Technology disputes are often quite complex and often require a quick and cost-effective resolution. Some organizations adopt specific rules for technology arbitrations, while others rely on their comprehensive rules with expedited procedures, led by an experienced arbitrator with expertise and management skills to control the procedure and work with the parties to implement a flexible resolution process, that suits the dispute.
The rules and the provider of the arbitration are usually specified in the arbitration clause in the transaction documents. However, the parties may agree on the practices they wish to incorporate into their arbitration. This article addresses best practices that parties should consider in the context of the JAMS Comprehensive Arbitration Rules and Procedures, but which may be incorporated into any provider’s rules with the consent of the parties and a knowledgeable arbitrator. (Draft arbitration clauses for technology transactions will be covered in a future blog.)
Remember, arbitration gives you the power to design your own process. Work with the referee on implementation.
- Use one arbitrator instead of three, except in exceptionally large cases that justify the need for three decision makers. Three heads may be better than one, but schedules will be more difficult to coordinate between counsel and three arbitrators, a problem when quick resolution is important. On the other hand, when dealing with bet-the-company stakes or the precedent-setting interpretation of licenses and contracts, three arbitrators provide protection against one arbitrator being wrong. Arbitrators benefit from advising each other on difficult, technical cases.
- Select a lead arbitrator experienced in technology and intellectual property cases. A lead arbitrator is someone who knows how to direct a case to bring it to court promptly while allowing all parties a chance to prepare. The arbitrator may urge one party or the other, but he or she will take seriously the obligation to resolve the case as quickly as possible.
- Plan a first case management conference as soon as possible. An experienced arbitrator will do this even over a party’s objection. At the case management conference, the arbitrator and the parties establish the timeline and roadmap for the entire case. Prepare a list of topics to be discussed and included in the original order of the arbitrator’s arbitration management conference.
- Topics to be discussed at the beginning Arbitration Management Conference.
- If possible, the arbitrator should require that all parties have not only counsel but also representatives of the parties at the first arbitration management conference to ensure an informed discussion of technology issues.
- Investigation Deadlines and Hearing Schedule
- The nature of the technology-related issues; what unique problems are likely to arise
- Creation and management of sensitive technology-related information
- The need for protection orders and non-disclosure orders (see below)
- Determination and collection of expert opinions
- The need for phased investigation and consultation
- The form of the award
- Introduce accelerated procedures. Technology disputes can be complex, but they also often (almost always, in fact) require expedited resolution. Technology is valuable, and binding the parties and technology to an arbitration adversely affects the parties’ businesses, startup funding, and the development of more technology. Overall, strive for expeditious procedures. (eg, JAMS Expedited Procedures.) Expedited Procedures establish disclosure, request and disclosure limits and disclosure and hearing time limits.
- Order or request a protection order regarding confidential information. Technology disputes often involve valuable technical and scientific information that is confidential to one of the parties. This confidential information comes in multiple forms, and each party is likely to have a lot of it. Prepare a proposed protection order for the arbitrator to sign to cover information that each party will present in the proceeding.
- Issue or request a confidentiality order for outgoing communications, orders and awards. The arbitration is private (the public is not allowed to attend hearings or view the files), but to ensure confidentiality from third parties you need an agreement, backed by an order from the arbitrator, prohibiting the disclosure of any information contained in the materials in arbitration reveal procedures, as well as even the existence of arbitration. And don’t forget to protect the award. Without an order confirming that the award is confidential, the winning party may broadcast it and either party may submit it to a court for confirmation or annulment. Agree or apply for an order providing for a confidential version of the award (attorneys’ eyes only) and an sanitized version sufficient for filing in court, with a motion for confirmation or setting aside of the award, if necessary.
- Decide if you want to use multimode dispute resolution in technology cases. A knowledgeable arbitrator may also be able to assist in mediating portions of the case as the arbitration proceeds and bring it to a resolution more effectively. Multimode Dispute Resolution, or arb-med-arb, is a valuable technique and requires careful documentation and execution. (A future blog will cover multimode dispute resolution.)