USA Law and Practice Contributed by: Claudia Ray, Joseph Loy, Josh Berlowitz and Andrew (Keum Yong) Lee, Kirkland & Ellis LLP
10. ADR 10.1 Dispute Resolution Mechanisms
The most common forms of ADR used in trade secret disputes are mediation and arbitration. Whereas mediation is non-binding, in arbitration a neutral third party – known as an “arbitrator” – will typically issue a written decision resolving the case on the merits. Parties may agree to arbitrate after a conflict arises, although occasionally the parties will have agreed in a prior contract (such as a licensing, subcontracting or joint venture agreement) to resolve future disputes through arbitration. However, if the parties have not entered into any contract containing an arbitration clause, courts are unlikely to mandate arbitration between litigants on the basis of arbitration clauses found in contracts with a party’s employees, even if those employees may have been involved in acts of misappropriation. In an arbitration proceeding, the parties present evi - dence and arguments supporting their positions to the arbitrator(s). The applicable procedural and evi - dentiary rules are usually determined by the parties’ arbitration agreement. Arbitration is generally less rigid than litigation but more formal than mediation. Depending on the type of arbitration, the arbitrator’s decision can be either binding or non-binding. In non-binding arbitration, the parties are usually bound by the decision unless one of them rejects it and requests a trial. In binding arbitration, the par - ties agree that the arbitrator’s decision will be the final resolution of the case, and the parties will generally not have the opportunity to appeal the merits of the dispute.
The parties may settle their civil dispute at any time. Depending on the jurisdiction and the judge’s indi - vidual practices, a court may (i) require the parties to engage in one or more settlement conferences or other alternative dispute resolution (ADR) procedures prior to trial, or (ii) offer voluntary procedures for access - ing ADR resources. The parties may also voluntarily choose to engage in mediation, a non-binding ADR process whereby the parties and their attorneys meet with a neutral third party who is trained to facilitate settlement discussions. A mediator typically helps the parties reach their own voluntary settlement by assessing the strengths of the parties’ positions and identifying potential areas of agreement or disagreement. Even if the parties are not likely to reach a complete settlement, the ADR process may assist by “stress testing” a party’s case and identifying any potential areas of weakness before proceeding to trial. ADR can sometimes offer advantages over tradition - al litigation. For example, parties frequently resolve disputes more quickly through ADR than they would in court, which can also save costs. The parties are largely in control of the ADR schedule and therefore have more flexibility to tailor the process to their unique needs. Many types of ADR are confidential, which can be appealing to parties who do not want the details of their dispute made public through court records.
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