Archive for the ‘patent’ tag

Keurig Walls Off the Garden by Shutting Out Third Party K-cups

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Keurig, the single serve coffee machine produced by Green Mountain, is nearly ubiquitous in offices, homes, and schools around the country. The device rose to popularity on the back of the K-cup, the single serve pods produced by Green Mountain that allowed a single cup of hundreds of different coffee, tea, and chocolate drinks to be brewed in a matter of seconds. Green Mountain made $3.9 billion in sales in 2012, with 2.7 billion coming from K-cup sales. Keurig was able to maintain strong sales of its K-cups because of several patents on the design and features of the K-cup. However, in September 2012, U.S. Patent Nos. 5,353,765 and 5,840,189 expired. These two patents covered the original K-cup design. Their expiry has opened the door for generic knockoff K-cups to flood the market. Green Mountain claims that the design covered by these patents is outdated and has been superseded by new and improved designs covered under patents that are still in force, including, U.S. Patent Nos. 6,645,537 and the still pending Application No. 20050051478. However, many generic K-cups are already on the market and work in Keurig’s brewing machines. While Keurig claims that generic K-cups will continue to make up less than 15% of the total K-cup market and stress that their current design is superior to any competing product, Green Mountain is clearly worried about the generic threat. In early March of this year Green Mountain announced “Keurig 2.0,” an improved brewing device that would be launching as early as the fall of 2014. Among other changes over previous models, the new Keurig brewer will contain technology that prevents generic K-cups from being used. Green Mountain is the latest to introduce protections for their propriety technology, following in the footsteps of Hewlett-Packard and other printer manufacturers who have added technology to their printers preventing generic printer cartridges from being used, or software companies that have added Digital Rights Management (DRM) to their software to prevent piracy. It is unclear exactly what sort of form this proprietary protection will take, but past forms used in printers include RFID tags. In any case, Green Mountain has made clear that they will still allow third parties to produce K-cups so long as they obtain a license from Green Mountain. Already, a legal fight is brewing over Green Mountain’s proposed move. TreeHouse Foods and Rogers Family are already suing Green Mountain on antitrust grounds. Besides the antitrust concerns, Green Mountain may have difficulty stopping third parties that circumvent their protections. In 2012, Lexmark installed technology to prohibit generic printer ink refills in their printers and lost an appeal in the 6th Circuit for a copyright and DMCA claim against a company that developed a work around for the protection technology for their generic ink refills. In the near future, the legal precedents set by these cases could have far-reaching effects on DRM and physical proprietary protections across the market.

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April 2nd, 2014 at 4:22 pm

Patents for Humanity

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The Obama administration recently announced a renewal of Patents for Humanity, a USPTO program promoting the use of patented technologies to address worldwide humanitarian needs.  Patents for Humanity is part of the President’s program to strengthen the patent system and to promote innovation by recognizing patent owners and licensees who using their patented technology to improve global health and living standards for the less fortunate.  In addition to public recognition for their contribution to humanitarian needs, the winners will receive an acceleration certificate that gives expedited processing of select matters (e.g. moving patent re-examination proceedings to the front of the queue) before the USPTO. The first Patents for Humanity was implemented in February 2012 as part of an initiative to solve long-standing development challenges.  Participants described in their applications how they've used their patented technology or product to address humanitarian issues (defined as issues “significantly affecting the public health or quality of life of an impoverished population”) in one of the four categories: medical technology, food and nutrition, clean technology and information technology.  The first 1,000 applications that met the competition requirements were considered, and the applications were independently reviewed by three judges selected from academia for their expertise in medicine, law, science, engineering, public policy, or a related field.  The judging process applied three neutrality principles – technology-neutral, geographically-neutral, and financially-neutral.  The program considered inventions from any field of technology that met the competition criteria. The targeted impoverished population may be located anywhere in the world.  And any means of getting technology to those in need may qualify without regard to financial consideration.  Lastly, the program considered the diversity of contributions in order to highlight global humanitarian contributions across all types of technology, organizations, and practices. The 2012-2013 program recognized 10 winners and 6 honorable mentions.  The medical technology category was divided into a category for medicine & vaccines and a category for diagnostics & devices.  The winners of the pilot program include research institutions like University of California, Berkeley and industry leaders, such as Microsoft and Proctor & Gamble.  USPTO expects to open applications for the 2014 Patents for Humanity program in April.  The latest USPTO announcement states that the 2014 program will be structured similarly to the pilot program that was introduced in 2012, with a few changes based on the feedback from the pilot program.

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March 11th, 2014 at 9:33 am

As Patent Litigation Reaches “DEFCON 1,” Tech Companies Look for Alternatives

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Non-practicing entities (NPEs) are nothing new in the world of patent litigation, but this past October, NPE litigation reached a new level when the Rockstar Consortium filed an infringement suit in the Eastern District of TexasRockstar Consortium (not to be confused with Rockstar Games, a videogame developer) is not a well-known name to the public: the company doesn’t actually make anything. Instead, Rockstar makes money by licensing its large (approximately 4,000 strong) portfolio of patents and enforcing its intellectual property through legal action. Rockstar employs a small cadre of engineers and technicians to reverse-engineer consumer electronics products to determine whether they might infringe one of its patents. When an engineer identifies a potentially infringing product, Rockstar’s attorneys approach the alleged infringer, likely threatening legal action if a settlement isn’t reached. However, what distinguishes Rockstar from a run-of-the-mill NPE is the support that it has received from traditional technology giants. Rockstar was formed shortly after the bankruptcy of the former Canadian telecommunications giant Nortel Networks. Nortel auctioned off its stash of patents, and “Rockstar Bidco,” backed by the unliely alliance of Apple and Microsoft (among others), won the auction with a bid of $4.5 billion, beating Google after many rounds of bidding. After distributing approximately 2,000 patents directly to its sponsors, a newly minted “Rockstar Consortium” remained with a cache of 4,000 patents to enforce. Two years of anticipated litigation was finally realized when Rockstar asserted patent infringement contentions against Google, Samsung, and a number of other companies who manufacture Android smartphones. Technology industry commentators called the act “DEFCON 1” in the patent wars. Google now faces a well-funded opponent, supported by Google’s direct competitors, with a large cache of high-quality patents. While the exact implications of this litigation have yet to be determined, Google is certainly facing potential disruptions to the distribution of its Android mobile operating system, possible licensing deals that could seriously damage its future profitability, and the near-certainty of spending many millions of dollars in legal costs. Google’s recent cross-licensing agreement with Samsung suggests that it may be looking for alternatives to litigation, and it would probably make good business sense for Google to explore options for resolving this dispute out of court.
 

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February 18th, 2014 at 11:24 am

Google And Samsung Announce Long-Term Cross-Licensing Deal

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Google and Samsung have announced a substantial and long-term cross-licensing agreement. This agreement will allow the companies to use each other’s existing patents, and any new patents filed, for the next 10 years. [1] Cross-licensing is a contract between two parties in which each party grants their intellectual property rights to the other. As such, the parties are free to use one another’s technology. This licensing agreement follows a trend of several other high profile cross licensing agreements in the last few years. Samsung also has a cross-licensing agreement with Microsoft, and both Apple and Microsoft have cross-licensing agreements with the Taiwanese cell phone manufacturer HTC. [2] Both Google and Samsung have expressed a desire to avoid the court room. Allen Lo, Deputy General Counsel for Patents at Google said: “By working together on agreements like this, companies can reduce the potential for litigation and focus instead on innovation.” [3] Google and Samsung have been seen as allies for some time, working together on the Android operating system; thus this agreement isn't surprising.  However, in recent years, Google has been changing their focus to mobile hardware. Google Glass is soon expected to become available at lower prices, Chromecast has been a hot seller, and rumors of a Nexus set-top persist. [4] This deal will likely give Google access to many valuable Samsung hardware patents. Samsung will also receive significant of benefits, gaining access to patents associated with the Android operating system, which may be useful for its developing Android-free Tizen operating system. Whether this deal will prove wise for  Samsung and Google remains to be seen; for now, they both seem to be content taking pot shots at Apple.  Dr. Seungho Ahn, the Head of Samsung’s Intellectual Property Center, has said, “Samsung and Google are showing the rest of the industry that there is more to gain from cooperating than engaging in unnecessary patent disputes.” [5]

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February 4th, 2014 at 12:26 pm

Patent Litigation Integrity Act – Raising The Stakes

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Patent trolls had an especially scary Halloween this year as Senator Orrin Hatch (R-UT) introduced Senate Bill 1612 – the Patent Litigation Integrity Act. The short and succinct bill has one purpose – “To deter abusive patent litigation by targeting the economic incentives that fuel frivolous lawsuits.”[1] The bill would shift litigation costs by granting the prevailing party “reasonable fees and other expenses, including attorney fees.”[2] On defendant’s motion, it would also require plaintiffs to “post a bond sufficient to ensure payment of the accused infringer’s reasonable fees and other expenses, including attorney fees.”[3] With the high cost of litigation today,[4] many businesses find it easier and cheaper to settle claims of patent infringement, even if a plaintiff’s claims are weak or unsubstantiated. Senator Hatch aims to prevent this practice by requiring plaintiffs to essentially "put their money where their mouth is."[5] By raising the stakes to litigate patent claims and instituting a default rule of winner-takes-all, bill supporters are hoping “those facing troll threats [will now have] the tools necessary to fight back while also giving trolls a disincentive to bring harassment suits.”[6] The senator has received general kudos from companies and organizations seeking patent litigation reform.[7] However, if eventually passed, is fee-shifting the best means to deter patent trolls? While the bill allows courts to consider “special circumstances [that would] make an award unjust,”[8] and also consider the “position and conduct of the nonprevailing party or parties,”[9] could the bill also prevent merited claims? As with all obscure legislative phrases, judges will inevitably jump at the chance to define what constitutes “substantially justified [conduct of the nonprevailing party].”[10] However, should the exemption be too narrowly defined, the bill could broadly deter both “abusive patent litigation”[11] and potentially justified but financially weak plaintiff patent infringement claims.

[1] Patent Litigation Integrity Act of 2013, S. 1612, 113th Cong. (1st Sess. 2013).
[2] Id.
[3] Id.
[4] In 2009 the American Intellectual Property Law Association (AIPLA) reported that the median cost per party in patent cases with stakes exceeding $25 million cost over $6.25 million to take the case to trial. In cases where the stakes were between $1-25 million, the median costs were $3.1 million. AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION, REPORT OF THE ECONOMIC SURVEY 2009, at I-129.
[5] Senator Hatch, although in different context. Press Release, Senator Orrin Hatch, Hatch to Senate Democrats: Put Your Money Where Your Mouth Is (Dec. 19, 2012) (on file with author), available at http://www.hatch.senate.gov/public/index.cfm/releases?ID=51ba83f0-c04e-492d-bedb-519f4370d587.
[6] Julie Samuels, Trolls, Watch Out: Senator Hatch Introduces New Patent Legislation, Electronic Frontier Foundation (Oct. 30, 2013), https://www.eff.org/deeplinks/2013/10/trolls-watch-out-senator-hatch-introduces-new-patent-legislation.
[7] Id.; Keith Kupferschmid, SIIA Praises Senator Hatch’s New Patent Troll Bill, Software & Information Industry Association (Nov. 1, 2013), http://www.siia.net/blog/index.php/2013/11/siia-praises-senator-hatchs-new-patent-troll-bill/; Press Release, Overstock.com, Inc, Overstock.com Commends Senator Hatch for Introducing Patent Litigation Integrity Act (Oct. 31, 2013) (on file with author), available at http://finance.yahoo.com/news/overstock-com-commends-senator-hatch-190000119.html.
[8] S.R. 1612.
[9] Id.
[10] Id.
[11] Id.

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December 4th, 2013 at 10:44 am

Nortel Patent Failure Returns to Haunt Google

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Last week on October 31st, a nightmare scenario that Google hoped to avoid came to pass. Attorneys for Rockstar Consortium filed suit in the Eastern District of Texas against Google and seven handheld device makers that employ Google's Android operating system on their devices. The suit alleges infringement of seven patents all titled “Associative Search Engine.” The patents, 6,098,065; 7,236,969; 7,469,245; 7,672,970; 7,895,178; 7,895,183; and 7,933,883, were filed from 1997 to 2007. Rockstar Consortium was founded in 2011 and is jointly owned by Apple, Microsoft, Blackberry, Sony, and Ericsson. The consortium was founded to bid on the patent portfolio of Canadian telecom company Nortel, which was liquidated at auction in 2011 when the company went bankrupt. At the time, Google attempted to purchase the patents, likely to avoid just such a lawsuit, but their top bid of $4.4 billion was exceeded by Rockstar, which purchased the patents for $4.5 billion. Google’s failure to land the patents may now be costly for them as well as Android device makers. Rockstar is part of an emerging new trend in the “patent troll” movement where large corporations assign or give their patents to small companies, for the purpose of reverse engineering existing products and for extracting licensing fees and damages from alleged patent infringers. This model allows a company with few employees–Rockstar has only about two dozen employees, including ten reverse engineering experts–to obtain license fees from potentially hundreds of tech companies. A small consortium like Rockstar has another advantage in a fight against a tech company like Google, they have no products or business of their own. They cannot be counter sued for infringement because they have no business that would infringe. The crux of the situation is that companies like Apple and Microsoft can inject capital into a Rockstar type partnership, which will then purchase patents and use them to attack Apple and Microsoft competitors while leaving Microsoft and Apple above the fray. The companies backing Rockstar are likely seeking to put a damper on the rabid growth of the Android platform. However, with the talk of legislation to control patent trolls, the Obama administration’s concern over standards essential patents, and the Justice Department’s comments on Rockstar committing to fair terms for standards essential patent licenses, it will be difficult to predict the outcome of this suit. If Rockstar sees success here, this may become the new battlefront between tech companies in the aftermath of the monstrously expensive Apple v. Samsung case.

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November 8th, 2013 at 2:25 pm

FTC sets sights on Patent Trolls

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On September 28 of this year the Federal Trade Commission voted to seek public comments on proposed information requests to better understand patent troll practices. This move by the FTC marks the first step on the road to possibly regulating patent trolls. Patent trolls are firms that buy patents with the sole purpose of suing others whose goods infringe the patent. Patent trolls do not attempt to produce the invention disclosed by the patent, but rather sue those firms that do. With the FTC’s latest focus on patent trolls, it is clear that patent trolls are becoming problematic for businesses. In 2011 alone, according to a Financial Times article, litigation by trolls accounted for sixty percent of all patent lawsuits filed in the US. Trolls create IP minefields for businesses, whereby businesses must exert resources to carefully act to not infringe a patent troll’s patent. Sometimes companies decide to not undergo innovation because doing so might put the company at risk of being sued by a troll. This action also antagonizes the ultimate purpose of patents - to further scientific and technological progress - by slowing the pace of innovation. It, therefore, makes sense that the FTC has decided to fight back against trolls - especially in light of the agency’s key mission “to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.” In spite of the FTC effort, it is unclear what regulations could effect in greater transparency of patent troll activities. One viewpoint is that if patents were bought and sold on an exchange, such centralization and transparency could make it easier for businesses to protect against patent trolls - by buying the patents first or through other financial incentives - and for regulators to prevent against behavior that thwarts competition and innovation. Creating a patent exchange would require better patent valuation techniques as well as a shift in thinking. While some firms, such as Ocean Tomo, have tried to popularize the idea of a patent exchange (e.g. Ocean Tomo's IPXI product), this reality has not become widely accepted. Might this be the future?

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October 10th, 2013 at 2:17 pm

Supreme Court to Revisit Question of Patentable Subject Matter

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Since the establishment of the Federal Circuit three decades ago, the Supreme Court has tended to distance itself from the development of patent law. As the Federal Circuit holds exclusive jurisdictions over appeals arising from disputes involving patents, circuit splits are unlikely to arise, and its judges are deeply familiar with the subject area. Thus it is not entirely surprising that as a general matter it is rare for the Supreme Court to review its judgments.

 However, in recent years the Supreme Court has reviewed several high profile Federal Circuit high-profile decisions, perhaps most notably in the area of the scope of patentable subject matter under 35 U.S.C. § 101. In Bilski v. Kappos, the Court agreed that an investment strategy was unpatentable subject matter, but indicated ambivalence towards the Federal Circuit’s chosen analysis. This year, in Mayo Collaborative Services v. Prometheus Laboratories, Inc, the Court held that claims over a medical diagnostic test were unpatentable “products of nature,” reversing the Federal Circuit. On November 30, 2012, the Supreme Court granted review in Assoc. for Molecular Pathology v. Myriad Genetics, a case involving the patentability of human genes. The case has had a long journey through the federal courts. In 2011, the Federal Circuit found that claims over “isolated” DNA molecules are patentable subject matter, as well as certain associated method claims. This judgment was vacated and remanded to the Federal Circuit for further consideration in light of Mayo. On remand, the Federal Circuit once again held these patents to be directed towards patentable subject matter. Now before the Supreme Court again, it is likely that the Court will be directly addressing the question of whether human genes are patentable. Petitioner argues that the patents at issue are invalid because they claim subject matter directed to a law or product of nature. They claim that these patents, which cover “isolated” forms of the BRCA1 and BRCA2 genes linked hereditary breast and ovarian cancer, have prohibited clinical testing, scientific research, and patients’ access to their genetic information. The respondent, Myriad Genetics, claims that the patents cover subject matter that was human-made and does not occur in nature. Myriad stresses the “enormous amount of human judgment” involved in their research and development of this area, and the importance of patent protection to support their industry. This case is likely to be closely followed by many. Patentable subject matter is an area that the Supreme Court has shown a close interest in recently, lending much uncertainty to the state of the doctrine. Patent lawyers and scholars will wait to see whether the Supreme Court clarifies this area of law. The decision is likely to have a major impact on the biotechnology industry, who for many years has successfully obtained patents such as the ones at issue here with relatively little questioning of their validity. The public will be watching as well, as the question of whether human genes are patentable is a topic likely to generate excitement and intrigue from many.  

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December 6th, 2012 at 8:34 pm

AIA and Double Patenting- Not Worth Taking Advantage Of

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The America Invents Act (AIA) was passed in September 2011, bringing with it many changes to patent law.  The most noteworthy change was the shift from inventorship being granted on a first to invent system to a first to file system. However, there were many additional changes to the system including, perhaps, some which were inadvertent. For example, there has been a change with respect to double patenting. Prior to the passing of the AIA bill, your own patents could be used as prior art against your new application to support a double patenting rejection under 35 U.S.C. 103.  This situation could be avoided by filing a terminal disclaimer. After the passing of the AIA, however, the new law states “a disclosure shall not be prior art to a claimed invention under subsection (a)(2) if — (c) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.” 35 U.S.C. 102(b)(2)(C). Now, under the new 102(b)(2)(C), which becomes effective March 16, 2003, your own prior disclosures cannot be used as prior art against you under 102(a)(2) to support a rejection. As a result, certain inventions could be re-patented to extend the life of the patent, provided that other 102(a)(1) prior art is not cited. So is it worth trying to take advantage of this loophole?  Probably not. First, the benefit received from taking advantage of this new law is minimal: patent-filers at most gain a one year extension on their patent due to the fact that your own admissions become prior art against you after a year under 102(b)(1). Though, a year-long extension may be lucrative in industries where patent rights are very important, such as the pharmaceutical industry. Second, if the prosecution history of your patent was ever being scrutinized during litigation, the Federal Circuit would most likely not allow this type of patent term extension.  To reach this analysis, the Federal Circuit could determine that references which do not qualify as prior art under 102(b)(2)(C) could nevertheless be combined to support an obviousness rejection pursuant to 103.  But this could be troubling, because under current law and prior case law, references used in a 103 rejection must qualify for prior art under 102. More likely the court would rely on precedent and the judicial doctrine of double patenting to reject such a term extension, explaining that Congress would not implicitly overturn prior case law. However, the main deterrent to exploiting this loophole may be the fact that you run the risk that not only will your extension be redacted- but worse yet, you might run into counterclaims of patent fraud, patent misuse or inequitable conduct invalidating your patent and exposing you to damages.

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February 12th, 2012 at 4:00 pm

Is a Computer Better Than You at Negotiating?: The Use and Usefulness of Online Dispute Resolution

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My first semester of law school, our torts professor explained to the class that we were training for a career in which we would essentially become nothing more than very expensive transaction costs. I’m pretty sure her intention with this comment was to cut short a circuitous and unproductive discussion that had developed about the cheapest-cost-avoider and economic efficiency. I think she just wanted to move onto the next case. But the comment has stuck with me. I was reminded of it again recently when I came across a Wall Street Journal article entitled: “At GE, Robo-Lawyers: Oil-and-Gas Unit Tests Online Resolution to Control Costs.” The article considers a software system called CyberSettle that allows parties to submit settlement bids into a double-blind program. If the bids come within a certain range in any of the rounds, the case settles for that amount. If the bids fail to match up in any round, the dispute gets bumped to online mediation. A facilitator uses the uploaded documents from each party to work out a compromise, without revealing the other party’s numbers. The settlement rate for CyberSettle clients is 65%. CyberSettle is not a new service. The company’s patents date back to 1998 and some of its biggest clients have been using it in some capacity for many years. The service is used not only by General Electric, but also Wal-Mart and several other corporations and insurance companies. Until recently, New York City used it as well. Additionally, CyberSettle enjoys a strategic partnership with the American Arbitration Association, which allows customers to begin settlement talks using the CyberSettle platform and then, if that fails to resolve the dispute, the parties can seamlessly transition to traditional AAA services. The appeal of an online dispute resolution (ODR) program such as CyberSettle is clear. It is an opportunity to limit the expensive transaction costs that come with using counsel to settle a dispute. Where the claim is small, attorney’s fees can otherwise easily out price the amount at issue. Criticism of ODR is concentrated on the challenges of removing the human element from the settlement process. Some claimants will want the cathartic experience of airing grievances in addition to monetary compensation. Other claimants, especially larger and more sophisticated corporations, would rather engage their own counsel than use a website. Additionally, at least one big former client of CyberSettle found that the system was not cost-effective. This year New York City stopped using the software for small personal-injury and property-damage claims, with a purported projected savings of $600,000 annually. Comptroller John Liu found that the same work could be done in house with claims adjusters who negotiated by phone. (It should be noted, however, that these numbers appear to be politically charged and controversial, seeing as the previous Comptroller claimed that use of CyberSettle saved the city $33.4 million from 2004 through 2008.) Regardless, there is a warranted debate about the usefulness of the program. While ODR may not be right for every kind of dispute, it does appear to fit a particular segment of legal fights very well. The way GE is currently using the service is for small claims with suppliers. GE Oil and Gas only uses Cybersettle for claims under €50,000, for what the company calls “micro-disputes,” and only in Italy. This GE unit now writes an ODR requirement into contracts with many of their Italian industrial suppliers. ODR works well for this category of claims because these disputes are less likely to have the same emotional attachment as personal injury claims and often involve smaller companies with less sophisticated legal counsel. In these situations it serves both the bigger corporation and the smaller supplier well to use an automated system with less transaction costs, at least as a first attempt at settlement. Indeed, the International Centre for Dispute Resolution launched a program in September suggesting that ODR is a particularly good way of dealing with supplier and manufacturer disputes. In an economic atmosphere that encourages companies to cut costs wherever possible, it makes eminent sense that executives would look to expensive legal fees as an area worth addressing. But how far will ODR expand? Should ODR be limited to certain kinds of disputes? What do you think?

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October 12th, 2011 at 12:11 pm

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