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Intellectual Property: Pre-Litigation & Negotiation Mediation


When the patent holders of a manufacturing process and the investors funding its prototyping and launch hit an impasse over a development agreement, how did the two sides avoid litigation and get their relationship back on track?

What Happened?

The patent holders (also serving as the development team) faced financial pressures that threatened layoffs and caused a product launch delay.  Without more capital from the investors, they would be forced to secure alternative funding, but the investor group, wary of extending additional advances, viewed the delay as an indication of deeper design, budget, and operational problems.  An immediate resolution was needed to preserve the parties’ business relationship and move the enterprise forward.

Special Considerations

  • The parties needed a neutral forum and location to resolve their issues.
  • The stalemate between the parties jeopardized a relationship with a motivated prospective customer that needed to be reassured of the soundness of the manufacturing process and the stability of the parties’ association.

How Did PREMi Help?

PREMi provided background information on several associates qualified to mediate the dispute, and assisted the parties to select a specialist who then:

  • Thoroughly explained the mediation process and expectations for resolution
  • Conducted several separate conversations with the parties and obtained a copy of the development agreement and other relevant material to fully understand and frame the specific issues between them
  • Required each party to prepare a memo, held in confidence by the mediator and not exchanged with the other party, which explained their allegations, arguments, risk, and possible liability
  • Provided the parties with an outline instructing them how and what to prepare for the mediation hearing
  • Counseled the parties to not only hold the hearing at the prospective customer’s office, but also encouraged them to have the customer attend the hearing as a non-participating observer
  • Fostered meaningful dialogue and facilitated a working solution in the course of a single, one-day session

What Was the Outcome?

The PREMi mediator successfully resolved the issues – and tensions – between the parties allowing them to move forward:

  • The development group invited the investors to visit the plant to demonstrate the integrity of the manufacturing process at the heart of the dispute
  • At the plant, the development group performed specific tests and verification procedures, the satisfactory completion of which convinced the investors to commit additional funding
  • The prospective customer gained greater confidence in the design, manufacturing process, and ability of the development team to deliver a quality product
  • The parties quickly resolved their differences, restored their business relationship, and avoided prolonged, counterproductive, and costly litigation


Disclaimer: This summary is illustrative of the types of cases and the manner in which the PREMI associate dealt with the matter. Care has been taken to avoid disclosure of sensitive or confidential information.