In Eros International Media Limited v Telemax Links India
Pvt Ltd (Notice of Motion No 886 of 2013 of Suit No 331 of
2013), a Single Judge of the High Court of Bombay (Court), in
his decision dated 12 April 2016 (Decision) on an application under
Section 8 of the (Indian) Arbitration and Conciliation Act, 1996
(Arbitration Act), has held that intellectual property (IP)
disputes arising out of an agreement are arbitrable if such
agreement contains an arbitration clause.
Eros, being the owner of several films, had entered into a term
sheet with Telemax (consisting of an arbitration clause) for
granting content marketing and distribution rights in respect of
films. While the term sheet contemplated the execution of a long
form agreement, no such long form agreement was executed between
Eros filed a suit for infringement of copyright of its content
by Telemax under Section 62 of the (Indian) Copyright Act, 1957
(Copyright Act), claiming that Telemax was not entitled to exploit
and deal with such content before execution of the long form
agreement. To counter the suit, Telemax filed an application under
Section 8 of the Arbitration Act stating that all disputes
(including under the present suit) between Eros and Telemax be
referred to arbitration in view of the arbitration clause in the
term sheet, which aspect came to be decided as part of the
Eros argued that Telemax had infringed its copyright and had
also sub-licensed this copyright-protected material to the other
defendants to the Suit. Eros argued that the action against Telemax
was not for breach of a contract (since the term sheet had also
expired), but was a statutory action under the Copyright Act which
is inherently non-arbitrable. Eros also contended that the other
defendants were not a party to the term sheet.
Telemax argued that the dispute arising out of the term sheet
was purely contractual and not simply an action for copyright
infringement. Telemax argued that by the suit, Eros sought to
enforce a right in personam as opposed to a right in
rem. Further, the other defendants, who were not parties to
the term sheet, were in the nature of persons claiming through or
under Telemax (under the amended Section 8) and had also filed
affidavits agreeing to submit the entire dispute to arbitration.
Telemax also argued that there was no specific bar on arbitrablity
of such disputes and relied on the decision of the Supreme Court of
India in Booz Allen & Hamilton Inc vs SBI Home Finance
Limited & Ors.
The Court passed the order in favour of Telemax and held
Provisions of the Copyright Act and
the (Indian) Trade Marks Act, 1999 (Trademarks Act) do not oust the
jurisdiction of an arbitral panel;
Although IP rights are special
rights, they are still a species of property rights and share much
with their more tangible cousins to whom acts such as the Sale of
Goods Act, 1930 or the Transfer of Property Act, 1882 apply;
Eros' action is in
personam as it is seeking a particular relief against a
particular defined party.
Practically, IP statutes such as Copyright Act / Trademarks Act
may provide the IP licensor certain flexibilities (such as choice
of jurisdiction) to initiate an infringement action in comparison
to such disputes being referred to an arbitrator. When it comes to
clauses such as an arbitration clause, commercial transaction
documents tend to follow a standard pattern across all agreements
within the transaction. However, with this Decision, parties may
have to decide whether or not to include the standard arbitration
clause in documentation for transactions which have a significant
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