Originally from Dispute Resolution Journal

The National Patent Board was formed by a group of patent owners to combat the “incredible expense” involved in patent litigation. In the following piece, M. Scott Donahey explains the workings of the Board and how it addresses the needs of a highly specialized sector. He holds that the NPB’s streamlined procedures make for a fair dispute resolution process that is akin to “having a day in court.”

Appalled by the incredible expense involved in patent litigation and alarmed by the lack of consistency and the unpredictability of court decisions, a group of patent owners decided that there must be a better way of dealing with patent infringement disputes. They decided that what was needed was an informed, nonbinding decision issued by neutrals familiar with patent law and infringement litigation, and a decision issued early in the process before the parties invest substantial sums in discovery and motion practice.

Although the decision of the panel would be nonbinding absent the parties’ agreement to make it binding, the patent owners wanted any nonbinding decision to be one with “teeth.” In other words, the rules should include fee and cost penalty provisions among other incentives to encourage voluntary compliance with the opinions issued.

Led by a group of in-house counsel from such major corporations as Procter & Gamble, Intel, Mobil Oil, General Electric, and Becton Dickinson, and Schlumberger, interested parties scheduled a nationwide conference for November 1998 in San Francisco to discuss the concept and proposed rules. More than 200 people from across the country attended, and the idea became a reality: the National Patent Board was formed. The concept, rules, and panelists issuing from these meetings were later acquired by the American Arbitration Association

The goal of the AAA’s National Patent Board remains the same since its founding: to provide an efficient, early, and informed indication of the likely outcome of a court proceeding which would assist parties to resolve their disputes voluntarily, and to do so at a stage prior to the expenditure of large sums in either product commercialization or patent litigation. It is designed to reach not only those disputes which arise after a potentially infringing product is on the market, but potential problems which are recognized after substantial development has been completed, but prior to actual commercialization.