[PODCAST] The Role of ADR in Resolving IP Disputes in the Life Sciences Industry

In this podcast, Steven Bauer, mediator and arbitrator at JAMS, and Sarah Geers, partner at the global law firm Jones Day, discuss the types of intellectual property disputes they are seeing in the life sciences industry and the advantages of using ADR to resolve these cases, as well as how the process might evolve in the future. They discuss, in particular, the value that an experienced neutral can bring to the table when deciding a life sciences IP dispute, and the benefits that may be reaped in terms of efficiency, cost savings and confidentiality. Steven and Sarah also offer their takes on how to prepare parties for arbitration and how to get the best results from the ADR process.

JAMS - Life Sciences Podcast Transcript

Andrew Longstreth: [00:00:00] Welcome to this podcast from JAMS. In this episode, we're going to explore how ADR can play a pivotal role in resolving IP related disputes in the life sciences industry. With us are JAMS neutral, Steven Bauer, formerly with the law firm Proskauer, where he co-chaired the firm’s patent and intellectual property group and was a member of its international arbitration practice group.

We also have Sarah Geers, a partner at the global law firm Jones Day, where she represents pharmaceutical clients and intellectual property litigation in various venues, including district court arbitration, and at the Patent Trial and Appeal Board.

So, thank you both for joining. Steven, I'll start with you. What kinds of disputes and issues have you been seeing lately?

Steven Bauer: [00:00:51] Well, thanks for having me here today, in addition to the traditional patent infringement cases, which there's no let up on, we're seeing a lot more inventorship disputes and battles collaboration, milestone disagreements, and trade secret.

What you're seeing is there's so much collaboration going on in the life sciences industry that as they move down the path, disputes come up. Whether it's inventorship between universities or between different companies or when things break down, trade secret issues – we see a lot of that kind of stuff now.

Andrew Longstreth: [00:01:25] And Sarah, what about you? What have you been seeing in your practice?

Sarah Geers: [00:01:28] Thanks for having me today as well, and nice to speak with you too, Steve. I mean, I would echo what Steve said. We are seeing a lot of alternative dispute resolution work and activity in areas related to trade secret confidentiality agreements and breaches of those, the types of milestone and royalty disputes that come out of these types of collaboration agreements and, you know, disputes over who gets credit for the work.

And so, we're definitely seeing an uptick in that. As collaborations are increasing. And as Steve also said, we're seeing a lot of the traditional patent infringement actions in federal court that you would expect to see and those are not letting up. But we are seeing in that area also an increase in the competitor versus competitor patent litigation, especially in the biosimilar space.

And that's been a really interesting recent development. Some of the folks that you don't expect to see going after each other are now doing that more frequently. And we're also seeing the continued popularity of the PTAB litigation, and that's also not letting up. There's a slight increase in PGRs now that the AIA has been in effect for 10 years, but that's still relatively uncommon, but you know, that also continues to be an active area.

So, it basically, it's a great time to be an IP litigator. There's lots of places we get to have fun, if you will.

Andrew Longstreth: [00:02:48] Steven, can you talk us through why ADR is advantageous for companies and their attorneys? Why turn to ADR instead of rolling the dice on a bench or jury trial?

Steven Bauer: [00:02:58] I think in the life sciences area, you need a special expertise.

You want the decision finder to have a lot more experience than you might experience in the courtroom. But I think the primary advantages include that the ADR process is completely confidential. Completely. People don't even know that you're in battle and you get a much quicker decision. For this industry where speed to market is so important, a quick decision is really important. People talk all the time about the expense of patent litigation, which budgeted starts in the $5 million range. And an ADR process is an order of magnitude less than that. You can really get to a decision efficiently and inexpensively by somebody who has some idea what they're talking about and it's confidential.

Andrew Longstreth: [00:03:49] Sarah, what would you add to that in your experience? And can you talk about the importance of that neutrals’ experience in how arbitrations or mediations play out?

Sarah Geers: [00:03:58] Absolutely. And I would a hundred percent echo what Steve just said. I think all of that sort of falls into the category of the ability to control how these proceedings go and the flexibility that they provide and the ability to tailor the proceeding to the needs of the case.

And so in district court and the PTAB, there's a lot of standardization of timelines and discovery rules, and it feels sometimes very one size fits all. And so, I think a real benefit of ADR here is that the parties can set their own parameters and can avoid those costs as Steve said.

So that absolutely is a huge benefit of ADR. The other point that you raised related to the experience of the neutrals is also extremely important to the IP and life sciences. There's a lot of categories of knowledge that are beneficial and that they bring that aren't necessarily the case for juries, especially, and also for some judges.

And so, the first one – and probably the biggest one – is the knowledge of technical issues and the fact that the neutrals have the appropriate scientific background. And so that's great and it's great that the parties can come into the arbitration, knowing that the neutrals have those and set those parameters before even beginning.

And that just makes it much easier for the parties to present their case. And to know that the information will be sort of understood the way that it should be for coming to the correct decision. But I think a sort of an underappreciated set of knowledge that the neutrals also bring is a knowledge of the realities of business and how these transactions work, how employees at these companies work and sort of the setting for these disputes and how they arose.

And again, the business background is not necessarily something that the factfinders in other arenas have. And so, I think that's extremely beneficial, especially when it comes to understanding how to resolve these. And, if we're talking about settlement, how to structure those types of settlement agreements.

Andrew Longstreth: [00:06:01] Yeah, absolutely. And Steve, what would you add to that list?

Steven Bauer: [00:06:04] So I can add a couple points here. One is that many neutrals also come in with litigation experience. There are a lot of neutrals who have business experience and come out as in-house counsel. And as Sarah said, understand the business realities, but you also have a good number of neutrals who have had first chair patent litigation experience, and they're able to control the arbitration process.

They're able to focus in on the key issues. They can control runaway discovery. They know how to keep the ADR process on track. The other thing is we've worked a lot with different types of expert mechanisms, so that there's just different ways, rather than just having two experts advocate with just their opinions.

There's all sorts of clever and original ways to have the experts face off on each other and get them to focus. Really focused like a laser on the key complex issues that are between the parties here.

Andrew Longstreth: [00:07:04] Well, we've talked a little bit about some of the benefits, advantages of ADR. How do you get attorneys to prepare their clients for arbitration to get the best out of the process and what should they expect?

Steven Bauer: [00:07:18] So I think the first thing that the attorneys need to explain to the client is this isn't a trial like you see on TV. Arbitration is a different thing. It's not just that you've hired a judge and now you’re off and running like in any other trial, you have a judge who has been around, understands how the process works and has the time of day to give to you.

This isn't a judge who you come in and talk to for 15 minutes once every three months. This is a judge, an arbitrator, who's going to give you as much time as you need as quickly as you need it. So, the parties need to understand credibility is important, focus is important. This isn't the type of case where you raise every single issue you can think of and hope that something sticks, because if you start raising weak issues, you lose credibility.

And you need to remind yourself that there's probably not going to be an appeal. So, you're not trying for the appeal court, which often at the jury level you are. Here, you're trying to win. You have to win in that first instance. And so, you have to present your case really well-focused and credibly.

Andrew Longstreth: [00:08:31] Sarah, you have experience getting a neutral analysis for Hatch-Waxman cases, can you talk about that and how helpful it is?

Sarah Geers: [00:08:41] Yes, it is very helpful. I think it is certainly underutilized in the Hatch-Waxman space, but we're increasingly seeing this as an important step in preparation for trial and clients really do want to know going into trial and planning for trial what to expect and how the case is winding up.

And so, we're seeing a lot more action in that area. And so just to describe a little bit about what it actually means – it's similar to a mock jury for a bench trial, instead of in front of a panel list of doctors it's in front of a panel of mostly former judges or to Steve's earlier points, some esteemed litigators, former first chair, IP litigators, who will evaluate the information presented and then provide their candid feedback on the strengths and weaknesses of how it's presented.

And so, it can be extremely helpful to, for example, test the themes in your case and how they resonate with the factfinder and line up with the evidence. And also, it's an opportunity perhaps not the favorite part for counsel at law firms, but it's an opportunity for the client to see how the members of the outside counsel team performed in this setting before they sort of have the training wheels taken off and do it in front of the judge.

And so, it's also a great opportunity for members of the trial team to practice and to get some experience on their feet before they have to do it in trial as well. And so, for all those reasons, I think we'll see it increasingly popular, especially for these really high stakes Hatch-Waxman cases where you potentially have, you know, billion-dollar products at stake.

Andrew Longstreth: [00:10:23] You know, the life sciences industry is so dynamic. It's innovations play such a crucial role in helping us live longer and better. How do you see the ADR shaping that future? Sarah, I'll start with you.

Sarah Geers: [00:10:36] Yeah, so I think the thing that comes to mind for me is a quote from a law school professor that I had that I will never forget, which is, “the law of abhors the defiance of reasonable expectations.”

And so, in the life sciences area where we have, you know, huge investments in very risky products that may or may not pan out. And if they do pan out, it's, you know, over the course of decades, it's very important to the business and to the folks involved that there be, you know, predictability and certainty in resolving these types of disputes.

And so, I think that that is something that ADR can provide. And it allows the parties going in to sort of set some of those parameters and provide comfort that if a dispute does arise, it'll be handled in a way that they'd like, and in front of a fact-finder and with rules that they think are the best suited for their case.

It's very rare in life sciences to have any sort of predictability or certainty. So, I really think that the confidence that this type of procedure can bring going into some of these collaborations that Steve has talked about is really valuable and will continue to be really valuable to life sciences.

Andrew Longstreth: [00:11:48] And Steve, what would, what would you add to that?

Steven Bauer: [00:11:50] Well, just following up on what Sarah says, which really is right. To go to arbitration, you have to have had an agreement between the parties. They went into some business relationship as friends and these processes are so complex. No one can predict all of the different paths that it might take.

So, you have to have a mechanism that says when there is a dispute between the parties, who both went into this in good faith, how are we going to resolve that dispute quickly and give some certainty to management. Remember, also these agreements are running for so long that by the time these disputes arise, the people who negotiated the agreements are often gone.

So, you can't just turn to some senior management person and say, “what did you intend when you wrote this?” But five years or 10 years from now, different management people are going to have different views and probably good faith differences, but they need an answer because they need to move ahead, and they don't want to spend millions more in money going to market only to be at a bigger risk later.

Andrew Longstreth: [00:12:55] Okay. Well, I'll leave the last word there with you, Steven, but we want to thank both you and Sarah for a great conversation. Thank you so much.

Steven Bauer: [00:13:05] This was a lot of fun. I appreciate the opportunity.

Sarah Geers: [00:13:07] Yes. Thank you both, this was a pleasure.

Andrew Longstreth: [00:13:10] You've been listening to a podcast from JAMS, the world's largest private alternative dispute resolution provider.

Our guests have been Steven Bauer from JAMS and Sarah Geers from Jones Day. For more information about JAMS, please visit www.jamsadr.com. Thank you for listening to this podcast from JAMS.