Notable Shifts and Trends in the Arbitration Regime WRT IPR In India
Research on Arbitration Cases Notable Shifts and Trends
Earlier scenario
Intellectual property rights are like any other property right such as rights to land, buildings, gold, etc. They basically agree to creators, or owners, of patents, trademarks, or copyrighted works to benefit from their own work or investment in a creation. These IPRs are negative rights which qualifies them to be right in rem since they affect the right of third parties and do affect monopolistic rights.
Changing scenario
Generally, commercial disputes are arbitrable, and intellectual property (IP) is commercial, thus potentially arbitrable. However, in India, IP disputes are excluded from arbitration due to the government’s control over IP rights like patents and trademarks. Internationally, the Geneva Convention states that all commercial matters are arbitrable, and the New York Convention excludes issues of public policy from arbitration. The arbitrability of disputes depends on government and judicial interests.
Since 1958, IP disputes have been considered non-arbitrable. The incidental nature of IP does not change this. Post-1985, the UNCITRAL model did not include IP disputes in its interpretation of commercial terms. Gradually, the World Intellectual Property Organization (WIPO) became a leader in IP arbitration, with forums in Hong Kong (2017) and Singapore (2019) offering options for IP dispute arbitration. Meaning that, in Hong Kong, the Arbitration (Amendment) Ordinance, 2017 (‘amendment’) enabled arbitration of IPR disputes even if it involved contentions regarding scope, infringement, etc. of intellectual property provided they were not barred by public policy. Taking cues from the Singapore Intellectual Property (Dispute Resolution) Act, 2019, the provisions of the amendment state that even when a relevant forum as per the statutory laws exists, the mechanism of arbitration could still be availed.
For instance, in 2019, Turkey implemented compulsory civil mediation for all business issues, including monetary IP disputes. In the Philippines, certain forms of intellectual property disputes that are handled by the Intellectual Property Office are required to participate in mediation
In recent time the arbitration is favoured for dispute resolution of IPR matters which is practised by entering an arbitration clause while executing the intellectual property contracts. Several changes were made in the IPR regime through Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Section 89 of Civil Code Procedure which empowers the Court if deems fit then to allow for arbitration, mediation and conciliation of disputes outside the court.
EU developments
Recent developments in the European Union also support the view that patent validity disputes are arbitrable. Specifically, the European Union is in the process of revamping its patent system with the unitary patent (UP) and the UPC. The new system reaches beyond the existing European patent (EP) and is intended to harmonise the protection of EPs and UPs within the European Union. In other words, under the new system, EPs may be granted and therefore protected and enforceable with unitary effect. In the future, national patents will coexist with EPs and UPs, but under separate systems.
The UPC Agreement provides that an affiliated patent mediation and arbitration centre (the Centre) will be established. As in the case of Germany, the applicable EU framework does not expressly prohibit patent validity arbitration. While the UPC Agreement stipulates that an arbitral tribunal or mediation panel may not revoke or limit a patent, the UPC’s draft Rules of Procedure indicate that an arbitral tribunal may order a party to surrender its patent and that the parties may request the UPC to confirm such arbitral award. The Centre provides yet another opportunity to promote the use of arbitration and alternative dispute resolution in connection with IP-related disputes.
Landmark Case- Eros International Media Ltd. v. Telemax Links India (P) Ltd 2016 SCC OnLine BOM 2179
where the Bombay High Court held that the dispute is arbitrable as the IP disputes in copyright or trade mark arising out of commercial contracts regarding an infringement or passing-off action, that action and that remedy can only be an action in persona. The Court stated that any finding of such infringement (or absence of) will be valid only against Telemax and not against any third party or world at large. It was observed that Section 62(1) of the Copyright Act which states that infringement matters could not be filed before any court lower than the jurisdictionally competent District Court, should not be read down to mean the ousting of the jurisdiction of an arbitral panel.
Landmark case– Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1
It dealt with the position arbitrability of IP disputes. The Court laid down a four-fold test to check the essentiality for arbitration of IP disputes and answered whether any dispute is arbitrable or not. It held that a dispute would be non-arbitrable when the cause of action and/or subject-matter of the dispute: relates to actions in rem that do not pertain to subordinate rights in persona that arise from rights in rem; affects third-party rights or has erg a omnes effect; relates to the inalienable sovereign and public interest functions of the State; and is expressly or by necessary implication non-arbitrable under a specific statute. The judgment clarifies the position of arbitrability of IP disputes. With Vidya Drolia, pronged test in force henceforth, it can be said that the tide would turn in favour of arbitrating IP disputes.
In the case of HDFC Bank v. Satpal Singh Bakshi 2013 (134) DRJ 566, the court held that all copyright disputes that come under the realm of right in persona are arbitrable and the parties of the case have the liberty to choose this alternate platform. Further, in the recent 2021 case Hero Electric Vehicles Private Limited v. Lectro E-Mobility Private Limited AIR ONLINE 2021 DEL 893, the court made an effort to resolve the existing ambiguity and held that IP disputes are arbitrable.
In the case of M/S Golden Tobie Private Ltd v. M/S Golden Tobacco Ltd 2021, delved into the interpretation of Section 8 of the Arbitration and Conciliation Act, 1996, in relation to the disputes involving trademarks. The court considered this dispute concerning the breach of a trademark licensing agreement as arbitrable and referred it to arbitration. the Plaintiff relied upon Vidya Drolia judgement to mention that the current matter involves dispute in relation to a trademark, and therefore, it will have Erga omnes implications relating to sovereign functions of the state. The court determined that the current matter is arbitrable as the dispute in question relates primarily to the understanding of the terms of the agreements between the parties, and to whether it is legitimate and legal for the Defendant to terminate the said agreements and cancel assignment of the trademark to the Plaintiff. The recent stand of the Delhi High Court in this matter has further clarified the position of the Supreme Court in relation to this matter, as it explicitly pronounced that the Supreme Court’s opinion does not reflect an absolute bar over the arbitrability of the disputes concerning trademark
International comparison
Internationally, patent disputes are allowed to be resolved through arbitration. Both the New York Convention, 1958 and the Model law on International Commercial Arbitration, 1985 provide for settlement of international disputes by way of Arbitration. Countries which have adopted UNCITRAL law like Australia, Germany, Japan, Canada have all validated arbitration of patent infringement and some even of patent validity. The ICC Commission has stated arbitration to be the “most desirable method for settling disputes arising out of intellectual property transactions.” The ICC Final Report on Intellectual Property Disputes and Arbitration even states that “There are no substantive differences in arbitrations arising from intellectual property disputes as from other areas.”
In the ICC case[1], It was held that such a dispute involving license agreement does not necessarily involve issues of (in)validity, revocation of registration or other concerns that might interfere with the public interest or public policy. The arbitrators in this case therefore saw no reason why such a case would be under the exclusive jurisdiction of French courts, since it had only pertained to a breach of contract. The fact that the patent has been extinguished as a result of such a contractual breach was deemed irrelevant under the present circumstances.
Brief analysis focusing on any notable shifts or trends
There are many reasons for this trend towards arbitrating IP disputes. Primarily, this trend is because of the territorially limited scope of state court proceedings. This feature of state court litigation no longer meets the requirements of complex cross-border economic processes and transactions, and related disputes arising from a more globalised world because of arbitration’s confidential nature is valuable for IP disputes in general because of the sensitive nature of confidential information and know-how regularly involved in such disputes. In addition, specialist knowledge is often required to resolve technical IP disputes efficiently – a difficulty that can be addressed by appointing suitably qualified arbitrators.
Latest Trends
In recent years, however, there has not only been a general increase in IP-related disputes but also a significant shift towards the resolution of IP disputes through arbitration. For example, the number of cases decided under the World Intellectual Property Organization (WIPO) Arbitration and Mediation Rules increased from 31 in 2012 to 182 in 2020 and to 263 in 2021, showing an increase of approximately 45 per cent over only one year .
SEP/FRAND
ADR in technology-related disputes is a matter of growing interest and is by no means a new phenomenon. Standards setting organisations, such as the Institute of Electrical and Electronics Engineers, nowadays support the use of arbitration (e.g., by including arbitration agreements in their IP policies) for, among other things, the determination of royalties respecting FRAND principles . It has also been iterated in cases- BlackBerry v. Qualcomm, see Todd Haselton, ‘BlackBerry awarded $815 million in arbitration case against Qualcomm’, CNBC, 12 April 2017
In 2017, WIPO developed and published the Guidance on WIPO FRAND Alternative Dispute Resolution (ADR), which aims to facilitate submissions of FRAND disputes to WIPO mediation and arbitration. The Guidance, among other things, explains the procedural options that are available at different stages of the process and identifies key elements that the parties may wish to consider to shape the arbitration proceedings. In 2018, the WIPO guidance was followed by the FRAND ADR Case Management Guidelines of the Munich IP Dispute Resolution Forum. While the WIPO guidelines focus closely on the services provided by the WIPO Centre, the guidelines of the Munich IP Dispute Resolution Forum expand on FRAND ADR in general and, as such, may work in synergy with the WIPO guidelines. Accordingly, the trend towards arbitration in this area is expected to continue.
Advanced use of technical tools in Arbitration
Although there was a growing interest in the use of technology in arbitration even before the onset of the pandemic, the pandemic led to an increased use of already existing technological tools. The WIPO Centre, for example, makes available at no cost to interested parties an online case administration platform, the WIPO e- ADR platform (which is already used in 30 per cent of the cases), and assists in the hosting of online meetings and hearings.
For its part, the International Chamber of Commerce (ICC) established a working group, in response to the pandemic, to update the 2017 edition of its report on information technology in international arbitration. The report has undergone a complete overhaul and now includes a variety of practical resources, including sample procedural language relating to technology tools and solutions, checklists for virtual hearings, items to consider when choosing an online case management platform and a template procedural order, mainly related to IPR.
Intellectual Property Trends in International Arbitration for 2024
In 2024, arbitration strengthens its role in IP disputes with the establishment of specialized IP arbitration centres in key innovation hubs. These centres incorporate best practices and cutting-edge knowledge, enhancing the resolution of IP disputes and safeguarding intellectual capital. The United Nations Commission on International Trade Law (UNCITRAL) shapes arbitration rules and promotes effective dispute resolution. The evolving IP arbitration landscape highlights the need for comprehensive legal frameworks that harmonize global standards while respecting local laws. This push for a cohesive arbitral environment is supported by treaties and agreements enhancing predictability and cross-border cooperation. International arbitration is increasingly vital for protecting and resolving IP rights, reinforcing its importance in global commerce. The ICSID leads in handling investment disputes.
This position on arbitrability will make sure that a balance of rights between inventor/author and the general public will be maintained, with inventor/author retaining the right to arbitrate contractual rights and courts keeping in mind jurisdiction over claims that affect the general public. Such a balance is desirable for effective functioning of the IP regime.
Oreo V. FAB! O: A Saga of Phonetically Similar Marks
Legal Implication Of Cease & Desist Notice In India
Case Analysis: Jack Daniel’s Properties, Inc V. Vip Products Llc, (2023)
Notable Shifts and Trends in the Arbitration Regime: IPR In India
Notable Shifts and Trends in the Arbitration Regime WRT IPR In India
Research on Arbitration Cases Notable Shifts and Trends
Earlier scenario
Intellectual property rights are like any other property right such as rights to land, buildings, gold, etc. They basically agree to creators, or owners, of patents, trademarks, or copyrighted works to benefit from their own work or investment in a creation. These IPRs are negative rights which qualifies them to be right in rem since they affect the right of third parties and do affect monopolistic rights.
Changing scenario
Generally, commercial disputes are arbitrable, and intellectual property (IP) is commercial, thus potentially arbitrable. However, in India, IP disputes are excluded from arbitration due to the government’s control over IP rights like patents and trademarks. Internationally, the Geneva Convention states that all commercial matters are arbitrable, and the New York Convention excludes issues of public policy from arbitration. The arbitrability of disputes depends on government and judicial interests.
Since 1958, IP disputes have been considered non-arbitrable. The incidental nature of IP does not change this. Post-1985, the UNCITRAL model did not include IP disputes in its interpretation of commercial terms. Gradually, the World Intellectual Property Organization (WIPO) became a leader in IP arbitration, with forums in Hong Kong (2017) and Singapore (2019) offering options for IP dispute arbitration. Meaning that, in Hong Kong, the Arbitration (Amendment) Ordinance, 2017 (‘amendment’) enabled arbitration of IPR disputes even if it involved contentions regarding scope, infringement, etc. of intellectual property provided they were not barred by public policy. Taking cues from the Singapore Intellectual Property (Dispute Resolution) Act, 2019, the provisions of the amendment state that even when a relevant forum as per the statutory laws exists, the mechanism of arbitration could still be availed.
For instance, in 2019, Turkey implemented compulsory civil mediation for all business issues, including monetary IP disputes. In the Philippines, certain forms of intellectual property disputes that are handled by the Intellectual Property Office are required to participate in mediation
In recent time the arbitration is favoured for dispute resolution of IPR matters which is practised by entering an arbitration clause while executing the intellectual property contracts. Several changes were made in the IPR regime through Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Section 89 of Civil Code Procedure which empowers the Court if deems fit then to allow for arbitration, mediation and conciliation of disputes outside the court.
EU developments
Recent developments in the European Union also support the view that patent validity disputes are arbitrable. Specifically, the European Union is in the process of revamping its patent system with the unitary patent (UP) and the UPC. The new system reaches beyond the existing European patent (EP) and is intended to harmonise the protection of EPs and UPs within the European Union. In other words, under the new system, EPs may be granted and therefore protected and enforceable with unitary effect. In the future, national patents will coexist with EPs and UPs, but under separate systems.
The UPC Agreement provides that an affiliated patent mediation and arbitration centre (the Centre) will be established. As in the case of Germany, the applicable EU framework does not expressly prohibit patent validity arbitration. While the UPC Agreement stipulates that an arbitral tribunal or mediation panel may not revoke or limit a patent, the UPC’s draft Rules of Procedure indicate that an arbitral tribunal may order a party to surrender its patent and that the parties may request the UPC to confirm such arbitral award. The Centre provides yet another opportunity to promote the use of arbitration and alternative dispute resolution in connection with IP-related disputes.
Landmark Case- Eros International Media Ltd. v. Telemax Links India (P) Ltd 2016 SCC OnLine BOM 2179
where the Bombay High Court held that the dispute is arbitrable as the IP disputes in copyright or trade mark arising out of commercial contracts regarding an infringement or passing-off action, that action and that remedy can only be an action in persona. The Court stated that any finding of such infringement (or absence of) will be valid only against Telemax and not against any third party or world at large. It was observed that Section 62(1) of the Copyright Act which states that infringement matters could not be filed before any court lower than the jurisdictionally competent District Court, should not be read down to mean the ousting of the jurisdiction of an arbitral panel.
Landmark case– Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1
It dealt with the position arbitrability of IP disputes. The Court laid down a four-fold test to check the essentiality for arbitration of IP disputes and answered whether any dispute is arbitrable or not. It held that a dispute would be non-arbitrable when the cause of action and/or subject-matter of the dispute: relates to actions in rem that do not pertain to subordinate rights in persona that arise from rights in rem; affects third-party rights or has erg a omnes effect; relates to the inalienable sovereign and public interest functions of the State; and is expressly or by necessary implication non-arbitrable under a specific statute. The judgment clarifies the position of arbitrability of IP disputes. With Vidya Drolia, pronged test in force henceforth, it can be said that the tide would turn in favour of arbitrating IP disputes.
In the case of HDFC Bank v. Satpal Singh Bakshi 2013 (134) DRJ 566, the court held that all copyright disputes that come under the realm of right in persona are arbitrable and the parties of the case have the liberty to choose this alternate platform. Further, in the recent 2021 case Hero Electric Vehicles Private Limited v. Lectro E-Mobility Private Limited AIR ONLINE 2021 DEL 893, the court made an effort to resolve the existing ambiguity and held that IP disputes are arbitrable.
In the case of M/S Golden Tobie Private Ltd v. M/S Golden Tobacco Ltd 2021, delved into the interpretation of Section 8 of the Arbitration and Conciliation Act, 1996, in relation to the disputes involving trademarks. The court considered this dispute concerning the breach of a trademark licensing agreement as arbitrable and referred it to arbitration. the Plaintiff relied upon Vidya Drolia judgement to mention that the current matter involves dispute in relation to a trademark, and therefore, it will have Erga omnes implications relating to sovereign functions of the state. The court determined that the current matter is arbitrable as the dispute in question relates primarily to the understanding of the terms of the agreements between the parties, and to whether it is legitimate and legal for the Defendant to terminate the said agreements and cancel assignment of the trademark to the Plaintiff. The recent stand of the Delhi High Court in this matter has further clarified the position of the Supreme Court in relation to this matter, as it explicitly pronounced that the Supreme Court’s opinion does not reflect an absolute bar over the arbitrability of the disputes concerning trademark
International comparison
Internationally, patent disputes are allowed to be resolved through arbitration. Both the New York Convention, 1958 and the Model law on International Commercial Arbitration, 1985 provide for settlement of international disputes by way of Arbitration. Countries which have adopted UNCITRAL law like Australia, Germany, Japan, Canada have all validated arbitration of patent infringement and some even of patent validity. The ICC Commission has stated arbitration to be the “most desirable method for settling disputes arising out of intellectual property transactions.” The ICC Final Report on Intellectual Property Disputes and Arbitration even states that “There are no substantive differences in arbitrations arising from intellectual property disputes as from other areas.”
In the ICC case[1], It was held that such a dispute involving license agreement does not necessarily involve issues of (in)validity, revocation of registration or other concerns that might interfere with the public interest or public policy. The arbitrators in this case therefore saw no reason why such a case would be under the exclusive jurisdiction of French courts, since it had only pertained to a breach of contract. The fact that the patent has been extinguished as a result of such a contractual breach was deemed irrelevant under the present circumstances.
Brief analysis focusing on any notable shifts or trends
There are many reasons for this trend towards arbitrating IP disputes. Primarily, this trend is because of the territorially limited scope of state court proceedings. This feature of state court litigation no longer meets the requirements of complex cross-border economic processes and transactions, and related disputes arising from a more globalised world because of arbitration’s confidential nature is valuable for IP disputes in general because of the sensitive nature of confidential information and know-how regularly involved in such disputes. In addition, specialist knowledge is often required to resolve technical IP disputes efficiently – a difficulty that can be addressed by appointing suitably qualified arbitrators.
Latest trends
In recent years, however, there has not only been a general increase in IP-related disputes but also a significant shift towards the resolution of IP disputes through arbitration. For example, the number of cases decided under the World Intellectual Property Organization (WIPO) Arbitration and Mediation Rules increased from 31 in 2012 to 182 in 2020 and to 263 in 2021, showing an increase of approximately 45 per cent over only one year .
SEP/FRAND
ADR in technology-related disputes is a matter of growing interest and is by no means a new phenomenon. Standards setting organisations, such as the Institute of Electrical and Electronics Engineers, nowadays support the use of arbitration (e.g., by including arbitration agreements in their IP policies) for, among other things, the determination of royalties respecting FRAND principles . It has also been iterated in cases- BlackBerry v. Qualcomm, see Todd Haselton, ‘BlackBerry awarded $815 million in arbitration case against Qualcomm’, CNBC, 12 April 2017
In 2017, WIPO developed and published the Guidance on WIPO FRAND Alternative Dispute Resolution (ADR), which aims to facilitate submissions of FRAND disputes to WIPO mediation and arbitration. The Guidance, among other things, explains the procedural options that are available at different stages of the process and identifies key elements that the parties may wish to consider to shape the arbitration proceedings. In 2018, the WIPO guidance was followed by the FRAND ADR Case Management Guidelines of the Munich IP Dispute Resolution Forum. While the WIPO guidelines focus closely on the services provided by the WIPO Centre, the guidelines of the Munich IP Dispute Resolution Forum expand on FRAND ADR in general and, as such, may work in synergy with the WIPO guidelines. Accordingly, the trend towards arbitration in this area is expected to continue.
Advanced use of technical tools in arbitration
Although there was a growing interest in the use of technology in arbitration even before the onset of the pandemic, the pandemic led to an increased use of already existing technological tools. The WIPO Centre, for example, makes available at no cost to interested parties an online case administration platform, the WIPO e- ADR platform (which is already used in 30 per cent of the cases), and assists in the hosting of online meetings and hearings.
For its part, the International Chamber of Commerce (ICC) established a working group, in response to the pandemic, to update the 2017 edition of its report on information technology in international arbitration. The report has undergone a complete overhaul and now includes a variety of practical resources, including sample procedural language relating to technology tools and solutions, checklists for virtual hearings, items to consider when choosing an online case management platform and a template procedural order, mainly related to IPR.
Intellectual Property Trends in International Arbitration for 2024
In 2024, arbitration strengthens its role in IP disputes with the establishment of specialized IP arbitration centres in key innovation hubs. These centres incorporate best practices and cutting-edge knowledge, enhancing the resolution of IP disputes and safeguarding intellectual capital. The United Nations Commission on International Trade Law (UNCITRAL) shapes arbitration rules and promotes effective dispute resolution. The evolving IP arbitration landscape highlights the need for comprehensive legal frameworks that harmonize global standards while respecting local laws. This push for a cohesive arbitral environment is supported by treaties and agreements enhancing predictability and cross-border cooperation. International arbitration is increasingly vital for protecting and resolving IP rights, reinforcing its importance in global commerce. The ICSID leads in handling investment disputes.
This position on arbitrability will make sure that a balance of rights between inventor/author and the general public will be maintained, with inventor/author retaining the right to arbitrate contractual rights and courts keeping in mind jurisdiction over claims that affect the general public. Such a balance is desirable for effective functioning of the IP regime.
Oreo V. FAB! O: A Saga of Phonetically Similar Marks
Legal Implication Of Cease & Desist Notice In India
Case Analysis: Jack Daniel’s Properties, Inc V. Vip Products Llc, (2023)
Notable Shifts and Trends in the Arbitration Regime: IPR In India
Notable Shifts and Trends in the Arbitration Regime WRT IPR In India
Research on Arbitration Cases Notable Shifts and Trends
Earlier scenario
Intellectual property rights are like any other property right such as rights to land, buildings, gold, etc. They basically agree to creators, or owners, of patents, trademarks, or copyrighted works to benefit from their own work or investment in a creation. These IPRs are negative rights which qualifies them to be right in rem since they affect the right of third parties and do affect monopolistic rights.
Changing scenario
Generally, commercial disputes are arbitrable, and intellectual property (IP) is commercial, thus potentially arbitrable. However, in India, IP disputes are excluded from arbitration due to the government’s control over IP rights like patents and trademarks. Internationally, the Geneva Convention states that all commercial matters are arbitrable, and the New York Convention excludes issues of public policy from arbitration. The arbitrability of disputes depends on government and judicial interests.
Since 1958, IP disputes have been considered non-arbitrable. The incidental nature of IP does not change this. Post-1985, the UNCITRAL model did not include IP disputes in its interpretation of commercial terms. Gradually, the World Intellectual Property Organization (WIPO) became a leader in IP arbitration, with forums in Hong Kong (2017) and Singapore (2019) offering options for IP dispute arbitration. Meaning that, in Hong Kong, the Arbitration (Amendment) Ordinance, 2017 (‘amendment’) enabled arbitration of IPR disputes even if it involved contentions regarding scope, infringement, etc. of intellectual property provided they were not barred by public policy. Taking cues from the Singapore Intellectual Property (Dispute Resolution) Act, 2019, the provisions of the amendment state that even when a relevant forum as per the statutory laws exists, the mechanism of arbitration could still be availed.
For instance, in 2019, Turkey implemented compulsory civil mediation for all business issues, including monetary IP disputes. In the Philippines, certain forms of intellectual property disputes that are handled by the Intellectual Property Office are required to participate in mediation
In recent time the arbitration is favoured for dispute resolution of IPR matters which is practised by entering an arbitration clause while executing the intellectual property contracts. Several changes were made in the IPR regime through Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Section 89 of Civil Code Procedure which empowers the Court if deems fit then to allow for arbitration, mediation and conciliation of disputes outside the court.
EU developments
Recent developments in the European Union also support the view that patent validity disputes are arbitrable. Specifically, the European Union is in the process of revamping its patent system with the unitary patent (UP) and the UPC. The new system reaches beyond the existing European patent (EP) and is intended to harmonise the protection of EPs and UPs within the European Union. In other words, under the new system, EPs may be granted and therefore protected and enforceable with unitary effect. In the future, national patents will coexist with EPs and UPs, but under separate systems.
The UPC Agreement provides that an affiliated patent mediation and arbitration centre (the Centre) will be established. As in the case of Germany, the applicable EU framework does not expressly prohibit patent validity arbitration. While the UPC Agreement stipulates that an arbitral tribunal or mediation panel may not revoke or limit a patent, the UPC’s draft Rules of Procedure indicate that an arbitral tribunal may order a party to surrender its patent and that the parties may request the UPC to confirm such arbitral award. The Centre provides yet another opportunity to promote the use of arbitration and alternative dispute resolution in connection with IP-related disputes.
Landmark Case- Eros International Media Ltd. v. Telemax Links India (P) Ltd 2016 SCC OnLine BOM 2179
where the Bombay High Court held that the dispute is arbitrable as the IP disputes in copyright or trade mark arising out of commercial contracts regarding an infringement or passing-off action, that action and that remedy can only be an action in persona. The Court stated that any finding of such infringement (or absence of) will be valid only against Telemax and not against any third party or world at large. It was observed that Section 62(1) of the Copyright Act which states that infringement matters could not be filed before any court lower than the jurisdictionally competent District Court, should not be read down to mean the ousting of the jurisdiction of an arbitral panel.
Landmark case– Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1
It dealt with the position arbitrability of IP disputes. The Court laid down a four-fold test to check the essentiality for arbitration of IP disputes and answered whether any dispute is arbitrable or not. It held that a dispute would be non-arbitrable when the cause of action and/or subject-matter of the dispute: relates to actions in rem that do not pertain to subordinate rights in persona that arise from rights in rem; affects third-party rights or has erg a omnes effect; relates to the inalienable sovereign and public interest functions of the State; and is expressly or by necessary implication non-arbitrable under a specific statute. The judgment clarifies the position of arbitrability of IP disputes. With Vidya Drolia, pronged test in force henceforth, it can be said that the tide would turn in favour of arbitrating IP disputes.
In the case of HDFC Bank v. Satpal Singh Bakshi 2013 (134) DRJ 566, the court held that all copyright disputes that come under the realm of right in persona are arbitrable and the parties of the case have the liberty to choose this alternate platform. Further, in the recent 2021 case Hero Electric Vehicles Private Limited v. Lectro E-Mobility Private Limited AIR ONLINE 2021 DEL 893, the court made an effort to resolve the existing ambiguity and held that IP disputes are arbitrable.
In the case of M/S Golden Tobie Private Ltd v. M/S Golden Tobacco Ltd 2021, delved into the interpretation of Section 8 of the Arbitration and Conciliation Act, 1996, in relation to the disputes involving trademarks. The court considered this dispute concerning the breach of a trademark licensing agreement as arbitrable and referred it to arbitration. the Plaintiff relied upon Vidya Drolia judgement to mention that the current matter involves dispute in relation to a trademark, and therefore, it will have Erga omnes implications relating to sovereign functions of the state. The court determined that the current matter is arbitrable as the dispute in question relates primarily to the understanding of the terms of the agreements between the parties, and to whether it is legitimate and legal for the Defendant to terminate the said agreements and cancel assignment of the trademark to the Plaintiff. The recent stand of the Delhi High Court in this matter has further clarified the position of the Supreme Court in relation to this matter, as it explicitly pronounced that the Supreme Court’s opinion does not reflect an absolute bar over the arbitrability of the disputes concerning trademark
International comparison
Internationally, patent disputes are allowed to be resolved through arbitration. Both the New York Convention, 1958 and the Model law on International Commercial Arbitration, 1985 provide for settlement of international disputes by way of Arbitration. Countries which have adopted UNCITRAL law like Australia, Germany, Japan, Canada have all validated arbitration of patent infringement and some even of patent validity. The ICC Commission has stated arbitration to be the “most desirable method for settling disputes arising out of intellectual property transactions.” The ICC Final Report on Intellectual Property Disputes and Arbitration even states that “There are no substantive differences in arbitrations arising from intellectual property disputes as from other areas.”
In the ICC case[1], It was held that such a dispute involving license agreement does not necessarily involve issues of (in)validity, revocation of registration or other concerns that might interfere with the public interest or public policy. The arbitrators in this case therefore saw no reason why such a case would be under the exclusive jurisdiction of French courts, since it had only pertained to a breach of contract. The fact that the patent has been extinguished as a result of such a contractual breach was deemed irrelevant under the present circumstances.
Brief analysis focusing on any notable shifts or trends
There are many reasons for this trend towards arbitrating IP disputes. Primarily, this trend is because of the territorially limited scope of state court proceedings. This feature of state court litigation no longer meets the requirements of complex cross-border economic processes and transactions, and related disputes arising from a more globalised world because of arbitration’s confidential nature is valuable for IP disputes in general because of the sensitive nature of confidential information and know-how regularly involved in such disputes. In addition, specialist knowledge is often required to resolve technical IP disputes efficiently – a difficulty that can be addressed by appointing suitably qualified arbitrators.
Latest trends
In recent years, however, there has not only been a general increase in IP-related disputes but also a significant shift towards the resolution of IP disputes through arbitration. For example, the number of cases decided under the World Intellectual Property Organization (WIPO) Arbitration and Mediation Rules increased from 31 in 2012 to 182 in 2020 and to 263 in 2021, showing an increase of approximately 45 per cent over only one year .
SEP/FRAND
ADR in technology-related disputes is a matter of growing interest and is by no means a new phenomenon. Standards setting organisations, such as the Institute of Electrical and Electronics Engineers, nowadays support the use of arbitration (e.g., by including arbitration agreements in their IP policies) for, among other things, the determination of royalties respecting FRAND principles . It has also been iterated in cases- BlackBerry v. Qualcomm, see Todd Haselton, ‘BlackBerry awarded $815 million in arbitration case against Qualcomm’, CNBC, 12 April 2017
In 2017, WIPO developed and published the Guidance on WIPO FRAND Alternative Dispute Resolution (ADR), which aims to facilitate submissions of FRAND disputes to WIPO mediation and arbitration. The Guidance, among other things, explains the procedural options that are available at different stages of the process and identifies key elements that the parties may wish to consider to shape the arbitration proceedings. In 2018, the WIPO guidance was followed by the FRAND ADR Case Management Guidelines of the Munich IP Dispute Resolution Forum. While the WIPO guidelines focus closely on the services provided by the WIPO Centre, the guidelines of the Munich IP Dispute Resolution Forum expand on FRAND ADR in general and, as such, may work in synergy with the WIPO guidelines. Accordingly, the trend towards arbitration in this area is expected to continue.
Advanced use of technical tools in arbitration
Although there was a growing interest in the use of technology in arbitration even before the onset of the pandemic, the pandemic led to an increased use of already existing technological tools. The WIPO Centre, for example, makes available at no cost to interested parties an online case administration platform, the WIPO e- ADR platform (which is already used in 30 per cent of the cases), and assists in the hosting of online meetings and hearings.
For its part, the International Chamber of Commerce (ICC) established a working group, in response to the pandemic, to update the 2017 edition of its report on information technology in international arbitration. The report has undergone a complete overhaul and now includes a variety of practical resources, including sample procedural language relating to technology tools and solutions, checklists for virtual hearings, items to consider when choosing an online case management platform and a template procedural order, mainly related to IPR.
Intellectual Property Trends in International Arbitration for 2024
In 2024, arbitration strengthens its role in IP disputes with the establishment of specialized IP arbitration centres in key innovation hubs. These centres incorporate best practices and cutting-edge knowledge, enhancing the resolution of IP disputes and safeguarding intellectual capital. The United Nations Commission on International Trade Law (UNCITRAL) shapes arbitration rules and promotes effective dispute resolution. The evolving IP arbitration landscape highlights the need for comprehensive legal frameworks that harmonize global standards while respecting local laws. This push for a cohesive arbitral environment is supported by treaties and agreements enhancing predictability and cross-border cooperation. International arbitration is increasingly vital for protecting and resolving IP rights, reinforcing its importance in global commerce. The ICSID leads in handling investment disputes.
This position on arbitrability will make sure that a balance of rights between inventor/author and the general public will be maintained, with inventor/author retaining the right to arbitrate contractual rights and courts keeping in mind jurisdiction over claims that affect the general public. Such a balance is desirable for effective functioning of the IP regime.
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