IP Litigation Costs - An Introduction
The settlement of the famous 2006 “The Lion Sleeps” copyright case – with its happy ending for the heirs of the author – was widely reported in the press and celebrated as an example of successful use of the intellectual property (IP) system in ensuring remuneration of creators.1 It should, however, be kept in mind that this case was exceptional in many respects, including the funding of the litigation. Given the song’s popularity and its cultural importance, the institution of the case benefited from significant financial sponsoring. In reality, for most litigants, one of the greatest obstacles associated with IP litigation is high, if not excessive, costs.
To what extent does the situation prevent right holders from taking legal steps against infringement? Do high litigation costs fuel a perception, more generally, that the IP system only benefits wealthy or large companies equipped with expensive legal expertise? And, against that background, in what possible ways could high litigation costs be addressed in the broader context of an enabling environment within which IP rights are respected?
These were among the thorny questions addressed at the November 2009 session of the WIPO Advisory Committee on Enforcement (ACE). The Committee, composed of WIPO Member States and accredited observer organizations, focused its discussions on “Contributions of, and costs to, right holders in enforcement, taking into consideration Recommendation No. 45 of the WIPO Development Agenda.” The Committee discussed issues, based on expert analysis presented, including the reasons for the high costs of IP litigation, especially for litigants in developing countries, and looked at suggestions for making the system more accessible.
High attorneys’ fees were viewed with concern. At the same time, at least in certain areas of IP disputes, they were seen in the context of the high level of specialization required for directing such cases. The often costly evidential burden (see “The UK: Can a high-cost country change its way?”) was also raised. It was suggested that greater use of presumptions could be worth further analysis, especially in civil cases.
The ACE discussed in some detail suggestions for alleviating the financial burden on parties – for instance, through the use of alternative dispute resolution models (see “A Cost-Effective Alternative”) or simplified procedures, especially in the field of border enforcement. Emphasis was placed on mechanisms to reduce litigation costs for parties in need, including legal aid, or provision for litigation on a pro-bono basis. In that regard, reference was made to South Africa where the bar association requires its practicing members to conduct a certain number of pro-bono cases per year, thereby supporting public interests and certain provisions of the Bill of Rights.
Another approach suggested was the conducting of litigation on a contingency basis (see “U.S. Contingency Fees: A Level Playing Field?”). Obviously, such a model could only be attractive in the case of litigation seeking monetary payment, as opposed to injunctive relief. With that in mind, another suggestion was proposed: establishing state-administered funds for instituting IP litigation. Such funds, it was argued, could be derived from registration fees. More broadly, the Committee looked at pre-emptive measures as a possible means of controlling enforcement costs. The suggestions in that respect touched on defining trade policies and business models – so as to diminish the demand for counterfeit goods – and bringing prices into a more balanced alignment.
The ACE, an advisory body with no norm-setting mandate, is a forum for exchanging information and does not work towards binding solutions on any of the matters it addresses. Discussions nevertheless clearly revealed that overly expensive IP litigation is a serious concern in many countries, and is perceived to have negative effects on effective law enforcement and the acceptance of the IP system in general.
This issue of the WIPO Magazine on IP Litigation Costs addresses the aforementioned challenges in IP litigation and looks in particular at the costs and particularities of IP dispute resolution in jurisdictions such as Africa, Europe, Japan and the U.S. The WIPO Arbitration and Mediation Center, co-editor of this issue, explains the benefits of Alternative Dispute Resolution, which appears to be an efficient way out of costly and complex IP litigation. Finally, a range of useful practical tips are provided for minimizing IP dispute settlement costs.
By Heike Wollgast, WIPO Enforcement and Special Projects Division
1 For details of the case and the settlement agreement, see “Copyright in the Courts: The Return of the Lion” in WIPO Magazine 2/2006.