Mediation in Intellectual Property Cases: Documenting the Settlement

In past articles we looked at mediation of IP disputes.

We are now assuming that the parties have reached basic agreement at the mediation session, but there is still more to do. That takes us into the sometimes difficult but essential business of documenting settlements in intellectual property disputes.

The Problem of Second-Guessing

Complex disputes usually mean complex settlements. And once the mediation session is over, parties often return to their offices with doubts. Buyer’s or seller’s remorse creeps in. The drafting process often becomes less about reflecting the deal struck and more about reshaping it. Sometimes, counsel explains this away by saying they are only adding the “usual terms.” But there really are no usual terms. What seems ordinary to one side often feels extraordinary, or even dangerous, to the other. So, it is important that at least the basics of the deal get written down and acknowledged at the mediation session. But writing down the agreement can unearth further disputes or issues. That is where a mediator’s neutrality matters. The mediator and parties know what the basic deal is. Still, when capturing it in writing, language suggested by an opponent may be suspect. But the same phrase offered by the mediator can sound fair and preserve the deal.

Indeed, sometimes it may seem the parties do not actually have a complete deal, and the settlement could fall apart. Again, a neutral mediator, who is quietly confident there is a deal, can help nail down the necessary details in terms acceptable to both parties and keep details from derailing the important part of the deal.

Details Matter

In IP cases, the details matter. A settlement that says simply “the defendant will stop infringing” invites future disputes. What patents are we talking about? What about continuations and other matters pending before the patent office? Which product? Which design? How is it described? What trademarks are we talking about? How are they best described? What about other registrations for similar marks? What is the royalty number on past sales or use? Etc.

Settlements fall apart without specifics. After all, a settlement is a contract. A court or arbitrator may have to interpret it later if things are unclear. Make it as clear as you can. That means bringing with you all the patent numbers, trademark or copyright registrations, descriptions of trade secrets, product descriptions, and other details so you can get the necessary details.

License agreements often figure into intellectual property settlements. These introduce additional complexity. Patent licenses require clear definitions of what is and is not covered, rates, payment timing, and means of ensuring compliance. After all, chances are the parties already disagree about what the patent claims mean. You will need to bring enough specificity and clarity to the deal to avoid later disputes.

Licensing trade secrets can also provide fertile ground for later disagreement if the definitions are not clear. And you generally have to accomplish the description while assuring the secrets stay secret. And you likely need to wrestle with specific financial terms and compliance mechanisms.

Specifics of what is and is not allowed matter if you are settling a trademark dispute. What is licensed? How will royalties be tracked and paid?

Mediators can help guide the parties toward clear provisions that lock in the deal. But remember that mediators are not responsible for the final agreement. That is up to the parties. Still, mediators can help the parties work out documentation of the deal to make it clear and to meet the parties’ concerns.

Beyond the Four Corners

Cross-licenses, field-of-use restrictions, and other arrangements can spark antitrust concerns. The U.S. Supreme Court has warned that IP settlements, while lawful, must be structured to avoid anticompetitive effects. These are issues best dealt with at the table rather than in future litigation. Trademark licenses carry the danger of “naked licensing,” where a trademark owner fails to impose quality controls, risking loss of rights down the road. Counsel should foresee the problems that could come up with the deal and understand how to best deal with them. Solving a tricky antitrust or naked licensing issue that counsel only realized—or did not realize—existed at the end of a long mediation day is not likely to go well.

You may think it is not worth the effort to anticipate all these issues. You and your team may, in fact, doubt that a mediated settlement is possible. But let me remind you that over 90% of IP cases settle before trial. In my experience, most cases that do not look like they could settle before the mediation actually do settle. Not all, of course. But a surprisingly large percentage do. So, it is almost always worth doing your homework before the mediation so you can document the settlement well.

Preparation Is Key

The most successful settlements are those where the parties arrive at mediation ready to draft. Even if the final agreement will take time, having drafts of key terms—royalty mechanics, releases, confidentiality, merger clauses—at hand allows the mediator to help shape a document that reflects the deal made. Without that, settlements risk dissolving in the haze of “we will work out the details later,” or at least a frustrating series of meetings and disagreements about the agreement you thought you had.

Final Thoughts

A settlement is not complete until it is written, specific, and clear. Mediators and well-prepared counsel can make all the difference between a fragile handshake and a binding peace.

Note: This article is based on a book chapter I wrote for Professor Dwight Golann’s excellent book, *Mediating Legal Disputes: Effective Strategies for Neutrals and Advocates* (American Bar Association, 2021). I had ChatGPT 5.0 summarize it, revised it extensively, and added some things I have learned in the last few years. The chapter is, of course, quite a bit more in depth. Professor Golann’s book, a great resource for all sorts of mediation issues, is available from https://www.americanbar.org/products/