Intellectual property right (hereinafter to be referred to as "IPR") has not been defined in any of Indian statues; however, the judiciary has described it as a negative right which means it is a right to exclude others from using the property generated by the registered owner1 . This property is the intangible or incorporeal property whereby these rights are only real and effective to the extent they enable the owner or transferee to keep out from use those who are not permitted to do so.2 Intellectual property rights include trademark, copyright, patent, and industrial designs. However, we will restrict ourselves to the copyright and the dispute arising out of the same.
Arbitration as a mode of alternative dispute resolution mechanism allows the party to resolve their commercial disputes within a stipulated timeline. We know the benefits that arbitration provides to the parties, however, certain types of disputes are incapable of being resolved via arbitration and the only remedy is litigation. In this article, the authors will analyse the judicial approach to the arbitrability of copyright disputes in India.
Before we delve into the issue, we shall understand the concept of arbitrability or the disputes which are capable of being resolved through arbitration. Arbitrability of a matter means whether it is capable of arbitration.3 The legislation neither defines arbitrability nor it illustrates the matters which are capable of arbitration. However, the Supreme Court in Booz Allen4 , not only defined arbitrability but also illustrated the matters which are incapable of settlement through arbitration.
The hon'ble Supreme Court laid down a basic principle to decide the arbitrability of any matter, whereby the court stated that the matter which relates to actions in personam i.e. refers to actions determining the rights and interests of the parties themselves in the subject matter of the case, are capable of being resolved via arbitration. However, the matter which is related to action in rem i.e. refers to right exercisable against the world at large, are incapable of being resolved through arbitration. The Supreme Court wanted to give the idea to the parties and arbitrators that the decision of the arbitrator is not bound on non-signatories but only on the parties to the contract and therefore, the actions in rem which are exercisable against the public at large are incapable of being resolved through arbitration and arbitrator by its decision cannot bind public at large. Moreover, the court has held that "Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable". Therefore, conclusively we can say that actions in rem are in-arbitrable and actions in personam are arbitrable.
The hon'ble Supreme Court of India in the Ayyasamy Case5 has listed patents, trademarks, and copyrights disputes as in-arbitrable. However, the case has not settled the position as it was merely an obiter dictum and therefore, cannot be relied upon to conclusively hold copyrights disputes as in-arbitrable. The Supreme Court, in the case of Vikas Sales6 construed the copyright, patent, and trademark as a right in rem. Moreover, the court, in the case of Emaar MGF,7 reiterated its decision in the Booz Allen whereby it was categorically held that Copyright, Patent, and Trademarks disputes as in-arbitrable as these classes of dispute fall under the category of rights in rem and therefore, only the civil court can exercise jurisdiction over such disputes and not the arbitrators.
From the above discussion, we can say the hon'ble Supreme Court has put a blanket bar on the arbitrability of the IPR Disputes in India. However, it is pertinent to note that the court has upheld the arbitrability of subordinate rights in personam arising from rights in rem, But the High Courts have taken different positions with certain reasonings. Let us examine the relevant decisions to understand the arbitrability of IPR disputes.
To view the full article, please click here.
1. Gurukrupa Mech Tech Pvt. Ltd. vs. State of Gujarat and Ors. (2018)4GLR3324
2. McDonalds India Pvt. Ltd. and Ors. vs. Commissioner of Trade & Taxes, New Delhi and Ors. 2017VIIAD(Delhi)350
3. Joseph Mante, Arbitrability and public policy: an African perspective, 33 OXFORD ARBITRATION INTERNATIONAL 277 (2017).
4. Booz-Allen & Hamilton Inc vs SBI Home Finance Ltd. & Ors., AIR 2011 SC 2507
5. A. Ayyasamy v. A. Paramasivam and Ors., (2016) 10 SCC 386.
6. Vikas Sales Corporation Vs. Commissioner of Commercial Taxes, (1996)4SCC433
7. Emaar MGF Land Ltd. Vs. Aftab Singh, 2018 SCC Online SC 2771
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.