Introduction
The World Intellectual Property Organization (WIPO) defines Intellectual Property as creations of the mind,
such as:
- Inventions
- Literary and Artistic works
- Designs and Symbols
- Names and Images used in commerce.
The Intellectual Property is protected under Law and grants the creator monopoly, including the right to assign or license the right to another person for a prescribed period. The foundation of this protection has an impact on the Arbitrability of IP disputes.
Arbitration is a private dispute resolution process in contrast to Intellectual Property rights which are protected by the state under law therefore the authorities are required to function transparently while handling the IP disputes.
This Article aims to explore the landscapes of Arbitration and Intellectual Property in India.
IIP disputes in India – Arbitrable or not?
The Hon’ble Supreme Court of India in the case of Booz-Allen & Hamilton Inc vs Sbi Home Finance Ltd.& Ors observed the principle that the disputes decided through the Judiciary can also be resolved by Arbitration. The bench also added that the legislature has reserved a class of dispute from Arbitration. This category of dispute is based on rights in rem as they are not determined only against the involved parties but also against the world. Therefore, the dispute should be adjudicated through Judiciary and public tribunals. On the other hand, the apex court observed that the dispute arising from actions in personam is specific to the rights and interests of the concerned parties therefore they can be arbitrated.
This landmark judgement removed the blanket ban on Arbitration in IP disputes and paved the way for Arbitration for IP disputes in India. However, it became critical for the courts and tribunals to do a case-by-case analysis of the underlying issue to determine the arbitrability of the dispute.
Euro Kids International (P) Ltd. v Bhaskar Vidhyapeeth Shikshan Sanstha is a good example of how the Court differentiates the rights in personam from the Non arbitrability doctrine in the absence of a binding precedent. Here the Bombay High Court observed that as there was no dispute in the ownership of the trademark and copyright the proceedings are regarded as proceeding in personam and therefore arbitrable.
With the rise in the commercialization of IP, the Bombay High Court analysed the criteria laid down in Booz-Allen & Hamilton Inc vs Sbi Home Finance Ltd.& Ors on the arbitrability of IP disputes in the case Eros International Media Ltd. v Telemax Links India (P)Ltd where it observed “What is in rem is the Plaintiff’s or registrant’s
entitlement to bring that action. That entitlement is a result of having obtained or acquired copyright (either
by authorship or assignment) or having statutory or common law rights in a mark.”
Therefore, the claim of IP infringement by an identified person or entity due to breach of contract is arbitrable
as it is a subordinate right in personam. The single bench also observed that the IP laws are not distinct from the general body of Law though IPR are special rights, they are merely a species of property. The bench also highlighted the overlap between commercial transactions and Intellectual property and assessed the irrationality of reserving IP disputes from arbitration in all forms.
Advantages of Arbitration in IP
1.Single Procedure: The traditional Litigation process involves a multitude of processes across jurisdictions which is very time-consuming. Through Arbitration the dispute can be resolved through a single procedure where the award can be enforced on the parties involved, thereby steering clear of the complexities of the multi-jurisdictional litigation process.
2. Autonomy of Parties: Unlike Litigation, in Arbitration the parties can decide on the arbitrator, procedural rules, applicable law, place of arbitration, and language in which the proceeding would be conducted.
3. Expertise: As mentioned before, in Arbitration the parties can choose the Arbitrator with subject matter expertise in the field of Intellectual Property Disputes. This increases the confidence of the parties in the Arbitration process. This was acknowledged by the Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC) therefore the Centers introduced the Specialts’ Panel for IP Dispute resolution.
4. Confidentiality: The Arbitration process is private and exclusive. The WIPO Arbitration and Mediation Rules have a specific set of rules on the treatment of business secrets and confidential information. This is highly imperative in case of an IP dispute as confidential information and trade secrets are at stake. This is beneficial to the parties as they can decide to keep the proceeding private without being concerned about the public impact.
5. Finality and Enforceability of Arbitral Awards: The Arbitral awards are to be enforced and recognised by all 137 member states without any review of merits according to the New York Convention, 1958. This is a huge advantage as the decision through IP litigation can be contested or challenged in higher courts.
6. Neutrality: The parties can nominate the arbitrator of any nationality and select a seat of arbitration different from the home jurisdiction of the parties. This brings in the neutral factor which increases the confidence of the parties in a fair hearing.
International Perspective of Arbitration in IP Disputes
WIPO plays a major role in promoting Alternate Dispute Resolution mechanisms for IP disputes. WIPO acknowledges the global rise in the IP economy and advocates Arbitration as a means to overcome the challenges faced in the tedious process of cross-border IP litigation. Prominent countries around the world have adopted Arbitration as a resolution mechanism for IP disputes.
Four Approaches for Arbitrability of IP Disputes
There are 4 primary approaches for Arbitrability of IP disputes:
The first approach completely prohibits arbitration to all kinds of disputes relating to intellectual property disputes or specific species of intellectual property. Eg: South Africa.
The second approach has a limited ban on the arbitrability of IPR disputes or disputes relating to species of IPR. As per this approach, the private law issues from contract such as breach of IPR assignment or licensing agreements are arbitrable while public law-related disputes like the scope of the grant of IPR or the validity of the grant of IPR by the state are non-arbitrable. Eg: Germany and Sweden. Some countries like Spain, Portugal and France allow arbitrability of licensing/ assignment issues even if a claim regarding the scope of the IPR grant by the State is ancillary to the main issue.
In the third approach, all disputes regarding IPR are made arbitrable. Eg: USA. The fourth approach is where all IPR disputes are arbitrable with an effect in rem. The arbitral awards passed, including the ones relating to scope and validity, have an effect universally Eg: This approach is followed by Swiss Law, which makes all disputes arbitrable. If an award is passed on the scope or validity of an IP and when it is accompanied by a certificate of
enforceability by a Swiss Court with jurisdiction, the decision is entered into the federal Intellectual Property Register.
The Indian Approach is between the first and second approach as in some cases the Indian Courts have decided that some IP disputes are arbitrable like in the case of Euro Kids International (P) Ltd. v Bhaskar Vidhyapeeth Shikshan Sanstha while in some cases the Courts have held that IP disputes are not arbitrable. (Example: Indian Performing Right Society Ltd. v Entertainment Network (India) Ltd.)
Conclusion
A significant share of international investments in India are conjoined with technology transfer or IP licensing.
The present restriction over the arbitration of IP disputes will pose a major challenge to the disputes arising in these international investments. This might lead to a decrease in the flow of foreign investments as the ease of doing business is disrupted.
If India wants to fulfil its aspiration to become an international hub for Arbitration it needs to bring transformational changes in the current regime on how the arbitrability of IP disputes are determined.