 8 months, and 91% of respondents stated that costs of mediation typically did not exceed USD 100,000. Arbitration took on average slightly more than 1 year and cost on average just over USD 400,000.
The survey report highlights the frequent cross-border aspect to technology transactions today. More than 90% of respondents concluded agreements with parties from other jurisdictions, with more than a quarter indicating that some 60% of their agreements involved parties from other jurisdictions. In the area of patents, 80% of respondents concluded agreements involving parties from other jurisdictions concerning technology patented in at least two countries. (Annex 1 )
Of the 2% of technology agreements that gave rise to formal dispute proceedings, disputes most often arose in relation to licenses (25% of respondents), followed by research and development agreements (18%), non-disclosure agreements (16%), settlement agreements (15%), assignments (13%), and merger and acquisition agreements (13%). (Annex 2 ) For contractual as well as non-contractual disputes, patent issues arose nearly twice as often as copyright or know-how issues.
As their number one priority when negotiating a dispute process, respondents identified costs, followed, in close connection, by time. Enforceability ranked as a further consideration among users of court litigation and arbitration clauses. Factors following at some distance included quality of outcome, neutral forum, confidentiality and desire for a business solution. (Annex 3 )
Survey responses show the most common mechanism used to resolve disputes to be court litigation in respondents’ home jurisdiction, followed by court litigation in a foreign jurisdiction, and then by the ADR mechanisms of arbitration, mediation, expedited arbitration, and expert determination. Responses also show a divergence between the indicated top priorities of cost and time on the one hand and the means employed to resolve disputes on the other hand, where respondents typically spent more time and incurred significantly higher costs in court litigation than in arbitration and mediation. (Annex 4 )
The survey report also translates the responses into a number of observations that may assist parties’ adoption of informed dispute resolution policies.