To resolve a cross-border dispute, particularly in the field of intellectual property, companies are increasingly seeking to resolve such disputes on their own before turning to state courts or arbitration tribunals, due to the unique nature of the subject matter—which is inherently charged with an “emotional element” not necessarily present in other areas of law—and the reputational risks associated with a potential court ruling.
A. Negotiation—the primary means of conflict resolution
Negotiation is now the primary means of resolving commercial disputes.
One reason is the time and cost savings achieved compared to systematically resorting to national, foreign, or arbitral courts—with their uncertainties, complexity, and often lengthy delays in reaching a final decision— as well as the associated costs, both external and internal to the company.
A second reason stems from the cultural shift we are currently witnessing, linked to the acceleration of innovation, the use of the Internet, and the exponential growth of cross-border trade. This has resulted in a decline in the influence of traditional hierarchical structures in society1. This calls into question the state’s role as a peacemaker2, as a recognized decision-making body tasked with resolving conflicts through authoritarian means. The vertical society, characterized by an “imposed order,” is evolving into a horizontal society marked by a “negotiated order”3. This evolution is also referred to as the “negotiation revolution” 4.
Finally, a third reason seems to be inherent in intellectual property itself, where reputation is paramount and where economic actors are generally “compelled” to operate within the same competitive market. They are therefore more inclined than in other areas of international trade to seek a negotiated “transactional compromise.”
However, few companies consult with lawyers to develop a genuine negotiation strategy, and few lawyers offer expertise in negotiation.
According to one author, in practice there appears to be a tendency for companies not to retain the services of a lawyer to negotiate, since they suspect the lawyer of being motivated by the fees—which would be higher if the negotiations fail, paving the way for legal proceedings5.
However, a lawyer is required to defend his or her client’s interests. If legal proceedings are initiated, the attorney is now required, pursuant to Article 56 of the Code of Civil Procedure, to inform the court in the summons of the steps taken to reach an amicable resolution of the dispute. Even though this requirement is akin to a boilerplate clause, the legislature encourages the parties to settle, undoubtedly seeing this as a way to relieve the burden on the courts.
Lawyers are the natural advisors to businesses and are prepared for this role through their professional training and ethical standards. However, few business professionals today have been trained in the principles of negotiation and/or mediation and have made them central to their professional practice. In the author’s view, lawyers would be well advised to take an interest in this field and to continue their training so that they can offer their clients negotiation skills—complementary to their traditional legal and advisory services—and thus remain their preferred advisors in the resolution of conflicts anddisputes.⁶
B. The Benefits of the Harvard Concept’s Principles for Rational Negotiation and the Psychological Insights from Negotiation Research
When companies engage in negotiations—with or without a lawyer—the question arises of how to negotiate.
Traditionally, negotiation differs little from a hearing before a court: in traditional negotiation, each party presents its legal position—the one it would rely on in legal proceedings—and states its claim or request.
In order to “convince” the other party of the “merit” of its argument, a company engaged in negotiations does not hesitate to put pressure on the other party, relying on what may in reality turn out to be “illusory power,” such as its financial strength or its competitive position in the market. The parties may also use psychological tactics to impose their position7.
This type of bargaining is often counterproductive, as it can cause the conflict to intensify or even reach an impasse due to incompatible positions. It can lead to a further escalation in personal relations between the parties’ representatives. At best, if a solution can be found, this type of negotiation results in an agreement of the “transactional compromise” variety, the main characteristic of which is precisely that each party yields on its position, in accordance with the conditions set forth in the Civil Code and case law regarding the validity of a settlement.
However, research on negotiation has shown that such compromises—reached under pressure, through trickery, or by following the adage of “splitting the difference”—are often “suboptimal ” (far from optimal) and that it would have been possible to significantly improve the chosen solution through a different negotiation approach—all in the best interests of both parties.
While negotiating from a position-based approach is often ineffective in economic terms, the concept of reasoned negotiation aims to maximize the satisfaction of both parties’ interests and not only resolves the dispute but also creates value beyond it.
Research conducted in the 1970s at Harvard University laid the scientific foundations for rational negotiation. Roger Fisher and William Ury’s book *Getting to Yes: Negotiating Agreement Without Giving In*, published in 1981, marked a significant breakthrough in the field. Since then, research has continued and has been enriched, in particular, by insights from psychology on human behavior in conflict.
This book was published 35 years ago and has become widely renowned. However, its lessons have had little impact on the negotiation strategies of business leaders and lawyers. In fact, most of them are convinced that they have been negotiating their entire lives and have nothing left to learn, even though a purely distributive negotiation—one that does not create value—fails to fully exploit the potential offered by principled negotiation.
The key takeaway from this Harvard concept consists of four negotiation principles that translate into communication techniques used in negotiation:
1. Separate the person from the problem,
2. Distinguish between positions and interests,
3. Develop as many unevaluated solution options as possible,
4. Make decisions based on objective criteria.
Thus, in rational negotiation, one should seek to align the parties’ interests while drawing on the “real power” provided by calculating each party’s “fallback position” in the event of a failure to reach an agreement, the BATNA (“Best Alternative to a Negotiated Agreement”), also known as MESORE (“Best Alternative Solution”)8.
In the case of difficult negotiations—particularly those that are emotionally charged and/or require an assessment of the parties’ fallback positions in the event of a failure to reach an agreement— a lawyer trained in rational negotiation might be tempted at times to assume the role of a “neutral” and empathetic third party—such as a mediator—to move the negotiation forward, but this dual
This dual role—as both a “tough” negotiator and a neutral, empathetic “mediator”—would be challenging and not without risk for the attorney when dealing with a client who does not understand this duality.
In such cases, the involvement of a neutral, independent, and impartial third party, such as a mediator, to negotiate in their presence, allows the parties and their attorneys to focus fully on the substance of the dispute under negotiation, without having to worry—as is the case in direct negotiations—about the conduct of the process. The principles of reasoned negotiation now form9 in the Western world, the basis for all commercial mediation10. Unfortunately, companies are often reluctant to share confidential information with a mediator whom they do not know and whose services entail a cost.
C. Reasoned Negotiation in Intellectual Property
The term “intellectual property” refers to the categories of exclusive rights—monopolies—that are granted for the exploitation of intellectual creations, encompassing, on the one hand, literary and artistic property and, on the other hand, industrial property. At the heart of virtually all these areas are intellectual creations, their commercial exploitation, and creators.
Thus, only a creation that can be considered original—one that bears the imprint of its author’s personality—is eligible for copyright protection. Since the creator’s personality is at the heart of any creation—whether artistic or technical, as in the case of patents—a dispute concerning such a creation is therefore necessarily imbued with the personality of its creator. The intuitu personae principle is particularly evident in intellectual property disputes and in all negotiations in this field.
The principles of reasoned negotiation generally allow the parties to express their grievances toward the other party, to share their pain, and to articulate their demands—without further escalating the conflict or stalling the negotiations. Psychology teaches us that empathetic listening, understanding shown by the other party, mutual recognition, and the experience of “agreeing to disagree” instantly soothe tensions and help each party shift their perspective, paving the way for finding solutions that best serve their respective interests11.
The principle of reasoned negotiation—that is, “separating the people from the problem”—and the ability to acknowledge and address the emotions of the opposing parties appear to be essential in this creative field for paving the way toward an amicable resolution of the dispute. This can be time-consuming and may prove difficult for companies negotiating without a neutral third party, even when assisted by their attorneys; however, it will be of great benefit to the rest of the negotiation if the parties can be encouraged to shift their perspectives and show each other a degree of appreciation. Particularly in cross-border relationships, acknowledging and addressing the other party’s emotions can be especially difficult during negotiations due to intercultural factors that must also be takeninto account.¹²
With regard to the second principle of the Harvard framework—distinguishing between positions and interests—it should be noted that this approach is difficult for companies to apply in intellectual property disputes. Indeed, intellectual property rights, by their very nature, confer monopolies or exclusive rights and thus encourage parties to formulate claims based on legal positions. However, when the focus is on the interests of economic actors in the creative sector—who operate in the same market and may be competitors—they often recognize the need to find a negotiated solution to their dispute, even in cases of infringement.
Next, regarding the third principle of the Harvard model, intellectual property law lends itself particularly well to creativity and the development of numerous possible options that could lead to an amicable resolution of a dispute, before finally deciding, based on objective criteria, on the solution that best serves the interests expressed by the disputing parties. Indeed, practice shows that the parties devise solutions that the courts could not grant in such matters. For example, in various specific cases, the following have been negotiated: (i) one party assuming the other party’s patent defense costs, (ii) the granting of a license for a product alleged to be infringing, (iii) the acceptance of the termination of a license agreement while continuing to ensure the production of the products for the new licensee, (iv) the transfer of a trademark alleged to be infringing to the other party or the creation of a joint venture to exploit it, (v) the arrangement for the coexistence of trademarks, and consultation on the content and presentation of advertising for competing products deemed misleading to the public, (vi) reaching an agreement on the disposition of products deemed to be infringing by introducing certain differentiations from those of the other party, (vii) organizing the exploitation by a publisher of a music catalog, etc.
Companies will consult with their attorneys to assess whether negotiation or mediation is the best course of action to resolve their dispute, before turning to the courts if negotiations fail13.
D. Conclusion
In the event of a dispute, particularly in the area of cross-border intellectual property, the parties’ interests can often be reconciled to reach an amicable, negotiated settlement that creates value, whereas their legal positions are, by definition, irreconcilable and can, at best, only lead to a settlement compromise in which each party has at least partially yielded on its position.
Dr. Martin Hauser
1 Robert Fisher, William Ury, Bruce Patton, *Getting to Yes: Negotiating Agreement Without Giving In*,3rd ed ., Boston 2012, preface
2 Jacques Faget, “The Dual Nature of Mediation”: Droit et Société 29-1995, pp. 25–38 (p. 38).
3 Martin Hauser, Commercial Mediation in France and Germany—A Comparison, Frankfurt am Main 2016, p. 36, with references
4 Robert Fisher, William Ury, Bruce Patton, *Getting to Yes: Negotiating Agreement Without Giving In*,3rd ed ., Boston 2012, preface.
5 Andreas Hacke, “A New Model of Business Mediation,” ZKM, October 2016, p. 168-173 (170)
6 Nathalie Besombes, Didier Chavernoz, Béatrice Gorchs-Gelzer, Martin Hauser, Sophie Henry, “Mediation and Business—New Obligations and Prospects,” JCP E, September 29, 2016, 1505, p. 29 ff., nos. 26–30
7 Robert-Vincent Joule, Jean-Robert Beauvois, A Short Treatise on Manipulation for the Use of Honest People, Grenoble 2014; Martin Hauser, Does Contractual and Negotiation Freedom Exist?
8 Thierry Garby, *D’accord*, Paris 2016, p. 70 ff.
9 In France, a pioneering work was published as early as 1977: Hubert Touzard, *Mediation and Conflict Resolution: A Psychosociological Study*, Paris, 1977.
10 For France and Germany, see Martin Hauser, Commercial Mediation in France and Germany—A Comparison, Frankfurt am Main 2016, p. 67.
11 Martin Hauser, Commercial Mediation in France and Germany—A Comparison, Frankfurt am Main 2016, p. 83-86
12 For intercultural aspects of Franco-German relations, see Martin Hauser, Commercial Mediation in France and Germany—A Comparison, Frankfurt am Main 2016, p. 54-64
13 Martin Hauser, “What Might Motivate the Parties to Choose Mediation?” June 23, 2014