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A recent report identifies budgeting and time as major concerns for tech companies during litigation. Arbitration is an answer, says the report, but pros and cons exist for both dispute resolution mechanisms.<\/p>\n
A new report\u00a0<\/a>from the Silicon Valley Arbitration and Mediation Center (SVAMC) and the Global Technology Dispute Resolution Council documented some of the technology sector\u2019s biggest concerns about litigation and how they may be potentially addressed through arbitration.<\/p>\n <\/p>\n <\/p>\n Sixty-four percent of survey respondents said that cost was their\u00a0top concern about litigation<\/a>. The report also found that 54 percent of respondents were concerned about the time it could take to get a resolution through litigation, while an additional 46 percent reported concerns about unqualified or inexperienced judges overseeing their cases and 36 percent reported concerns about overly invasive discovery.<\/p>\n The survey did not ask for information about similar concerns related to\u00a0arbitration<\/a>, but it did ask survey respondents to identify some of the perceived benefits of arbitration in commercial disputes involving technology companies. Seventy-six percent of survey respondents identified the potential use of a specialized expert as a benefit to arbitration in such disputes, while 54 percent reported a speedier time to resolution, and 41 percent reported increased privacy as similarly important factors lending themselves to arbitration.<\/p>\n The survey polled corporate counsel, law firm counsel, neutrals and users in the technology sector. It was conducted over the spring and summer of 2017.\u00a0<\/p>\n Gary Benson, founder and chairman of the SVAMC, said that the major concerns highlighted by the survey were fairly common knowledge across the technology sector, as in other sectors. Benson clarified however that companies seemed to be less troubled by the final price tag of potential litigation than they are the ability to budget for potential litigation costs.<\/p>\n \u201cObviously nobody wants to pay more than they have to. At the same time, what every general counsel at a technology company tells me is, \u2018Of course we\u2019re willing to pay the cost if it resolves the dispute the right way. What we\u2019re most concerned about is predictability about what the cost is,\u2019\u201d Benson said.<\/p>\n \u201cGeneral counsel want to be able to budget and expense and not be surprised,\u201d he added.<\/p>\n The high profile patent dispute litigation between\u00a0Apple Inc. and Samsung Electronics Co<\/a>., which is now in its fifth year\u00a0with no end in sight<\/a>, is something of a nightmare scenario for many technology companies, especially given the speed of innovation. \u201cTo me, it\u2019s no longer a case about a $1 billion verdict, it\u2019s a case about how long it takes to get any conclusion in the courts. Sadly, these companies are still litigating now over technology that\u2019s now relatively obsolete,\u201d Benson noted.<\/p>\n Given these concerns, Benson believes technology companies are starting to look toward arbitration as a means to offset some of these concerns. \u201cArbitration has always been out there as an alternative that offers the promise of more efficient dispute resolution. I think it\u2019s become increasingly attractive in the technology sector, and people are starting to see it much more in the last five years,\u201d he said.<\/p>\n Cedric Chao, trial partner and co-head of the global international arbitration practice at DLA Piper, said that although these litigation concerns hold significant water for technology companies and arbitration may seem like an exciting alternative, it also poses its own host of issues.<\/p>\n \u201cThe choice between litigation and arbitration is harder than one might expect. There is no perfect system, and there is no \u2018correct\u2019 answer that applies universally. What works for one party or one type of dispute does not necessarily work well for a different party or dispute,\u201d Chao noted.<\/p>\n Chao explained the technology sector\u2019s reticence toward arbitration is more about the gravity of what they\u2019re working with. \u201cTheir crown jewel is their intellectual property,\u201d Chao said. \u201cAn adverse ruling can impact the fundamental value of the company with implications extending beyond the value of the dispute itself.\u201d<\/p>\n Given the importance of intellectual property to technology companies\u2019 core business, retaining access to the right of appeal inherent in litigation can be an important factor to consider. \u201cThere\u2019s no automatic right of appeal. If you make an error of law, there\u2019s no right of appeal,\u201d Chao explained of arbitration. \u201cThere are some ways to vacate the bad decision, but it\u2019s narrower. If you read the contract wrong, I cannot get that decision overturned. In court, I could.\u201d<\/p>\n \u201cI tell clients it\u2019s a little bit like going to Las Vegas. If you win you love it, because the other side has a very difficult time overturning your award. But if you lose, you hate it,\u201d Chao added.<\/p>\n The question of judge expertise varies more by jurisdiction than matter type. Benson noted that while there are many excellent judges across the country, and many judges in California and Virginia especially have developed strong backgrounds in complex technology and intellectual property matters, \u201cmost of the country doesn\u2019t have those resources, and the judges are focused on their criminal case dockets and their other issues. They just don\u2019t have the specialization to the dealing of a lot of complex [intellectual property] cases,\u201d he said.<\/p>\n Arbitration offers parties the ability to agree upon particular skill sets or expertise of their arbitrators. Chao qualified, however, that judges in some of the more tech-savvy jurisdictions may at times be a better bet than even a qualified arbitrator. \u201cIf you\u2019re sitting in California, the judges come from big law firms, they tend to have a lot of exposure in their younger years to complex transactions and intellectual property. I\u2019ve got clients who\u2019ve much rather have their despites heard by judges than they would be an arbitrator,\u201d he said.<\/p>\n As technology commercial disputes move more square into the international applicability, Benson also noted arbitration\u2019s ability to apply across multiple international contexts.<\/p>\n \u201cIt also ensures that awards can be enforceable because, of course, U.S. court judgments are only enforceable in the U.S. They\u2019re not automatically recognized by any foreign country, whereas international arbitrations are enforceable,\u201d Benson said.<\/p>\n Chao said that international considerations should weigh into both potential pros and cons of arbitration. \u201cThat one works for you in this one market or this one geography may not be the answer in a different commercial relationship in a different geography,\u201d he noted.<\/p>\n Gabrielle Orum Hern\u00e1ndez is a reporter with Legaltech News and the Daily Report covering legal technology startups and vendors. She can be reached by email at ghernandez@alm.com, or on Twitter at @GMOrumHernandez.<\/em><\/p>\n<\/p><\/div>\n A recent report identifies budgeting and time as major concerns for tech companies during litigation. Arbitration is an answer, says the report, but pros and cons exist for both dispute resolution mechanisms. A new report\u00a0from the Silicon Valley Arbitration and Mediation Center (SVAMC) and the Global Technology Dispute Resolution Council documented some of the technology … <\/p>\n
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