The IP ADR Blog

Metaphor as Conflict - the Google Settlement from a Mediator's Perspective

Mary Zachar — Fri, 12 Mar 2010 08:00:00 -0800

As a mediator reflecting on the label “Evil” attributed to the proposed Google Book Settlement (article by Tom McNichol in California Lawyer, Saving the World from Google: Public and private interests band together to fight a deal that, they say, would destroy competition on the Internet), I wonder under what alpha-tag Google might fall in Vickie Pynchon’s new book, A is for Asshole, the Grownup's ABC's of Conflict Resolution. Is there an E for Evil?

I am also curious about where this Evil metaphor might fit within Google, Inc.’s Senior Copyright Counsel, William Patry’s new book, Moral Panics and the Copyright Wars, which asks that we look at the moral panic generated by such labels not as aggressors, but rather as mediators in the copyright wars. As Patry describes in his blog, copyright is a system of social relationships, and that “the advantage in regarding copyright as a system of social relationships is that it focuses attention where it belongs: in mediating conflicts within that system… .”

If you would like some background and context use The Public Index, a project of the Public-Interest Book Search Initiative and the Institute for Information Law and Policy at New York Law School. For audio listen to Pamela Samuelson’s recent lecture, and for balance see the Google Public Policy Blog.

Here’s how Google became the Evil villain:

In September, 2005, the Authors Guild, representing about 8,000 US published authors and screenwriters, brought a class action against Google The Authors Guild, Inc. v. Google Inc., No. 05 Civ. 8136 S.D.N.Y Sep. 20, 2005), claiming that Google’s Library Project, launched as the Google Book Search, a project which scanned millions of in-copyright books from the collections of major research libraries, was copyright infringement. Google’s goal at the time was to make indexes of the books’ contents and to provide short snippets of the book contents in response to its users search queries.

In response to the lawsuit, Google temporarily suspended scanning, and agreed to allow copyright owners to submit lists of books they wish to be excluded. The Association of American Publishers then filed a second lawsuit (now coordinated with the earlier Authors Guild action) for copyright infringement, seeking injunctive relief, and this time Google defended arguing fair use, claiming that "snippets" from books were authorized under the Copyright Act’s fair use defense Section 107.

Settlement efforts commenced in the Spring of 2006, and in the Fall of 2008, a lengthy (over 300 pages) agreement was finally reached between the Authors Guild, the Association of American Publishers and Google, establishing a complex new business arrangement. An Amended Settlement Agreement was preliminarily approved November 19, 2009.

The Settlement gives Google a license to commercialize all out-of-print books and to make up to 20 per cent of their contents available in response to search queries (unless rights holders opt-out). Judge Denny Chin held a Fairness Hearing on February 18, 2010, which has been continued to late June. Holding up the Settlement is the Department of Justice’s Statement of Interest which asserts that the Agreement violates US anti-trust laws, and this along with many other objections has caused the fairness hearing to be postponed. As the DOJ argued in its recently filed Statement of Interest,

“This outcome has not been achieved by a technological advance in search or by operation of normal market forces; rather, it is the direct product of scanning millions of books without the copyright holders’ consent and then using Rule 23 to achieve results not otherwise obtainable in the market.”

To the DOJ, this seems to be at the core of Google’s Evil – that its position of dominance has arrived not by merit, but by self-help in scanning millions of books, without consent, and then benefiting from a settlement after the fact.

Is this Evil? Are there multiple interests at stake and who is supposed to represent these interests at the negotiating table?

It may appear unfair for Google to benefit by the Settlement which results in a privately negotiated compulsory license, using the class action status as a way to insulate itself from any future claims with respect to the use of the works, and making it the only source of a digital library. Yet Google, as a defendant in the lawsuit, did not construct the class (although some would say that it acquiesced because of the benefit conferred). Nor can it be responsible that it has not litigated the fair use defense for the benefit of all competitors. It is in fact the litigation and class action construct which allows a private settlement for a copyright infringement. The lawsuit, despite its class action nature, depends only on the relationship between the parties before the court and in the class. The court does not look beyond the class, although FRCP 23 does include representation guidelines built into class certification and court review of the settlement.

With neither libraries nor research interests as part of the class, can there be meaningful resolution of a copyright infringement dispute using a class action model?

The US Supreme Court recently confirmed a settlement reached under similar circumstances in ELSEVIER, INC., v. MUCHNICK,--- S.Ct. ----, 2010 WL 693679 (U.S.), 93 U.S.P.Q.2d 1719, a class action of authors against publishers claiming wholesale copyright infringement based on digitization of a data base of works. This mediated settlement also took over three years and yet it has not generated the same vitriolic response as the Google Books Settlement. So it seems possible to mediate the social relationships which inhere in the copyright system.

Then what’s so evil about Google?

Maybe the answer lies in the nature of the copyright system itself. As Mike Linksvayer put so kindly in his Creative Commons Blog on November 16, 2009,

“We hope that a socially beneficial conclusion is reached. However, it’s important to remember why getting there is so contentious. Copyright has not kept up with the digital age — to the contrary, it has fought a rearguard action against the digital age, resulting in zero growth in the public domain, a vast number of inaccessible and often decaying orphan works, and a diminution of fair use. If any or all of these were addressed, Google and any other party would have much greater freedom to scan and make books available to the public — providing access to digital books would be subject to open competition, not arrived at via a complex and contentious settlement with lots of side effects.”

Zohar Efroni, who contributes to the Stanford Law School Center for Internet & Society Blog, notes in his 4/19/09 post that because Google does not own the copyrights in the books it digitizes, it’s monopolistic position really only extends to infrastructure –

“its giant store of digitized content, together with smart and high-power logical and logistic commercialization tools. It does not have a monopoly over content….” “Technically, it is a mere licensee, not even an exclusive one. The real ‘monopolists’ here are, how surprising, the authors guild and the publishers’ association. “

As he opines,

“In my view, it is premature to flatly condemn Google at this point. We still know too little on how this system will function in practice. To me, the most important lesson is that the process of public lawmaking has failed miserably in structuring comparable mechanisms for providing broad access, and at the same time, accommodating rewards for rightholders. It is not surprising that private actors with the necessary foresight and resources rush to fill this gap. What’s the point of lamenting that the contracts they draft lack the checks and balances we would expect to find in public regulation? Prof. Samuelson calls the BRR ‘a new collecting society,’ which implicitly hits the mark: Technically, the term describes the BRR's principal functions and responsibilities. One main difference is, however, that real collecting societies are, for better or for worse, highly regulated entities (in Europe all the more). This is precisely what the BRR is not.”

What seems clear is that the Google Settlement matters.

In another compelling blog entry in Publishers Weekly, The Google Settlement: Why it Matters, finds that although the Google Books initiative may be deemed good for society in the sense that it "empowers users to seek out whatever they want to learn,

"the potential effect of the settlement terms cannot be ignored. Three areas he points to as matters of concern include: “(1) whether a handful of lawyers negotiating it can adequately represent the class members and the public interest; (2) the effective orphan works monopoly granted to Google; and (3) the risks presented by use of an opt-out class action mechanism and whether legislation is a more appropriate response. “

As Professor Grimmelmann observes,

“when search engines work right, they empower users to seek out whatever they want to learn. That's the exact opposite of broadcasting, in which a few big speakers choose what everyone else hears. In a world where everyone can self-publish, search engines turn what would otherwise be deafening cacophony into the best party ever, where every guest can instantly join the conversation that most interests them. That's good for freedom, and good for democracy. Building better search engines is a moral imperative.”

The problem lies in the Settlement, not the conduct per se which should be found fair use. As he points out, the Settlement goes far beyond just scanning and indexing and allows Google to sell full books, obviously an infringement. The settlement allows Google to sell out-of-print books unless the copyright owners object, while a competitor will need to get individual permission for any use. With respect to orphan works, by definition there is no one known from whom permission can be granted.

“The class action opens a door for Google, but leaves it closed for everyone else. That fact has always been the absolutely critical feature of the settlement. It makes the settlement exciting, because it means that millions of out-of-print and orphan books would become much more widely available. It also makes the settlement dangerous, because millions of copyrights would be collectively press-ganged into Google's service.”

The vote may still be out on whether Google’s status as a private company with a desire to maximize profit while doing what consumers want is good or evil. Google did not define the class, nor is Google a fiduciary with respect to the members of the class. Instead, the publishers and authors are the class representatives, and may through the proposed Book Registry continue an institutional bias based on the social relationships between owners and their market. As a metaphor, Evil imbues conduct with intent to harm. Was Google’s evil its initial conduct in copying the works in the first instance – even though it relied on fair use and many commentators agree that this defense has merit? Can we say that Google intended to harm the unseen interests in entering into a private settlement, court supervised, under the watchful eye of the federal court, Judge Chin, and the public? Or was this a skillful settlement, avoiding the slap of statutory damages for infringing over 7 million works, in exchange for a license to digitize, filling a consumer demand for access to digital works? And aren’t registered works under the Book Right’s Registry getting a large market share, 63%, for Google’s technological savvy and marketing?

If Open Book Alliance Co-founder Peter Brantley, who heads the Internet Archives' Bookserver Project, a coalition made up of Microsoft, Amazon, Yahoo, Author Guilds and libraries, prevails in their opposition to the Settlement, we may see intervening congressional hearings before the litigation concludes. This may be the answer necessary to address all of the social relationships at stake in the copyright system.

Copyright is a limited monopoly, designed to “promote the Progress of Science and useful Arts.” US Const. art. I, Sec.8, cl.8. It may be that some disputes can only be mediated in the forum in which the public’s long term interests in democracy, free speech and free markets also occupy a seat at the negotiating table. With copyright, that venue is Congress. With attention now focused on the future effect of this Settlement and how it may impact all the stakeholders, mediation has served a purpose here. It has opened up the conflict to allow dialog and illumination towards positive systemic change, always a good thing from a mediator’s perspective.

-MZ

Door Number One? Door Number Two? Or Door Number Three?: Part II

Eric Van Ginkel — Thu, 11 Mar 2010 12:00:00 -0800

How do I choose the "right" mediator for my IP-related dispute?

Yesterday I discussed the top three questions one should ask in order to select the “right" mediator for your Intellectual Property-related dispute. Briefly, we discussed the importance of a mediator’s training, experience and reputation. I recommended that you select a mediator who has been taught the craft of mediation at an established Institution (such as my Alma Mater, the Straus Institute at Pepperdine), has several years experience in the craft of mediation, and who has a reputation for being able to settle disputes similar to your own.

The last three questions you should ask when choosing your IP mediator are more nuanced and relate to your personal taste and the circumstances of the case you are working on.

4. What is the Mediator's Typical Negotiation Style?

Your mediator must have the style of mediating that the parties like.

Several years ago, Professor Len Riskin defined the various approaches used by mediators into a system he called a “grid” which went from being “facilitative” to “evaluative” and from being “narrow” to being “broad.”

A facilitative mediator would be someone who promotes the communication between the parties with the goal of helping to find an acceptable resolution of their dispute. An evaluative mediator on the other hand would be the person who will express an opinion about the various aspects of the case, - usually including a dollar amount that she believes to represent a fair settlement in a distributive,
zero-sum negotiation.

In my view, the best mediator will in fact consider the “grid” to be a true continuum, in which she can freely use the facilitative and evaluative styles in the same mediation, applying these differing approaches to the various stages or aspects of the process as she sees fit. In either case, the mediator should attempt to refrain from advising a party what to do.

5. Do they have Substantive Legal Knowledge? (Notice that I put this requirement in fifth place!)

If the mediator is unfamiliar with intellectual property laws, it is obvious that she will need more time to understand the issues that arise from that area of the law, and she may require a more detailed briefing. Therefore, if for example the dispute involves a copyright matter, it is highly recommended that the mediator knows something about copyright law. Just as when a dispute involves family law it is highly recommended that the mediator is an experienced family lawyer.

In many ways, the considerations are the same as when you would select an arbitrator.

On the other hand, it should be remembered that the more important skill-set of the mediator is his or her training and experience in the mediation process. If you had to choose between a mediator with lots of experience in copyright law but without adequate training in mediation and a mediator with no experience in copyright law but with extensive training and experience in mediation, be sure to CHOOSE THE TRAINED MEDIATOR!

6. What is the Mediator's Availability Like?

Last but not least is the availability of the mediator. Imagine both parties have settled on the ideal mediator who meets all of the above requirements. As this is a big case, you guesstimate that the mediation will require two days. And now you find out that the mediator doesn’t have two consecutive days available before a date that is almost five months away.

In such a case, I recommend that you check the availability of the next two mediators on your list. The timing of the mediation – and being able to settle it when it is “ripe” – is not to be underestimated.

We will discuss “ripeness” in a future post.

-EvG

Door Number One? Door Number Two? Or Door Number 3?: Choosing the "Right" Mediator?

Eric Van Ginkel — Mon, 08 Mar 2010 07:58:44 -0800

How do you select a mediator in an IP-related dispute?

In 2009, better than 96% of federal cases filed never went to trial. Roughly 12% of those were withdrawn or dismissed on motion. Conclusion: some 84% of all federal cases were disposed of by either direct negotiations or mediation.

If the general federal statistics are any guide, it’s safe to say that the vast majority of IP-related disputes are settled either by direct negotiations or mediation. Regrettably, we don’t know which settlements are achieved in mediation. Suffice it to say that mediation plays an important role in the settlement of IP-related disputes.

There are quite a few steps attorneys can take in advance of mediation that will contribute to a successful mediation. While I leave other steps to a future post, clearly one of the most important items is the selection of the “right” mediator. But how do you accomplish that?

When searching for the "right" mediator for your IP-related dispute, you should ask six questions... I will discuss them in descending order of importance and will provide the top three today and follow up with the next three tomorrow:

1. What Training has this Mediator Received?

The mediator must have received formal, preferably extensive, training in dispute resolution. As in most states, anyone can put up a shingle that proclaims that he or she is a mediator, the parties need to investigate what formal training the mediator has received.

I recommend a mediator who has received at least a Certificate in Dispute Resolution, or its equivalent, from a law school that has a reputable dispute resolution institute. A Certificate from the Straus Institute at Pepperdine Law School means the mediator has received at least 14 law school units (14 hours per unit for a total of 196 hours) of instruction and practical training in dispute resolution. A Master’s degree means he/she has received at least double that.

2. How Much Experience Does the Mediator Have?

The mediator needs to have a fair amount of experience as a neutral. Certain mediation skills cannot be taught and really come only from doing it for quite a while.

3. How is the Mediator's Reputation?

The mediator must have a reputation as a good and effective mediator. There are mediators who have had all the training there is to be gotten, have done a lot of mediations and have still not mastered the craft. A good and effective mediator will have certain personality traits, including flexibility, creativity, patience, persistence, knowing how to set the “climate” of a mediation session, and (most importantly) will be able to instinctually guide the parties to a settlement.

These are qualities a mediator either does or does not have. They are hard to define, and practically impossible to learn, but they are vital when it comes to breaking an impasse and achieving a settlement.

To be continued…

Introducing Mary Zachar!

Mary Zachar — Tue, 02 Mar 2010 15:05:51 -0800

PROFESSIONAL BACKGROUND: Mary Zachar is a lawyer and mediator with a contemplative law practice specializing in business and copyright matters. After practicing business litigation in Los Angeles for 25 years and raising two daughters, she returned to her alma mater, Indiana University School of Law in Indianapolis, Indiana, to pursue an LL.M. in Intellectual Property under Kenneth Crews, now Director of Columbia University’s Copyright Advisory Office.

While working on her LL.M., Mary taught employment law to IUPUI undergraduates, and served as a pro bono mediator, assisting Steve Tilden, Director of Mediation with the Indiana Civil Rights Commission. As she finished her thesis, she also served as a juvenile court public defender, witnessing the need for mediation of disputes and conflicts within the criminal justice system at the adjudicative stage, as well as post-conviction restorative justice. Having recently returned to Los Angeles, Mary is delighted to join us at the IP ADR Blog to expand on her LLM training to show how mediation can serve the interests of those operating under the default provisions of the Copyright Act, as well as those whose creative drafting measures may conflict with the intentions of others.

ADR TRAINING: Mary has trained in both Indiana and Los Angeles, and is an advocate of mediation for the resolution of conflict, agreeing with Kenneth Cloke that at the heart of every conflict is a place of reconciliation awaiting skillful resolution.

EDUCATIONAL BACKGROUND: Mary holds a J.D. and LL.M. from Indiana University School of Law- Indianapolis.

Why Pre-litigation Mediation Works best for All Authors

Mary Zachar — Tue, 02 Mar 2010 11:24:55 -0800

U.S. Statutory Remedies Unavailable to Unregistered Berne Foreign Authors, Making Pre-litigation Mediation a Good Strategy to Resolve Infringement Disputes for All Authors

Whether you are eligible under Section 412 of the U.S. Copyright Act to recover statutory damages plus attorney’s fees and costs depends on timely registration of the work with the U.S. Copyright Office. To obtain the benefits of Section 412 in a copyright infringement action as provided by Sections 504 and 505, you need to register before the infringement occurs, or within the first three (3) months after first publication of the work:

§ 412. Registration as prerequisite to certain remedies for infringement

In any action under this title, other than an action brought for a violation of the rights of the author under section 106A(a), an action for infringement of the copyright of a work that has been pre-registered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c), no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for —

(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or

(2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.

Judge William Pauley of the Southern District of New York, in Elsevier B.V, v. UnitedHealth Group, Inc., 2010 U.S. Dist. LEXIS 3261 (S.D.N.Y. January 14, 2010), recently confirmed that owners of foreign Berne member works, while not required to register their works for U.S. copyright protection or as a condition to bringing suit in the U.S., will not benefit from the Act’s statutory damages and attorney’s fees unless registration occurs as described in Chapter 4 of the Act. National equal treatment requires nothing more – all unregistered works, whether foreign or U.S. authored, receive no statutory litigation benefits unless registered.

Elsevier, a publisher, sought a declaratory judgment that the Berne Convention requires equal treatment and that no formalities could be asserted against member countries denying them the full panoply of rights and benefits afforded nationals within any member country. Despite a good argument that Section 412 violates the Supremacy Clause, Article IV of the U.S. Constitution, the court found that Congress was satisfied that the statutory incentives for registration were not preconditions to enjoyment and exercise of copyright, and that Section 412 did not condition all meaningful relief on registration.

Naomi Jane Gray’s new Blog, Shades of Gray, presents a detailed discussion of the arguments presented in Elsevier, including preemption and treaty interpretation. Her most compelling comment for how this decision affects ADR and Copyright practice is that:

“Statutory damages are critical in cases where it is difficult to prove actual damages, and provide copyright owners with significant leverage in settlement negotiations. Thus, Section 412 acts as a powerful incentive for authors and owners to register their works promptly.”

When a foreign author has not registered a work in the U.S. but discovers an alleged infringement which should be addressed in a U.S. court, an Owner of an unregistered foreign copyright may be better off seeking pre-litigation mediation of an infringement dispute, often a more viable and less expensive alternative to litigation.

While we must assume that the alleged infringer will discover that the Owner has not registered, and lacks the leverage of the Act’s remedies for past wrongs, immediate registration upon discovery of the infringement can afford the Owner statutory remedies for prospective infringements should the infringing conduct not be resolved in mediation.

Mediation of copyright disputes is a good way to proceed in all copyright infringement disputes. As demonstrated by Elsevier, unless an Owner (whether foreign or domestic) registers the work in the U.S. timely, mediation may be the most reasonable way to proceed, allowing creative prospective solutions to alter the default paradigm of copyright law.

Welcome Back to the IP ADR Blog!

Eric Van Ginkel — Mon, 01 Mar 2010 12:21:37 -0800

Today is the first of March, 2010. As you may have noticed, the Blog has been dormant for a while, as we worked out the details of the transition from Victoria Pynchon’s eminent leadership of this Blog to my role as blogger-in-chief.

We are in the process of putting together a new team of contributors, and you will see their names, bio’s and photo’s appear in the coming weeks.

Today, I want to introduce you to one of our new contributors, Mary Zachar, an eminent lawyer with extensive experience in both intellectual property issues and alternative dispute resolution. Her discussion of the recent Elsevier v. UnitedHealth Group case is both timely and thought-provoking. It once again reminds us that it pays to register one’s copyright and that mediation often is the best solution for both parties.

As for me, in the next few weeks I intend to return to some of the more basic questions that underlie the very nature of this Blog:

First, why mediate and arbitrate an IP-related dispute instead of filing an infringement action in court?, and

Second, how do you choose a good mediator to help parties resolve an IP-related dispute?

So, stay tuned!

Eric van Ginkel

The IP ADR Blog Continues

Eric Van Ginkel — Thu, 07 Jan 2010 15:36:03 -0800

As I mentioned in my last post, I decided to more or less abandon the IP ADR Blog and pursue a more general blog about Commercial ADR, including arbitration and mediation, focusing on the business of business and the substantive laws with which business people and their lawyers must grapple, recommending litigation in some cases, arbitration occasionally and mediation and settlement (a lot!)

One of the long-standing members of the IP ADR Blog and IPADR.COM, as well as my good friend and Straus Institute colleague Eric Van Ginkel, will be picking up the baton and continuing to write about IP issues, both nationally and internationally, with the assistance of attorney Robert Rose at Sheldon Mak and a few other IP experts. Even I'll be staying around and contributing a post or two whenever I have IP thought.

IP ADR Blog Merges with Commercial ADR Blog

Victoria Pynchon — Fri, 11 Dec 2009 13:18:46 -0800

I’m merging the IP ADR Blog with a new blog called Commercial ADR – Business Solutions to Justice Problems. I’ll continue to post articles to the Settle It Now Negotiation Blog on matters of general interest to negotiators, including litigators who negotiate the settlement of lawsuits and some of my colleagues might post occasional IP ADR Blog articles here. At some point, however, I'm going to have to shut the IP ADR Blog down.

After three years of negotiation and general ADR blogging, I feel the need to narrow my Negotiation Blog posts and expand my IP ADR Blog posts to the type of work that consumed the vast bulk of my 25-year litigation and trial career – general commercial litigation.

Since 1982, I’ve been litigating and trying commercial cases of all stripes, including the small business dispute. I’ve represented garment manufacturers, car dealers, medical groups, insurance carriers, cable companies, import/export businesses, banks, title companies, stock brokerages, law firms, hospitals, agri-business, contractors, and the people who own, manage or represent these commercial concerns in-house. I’ve also represented the interests of small business people in the predictable conflicts in which they become involved, including partnership disputes and other actions in which fiduciary duties or contractual obligations have allegedly been breached.

In the course of handling business-to-business disputes, I’ve prosecuted and defended legal actions for copyright, tradename, trademark, and patent infringement; securities fraud; and, insurance coverage (particularly concerning catastrophic environmental liabilities); antitrust; and, unfair competition disputes. I have also represented both the Plaintiffs and the Defendants in nationwide class actions; and, from time to time, represented attorneys and accountants in malpractice cases. I even have a small amount of experience representing employees and employers in wrongful termination and discrimination cases, but certainly not enough to call myself an expert in that field.

In the course of my ADR career, I have continued to focus my practice on commercial disputes, although I have also mediated employment, legal and medical malpractice, and personal injury cases.

Colin Powell famously said that the most important knowledge to possess in international diplomacy is the “other guy’s decision cycle.” What interests must the client serve and to whom does he or she answer? What potential damage might there be to the career of in-house counsel or a high-level manager if the litigation goes south or the mediated settlement agreement angers the Board, the shareholders or even the public? Are there tensions between counsel and client that should be resolved if the settlement reached will serve everyone’s interests? Are there upcoming mergers or other significant corporate events that make “circumstances” more important than the merits of a particular piece of litigation?

This describes just the tip of the iceberg of the commercial litigation and settlement “decision cycle,” I know intimately. I know what keeps clients awake at night because their concerns have been my business for more than a quarter of a century. I also know at greater depth than I know anything else the competing demands and hard hours my new “clients” – commercial litigators – labor under on a daily basis. And having cut the law firm umbilical cord five years ago, I finally know first hand the challenges of running one’s own business.

This is what I bring to my mediation practice, along with the negotiation and mediation skills I have been studying, writing about, and teaching with great diligence for the past five years. I continue to teach trial and deposition advocacy for the National Institute of Trial Advocacy just to keep my hand in the adversarial system. I also continue to follow developments in the law of all of the specialties that consumed my practice as an attorney.

And then there’s that LL.M in Conflict Resolution that perplexes most people in the legal community. One of my dearest friends – a man who served as my discovery referee for seven years – asked me “how many ways are there to stir the mediation pot?” Thousands, it turns out, particularly given the enormous progress that has been in the science of the mind, the study of decision-making and the examination of cognitive biases since I was at University.

Sitting on this side of the table for the past few years has been as confounding as it is exhilarating. I remain steadfastly convinced that the principle problem at hand is a commercial one to which there is almost always a better business, than a legal, solution. That does not mean that I ignore or marginalize the “merits” or “positions” of the parties. The ability to analyze the facts and the law of matters that have been in litigation for years — sometimes decades — in several hours or a couple of days is the mandatory minimal qualification for anyone who wishes to help litigators resolve commercial disputes.

Though the law “monetizes” injustice, no one – not even the most cynical Fortune 50 client – wants to settle a case that leaves the bitter taste of injustice in his mouth. To deliver the benefits of the legal system to our clients we must never forget that they seek out the services of the “justice system” because they believe they have been treated unfairly. So it is that a critical element of every “commercial” solution to every legal/business conflict, is the resolution – even at the level of “rough” justice – of what brought clients to lawyers in the first instances – their perception that they have been cheated, blackmailed, insulted, taken advantage of, lied to, coerced or disrespected.

After twenty-five years of legal practice, I can say with conviction that the highest and best use of every mediator is to help the lawyers help their clients obtain – at a minimum – a “deal” that not only releases them from the trap of litigation, but one that releases them from the grip of injustice.

All of these goals; each of these interests; and, every one of these skills, are possessed by dozens of mediators with whom I have worked or who I have observed in the course of their work. I’m certainly not the best nor the only passionately competent commercial mediator in the business. I’m just one of them.

This new Commercial ADR Blog will cover not only negotiation and mediation strategy and tactics — including tips for resolving thorny legal and commercial problems, but also the social psychology of conflict as it relates to the business of commerce. I will also cover developments in commercial law and civil procedure that are particularly relevant to the settlement of litigation.

I hope you’ll join me here.

Von Dutch Tradename Settlement Gives Rise to Legal Malpractice Action and Questionable Mediation Confidentiality Decision

Michael D. Young — Sat, 14 Nov 2009 08:06:54 -0800

by Michael D. Young

Here we go again. A California appellate court has judicially created another exception to mediation confidentiality -- this one for alleged attorney malpractice occurring during the mediation but outside the presence of the mediator or opposing parties. Cassel v. Superior Court (.pdf).

Essentially, the court (in a 2-1 vote) holds that a communication with one's attorneys only -- one that does not involve the mediator or the opposing party -- is not part of the mediation process, does not fall within the policy reasons supporting confidentiality, and hence is not protected by California's mediation confidentiality statutes.

For those who are interested, I go through the case in a little more detail below. However, at this point, I have a question:

Is there a public policy reason to protect communications between an attorney and a client (and only between them) during the mediation process? In other words, do we need to protect those private communications in order to reap the benefit of mediation? Or are the policies behind confidentiality amply supported if we only protect communications with the mediator and opposing parties? I had always thought of confidentiality as being necessary to encourage frank and candid discourse between the disputants. Is it also necessary to encourage frank and candid discourse between a client and his or her own counsel?

SUMMARY OF OPINION

In this new case, Cassel v. Superior Court, the client alleged that his attorneys bullied and coerced him into signing a settlement agreement in mediation that was for less money than the client wanted.

He wanted to introduce evidence of things his attorneys said and did during the private time in the mediation when neither the mediator nor opposing party were present.

The debate was: (a) were these communications simply privileged under the attorney-client privilege (and thus waived in a subsequent malpractice claim); or (b) were they also covered by the mediation confidentiality statute (not a privilege), and thus inadmissible even in a subsequent malpractice claim.

The trial court held the communications inadmissible under the mediation confidentiality statutes, and then stayed the proceedings to allow the parties to take a writ.

The appellate court looked at the policy behind confidentiality and decided it did not apply to communications between a party and his or her own counsel:

Legislative intent and policy behind mediation confidentiality are to facilitate communication by a party that otherwise the party would not provide, given the potential for another party to the mediation to use the information against the revealing party; they are not to facilitate communication between a party and his own attorney.

The court quoted language from other cases describing the purpose of confidentiality to encourage frank discussions with "the mediator" and "the opposing party.The court acknowledged the Wimsatt case (familiar to our California brethren) which upheld confidentiality in the face of malpractice claims.

That court reluctantly stated:

[t]he stringent result we reach here means that when clients ... participate in mediation they are, in effect, relinquishing all claims for new and independent torts arising from mediation, including legal malpractice causes of action against their own counsel.

The Cassel court sidestepped this by saying the quoted language was not the Wimsatt court's holding and thus was not binding authority. Instead, the Cassel court determined that the attorney/client communication, despite being held during a mediation process and addressing issues such as whether the client should settle and for how much, was not "linked" to the mediation: "there is no readily identifiable link to the mediation in the communications." ["Huh?" says Mike.]

As another example of why the communications were "tenuous," and were "more related to the civil litigation process as a whole rather than to the mediation:"

For example, according to the record, Cassel[] expressed in his deposition that, during the course of Wasserman Comden's conference with their client that occurred after the mediation process had begun, he was evaluating the value of the case as he always does when it appears that the case will go to trial.

[Can I say HUH? a third time? Of course one values a case when it appears it will go to trial. One values a case before it is filed and at every stage thereafter. One also values a case in mediation; and indeed, one uses the mediation process to refine and test that valuation. According to this court, simply because the communication was of a type that occurs as part of the trial process, it is not sufficiently "linked" to the mediation to enjoy confidentiality protection.]

After all this wind-up, the court finally got to what I think is the main point:

That is, as we previously concluded, they were not communications between “disputants” and the “mediator,” as required to come within the definition of a “mediation” or “mediation consultation” and, therefore, to qualify for protection under mediation confidentiality.

In other words, if the communication does not involve the mediator or the opposing party, it is not part of the mediation process, and hence is not covered by the mediation confidentiality statutes. The attorneys were not part of the class of persons who confidentiality was designed to protect.

One thought that comes from this -- the discussion between counsel and client during the mediation process regarding the wisdom of settlement will inevitably include an analysis of information and communications from the mediator and opposing party. If these private attorney/client communications are admissible, won't that necessarily result in the disclosure of the mediator's and opposition's thoughts and actions? Would this exception swallow the rule? The Court anticipated this argument, and sidestepped it, with the following:

Neither Cassel nor Wasserman Comden assert that the communications contained information which the opposing party (or its representatives) or the mediator provided during mediation or otherwise contained any information of anything said or done or any admission by a party made in the course of the mediation.

The dissent noted that the confidentiality statute covers all communications in mediation, and that the court should not judicially create new exceptions. That's the legislature's job.

[Ed. note: I reached the same conclusion over at the Negotiation Law Blog and also raised some questions about the recent Carrie Prejean/Larry King Dustup at the same time here]

Insurance Coverage for Trademark Infringement Actions

Victoria Pynchon — Fri, 13 Nov 2009 19:45:38 -0800

Whether a commercial case can be settled or not often depends upon the existence of insurance coverage. This opinion - answering the question "yes" for a trademark infringement action - was sent down by the California Court of Appeal today.

Caveat reader: I haven't read the case yet and am only providing the summary provided by a local legal rag below (I'll come back to this).

Where insurance policy defined covered "advertising injury" as "injury arising out of one or more of the following offenses: a) oral or written publication of material that slanders or libels... b) oral or written publication of material that violates a person’s right of privacy; c) misappropriation of advertising ideas or style of doing business; or d) infringement of copyright, title or slogan," such policy included trademark infringement actions. Prior publication exclusion applies to trademark infringement claims where the claimed offending words in underlying action both before and during the policy period are identical. Kim Seng Company v. Great American Insurance Co. of New York - filed November 13, 2009, Second District, Div. Five.

Are We Having a Conversation or a Meeting with the Choir: Cass Sunstein and Cyperpolarization

Victoria Pynchon — Thu, 29 Oct 2009 09:18:32 -0800

If you'd like to better understand what's really going on in separate-caucus mediation and, by the way, also in famous "conversation" happening in the blogosphere, do check out the New Yorker's Cass R. Sunstein and Political Rumors on the Internet by Elizabeth Kolbert. Excerpt below and my own short article on conspiracy theories in the adversarial system here.

There is virtually no opinion an individual can hold that is so outlandish that he will not find other believers on the Web. “Views that would ordinarily dissolve, simply because of an absence of social support, can be found in large numbers on the Internet, even if they are understood to be exotic, indefensible, or bizarre in most communities,” Sunstein observes. Racists used to have to leave home to meet up with other racists (or Democrats with other Democrats, or Republicans with Republicans); now they need not even get dressed in order to “chat” with their ideological soul mates.

“It seems plain that the Internet is serving, for many, as a breeding group for extremism, precisely because like-minded people are deliberating with greater ease and frequency with one another,” Sunstein writes. He refers to this process as “cyberpolarization.”

Put the Web’s filtering tools together with cyberpolarization and what you get, by Sunstein’s account, are the perfect conditions for spreading misinformation.

Arbitration's "Down" Side: Two Years of Proceedings; $20 Million in Punitives; and, No Appeal

Victoria Pynchon — Tue, 27 Oct 2009 09:19:04 -0800

This just in from the Ninth Circuit -- In re Bosack -- an opinion affirming the trial court's refusal to vacate an arbitration award totaling nearly $20 million after proceedings that "lasted two years, during which more than sixty days of hearings were held, more than twenty witnesses testified, and over five hundred exhibits were entered into evidence."

The contested award?

The arbitration panel's finding that Respondents Bosack and Lerner "had 'acted with malice and oppression,' and that [Petitioner] Soward was entitled to punitive damages of $10,999,494 against Bosack, and $8,555,162 against Lerner."

Doctrines discussed: functus officio; manifest disregard of the law; the scope of review ("whether or not the panel’s findings are supported by the evidence in the record is beyond the scope of our review";) and, whether the Court can vacate an award based upon the argument that a punitive damages award is unconstitutional (no).

Not quite an arbitral Bleak House but no cost-efficient proceeding either.

The Benefits of Interest-Based Negotiation in IP Disputes

Victoria Pynchon — Tue, 27 Oct 2009 07:59:01 -0800

I've been thinking jurisprudential thoughts for the last couple of weeks because I'm finishing the second draft of the ABC's of Conflict Resolution and because I made the terrible error of trying to cover the history of dispute resolution in Blawg Review # 234 (as Ed. commented: "war and peace? best of luck with that!)

Yesterday, I finished J is for Judge and L is for Lawyer (and moved on to the revision of P is for Paranoid). So I was thinking a lot about the rights, obligations, and remedies business; adversarialism and its discontents; and, competitive-position based negotiation. Then I had dinner last night with Stephanie West Allen of Idealawg and Brains on Purpose (she is here for a neuroscience conference at UCLA) and we talked about the theory and practice of mediation -- separate caucus position-based facilitated distributive and competitive bargaining vs. client-centered interest-based transformative mediation.

My brain hurts.

And I still have to revise K is for Kin (-selection); T is for Terrorist; and V is for Victim before the week is out.

So I'm just going to provide you with something to think about from a year 2000 article provocatively entitled Forget the Mechanics and Bring in the Gardeners: an Exploration of Mediation in Intellectual Property Disputes.

Irrespective of the source of the conflict between the parties, it must be formulated in court as a disagreement over norms and/or over factual matters... The verdict of the court has an either/or character; the decision is based upon a single, definite conception of what has actually taken place and upon a single interpretation of the legal norms.

Fisher & Ury, supra note 53 at 4-5: "When negotiators bargain over positions, they tend to lock themselves into those positions... As more attention is paid to positions, less attention is devoted to meeting the underlying concerns of the parties... Bargaining over positions creates incentives that stall settlements... Positional bargaining becomes a contest of will" At 4-5.

As Julie Macfarlane reiterated, an emphasis on litigation reflects, ".. .the dominance of a 'rights' culture, seen in both the justice system and public attitudes towards conflict and reconciliation." The court therefore, focuses on rights, and winners and losers, while mediation is designed to focus on parties' interests' and mutual gain. Julie Macfarlane, "The Mediation Alternative" in Julie Macfalane, ed., Rethinking Disputes: The Mediation Alternative (Toronto, ON: Emond Montgomery, 1997) at 5.

The courts' focus on rights affects the negotiation strategies that parties utilize. As I mentioned, most of the early texts used in law schools to teach negotiations, for example, focused on the "competitive strategy" and at least implicitly endorsed such a strategy. The competitive negotiator tries to maximize the benefits for her client by persuading her opponent to settle for less than the opponent would have settled with at the beginning of the negotiation. The underlying premise of the competitive strategy is that all gains for one's own client are obtained at the expense of the opposing party. In other words, competitive negotiators see the negotiation as a competition over a fixed pie. As such, these negotiators work to convince their opponents that their settlement alternative is not as advantageous as they previously thought, in turn lessening the opponent's confidence in their case and thereby inducing them to settle for less than they originally asked. The competitive negotiator therefore, moves "psychologically against the other person," with behaviour to unnerve the opponent,68 and may employ very strategic tactics:

• arrange to negotiate on their own turf;
• balance or slightly outnumber the other side;
• designate one of their demands as a "precondition";
• make the other side tender the first offer;
• make the first demand very high;
• make the other side make the first compromise;
• invoke law or justice;
• be tough -- especially against a "patsy;"
• appear irrational where it seems helpful;
• claim that they do not have the authority to compromise; and

• will themselves promptly reduce the agreement to writing.⁶⁹

Not surprisingly, competitive negotiators expect similar tactics from their opponents and therefore mistrust them.

It is interesting to note that law, through its legal principles and male's historical domination of the legal profession and the public sphere more generally, may have in fact facilitated these competitive negotiation strategies. These competitive negotiation strategies, lined with deception and mistrust, seem fuelled, or at least reinforced, by certain common law principles like "caveat emptor", which warns, "let the buyer beware."Although there is no consensus when caveat emptor came into being most agree that it was the case of Lopus, which had been credited as the originator of the doctrine of caveat emptor under English common law. The decision was recognized for the proposition that English courts were not interested in enforcing the fairness of an exchange because they thought contracting parties should handle such matters themselves. Couple legal principles like caveat emptor with how men have been socialized to be competitive and to play a prominent role in the public sphere and we begin to see how this competitive negotiation strategy came to flourish. Put plainly, the courts and the legal system in general seem to facilitate competitive negotiation tactics.

For anyone who's made it this far, hopefully, LexBlog has gotten my comment section working again for you to leave your thoughts.

Dispute Resolution and Social Media Online Event Announcement

Victoria Pynchon — Sun, 25 Oct 2009 08:12:35 -0800

ODR WEEK 2009 Web 2.0: Going from OH? To KNOW!

Friday October 30th

2:30pm - 3:30pm est. (it will be archived too!)

Spots limited, see below.

Join Jeff Thompson (www.enjoymediation.com & Centre For Peace & Social Justice) and an all-star lineup of Mediate.com featured bloggers:

Diane Levine (www.mediationchannel.com)
Victoria Pynchon (www.Negotiationlawblog.com)
Tammy Lenski (www.MakingMediationYourDayJob.com)
John Ford (editor, www.mediate.com)

They will be discussing web technology!

Find out how and why they do it (successfully!), the benefits and how it is has helped them. Learn tips and skills that can help your practice too!

***FREE*** But spots are limited: sign up by emailing Jeff @ mediator.jeff@gmail.com

If you are interested in submitting a question prior to the event for the panel, email Jeff at the address above or simply post a comment in this post.

Go to www.EnjoyMediation.com for more info on this event and for more info on ODR Week, go to www.ODR.info

This event is presented by EnjoyMediation & the Centre for Peace and Social Justice, Southern Cross University, Australia.

Using the Power of Social Media to Win Copyright Fight

Victoria Pynchon — Fri, 23 Oct 2009 07:47:19 -0800

The following from Carolyn Elefant at My Shingle:

[T]his recent article from NPR . . . reports on Rock Art, a local Vermont brewery that successfully fended off a copyright challenge by the national company that makes Monster energy drink. Rock Art didn't win as a result of a clever legal team. In fact, after Rock Art received a cease & desist from Monster, demanding that the company stop using the name Vermonster in connection with its drink, Rock Art's lawyers told the company that fighting a national corporation would be too pricey and that the company was better off registering a less controversial trademark. After Rock Art's lawyers backed down, Rock Art launched a social media campaign, enlisting customers to help with the effort. The campaign went viral and ultimately, the bad publicity lead Monster to back down.

Now that's alternative dispute resolution.

We Welcome IP Watchtower to the IP Blogosphere!

Victoria Pynchon — Tue, 20 Oct 2009 09:49:51 -0800

That person ringing your virtual doorbell is not -- I repeat not -- someone trying to sell you magazine subscriptions or somebody's else's religion. No! That's the incredibly bright, accomplished and talented Erica Bristol delivering up-to-the-minute news and analysis on the most important intellectual property issues of the day.

That's right! It's Erica! Who has an extremely cool new website (Erica Bristol, Mediator) and a terrific new blog -- The IP Watchtower.

Here are Erica's creds:

Erica Bristol is an attorney and mediator practicing in Southern California. She received her law degree from the UCLA School of Law in 1999. Her practice areas include intellectual property, contracts, real estate and business transactions. Ms. Bristol completed the Los Angeles County Bar Association/Dispute Resolution Services' Mediation Training Program. She serves as a federal settlement officer for the United States District Court, Central District and a court-appointed mediator for the Los Angeles Superior Court. Ms. Bristol is a member of the Trademark and Licensing Committees of the Intellectual Property Section of the State Bar of California and the Business & Corporations and Corporate Law sections of the Los Angeles County Bar Association.

We promised not to mention that you can find Erica astride her motorcycle most weekends but what are girlfriends for if not to make one another way more interesting than they at first appear?

Negotiating Resolution with Hi-Lo Agreements

Victoria Pynchon — Tue, 22 Sep 2009 09:16:11 -0800

Below, ADR Services colleague Ralph Williams' September 2009 ADR Tip.

High - Low Agreements, also known as "Mini - Maxi" agreements are used to limit or bracket arbitration awards and jury verdicts. They can be made at any time before the award/verdict is rendered. Below we discuss the mechanics of a high - low agreement as it usually occurs in an arbitration.

Prior to commencing the arbitration, the plaintiff agrees to limit its recovery ($500,000). In consideration the defendant agrees to pay a sum certain ($100,000). If the award ($700,000) is more than the high, it is reduced to the high number ($500,000). If the award ($20,000 or a defense verdict) is less than the low, the award is increased to the low number ($100,000). If the award falls between the two numbers ($350,000) that number is the award.

When implementing a high - low agreement, consider whether to tell the arbitrator its parameters. Generally, if the arbitrator knows the parameters of a high - low agreement, you will get a result between the numbers. Therefore, if you are the defendant with the chance at a defense verdict or the plaintiff with the chance of a homerun, you probably do not want to disclose the high - low agreement's numbers.

When using a high - low agreement in an arbitration, where the arbitrator does not know its parameters, request an interim award, because the arbitrator loses jurisdiction on signing the award, except for limited grounds to correct. After receiving the interim award, reveal the high - low agreement's parameters and have the arbitrator enter the final award in accordance with the agreement.

When using a high - low agreement in a bench or jury trial, it is best practice to let the trial judge know the existence of the agreement without revealing its parameters, so as to avoid the perception that you are manipulating the court and/or wasting judicial resources.

Negotiating Women at ForbesWoman

Victoria Pynchon — Mon, 21 Sep 2009 08:45:11 -0800

Yes, that's my article right below Michelle Obama's. Sometimes you've just GOT to brag!

If You Haven't Given Legal Blogging a Second Thought, Think Again!

Victoria Pynchon — Fri, 18 Sep 2009 11:49:54 -0800

If this tremendous article on legal blogging (and in particular ADR blogging) from this summer's ABA Dispute Resolution Magazine Only Connect the Impact of Blogging on the Field of ADR by Diane Levin doesn't make you want to immediately run to blogger.com and begin posting missives to the legal world, well . . . legal blogging isn't right for you. Excerpt below and full article at link above.

In his 2006 book Conversation: A History of a Declining Art, author Stephen Miller evoked a golden age of discourse that England enjoyed in the 18th century. The seat of that renaissance of conversation was the coffeehouse, where wit and aphorism flourished. Men gathered to warm themselves with a dish of coffee, transact business, gather news, enjoy the latest gossip, and of course converse.

Although the British coffeehouse has largely faded from public memory, a spiritual descendant has emerged possessing many of its ancestor's most distinctive attributes: the blog. Like its 18th century predecessor, the blog is simultaneously marketplace, library, and public square, with a wealth of views and ideas clamoring for consideration, attracting businesspeople, scholars, thinkers, writers, celebrities, and ordinary citizens.

ADR professionals and scholars perhaps would have felt at home in the 18th-century coffeehouse. We and the coffeehouse share similar virtues: ours is a field that promotes and pursues the exchange of ideas and information. It is fundamentally about conversation. And, like England in the 18th century, the ADR field is enjoying its own renaissance in discourse, one that flowers lushly online, thanks to the phenomenon of blogging, drawn to its capacity for bringing people and fresh thinking together.

For four years as a blogger, I have chronicled the impact that blogging has had on ADR. I began blogging at MediationChannel.com [FN1] when I was one of only a handful of men and women blogging about dispute resolution. During that time I have also served as the ADR blogosphere's taxonomist, tracking blogs worldwide at ADRblogs.com, [FN2] a blog catalog that today lists almost 200 blogs from 29 countries.

During those four years--a long time on the Internet, where change happens rapidly and yesterday is old news--I have witnessed firsthand the changes blogging has brought to our profession and to the work that many of us do. For ADR bloggers and our readers, the phenomenon of blogging has dramatically affected us and the way we practice in three key areas: the business of ADR, the dissemination and discussion of information and ideas, and professional networking. I invite you to explore them with me, following a brief introduction to blogs.

Challenges to Mediation and Mediated Settlement Agreements in the Courts with a Link to ADR Malpractice Series

Victoria Pynchon — Tue, 15 Sep 2009 09:13:31 -0800

Pertinent to my new series on avoiding ADR malpractice, there's a great (but now dated) law review article entitled "Disputing Irony: a Systematic Look at Litigation Concerning Mediation" (.pdf) ( Harv. Negot. L. Rev, 2006) (summary here) that is a "must read" for anyone who settles many of their lawsuits in mediated negotiation sessions.

Hamline University has also conducted a survey of litigation about mediation which is best communicated in the following charts appearing on Hamline's Mediation Case Law Project Web Page (hat tip to conflict consultant Debra Healy for the reference).

Nota bene!