Resolving IP Disputes – Litigation or ADR?

Resolving IP Disputes – Litigation or ADR?

Intellectual property is more important to businesses than ever, with many entities relying on it almost entirely. When that property is compromised, it can cripple a business as operations grind to a halt. Even in corporations where IP is not their sole asset, these issues can still result in heavy losses as their position in the market is compromised.

Regardless of the entities involved, there are ways to resolve IP issues without going through a lengthy litigation process. Alternative dispute resolution (ADR) can be highly beneficial to parties involved in these disputes, whether they involve copyrighted material, trade secrets, patents, or trademarks.

On the other hand, litigation is often necessary to achieve certain objectives when it comes to protecting intellectual property. Choosing whether to use ADR or court litigation is a function of the type of issue at hand and the parties involved in the dispute.

Objectives of Litigation

Litigation is used to achieve a win-lose result. One party is awarded damages, and the other has to pay out. Obviously, this is not conducive to a continued business relationship with the other party. However, in scenarios where the other party is not willing to submit to mediation or arbitration proceedings, filing a lawsuit is typically the only recourse.

In addition to attempting to force the other party into paying damages, litigation also sets a public precedent, which means that the decision made in the court can be applied to future disputes of a similar nature. For instance, a claim made against your rights to some aspect of your trademark, if defeated in court, would prevent further attacks of that nature in the future.

That said, litigation is highly expensive, and since the proceedings are a matter of public record, it can compromise trade secrets and tarnish your reputation. It’s also highly risky since there is no guarantee that you’ll win the case.

Advantages of ADR

Alternative dispute resolution, such as arbitration and mediation, can resolve sensitive IP disputes at far less cost and with far less risk than litigation. The advantages it offers include:

  • Typically less time consuming or complex than litigation in court
  • Usually far less expensive than filing a lawsuit
  • Privacy of ADR allows entities to protect trade secrets
  • Multiple methods of dispute resolution allow flexibility in resolving IP issues
  • Business relationships can be preserved as disputing parties reach a mutually beneficial solution

Settlements made in ADR can be either binding or nonbinding, but the ultimate goal is to help disputing parties reach a solution out of sight of the public eye and potentially preserve beneficial relationships where they exist.

ADR Limitations

On the other hand, ADR cannot set a publicly binding precedent, so in cases where one party wishes to prove the legitimacy of a claim related to their intellectual property, litigation would be the only recourse. In addition, ADR only works if both parties consent to it. If one is resistant, alternative dispute resolution can be a long, drawn out, and expensive process (if it’s even possible at all).

When deciding whether to use ADR or litigation in an IP dispute, it’s best to consult with an experienced attorney. Hart David Carson, LLP, can provide legal counsel and representation when it comes to protecting your intellectual property.

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