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Arbitration or No Arbitration

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Exploring the Legality of Arbitration in Intellectual Property Disputes

Abstract:1

Increasing commercialisation, prevalence of high competition, and growing importance of

new ideas and concepts, has not only increased the stature of Intellectual Property Rights, but

also the fight over them. The issue then arises: are Courts well equipped to handle these

matters, or can they be amicably solved through alternative modes like arbitration?

Arbitration, with all its lucrative features, provides a tempting alternative of the Courts,

which are currently flooded with Intellectual Property litigations. However, the entry of the

arbitration in the Intellectual Property regime is not swift, and questions about the legality of

arbitration in these matters have arisen now and then. The unclear position of law and

uncertain approach of some countries added to the misery. This paper seeks to analyse the

various grounds on which resistance against use of arbitration in Intellectual Property matters

is offered, along with brief introduction to the global scenario on this issue.

This paper also seeks to analyse the Indian stance on this point; particularly in the light of a

very recent judgement of the Bombay High Court in Eros International v Telemax, which

may be seen as a beginning point of a strong pro arbitration stance in Intellectual Property

disputes.

Finally, the paper ends by giving some recommendations to make the existing legal

framework well equipped to cope up with the challenges that arbitration of Intellectual

Property disputes may offer.

1
Arpit Shivhare, IV Year, National Law Institute University, Bhopal.

The protection these rights enjoy is subject to local laws of the country granting those rights. IP rights are territorial in nature. and has failed. 2003). Some disputes have been specifically reserved to be decided by the Courts alone. 2001). Sweet & Maxwell. in THE PRIVATE CORRESPONDENCE OF BENJAMIN FRANKLIN 132 (3d ed. Letter to Joseph Banks (July 27. The arbitrability of a matter has been recognized in New York convention in the form of ‘subject matter of the difference capable of settlement by arbitration’. Thus. RUSSELL ON ARBITRATION ¶ 2.4 But which matters are incapable of being decided by arbitration has remained uncertain. With increasing commercialisation and privatisation. Arbitration has become the preferred way of settling disputes due to its party oriented approach and economic and speedy disposal of cases. and are granted by the State.“NOW”. Page 2 of 17 . not all disputes fall within the realm of arbitration. However. COMMERCIAL ARBITRATION 71 (2d ed.5 Arbitrability of Intellectual Property (IP) disputes has never been equivocally accepted throughout the world. arbitration as a mode of settling disputes is becoming popular all over the world. 1818). 5 MUSTILL & BOYD. 1783). 4 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 3 DAVID SUTTON. he would have got the answer in one single word . This has led some to remark that the attempt to draw up a list containing the common factors which determine inarbitrability was bound to fail. 2 Benjamin Franklin. 1958). 1958 (New York Convention. the extent to which arbitration can penetrate in IP disputes varies significantly from country to country.007 (22 ed.3 for which the concept of arbitrability has been evolved. Introduction: “When will mankind be convinced and agree to settle their difficulties by arbitration?” 2 -Benjamin Franklin If Benjamin Franklin would have been alive.

1958. enforceability and infringement of these rights. the oldest being the perceived intrusion in ‘exclusive sovereign authority’. New York Convention.The resistance to the use of arbitration in resolving IP disputes is based on several grounds. with a general overview of the position in this regard in different jurisdictions. Since. joint ventures etc. and advantages of exclusivity. Since Intellectual Property Rights (IPR) are granted by the State. IPR not only 6 Art. the ground of public policy. The time has gone when their cousins from the corporeal family enjoyed superiority over them. V(2)(b). Another argument against arbitration of IP disputes is that it affects the rights of third parties. such as patents and trademarks. The use of arbitration in IP rights which require registration. Lastly. before examining the position in India. which does not require registration for its enforcement. being appointed by private parties. The IPR holder not only has right to exploit IPR by herself. but she can allow the enjoyment of these rights to others through license. it is argued that only the State has the power to decide on the validity. With the increasing use of new technologies. as has been recognized in New York convention. arbitration of IP disputes may deny the contractual nature of arbitration. any ruling of an arbitrator may impinge upon the rights of a large number of stakeholders which may not be party to the dispute. IPR have made their mark across the globe. could not rule on the validity of these rights granted by the State. need for continuous innovation. This paper intends to examine all the above mentioned arguments against arbitration of IP disputes.6 is used in some countries against the arbitration of IP disputes. is less likely than use of arbitration in Copyright. Some factors which determine the odds of arbitration in IP disputes are also located within the IPR regime. Arbitration in IP disputes: Preferred way of Dispute Resolution? In this era. An arbitrator. Page 3 of 17 .

arbitration not only has an edge over conventional litigation but has left it behind in some countries in terms of resolving IP disputes. 2 OXFORD JOURNAL OF LEGAL ANALYSIS Vol. it is not feasible to institute multiple suits in different jurisdictions on account of economic and legal issues. various multinational players are contesting or defending IP matters and related suits. arbitration provides more legible and economic option of resolving the disputes by ruling out the problem of differences in local laws and curbing the cost of multiple litigations. arbitration can provide speedy remedy 7 Daniel Klerman. In such matters. With some IP disputes oriented advantages of arbitration. Page 4 of 17 .7 Arbitration provides a dispute resolution mechanism free from these biases. IP disputes may contain case sensitive information. There is always an apprehension of Courts being biased in favour of local parties. Lastly. as can be seen in several patent litigations. since infringement in case of IP matters is generally of continuous nature. Resolving IP disputes often requires subject specific technical expertise. The infringement of IPR can take place simultaneously in multiple countries. which can hardly be ensured by conventional courts but can certainly be accommodated through arbitration. IPR are not only granted to be exploited in national boundaries. as in the case of trade secrets. Further. but. which judges of conventional courts may lack. Arbitration of IP disputes permits appointment of arbitrators who may be well equipped to deal with these matters with ease. Rethinking Personal Jurisdiction. in this global arena of IPR world. are considered as valuable assets of the business. Not surprisingly. which may require very high amount of confidentiality. the growing use and importance of IPR has increased IP disputes as a by- product. Moreover. 6. but they have a global reach as they often involve multinational parties and trans-border transactions.feature in this commercial world. When such cross border claims occur. 245-303 (2014).

it is the State in a particular territory which grants a person these rights for certain period. such as trademarks and Page 5 of 17 . i. With the exception of very few countries. in one country or another. this distinction should not be equated with arbitrable and inarbitrable IPR. and validation of IPR never went out of the picture. with extra caution. The main arguments which are used to resist arbitration of IP disputes can be summarised as follows: State’s Exclusive Authority The argument of State’s exclusive authority to deal with the enforcement.and thus. recognition. Although arbitration has been accepted as a mode of settling IP disputes in some countries.e. Points of Contention: Challenging the Arbitrability of IP Disputes The roadmap towards universal acceptance of arbitration as the mode of settling IP disputes is not without barriers. However. the test should be of arbitral awards’ impact. But. arbitrability of IP disputes is most problematic with respect to rights which confer a monopoly and require the intervention of the State to grant it. whether it is inter partes or erga omnes. are arbitrable.e. Instead. as doing this would mean dividing the entire IPR regime into arbitrable and inarbitrable rights. which does not require registration. the distinction between registered and non-registered IPR may be noted in this context. which is too broad a demarcation to make. can prevent the prospective losses. These above mentioned intrinsic features of arbitration give stimulus to the IPR community for preferring arbitration over litigation. the arbitrability of these disputes has been challenged every now or then. Nonetheless. matters concerning the infringement of Copyright. This argument is based on the territorial nature of IPR i.

6097 (1989). 2009). See also LOUKAS A. 2009). 2009). 11 Interim Award in Case No. but could not decide the validity of these rights. 79. 10 Interim Award in Case No. 8 LOUKAS A. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE 53 (Kluwer Law Int’l. resistance to arbitration of IP disputes on this ground has somehow fainted. It is said that since the State grants these rights. The middle path put forward by Courts and legislations of some of the countries is that arbitrator can rule on the issues of infringement of these rights. There is a gradual shift in States’ attitude towards respecting party autonomy over State’s exclusivity. following this path is not as simple as it may seem. However. BREKOULAKIS. as it would fall within the exclusive domain of the State. BREKOULAKIS. since only a national Court with proper jurisdiction can invalidate a monopoly granted in the form of patent or trademark. The validity or ownership of a patent or trademark often arises. 79. See also LOUKAS A. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE 52 (Kluwer Law Int’l. MISTELIS & STAVROS L.9 Then. 6097 (1989).8 It has been argued that since the bargain for grant of these rights is between the State and right-holder. an arbitrator appointed by the consent of the parties could not rule on the validity of these rights. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE 53 (Kluwer Law Int’l. only the State has the authority to rule on the validity of these rights. in the context of disputes on infringement. as a preliminary question or as a defence. MISTELIS & STAVROS L.11 This argument of State’s exclusive authority to deal with issues of IPR no longer enjoys as much popularity as it once did. 9 LOUKAS A. Consequently. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE 52 (Kluwer Law Int’l. MISTELIS & STAVROS L. BREKOULAKIS. 1993. BREKOULAKIS. 1993. the conclusion of the award will operate solely inter partes. as a preliminary matter. MISTELIS & STAVROS L. ICC Bulletin. ICC Bulletin. Oct.”10 However. In such cases. deciding on the validity of patent or trademark may become sine qua non to decide upon the issue of infringement. Oct. “there is no legal obstacle that bars an arbitration tribunal to rule on the validity of a patent.patents. Page 6 of 17 . 2009).

13 To allow the arbitration of questions of grant or validity of IPR challenges the contractual nature of arbitration. more or less. However.. (2011) 5 SCC 532. The Arbitrability of Patent Controversies. 662-663. E.e. INTERNATIONAL COMMERCIAL ARBITRATION 352 (Kluwer Law Int’l. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE 52 (Kluwer Law Int’l.. However. it is universally accepted that it cannot be done in respect of right in rem. PAT. Page 7 of 17 . 12 See.g. 15 For e. MISTELIS & STAVROS L. since a private arbitrator is not authorised to dictate legal effects erga omnes. Thus. 1999). UK. 44 J. at ¶ 23. OFF. FOUCHARD. See also LOUKAS A. 2009). & Ors.e.15 This approach guards against the intrusion by arbitration into the rights of third party and thus.g. Arbitration cannot bind third party since it is not a party to the arbitration. v. they can be enforced against the world.. BREKOULAKIS. disputes relating to sub-ordinate rights in personam arising from rights in rem have always been considered to be arbitrable. for e. Therefore. sanctifying the contractual nature of arbitration. SBI Home Finance Ltd. Booz-Allen & Hamilton Inc. provided that the existence or validity of the rights themselves are not at issue. Germany. Resistance to use arbitration as a mode of settling IP disputes comes in the form of argument that it will bind third party which has not consented to arbitration. Canada.14 A solution to this issue can be in the form of restricting the effect of arbitral award between the parties i. 14 Christopher John Aeschlimann.12 IPR are in nature of right in rem i. disputes concerning the performance or termination of contracts relating to IPR involving third parties are clearly arbitrable. SOC’Y (1962) 655. This view has been adopted by Courts and legislations of some countries by specifically providing that the award in IP disputes binds only parties to the disputes. USA. giving it inter partes effect only. GAILLARD & B. it is being done in respect of a right in personem. by its very nature. 13 P. GOLDMAN.Affecting Rights of Third Party Arbitration is contractual and consensual in nature and determines the rights and liabilities of parties to the contract.

is challenged and a particular patent is held to be invalid. there may be instances of false claims motivated by business interests. public may still be under impression of its validity and this may have serious repercussions on public interest by hampering research in that area. due to the unavailability of information regarding the award.Against Public Policy Public policy becomes hindrance in some countries when it comes to use arbitration in IP disputes. which may require going into the motive of the parties. depending upon the socio-legal conditions of that country. which can be assessed properly by the Courts alone having proficiency in dealing with these matters. who may have an interest in the outcome of these disputes. However. Page 8 of 17 . then. Further. like patent. what constitutes public policy for that matter has always remained uncertain and has been the subject matter of evolving jurisprudence. This may jeopardize the interest of public at large. New York Convention. Arbitral awards are not published and persons who are not a party to the dispute seldom come to know about the proceedings or the outcome of arbitration. New York Convention recognizes public policy as a ground against enforcement and recognition of arbitral award. 1958. 16 The ambit of public policy may vary from country to country. to balance these two may 16 Art. the above mentioned two grounds of State’s exclusive authority and effecting the rights of third party. this ground also has different dimension in terms of IP disputes. has to be balanced against public interest. and the capacity of arbitrator appointed by private parties. V (2)(b). In cases where the validity of an IPR. By and large. However. Confidentiality. may themselves be considered as part of resistance to arbitration in IP disputes on ground of public policy. being a lucrative feature of arbitration.

294. 420/364). Page 9 of 17 . and countries where the question remains uncertain and has not been addressed either in legislation or by judicial authority (unclear approach).1. countries qualifying arbitrability on public policy grounds. The first three approaches are briefly discussed below. with the exception of some countries. Code Sec. some states like USA made it compulsory to register the arbitral award with the tribunal. 2011). it is a smallest category. in this respect.S. Pp.17 which may. violation. 18 On the basis of the report of the International Chambers of Commerce (ICC). as they provide practical examples of how countries have dealt with this thorny issue. prior to 1993. Arbitration of IP disputes: A Global Scenario Globally.be doubted. Vol 9. Conservative Approach: This category has dearth of countries within it and fortunately. 19 Final Report on IP Disputes and Arbitration (Document No. IPR issues such as infringement. TWO BIRDS. Bulletin of the ICC International Court of Arbitration. can be broadly categorized into four types: countries wholly denying arbitrability to intellectual property disputes (conservative approach).twobirds. 18(1) of the Patents Act 1978 (South Africa). to some extent. NO.19 countries. However. and restricting the effect of arbitral award (mixed approach). 20 Sophie Lamb. Alejandro Garcia. countries granting full arbitrability (liberal approach).20 South Africa explicitly bars the arbitration of patent related disputes21 and it is commonly understood there 17 35 U. available at http://www. 21 Art. Arbitration of Intellectual Property Disputes. The example of this approach can be South Africa. or transfer of patents and copyright are more likely to be arbitrable. provide an answer to this problem. and Israel. INTERNATIONAL COMMERCIAL ARBITRATION & ITS INDIAN PERSPECTIVE 188 (Universal Publications. 37 et seq.com/en/news/articles/2007/arbitration-ip-disputes (accessed 13/10/2016). 18 HARSH SETHI & ARPAN KR GUPTA.

Arbitrability of Intellectual Property Disputes 12(2) ARB. 14 BERKELEY J. Effective November 2. 25 Moses H. Blessing.”23 However. Mercury Constructions Corp. and ownership. though in varying degrees and form. ARBITRABILITY: INTERNATIONAL & COMPARATIVE PERSPECTIVE (Kluwer Law Int’l. See also William Grantham. 27 M. the award “shall be binding between the parties to the arbitration. 218 (1996). INT'L LAW. Bercho Gold Jewellery Ltd.26 Altogether. Cone Memorial Hospital v. Rights that are subject to registration are also arbitrable. the Swiss law displays the most liberal position.. In the U. See generally LOUKAS A.S. explicit legislation permits the arbitration of disputes “relating to patent validity or infringement. the exact content of public policy has always remained the 22 Golan Work of Art Ltd. New York Convention. MISTELIS & STAVROS L. V.25 US Courts have also allowed the arbitration in ‘complex copyright disputes’ including issues of validity. 3d 82. even their validity and their removal from the registry.that IP disputes are not arbitrable. 2002. Co. Public Policy considerations in realm of arbitration have their roots in the New York Convention. All aspects of patent rights can be arbitrated. Forum Capital Markets.27 Mixed Approach: The ground of public policy is more or less followed by several countries. 24 35 U.C. The Arbitrability of International Intellectual Property Disputes. 26 McMahan Sec. in WORLDWIDE FORUM ON THE ARBITRATION OF INTELLECTUAL PROPERTY DISPUTES (1994) WIPO Publication No.”24 Supreme Court of USA also held that any issue concerning the arbitrability of q dispute should be resolved in favour of arbitration. INT’L 200 (1996). 173. Sec. The Arbitrability of Intellectual Property Disputes with particular emphasis on the situation in Switzerland.. 1958. Page 10 of 17 . Sec.C. V (2)(b). BREKOULAKIS. infringement. 728(E) at 72. 460 US 1 (1983) (24-25).28 Though. 294 (c). 2009).22 Israel followed the same approach by denying arbitration of IP disputes.. 23 35 U.S.S. Tel Aviv District Court civil case 1524/93. Robert Briner. 294: “Voluntary Arbitration”. v. 28 Art. Prior to 1993 judgement. but shall have no force or effect on any other person. we have USA and Switzerland which allow the arbitration of all IP disputes. Liberal Approach: On the other end of the spectrum. (a). 35 F.

.G. (1) 644. 32 William Grantham. 2060 of French Civil Code. 35 Oil & Natural Gas Corporation Ltd v. ICC Case No. General Electronic Co. Page 11 of 17 . 1996. No. it will have inter parties effect only. In the UK36 and Germany37. INTERNATIONALEN PRIVATENSCHIEDSGERICHSBARKEIT 232 (2d ed.39 Some countries like Italy. v. (69). Vol. and jurisprudence on this point is still evolving. 2001). France. 1977.32 Enforcement of arbitration award in India can be denied on the ground of public policy. (2003) 5 SCC 705.38 as long as they are not intended to bind third parties. Similarly. International arbitral awards will be recognized and enforced in France unless such recognition and enforcement is "manifestly contrary to international public policy”. 37 P. INT'L LAW. Harbinson Limited (2006). Spain. 209 (1996). 31 William Grantham.31 Italy. SCLOSSAN DAS RECHT DER. See also. 1989). 15. on the other hand has given special powers to public prosecutor to intervene in trademark or patent validity cases by both Trademark Law and the Law on Patents . the exact scope of public policy in India is unclear. 34 Renusagar Power Co Ltd v. 173. Canada follows the same approach.point of contention. Del Grandes Marques. at ¶ 30 .. 2004. Japan follow the middle path of allowing the arbitration 29 Art. INT'L LAW. the interest of India and justice and morality. 39 University of Toronto et al v John N.e. 1994 SCC Supl. ICC Bulletin. 33 Sec 34(2)(b) (ii).33 The Supreme Court in India has defined public policy as fundamental policy of India law. No.35 However.. Copyright disputes in Canada are arbitrable after judgement of the Supreme Court. France also embraces the concept of an international ordre public and have different international arbitration rules. 36 MUSTILL & BOYD. it is generally understood that IP disputes are arbitrable but the award will only bind the parties to the arbitration i. France29 and Italy30 have the ordre public bar which means restricting the power of arbitrator on ground of public policy. 14 BERKELEY J. 38 Desputeaux v Éditions Chouette (1987) Inc (2003 1 SCR 178). The Arbitration and Conciliation Act.1. 1994 AIR 860. 205 (1996). Cass. COMMERCIAL ARBITRATION 73 (2 ed. The Arbitrability of International Intellectual Property Disputes. 3989. Ontario’s Superior Court of Justice held patent disputes to be arbitrable. 173. 6709. Sept.34 The same Court has ruled that an award would be contrary to public policy if it is ‘patently illegal’. 46 CPR (4th) 175 (Ontario Superior Court of Justice). Saw Pipes Ltd. The Arbitrability of International Intellectual Property Disputes. 30 Scheck Enterprises A. 14 BERKELEY J. Soc. 5. even after these judgements.

The Supreme Court laid down that every civil or commercial dispute. with the encouragement of arbitration in recent times. India has to develop itself as a global arbitration hub.of infringement of patent disputes but do not allow the arbitration of issues involving the validity of a patent. sec. 42 The Arbitration and Conciliation Act. In most developed countries. at ¶ 1. S.com/en/news/articles/2007/arbitration-ip-disputes (accessed 13/10/2016). 44 Code of Civil Procedure. However. 1-7-2002). Alejandro Garcia. LAW OF ARBITRATION & CONCILIATION at xxiii (LexisNexis. 46 Nonetheless. The Indian Supreme Court made an observation that arbitration in India has made ‘lawyers laugh and legal philosophers weep’. arbitration of commercial disputes is the rule while litigation is the exception. AIR 1981 SC 2075 (2076). 1996. Further. Page 12 of 17 .47 However.42 India tried to become more arbitration friendly by creating this Act on the lines of the Model Law on Arbitration of the UNICITRAL43. 7 (w. after giving effect to Section 89 of CPC44 in the year 2002.45 India has promoted the arbitration.40 Position in India after the Eros Judgement: Settling dust in muddy waters? In its quest of becoming a business giant in this world of globalization and considering the rising popularity of arbitration as mode of settling disputes. By Act 46 of 1999. available at http://www. 45 Ins. The arbitral award can be set aside in India if the subject-matter of the dispute is not capable of settlement by arbitration. as mode of settling disputes outside the Courts. which 40 Sophie Lamb. the situation is just the reverse. 1996. these efforts are not sufficient to make India an arbitration friendly country on the map of the world. Ratan Singh and Sons. 2010). In India. TWO BIRDS.f. 43 United Nations Commission on International Trade Law. BACHAWAT.e. 47 Sec 34(2)(b)(i).41 With the advent of a new arbitration act in 1996.twobirds. Arbitration of Intellectual Property Disputes. one can look towards future of arbitration in India with optimism. what all subject matters are not arbitrable is a point of contention. 46 JUSTICE R. 1908. The condition of dispute resolution in India was not very pleasant. 41 Guru Nanak Foundation v. The Arbitration and Conciliation Act.

vs.. IPR. is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. 49 Shree Vardhman Rice & Gen Mills v.. 51 Delhi High Court in a matter relating to IP dispute. trademarks and copyrights for many years and called it very unsatisfactory state of affairs.48 The arbitration of dispute in India can be denied on the ground of deciding the rights of third party and being against the public policy. Page 13 of 17 . & Ors. However. India is not an exception. TVS Motor Company Ltd. at ¶ 23. at ¶ 3. Nothing has been laid down by the laws of the India with respect to arbitrability of the IP disputes. v. (2011) 5 SCC 532. In one case. 52 Booz-Allen & Hamilton Inc. AIR 2007 Delhi 284. by their nature. (2009) 10 SCC 257. Supreme Court of India has observed that matters relating to trademarks.52 The basic premise of resistance against using arbitration in IP disputes rests on this erga omnes effect of arbitral award in matters related to IPR. this has been subjected to differing interpretations of national courts in cases where the arbitrability of IP disputes have been challenged. adopted a process known as early neutral evaluation on the lines of alternate dispute resolution and advocated the inclusion of such procedures. Amar Singh Chawalwala. Courts in India are more often in favour of resolving IP dispute expeditiously. v. Generally all disputes relating to rights in personam are considered to be amenable to arbitration. and all disputes relating to rights in rem are considered to be inarbitrable.49 In another case50. SBI Home Finance Ltd. (2011) 5 SCC 532. (2009) 9 SCC 797. have their genesis in bargaining with the State and are universally considered to be rights in rem. at ¶ 11. & Ors. 51 Bawa Masala Co. 50 Bajaj Auto Ltd.. This attitude of the Courts shows the pitiful condition of litigation relating to IP disputes in India and the eagerness of the Indian Courts to get rid of it. at ¶ 22. Ltd. Pvt. Supreme Court expressed grave concern over the pending suits relating to the matters of patents. copyrights and patents should be finally decided expeditiously by the Court. and Anr. v. Bawa Masala Co. 48 Booz-Allen & Hamilton Inc. at ¶ 9. Thus.can be decided by a court. SBI Home Finance Ltd.

55 Booz-Allen & Hamilton Inc. v. American arbitration association. & Ors.. this does not represent the true picture of arbitration of IP disputes in the country.. “International Commercial Arbitration & Its Indian Perspective”. Page 14 of 17 . Dealing with the matter related to copyright infringement.. at ¶ 12. YOUNG ICCA BLOG (JULY 28. The other question which came up before the Court was of denying the exclusive jurisdiction of the District Court in case of copyright infringement. 56 Booz-Allen & Hamilton Inc. universal publication. (2011) 5 SCC 532. & Ors.e.56 The Court upheld the reasoning that disputes relating to sub-ordinate rights in personam arising from rights in rem have always been considered to be arbitrable. 57 Booz-Allen & Hamilton Inc. Since. See also Rahul Donde. (2011) 5 SCC 532. Suit No. 886 of 2013 in Suit No. The Court ruled that Section 62 of 53 Worldwide Forum on the Arbitration of Intellectual Property Disputes. 331 of 2013 (Bombay High Court). The recent judgement of Bombay High Court in Eros International Media Limited v Telemax Links India Pvt Ltd54 has tried to settle down the controversy relating to arbitration of IP disputes. 54 Notice of Motion No. 57 The Court observed that it would be a broad proposition to say that no action under the Trade Marks Act or the Copyright Act can ever be referred to arbitration.com/arbitrability-of-intellectual-property-disputes-setting-the-scene/. 2011 edition. at ¶ 23. SBI Home Finance Ltd. v. Now. the Court allowed the application of defendant to refer the dispute to arbitration in accordance with the terms of contract. http://www. the remedies sought in this case were permanent injunctions and damages. v. 58 Eros International Media Limited v Telemax Links India Pvt Ltd. SBI Home Finance Ltd. what remedies arbitrator is capable of awarding. page 188. WIPO. (2011) 5 SCC 532. 1994. See also. the Courts in India may take pro arbitration stance in view of growing popularity of arbitration.53 However. SBI Home Finance Ltd. the Court ruled that arbitrator is well capable of awarding these remedies. The Court followed the ‘rights test’ laid down by Supreme Court in Booz Allen case55 and differentiated between rights in rem and subordinate rights in personem arising from rights in rem.The ICC working group on IPR has listed India in the group of countries who do not allow arbitration for the settlement of IP disputes. Arbitrability of intellectual property disputes: setting the scene?. p. & Ors. 2016).58 In this case. the Court not only followed ‘rights test’ but also evolved a ‘remedies test’ i. 104. 331 of 2013 (Bombay High Court).youngicca-blog. Harsh Sethi & Arpan Kr Gupta.

Copyright Act59 and section 134 of Trademark Act60 do not oust the jurisdiction of arbitral panel. 63 Eros International Media Limited v Telemax Links India Pvt Ltd. it can be inferred from the reasoning of the Court that arbitration of disputes relating to the infringement of patent or trademark may also be arbitrated. The grounds of challenge to arbitrability of IP matters cannot be discarded altogether. involve dealing in IPR and have arbitration clause as mode of settling disputes.63 Although the judgement of the Bombay High Court did not specifically rule on disputes related to IPR other than copyright. Jayesh H. Nonetheless. banning arbitration of all IPR related matters would do any good. Page 15 of 17 . 61 The Court also upheld the Sukanya Holdings Case 62 by denying the principle of severability of dispute. 61 Eros International Media Limited v Telemax Links India Pvt Ltd. at ¶ 16. Closing the doors for arbitration in these matters would mean taking a step backward in the field of dispute 59 Act No. nothing can be said with certainty about the arbitration of validity of Patent and Trademark claims. These sections do not themselves define arbitrability or non-arbitrability and for that. Suit No. This judgement can also be seen as positive sign of upholding the parties’ autonomy. joint ventures etc. 14 of 1957. 47 of 1999. this judgement is a step forward to make India more arbitration friendly and in particular. 62 Sukanya Holdings Pvt. certainly not in this globalized and commercialised world where even general business events like mergers & acquisitions. Suit No. to resolve IP disputes in an expeditious manner through arbitration. 2003 (5) SCC 531. 331 of 2013 (Bombay High Court). 331 of 2013 (Bombay High Court).Pandya. Ltd. at ¶ 22. But. 60 Act No. we must have regard to the nature of the claim that is made. however. v. Conclusion & Recommendations The arbitrability of IP disputes has been challenged and will continue to be challenged until all the countries adopt strong pro arbitration stance.

but the advantages of arbitration tilt the balance in favour of pro arbitration approach. a strong and clearer pro arbitration stance of India in cases of IP disputes may cater to the needs and aspirations of the country. amendments in requisite legislations should be made. Considering the speed of disposal of cases due to overburdening of Courts. The unclear stance of India towards the arbitration of IP disputes reflects the unsatisfactory condition of arbitration in India and is a hindrance in the Indian aspiration of becoming a global arbitration hub. In countries where arbitration of patent or trademark validity is allowed. provisions regarding the registration of arbitral award should be made in order to protect the interest of public. If arbitrator rules on the validity of the IPR in order to determine the issue of infringement. in order to clear the doubts into the minds of persons who may agree to settle their disputes through arbitration. Page 16 of 17 . and should not impact the validity of IPR as such. The path towards becoming a global arbitration hub is a long one. The judgement in Eros case is a welcome step and has shown some rays of hopes in rather gloomy atmosphere. but every long journey starts with one small step. or may be allowed in future. Recommendations: Certain recommendations could be as follows: 1. by denying the efficacious out of Court remedy like arbitration. such award on the validity should be restricted for the purpose of deciding that particular case. 3. The dangers of an arbitration invasion cannot be ruled out. and pledge of India to uphold the sanctity of IPR. 2.resolution. With regard to the India in particular and other countries in general where law on the point is not clear.

What we need is to think through the limits of arbitrability. by all logical means the benefits of arbitration in IP disputes cannot be denied.With its more flexible and business oriented approach. not even by those who oppose it. arbitration can possibly be our answer to these challenges posed to the IP regime. The increasing IP disputes. and its ability to resolve disputes in lesser time than Courts. and to genuinely asses the efficacy of arbitration in IP matters. on both national and international level. and with all its promising results so far. poses the challenge to the existing legal framework to cope up with them. Page 17 of 17 .