Commercial Awareness Update – W/C 27th May 2024

THE SEE-SAW OF MEDIATION AND EXPERT DETERMINATION

Throughout the development of alternate dispute resolutions, aiming to reduce the tension and overburden of the courts, two methodologies often stand out: mediation and expert determination.

The choice between mediation and expert determination often hinges on the nature of the dispute, the parties’ preferences, and the desired outcomes.

Understanding these factors before deciding on a method is vital. While mediation prioritises dialogue and collaboration, expert determination emphasises expertise and efficiency.

What is meant by see-saw

Mediation involves a neutral third party, the mediator, facilitating discussions between disputing parties to reach a mutually acceptable solution. It prioritises open communication, cooperation, and compromise, aiming for a win-win outcome.

On the other hand, expert determination relies on an impartial expert who evaluates evidence and makes a binding decision based on their expertise in the subject matter.

Mediation has proven successful in various contexts, including family law, commercial conflicts, and community disputes. Its focus on collaboration, confidentiality, and party autonomy has been praised for its potential to reduce litigation costs and alleviate court backlogs.

Similarly, expert determination has effectively resolved complex disputes requiring specialised knowledge, particularly in technical fields such as construction, intellectual property, and insurance.

Parties may opt for a hybrid approach, which aspects of mediation and expert determination to tailor a solution that meets their needs and circumstances. For example, parties may mediate to explore solutions collaboratively before resorting to expert determination to resolve remaining contentious issues.

This hybrid model allows for flexibility and customisation while leveraging the strengths of each method, leading to a more effective resolution.

Critical issues

One critical issue in mediation is the process’s voluntary nature. While parties retain control over the outcome, this voluntary aspect can sometimes hinder progress if one party is unwilling to engage or compromise. Conversely, expert determination may face challenges regarding selecting an appropriate expert and ensuring their impartiality throughout the process.

Mediation, characterised by the involvement of a neutral third party who guides disputants towards a mutually agreeable solution, has garnered significant support from UK case law.

Precedents like Dunnett v. Railtrack plc [2002] underscore the courts’ emphasis on parties’ engagement in mediation. Adverse cost consequences loom for unreasonable refusals, as seen in Halsey v. Milton Keynes General NHS Trust [2004]. Similarly, expert determination, wherein independent experts decide specific disputes, has found favour in various industries.

The enforceability of expert determination clauses, upheld in cases such as Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010], underscores their binding nature, contingent upon exceptions such as fraud or procedural unfairness highlighted in Vision Systems Ltd v. Focus Media Ltd [2009].

The way forward

Moving forward with mediation and expert determination involves several vital steps to ensure effective utilisation, which are as follows:

• Parties should be encouraged to become familiar with the benefits and processes of mediation and expert determination through awareness and education initiatives, including educational resources and training sessions.
• Early consideration of these methods at the outset of a dispute is crucial, as it can prevent escalation and preserve relationships, leading to faster and more cost-effective resolutions.
• Clarity is essential in drafting mediation and expert determination clauses within contracts and agreements to define all parties’ scope, procedures, and roles, minimising ambiguity and potential disputes.
• Engaging qualified and experienced professionals is paramount to facilitating the resolution process, ensuring they possess the necessary skills, knowledge, and impartiality to guide parties towards fair outcomes.
• Good faith participation from all parties involved is not just a suggestion but a crucial element that encourages open communication, active listening, and a willingness to explore resolution options collaboratively. This active participation is critical to the success of the process, making each party feel valued and integral to the resolution.
• Enforceability is key, necessitating that agreements reached through mediation or expert determination are legally valid and binding, and legal advice must be sought to confirm their enforceability and validity.

Impact on the legal sector

• Drafting mediation and expert determination clauses requires the expertise of legal professionals, who ensure clarity and effectiveness in outlining procedures, rights, and obligations.
• Clients seeking robust dispute resolution mechanisms must engage lawyers or firms proficient in mediation and expert determination.
• Lawyers specialised in mediation and expert determination can expand their clientele and bolster their reputation by offering tailored services in drafting these clauses.
• Well-crafted clauses provide clients with structured frameworks for resolving disputes through mediation’s collaborative approach or expert determination’s efficient decision-making.
• Legal experts are to educate clients on the advantages and potential outcomes of mediation and expert determination, empowering them to make informed decisions during dispute resolution processes.

By Nawal Abdul Wahab

THE PATENTABILITY OF ARTIFICIAL NEURAL NETWORKS

In June 2022, the UK Intellectual Property Office (UKIPO) refused to grant Emotional Perception AI a patent for its innovative system, which recommends media files to users using a trained artificial neural network (ANN). This system was designed to suggest music based on human perception and emotion, regardless of genre or the tastes of other users.

Upon appeal late last year, in a landmark ruling in Emotional Perception AI v UKIPO, the High Court determined that the ANN did not fall under the exclusion of non-patentable subject matter as a “computer program as such.”

Given its potentially profound impact on redefining the patentability of ANNs in the UK, this case became a point of further discussion during hearings at the Court of Appeal on May 14 and 15, 2024.

Although the judgment is still pending, there is optimism that it will provide valuable guidance on assessing such technologies’ patentability.

Key discussion points from the hearings

Exclusion of a “computer program as such”

The first ground of appeal was the exclusion of a “computer program as such” under the Patents Act 1977. The main points of discussion revolved around whether an ANN can be defined as a “computer” as a matter of law and whether a trained ANN is merely a set of instructions that enable a computer to perform specific tasks.

Emotional Perception AI argued that “computer” should not be construed so broadly as to include systems that the act never intended to exclude.

This highlighted the pressing need for a clear definition of what constitutes a “computer” or a “program of a computer” under the Patents Act.

Mathematical method exclusion

Another point of contention was whether excluding mathematical methods applies to ANNs. The High Court did not initially consider the idea, and by addressing this in the appeal, there is an opportunity for clarification.

This is because even if the exclusion for computer programs is ruled out, the UKIPO might still reject patent applications for ANNs based on mathematical method exclusions.

Substantive technical contribution

The appeal also addressed whether the ANN made a technical contribution that would exempt it from the exclusion defined by Section 1(2) of the Patents Act 1977.

This issue is pivotal because it allows the Court of Appeal to clarify a technical contribution. The absence of a precise statute and case law definition makes this an especially significant aspect of the appeal.

Importance

The forthcoming verdict of the appeal holds significant implications beyond this specific case, particularly within the life sciences sector.

As AI rapidly gains ground in healthcare applications, the outcome of this case could profoundly affect the industry’s trajectory. Moreover, it boosts the drive for innovative data-driven organisations, the so-called “TechBios,” which aim to capitalise on this technology.

Overall, the outcome of this case could significantly impact law firms operating in the realms of intellectual property or life sciences. Firms will assist in filing patents for these new technologies and advise on strategies for effective patent portfolio management.

Furthermore, this will affect patent litigation, with firms representing organisations such as TechBios defending or challenging competitors’ validity.

By Yman Abrate

HOW AI IS CHANGING THE LEGAL PROFESSION

AI is transforming the legal industry by utilising technologies like machine learning, natural language processing, and robotics to enhance the traditional legal processes we are accustomed to.

From document review to predictive analytics, AI is increasing efficiency, accuracy, and accessibility in legal work for our generation. These technologies are also changing how legal services are provided.

AI adaptations

AI is mainly used in legal research, contract analysis, and predictive analytics. Legal research, which was once time-consuming, is now faster thanks to AI algorithms that can analyse large amounts of legal texts and case law.

Contract analysis benefits from AI’s ability to review, interpret, and even create documents, reducing the risk of human error. Predictive analytics uses historical data to predict legal outcomes, helping lawyers develop better client strategies.

Incorporating AI in these areas demonstrates its potential to streamline operations and enhance decision-making, leading to quicker turnaround times in the future with cases.

Critical issues in Al implementation

Although AI offers numerous advantages in the legal field, many crucial issues need to be addressed first:

• Job displacement and role evolution: One primary concern is the possibility of job displacement. AI can automate tasks junior lawyers and paralegals, such as document review and legal research previously handled. This automation may reduce the demand for entry-level legal positions, affecting career opportunities for new graduates. However, it also requires legal professionals to shift their focus to tasks that require higher-level cognitive skills, such as strategic planning and client advocacy.
• Ethical considerations and bias: The effectiveness of AI systems depends on the quality of the data they are trained on. If the data is biased, the outputs of AI systems will also be biased, resulting in unfair or discriminatory practices, especially in areas like sentencing recommendations. The legal profession must ensure that AI systems are transparent, accountable, and free from bias. The development of regulations and standards to govern the ethical use of AI in legal contexts is becoming increasingly necessary.

• Data privacy and security: The legal profession deals with vast amounts of sensitive information. As AI systems process this data, ensuring its protection and privacy is paramount. Concerns arise regarding data breaches and the potential misuse of personal information, which can have severe consequences for clients and legal practitioners. Implementing robust data protection measures and complying with privacy laws are essential to mitigate these risks.
• Access to justice: While AI has the potential to make legal services more affordable and efficient, it risks creating a digital divide. Individuals and small firms with limited resources may struggle to access advanced AI technologies, potentially exacerbating existing inequalities in the legal system. Addressing this issue is crucial to ensuring that AI does not widen the justice access gap.

Broader implications

As previously espoused, AI now plays a prominent role in the legal sector. For instance, when undertaking due diligence, AI-based solutions like eBrevia use natural language processing and machine learning to extract relevant data from legal contracts and documents, aiding lawyers in analysis, due diligence, and lease abstraction. This technology can significantly speed up the due diligence process and reduce errors, translating into lower costs payable by clients.

There is also the sphere of litigation finance. AI is utilised in litigation finance to help investors make data-driven assessments of which cases are worth supporting. Companies like Legalist Inc. use data and machine learning algorithms to assess the likelihood of success for individual cases, providing more accurate and informed investment decisions.

Nonetheless, it is essential to continuously evaluate and assess AI’s impact on the legal profession, as the use of AI in law is still in its early stages, and additional challenges may arise.

By Alara Bir