[This article is authored by Advik Rijul Jha & Maithreya Shetty, law graduates from JGLS, Sonipat.]
Keywords: Arbitration, Copyright Matters, IPRs.
Intellectual property rights provide an avenue for creators to exercise their power over third parties stealing their creation without seeking permission, terming them as their own and deriving monetary benefits out of the same.
Currently, the holders of intellectual property are expected to be cautious and take recourse to the courts in the event of an infringement of their copyrights. Although the Indian judiciary has made significant efforts to ensure the development of an intellectual property regime in India, it would go a long way in achieving this objective if it were to deploy alternative dispute resolution mechanisms as established modes of dispute resolution.
Reaction of Indian Courts
It is pertinent to mention the judgment of the Bombay High Court in Eros International Media Ltd. v. Telemax Links India Pvt. Ltd. [i], which categorically stated, "Section 62 of the Copyright Act 1957 corresponds almost exactly to Section 134 of the Trade Marks Act, 1999: infringement and passing off actions cannot be brought in a court lower than a jurisdictionally competent District Court, one within whose limits the plaintiff resides or works for gain. I do not think these sections can be read as ousting the jurisdiction of an arbitral panel." The Court also observed that there is no specific authority that states that disputes concerning copyrights, trademarks, and patents are non-arbitrable in nature.
It was further held that "As between two claimants to a copyright or a trademark in either infringement or passing off action, that action and that remedy can only ever be an action in personam. It is never an action in rem."
Rights in rem and personam are defined in Salmond’s text on Jurisprudence, wherein he describes the origin of the rights as “a right in rem is available against the world at large; a right in personam is available only against particular persons. The distinction is of great prominence in the law, and we may take the following as illustrations of it. My right to the peaceful occupation of my farm is in rem, for all the world is under a duty towards me to not interfere with it. But if I grant the lease of the farm to a tenant, my right to receive rent from him is in personam. …. A right in rem, then, is an interest protected against the world at large; a right in personam is an interest protected solely against determinate individuals… the law confers upon me a greater advantage in protecting my interests against all persons than in protecting them only against one or two. The right of a patentee, who has a monopoly against the world, is much more valuable…”[ii].
A right in rem cannot be exercised meaningfully without a corresponding remedy in place. Such a remedy must be available against the world as a whole. Property rights are usually rights in rem. Therefore, intellectual property rights are rights in rem. However, contractual rights constitute rights in personam. Therefore, intellectual property disputes (including copyright disputes) arising out of a contract between two or more parties should ideally be arbitrable. Therefore, although the Hon’ble Court in the Eros International case erred in its judgment by saying that copyrights are not rights in rem, this does not invalidate the first part of the judgment, which states that copyright disputes are arbitrable.
Intellectual property disputes are arbitrable across the common law world, although they are rights in rem. With respect to copyrights in the USA, the Court of Appeals in Kamakazi Music Corp. v. Robbins Music Corp. upheld the arbitrability of copyright infringement claims where copyright validity was not in issue. There have been a few other cases where the Court has held that arbitration is possible even when the validity of the copyright is in issue if the matter arises out of a copyright license suit. Here, the arbitrability of such disputes is dependent on and limited to such remedies as can only possibly be granted by an arbitral tribunal. Copyright disputes are arbitrable if and only if orders in this regard are not binding on third parties. Therefore, a crucial distinction must be drawn between copyright disputes where the issue is related to the right in rem, and a claim made thereunder and an issue arising out of a contract where the remedy is restricted to the parties in the arbitration (right in personam).
Applying the principle put forth by Salmond to disputes pertaining to copyrights, if the holder of the copyright (right in rem) has executed an agreement to grant a license to another entity to print, publish, perform, film or record literary, artistic or musical material in relation to which such copyright is held, in return for a license fee, any claim for damages against breach of such a license by the licensee is a right in personam. Therefore, this piece essentially argues that only copyright disputes of such a nature ought to be amenable to arbitration.
Another case that highlights the need for a speedier dispute resolution mechanism in relation to intellectual property disputes is that of Shree Vardhman Rice & General Mills v. Amar Singh Chawalwala. Here, the Court held that "…Without going into the merits of the controversy, we are of the opinion that the matters relating to trademarks, copyrights and patents should be finally decided expeditiously by the Trial Court instead of merely granting or refusing to grant injunction. In the matters of trademarks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction, and that goes on for years and years, and the result is that the suit is hardly decided finally. This is not proper…In our opinion, in matters relating to trademarks, copyright and patents, the proviso to Order XVII Rule 1(2) C.P.C. should be strictly complied with by all the Courts, and the hearing of the suit in such matters should proceed on a day-to-day basis, and the final judgment should be given normally within four months from the date of the filing of the suit."
It is pertinent to draw attention to the case of Intellectual Property Rights Society (“IPRS”) v. Entertainment Network, where the dispute pertaining to intellectual property was held to be not arbitrable owing to being connected to a right in rem. This case was differentiated from the Eros International case in the sense that it was based on IPRS’s right to claim royalties in respect to the broadcasting of sound recordings. The ruling given in this case held that the subject matter is non-arbitrable owing to the fact that the award would, in essence, declare whether IPRS had any copyright in the works it had licensed. Hence, it was not merely a right under the license agreements between the two parties that were to be decided in this case, but IPRS’ rights to communicate their works to the public, i.e., right in rem.
In light of the decisions mentioned, it is evident that there is a need for expeditious disposal of the cases relating to intellectual property disputes pertaining to copyright infringement arising out of matters which are in personam. The faster the pace of dispute resolution, the better it is for parties disputing over copyright infringement.
In order to enable parties to a dispute concerning copyright infringement arising out of a contract between them (in personam) to take advantage of arbitration, there is a need for the courts to encourage parties having such disputes to opt for arbitration. This would enable such parties to resolve their disputes in a speedy manner. However, in rem disputes are justified to be dealt with by courts subject to the exception that subordinate rights in personam that arise from rights in rem be amenable to arbitration.
[i] Eros International Media Limited v. Telemax Links India Pvt. Ltd.,  SCC Online Bom 2179.
[ii] PJ Fitzgerald, Salmond on Jurisprudence, (12th edn, Universal Law Publishing 1985).