Best Practices for Technology Arbitrations

Technology disputes are often quite complex, and they frequently require a speedy and cost-efficient resolution. Some organizations are adopting special rules for technology arbitrations, while others rely on their comprehensive rules with expedited procedures, managed by an experienced arbitrator with expertise and managerial skills to can control the proceedings and work with the parties to implement a flexible resolution process that suits the dispute.

The rules and the arbitration provider are usually set forth in the arbitration clause in the transaction documents. However, the parties can agree on the practices they want to integrate into their arbitration. This article looks at best practices that the parties should consider in the context of the JAMS Comprehensive Arbitration Rules and Procedures, but may be integrated into any provider’s rules, with the consent of the parties and a knowledgeable arbitrator. (Drafting arbitration clauses for technology transactions will be covered in a subsequent blog.)

Remember: Arbitration provides you with the ability to design your own process. Work with the arbitrator to implement it. 

1. Use one arbitrator rather than three, except for extraordinarily large cases that justify the need for three decision-makers. Three heads may be better than one, but schedules will be more difficult to coordinate among counsel and three arbitrators, a problem when expeditious resolution is important. On the other hand, where bet-the-company stakes are involved, or precedent-setting interpretation of licenses and contracts, three arbitrators provide a protection against one arbitrator getting it wrong. Arbitrators do benefit from deliberating with each other in difficult, technical cases. 

2. Select a managerial arbitrator with experience in technology and intellectual property cases. A managerial arbitrator is one who knows how to manage a case to bring it to hearing promptly while still enabling all parties to be prepared. Th arbitrator may push one party or another, but he or she will take seriously the obligation to bring the case to resolution as promptly as possible. 

3. Schedule an initial case management conference promptly. An experienced arbitrator will do this, even over a party’s objection. The case management conference is where the arbitrator and parties set the schedule and road map for the entire case. Prepare a list of topics to be discussed and included in the arbitrator’s initial arbitration management conference order. 

4. Topics to be discussed at the initial arbitration management conference.

• If possible, the arbitrator should request that all parties have not only counsel but also parties’ representatives at the initial arbitration management conference, to insure a knowledgeable discussion of technology issues.
• Discovery deadlines and hearing schedule
• The nature of the technology-related issues in the dispute; what unique problems are likely to arise
• Production and management of sensitive technology-related information
• The need for protective orders and confidentiality orders (see below)
• The discovery of and taking of expert evidence
• The need for phasing of discovery and hearings
• The form of the award 

5. Adopt expedited procedures. Technology disputes may be complex, but they also often (actually, almost always) need expedited resolution. Technology is valuable, and having the parties and the technology tied up in arbitration interferes with the parties’ business, the funding of startups and the development of further technology. On balance, aim for expeditious procedures. (E.g., JAMS Expedited Procedures.) Expedited procedures set limits on discovery, motions, and briefing, as well as deadlines for discovery and the hearing. 

6. Stipulate to or apply for a protective order regarding confidential information. Technology disputes often concern valuable technical and scientific information that is confidential to one of the parties. This confidential information comes in multiple forms, and each party is likely to have a lot. Prepare a proposed protective order for the arbitrator to sign to cover information that each party will be producing in the proceedings. 

7. Stipulate to or apply for a confidentiality order governing outbound communications, orders, and awards. Arbitration is private (the public may not attend hearings or view the docket), but to provide confidentiality vis-a-vis third parties, you need an agreement confirmed by an order from the arbitrator that prohibits disclosure of all information revealing materials in the arbitration proceedings, as well as even the existence of the arbitration. And don’t forget to protect the award. Without an order confirming that the award is confidential, the winning party may broadcast it and either party may file it in court to confirm or vacate. Agree upon or seek an order providing for a confidential version of the award (attorneys’ eyes only) and a sanitized version sufficient for filing in court if needed with a petition to confirm or vacate the award. 

8. Decide whether to use multimode dispute resolution in technology cases. A knowledgeable arbitrator may also be able to assist in mediating parts of the case in the course of the arbitration, moving it along toward resolution more effectively. Multimode dispute resolution, or arb-med-arb, is a valuable technique and requires careful documentation and execution. (A subsequent blog will discuss multimode dispute resolution.)