Arbitration and Mediation Cases and Dispute Resolution Clauses

Arbitration and Mediation Cases and Dispute Resolution Clauses in the context of R&D World Intellectual Property Organization WIPO Arbitration and Mediation Center Leuven, November 13, 2009 Judith Schallnau, LL. M. WIPO Arbitration and Mediation Center 1

Mediation, (Expedited) Arbitration and Expert Determination • Mediation: an informal procedure in which a neutral intermediary, the mediator, assists the parties in reaching a settlement of their dispute, based on the parties’ respective interests and enforceable as a contract. • Arbitration: a private procedure in which the parties submit their dispute not to a court but to one or more chosen arbitrators, for a formal decision based on the parties’ respective rights and obligations and enforceable as an award under arbitral law. • Expert Determination: a procedure in which the parties submit a technical/scientific issue to one or more experts who make a determination on the matter, which can be binding unless the parties have agreed otherwise. 2 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Alternative Dispute Resolution (ADR) in Research and Development Collaborations ADR • International • Neutral expertise • Efficiency • Confidentiality • Preserving party relationships Characteristics R&D collaborations • Cross-border dimension of R&D/ Internationalization (FP 7) • Rapid evolution of research processes and emerging technological areas • Complex questions on IP and technical issues • Large investments in time and money • Mediation Directive 2008/52/EC • Diverging expectations/ understandings of commercial/ legal concepts • Long-time collaborations 3 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Legal Basis DISPUTE RESOLUTION CLAUSE in the contract for future disputes Preparatory stage Letters of Intent Non-disclosure agreements Options Conclusion of Contract SUBMISSION AGREEMENTS for existing disputes During the Collaboration Outside the Collaboration Consortium agreements Research and development contracts Material transfer agreements Licensing agreements 4 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Options 5 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO Dispute Resolution Clause – Mediation • Future disputes 4 "Any dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non -contractual claims, shall be submitted to mediation in accordance with the WIPO Mediation Rules. The place of mediation shall be [specify place]. The language to be used in the mediation shall be [specify language]. “ • Existing diputes 4 "We, the undersigned parties, hereby agree to submit to mediation in accordance with the WIPO Mediation Rules the following dispute: [brief description of the dispute] The place of mediation shall be [specify place]. The language to be used in the mediation shall be [specify language]. " 6 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO Dispute Resolution Clause – (Expedited) Arbitration • Arbitration 4 "Any dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be referred to and finally determined by arbitration in accordance with the WIPO Arbitration Rules. The arbitral tribunal shall consist of [three arbitrators][a sole arbitrator]. The place of arbitration shall be [specify place]. The language to be used in the arbitral proceedings shall be [specify language]. The dispute, controversy or claim shall be decided in accordance with the law of [specify jurisdiction]. “ • Expedited Arbitration 4 "Any dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be referred to and finally determined by arbitration in accordance with the WIPO Expedited Arbitration Rules. The place of arbitration shall be [specify place]. The language to be used in the arbitral proceedings shall be [specify language]. The dispute, controversy or claim shall be decided in accordance with the law of [specify jurisdiction]. " 7 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Mediation followed by Arbitration • Try mediation before arbitration, at least until 4 lapse of time period 4 termination • Combining the benefits 4 arbitration well-prepared "Any dispute, controversy or claim arising under, out of or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be submitted to mediation in accordance with the WIPO Mediation Rules. The place of mediation shall be [Brussels]. The language to be used in the mediation shall be [English]” If, and to the extent that, any such dispute, controversy or claim has not been settled pursuant to the mediation within [60][90] days of the commencement of the mediation, it shall, upon the filing of a Request for Arbitration by either party, be referred to and finally determined by arbitration in accordance with the WIPO Arbitration Rules. Alternatively, if, before the expiration of the said period of [60][90] days, either party fails to participate or to continue to participate in the mediation, the dispute, controversy or claim shall, upon the filing of a Request for Arbitration by the other party, be referred to and finally determined by arbitration in accordance with the WIPO Arbitration Rules. The arbitral tribunal shall consist of [a sole arbitrator]. The place of arbitration shall be [Brussels]. The language to be used in the arbitral proceedings shall be [English]. The dispute, controversy or claim referred to arbitration shall be decided in accordance with [Belgian] law. " 8 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Areas of Potential Disputes • Research 4 Intellectual property rights: 4 4 4 Inventorship (Co-) Ownership, transfer Access rights background/ foreground Patent infringement Dissemination 4 Confidentiality (non-disclosure agreements) 4 Project-management 4 Compliance with work plan 4 Payment modalities • Exploitation 4 Control and use of research results (including licensing) 4 Technology valuation 4 Manufacturing, marketing, distribution obligations Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven 9

Mediation Process COMMENCEMENT APPOINTMENT OF MEDIATOR INITIAL CONFERENCE MEETINGS CONCLUSION 10 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Recent Mediation Case (I) • U. S. company/ Swiss company • Patent infringement (automotive sector, U. S. patents) • Settlement agreement 2007 • Dispute Resolution clause: WIPO Mediation followed by WIPO Arbitration • Request for mediation in May 2009 • WIPO list of candidates • Parties chose a patent practitioner, knowledge of U. S. Patent Laws, fluent in English, experience in mediating patent infringement disputes 11 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Recent Mediation Case (II) • Two-day hearing in August (June) in Geneva, WIPO • Mediator gave introduction, explained rules of the hearing (e. g. confidentiality, caucus) and his role • Early agreement on framework for royalty payments • Further discussions on business aspects • Settlement in the afternoon of second day: 4 « Term sheet » down-payment, annual instalments, net sales based royalty 4 Re-drafted original licensing agreement, final agreement until September 2009 • End of 2 -years dispute within 5 months, parties avoided U. S. arbitration/ high costs, further collaboration possible 12 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO Pharma Mediation (I) • European university holding pharmacautical patent applications in several countries • Pharmaceutical company • License option agreement, company exercised option • 3 years negotiations of license agreement • Parties unable to agree on terms of license • Submission agreement to WIPO mediation 13 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO Pharma Mediation (II) • Parties requested the WIPO Center to appoint a mediator • Qualifications: lawyer, working experience in pharma industry, licensing experience • Parties requested mediator to help them reach an agreement on the terms of the license • One-day meeting session: parties identified issues and improved legal understanding • Continued direct negotiations on this basis, reached settlement agreement 14 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO ARBITRATION Request for Arbitration Answer to Request for Arbitration (30 days) WIPO EXPEDITED ARBITRATION Request for Arbitration and Statement of Claim Appointment of Arbitrator(s) Answer to Request for Arbitration and Statement of Defense (20 days) Statement of Claim (30 days) Appointment of Arbitrator Statement of Defense (30 days) Hearing (maximum 3 days) Further Written Statements and Witness Statements Closure of Proceedings (3 months) Hearings Final Award (1 month) Closure of Proceedings (9 months) Final Award (3 months) • One Exchange of Pleadings • Shorter Time Limits • Sole Arbitrator • Shorter Hearings • Fixed Fees Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven 15

WIPO R&D Biotech/ Pharma Dispute (I) • European biotech company held several patents for the extraction and purification of a compound with medical uses • License and development agreement with a large pharmaceutical company with expertise in the medical application of the substance related to its patents • Development agreement contained a clause referring to WIPO Arbitration Rules • Biotech company filed request for arbitration alleging that the pharmaceutical company had deliberately delayed the development of a biotech compound 16 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

WIPO R&D Biotech/ Pharma Dispute (II) • Parties chose one out of the Center’s list of proposed candidates with experience in biotech/ pharma • Written submissions • Three-day hearing in Geneva for examination of witnesses • On the last day, following a suggestion made by the arbitrator, the parties held a private meeting and agreed to settle their dispute • Continued to cooperate towards the development and commercialization of the biotech compound 17 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Settlement in WIPO Administered Cases 18 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven

Additional Information • WIPO Center 4 Website: http: //www. wipo. int/amc/en/ 4 Email: arbiter. mail@wipo. int, judith. schallnau@wipo. int 4 Telephone: +41 22 338 7256 (Center secretariat: -8706) • WIPO Workshops 4 Conference on Dispute Resolution in International Science and Technology Collaboration, April 2005 4 http: //www. wipo. int/amc/en/events • Thank you! 19 Judith Schallnau, WIPO ADR in R&D Collaborations, November 13, 2009, Leuven