By Amisha Mittal

Abstract

This piece is Part 1 of a two-part post on the arbitrability of Intellectual property disputes. The piece essentially will talk about arbitration as a tool with a focus on its advantages as a dispute settlement mechanism. Through these advantages a narrative is drawn to ascertain why arbitration as a tool might be helpful to solve Intellectual property-related disputes.

I.              Arbitration as a tool

Arbitration has materialised itself as a very efficient method of conflict resolution. It is now expediently spread across jurisdictions to resolve various disputes. In simple terms, the process of alternative dispute resolution involves resolving disputes outside of a court of law through negotiation, mediation, conciliation, and arbitration which by nature are non-judicial processes. However, these methods are not only used when there has been a wrongdoing but can also be utilized to resolve disagreements to maintain a positive relationship. While understanding alternative dispute resolution, it is paramount to understand that not all disputes can be resolved through these methods and some may require litigation. Thus it is important to determine the best approach for resolving each dispute.

Generally, arbitration is a result of a contract between parties and such a contract defines the rights and obligations between the parties. Such rights and obligations are exclusive to the parties involved and often include the matters that may be subject to arbitration in case a dispute arises. However, along with the contract between the parties, it is more often the jurisdictional law of the place where the arbitration is held that determines what subject matters would be arbitrable and what must be left out of the scope of arbitration. Arbitrability of a subject matter essentially implies whether a particular matter can be resolved through arbitration or would be subject to national courts of that particular jurisdiction. The Arbitration and Conciliation Act of 1996 is silent on the exhaustive list of arbitrable disputes, notwithstanding the provisions of Sections 2 (3), 34 (2) (b), and 48 (2) which implicitly address the issue of non-arbitrability of disputes to some extent. With respect to Intellectual property rights and arbitration as a means to resolve intellectual property disputes, the purview still remains to undergo various clarifications.

II.            Intellectual property rights and the arising disputes

Similar to other types of property rights, such as rights to land, valuable metals like gold, or structures, intellectual property rights are a type of property right. They enable inventors and owners of patents, trademarks, and works protected by copyright to profit from their own labour or investment in a creation. These rights are frequently referred to as negative rights since the owner enacts their enforcement by prohibiting third parties from abusing the subjects of the rights. IPR as a ‘discourse’ is a cross-national matter which often goes beyond the scope of jurisdictions and has international significance. These rights are generally governed by states who decide the subject matters that may be arbitrable under such rights. While there are countries like South Africa that mandate all IPR disputes to be non-arbitrable, most countries allow it selectively depending on a threshold.

Through this piece, an effort is made to analyse the approach of arbitrability of IPR disputes in India while analysing the lacunas that exist in the law. This piece also deals with why there exists a need to recognise the arbitrability of IPR disputes in the first place and what approach shall India appoint to facilitate a pro-arbitration regime in India with respect to matters involving IPR disputes while referring to a crisp cross-judicial analysis to understand various approaches to the arbitrability of IPR issues.

III.          Why do we need arbitration of IPR disputes?

In a pro-innovation regime, intellectual property rights hold great importance and their enforcement is of paramount value to protect innovation. With increasing innovation, disputes surrounding IPR also increase. In that context, the use of arbitration as a confidential and effective dispute resolution mechanism has been increasing especially in cases where the parties to the dispute hail from different jurisdictions. While there are several reasons for why one might opt for arbitration to settle IPR disputes, the primary one can be ascertained to the fact that IPR disputes often cross borders and fall under the international arena as they might involve parties from different jurisdictions governed by various substantive laws. For instance, a case against the infringement of a global patent might involve countries from different jurisdictions willing to comply with the laws of their own jurisdictions. Decisions in such cases can be overlapping or contradictory and can create confusion. An international arbitration in such a case can be beneficial as it works on the basis of a single law determined by the parties that governs the arbitration as well as a chosen institutional procedure that avoids confusion.

Secondly, in matters involving IP arbitration, since the disputes are technical in nature, it is preferred for the adjudicators to have technical and expert knowledge in the subject matter of the dispute involved. This serves as another pivotal reason to allow arbitrability of IPR disputes as arbitration serves the parties with the autonomy to choose arbitrators possessing expertise and knowledge about the subject matter of the dispute involved, unlike court litigation where the former is difficult to avail. The need for the same has also been recognised by various arbitration institutions including SIAC which provides for a separate panel of arbitrators for intellectual property disputes. Thirdly, in addition to the above, arbitration also allows the consolidation of proceedings. This can especially prove to be useful in the context of IPR wherein parallel IP proceedings are consolidated into a single forum resulting in reduced costs and reduction of risk related to contradictory or inconsistent decisions.

Fourthly, speed, efficiency, urgency, and flexibility together form a strong basis for why one would choose arbitration as a means to dispute resolution in IPR disputes. While it may not be the case every time, international arbitration is still considered a speedy process as compared to court litigation, especially in countries like India. In addition to it, many arbitration institutions provide parties with the choice of emergency arbitration rules and procedures which can result in faster resolution. Arbitration tribunals also provide injunctive reliefs which might not be allowed in certain jurisdictions in court litigation. Such urgent reliefs prove to be especially beneficial in cases of a breach of a non-disclosure agreement, patent infringement, or removing IP infringing goods from a market. Arbitration as a process is also overarchingly flexible as compared to court litigation as it provides the parties with the autonomy to mutually agree on procedural deadlines and steps or to conduct proceedings at a different location or even use technology to take it virtually which becomes relevant given the cross-national nature of the matter.

Lastly, arbitration comes with a seal of considerable confidentiality as opposed to typical court litigation which makes it fit for IP disputes since the discourse around them is already sensitive, and often parties like to maintain the confidentiality of their trade secrets. The enforcement and limited scope of appeal in international arbitration also comes forward as an ideal reason to resort to it. The New York Convention provides for the enforcement and recognition of foreign arbitral awards in the 170 countries that ratify it. This makes such an enforcement internationally viable as compared to mainstream court litigation. However, lacunas arise with respect to such enforcement if the subject matter of the award is not arbitrable in the country a person pursues to enforce the award in.

Since IP disputes and their arbitrability varies across jurisdictions and is widely subjective with certain jurisdictions like South Africa completely disallowing it, the scope of arbitrability of such disputes is open to various clarifications. “The arbitrability of intellectual property rights disputes brings along a great set of challenges, including the harmonization of several existing laws”. However, given the challenges, it is important to put stress on the foundation principles of arbitration. Arbitration thrives on consent and facilitates minimum intervention of the judiciary for dispute resolution especially when private parties are involved and they mutually agree to arbitrate. These principles must be the basis of consideration while deciding matters regarding the arbitrability of various subject matters.

The next part of this series will offer a brief commentary on the Indian judicial stance on the arbitrability of Intellectual property disputes vis-à-vis other jurisdictions and will subsequently suggest recommendations to curb the lacunas in laws surrounding such issues.

About the Author

The piece is authored by Amisha Mittal. Amisha is a penultimate-year student at Jindal Global Law School. Her interest areas lie in Intellectual property and Technology, Media, and Telecommunications.