ARBITRATION-An Ideal Way to Resolve High-Tech Industry Disputes

By Bender, Raymond G. | Dispute Resolution Journal, November-January 2010 | Go to article overview

ARBITRATION-An Ideal Way to Resolve High-Tech Industry Disputes


Bender, Raymond G., Dispute Resolution Journal


High-tech businesses should look to arbitration when they have commercial disputes because arbitration's core features respond in a compelling way to the needs of the high-tech community for expert decision makers. The term "high technology" (or the shorter version-"high-tech") is routinely used in modern vocabulary, but the meaning is hardly precise. Even dictionary definitions are quite general. One defines "high technology" as "technology that uses highly sophisticated equipment and advanced engineering techniques," such as microelectronics, genetic engineering and telecommunications.1

In the early 1980s, the Organization for Economic Co-Operation and Development (OECD) created a list of manufacturing businesses in the "high-technology" sector that produce "hightech products." This list contained the following businesses: aerospace, pharmaceuticals, computers and office equipment, electronics, communications and precision instruments.2

High-technology companies often contract with one other and with companies that provide services to other businesses. For example, they enter into contracts to: acquire, sell or finance a high-tech business or project; manufacture, distribute and/or deliver high-tech products or provide a high-tech service; license patents or other intellectual property rights; and purchase insurance policies covering risks associated with the production or operation of high-tech assets.

Arbi tration has distinct advantages over court litigation when contracting parties have a complex commercial dispute that needs to be resolved promptly, fairly and economically. Disputes that arise in high-tech fields tend to be among the most complex. High-tech businesses have other characteristics in common besides complex that make arbitration a more efficient and effective process for them to use to resolve disputes.

Shared Characteristics of High-Tech Businesses

The traits that high-tech businesses have in common are complex processes, the use of proprietary and confidential information, an international focus, a fast-paced, competitive market, and in some fields, government regulation.

Complexity. The complexity of high-tech businesses is mainly due to the fact that high-tech products and services are grounded in the domains of applied science or engineering, or both. Let's look at three high-tech business ex amples: aerospace, information technology (IT)/telecommunications, and biotechnology.

The aerospace industry designs and manufacturers everything that travels through the air or space, including civil and military aircraft, guided missiles, space vehicles, communications satellites that are placed into geostationary orbit approximately 22,300 miles above the earth's surface, and rockets for launching them into space. De signing and manufacturing these products involve intricate processes that can challenge even the most experienced aerospace engineers.

Telecommunications and IT systems facilitate the transmission and receipt of voice, data and video signals instantaneously across oceans and over wide geographic expanses via terrestrial and satellite-based networks. These businesses have had a transformative impact on the economic, social and cultural fabric of modern life. Revolutionary advances that have changed how people work and play include fiber optics, digital communications, state-of-the-art network equipment, consumer devices enabling a broad array of applications, advanced software, and creative network management. A significant development noted by one IT executive was the design and manufacture of "enterprise systems"-i.e., electronic equipment and software that help businesses address particular problems.3 These products include, for example, large-scale servers, storage systems, and networking equipment. Designing these systems is a complex and intricate business, especially configuring the software elements.4

Biotechnology, the third high-tech example, combines the use of science and technology. …

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