A recent reform of the Spanish Civil Procedure Act will introduce what the Recitals of Organic Law 1/2015 (“the Law”) call “other adequate means of dispute resolution in the non-jurisdictional route, as an indispensable measure for the consolidation of a sustainable public justice service” (according to the Spanish acronym, “MASC”). Recital IV of the Law goes on to say that “before entering the temple of Justice, one must pass through the temple of concord.” The objective of the Law is to try to reduce the workload of Spanish courts by introducing MASC as a mandatory recourse without which one will not be able to enter the temple of Justice. In other words, unless the complainant shows that it has tried to resolve the dispute through MASC, the complaint will not be admitted.
The purpose of this entry is to provide a few snapshots of the main characteristics of this new procedure:
1. What is MASC?
Art. 2 of the Law refers to “any type of negotiation activity, acknowledged in this or other state or autonomous community laws, to which the parties of a conflict resort in good faith for the purpose of finding an extrajudicial solution to the same, either by themselves or with the intervention of a neutral third person.” Although this article uses the term “negotiation”, from the context of the provision and, in particular, the reference to a “neutral third party”, the contents of art. 5 (more on this below) and the purpose of the Law (trying to avoid litigation), it is clear that the use of any alternative dispute resolution (“ADR”) procedure (negotiation, mediation, conciliation, arbitration, etc.) will be sufficient to show that MASC has been attempted. According to art. 5, having previously taken recourse to MASC will be a condition for granting leave to proceed (i.e., admitting) the complaint. For the purpose of complying with this requirement, the complainant will have to show that the object of the negotiation and the object of the judicial proceedings are the same. The second paragraph of art. 5 points out that “This requirement will be considered to be fulfilled if previously recourse is taken to mediation, conciliation or to the neutral opinion of an independent expert, if a binding confidential offer is made or if any other negotiation activity is employed, acknowledged in this or other state or autonomous community laws […].” So, the Law confers wide leeway on the parties regarding the form of MASC used. In the same paragraph, the Law further clarifies that “particularly, the requirement will be considered fulfilled when the negotiating activity is carried out directly by the parties, or between their lawyers under their instructions and with their agreement, as well as in cases in which the parties have resorted to a collaborative legal process.”
2. What kind of patent-related proceedings are affected by MASC?
According to art. 5, MASC will be required for admitting declaratory complaints (for example, in the case of patent proceedings, infringement and nullity actions). It will not be required for filing an application for a preliminary injunction prior to the main complaint, the application for “saisie-contrefaçon” inspections or for the filing of a protective writ.
3. What effects does the opening of a MASC procedure have?
Art. 7 states that the request of one of the parties addressed to the other party to initiate a MASC procedure, “in which the object of the negotiation is adequately defined”, will interrupt the prescription or will suspend the period for the expiry of an action from the date when communication with the other party was attempted. If a preliminary injunction has been ordered before the MASC process has started, the 20-calendar-day deadline established by the Civil Procedure Act to file the main action will likewise be suspended.
In principle, this interruption or suspension will be maintained until the date when the agreement is signed or the termination of the negotiation process without agreement. However, such interruption or suspension will be lifted if a first meeting aimed at reaching an agreement is not held or a written response has not been obtained within 30 calendar days from the receipt of the petition, or from the date of the request, if such receipt does not take place. Art. 5 clarifies that, if a specific proposal of agreement does not receive a response from the other party within 30 calendar days from its receipt, such interruption or suspension will be lifted. Par. 2 of art. 7 contains similar rules on the interruption of deadlines and suspension of the expiry of actions for cases when mediation, conciliation or alternative ADR other than negotiation are attempted.
4. For how long is the door for filing a complaint open after going through MASC without reaching an agreement?
Par. 3 of art. 7 states that if the initial request for negotiation does not receive a response or the negotiation process ends without an agreement, the parties must file the complaint within one year of the receipt of the request by the other party, if the latter has not responded, or within one year of the termination of the negotiation process without an agreement. Assuming that more than one year has passed, it will be necessary to start a new MASC procedure.
5. Encouragement to engage in the MASC procedure
In order to discourage abuse of the public justice service by the parties, par. 4 of art. 7 states that if a judicial process is initiated with the same object that a previous negotiation activity attempted without agreement, courts must take into consideration “the collaboration of the parties” with respect to the solution and “the eventual abuse of the public justice service” when awarding or assessing costs, and for the imposition of penalties and sanctions established by the Civil Procedure Act”. This article seems aimed at discouraging massive class actions filed by “ambulance chasers” in the past. It is less clear what impact this provision will have in the context of patent litigation.
6. Confidentiality and format of the negotiations
Needless to say, the negotiation process and any documents used in that context will be confidential, except the information regarding whether or not the parties engaged in the attempt at negotiation and the object of the dispute (art. 9). The Law also clarifies that any negotiations may be held online (art. 8).
7. How can the negotiation attempt be proved?
Taking into account that, as mentioned at the outset of this entry, having attempted to resolve the dispute through MASC will become a condition for the admissibility of the complaint, the negotiation attempts and the success or failure thereof will have to be reflected in documents.
If no third party has intervened, the use of the MASC process may be proved with any document signed by both parties reflecting their identity, the subject of the dispute, the date of any meetings and an affidavit stating that both parties have intervened in the process in good faith. In the absence of this, the negotiation attempt may be proved by any document showing that the other party received the request or invitation to negotiate or the proposal, as the case may be, the date, and that it was possible for that party to have access to its full content (art. 10.1). If a third party has intervened, this person will have to issue, at the request of either party, a document setting out the above details, plus the identity, qualifications and professional affiliation of that person (art. 10. 2).
8. When is MASC considered to have finished?
The next question considered in this entry is when can the MASC process be considered to be finished. According to art. 10.4, the MASC process is considered to have terminated without an agreement when any of the following four circumstances take place: a) 30 calendar days have passed since the receipt of the initial request for negotiation and no first meeting or contact aimed at reaching an agreement has taken place, or no written response has been received; b) if, once the negotiation activity has started, 30 days pass since the date when the other party received a specific proposal from the proposing party, without reaching an agreement or without having obtained a written response; c) if 3 months have passed since the date of the first meeting without having reached an agreement, although the parties may continue the negotiations; d) if either party sends a written communication to the other party terminating the negotiations reflecting that this is the will of that party.
9. When does the Law introducing MASC come into force?
The MASC procedure will come into force on 3 April 2025.
10. How will the MASC requirements be interpreted in practice?
For obvious reasons, the million-dollar question is how will Spanish courts interpret the MASC requirement in practice. On a first reading, MASC may prove to be a useful procedure to discourage some types of class actions and/or prompt negotiations in contractual matters where the parties’ positions are typically far apart as part of their negotiation strategy. Within the realm of patents, it may also be helpful in cases involving inventorship disputes or discrepancies between a licensor and a licensee (e.g. FRAND disputes). It is less clear what role MASC may play in cases where a party is seeking the revocation of a patent which it considers to be null or a patentee is seeking a declaration of infringement of a patent that it considers to be infringed. Only time will tell.
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