India – Infringement Of Copyright Is An Arbitrable Issue If Work Developed Under Contract.
A petition filed under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter “the A & C Act”) was referred to the intellectual property division of Delhi High Court (hereinafter “the Court”) since the matter relates to the intellectual property rights of the petitioner. The petitioner, Wieden+Kennedy India Private Limited, is the Indian arm of the advertising agency Wieden + Kennedy Inc.
The petitioner approached the Court seeking restraint on Jindal Steel And Power Limited, the respondent, from sharing or releasing a video titled ‘Jindal Steel– the Steel of India’ (hereinafter “the impugned video”) on all platforms, including videos, social media or in any manner infringing petitioner’s copyright in the ad film campaign which the petitioner prepared under the agreement (hereinafter “Services Agreement”) dated May 8, 2023, executed between the parties before the commencement of arbitration.
The petitioner also sought relief for being recognised as the original creator and copyright owner of the impugned video and to further restrain the respondent from disclosing the petitioner’s confidential information, i.e., the impugned video, and from creating any third-party rights in the said intellectual property/confidential information.
Brief Facts
The respondent previously engaged the petitioner to develop their previous campaigns, which had been successfully executed. In April 2023, the respondent engaged the petitioner to develop another brand campaign and a Services Agreement was executed between the parties. Under the Services Agreement, the petitioner was required to deliver a television commercial (TVC) / digital film or a series of films using a multiple-film approach. In line with the terms of the Services Agreement, the petitioner created an ad campaign named “Jude Raho India”.
Campaign choices and other deliverables as required under the Services Agreement were delivered to the respondent, and it was agreed between the parties thereafter that they should proceed with the “Jude Raho” campaign. After several exchanges of emails, the campaign was tailored to the requirements of the respondent. The petitioner requested the release of its overdue payments, and despite several reminders from the petitioner, the payment was not made. It continued its work and sent the “Steel of India” film campaign to the respondents. Subsequent to sharing the “Steel of India” campaign, the petitioner sent further reminders for its dues to be cleared.
However, the respondent terminated the Services Agreement unilaterally with immediate effect on the grounds that there was a change of team and there were inadvertent delays along with a proposal to pay 15% of the contract price as a one-time settlement. The petitioner immediately raised its concerns, stating that 50% of the project fee was due and further requesting the respondent not to share the petitioner’s ideas and scripts with other agencies/partners without the petitioner’s prior knowledge.
Despite discussions between the parties, the matter could not be settled, and the respondent agreed to pay only INR 25 lakhs towards a full and final settlement. The respondent launched its campaign “Steel of India” in March 2024, which was created by other filmmakers. The petitioner sent a cease and desist notice calling upon the respondent from playing and disseminating the impugned video and to take it down from all digital platforms, alleging copyright violation as the impugned video was a flagrant reproduction of works which were developed and pitched by the petitioner.
The petitioner contended that it developed the impugned video, including the script, elements, and narrative flow, in the form of a montage video consisting of original works, including script, screenplay, novel elements, unique expressions, and musical themes. Thus, it claimed the authorship and copyright in these works, which included literary works and dramatic works, under Sections 2(1)(h) and 2 (1)(o) of the Copyright Act, 1957.
However, the respondent, in its reply, refuted these allegations, claiming that the petitioner’s presentations consisted of broad ideas that are not safeguarded under the Copyright Act. Consequently, the petitioner was constrained to approach the Court before the invocation of arbitration under clause 11.4 of the Services Agreement for interim relief under Section 9 of the A&C Act.
Contentions of the Parties
The petitioner’s main contention was that it had created the components of the advertising campaign, which were entitled to protection as literary and dramatic works under the Copyright Act, and the said work was created as outlined in the Services Agreement. The petitioner emphasised that the respondent had selected the “Jude Raho” theme and relied upon the exchange of written communication. Further, it also submitted that if the respondent rejected the petitioner’s work, it could not claim copyright over it. The petitioner contended that the respondent violated its intellectual property and breached confidentiality in violation of the terms of the Services Agreement.
Further, it was submitted by the petitioner that the abrupt termination of the Services Agreement by the respondent was dishonest and mala fide, with the sole intention of depriving the petitioner of the copyright of their works as well as a fee under the Services Agreement. The petitioner relied upon Brand David Communications Pvt. Ltd. & Anr. v. Vivo Mobile India Private Limited & Anr. (2019 SCC OnLine Bom 9389), where, in similar facts and circumstances, the Bombay High Court had restrained the dissemination of a TVC/advertisement/film so as not to infringe the plaintiff’s copyright.
It also relied upon the decision of the Court in Anil Gupta & Anr. v. Kunal Dass Gupta & Ors. ((2002) SCC OnLine Del 250), where the Court had held that when an idea had been developed, and substantial fundamental aspects of the mode of expression were present in the defendant’s work, it would amount to a violation of copyright.
The respondent, on the other hand, contended that there was no question of infringement of copyright of the petitioner as the impugned video, which was already released, had presence of unique characteristics, including the lack of a voice-over, poem, screenplay had not been used, images used were different, the manner in which images were stitched together was different, and theme of montage was not a novelty in the steel industry. The respondent relied upon the Supreme Court’s decision in R. G. Anand v. Delux Films & Ors. [(1978) 4 SCC 118] contended that there was no copyright in an idea and that the petitioner had presented merely an idea which had not been converted into an expressed form or crystallised into literary and dramatic work.
The respondent relied upon the scratch films (played in Court) provided by the petitioner and the impugned video to point out the differences between the two. Further, the respondent submitted that the balance of convenience is also tilted in its favour as the respondent had already spent a considerable amount on the production and release of the impugned video, which had been live for some time. The respondent emphasised that an injunction might result in significant financial damage. Since the disagreement between the parties would essentially be settled by financial means, they proposed to deposit INR 50 to establish bona fide before the commencement of arbitration. The respondent also relied upon the Supreme Court’s decision in A. Ayyasamy v. A. Paramasivam ((2016) 10 SCC 386) and Vidya Drolia. & Ors. v. Durga Trading Corporation ((2021) 2 SCC 1) to raise an issue of non-arbitrable copyright.
The petitioner, in its rebuttal, relied on the decision of the Court in Liberty Footwear Co. v. Liberty International ((2023) SCC OnLine Del 83) wherein it was held that disputes relating to subordinate’ rights in personam arising from rights in rem are considered to be arbitrable including a claim for infringement of copyright against a particular person even though the larger right arises as a right in rem. The petitioner also objected to other contentions raised by the respondent and agitated that if the impugned video were disseminated, it would be bound to cause the petitioner considerable harm since advertising agencies essentially rely upon the reputation they earn from successful campaigns, including various advertising awards which add to their goodwill and commercial reputation.
Analysis and Decision of the Court
The Court analysed the matter of arbitrability in accordance with Section 9 of the A &C Act, acknowledging that actions in rem are not eligible for arbitration based on the Vidya Drolia case. Although intellectual property matters related to trademarks and patents are typically not subject to arbitration because they involve public interests, the Court emphasised that accusations of copyright infringement involving specific people can be resolved through arbitration.
In this instance, the petitioner claimed that the respondent had violated specific terms outlined in the Services Agreement. Thus, the Court observed that the concerns involved specific violations of a contract instead of the underlying registration of intellectual property rights. Thus, the Court held that the issue of arbitrability ought not to arise when the petitioner claims the copyright of works developed as part of the Services Agreement and alleges a breach of various contractual provisions by the respondent. Consequently, the Court directed that the respective rights and contention of the parties were to be raised by the parties in arbitration.
After perusing the documents and hearing the contentions of both parties, the Court observed that the parties were consistently collaborating to develop an ad campaign under the Services Agreement, and there were substantial presentations made for the proposed theme, format, and content of the campaign. The Court noted that subsequent to the presentations, the respondent also made a choice and selection to go ahead with the ‘Jude Raho India’ theme and thereafter terminated the Services Agreement.
The Court further noted that even after the termination of the Services Agreement, the petitioner did not get the rightful compensation even though the respondent responded to the petitioner’s demand for 50% payment on the same day and asked to continue its service. While passing an interim order vide its decision, the Court observed that the impugned video of the Respondent utilised the petitioner’s material, for which the petitioner has not been paid anything under the contract.
However, as the campaign had already commenced, the Court, in the interest of justice and equity and without going into the merits of the case of infringement, denied an injunction at this stage and directed the respondent to deposit an amount of Rs. 50 lakhs plus 18% GST, amounting to Rs. 59 lakhs, with the Registry of the Court within 2 weeks from the order. The said amount was directed to be kept in the form of an interest-bearing FDR initially for one year, to be renewed thereafter, and subject to further directions of the sole arbitrator.
However, the Court additionally observed that in the event the said deposit is not made within the period of 2 weeks, as directed, there shall be an ad interim injunction against the respondent restraining them from playing, distributing, publishing the impugned video titled ‘Jindal Steel – the Steel of India’ on all platforms including social media, digital platforms, broadcast. The interim directions were passed by the Court till the parties sought relief before the sole arbitrator under Section 17 of the A&C Act.
In conclusion, the decision of the Court strikes a balance between the interests of the parties, keeping the avenue of claiming compensation by the petitioner if the infringement is proven at the time of arbitration and, at the same time, subject to a deposit being made with the Court, allowing the respondent to continue with the dissemination of its ad campaign. This decision reinforces that issue of infringement of copyright rights, which are in the nature of in personam arising from rights in rem, are arbitrable even though the larger right arises as a right in rem.
