The issue of arbitration of intellectual property rights (IPR) disputes has always been a subject of great uncertainty. IPR plays a very important role in every field and hence gives rise to disputes also. For a healthy economy, it is essential to resolve these disputes as soon as possible.
Indian position on arbitrability of IPR disputes
The Indian courts dealt with this question for the first time in Booz Allen & Hamilton's case. The Supreme Court gave a framework popularly known as the “Booz Allen Framework” to decide on the arbitrability of any dispute. It stated that any dispute based on rights in persona is arbitrable. The order in Booz Allen held that only where the subject matter of the dispute lies exclusively within the domain of courts, the dispute is said to be non-arbitrable. This means that a right in rem would not be arbitrable but a right in persona would be capable of arbitration in a private forum.
However, in the landmark Eros v. Telemax, the Bombay HC favored the arbitration of IPR disputes since the arbitration clause was a part of the term sheet and hence becomes contractual. The Court concluded that Eros was exerting their right in the persona which was very much arbitrable. Section 62(1) of the Copyrights Act, 1957 does not restrict the arbitrability of copyrights. Since the Court laid down that the relief sought by Eros was for a right against Telemax only, the dispute between them was arbitrable.
Since Indian laws (including IPR laws) do not provide for an exhaustive list as to which disputes are arbitrable and which are not, the courts usually decide upon arbitrability of the matter. Different Courts are either giving contradictory decisions or they are giving the same decisions with different reasoning, thereby leading to confusion.
The Parliament should amend the provisions of the Arbitration and Conciliation Act, 1996, and add a section that could specify the matters which can be arbitrated and which cannot be arbitrated. Disputes which are contractual in nature and arise out of agreements entered between the parties in which one of the parties have a valid IPR in the subject matter should be explicitly declared arbitrable.
Another option is to alter various IPR laws to provide for disputes which can be arbitrated. For instance, Section 62 of the Copyright Act, 1957, which gives exclusive jurisdiction to the civil courts could be amended by adding that IPR disputes arising out of a contract between the parties, one of whom have valid ownership of the IPR could be subject to arbitration. More importantly, those areas on which the tribunal cannot pass an award shall be clearly declared.
It is evident that the Indian courts have not been able to find a proper law to be followed upon the issue of arbitrability of IPR disputes. This makes the law ambiguous in the eyes of a layman. This leads to unnecessary disputes and delays. There is a dire need for the legislature to come up with a set of amendments which conclusively decide upon the issue and eliminate the litigation arising out of it at the initial stage. It would not only lead to faster resolution of disputes but also save the valuable time of the heavily burdened judiciary.