Beer Before Bed? Specialty Arbitration Provisions for Unique Disputes
You can probably guess that most of us here at the IP ADR Blog think it's a good idea to include in your ADR clauses specialty requirements for the arbitration or mediation of your commercial or IP disputes.
Not to mention a bad idea to serve your infant beer before bed!
The need for an ADR neutral with specialized legal or industry knowledge is particularly true for patent litigation but also important for the other "soft" forms of IP disputes.
Let's not go overboard however, by requiring that the arbitrator have at least twenty-five years experience in trademark litigation, an office in Santa Barbara County, belong to a lawfirm with at least five offices and no fewer than 1,000 attorneys, and . . . . serve his clients beer before bed!
Riduculous you say? Don’t be surprised, I have seen weirder clauses.
The Beer Before Bed Amendment to the Business and Professions Code
I was reminded of this problem today when I came across a proposed amendment to the Business and Professions Code introduced by Gloria Negrete McLeod, California State Senator for the 32nd District (San Bernardino County) back in February of this year. It is currently on Governor Schwarzenegger’s desk awaiting his signature.
This is a good example of legislators going overboard.
The proposed legislation requires the arbitration of disputes concerning the termination of an existing wholesaler by a company aquiring a beer brewery. If the terminated wholesaler believes the new brewer has not paid him the fair market value of his distribution rights, the dispute over compensation must be submitted to arbitration. So far so good. But here's where the legislation goes astray.
The proposed amendment requires that the arbitration of the dispute must be held
through a private arbitration services provider with at least three offices in California and a statewide roster of at least 70 neutral arbitrators, of which at least 30 have prior experience as a sole arbitrator in franchise, distribution, or related business litigation.
We don't even want to go tothe "additional amendments" that will govern the "arbitration process."
So, as in all things, moderation is key.
I suppose this is one way of "selecting"a particular service provider without directly saying so, as there are likely not many (maybe one?) which would meet these requirements!
What happens if the criteria can't be met? Is there a default to litigation? Is this the drafter's way of making sure it goes to the court for resolution?