by Andrew Flake

I participated recently in a discussion on alternative dispute resolution in IP disputes — mediating and arbitrating trademark and patent infringement cases, and particular challenges that can arise. One of the topics we took up, which has importance beyond the IP context, was drafting the ADR clause itself, and in particular, the arbitration clause. How much ground should it cover? How general or specific should it be?

In answering this question, one participant shared the view that when it comes to an IP arbitration clause, “the more detail, the better.” Not everyone agreed, and as an arbitrator, I’d also push back on that view, at least as a categorical position. Why? Because once we get past the essentials — the administering organization and the rule set, the seat of the arbitration, the number of arbitrators, the language if the dispute is international — drafting counsel risks including constraints on the arbitrator’s ability to adapt to the dispute at hand, and often, without being aware of it.

One example that I’ve seen, and hear frequently from fellow arbitrators, has to do with discovery. From time to time, a clause will provide that as to discovery, the Federal Rules of Civil Procedure apply. The provision was undoubtedly well-intentioned. The drafter wanted predictability, and possibly, to preserve options in the event of a dispute.

In practice, though, that clause may raise the ceiling on expensive and potentially unnecessary discovery, as with interrogatories (up to 25) and depositions (up to 10). When a dispute does arise, counsel may be better off working with opposing counsel, and the arbitrator, to propose a discovery plan that fits the actual case; in fact, a good arbitrator will use the preliminary conference in the case to do exactly that, taking into account the needs of the case, the parties’ position, and the interests of moving the case forward efficiently and cost-effectively. To the end, a more general and tested clause, of the sort that you can find from the administering organization (the AAA’s are here) would be a better choice.

Are there instances when the suggestion “the more detail, the better,” does fit? Perhaps, if we are talking about two negotiating or drafting parties who have more insight into the kind of disputes that may arise in the future. An example — and I imagine this is what my colleague who made the suggestion, an experienced IP neutral, had in mind — might be the settlement of a patent infringement dispute in which the parties will have future interactions, work in the same market, and know the sort of disputes that might arise. In a negotiated settlement or deal between parties in past and future relationship, it may make sense to consider more of a bespoke clause, including aspects like required pre-arbitration negotiation or discussion and criteria/qualifications for the arbitrator.

More often, though, are the cases in which drafting counsel has less predictive ability. She is preparing a clause without knowing whether, when, and in what context a dispute may arise. In those instances, a well-drafted, complete, but more general clause is more likely to be helpful when a dispute arises, giving more flexibilty to claimant’s counsel — who is rarely the same lawyer who drafted the clause.

An optimal drafting process, if you have the opportunity to structure it, will involve both corporate counsel and a litigator with arbitration experience, permitting a conversation about the types of disputes that may arise, and the level of detail that best fits that prediction. And instead of simply bequeathing a legacy arbitration clause from one contract to the next, be thoughtful; if you have the opportunity to modify or negotiate it, consider what elements, beyond the essentials, that you want to include and why.