Jeff Kichaven writes on mediation for the International Risk Management Institute. First published on IMRI.com.
An “Urban Legend” is commonly defined as “an often lurid story or anecdote that is based on hearsay and widely circulated as true.” Like the one about alligators living in the sewers—although everyone has heard it, it’s just not true.
But what about the one that says, “To mediate a patent case, a mediator has to be an expert in science and technology”? The proposition is cited commonly enough that it bears exploration. Is that an Urban Legend, too? Is it based on hearsay? Or does it reflect lawyers’ actual experience in the mediation of patent cases? And, should it be a patent lawyer’s most important criterion in mediator selection?
To shed light on these questions, I spoke with 20 partners in major law firms with national patent litigation practices. Their views can be easily synthesized: A mediator must be able to understand the technology about as well as the lawyer is able to explain it. And a mediator needs to understand a whole lot of other things as well.
In patent cases, as in all others, the mediator begins not knowing about the facts of the dispute—or about the people involved. So a mediator must be able to absorb what the lawyers teach her, and then participate intelligently in the discussion. But a mediator would be a fool to try to compete with science and engineering “pros” on their own turf.
Lawyers are taught that only rarely should they confront a technical expert head-on in cross-examination. So a mediator should not confront an expert head-on in a mediation. It’s almost impossible for a mediator to convince a “pro” that his opinion is “wrong.” So, wisely, the lawyers I surveyed neither expect mediators to undertake that task, nor select mediators based on a brazen willingness to try.
Trust over Technical Knowledge
For the patent mediator, as for every other, the key to effectiveness is instead whether the participants trust him to help them. When the parties trust the mediator, they become remarkably open to new ways of thinking and progress in their negotiations. The key to trust, in turn, is not technical mastery. Sure, the lawyers I surveyed expect the patent mediator to have some fluency with patent law and their clients’ business realities. But the key to trust, they say, is how hard the mediator appears to be working to understand and help. Has the mediator mastered the basic vocabulary of the dispute? Does the mediator care what happens? Has the mediator worked hard to learn as much as he can?
Lawyers mentioned these factors over and over. Almost all of them immediately followed with a resentful comment about a settlement officer “who had not even read the papers.”
Of course, very few patent litigators are rocket scientists by training, either. They reported a wide range of undergraduate majors, mainly in the humanities and social sciences. Most of them said that their ability to connect with judges and juries is generally more important than agility with technical jargon. Indeed, they emphasized the need to get away from technical jargon and describe inventions and processes in terms that judges and juries understand. Hence, the need for mediators to be able to understand as well as lawyers are able to explain. A mediator can tell a lawyer whether she is communicating well or poorly. The ability to communicate with a mediator is generally a good proxy for the ability to communicate with a judge or jury, and so mediation is a good forum to test a lawyer’s ability to communicate about her case. Some lawyers complained that a mediator with too much technical background fails to serve as that good proxy, fails to see the big picture, and spends too much time on minutiae rather than on the facts that are likely to have an emotional tug on a trier of fact.
The question posed by the most insightful of these lawyers, though, was whether they give the mediator a fair chance to serve as that proxy, and themselves a fair chance to benefit from that service. The root of the problem? A self-confessed inadequate preparation for mediation.
Compare the typical lawyer’s preparation of a mediator to that same lawyer’s preparation of a judge to rule on a motion for summary judgment.
In court, you know that an actual adjudication is on its way, so you prepare the judge to the hilt. Lawyers rigidly adhere to a briefing schedule, provide detailed expert reports, and furnish visual aids. The work is so polished, you could send it to Cooperstown. And, you charge the client accordingly.
Mediation is different, especially when it is court-ordered. When it is compelled and not voluntary, lawyers fear that the other side is not ready to settle, will not take the mediation seriously, and that an impasse will quickly result. Of course, this may be a projection of one’s own state of mind as well. Since the kind of preparation you furnish a judge is expensive, and in mediation the inevitability of resolution is uncertain, you may logically ask, “Why bother?” So, lawyers’ actual preparation for mediation has become more casual. Briefs get delivered late, and without the supporting material that judges get.
Often, there is very little information about damages, it just isn’t available until right before trial. But the absence of this information makes it hard to settle. Lawyers express frustration with this casual preparation, and its consequences, but understand the financial constraints that lead to it.
The result is a mediator who cannot possibly be up to speed on the technical issues. The parties have not given the mediator the necessary tutorial.
Picking the Right Mediator
How can you get out of this box? Better communication among counsel can play a role. If you are going to take the mediation seriously—and want to be sure that your counterparty will, too—do some planning. Pick a mediator in whom you have confidence, not someone assigned to you from a list. Agree on a briefing schedule that gives the mediator time to read and digest the information. Agree on the information to be provided to the mediator: expert reports, visual aids, damages analyses. If you need to give the mediator an advance technology tutorial, do it.
Perhaps more importantly, lawyers can pick mediators who can go beyond the technology and focus on the human issues that are often the keys to settlement. In patent cases, the three most common are: The Skittish Inventor, The Large Plaintiff with Small Damages, and the Small Defendant That Can’t Afford to Move On.
The Skittish Inventor
This inventor has toiled for years without commercial success, believes that her first marketable idea has been ripped off by a big company, has sued, and is terrified about settling without a big payday. She fears that she will never have a good idea again! But on the merits, her case has problems. Can your mediator help this plaintiff understand the risks and uncertainties of litigation and, more importantly, model the confidence and assuredness that will help this plaintiff to accept a reasonable deal and move on with her career?
The Large Plaintiff with Small Damages
Many infringement suits involve large corporate plaintiffs suing smaller entities who use allegedly infringing technologies, but have not made a lot of money doing so. Even so, these large plaintiffs typically spend a lot of money prosecuting their cases. In settlement, they would like to recoup their attorneys’ fees, plus something on account of damages. There are only two problems.
First, the defendant typically doesn’t have the money. Second, if the defendant has an insurance policy in play, the insurer typically won’t value the plaintiff’s case to be worth the plaintiff’s attorneys’ fees, because the defendant’s sales and profits have been small. Can your mediator help this plaintiff to view its attorneys’ fees largely as a cost of doing business, and to value an injunction, a licensing agreement, or the other nonmonetary relief that patent settlements commonly entail?
The Small Defendant that Can’t Afford To Move On Many smaller defendants are afraid to settle with larger plaintiffs on terms that require them to abandon the technologies that are the foundation of their businesses. They can’t afford to develop something new. But, if they have an insurance policy in play, they can afford to defend the suit, albeit on the insurer’s dime. The result is particularly wasteful litigation. Does your mediator understand how to engineer a “parallel settlement,” in which the insurer pays for a release of claims against its insured, and the plaintiff then uses those sums—in a separate and independent agreement—to pay the defendant to agree, among other things, not to infringe in the future? The defendant can then afford to develop new technology, and the settlement does not run afoul of the insurer’s prohibition against paying money to its own insured.
These broader inquiries will help patent lawyers pick the mediators best able to help them get these complex and expensive lawsuits settled. Then, perhaps the story about the patent case that took forever, cost a fortune, and wrecked companies and careers will become an urban legend as well.
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