18 August, 2016
The dispute in Eros International Media Limited v Telemax Links India Pvt Ltd1, arose from a term sheet by which Eros had granted to Telemax certain content marketing and distribution rights in respect of its films. Eros subsequently alleged copyright infringement against Telemax and commenced court proceedings. Relying on the arbitration clause in the term sheet, Telemax filed a petition under section 8 of the Arbitration Act to refer the dispute to arbitration. Eros opposed the petition on the ground that copyright and trademark disputes are inherently non-arbitrable as these confer rights in rem (i.e. rights of a proprietary nature, available against the world at large) as opposed to a right in personam (i.e. a right enforceable against a particular party only). Eros further argued that the suit was not for a breach of contract but was a statutory action under the Indian Copyright Act 1957 and was thus non-arbitrable. Telemax argued that the action brought by Eros was in fact a dispute between Eros and Telemax in personam, and was therefore arbitrable.
Decision of the Court
The Court recognised that in a dispute between two parties relating to a copyright or trade mark in either an infringement or a passing off action, the action and remedy can only ever be in personam. The Court specifically held that civil courts should not constantly attempt to short-circuit the arbitral process and that, unless specifically barred, an arbitrator can do whatever a civil court can do (including making a factual finding of copyright infringement). Therefore, the Court held that where there are commercial disputes and parties have consciously decided to refer these disputes arising from that contract to a private forum, no question arises of those disputes being non-arbitrable.
Comment
It is increasingly common for parties to choose in their contractual arrangements for IP disputes to be referred to arbitration (which has led several institutions such as the World Intellectual Property Organisation, the Singapore International Arbitration Centre, Hong Kong International Arbitration Centre etc. constituting special arbitrator panels with expertise in IP disputes), so a decision confirming that the Indian courts will uphold such choices is to be welcomed.
This decision forms part of a now-established trend of the Indian courts developing their arbitration jurisprudence in line with international norms upholding party choice, and appearing reluctant to oust the jurisdiction of arbitral tribunals unless there are compelling reasons to do so. In light of this decision, parties should take care to consider if they specifically want the courts to adjudicate IP disputes, in which case an appropriately worded carve-out (drafted with specialist advice) should be inserted into the contract.
1 Bombay High Court (decided on 12 April 2016).
For further information, please contact:
Nicholas Peacock, Partner, Herbert Smith Freehills
nicholas.peacock@hsf.com
