Alternative Dispute Resolution
Tier 2 Resolution Plan (Patent)
Tier 2 Resolution is designed for more complex disputes requiring a more involved proceeding than Tier 1, but still provides an affordable and efficient resolution process.
Brief Overview of the Tier 2 Resolution Plan:
Cost = $10,000 per party to initiate proceeding, winner gets half ($5000) back
Scope = 1 patent claim, 1 accused product, non-infringement and invalidity defenses
Timing = About 3 months to final resolution
Outcome = Confidential (contractual) determination to cease or allow continuation of accused activity, 5% royalty damages award if patent owner prevails
Details of Tier 2 Resolution Plan:
An efficient and affordable determination of infringement and/or validity with a simple flat 5% royalty if the patent owner prevails.
The Patent Owner identifies the accused product, and presents their assertion of infringement of one patent claim. The Respondent may present both a non-infringement defense and a validity challenge.
Each party is responsible for its own attorney fees, but the proceeding is relatively focused with moderate page limits on briefs and fairly short time constraints, and structured to keep legal fees within reason. A condensed one-day oral hearing is provided if requested by the parties.
The Umpire renders a decision with a short written explanation. If the Patent Owner prevails, the Respondent must stop all sales or use of the infringing product and pay a 5% royalty on infringing sales within 30 days of the Umpire's decision (or the parties are free to separately negotiate a license). If the Respondent prevails on a non-infringement defense they are free to continue without further action by the patent owner. If the Respondent prevails on the basis of a validity challenge, they receive a royalty-free non-exclusive license for the term of the patent.
The proceedings are private and confidential. The resolution obtained is enforceable in court, if necessary, under contract law. A successful validity challenge does not result in entry of judgment of invalidity in court -- the patent owner remains free to assert the patent against unrelated third parties (which may also benefit the prevailing Respondent due to reduced competition in the marketplace for its licensed products).
Each party pays $10,000 to initiate the proceeding.
The prevailing party gets $5000 back when the proceeding is over.
1. The Patent Owner submits its initiation fee, identifies the patent-in-suit and the accused product, and provides contact information for the accused infringing party. The Umpire contacts the accused party and invites them to participate in the proceeding. If the accused party accepts, they submit their initiation fee, the parties execute a resolution agreement setting out the terms of the proceeding, and the Umpire sets the schedule. If the accused party declines or fails to respond, the Patent Owner's initiation fee is refunded, less a $250 processing charge.
2. The proceeding begins with the Patent Owner submitting its Claim Initiation Brief (10 page limit) setting out their infringement contention by applying the selected patent claim to the accused product.
3. The Respondent submits its Principal Brief (25 page limit) within 20 days of receiving the Patent Owner's Claim Initiation Brief, setting out one non-infringement defense and/or one validity challenge to the Patent Owner's selected claim. Respondent discloses its sales numbers to the Umpire in confidence (not disclosed to Patent Owner unless Patent Owner prevails).
4. Principal Brief (25 page limit) by Patent Owner due 20 days after Respondent's Principal Brief responding to the asserted defenses.
5. Respondent's Reply Brief (10 page limit) due 10 days after Patent Owner's Principal Brief.
6. One day condensed oral hearing (each party has 3 hours total to present an opening statement, case-in-chief, rebuttal, and closing argument).
7. Umpire's Decision within 14 days after oral hearing.
Notes: The above are typical terms of a standard Tier 2 proceeding for a patent dispute, but may vary in particular cases, or upon agreement of the parties. The roles and timing can be reversed if the accused infringer is the one who first asks for a Tier 2 Resolution. Similar proceedings can be provided for trademark disputes.