Role of Arbitration In Intellectual Property

Intellectual property rights are becoming increasingly globally and economically oriented. Due to the varied jurisdiction and the different rules that will be used, the parties to IP issues at the international level may be unable to file a court case. Therefore, in order to resolve disputes in light of the emergence of globalisation, it is crucial to switch to another legal option. Arbitration as a concept is not new to the globe, but it does have certain issues. One of the most contentious topics in arbitration is the arbitrability of IP disputes.

There has been discussion over the extent and specific restrictions of some intellectual property rights’ arbitrability. In order to lessen the burden on the court, the courts are also expanding the scope of alternative dispute mechanisms. Arbitration is a new legal strategy in India, and because it has been a contentious subject regarding intellectual property rights, it has brought up several issues for the courts to consider. Any disputing party prefers to reach a resolution through discussion as opposed to drawn-out legal processes. Thus, it was also possible to witness the parties to the IP dispute advancing toward arbitration. An overview of the arbitrability of IPR issues has been provided in this article.

Arbitration in Intellectual Property

In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011) the “arbitrability of IPR disputes” was the subject of a notable ruling by the Hon. Supreme Court. In this instance, SBI Home Finance Ltd. has granted a loan to Capstone Investment Co. Pvt. Ltd. and Real Value Appliance Pvt. Ltd. With Booz Allen and Hamilton, these businesses had engaged into a leave and licence arrangement.

Following that, these four parties signed a security deposit agreement that had an arbitration clause. These entities got into a dispute, and SBI filed a lawsuit to get the money back through the sale of the disputed property. The question at hand was whether an arbitral tribunal may rule on a lawsuit for the enforcement of a mortgage by sale and whether the topic at hand was under the purview of an arbitration agreement. The Supreme Court stated that all conflicts involving rights in rem must be decided by courts and public tribunals since they are “unsuited for private arbitration,” contrary to what is generally and customarily trusted. Additionally, the inferior rights in personam deriving from rights in rem must be considered arbitrable.

Additionally, the Hon’ble High Court of Bombay rendered a pro-arbitration decision in the matter of Eros International Media Limited v. Telemax Links India Pvt. Ltd., 2011 in relation to the personam problem arising out of rights in rem. The arrangement between Eros and Telemax was for the licencing of Telemax’s copyrighted Eros content. Eros learned that Telemax was violating its copyright, and in accordance with the arbitration provision, the case was referred to an arbitrator. Telemax, however, noted that because the Copyright Act grants rights in rem, it is not subject to arbitration.

The question posed in this case was whether Section 62 of the Copyright Act, 1957 precludes the jurisdiction of an arbitral tribunal and whether disputes alleging copyright infringement arising out of commercial agreements are subject to arbitration. The Bombay High Court ruled that the arbitration clause in the contract is lawful in response to this. The jurisdiction of the arbitral tribunal is not affected by the Trademarks Act or the Copyright Act. The statement “section 62(1) of the Copyright Act shall not be construed down to indicate the ouster of an arbitral panel’s jurisdiction” was made in addition.

In another IPR-related case, Indian Performing Rights Society (IPRS) Ltd. v. Entertainment Network, the issue was outside the purview of arbitration. In this instance, a licence agreement between the two parties granted Entertainment Network permission to broadcast IPRS’s work. However, the arbitral award was made and then contested because of the agreement’s violation. The question of whether a licence agreement for copyright infringement would be arbitrable was thus addressed by the Bombay High Court. According to the ruling of the court, “Section 62(1) demands the institution of every claim in civil courts exclusively and instances of infringement of copyright, passing off, and remedies of an injunction are not subject to arbitration.”

The Delhi High Court concluded that a trademark issue might be arbitrated in Hero Electric Vehicles Private Limited v. Lectro E- Mobility Private Limited because the plaintiffs were seeking to defend their brand rights against a certain group rather than the entire world.

In EuroKids International Private Limited v. Bhaskar Vidhyapeeth Shikshan Sanstha, the Bombay High Court noted that the ownership of the trademark and copyright by the petitioner (i.e., EuroKids International Pvt. Ltd.) was unchallenged. The petitioner’s procedures were not thus in rem. As a result, the petition was approved by the court, and the respondent was forbidden from breaking the conditions of the franchise agreement.

Analysis

It is clear from the aforementioned cases that the issue at hand was whether or not an IP dispute could be resolved by arbitration. As with any other private rights, issues involving intellectual property can be resolved by arbitration. Any claim that is amenable to resolution via settlement may be subject to arbitration. The arbitral ruling would only apply to the disputed parties (parties concerned) and would not have any bearing on a third party, in accordance with the “consensual nature of the arbitration.”

Several issues relating to the arbitrability of intellectual property have been addressed by Indian courts, one of which was whether “passing off of the copyright” would be subject to arbitration. he question of arbitrability of IPR is still not clearly answered and there is still a confusion over which areas of Intellectual Property Rights would be covered under Arbitration. The Indian Courts have held that disputes regarding Intellectual Property are not arbitrable and the reason being that the public policy aspect is also there in IPR which means it would be against the interest of the public to make the disputes arbitrable. Also, Section 89 of the Code of Civil Procedure, 1908 states that “if the court deems fit, it can allow arbitration, mediation or conciliation for settlement of disputes between parties outside the court.”

The sectors of intellectual property rights that would be covered by arbitration is still up for debate, as is the question of whether IPR is arbitrable. Due to the public policy component of IPR, which implies that making the issues arbitrable would be against the interests of the public, the Indian Courts have ruled that conflicts involving intellectual property are not subject to arbitration. Additionally, according to Section 89 of the Code of Civil Procedure, 1908, “the court may permit arbitration, mediation, or conciliation for the settlement of disputes between parties outside the court” if it finds it appropriate.

Despite the IPR issue, arbitration will be a useful tool for resolving IPR issues because IP disputes frequently include parties from many jurisdictions. Therefore, sending the international issue to arbitration may be a simple and effective next step. Additionally, because of the technical nature of intellectual property, the adjudicators must be knowledgeable in that area. Additionally, each party is free to choose an arbitrator with the appropriate expertise. Arbitration protects the confidentiality of the procedure, which is crucial given the delicate subject of IP infringement.

Conclusion

IPR’s disputed parties will undoubtedly benefit much from the successful adoption of arbitration. In order to expand the scope of arbitration and effectively execute the system of IP dispute arbitrability, India must strive to become a centre for international commercial arbitration. Arbitration might be viewed as the proper place for resolving disagreements between the parties and achieving a result that would be advantageous to both parties. Even after several attempts to resolve the matter, it is still unclear what the status of Arbitration in IPR is. Similar to the WIPO model, the arbitration procedure should be institutionalised such that there is a globalised ADR process for intellectual property rights.

It is anticipated that the trend of arbitration in IPR will continue as the value of intellectual property and IPR conflicts both increase.