Analysing The Arbitrability Challenges In Intellectual Property Rights In India

Author: LawSphereX

Category: Intellectual Property

Published: 2026-08-23T17:56:50.673843+00:00

Updated: 2026-08-30T07:10:21.336Z

ANALYSING THE ARBITRABILITY

CHALLENGES

IN INTELLECTUAL PROPERTY RIGHTS IN INDIA Ankit Chauhan, Practising Advocate at Delhi High Court Ankita Singh, Sardar Patel Subharti Institute of Law

ABSTRACT

Arbitration has become the most effective technique to resolve business and commercial disputes around the globe. The majority of parties involved in business chose the arbitration procedure to resolve their disputes rather than submitting them to traditional courts. However, there is so much uncertainty regarding determination of intellectual property rights disputes through arbitration. The objective of this article is to examine the uncertainty surrounding the (hereinafter referred as arb. ) of IPRs disputes in India. In addition to the point that the matter is still unresolved, Indian courts have rendered verdicts that are uncertain and have completely opposite outcomes. The uncertainty arose due to two different and opposite views.

The first view taken by the courts is that the IPRs disputes cannot be determined by way of arbitration because these rights can be enforced against anyone and not against any specific individual. On the other side, the courts have ostensibly allowed the arb. of IPRs disputes. This article aims to evaluate the material on the current subject in addition to reviewing the reasons both in favour and opposition to the arb. of IPR issues, which have been clarified in numerous court rulings. The article emphasises how crucial it is to take a pro-arbitration stance in India for enticing international parties to conduct business with Indian parties. In addition, Indian courts must uphold their obligations under international conventions and adhere to the norms set by the world community. The article ends with recommendations for strengthening India’s stance on the arb.

of intellectual property rights issues in India.

Introduction

The development of technology has resulted in globalisation and commercialization throughout the sphere. Now, people can communicate with one another even if they are on different sides of the world, and they can also make business agreements and resolve disputes. Most of the individuals do not have much time to knock the doors of court, file papers, and then sit through hours of waiting for a hearing. Due to the inefficiencies of litigation, we are quickly moving towards a point where alternative dispute resolution (hereinafter referred as ADR) is replacing it. ADR is a technique which is aimed at settling the disputes outside the traditional courts with the help of an impartial third party. When the conflicting parties agree to adopt an arbitration procedure, the ADR process gets initiated.

This process might be initiated by the order of the court, by a clause in a contract, or even both. It might also be the decision of the parties. The most effective ADR method for resolving their dispute is determined by the parties themselves, frequently with the assistance of legal counsel. There are reasons behind the exploration of ADR in India like providing access to justice1, Law commission’s Report2, inefficiencies of the courts etc. ADR incurs lower costs than bringing a lawsuit. ADR procedure is completely confidential and it works on the wish of the parties to settle down the dispute on their terms and conditions. These are the reasons for the rising popularity of ADR. ADR technique is both time and money saving for the parties. The main purpose of ADR mechanism is to reduce burden of traditional courts as the courts are already having a huge number of pending cases.

In 1885, the United Nations Commission on International Trade Law (UNCITRAL) was founded with the intention of strengthening the procedures and protocols involved in conducting business and trade internationally and to set up a procedure for resolving the conflicts at international level. In response to the recommendations of the UNCITRAL model, the government of India adopted Section 89 of the Code of Civil Procedure, 1908, and replaced the earlier Arbitration Act, 1940 with the Arbitration and Conciliation Act 1996. There are mainly four methods of Alternative Dispute Resolution; (a) Arbitration; (b)

1 The Constitution of India, 1950 art. 39A.

2 222nd report of Law Commission of India [2009].

Conciliation; (c) Mediation; (d) Negotiation. The Arbitration and Conciliation Act, 1996 governs arbitration in India. An impartial third party or parties are chosen to decide the dispute in this method of conflict resolution. They perform a neutral function and they are referred as “Arbitrator”. The decision of the arbitrator, is called as the “arbitration award”. The informal nature of arbitration procedure makes it possible for disputes to be settled quickly and peacefully at a lower cost. Arbitral awards are final in nature and legally enforceable against both parties. In conciliation, a third person, known as the conciliator, speaks to each side separately with the aim of encouraging conversations between the conflicting parties and help them to reach a mutually agreeable resolution. The Arbitration and Conciliation Act, 1996 governs conciliation in India.

Disagreements arising out of legal relationships, whether or not they are contractual in nature, may be settled through conciliation as per section 61 of the Arbitration and Conciliation Act. The work of conciliator is to assist the parties in reaching a mutually acceptable compromise. Whereas in mediation, an impartial third party helps parties in conflict to a reach at a resolution. That impartial third party is known as Mediator. In this process, the mediator effectively communicates to both the conflicting parties and applies appropriate negotiation strategies with a view to exchange perspectives between them. In mediation, the settlement is a mutual decision of the parties and the third party is not supposed to announce the decision regarding the dispute. In mediation, the decision is not legally enforceable against the parties.

Recently, the Mediation Act, 2023 came into force to deal with the procedure of mediation. Negotiation is another mechanism of dispute resolution. No statue or legislation is available to deal with negotiation in India. Negotiation is a mutually agreeable resolution or compromise which is sought through cooperation between both the parties. There is no third party in negotiation to help in resolving the dispute. Intellectual Property Rights Intellectual property rights are those rights which are granted to people for their creative works—including inventions, literary and artistic productions, as well as symbols, names, and pictures used in commerce. In general, they grant the inventor, an absolute right to utilise his or her creation for a qualified time period.

The term "intellectual property" contains the rights pertaining to the following: inventions in all domains of human endeavour; scientific discoveries; industrial designs; trademarks, service marks, and commercial names and designations; performances by performing artists, phonograms, and broadcasts; defence against unfair competition and protecting all other rights arising from creative, scientific, literary, or industrial intellectual activity3. The Universal Declaration of Human Rights (UDHR) also provides that “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author4. ” Intellectual property rights (hereinafter referred as IPRs) important to encourage and promote research and development.

People and organisations concerned will not benefit from their labour if their inventions and ideas are not protected, which will inevitably cause them to feel unhappy and reduce their efforts in the field of research and development, Therefore Intellectual property rights are crucial for the expansion and advancement of humanity. Indian law recognises seven types of Intellectual property rights i. e. , Copyright; Trademarks; Designs; Patents; Geographical Indications; Semiconductor integrated circuit layouts and Plant varieties. There is no one statue for all kind of Intellectual property rights (IPRs) but there are separate statutes for specific intellectual property rights. Copyright Copyright is governed by “ The Copyrights Act, 1957”. Copyright is the right provided to the authors for their artistic and literary works.

An author is granted exclusive rights to his or her work through copyright, which also forbids unauthorised publishing and copying. A copyright can be acquired for ‘original literary, dramatic, musical and artistic works; cinematograph films; and sound recordings’5. Trademark The term "trade mark" refers to any visually expressed mark that can be used to identify one 3 The Convention establishing the World Intellectual Property Organization signed at Stockholm on 14 July 1967, art 2(viii).

4 Universal Declaration of Human Rights (UDHR), art 27.

5 The Copyrights Act, 1957, s 13.

person's goods or services from those of another. It includes the shape of the product, it’s packaging, and colour combinations. 6 In different words, a trademark provides protection for shapes, symbols, words etc. Trademarks are governed by The Trademarks Act, 1999 in India. Patent Any new invention is protected by an IPR called "patent. " It’s a specific right that protects the rights of the inventor and stops others from misusing or infringing the registered patent. It is governed by “ The Patents Act, 1970”, generally known as Patents Act.

Design ‘Design’ means and includes ‘only the article’s configuration, shape, pattern, ornamentation or combinations of colours or lines, applied to any object in two or three dimensions or in both manners, by any industrial technique or tool, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to an are judged solely by the eye’7.

Geographic Indications ‘Geographical Indication’ is defined as “an indication which designates the goods as manufactured goods, natural goods or agricultural goods as originated, produced or manufactured in the geographical limits of country, or a locality or region in that geographical limits, where a particular quality, reputation or other attribute of such goods is primarily attributable to its geographical location or, if the goods are manufactured, where one of the activities of either the production or of the processing or preparation of the goods concerned takes place in that territory, region, or locality, as the case may be. ”8 Geographical Indications are governed by “The Geographical Indications of Goods (Registration and Protection) Act, 1999”.

Semiconductor Integrated circuit layouts The Semiconductor Integrated Circuits Layout- Design Act, 2000 (“SICLD Act”) defines a ‘semiconductor integrated circuit’ as ‘a product with transistors and additional circuit

6 The Trademarks Act, 1999, s 2(zb).

7 The Design Act, 2000, s 2(d).

8 The Geographical Indications of Goods ( Registration and Protection) Act, 1999, s 2(e).

components which are integrated into the insulating material or semiconductor material or both materials and intended to carry out the electrical circuit functions.9’ These circuits are protected under this act. Plant Varieties Plant varieties are protected under the Protection of Plant Varieties and Farmer’s Right Act,

2007. It recognizes the rights of Indian farmers and to provide protection to plant varieties in

order to encourage the progress and advancement of more plant varieties. Are IPRs Arbitrable in Nature? The courts are frequently asked whether issues involving intellectual property, namely those involving copyright infringement, are under the purview of arbitrators or are instead completely within their purview. According to the court’s jurisprudence which was developed about the limit on arb. , all issues involving rights in personam are believed to be subject to arbitration, whereas all disputes which involves rights in rem must be decided by public tribunals and traditional courts. An observation has been made in the case of HDFC Bank v. Satpal Singh Bakshi10, that all disputes pertaining to “right in personam” are subject to arbitration; the parties may select this alternative forum at their discretion.

However, disputes pertaining to “right in rem” that have an underlying public interest are not arbitrable in nature and the parties’ choice of the arbitration forum is rescinded. IPRs are rights in rem which are available against whole world. It has been interpreted by various courts that Intellectual property rights are not arbitrable in nature due to its nature of availability against world at large. The concept of arbitration is based on the choice of parties but in the matter of intellectual property rights, the parties are strangers to each other. There is not any pre existing agreement between them. Thus, arbitration cannot be used to settle the disagreement and it has been observed that generally, IPRs related disputes are adjudged by courts as per the provisions provided under the respected Intellectual property right acts.

These acts provide that the courts shall take cognizance of the matters related to such rights.

9 The Semiconductor Integrated Circuits Layout- Design Act, 2000, s 2(r).

10 193 ( 2012 ) DLT 203

It has been noted that Indian courts frequently lean against the arb. of intellectual property rights challenges. The precedent-setting case of Booz Allen and Hamilton Inc. V. SBI Home Finance Ltd. & Ors11, emphasised the requirement for a competent judicial entity to adjudge on the area of rights “in rem” and completely excluded it from the scope of arbitration. It did, however, make reference of the fact that rights in rem and personam cannot be completely divided; subsequently, arbitration may be an option in situations when rights in personam arising from rights in rem are predominate. In A. Ayyasamy vs. A. Paramasivam and Ors12. ,the Court has concluded that certain types of disputes, such as those involving patents, trademarks, and copyright, may not be able to be resolved through arbitration.

Any disagreement pertaining to a right in rem will not be subject to arbitration and will fall within the exclusive jurisdiction of the traditional courts in India. The Supreme Court has declared that copyright and patent rights are included in the right in rem. 13. The apex Court in the case of Chiranjilal Shrilal Goenka (LRs. ) V. Jasjit Singh14, held decided that even with the parties’ permission, the action in rem could not be submitted to arbitration. Further in the case of Indian Performing Right Society Ltd. V. Entertainment Network (India) Ltd15, the court determined that the copyright is a right in rem after reviewing all of the judicial precedents on the subject. Based on this finding, the hon’ble court put aside the decision of arbitrator on this ground. In the case of Indian Performing Rights Society Ltd. V.

Entertainment Network16 the court determined that the “Section 62(1) of the Copyright Act mandates the institution of every suit in civil courts only and cases of infringement of copyright, passing off, remedies of an injunction are not arbitrable. ” In the recent landmark case of Vidya Drolia17, which primarily addressed the arbitrability of landlord-tenant disputes, it had been touched upon the issue of the validity of patents and the rights arising from patents are distinct, making the former non-arbitrable while the latter may be depending on the facts and circumstances of the case. While outlining the four-fold test, it reaffirmed that in some situations, the State or a particular person possess sovereignty or

11 AIR 2011 SC 2507

12 A. Ayyasamy vs. A. Paramasivam and Ors.,(2016) SC.

13 Suresh Dhanuka v. Sunita Mohapatra, (2012) 1 SCC 578.

14 Chiranjilal Shrilal Goenka (deceased) through LRs. V. Jasjit Singh,(1993) 2 SCC 507.

15 Indian Performing Right Society Ltd. V. Entertainment Network (India) Ltd., (2016) SCC OnLine Bom 5893. 16 Indian Performing Rights Society (IPRS) Ltd. Vs. Entertainment Network, arbitration petition no. 341 of 2012

17 (2019) SC

privilege, which is not subjected to arbitration because it would be against public policy, unless the relevant statutory provision specifically permits arbitration. Another reason for non arbitrability in the IPR disputes is that instead of being just another personal dispute between the contracting parties, intellectual property disputes frequently involve a question of legal character; however, the arbitration tribunal is unable to decide upon legal questions because doing so would violate the judicial system’s constitutional framework. For instance, in a copyright dispute, the arbitrator cannot rule on whether the title should be revoked or not, but he can determine whether the parties to the conflict complied with the conditions of the contract or not.

Similarly, in a dispute related to patent, the arbitrator cannot decide the issue of patentability because that is a matter for the court, but he can definitely decide on whether monopoly enforcement should take place or not. Resolution of intellectual property dispute through arbitration is still in its evolving phase with a few challenges like the lack of judgement, the confidentiality of arbitral proceeding and sovereignty of the state. No statutory provision or precedent is there which clearly explains the arb. of IPR disputes. Instances of Arbitration in IPR Arbitration has proved as a very effective method of resolving disputes. The entire world is recognising this trend, not just India. The majority of cases that arise are, whenever possible, directed to arbitration. This idea, however, is relatively new in our nation.

The regulations governing arbitration have changed recently and attracted a large number of interest, particularly in our country. The facts provided above makes it quite evident that arbitration, without a doubt, contributes significantly to issue solving and decision-making. However there are much uncertainty regarding arbitrability in IPRs but upto some extent courts were of the view that some issues in relation to IPRs can be settled by way of arbitration. In a recent landmark case of Eros International Media Limited vs. Telemax Links India Pvt Ltd18. , an application was filed by Telemax Links India Pvt. U/S 8 of the Arbitration and Conciliation Act, 1996, and the issue emerged that whether or not such intellectual property disputes are exclusively arbitrable, and whether or not there is a special legislative constraint

18 (2016) SC

on that regard under the court’s jurisdiction. In brief, Eros International Media Limited, the copyright holder of various significant films, entered into an agreement with the defendant granting content marketing and distribution rights. The arbitration clause in the agreed-upon terms covered dispute resolution. Despite a specified timeframe for agreement execution in the term sheet, none occurred. Following disagreements, Eros sued Telemax and subsequent licensees for copyright infringement, claiming Telemax lacked the right to use the content pre-agreement. Telemax, in response, invoked Section 8 of the Arbitration Act, pointing to the arbitration clause in the term sheet and urging arbitration for all issues, including those related to the ongoing lawsuit. Briefly stated, the Eros International Media Limited, owned the copyright to several major films.

It signed a sheet of terms and conditions of agreement with the defendant to give the latter content marketing and distribution rights for films. Arbitration was covered by the aforementioned term sheet. Additionally, even though the term sheet called for the execution of an agreement within a certain window of time, none did. After disagreements between the companies, Eros sued Telemax and the subsequent licensees for copyright infringement. Eros asserted that Telemax had no right to use and exploit this content prior to the agreement’s execution. Telemax, however, submitted a request under Section 8 of the Arbitration Act in response to the lawsuit.

Citing the arbitration clause in the term sheet, whose element came to be decided as part of the ruling, and requesting that any problems (including those arising out of the current lawsuit) between Eros and Telemax be brought to arbitration. Moreover, while ruling in favour of the Telemax, the Court noted that the purpose of the Copyright Act and the Trade Marks Act, 1999 (Trademark Act) is to prevent such conduct from being presented before the governing body or the registrar. These provisions do not, however, remove the place of an arbitration institution's jurisdiction. Furthermore, there isn’t any question that business disputes that have been voluntarily placed before a private court by conflicting parties involved as per the contract are not arbitrable.

These are always a right in personam, when, as opposed to the broader public, one party seeks a particular remedy against another identified party. Court further held that, Eros is acting in personam since it is suing a specific attorney for a specific relief. As the court’s decision makes very clear, an infringement or passing-off action only binds the adversary parties to it, whereas registration under copyright and trademark laws give the registrant a right against everyone in the world. It is also possible that an opposition against such an application (in front of the Registrar) might be considered an action in rem. Furthermore, the Arbitration and Conciliation Act, 1996 defines the term “international commercial arbitration”19 can refer to any disagreement of a business nature that develops between the parties of India and other countries.

In the Commercial Courts Act, 2015, IPRs issues are expressly included in the definition of “commercial dispute. ” Furthermore, without explicitly barring arbitration of IPRs disputes from its jurisdiction, section 10 of this act provides provision for the arb. of commercial disputes. In summary, the Arbitration Act does not prohibit the implementation of rulings pertaining to IPRs, inspite of the fact that whether these rulings are lawful or violate property rights. Arbitration in instances solely involving the government is permitted by the Indian Patent Act, 1970. Because intellectual property rights lie under the purview of commercial conflicts, it is evident that there is room for arb. in this area. In certain instances, courts have ruled that disputes pertaining to intellectual property rights can be settled through arbitration provided the parties have an agreement.

It is important to note that disputes pertaining to IPRs have to be arbitrated, just like disputes concerning other private rights. Need to Bring Certainty Arbitration has shown to be a highly effective means of resolving business conflicts. However, Intellectual Property Rights are not of commercial nature exclusively but they adopt the nature of commercial transactions as soon as any IPR has been made a source of earning royalty or it has been linked with any kind of transaction. It has been interpreted by various courts that right in rem are not arbitrable in nature as they are available against the world at large. Only rights in personam are arbitrable. The reason behind their arb. is that they are available against an individual and usually parties have a pre-existing contract between them. IPRs are right in rem, hence non arbitrable in nature.

This is one observation of the courts but in some cases, court decided in the favour of arb. in IPRs. These conflicting views have a indefinite outcome. Further, it creates more confusion to the matter. Intellectual property rights are indeed rights in rem but when two parties (one of them having a registered Intellectual Property) enters into any contract related to sale of that IP and in

19 The Arbitration and Conciliation Act, 1996, s 2(1)(f).

exchange, getting a royalty then this right in rem converts into right in personam. Therefore, it is arbitrable in that condition. Moreover, in Eros International’s case, the court adopted the view that trademark and copyright act doesn’t clearly excludes the role of arbitral tribunals related to matters of trademark and copyright. But neither the courts nor the statutes provided any clear words regarding arbitrability of IPRs in general. Arbitration has become an effective tool to resolve the dispute in today’s time, not just at national level but at international level also. Section 62 of Copyright Act puts a restriction on the arb. of copyright matters. Lifting this bar can prove fruitful to the affected parties as arbitration is not a technical procedure like traditional courts and their matter can be resolved in less time. It is more convenient and money saving mechanism.

There is need to bring more certainty regarding the nature of arb. in IPR. To bring clarification, a provision related to arbitration should be inserted in the Intellectual property rights statues. A clear language of act or any rules regarding the same will provide much certainty to the Intellectual property rights matters. Conclusion and Suggestions Whether Intellectual Property Right disputes can be arbitrable or not, it is still an open question. Due to the wide range of conflicting judgements, the issue is still up for debate. Examining the aforementioned cases makes it abundantly evident that the judges of the hon’ble Courts in India had different points of view. The analysis of the aforementioned instances makes it abundantly evident that, although it will rely on the particulars of each case, there cannot be the general ban on the arb.

of IPR disputes arising from agreements signed by the conflicting parties. While still in its early stages, the process of resolving intellectual property issues confronts several challenges, like insufficiency of decisions in rem and the requirement for confidentiality in arbitral proceedings, and sovereignty of state. It is an excellent choice for the to acknowledge the importance of arbitration in settling intellectual property issues. Because it not only provides a speedy conclusion but also gives an institution the freedom to select a knowledgeable arbitrator. The successful implementation of arbitration will surely have significant benefits for the parties involved in IPR disputes. To encourage globalisation and international investment in India. With a view to improve the arb. of IPRs conflicts, I would argue that the courts must take a more thorough approach.

India must successfully curry the arbitration intellectual property rights in order to broaden the arbitration’s purview.