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An intellectual property dispute can often be settled to the satisfaction of all parties through mediation or arbitration. These two methods of resolving differences without a lawsuit provide a confidential arena to protect trade secrets or inventions that may be the basis of an intellectual property dispute. Arbitration or mediation is also less costly that a protracted legal battle, where attorney fees can be substantial. In many jurisdictions, arbitration is mandatory before courts will accept a lawsuit over intellectual property rights.
Mediation involves an unbiased third party who helps both sides come to a mutual agreement. The opponents in the intellectual property dispute select the mediator, a process unavailable in a court proceeding before a judge or jury. A mediator who has expertise in the area of the dispute can understand the technology or nuances of the argument to determine if a patent is valid or the inventor's rights have been infringed upon.
Intellectual property rights cover trademarks, copyrights, and trade secrets. A dispute may occur within a business relationship that concerns licenses, franchises, or research and development. Those commercial relationships might remain intact if an intellectual property dispute can be resolved by mediation or arbitration instead of a lawsuit. The process also provides flexibility for the terms of an agreement.
Many countries require an arbitration clause in patent laws. It is often referred to as an "alternative dispute resolution" measure that must occur before a court will get involved. Arbitration precludes lawsuits that might be filed in several jurisdictions where infringements on intellectual property have occurred.
An arbitrator's decision is binding. International treaties and international law commonly provide enforcement of an arbitration decision if it affects a foreign country. Once an intellectual property dispute is settled through arbitration, it prevents others from using or profiting from the invention or product.
Alternative dispute resolution typically takes less time than winding through the court system. A long legal fight could disrupt business and may make the invention obsolete by the time a decision is rendered. For example, technology changes so rapidly that a newer invention could be developed while waiting for a court date.
Sometimes a party to the conflict prefers that an intellectual property dispute be decided by a judge or jury. This typically happens when the person holding the patent, or the person accused of infringement, wants public vindication of his or her rights. Prevailing in court might be necessary to protect the credibility of a product that has been developed or a license to distribute that product.