The potential for use of mediation in the field of IPRs and the current mediation system in Taiwan

Tuesday 12 July 2022

Yi-An (Ann) Lai
Chien Yeh & Associates, Taipei; Young Lawyers Liaison Officer, IBA Mediation Committee

Due to the very nature of the intellectual property rights (IPR) that are aligned with the essence of mediation, they are simply called '3M', which are 'market cycle', 'multiple jurisdictions' and 'market power'. This paper will explain why the disputes related to IPR are suitable for mediation.

Firstly, the market cycle is critical for the IP owner, so efficiency is an essential concern. The market cycle varies as technology changes – let’s say five to ten years for now.

Lengthy litigation might not be suitable for the IP dispute, especially for cutting-edge technology – that life cycle could be very short due to obsolescence ten years from now.  Similarly, mediation could be adopted during the infancy phase in product life or even before the conflict arises, which is helpful for IP-rich companies to nip problems in the bud. They could solve the problematic situation but have no fear of losing the vantage point of market position and remain competitive. Additionally, it is also helpful to both market participants with limited resources or the accused infringers as mediation could offer the opportunity to present one's views, time to prepare, and be a time-efficient tool.

Secondly, it has become prevalent that a rights holder may have several trademarks or patents in multiple jurisdictions due to the increasing significance of intellectual property to international trade in today’s globalised world – most IP disputes are inherently international in nature. Likewise, delocalisation refers to a process that unifies the procedurally and geographically flexible and fluid nature of international mediation[1] as opposed to the formal trials with procedural confinements, which require evidentiary scrutiny in order to protect integrity. On top of that, unlike arbitration, mediation has never required the need for a ‘seat' or to decide the application of foreign laws in the case of cross-border disputes involving parties domiciled in different countries.

Thirdly, the economic interests of the IP are related to market power.  Compared to the intangible and material possessions, the value of an intangible IP right largely relies on how the owner or the licensee uses it and how they exploit it based on their competitive position. Hence, we can analogise the IP right to a big empty box that has no intrinsic usefulness like material property rights. It only becomes valuable and useful when the right holder fills in the economic interest of its exploitation based on the owner's market power. In other words, if such an IP right doesn't have the market power nor the capacity of being exploited, it doesn't have the economic interest with a real commercial value in reality.[2]

In the same vein, mediation has been known as party-interest-centric and led by a professional mediator who will explore your substantive interests and procedural interest, such as financial remuneration, property, the existing or potential market power, as well as the risks, such as competitive position on this relevant market of such IPR.

An anonymous case[3] in World Intellectual Property Organization (WIPO) is a great example that precisely demonstrates why IP disputes are particularly suitable for mediation. It would prolong the agony for parties if litigation is filed, which might go against the party's interest or even lead to losing the ownership; however during the process of mediation, each party will analyse the IP portfolio in the market cycle and identify the best economic interest based on the market power, by considering the current maturation, underlying trend or strength of the product as well as the relative performance with this long-term business environment across the overall marketplace. As result, the parties agreed that each party kept its own right in its respective country.

Many believe that ADR is very suitable for cross-border disputes concerning IPR as most jurisdictions acknowledge IP disputes like any other disputes where the parties can dispose of their private rights freely. However, as certain IP-related issues are usually governed and granted by individual states, and different national legal systems treat the issues of arbitrability or mediation differently, the following two problems are frequently encountered:

  • What are the exceptions and limitations regarding specific IP rights?
  • Should we draw the same conclusions with mediation and arbitration?

Some people might be concerned that some subjects or cases which relate to the public interest or the moral right might not be suitable for mediation, such as patent validity; however, the parties who decide to use mediation procedures to resolve the problem would be restricted from challenging the validity of the patent, but any others who are not parties to the ADR would be able to continue challenging the validity of the patent, which means the binding legal effect only applies to two parties.

Secondly, as for the title dispute and the right of paternity in restitution art issue, even though it is not exactly related to IPR issues, could precisely explain why the moral right which can’t be monetszed or commercialised as economic interest can still go through mediation, eg, looted art, which in this case, refers to the artwork that Nazis stole during the Second World War. Nowadays, a lot of countries have legislation that claims art restitution[4] for the heirs of Jews. However, the law is in favour of the good faith purchaser, such as the museum, since mediation is not just concerned about commercial or economic interest, but also other public interests related to the cultural, ethical, historical, moral, religious, or spiritual,[5] which will all be taken into account.

Due to the very nature of the mediation, in general, the mediation process begins when two parties have attempted to settle a dispute but haven't been able to settle completely; however, they could narrow down the issue that is one of the essences of mediation. Therefore, the victim could somehow build better relationships with museums, which also contributes to the creation of a good reputation and public perception towards the museums.

Moreover, it is prevalent to see the inventors and creators transfer the IP to a company, which is typically emotionally charged and involves high stakes when they are stuck in deadlock to move forward in talking about the mutual economic interest and build trust, hence the psychological interests such as personality and the ego of the party shall be taken into account. Now, because of the principle of interest in mediation, there is a part of sessions during the mediation process to separate each side, where a mediator can avoid confrontational and antagonistic exchanges, and be addressed through interaction with the other parties.  Whether between the licensors and licensees or the rights holders and counterfeiters, disputes shall by principle go to mediation which could narrow down the issue as well as the incentives to adopt mediation being greater than filing litigation or holding arbitration proceedings.

The mediation situation in Taiwan

Current mediation system

Regarding mediation mechanisms in Taiwan, a discrepancy exists in the ways individual institutions perform mediation processes. This is due to the fact that the effects of the mediation decisions are varied as people choose different mediation institutions and also elements scattered into various laws. In other words, there is no specialised law that stipulates mediation proceedings. Some mediations have the same effect as a final decision made by the court and are enforceable, while some of the decisions from certain mediation authorities are considered as a civil contract. In Taiwan, all civil cases and commercial disputes can be settled via mediation procedures. The mediation decision needs to be approved by a court[6] if it is established by mediation committees of townships and county-administered cities.

However, if the party submits a complaint in accordance with the civil procedure prior to filing civil litigation, then the dispute could be divided into compulsory mediation cases and non-mandatory mediation cases. This mediation system can be subdivided into two types: mandatory mediation and non-mandatory mediation.

Mediation via courts

Mandatory mediation: Disputes arising from the below-listed matters[7] must compulsorily go through mediation before any legal action is initiated. Only when the mediation process fails can the disputes enter court proceedings.

  • Disputes arising from a relationship of adjacency between real property owners, or the determination of boundaries of real property, or the management of a building among the owners, etc;
  • Increment or reduction of the term, scope, or rental fee regarding lease agreement;
  • Traffic accident;
  • Medical treatment;
  • Employment contract;
  • A business partnership or the proprietary rights among spouses and relatives;
  • The value of the object in dispute being less than NT$ 500,000;
  • Major commercial disputes, which are defined by the Commercial Case Adjudication Act, such as the value of the dispute being over NT$ 100 million;[8]
  • Most family matters[9] concerning divorce, termination of the adoptive relationship, division of the estate, which is settled by the mediation have the same effect as the final judgment and are entitled to be used as a writ of execution[10]

Mediation via others: Aside from the above-mentioned mediation via court, other particular disputes can be also mediated via certain authorities, such as:

  • Regarding disputes arising from employment relationships, a party may submit an application in writing for mediation to the municipal or county (city) competent authority where the party from the labour side concerned provides services;[11]
  • In the event that a governmental entity and a supplier fail to reach an agreement over disputes in relation to the performance of a procurement contract in question, the parties can apply to the Complaint Review Board for Government Procurement (CRBGP) for mediation;[12]
  • Regarding disputes arising from public nuisance, a party may apply for mediation by submitting an application form to the special municipality, county, or city government that has a public nuisance dispute mediation committee to settle such disputes;[13]
  • Regarding disputes arising from copyright issues, if the disputes are over royalties or plate-right, a party may apply to the specialised agency in charge of copyright matters for mediation.[14]

The settlement rate of mediation hits a new record in Taiwan

Referring to the data in the table below , the statistics show that more and more people choose to settle their disputes via mediation instead of direct lawsuits. The number and the settlement rate of mediation cases are increasing year by year. It can be inferred that the public is becoming comfortable with the efficiency of and outcomes reached via mediation proceedings.

YearNumber of mediation casesSettlement rate
2019Over 150,00085.66%

Some pending concerns in Taiwan

Taiwan has not clearly or distinctly adopted 'evaluative mediation' or 'facilitative mediation'. It is dependent on each mediator's style. Hence, time is still needed to tell what kind of mediation might help parties to properly resolve disputes.

Secondly, given that Taiwan is not a signatory to the Singapore Convention on Mediation, perhaps we need to incorporate it into domestic law, similarly to what has been enacted in the Arbitration Law 2015,[15] to ensure that a settlement agreement could be recognised and be enforced in Taiwan. However, the Singapore Convention came into effect in September 2020, and only a handful of states have ratified it.

Thirdly, in Taiwan, mediation might not be warmly welcomed by lawyers as they consider it a bureaucratic procedure before litigation. Lawyers shall receive training so that they will view themselves as joint problem-solvers instead of pure advocates. I believe there are two successful examples in Singapore that are worth learning from. One is about implementing the mediation system into the youth community. There are some non-profit organisations[16] that teach mediation knowledge to teenagers aged 13 to 16. During the training course, the workshop engages in dynamic role-playing and simulates disputes/friction that happens in their daily school life. For example, a good student has some issues with another student who is a troublemaker. The conflict escalated to physical violence and needed to be settled by the president of the student leader board. That project taught more than 300 youths about peer mediation. By capturing learning in these roles, it did not just equip them with conflict resolution skills but also enhanced their awareness of ADR since the mediation concept is entrenched everywhere, and people living in the society from adolescence to adulthood would slowly but surely become aware that mediation is a useful, efficient tool to solve problems.

Last but not least, we need to be aware that the direction and interest could be different or even adversarial between the lawyer and client. The client wants to solve the problem as soon as possible. However, the more complicated the case is, the more lucrative it is for the lawyer. Hence, we shall balance and ensure that the interests are aligned with each other and not cut out too much profit from lawyers but also let lawyers support ADR. In Singapore, the funding to cover up to 50 per cent of the lawyer fee from EMPS[17] may be an ideal option.

New mechanisms in Taiwan

Cooperation between Courts and the Financial Ombudsman Institution (FOI)

For years, the Taiwan Taipei District Court has been receiving a tremendous number of civil cases in association with disputes over banking, insurance, or securities transactions due to improper business solicitation of banks, insurance companies or securities firms. Because most headquarters of the banks/companies/firms are located in Taipei city, the capital of Taiwan, the Court collaborates and refers the disputes to the Financial Ombudsman Institution to help financial consumers resolve their disputes.

'Alternative Dispute Resolution (ADR) Mechanism Search Platform' available for public use.

To provide the public with a user-friendly facility to quickly find a dispute resolution mechanism to facilitate ADR, the Judicial Yuan of Taiwan established 'the Alternative Dispute Resolution (ADR) Mechanism Search Platform'[18] via its official website.

New specific mediation law in Taiwan

As government plays an important role in providing the public with sufficient information to assist them in settling their disputes in an efficient and appropriate way, the Judicial Yuan of Taiwan held, in 2022, the first meeting for the draft Mediation Fundamental Act and discussed the legislative background, contents, and appropriateness of the draft Bill. This is in the hope that such legislative reform can strengthen the functions of mediation and further render the whole judicial system transparent, participatory, and approachable, reduce the number of lawsuits and ease the burden of courts. We expect a mature mediation system in the future.

[1]Singapore Convention Series: Why is there no ‘seat’ of mediation? Shou Yu Chong, Nadja Alexander http://mediationblog.kluwerarbitration.com/2019/02/01/singapore-convention-series-why-is-there-no-seat-of-mediation/ (last accessed 18 July 2022)

[2]Shared by Martin Hauser, Commercial Mediator, Martin Hauser Mediation, Munich; Co-Chair, IBA Mediation Committee in the IBA webinar Mediation of IP disputes - a new era (22 Jun 2021)

[3]There were two foreign companies competing in a specific market and trading for patents for the same or similar technology on their respective market in each of their countries. Two companies had approached the judicial system to cope with this issue, and inevitably, they would have encountered some questions as follows: Who is the inventor? What is the evidence? Should we be playing offense? Should we be playing defense? However, in the mediation process, it became, all of sudden, the way that it is no more interesting to get this right, why? Extract from the talk by Martin Hauser, Commercial Mediator, Martin Hauser Mediation, Munich; Co-Chair, IBA Mediation Committee in the IBA webinar Mediation of IP disputes - a new era (22 Jun 2021 )

[4]In the US and Europe, mediation is the foremost form of ADR to resolve restitution claims.

[5]https://www.wipo.int/amc/en/center/specific-sectors/art/ (last accessed 18 July 2022)

[6]Article 27, Paragraph 1 of the Townships and County-Administered City Mediation Act

[7]Regarding items 1-7, please refer to Article 403 of the Taiwan Code of Civil; regarding item 8, refer to Article 2 of the Commercial Case Adjudication Act for; regarding item 9, refer to Article 30, Paragraphs 1-2 of the Family Act

[8]Article 2 of the Commercial Case Adjudication Act

[9]Article 23 of the Family Act

[10]Article 30 of the Family Act

[11]Article 9 of the Act for Settlement of Labor-Management Disputes

[12]Article 85-1 of the Government Procurement Act

[13]The Public Nuisance Dispute Mediation Act

[14]See Article 2 of the Regulations of Copyright Dispute Mediation

[15]The Arbitration Law of ROC

[16]Peacemakers Conference, https://peacemakers.sg/events/pmc/

[17]https://www.ipos.gov.sg/docs/default-source/growing-your-business-with-ip/funding-assistance/emps-faqs.pdf  (last accessed 27.Aug.2021)

[18]https://www.judicial.gov.tw/tw/lp-2176-1-1-60.html (last accessed 18 July 2022)