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Challenges in Intellectual Property Rights Disputes – II

This article is second in series on ‘ADR in IPR’. The first article can be accessed here.

Justiciability of ADR in IPR

Until the early 2000s disputes arising in IPR were resolved only through the conventional iterative process. Parties would usually manage to resolve the dispute before it went to the full-fledged trial phase. This as discussed earlier was a time and resource-consuming process for all parties involved the result of which was only their dissatisfaction. But this scenario saw a change with the introduction of TRIPS. This landmark document though released at an international scale had severe repercussions in the patent and other laws in India. This resulted in the drastic amendment of the Code of Civil Procedure in July of 2002. The amendment saw the introduction of s. 89 which expanded the scope of the court’s discretionary powers allowing them to direct cases to arbitration, mediation or conciliation as they see it in accordance with the laws.

Despite this step, some areas of ADR like mediation, saw little or no participation of parties in IPR matters. But things took a turn around late 2006 when the High Courts of the country started to introduce exemplary and punitive damages in their judgments as a method to make civil dispute resolution attractive. The business community however seeing this as a threat sought the help of ADR mechanism for dispute resolution including mediation. As of today, parties are free to enter into any alternative dispute resolution process and upon reaching a consensus enter into a legally binding agreement, which would cover all issues present and future including details of future disputes.

Arbitration of IPR disputes

For a time in history, IPR disputes were non-arbitrable as the IP rights were bestowed by a sovereign entity and it must be adjudicated only by sovereign sanctioned bodies like courts. But with changing trends in IP law like the development of transferability of patent rights, etc. dispute resolution in IPR has also been made more liberal. While most issues in IPR are matters of individual concern they can be suitably resolved through private arbitration. However, those that are a matter of public concern (right in rem) cannot enter into arbitral or any other ADR proceedings.

This was upheld in the case of Booz-Allen & Hamilton Inc. v. SBI Home Finance Ltd[1]. the Supreme Court held that; subject matter of arbitration that involves only rights in sonpersonem are arbitrable in nature, but no matter involving right in rem, for example, with validity proceedings, where the effect of the award could potentially be to discontinue the existence or enforceability of the monopoly, can be put before any private arbitral tribunal for decisions.”[2] This principle was further in the case of Eros International Media Limited v. Telemax Links India Pvt. Ltd. and Ors[3] wherein it was held that’ “IPR disputes born arising out of commercial contracts the remedy can only be an action in personem”[4]. It is important to note here that in case of disputes arising in the field of patents, the regional patent offices don’t recognize the arbitral awards to make. However, disputes arising in the subject-matter of the contract between the parties can be arbitered.

As attractive as the field of arbitration is for resolving IPR disputes, it also faces certain criticisms, one of the biggest being that it is enforceable only on the parties to the dispute and does not have any largest scope of application. It also entails certain procedural difficulties, for instance in the absence of a prior contract clearly providing for arbitral proceedings, it is difficult to obtain the consent of all parties. Also, unlike the courts, arbitration isn’t bound by the principles of justice and equity to the word. In the case of parties hailing from different economic or political backgrounds, there is the risk of one of the parties being a loss.

Mediation of IPR disputes.

Mediation as discussed earlier shares the same benefits of arbitration when it comes to dispute resolution including ease, cost & time effectiveness, control, etc. The non-binding nature of the mediation process gives parties a good opportunity to attempt to reconcile the matter without being bound. This informal tone of the process would have a good impact when it comes to business transactions. The confidentiality of the process to makes it an attractive option of parties in the innovation business. Recent amendments in the Commercial Courts Act of 2015 has incentivized mediation-based dispute resolution, especially in IPR in terms of flexibility and agreements. The entire mediation process is found to be IPR dispute resolution friendly, from the parties choosing their mediator and having full control over the proceedings and the outcome.

Raw Mango Pvt. Ltd. v. Vaishali Shadangule -The success of mediation in speedy and effective dispute resolution is evident in the story of famous Indian designer Vaishali Shadangule. Recently she claimed that Sanjay Garg, a co-artist in the fashion world had plagiarized her designs causing her loss of accruable revenue. Sanjay who denied all the allegations, in turn, filed a suit for defamation. When the case appeared before the Delhi High Court, it was directed for mediation before the Fashion Development Council. The dispute was resolved in a landmark 4-day period.

Conclusion

With the ongoing globalization, the use and importance of Intellectual property are only going to multiply. That means the issues that entail along with it multiply too. Hence there is a need for dispute resolution mechanisms that are speedier, easy, and effective than the conventional ones. The ADR mechanisms for dispute resolution offers a lot more than the traditional litigation process and this highly important when it comes to businesses, both developing and established. For individual innovators and small business who haven’t yet acquired traction in their field, IPR is a very valuable asset, however, they aren’t ready to take the heat of legal battles. Through ADR they may resolve disputes through first discussing with the other party instead of accusing them. Many a successful mediation have offered young individuals and enterprises an opportunity to step up. Although it must be kept in mind that along with the flexibility and control that ADR offers in dispute resolution some drawbacks inevitably follow. But to think of it one cannot have it all. Hence the application of ADR mechanisms in IPR dispute resolution may not be perfect but is surely worth a try.


[1] AIR 2011 SC 2507

[2] Id

[3] 2016 ARBLR 121 (BOM)

[4] Id

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