In many instances, the parties cannot resolve a software dispute with an audit. In some of these cases, there are contractual requirements or other considerations that cause the parties to employ traditional alternative dispute resolution frameworks to bring the decision makers to the table and try to resolve the case before a trial becomes necessary.
Mediation
Software publishers usually want to avoid costly litigation as much as end users do. Accordingly, a publisher may try to persuade the target to participate in mediation prior to commencing formal legal proceedings. Mediation can be valuable when there is an ongoing relationship between the parties, and the parties are interested in continuing the relationship.
One of the many advantages of mediation is that it can, relatively quickly, bring parties interested in resolution together. Mediations are typically shorter, more informal, and less costly. Parties with settlement authority attend the mediation with the goal of reaching a resolution and avoiding more formal, more costly arbitration or litigation.
Arbitration
In some instances, arbitration can be more favorable than litigation when resolving a
software dispute. In theory, the procedure is less formal, and in many instances, proceeds
more quickly than litigation. Either a single arbitrator or an arbitration panel considers the
issues of the matter and makes a decision that is binding on the parties. Arbitrators with
considerable software licensing experience and a general understanding of IT should be
selected for software disputes. In complex cases, the arbitrator selection process can be
time consuming and expensive.
There are also some significant disadvantages to arbitration. Initially, arbitrators are not required to follow the law when making their decisions. It is therefore sometimes difficult to accurately evaluate the probability of success on the merits. Additionally, whether and to what extent factual discovery will be permitted is almost always left to the arbitrator’s discretion. In reality, parties can spend years and hundreds of thousands of dollars arbitrating a software dispute.
Because the results in arbitration can be unpredictable, it is vital for a company to be in a position to accurately evaluate what is at risk in a software dispute to be arbitrated. The consequences for guessing incorrectly could result in an adverse award with catastrophic consequences.