Working toward settlement where reasonably possible

Jeff Kichaven (pictured left) is one of California’s leading mediators. Kichaven, a graduate of Harvard Law School, has been mediating complex litigation disputes, including a variety of intellectual property related disputes, for nearly 20 years.  Kichaven is a past Chair of the ADR Committee of the American Bar Association’s Section of Intellectual Property Law.

I met Kichaven several months ago while I was in Newport Beach, California, to speak at the Orange County Bar Association. Unfortunately, Kichaven was unavailable to attend, but he did have a mediation scheduled nearby so we met for breakfast and talked intellectual property and mediation, a topic near to my heart given that my LL.M. master’s thesis was on the use of alternative dispute resolution to resolve patent disputes.

Given my interest in mediation, and the fact that I’m always looking for new and interesting topics that relate to patents and intellectual property, at the conclusion of our breakfast meeting I asked if he would be interested in an on the record conversation for publication. He agreed, and the conversation that appears below occurred on Monday, December 22, 2014.

Without further ado, here is my interview with mediator Jeff Kichaven.

QUINN: Thanks, Jeff, for taking the time to chat with me today I really appreciate it.

KICHAVEN: Thank you, Gene, it’s an honor to be interviewed.

QUINN: Based on the several conversations we’ve had I know you’re deep in the mediation business. I know that you didn’t start your career as a mediator, so I thought maybe one of the things we might want to explore to jump start the conversation in an open ended way is how you went from being a practicing attorney to being a full time mediator?

KICHAVEN: Sure. For the first 15 years of my practice, I did commercial litigation with a firm known for its rough, tough, take-no-prisoners litigation style. And, as I got older and perhaps more mature, it was less satisfying to me. In the mid-1990s, after about 15 years of practice, the firm recovered a very substantial contingent fee and I had a degree of financial flexibility, which I had never had before. So it was a unique opportunity for me to get off the path of least resistance and really take a good look at what I was doing with my life and career and make some decisions. Mediation was coming into its own as something you could actually do professionally and full time for a living at that time. And I had been involved in some mediations on behalf of clients as an advocate and I was attracted to the process. I took some training courses, and started doing some cases pro bono. People started coming back with paying cases and one thing led to another. I was really at the right place at the right time and I feel very lucky and very blessed that it has evolved into something where I can support myself and my family doing work I love.

QUINN: You’re doing doing a lot of IP work, too, now, correct?

KICHAVEN: Absolutely.

QUINN: Before we get into that IP heavy discussion of what has changed over the years in the IP industry, which I know we want to get to, let me throw another open ended question at you to kind of set the framework for the conversation. What is your philosophy of mediation?   Now, I know that that’s a very open ended, that is intentional so you can take it whichever direction you want and we can follow up.

KICHAVEN: The primary goal in mediation is to allow clients, with the assistance of their lawyers and the mediator, to make the best decisions possible under the circumstances. We want people to make clear, strong decisions about how to proceed with their cases. Almost all the time, when we exchange information and talk about the case in detail, its strengths and weaknesses and the prospects for the future of the litigation, people want to settle cases if there’s any reasonably possible way to do so. And what we do in mediation is we try to determine whether there is any reasonably possible way to do so.

We have to keep in mind the distinction between being committed to settlement wherever reasonably possible, on the one hand, and being attached unduly attached to the goal of settlement for settlement sake, on the other hand. We want to be committed to working toward settlement wherever reasonably possible, but we never want to cross the line into being attached to settlement for settlement sake, because then we risk bullying people and becoming overbearing, and the temptation to lie starts to enter into the equation as well. We have to keep in mind that people do have a constitutional right to a jury trial, and we are not here to bully people out of their Constitutional rights. Yet at the same time we do want to recognize the economic and practical and emotional and psychological realities that people generally speaking do want to work toward settlement wherever reasonably possible. That is the overall approach to the process.

QUINN: That’s interesting. And I never really thought about it in that way.

KICHAVEN: Let me just add one more thought. When mediators keep in mind the distinction between being committed to settlement wherever reasonably possible, and yet not being attached to settlement for settlement sake, and we refrain from some of the heavy handed, bullying, overbearing tactics that we are sometimes asked to use, we will actually settle more cases. We will settle more cases by allowing people to come to their own decisions than by having people think that they’re having decisions forced upon them. If people think they’re having decisions forced upon them, they’ll rebel, they’ll resist, they’ll push back. When people come to their own decisions they not only settle more cases, but they are happier and more enthusiastic and more pleased, not only with the settlement but with the performance of their lawyers along the way.

QUINN: And with the judicial system, too. Because if you go to court people have this mistaken belief that if they win they’re going to be happy with the decision. And my experience usually when the judge or the jury makes the decision neither party is happy.

KICHAVEN: That’s true. So many times it has cost so much, taken so long and been so grueling along the way, that even the winner questions whether it was worth it.

QUINN: Yes.

KICHAVEN: It’s especially true in intellectual property cases because when people get too involved in litigation focusing on the past and perhaps lose their focus on the marketplace, new competitors can come in and beat them in the marketplace. So it’s important, particularly for technology companies in fast moving industries, to keep their eyes focused on the future and competing in the marketplace rather than focused on the past and competing in the courtroom, other than in a small number of cases where that focus really is absolutely necessary.

QUINN: I think that’s a very important point. Because with getting sued there remains a certain amount of uncertainty and you really need certainty in order to move forward with business. Business abhors this kind of uncertainty vacuum and having a resolution today is much better than not having a resolution for years in the future. Lack of certainty that is brought about by a lawsuit can be almost debilitating for businesses.

KICHAVEN: It’s true.

QUINN: So now we’re talking about IP specifically. And let me ask you this: What kind of IP cases have you seen recently and has that changed over time?

KICHAVEN: We see all kinds of IP cases in mediation, Gene, just as you see all kinds of IP cases in court. Copyright, trademark, patents, trade secrets the whole gamut. How it’s changed over the years. The kinds of cases that we see in mediation changes just as the kinds of cases that you see in the court docket changes, as new industries and technologies emerge and become important.

QUINN: Well, let me ask you specifically about the America Invents Act, because we’ve had that now since 2011. And we’ve had the most dramatic changes didn’t come into effect until March of 2013 with the new first to file laws. But we’re starting to creep up on the second anniversary of those first to file changes and I wonder whether you’re seeing different disputes, maybe not “dispute” in the larger meaning but different issues that have crept into mediation since that Act got passed?

KICHAVEN: I think we’re going to see those changes work their way into mediation more profoundly in the next year or two because in so many cases, when they’re first filed in court, they’re really not ready to be mediated, they’re really not ready to be settled. People need to go through the factual discovery and get their various pretrial rulings on legal issues to get some clarity from the judge as to which way the wind is blowing in their cases. So I don’t think we’ve really felt the full impact of the AIA yet. I think that within the next year or two, we’ll start to see more and more. Of course, we are seeing a lot more cases with nonpracticing entities in mediation and those present their own kinds of challenges because you’re dealing with particular kinds of parties with particular kinds of economic and business interests. When we deal with nonpracticing entities in mediation, we have to take them seriously. They are the parties to the lawsuit. They operate the kinds of businesses that they operate. They take positions and have underlying interests that need to be acknowledged as real and sincere. And the parties opposing the nonpracticing entities have to deal with them straight up and sometimes make some difficult decisions as to whether to settle and how much money to pay.

QUINN: Yes. So now if you were going to advise somebody on when is the optimal time to engage in mediation what would you say? And I suspect this is a probably a multipart answer depending upon what the parties are really looking for. But generally speaking how would you address that question?

KICHAVEN: I would say that in a lot of lawsuits, a lawyer gets a sense that in the mind of the client and in the heart of the client, the subject of the lawsuit is not quite as much of a fresh wound as it once was. And the subject of the lawsuit is starting to seem like it’s becoming part of the ancient history of the client’s life. But the client is not quite ready to leave it.

It’s the familiar stages of grieving: Denial, anger, acceptance. Well, litigation in many senses resembles that. People are grieving, not for a death of a loved one as in the original psychological literature, but people are grieving for the loss of a business opportunity, for the loss of income, for the loss of career opportunities, things of that nature. At a certain point, people are in denial. At a certain point, they’re in anger, and that’s when litigation is in its full-blown state. And then at a certain point, people are ready to put it behind them on realistic terms and move on.   Perhaps pay a little more or take a little less than they think they should be obligated to pay, or might be entitled to receive, in order to get the benefits of finality and closure and being able to move on.

When a lawyer senses that a client is about at the cusp of acceptance, and about at the point where they’re ready to put things behind them, and they need some help getting the client to a psychological, emotional, factual and financial place where they’re comfortable with putting it behind them, a mediator can help a lawyer get the client over that hump from anger into acceptance, to finality, where they’re ready to put something behind them. So it has less to do with the factual development of the record than it does with the emotional and psychological state of the parties. That’s one reason why we sometimes question whether courts are in a good position to tell people when they ought to mediate their cases. While courts and judges are very familiar with the factual state of the record, generally speaking they have no familiarity with the emotional and psychological state of the parties, and whether they’re ready to put things behind them on terms that can actually be negotiated.

It’s important for lawyers to keep this in mind in terms of their need and desire to maintain control over the management of the case in all of its aspects, including the critical decision of when is the right time to mediate. Mediation is not a trivial decision, Gene. It takes a lot of time to prepare properly for mediation, it costs money both to prepare for a mediation and to engage a mediator. It often involves significant travel and time commitments by various people involved. So it’s not a decision to be made lightly or thoughtlessly. It’s not a decision to be made by saying “Well, let’s just try it and see what happens.” People have to look at it more critically and ask what are the challenges that we’re facing, what’s missing in this case, what’s missing that’s preventing us from reaching a settlement, and can a mediator with the skills of a mediator help provide us with that missing factor?

QUINN: Yes. Now many years ago I did my thesis for my LLM on intellectual property, alternative dispute resolution and I did a survey of practicing attorneys and looked at all the statistics for litigation and one of the things I also did is I flew down to the Delaware to the United States Federal District Court, which at the time handled a large volume of patent litigation, and they still do today. I talked to several judges and I talked to one of the magistrates there who at the time she told me she had mediated somewhere around 700 different patent cases over her career. And she told me that probably one of the most critical things to getting a settlement in a case is you have to have the right people in the room and that means that it’s got to be somebody who has got their eye on the financials and is not tied to the innovation. It can’t be the attorney who drafted the patent, which unfortunately in a lot of cases, or fortunately or unfortunately depending on your viewpoint, there are many startup companies who will have a patent attorney and then that patent attorney will grow with the company and ultimately become a general counsel or having a decision making authority and now the patent that that person prosecuted is being questioned. And generally speaking that dynamic isn’t necessarily going to facilitate settlement.   So I guess my question to you is with your experience what is the dynamic that leads to a settlement resolution more often than not?

KICHAVEN: Again, when people reach a point where they can start to see a future independent of whatever is in dispute in this lawsuit, then they’re ready to say, “you know what there’s another invention out there, another business opportunity, another job, another prospect.” And, when something emerges in their future that begins to look concrete and real and promising, then people are less likely to cling on to what has existed in the past as the keystone to all of their success and their career and their lives.

QUINN: Well, let me ask you like this. When you were are doing a mediation do you have any ground rules or do you require somebody with decision making authority be present or available by phone or—what kind of ground rules do you find that usually work better?

KICHAVEN: Every case is unique. And, every case has to be customized to the particular needs and requirements of that case. So what we try to do is to customize those ground rules in advance, and make sure that there are no surprises on the day of the mediation. We want each side to know who the other side is bringing. If there are questions about the levels of authority of the people who are coming, we try to flesh those out in advance and make sure that each side knows and is satisfied with the people who are coming. Many times, even very senior people in their organizations may have to call back to a committee or a chief financial officer or a board of directors or a chief executive officer to get final approval of a settlement. Particularly in larger, more complex cases.

Before a mediation, we ask questions, such as who is coming? What is her level of authority? What’s her track record with the people who will be on the other end of the phone when she calls headquarters for approval of the settlement? If she recommends a particular settlement, is the advice likely to be taken or not? What’s the relationship, the institutional history, what are the overall circumstances? We ask these questions, and seek permission to tell the other side the answers, because we don’t want people surprised when they come to a mediation and find out who’s there or what their levels of authority are.

This raises the overall issue of the critical importance of adequate preparation for the mediation. You know, as mediators, we ask people for briefs reasonably in advance of the mediation so that we can read the briefs, become familiar with the issues, read whatever legal or factual authorities we need to read and work out all of the logistical issues with the lawyers before the mediation. As mediators, we want to understand the challenges that we face in this particular mediation and the expectations of the mediator, because the challenges and the expectations vary from case to case. We as mediators, want very much to meet the challenges and exceed the expectations of the lawyers and their clients. And it really helps if we know in advance what those challenges and expectations are.

So, if one of the challenges that we may face in a mediation is making sure that people come with appropriate levels of authority to get the case settled, that’s something that can and should be addressed before the mediation even starts. If the mediator gets those briefs sufficiently in advance of the mediation to make some phone calls to lawyers, find out what’s going on behind the scene, do whatever can be done in advance of the mediation to make sure that the mediation day is productive and successful.

QUINN: Trust building has to be a critical role for the mediator. Now the question is how do you go about doing that? And I suspect based on what you were just saying the attempt to build trust with the parties has to start prior to the mediation ever formally beginning.

KICHAVEN: Absolutely. It begins with who you are and your reputation as a trustworthy person. Because lawyers are going to check you out. They’re going to check your references as a mediator beforehand. And we spend our whole careers trying to develop our reputations, and to earn the reputation for being trustworthy. So that’s the most important thing.

When then when you get into the context of an individual case, being thoroughly prepared is an important way to generate trust. So when lawyers send you the briefs, you earn trust by reading those briefs, understanding them, calling the lawyers with any questions that you may have and demonstrating to the lawyers that you are really concerned for them and their clients, that you really want them to make the best decision possible, and at the same time that you respect their abilities as decision makers and you’re not there to bully or strong-arm them. Demonstrating all of that is very important to generating trust.

You have to demonstrate that you understand the subject matter of the lawsuit, and that you can participate intelligently in a conversation about the merits of the case. So if you know absolutely nothing about patent law, you will have a difficult time establishing the level of trust that’s necessary among the participants in a patent case. And it’s true in any other area as well. That’s one reason why as we see the mediation profession maturing, we see greater specialization. So you’ll have mediators who might do intellectual property cases, but might not go near trust and estate cases or probate cases.

A mediator who’s generally familiar with the field of, for example, patent law, can read the briefs and learn anything extra that needs to be learned about the particular issues in that case.

There are also certain process things that mediators can do to develop trust. For example, in olden times, in basic mediation trainings, they would train us to escort everybody into a conference room, seat people around the table and begin a joint session by turning to one side and saying, in essence, “What do you think?,” and then turning to the other side and saying, “What do you think?” As time has evolved that’s proven to be a recipe for disaster in many cases. Sometimes it may still work, but generally it doesn’t. What’s better, in general, is to meet with the sides privately when they first arrive at the mediator’s office in the morning. This helps because, although the mediator may be very familiar with the lawyers involved, the mediator is probably not familiar with the clients, the executives of the underlying companies, the inventors, business executives, representatives of insurance companies, whoever happens to be involved in a particular case. And it’s good when the mediator has the opportunity to meet with those people to establish some rapport, to develop some chemistry, to ask whether those people have any questions about the process, to discuss with each of the participants what role they feel comfortable playing, how directly they want to be involved or not involved. Some clients want to be involved every moment of the way. Other clients want to be more deferential to their lawyers and let their lawyers carry the ball much more of the time. Again, we customize every case. So meeting with people, understanding their needs and concerns and customizing the process to meet those needs and concerns, with the mediator providing input along with everybody else, is another way to develop trust.

We have set the stage for productive and constructive Opening Joint Sessions in many, many cases. If we plan for an Opening Joint Session only after having telephone calls with the lawyers before the mediation, and only after meeting with the sides separately at the beginning of the mediation day, we can then create and mold and shape an agenda for an Opening Joint Session which focuses in on those issues which can be discussed productively and constructively between the sides, will actually move the conversation forward. When the mediator demonstrates that kind of concern for the parties, working with them to devise a process which meets their needs and moves the ball forward, that does a lot to generate trust. And that’s critical for the mediator to develop as the mediation day goes on.

QUINN: Well, let me ask about this, before I let you go I’ve got—

KICHAVEN: I’m happy to do it, Gene.

QUINN: I definitely want to get to, back to trade secrets because I know you raised that as an issue a couple times and I tend to think that given the changes to the patent law, and not just specifically the America Invents Act but also some of the more unfavorable rulings from the Supreme Court about what is patent eligible, we’re going to see a lot of companies choose to protect what they’ve come up with with trade secrets rather than a patent. Is that something you anticipate seeing? Or maybe have you already started to see that? And then the second question along those lines is what does that do to the dynamics, if anything, when you’re talking about something that fundamentally that has to remain a secret in order to be valuable?

KICHAVEN: You know, as mediators we look at the kinds of continuing legal education programs that the different bar associations and continuing education providers are putting on. And we think those are a leading indicator of the kinds of cases that we’ll be seeing six months or a year or two years down the road. And given what has happened in the patent eligibility field, there are a lot more continuing legal education courses now about trade secrets and whether things which at one point people thought they could patent, but maybe now they can’t, are eligible for trade secret protection. So I think mediators are anticipating that we’re going to see more trade secret cases being mediated because I think there are going to be more trade secret cases filed in the foreseeable future. And they will pose some ticklish questions in mediation as they do in litigation because there’s a tension between the desire to protect your trade secret, and the desire not to disclose too much to your litigation adversary lest you lose the benefit of having the secret in the first place. So I along with many other mediators, and I’m sure a lot of litigators as well, are wondering how that tension is going to play itself out in what everybody is predicting will be an increase in trade secret litigation in the future months. What do you think?

QUINN: Well, I think you’re going to see that particularly in the biotech community, for example. So much of the real valuable stuff that could be developed right now is not likely patentable in the diagnostic space particularly, in some of the genetic spaces also. And I think at the end of the day society is going to wind up losing because the whole purpose of the patent system is to facilitate the exposition of these ideas and innovations so that others can build upon them in an incremental way up until the point where then you get paradigm shifting innovation. But you’re never going to get real paradigm shifting innovation, or at least not nearly as much paradigm shifting innovation, if innovators can’t build on the shoulders of the people who stood before you. So it’s a big problem for the industry right now. Maybe over time the Supreme Court will loosen up, but I’m not holding my breath that the Supreme Court will come to their senses. I think there’s more people hoping that maybe at some point Congress may step in and loosen up patent eligibility. But between now and whenever we get to a more favorable patent regime people are going to have to make decisions for their businesses and I think increasingly you’re going to have people relying on trade secrets. I also think that in the next year in Congress there’s going to be an effort to get federal trade secret legislation so I do think we’re going to start to see a lot more of these issues over the coming years. Now the question is what is the dynamic going to be when you have these kinds of disputes? We have something of an idea based on how disputes arose in the early years in the computer industry. A generation or more ago there were more trade secret disputes as people moved from company to company, so maybe we’ll see that trend resurrected. But I don’t know. I don’t think anyone knows for sure. I know that there are a lot of people preparing for that. But I also know that there were a lot of people preparing for all the litigation around Y2K and that just never went anywhere.

KICHAVEN: [Laughs] Right.

QUINN: All the interest in Y2K would have been one of those scenarios where the leading indicators based on CLEs would have led everybody astray. The volume of CLEs focusing on Y2K was astonishing and attorneys were preparing for all this litigation and then midnight struck the computers didn’t crash.

KICHAVEN: And life went on, yeah.

QUINN: Yeah, life went on which is good. But for an awful lot of firms that were planning for this to be the next big wave of litigation that didn’t work out so well.

KICHAVEN: Well, one way or another, Gene, we know that the pace of technological change is not about slow down. And technological changes are going to continue to be critically important to advances in our economy. And there will continue to be litigation in one form or another over technological changes because there is just so much commerce related to that space. And those cases will continue to need resolution. And so there will be work for lawyers, there will be work for mediators, and hopefully together we can help keep some of these cases out of our crowded court system so that the courts can devote the time that they need to the cases which really need a court’s attention.

QUINN: That’s right. I think that’s at the end of the day one of the reasons why mediation and alternative dispute resolution are so useful is to quote Abraham Lincoln, “Justice delayed is justice denied.” Our court system is overworked. The judges are underpaid and in a lot of places even the federal court judges are making only a little bit more than an associate in a large firm, which is a problem. I think that there are a lot of issues that the judiciary needs to face and Congress needs to address them. In the meantime these disputes needs to get resolved, and that largely means settlement. So I do think mediation is a very important process and it’s only going to get more important as we move forward because I don’t see any sign of our society becoming less litigious.

KICHAVEN: The country continues to grow. The economy continues to grow. And a certain percentage of deals are going to end up resulting in conflict. Some contracts do get breached. Some patents do get infringed. And as there are more contracts and more patents, if the percentage of them which go into disputes remains the same, then the number of disputes is going to grow. And we need to have efficient ways of dealing with them while still recognizing that there are some cases that really do need resolution by courts. There are some important issues in terms of what is eligible for a patent and what is not. Are we striking the right balance between protecting inventors and allowing competition. And courts will always need to resolve some of the issues in that area and related areas to make sure that we actually are promoting innovation and progress in the right ways and to the right degrees. So if we as mediators and lawyers can make sure that courts have the time and resources necessary to resolve those cases that really need their attention, then we’re providing a very valuable service for society as well as a very valuable service for the companies and inventors and investors in those companies who need their disputes resolved, who need the kind of finality to which you referred earlier in our conversation, so they can have a degree of certainty and move on and focus on the future and competing in the marketplace which, all else equal, is better and more productive and constructive for society than focusing on the past and fighting or competing in the courtroom.

QUINN: And that’s probably a really good place to stop. I really appreciate you taking the time to chat with me and hopefully over the next year we can revisit again and see what has changed and whether these Supreme Court decisions are changing the way disputes are being resolved or whether we do see more trade secret cases.

KICHAVEN: Gene, there will always be changes in the law. There will always be changes in technology, there will always be changes in the economy. Part of the great challenge and joy of doing the kind of work we do is contributing to those changes, and adapting to them as well.

QUINN: All right. Thanks a lot, Jeff, I really appreciate it.

KICHAVEN: You’re very welcome, Gene.

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If you have questions for Jeff Kichaven he can be reached at  [email protected], or via telephone at 888-425-2520.