Indian Courts Clarify Scope of Arbitration in Intellectual Property Disputes

India continues to grapple with the question of whether intellectual property (IP) disputes can be resolved through arbitration, despite legislative reforms favoring arbitration. The fundamental issue lies in the nature of IP rights as state-granted, public, and in rem rights, which contrast with the predominantly private, in personam contractual disputes arising from IP exploitation.

The doctrinal foundation for arbitrability in IP disputes was articulated by the Supreme Court in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (5) SCC 532, which distinguished between rights in rem—enforceable against the world at large and implicating public interests—and rights in personam, which arise inter se between parties and are generally arbitrable.

This distinction was further refined in Vidya Drolia v. Durga Trading Corporation AIRONLINE 2020 SC 929. The Court established a four-fold test for non-arbitrability: a dispute is non-arbitrable if it (i) involves rights in rem without subordinate rights in personam, (ii) affects third-party rights, (iii) concerns sovereign or public functions, or (iv) is expressly or impliedly barred by statute. The judgment emphasized a strong presumption in favor of arbitration in commercial matters.

Applying these principles to IP, actions concerning grant, validity, revocation, and rectification of IP rights—such as patent revocation under Section 64 of the Patents Act, 1970, and trademark rectification under Section 57 of the Trademarks Act, 1999—are in rem and thus non-arbitrable. Conversely, disputes arising from contracts related to licensing, assignments, royalties, and negative covenants involve inter se obligations and fall within the ambit of arbitration.

Arguments invoking sovereign authority and exclusive statutory jurisdiction have been moderated by Vidya Drolia. Although IP rights are statutory monopolies, their contractual exploitation is treated as a private law matter. Jurisdiction conferred on civil courts by provisions like Section 62 of the Copyright Act, 1957, and Section 134 of the Trademarks Act, 1999, does not preclude arbitration unless the statute creates non-waivable public rights or vests exclusive adjudicatory power in a specific forum. The dissolution of the Intellectual Property Appellate Board (IPAB) and the transfer of its jurisdiction to High Courts further reinforce the limited scope of non-arbitrability to disputes with erga omnes or public law consequences.

Arbitration offers significant advantages in resolving IP disputes in India’s overburdened judicial system. It mitigates procedural delays, including protracted injunction proceedings, and provides a confidential, efficient forum, particularly for cross-border IP conflicts. Arbitration’s flexibility allows parties to select arbitrators with specialized expertise in patent law, software copyrights, or trademarks, ensuring informed adjudication of complex technical issues.

Internationally, the World Intellectual Property Organization (WIPO) reports a growing trend in IP alternative dispute resolution (ADR), reflecting increased acceptance of arbitration for licensing and technology transfer disputes. In India, this aligns with the Arbitration and Conciliation Act, 1996, and institutional support from bodies like the New Delhi International Arbitration Centre (NDIAC).

Nevertheless, certain categories of IP disputes remain non-arbitrable under the Vidya Drolia test. Actions in rem affecting public registers—such as validity, subsistence, registration, rectification, or cancellation—cannot be resolved through arbitration. For example, patent revocation and trademark rectification proceedings must be adjudicated by state authorities, now primarily High Courts, which exercise sovereign powers.

Pure infringement and passing-off actions lacking a contractual basis are also non-arbitrable. Claims under Section 62 of the Copyright Act or Section 135 of the Trademarks Act seek remedies with erga omnes effect, such as injunctions enforceable worldwide. However, infringement claims incidental to contractual breaches may be arbitrated.

Criminal proceedings related to IP offenses, including trademark counterfeiting under Section 103 of the Trademarks Act, 1999, and copyright piracy under Section 63 of the Copyright Act, 1957, are categorically excluded from arbitration due to their penal nature and exclusive jurisdiction of criminal courts.

In K Mangayarkarasi v. NJ Sundaresan 2025 Supreme(SC) 828, the Supreme Court held that disputes arising from trademark assignments and family settlements are arbitrable when they concern inter se contractual obligations and do not challenge the validity or subsistence of the mark. The Court applied the Vidya Drolia framework, treating the dispute as in personam and affirming that allegations of fraud or incidental statutory IP rights involvement do not bar arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.

Conversely, in Anand Khosla v. Punam Kumari Singh 2025:BHC-OS:26726, the Bombay High Court upheld an arbitral tribunal’s refusal to determine copyright ownership of software developed under a Limited Liability Partnership (LLP) agreement. The Court held that ownership is a right in rem and non-arbitrable, while contractual disputes between partners remain arbitrable. This decision reflects a restrictive approach permitting bifurcation of causes of action and highlights doctrinal uncertainties.

The evolving jurisprudence thus distinguishes between arbitrable contractual IP disputes and non-arbitrable matters involving statutory validity, erga omnes enforcement, or criminality. The pro-arbitration stance in K Mangayarkarasi contrasts with the restrictive in rem approach in Anand Khosla, indicating a nuanced and developing legal landscape.

Overall, Indian courts are progressively endorsing arbitration as an effective forum for private, commercial IP disputes, particularly those involving technology and innovation. This trend aligns with global practices and supports efficient resolution of complex IP conflicts in India’s dynamic legal environment.

About the authors: Zeeshan A Khan is a Partner and Keshav Yadav is an Associate at Luthra and Luthra Law Offices, India.