Legally Speaking

Legally Speaking Mediation - A Very Effective Way to Resolve Licensing Disputes

By: Gregory J. Battersby

BOOK AVAILABLE!

THE BUSINESS OF LICENSING The Essential Guide for Intellectual Properties

Licensing has has exploded into a $250+ billion worldwide industry at retail and generates more than $7 billion in royalty income for those property owners who are savvy enough to license their properties for a wide variety of consumer products. About 8 years ago, lawyer Gregory J Battersby and licensing veteran Danny Simon introduced the first Basics of Licensing book. They published a revised version a couple of years later and followed it with a Licensee edition and then finally an International edition. Recognizing that there was a degree of commonality between these editions, Battersby and Simon concluded that it was time for the definitive work on licensing, hence, The Business of Licensing which combines the best of all three prior editions and takes the subject to the next level. This book takes the reader through the nuts and bolts of how to conduct a licensing program and handle many of the problems that it might face There is a substantial amount of reference material. They have included an expanded history of merchandising, and an extensive collection of the forms that any licensing professional may need which they intend to provide to purchasers with electronic access to the forms via Dropbox.

The Complete Business of Licensing is available at a cost of $39.95 ($34.95 for LI members). https://www. totallicensingworld.com/site/business_ of_licensing

Gregory J. Battersby Battersby Law Group, LLC 25 Poplar Plains Rd. Westport, CT 06880 (203) 454-9646 gjbattersby@gbiplaw.com www.gbiplaw.com

Disputes in licensing matters are not new. They have occurred since the infancy of the industry. For example, CFOs of licensors will have an entirely different understanding and interpretation of the definition of net sales than the CFO of the licensee.

Licensees who are bound to follow very tight guidelines relative to approvals, etc., will occasionally step out of line, and a licensor will, rightfully, call them on it. These are only a handful of possible disputes regularly occurring in the licensing field.

When a dispute occurs, the parties will typically exchange letters with increasing nastiness until an impasse is reached. Then the provisions of the disputes clause come into play. It might require litigation or arbitration to resolve these disputes.

As anyone who has ever been involved in litigation or even arbitration knows, such forms of dispute resolution are time-consuming, lengthy, and, above all else, expensive. The wheels of justice grind slowly, and, typically, the only real winners in any dispute are the lawyers. For example, I have been personally involved in an infringement action that has gone on for 17 years, cost collectively more than six million in legal fees, and resulted in a seven-figure judgment. I might live to see the outcome of the case, a case that could have, should have, been settled at the beginning for a mid-five figure number.

There is an effective and relatively painless way to resolve disputes called mediation. Mediation differs from litigation or even arbitration in that the parties meet and discuss the issues in the presence of a neutral third party whose objective is to get the parties to understand the issues, compromise, and reach a workable settlement.

There is an adage in dispute resolution—the best settlement is one that neither party loves.

The most effective mediators frequently scare each of the parties enough to “soften them up” to consider settlement, i.e., highlighting the weaknesses of their cases. That way, they understand that there is a real possibility that they could lose the case. Once the mediator gets that message across, the parties become more openminded, making a reasonable settlement possible.

Several groups offer mediation services—the various arbitration associations, JAMS which typically employs retired judges and skilled attorneys, and a host of private mediators.

Courts will typically provide mediation services to settle cases that have been filed, frequently using magistrates to conduct such a hearing. Some magistrates are excellent, others not so much.

It is helpful to find a mediator familiar with the dispute’s subject matter. For example, finding a mediator with licensing experience will frequently shortcut many extraneous issues in a licensing dispute and help the parties find a solution. In contrast, court-appointed mediators may have far more experience in other areas and not truly understand the unique issues facing licensors and licensees.

Mediation forces the parties to talk to the other party directly rather than having their attorneys lob threats and accusations.

While direct conversation seems to have become a lost art, it can be very effective in resolving disputes with the result that the conflict will be quickly and, hopefully, inexpensively resolved.

For years, in my standard license agreements, I have included a provision in the disputes provision that requires any party seeking to litigate or arbitrate disputes to first engage in structured mediation as a pre-condition before commencing such an action.

The provision states: The parties agree that before initiating any litigation or arbitration under this provision, they shall first submit the dispute to mediation before [identify mediator] and engage in a good faith effort to resolve such dispute. If, after engaging in such good faith efforts, they cannot resolve the dispute, then and only then can they initiate such an action.