I recently met with a group of entertainment attorneys (like myself) here in Los Angeles, some of whom were also considering entering the arbitration field. A significant number of these attorneys did not understand that copyright infringement and other intellectual property disputes can be arbitrated or mediated --whether pursuant to an arbitration provision in an agreement or by post-dispute agreement, and the results can be binding on the parties, albeit not to others.
The purpose of this article is to review private rather than judicial or governmental (such as the USPTO or the Copyright Office) methods of dispute resolution in the intellectual property area; the goal is not so much for the benefit of the readers of this publication, most of whom are aware of the law in this area, but rather might be useful information in guiding attorneys or their clients or rights holders to alternative means of resolving their disputes.
A. I will first consider the use of arbitration.
In preparing these comments I have assumed that, if the parties are proceeding under an arbitration agreement in a contract, the arbitration agreement between the parties is sufficiently broad to cover any type of dispute, e.g. “Any controversy or claim arising out of or relating to this agreement, the breach thereof and/or the scope of this arbitration provision shall be settled by arbitration…”
I don’t want to overload these comments with citations, but in view of the importance of the Courts’ positions a few citations may demonstrate my point.
Prior to the present posture of the U.S. Supreme Court, that Court and others disallowed non-judicial resolution of intellectual property cases under several approaches. Some Courts held that because the rights were created by Federal statute any dispute respecting either the validity of or the infringement of the rights are subject to the exclusive jurisdiction of the appropriate governmental agency or in the final analysis the Federal Courts. A second approach, taken by a couple of Courts had been that arbitration was inappropriate because the procedure was incomplete, i.e. if interim measures were required the parties would have to go to court, but this is clearly not a view now held by the Courts generally. .Another approach was a public policy position, e.g. (i) any decision should be public (not private) because of the impact on the rights or (ii) only the Courts should be determining such disputes because protection of all intellectual property rights (copyright, trademark, patent and rights pertaining to unfair competition) involve, in one way or another, antitrust considerations. However in Mitsubishi Motors Corp. v Soler Chrysler-Plymouth, 473 U.S. 614 (1985) the Supreme Court upheld arbitration regarding claimed intellectual property rights notwithstanding that the case raised statutory antitrust questions. Most recently, in14 Penn Plaza v. Pyett, 556 U.S. 247 (2009), .a case that surprised some of us in the labor field, Justice Thomas, writing for a 5-4 split Court, upheld the enforceability of an arbitration agreement between a union and employer (which required all ADEA claims to be arbitrated between the employer and the company) , thereby overturning earlier cases which preserved to employees their rights to go to Court for ADEA and other civil rights violations ; the agreement between union and company required arbitration of all employee grievances; the union determined not to prosecute employee’s claim but said he could on his own, at his expense, and although this raised questions of duty of fair representation, it shows how far the Court has moved in upholding arbitration provisions of rights created under federal statutes.
The leading (and one of the few) copyright cases was Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F. 2d 1191 (7th Cir.1987) dealing with a dispute over an exclusive license. The Court discussed the issues of public policy and copyright monopoly but followed Mitsubishi in upholding the arbitration agreement and, further, held that an arbitrator may determine the validity of the copyright. Again, in Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108 (2d Cir. 1993) a Court upheld an arbitration award involving an issue as to ownership of copyrights as between the parties. An earlier case (Kamakazi Music Corp. v. Robbins Music Corp., 684 F.2d 228 (2d Cir.1982) upheld an arbitration award of infringement. As noted above, these types of cases determine the rights of the parties, but are not binding on others.
My emphasis in these comments is the area of copyright where arbitrations are upheld even though there is no statutory authority for use of arbitration. Again, in the case of trademarks, as in the case of copyright, there is no statutory authority for arbitration of disputes, but trademark validity and infringement cases may be arbitrated in the same way as copyright cases. In the case of patents, there is a statutory provision that provides that both infringement and validity may be arbitrated but the Award is not enforceable until notice of it is given to the USPTO; again the statue is clear that the award is binding only between the parties.
Of course there are the usual advantages to using arbitration in intellectual property cases; for example (unless a public decision is required for precedent or whatever) the privacy of an arbitration may be desired; also, in selecting the arbitrator, the parties can have an upper hand in getting someone who is an expert in the area.
Finally, in the case of international arbitrations between nationals of different countries that are signatory to the New York Convention, the Convention requires recognition of arbitration awards rendered in any signatory country in the Courts of any other signatory country; hence arbitration awards may be more easily enforced than judgments which are rendered in a signatory country when an effort is made to file and enforce that judgment in another signatory country; see Chapter 2, Federal Arbitration Act, 9 U.S.C. Secs.201ff.
The foregoing background upholds the inclusion of arbitration clauses in intellectual property agreements; it also suggests that parties may benefit by entering into post-dispute agreements in other appropriate situations where their agreement is silent as to arbitration.
B. But what about mediation?
Clearly parties to a disputed agreement or to any other dispute are free to seek mediation to resolve the dispute; there is no restriction whatsoever (at least in the U.S. and to my knowledge elsewhere) on attempts to mediate. More importantly, if agreement is reached, and reduced to writing, that agreement is enforceable in any appropriate U.S. court.
But what about international commercial disputes? Although a mediation settlement agreement in a commercial dispute will not be enforced under the New York Convention, once that agreement is reduced to an arbitration award, it can be introduced and enforced in other countries under the terms of the New York Convention .It seems to me that the best practice,(if agreement is reached) to evidence the settlement by a written agreement, thus satisfying U.S. laws such as the California law regarding enforcement of agreements; then I recommend following that up with a stipulated arbitration award (or possibly conciliation award) to be signed by the parties and the mediator acting, for that sole purpose, as arbitrator. In fact, in the California statues dealing with arbitration and conciliation of International Commercial Disputes that very procedure is allowed and recommended. See CA Code Civ.Proc., Sections 1297.301ff. I presume the same approach might be considered in the U.S. to allow for confirmation of the Award, rather than filing to enforce the agreement, but I leave that discussion to the litigators.
Dixon Dern is a practicing attorney and additionally acts as both an arbitrator an mediator and in both labor and commercial matters, with an emphasis on entertainment, intellectual property and labor/employment matters; he and has arbitrated numerous entertainment, commercial and labor matters since 1967; he is a neutral Arbitrator on the Producers/Writers Guild of America and Producers/Directors Guild of America panels and for American Arbitration Association. He serves as a neutral Arbitrator on the Independent Film & Television Alliance (American Film Market) Arbitration Panel and is a member of IFTA’s Arbitration Advisory Committee. He has also been a mediator in a number of business and entertainment related cases and is currently serving on the Court of Appeal, 2d District Mediation program. He is an Adjunct Professor at California State University, Dominquez Hills, teaching in the Negotiation, Conflict Resolution and Peace Building (NCRP) Program. In his role as a member of the Board of the State Bar of California, in 1985-86 he helped draft and was instrumental in securing legislative support that led to the Dispute Resolution Programs Act (DRPA) of 1986.