Collaborative Law and Intellectual Property Cases

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Guest Blog Post by Tamera H. Bennett

Thank you to Victoria Pynchon for allowing me to be a guest blogger. In preparing to write the post I had several topics going through my mind, but I thought it would be interesting to pitch this topic out to the fantastic readers of this blog for some feedback.

This may be the first blog post that asks more questions than it answers.

Is the IP arena ready for the “Collaborative Law” process?

You may be asking what is “Collaborative Law?” A colleague of mine that has been in a trademark transactional/litigation/mediation practice for over 25 years did not know what I was asking about when I posed the same question.

“Collaborative Law” is an approach to resolve disputes by removing most, if not all, of the court house adversarial nature of litigation. It began in the family law arena and numerous states now have statues codifying the process for family law matters.

The ABA states:

The process is a structured, voluntary, non-adversarial approach to resolving disputes. The process is based on cooperation and team work, full disclosure, honesty and integrity, respect and civility, and parity of costs. The collaborative process enables individuals, families, businesses and organizations to maintain control over their relationships with others by empowering them with the ability to peaceably resolve their disputes.

In Texas, after one party files for divorce, the parties may agree to move into the Collaborative Law process. At that point the parties enter into a participation agreement outlining how they will behave and what is expected of them.

Below are the typical points to the participation agreement you will find in most statutes:

1.      The lawyers will not litigate the case. If the process fails, and litigation is the only recourse, the original lawyers must withdraw and the parties must retain new lawyers (the “disqualification” provision);

2.      Neither party will take advantage of mistakes by the other side;

3.      The parties will freely disclose all pertinent information and will not hide any material facts;

4.      What is said in the settlement meetings remains confidential;

5.      All experts will be neutral, and hired jointly by both parties and their children; and

6.      Everyone will behave courteously and in good faith.

The process should help eliminate that “hide the ball” and bury the other side in discovery mentality. One of the reasons it has taken off so successfully in family law is because there is a pre-existing relationship between the parties. In the event there are children impacted by the divorce, there are also good reasons to play nice because of the continued relationship of the parties.

Back to my original question.  Is the IP arena ready for the “Collaborative Law” process?

Although there are more than three types of IP disputes, I am going to generalize them into three categories:  Infringements, Inter-related Parties/Joint Owners, and Contract Disputes.

1.  Infringement Actions: My gut tells me that in unrelated third party infringement actions we are not ready for the Collaborative Law process. Would an alleged infringer readily come to the table to settle the dispute? In this scenario, there would have to be an admission of infringement and the only issue remaining would be damages before I believe the parties would even come to the same table.

Would an alleged infringer really walk in the door with all of its accounting records and allow a jointly approved expert analyze them for a determination of profit? Probably not.

What happens to statutory damages and attorneys’ fees? By the nature of electing the Collaborative Law process has the plaintiff given up statutory damages and attorneys’ fees (when appropriate) unless they then move out of Collaborative Law and back into the litigation system? I think so.

Could we move the owner of the copyright/trademark/patent and the alleged infringer into interest based talks as opposed to position based arguments?

2.  Inter-related Parties/Joint Owners: This is an area where I believe the IP practice field is ready for Collaborative Law and could embrace the process for helping their clients.

How often do we face the dispute of two or three business owners wanting to remove a partner/shareholder or wanting to dissolve the business completely? In the division of assets the question becomes who really owns the copyrights, trademarks, patents, trade secrets, the website, the domain name, and on and on.

Typically one or more of the shareholders wants to continue the business and needs certainty as to the assets he controls before he moves forward. The scenario begins to sound more like a divorce, and often that is exactly what we tell our clients. Like a divorce, there was a prior relationship and like a divorce there are “kids” of the marriage that will need to be taken care of and raised after the fact.

If there is no truly “bad actor,” I believe Collaborative Law will work well in inter-related disputes. The books and records are already available to all the parties. The parties may need to hire several joint experts: a legal expert to analyze the ownership of the IP and a valuation expert to determine the value of the IP and the business as a whole. In the family law field, there is also a communication coach/expert to help the parties express themselves and work together. This could also be an option in IP/business disputes.

3.      Contractual Disputes: I am still undecided on where I fall on contractual disputes. Like a divorce, there is a prior relationship and most likely a continued desire to work together in the future. You are more likely to have a balance of power issue in contractual disputes than in inter-related parties dispute. In a licensee/licensor relationship, if the licensor files suit because there is breach of contract related to royalties, will the licensee simply hand over the books and records and agree to one expert’s report?

Can you move a licensee and licensor into interest based talks? It seems more attainable in a contractual dispute than in an infringement action. Again, it is probably only feasible if the parties will continue to have a relationship after they reach a resolution.

I have asked more than I have answered. When I first learned about Collaborative Law three years ago, I thought it could be an amazing process for areas beyond family law. I would enjoy your feedback on whether or not you think it could work for our IP clients.