Overview of ADR as dispute resolution process: Mediation as an alternative dispute resolution method, has progressed leaps and bounds in recent years. It has proven to be an effective mode of dispute settlement and so has arbitration. However, our research for this article shows shows that it is yet to take a grip in the field of the Intellectual Property in India due to the technical nature of disputes. The emerging picture is that while mediation is a welcome medium, arbitration is not so much popular. Increasingly, transnational IP disputes are being arbitrated, with arbitral institutions such as WIPO, ICC, etc. WIPO as an organization that has been playing a pivotal role in bringing mediation to the forefront whenever there is a dispute involving intellectual property rights and India. WIPO addresses issues of enforcement and dispute resolution through its Arbitration and Mediation Center since 1994. The article examines the scenario vis a vis India.
Mediation as Dispute resolution mechanism in India in IPR disputes: The process of”mediation” in India was given a statutory shape first in the Industrial Disputes Act, 1947. Later a major change was introduced in the year 1999, when the parliament passed the CPC Amendment Act of 1999, which inserted section 89 in the original Act giving legal recognition to mediation. In the famous case of Afcons Infrastructure Ltd. and Anr. V. Cherian Varkey Construction Co. Pvt. Ltd. the Hon’ble Supreme Court had laid down guidelines as to what type of cases could be eligible for ADR eg disputes arising out of contracts (including all money claims), matrimonial disputes etc. International body WIPO clarifies, mediation is not a suitable procedure for settling disputes in all cases. Where deliberate, bad-faith counterfeiting or piracy is involved, mediation, which requires the cooperation of both sides, it is unlikely to be appropriate. Similarly, where a party is certain that it has a clear-cut case, or where the objective of the parties or one of them is to obtain a neutral opinion on a question of genuine difference, to establish a precedent or to be vindicated publicly on an issue in dispute, mediation may not be the appropriate procedure.
Bottlenecks over Arbitration as Dispute resolution process in IPR matters: There is strong arguments against arbitration in the Indian legal system. The jurisprudence of right in rem and personam, rule of public policy issues are the main hindrances. Another important line of legal submission says grant of an IPR is an exercise by the sovereign authority of the State and therefore only State should be able to undo it. Since an arbitral tribunal is creation of parties and it derives its power through consent of the participating parties, therefore cannot over reach to undo sovereign function. Consequently, an arbitral tribunal exercises no authority or, ordinarily, carry any power over non parties to the arbitration. It would however be incorrect to suggest that no jurisdiction has attempted to arbitrate intellectual property disputes.
(a) The concept of right in personam: Supreme court in Booz Allen& Hamilton Inc. vs. SBI Home Finance Ltd while laying down the test of arbitration, passed a judgment stating that the disputes which fall under the category of right in rem are non arbitrable whereas disputes falling within the category of Right in personam are arbitrable. It is pertinent to note that IPR matters fall within the scope of right in rem because the creator of such intellectual property is conferred with monopoly rights which enables him to prevent the exploitation of his creation by others, allowing him to enjoy his right against the world at large
Generally, most of the jurisdictions permit arbitration of intellectual property disputes that are purly of contractual nature on the basis of right in personam. There is no clear cut answer either from the applicable statutory law or judicial decisions. Indian jurisdiction has not directly addressed the issue of whether intellectual property disputes can be arbitrated in India. The courts in India have often held that Intellectual Property Rights disputes that are primarily related to interpretation of the terms of the Agreement between the parties and right asserted by Plaintiff emanates from the Agreement for eg.the assignment of trademark is by a contract and not by a statutory Act and the matter was accordingly referred to Arbitration. The problem however is complicated in instances of non contractual disputes, or contractual disputes where non contractual defences such invalidity and ownership are raised. Questions concerning validity and ownership are usually held to be inarbitrable in various jurisdictions.
(b) Issues of Fraud for non-arbitration: From the era of Booze Allen and N. Radhakrishnan v. Maestro Engineers & Ors.,where issues of public consequences and fraud were held non-arbitrable. The Hon’ble Supreme Court in its judgement, in A. Ayyasamy vs. A. Paramasivam and Ors, referred to the book penned by OP Malhotra called “The Law & Practice of Arbitration and Conciliation” and stated that generally patent, copyright, trademark disputes are non arbitrable. This was well recognised as obiter dictum in many cases. A pro arbitration judgement by holding the view that if the dispute is regarding the enforcement of trademark against the particular group as contrary to enforcement of such rights against the world, then such cases are arbitrable. Another issue raised by the Hon’ble Supreme Court of India recently in A Ayyasamy v. A Paramasivam & Ors held that unless the fraud in question is of a serious and complicated nature, the jurisdiction of the arbitrator would not be ousted.
(c) Public policy: Since the protection of intellectual property is territorial in nature, the public policy consideration as set down by the Supreme Court of India in the case of O.N.G.C v. Saw Pipes, can pose a hurdle towards enforceability of arbitral awards, if made on the mandate of intellectual property related disputes. Under the Indian Arbitration and Conciliation Act, 1996 (the Act) a court may set aside a domestic arbitration award if it conflicts with the public policy of India (section 34 of the Act). The Indian courts have interpreted “public policy of India” widely. In ONGC v Saw Pipes1(Saw Pipes) the Supreme Court said it included circumstances where a tribunal has made an error in applying Indian law. This interpretation has led to the courts reviewing the merits of awards, as if the arbitrators were a lower tier of the court system. When considering the enforcement of foreign awards, the courts have adopted a narrower approach.2As far as domestic awards are concerned, however, the broad view of public policy still holds sway. This has been confirmed in two recent Supreme Court decisions.
Advantages of Arbitration and Mediation in IP Disputes
Mediation can prove to be boon in IP disputes when we take into consideration the complexities and the technicalities of law. For example, patent disputes involve several technicalities which would be tough for a civil court judge to delve into, whereas a mediator can bring parties to the table to where parties can reach to an amicable solution while delving into various technicalities subject to issues that does not involve clear cut mediation. Bringing industry experts and leading IP practitioners to the field can help expand the scope of mediation of IP disputes since they might be able to help parties make more objective assessments when they come to a mediation table, which might help in shortening the process and keeps the costs low. Furthermore, when we look at the litigation in IP disputes companies may be forced to reveal the information about their intellectual property whereas mediation offers complete confidentiality.
IP disputes that can be Mediated
Commercial Copyright and Software Disputes
Generally, the question of infringement is taken up in such issues. Mediation is possible in copyright disputes as the cases generally depend on the facts surrounding the matter. Whereas, in software disputes the parties can go to mediation in order to protect their codes and algorithms in a much more effective way.
Commercial Patent Disputes
Mediation can be effectively used in patent disputes as they generally involve core technical aspects. With a mediator well versed with all the technicalities of the field, mediation can become an attractive option while resolving such disputes.
Trademark and Trade Dress Disputes
Such disputes can amount to confusion as parties coming to such dispute may have similar marks or packaging. A courtroom battle in such cases may be drawn out long hurting both parties in process, with mediation the parties to such disputes can amicably reach to a settlement as to which course of action would be best for both of them.
Trade Secrets
A specific amount of confidentiality is involved in disputes such as these, a mediator with specific knowledge of the industry might be able to help in a better manner while maintaining confidentiality that is required in such disputes.
Domain Name
Though trademark and domain name might be similar in some aspects, they are different as they are governed by various laws. While different trademarks could be registered in different countries in various manners, it’s hard for domain names to be exclusive because people can access them irrespective of the geographical location.
Copyright Infringement
When an individual reproduces an original work covered under the copyright laws, it can be called an infringement of copyright. While there are many rights that are incorporated into the Copyright Act, 1968, they can be majorly divided into economic and moral rights.
The aspect of confidentiality can also prove to be pretty handy as the parties involved in trade secret disputes want to keep information confidential. Through mediation, the parties can reveal the same information during caucus session and such information definitely remains confidential.
In India there is no specific statute or legislation which regulates the process of mediation. The path to Arbitrability of Intellectual Property Rights disputes has never been without challenges. From giving firm and rigid judgements against arbritrability of IPR disputes to giving green signal to certain IPR disputes, the Indian Courts have come a long way in widening the paraments of Arbitration in IPR disputes not hit by adjudicated settled principles.
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