Intellectual Property Mediation Conference

The EU Mediation Directive

Alicante, 29 May 2014

Tackling the challenges to mediation, especially in IP

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Giuseppe De Palo

President, ADR Center (Rome, ITALY) Professor of Alternative Dispute Resolution Law & Practice, Hamline University School of Law (St. Paul, USA)

Obstacles to IP Mediation

• Obstacles to IP Mediation are, by and large, the same obstacles to all mediations

• Savings of time and costs are high on average,

imagine how much they would save on complex IP disputes

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DIRECTORATE GENERAL FOR INTERNAL POLICIES

LEGAL AFFAIRS

‘Rebooting’ the Mediation Directive: Assessing the Limited Impact of its Implementation and

Proposing Measures to Increase the Number of Mediations in the EU

1) Update the “Costs of Non Mediation” survey

2) Analyze the legislation implementing the Mediation Directive in a number of Member States

3) Propose legislative measure to increase the use of mediation across the EU

4) Propose non legislative measures to increase the use of mediation across the EU

The EU Parliament’s Study Goals: Resolving the “EU Mediation Paradox”

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Time and Cost Savings: Break-Even Point in the EU (source: Quantifying

the costs of not using mediation, 2011)

Time Savings

Cost Savings

-€ 4,000.00

-€ 2,000.00

€ 0.00

€ 2,000.00

€ 4,000.00

€ 6,000.00

€ 8,000.00

2% 3% 23% 25% 40% 43% 44.5% 45% 50% 75% 90%

Cos

t Sav

ings

Success Rate of Mediation

-100

0

100

200

300

400

500

5% 8% 8.5% 9% 10% 19.5% 20% 25% 30% 40% 40.5% 50% 75% 90%

Tim

e Sa

ving

s (d

ays)

Success Rate of Mediation

19% Success Rate

24% Success Rate

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High Performance Even at Low Success Rates

Savings of successful mediation are much greater than extra costs (i.e., mediation then litigation) when mediation fails

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1203 Total Responses From Across the EU

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• Questionnaire created and sent to highly selected experts to test the clarity of the format and the questions

• Questionnaire published online and sent to contacts and other highly recognized mediation organizations

• Questionnaire available online for three weeks before the responses began to be analyzed

• 816 responses were collected for the study, an additional 387 were collected after the study period had closed

• The majority of respondents identified themselves as mediators, the number of lawyers who responded was also high

Estimated Annual Number of Mediations in the EU

Over 10 000: DE, UK, IT, NL Between 5 000 and 10 000: HU, PL Between 2 000 and 5 000: BE, FR, SL Between 500 and 2 000: AT, DK, IE, RO, SK, ES Less than 500: BG, HR, CY, CZ, EE, FI, GR, LV, LT, LU, MT, PT, SE 8

Estimated Annual Number of Mediations in the EU

Over 10 000: DE, UK, IT, NL Over 200 000 Italy A bit more than 10 000 Germany United Kingdom Netherlands

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Average Time of a Dispute in Days

566

Average time of litigation in the EU

326

Average time of mediation then litigation (with 50% mediation success rate)

212

Average time of mediation then litigation (with 70% mediation success rate)

Savings 240 days

Savings 354 days

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Average Cost of a Dispute in Euro

9 179

Average Cost of Litigation in the EU

7 960

Average cost of litigation if trial is preceded by succesful mediation in 50% of the cases

6 124

Average cost of litigation if trial is preceded by succesful mediation in 70% of the cases

Savings 1 219

Savings 3 055

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1) Strong confidentiality protection 2) Judges pro-activity 3) Easy enforceability 4) Financial incentives 5) Lawyer duty to inform clients 6) Robust mediator accreditation systems

Legislative Measures That Have Not Made Mediation Happen

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The Single Most Effective Legislative Measure

Mandatory mediation in certain cases

Mandatory mediation info sessions

Financial incentives to mediate

Require counsel to inform parties of mediation

Economic sanctions

Judges power to order mediation

Mandatory mediation with opt-out

270

212

188

142

105

90

85

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The Single Most Effective Legislative Measure

Mandatory mediation in certain cases

Mandatory mediation info sessions

Financial incentives to mediate

Require counsel to inform parties of mediation

Economic sanctions

Judges power to order mediation

Mandatory mediation with opt-out

270

212

188

142

105

90

85

297

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Going Beyond Voluntary Mediation….

I will drink only if someone leads me to water!

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Fight Flight

The Two «Fs»

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Will a «Culture of Safe Driving» Alone Do it?

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1) Introduce “mitigated mandatory mediation” in Mediation Directive and other EU legal instruments on ADR (in force and being proposed), albeit on a temporary basis, as a trial. 2) Insist that the MS accept the “Balanced Relationship Target Number” theory (given the poor results of all other pro-mediation legislative measures, alone or combined, it should lead the MS to do the same as above)

Legislative Measures to Solve the «EU Mediation Paradox»

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Each MS must determine its own BRTN = minimum percentage of cases to be mediated to arrive at “balanced relationship” with that of litigated cases.

Each MS free to choose the appropriate policy tools to reach its BRTN (mandatory mediation, information sessions, financial incentives etc.)

Failure to set and reach BRTN = failure to comply with the Directive

Art. 1 of the Mediation Directive The objective … is to facilitate access to alternative dispute resolution and to promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a balanced relationship between mediation and judicial proceedings.

The «Balanced Relationship Target Number» Theory

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Recent Trends in Favor of Mandatory Elements in Mediation

• New York County Commercial Division Mandatory Mediation Pilot (“every fifth case”) - expected by the end of Spring 2014

• French Senate Report mandatory mediation trial programs – February 2014

• UK Mediation Information and Assessment Meetings (MIAMs) – April 2014

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«The Emperor Has No Clothes!»

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