Arbitration - A Catalyst For Resolving Intellectual Property Disputes In India's Legal Framework

Author: LawSphereX

Category: Intellectual Property

Published: 2026-08-23T18:07:04.395109+00:00

Updated: 2026-08-26T17:12:07.971+00:00

ARBITRATION: A CATALYST FOR RESOLVING

INTELLECTUAL PROPERTY DISPUTES IN INDIA'S

LEGAL FRAMEWORK

Elisha Gupta, Campus Law Centre, University of Delhi Shivangi Dwivedi, Campus Law Centre, University of Delhi

INTRODUCTION

In a country like India where our judiciary is already overburdened by enormous pendency of cases, Arbitration provides an alternative to resolve disputes outside of the courtroom by involving an impartial third party known as an arbitrator who renders decisions. An arbitration hearing may involve the use of an individual arbitrator or a tribunal. Arbitration decisions are seen as final and binding providing non-interference of the courts with the parties having the flexibility to select an arbitrator with relevant expertise. This process typically entails shorter hearings, confidentiality, and requires less intensive preparation compared to traditional legal proceedings.

Intellectual Property Rights are considered negative rights because they impact the rights of third parties where, the parties enter into arrangements relating to the development, transfer of IP rights granted, disputes arising from such commercial arrangements could be arbitrated without any controversy arising from the issue of its arbitrability1. IP sectors are increasingly characterized by international transactions, the laws applicable keep on varying from country to country and involve a high level of specialization in their concerned domain. Furthermore, the patent terms are limited, technology becomes obsolete fast, and lengthy court proceedings and extensive appeal processes are not in the best interest of parties involved in disputes. Therefore, arbitration provides significant advantages.

COMPARATIVE STUDY

Several nations including Australia, Germany, and Canada have embraced a favourable stance

1 Kartik Tyagi, “Arbitration And Intellectual Property Rights”(Legal Service India)

Accessed on 22 March 2024

towards arbitration, extending it even to Intellectual Property conflicts. Additionally, crossborder IP disputes are experiencing a rise in arbitration, facilitated by organizations like the World Intellectual Property Organisation (WIPO) and the International Chamber of Commerce (ICC) offering robust frameworks and assistance. The courts of the United Kingdom recognise the arbitrability of IP disputes specifically in trademark and copyright-related dispute areas. On the other hand, laws in the United States of America state that parties can opt for an arbitration mechanism as a dispute settlement method in patent disputes and the US courts have held that copyright disputes are arbitrable. However, exceptions can still be seen. In India, there is no straightforward answer to the issue of arbitrability of IP disputes, either from the applicable statutory law or the juridical decisions.

ARE IP RIGHTS ARBITRABLE IN INDIA?

The major IP legislations, namely (a) The Patents Act, 1970 – Section 104; (b) The Trademarks Act, 1999 – Section 134; and (c) the Indian Copyright Act, 1957 – Section 55 read with Section 62, suggest that IP was traditionally considered and treated only as a right in rem. Similarly, the Arbitration and Conciliation Act of 1996 does not present a specific list of issues deemed arbitrable. Moreover, according to Section 34(2)(b)(i) of the Arbitration Act, courts are empowered to invalidate an arbitral award if the subject matter of the dispute is unsuitable for resolution through arbitration or contravenes India's public policy.

INITIAL APPROACH USED IN ARBITRATION OF IP

The Hon'ble Supreme Court established two kinds of disputes that fall outside of arbitration's purview in the Booz Allen Hamilton v. SBI Home Finance Case2 which initially decided whether intellectual property conflicts may be arbitrated.

1. Exclusion based on rights in rem: Arbitration may be used to settle conflicts involving

rights that functioned in personam, but public tribunals were required to decide cases involving rights in rem. Additionally, it was noted that rights in rem that flowed from subordinate rights in personam were arbitrable, suggesting a flexible approach.

2. Exclusion based on the forum that exercises exclusive jurisdiction – Disputes arising

out of a special statute, which is reserved for the exclusive jurisdiction of special courts

2 Booz Allen and Hamilton Inc. V SBI Home Finance Ltd. (2011), Civil Appeal No. 5440 of 2002

are generally considered to be arbitrable. Until 2020, the aforementioned tests were used to evaluate whether IP disputes may be arbitrated. This distinction is supported by an example given by the Supreme Court, which says that while rights under a patent license may be arbitrated, the validity of the underlying patent may not. In general, intellectual property issues are not within the purview of arbitration. But, instead of a blanket ban on the arbitration of IP disputes, it became crucial for the courts to have a case-by-case analysis of the actual issue involved to adjudicate on the arbitrability of IP disputes thereby creating lots of perplexity3. But as intellectual property has become more commercialized, the Hon'ble Bombay High Court demonstrated in Eros International Media Limited v. Telemax Links India Pvt. Ltd4 a shift in the direction of arbitrability of IP dispute.

It noted that because infringement is a subordinate right in personam, a claim of infringement by an identifiable person or entity resulting from a violation of the contract is arbitrable. The Court clarified that an unavoidable overlap exists in the current world between intellectual property and economic transactions, as well as the absurdity of outright prohibiting the arbitrability of IP issues in any format. The Court ruled that the IP disputes in copyright or trademark arising out of commercial contracts regarding an infringement or passing-off action are arbitrable and that the only available remedy is an action in personam.

This ruling makes abundantly evident that even though registration confers a right against the public at large under trademark and copyright law, opposition to such an application (before the Registrar) may give rise to an action in rem; on the other hand, an infringement or passing off action only binds the parties to it.

CURRENT POSITION

The Hon’ble Supreme Court, after delving into the interpretation of ‘non-arbitrability’ of IP disputes, propounded a fourfold test to ascertain the instances in which the subject matter of a dispute in an arbitration agreement is not arbitrable (Vidya Drolia Test). It held that a dispute would be non-arbitrable when the subject matter of the dispute: 3 Pallavi Rao & Robin Grover, “Arbitrability of IP Disputes – A Step Forward “(Dispute Resolution Blog, August 28, 2023) Accessed on 23 March 2024

4 Eros International Media Limited v. Telemax Links India Pvt. Ltd, suit no. 331 of 2013

relates to actions in rem that do not pertain to subordinate rights in personam that arise from rights in rem; • affects third-party rights • relates to the inalienable sovereign and public interest functions of the State; • and is expressly or by necessary implication • non-arbitrable under a specific statute5. The ruling made clear whether intellectual property issues may be arbitrated and said that anything that is prohibited by law cannot be arbitrated since it affects other parties' rights. It may be predicted that after the Vidya Drolia criteria was implemented, the trend would shift in favour of IP dispute arbitration. The Hon’ble Supreme Court has clarified further that these criteria are not impenetrable barriers and that the arbitrability problem must now be examined through the prism of the Vidya Drolia Test.

In this particular instance, the Supreme Court made it clear that the issuance and grant of patents, as well as the registration of trademarks, are exclusive affairs that lie under the purview of government powers and have an erga omnes impact. Furthermore, because these awards give rise to monopoly rights, they cannot be arbitrated. In Hero Electric Vehicles Pvt. Ltd. & Anr. v. Lectro E-Mobility Pvt. Ltd. & Anr6 the Delhi High Court was confronted with the issue of arbitrability of a trademark infringement and passing off dispute between two family groups, in terms of a Family Settlement Agreement (“FSA”) and Trademark and Name Agreement (‘TMNA’).

In addressing the issue of whether IP disputes can be arbitrated, the Hon’ble Court held that, under the circumstances of that case, the question that needed to be answered was not whether the parties' rights to use the intellectual property were being exercised by the terms of the FSA and the TMNA, but rather whether the rights in personam were being adjudicated arbitrable. As a result, the case upholds the arbitrability of intellectual property disputes. The Bombay High Court, in EuroKids International Private Limited v. Bhaskar Vidhyapeeth Shikshan Sanstha 7 observed that the petitioners were not in 5 Yash Vardhan Garu & Hetvi Mehta, “Arbitrability of Intellectual Property Rights’ Disputes: An Affirmative Step” (SCC Online Blog, December 26, 2022) Accessed on 22 March 2024

rem and the Court allowed the petition and restricted the respondent from violating the agreement. In the case of Vijay Kumar Munjal v. Pawan Kumar Munjal8, the Hon. Delhi High Court held that disputes arising from subordinate rights, such as licenses granted by the owner of a registered trademark or contractual rights, are arbitrable as they relate to rights and obligations inter se the parties to an agreement that is an action in personam.

CONCLUSION

Disputes relating to IP rights must be solved by arbitration just like any other private rights. . Numerous issues about the arbitrability of intellectual property disputes have been addressed by Indian courts; conflicts involving "rights in personam" are under the purview of arbitration, while disputes involving "rights in rem" fall under the purview of public tribunals. There is considerable uncertainty about whether aspects of intellectual property rights would be covered by arbitration and the question of whether intellectual property rights are arbitrable. Court rulings have found that intellectual property issues cannot be arbitrated since doing so would go against the public interest. Despite the problem of arbitration in IPR, the arbitration will be an effective mechanism in solving disputes of IPR as the IP disputes also contain parties from different jurisdictions.

Hence, submitting the international dispute to arbitration could be a quick and efficient step.

8 Vijay Kumar Munjal v. Pawan Kumar Munjal, 2022 SCC Online Del 499