Suggestions for the PMAC draft Mediation Rules

The Patent Mediation and Arbitration Centre (PMAC) of the Unified Patent Court (UPC) has released a draft version of its Mediation Rules to undergo a public consultation process. The PMAC was established by the Agreement on a Unified Patent Court (UPCA) as one of the twofold mechanism (alongside the UPC) for adjudicating disputes on European patents and European patents with unitary effect. Currently, twenty-four EU Member States have signed the UPCA, and eighteen EU Member States have ratified it. By fine-tuning its own mediation rules pursuant to Article 35(3) UPCA, the PMAC is gearing up to become fully operational by early 2026.

A draft overview

The draft PMAC Mediation Rules reflect best practice in IP ADR – and probably a step ahead – with tailored provisions addressing confidentiality (which is key when it comes to patents) and FRAND disputes. Flexibility permeates the draft rules in the spirit of the mediation mantra according to which parties retain control over the dispute and its settlement.

The draft ties in well with the UPCA and the UPC Rules of Procedure (UPC RoP) providing for different routes to mediation (upon referral by the UPC, request by one party, or by way of a joint request). Parties to UPC proceedings enjoy access to ample information about mediation and ADR options throughout their proceedings. Further, any party to an ongoing UPC case may apply to the PMAC to request an ADR information session. The PMAC can also assist the parties in drafting a mediation submission agreement.

UPC proceedings are stayed pending the referral of the dispute to an ADR method provided by the PMAC and any prescription shall be deemed suspended for claims that are subject to any ADR conducted under the auspices of the PMAC. Parties to any ADR proceedings of the PMAC may still apply to the competent court or arbitral tribunal for interim relief. Parties may also curtail the scope of the dispute submitted to the PMAC mediation by sectioning off other parts of the dispute that can remain out of the mediation scope.

The draft also provides for fast-track mediation by giving the parties the option to shorten the time-limits. With the view of providing cost-effective solutions, emphasis is put on the use of electronic submissions, videoconference, and a dedicated ADR online platform.

In accordance with Rule 4 of the PMAC Rules of Operation – laying down that mediation proceedings can be held either at PMAC twofold-seat in Ljubljana or Lisbon or elsewhere in the world – draft article 13 provides that parties may freely agree on the place of the mediation and that the mediator and the parties may meet at any location and in any form the mediator considers appropriate.

Draft Article 16 provides the mediator with a helpful toolkit to assist the parties in cases where the dispute is not capable of being resolved solely through Mediation and other ADR methods may be combined by the parties.

Draft Article 22 specifically tackles FRAND disputes concerning the licensing of Standard Essential Patents (SEPs), including the thorny question of FRAND royalty rate calculation methods that can be raised in a mediation.

The role of the “confidentiality advisor” provided for by the draft rules is particularly interesting to preserve any confidential aspect of the dispute. On this point, it may be important to clarify at article 24(2)(a) of the draft rules who gets to appoint this advisor (whether the parties, the mediator, or the PMAC).

In line with the requirements for reliance on settlement agreements as per Article 4(1)(b)(i) of the Singapore Convention, the settlement agreement shall be signed by the mediator, if the parties so request, to prove that the agreement was the product of a mediation.

Pursuant to Draft Article 18, parties to PMAC mediation may also request the UPC at any time to confirm their settlement by way of a decision, as per Articles 35 and 79 UPCA and Rule 365 UPC RoP. The confirmed settlement agreement becomes enforceable as a national court decision in any Contracting State to the UPCA where the enforcement takes place as per Article 82 UPCA.

The enforceability of UPC decisions is not limited to the UPCA Contracting States only. Indeed, the recognition and enforcement of UPC decisions in the EU Member States that are not a contracting party to the UPCA shall be carried out in accordance with Brussels Recast Regulation № 1215/2012 as per its Article 71(2)(b). This Article precisely refers to judgments (such UPC final decisions) given in an EU Member State by a court in the exercise of jurisdiction provided for in a convention (such as the UPCA) on a particular matter (such as patent law) and it stipulates that such judgements shall be recognized and enforced in the other EU Member States in accordance with this Regulation. Notably, Article 31 UPCA refers back to the Brussels Recast Regulation to substantiate an international jurisdiction among all EU Member States and the UPC is one of the two existing “courts common to the Contracting Member States” for the purpose of article 71 of the Brussels Recast Regulation as amended by Regulation (EU) № 542/2014. Therefore, a UPC decision shall be recognized in any of the EU Member States that did not ratify the UPCA without the need of any special procedure and shall be enforceable without any exequatur.

Possible suggestions

Although the parties have the possibility of having their settlement confirmed by a decision of the UPC, thus making it enforceable as a national court decision of the Contracting State to the UPCA, still the parties may be interested in having their settlement converted into a consent award instead, so as to benefit from its wider worldwide enforceability under the New York Convention.  To this end, it is recommendable to give this option by adding a second paragraph to Draft Article 18 as follows:

“Alternatively, the parties may, subject to the consent of the Mediator, agree to appoint the Mediator as an Arbitrator and request him or her to confirm the settlement agreement in an arbitral award."

Depending on where enforcement is likely to be sought, parties should carefully ponder whether they wish to convert their settlement into a UPC decision. If enforcement is likely to be carried out in any EU Member States, it is, of course, desirable to have the settlement confirmed by the UPC (being a court common to the EU Member States). On the other hand, if enforcement is more likely to take place outside EU borders, then a settlement agreement turned into a consent award will be much easier to enforce than a foreign court judgement. This option may prove sensible for PMAC proceedings where neither party is based in the EU or where an EU-based party has to settle a dispute with a non-EU based counterparty.

A provision dealing with multi-party mediation may be a welcome addition to allow an additional party to join at a later stage an ongoing mediation with the consent of all the parties involved. This may prove useful in the context of SEP disputes where a difference may concern a SEP holder and several SEP implementers who may have different interests at stake in simultaneous related proceedings. Such an addition may increase transparency in SEPs licensing (which was the leitmotiv of the now sunk Proposal for an EU Regulation on SEPs and FRAND Licenses) as well as streamline the UPC's caseload by tackling multiple proceedings at once.

Also, the inclusion of a provision on standing-by mediation may come in handy. This ADR sub-genre is particularly suited for long-term contracts where a standing mediator may facilitate the resolution of recurring disagreements that may arise concerning the performance of such contracts, so that parties' collaboration does not have to come to a halt. Such an incorporation may be carried out in Draft Article 16 by adding a letter to this purpose to the list of procedures available to the parties for the resolution of their dispute (i.e., "g) standing-by mediation") and by clarifying in the same Article in fine that – while the Mediator shall not act as an arbitrator in respect of a dispute concerned or related by its mandate – “the Mediator can be re-appointed or remain appointed as mediator for the duration of the contract concluded as a result of the mediation to facilitate the resolution of any recurring or re-emerging disputes concerning the performance of that contract.” This suggestion is drawn from the WIPO ADR services specifically catering to the needs of Life Sciences businesses, but potentially it could be applied to any R&D agreements, also on SEPs, whose development may span over a long period of time.

Conclusion

In sum, the draft rules equip the PMAC with a modern, flexible, cost-effective, and user-friendly legal framework to facilitate the mediation of patent disputes in Europe. It will be worth keeping an eye on the PMAC future caseload and statistics and keeping PMAC mediation as an option alongside other more established IP-ADR fora, such as the WIPO.