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ARBITRABILITY OF COPYRIGHT DISPUTES: BALANCING RIGHT IN REM AND RIGHT IN PERSONAM
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Article Details
ARBITRABILITY OF COPYRIGHT DISPUTES: BALANCING RIGHT IN REM AND
RIGHT IN PERSONAM
AUTHORED BY - AKHILA
M S
Designation: Student – LLM (IPL)
Institution: School of Law, Christ
(Deemed to be University), Bangalore
Address: No. 723, 4th Main, HAL III
Stage, Bangalore - 560075
Abstract
The Copyright Act, 1957 is a special legislation
enacted with the object of protecting original literary, dramatic, musical and
artistic works, cinematograph films and sound recordings from unauthorized use.
It recognises the right of copyright owner to alienate, transfer, assign or
licence the subject matter of copyright to third parties. Copyright, being a
form of intellectual property comprises of right in rem and right in personam. In
the first part, this paper analyses the jurisprudence of copyright law. Generally,
a special statute ousts the jurisdiction of general Courts. The Copyright Board
and the High Courts are granted jurisdiction to adjudicate disputes under the
Copyright Act. However, in case of copyright disputes, party autonomy is given
importance and disputes between parties where copyright is the subject matter
of the dispute, may be referred to arbitration, with certain exceptions. The second
part of the paper dwells with the jurisprudence of arbitrability and nature of
disputes that can be arbitrated. This paper has explored the applicability of
arbitration to copyright disputes in various international countries. It
further explores the interpretation adopted by Indian courts in permitting
parties to arbitrate copyright disputes.
Keywords: copyright, arbitrability, right in rem, right in personam,
public policy.
Introduction
Copyright is one of the intellectual
property rights recognised and protected both under the international
conventions and national laws.[1] Copyright
has seen change in the level of importance and recognition given to an author
and protection of rights over the years. Copyright is an affirmative and
positive right granted to the owner of the copyrighted work. It is a statutory
right and its existence is limited to the parameters and protection granted
under the statute.[2]
Copyright law is enacted to provide
safeguards to the rights of owners of copyright and to reward their creativity
by granting them exclusive rights. It is aimed at motivating and creating a
conducive atmosphere to create new art for the economic and social development
of society.
Copyright serves as a
vital safeguard to authors/ owners, ensuring protection and recognition of
their creative works. It nurtures and rewards creativity, which is a
cornerstone of progress and plays a pivotal role in society’s economic and
social development. Copyright protection is extended to writers, artists,
designers, dramatists, musicians, architects, as well as producers of sound
recordings, cinematograph films, and computer software. It cultivates an
environment that nurtures creativity, which in turn, not only motivates these
creators to produce more but also inspires others to embark on creative
endeavours.
The Copyright Act, 1957 aims to bestow
certain rights on the creators of copyrightable work, such as a literary,
dramatic, musical and artistic works and producers of cinematograph films and
sound recordings. The Act confers a bundle of rights including, right to
reproduce, communicate to the public, adapt and translate the work.[3] It
confers legal right to the owner of the work to protect the work for a certain
period of time. Copyright comprises of property right in rem and right in
personam.[4]
The duality of the rights under copyright poses a difficult in determining
arbitrability of the disputes.
History of
copyright
Property inevitability was recognised
as physical and tangible property for a long period of time. The term
‘property’ is derived from the Latin word ‘proprius’, which refers to “one’s
own”. The owner of the property is granted exclusive rights to deal with the
property and to exclude others. The development of science and evolution of
technology created need to recognise intellectual and intangible property. A
wide interpretation was given to ‘property’ to include corporeal or
incorporeal, real or personal, tangible or intangible property which is capable
of ownership. The law has recognised intellectual property as a form of property
as it is derived from the labour of a person’s intellect. Therefore, the rights
granted to a tangible property is extended to intellectual property.
Copyright is rooted in property
paradigm and rights that are granted to property is extended to copyrighted
works, with certain variations.[5] It is a branch of private law, which protects
original expression of work. It strikes a balance between the interest of
private author/owner of the copyright and the public at large. The owner of
copyright has the right to possess and alienate, transfer, assign the work as
per his choice. Copyright empowers the owner to prevent third parties from
infringing his right and it is a negative right as opposed to positive right to
deal with the property granted to the owner.
International
Conventions
The Berne Convention for Protection
of Literary and Artistic Works, 1886 (‘Berne Convention’) sets down
basic principles for protection of original work and the rights of the owner of
such works.[6] The
Berne Convention provides minimum standards of protection that are required to
be granted by the member countries. It also enumerates the exclusive rights of
the owner that must be recognised and protected by national laws, such as right
to made reproductions, right to made adaptations, right to translate, right to
broadcast, right to communicate to public etc. It also recognises moral rights
of the authors. It also stipulates that protection must be granted for a
minimum period of 50 years after the death of the author.
The Agreement on Trade Related
Aspects of Intellectual Property Rights, 1994 (“TRIPS Agreement”) which
is annexed to the Marrakesh Agreement is binding on all the members of World
Trade Organisation. The TRIPS Agreement provides the minimum standard of
protection for intellectual property, including copyrights. It mandates
national treatment, automatic protection and independence of protection. It
also provides limitation on protection in order to balance the interest of the
general public and economy.[7]
Right in
rem v. Right in personam
Right to a property refers to right
to use the property. The subject matter of a right of a property can be either
material or immaterial thing. Immaterial properties that are created by virtue
of human skill and labour is recognised as intellectual properties. The law
recognises the product produced by a human intellect and grants exclusive right
to use product and benefit from it. It also confers proprietary right and
unauthorised use of the product is violation of proprietary right of the owner.[8]
The terms ‘in rem’ and ‘in personam’
are derived from the Roman terms ‘actio in rem’ and ‘actio in personam’. Actio
in rem refers to an action for recovery of control or ownership of property,
whereas actio in personam refers to action taken for enforcement of an
obligation. The right protected under actio in rem is known as jus in
rem and the right protected under actio in personam is known
as jus in personam.[9] Rights
in rem are negative and rights in personam are positive. The
distinction between the two rights (i.e. right in rem and right in
personam) is important to determine arbitrability.
Salmond states that the distinction
between right in rem and right in personam is based on the
corelative duty. Right in rem imposes duty on all persons in general,
whereas, right in personam imposes duty on specific individuals.[10] Owner
of a property has the right to peaceful possession and occupation in his
property against the world at large. Further, in case of renting of the
property on lease, the owner will have right on the lessee to collect rent
periodically. In the similar way, owner of a copyright has right to exclude the
general public against infringement of the work. The assignor of the copyright
has the right to receive royalty from the assignee.
Arbitrability
of disputes
Arbitration is one of the forms of
alternative dispute resolution, where parties mutually agree to waive their
right to approach the Court and resolve their disputes by authorising an
independent and neutral third party to adjudicate. Arbitrability refers to
whether subject matter of dispute can be adjudicated by an arbitral tribunal.
The test of arbitrability can be
based on three factors, namely, (i) existence of an arbitration agreement, (ii)
the dispute is within the purview of the arbitration agreement and (iii)
subject matter of the dispute is not barred by law from arbitration. The Courts
should also determine whether the dispute can be adjudicated in a private forum
and whether the arbitrator will have the authority to grant the relief claimed.
Therefore, it is important to consider the above factors to determine whether
the dispute can be arbitrated. Various nations have different criteria to decide
whether the dispute can be subjected to arbitration or not.
International
perspective
The United States of America enacted
Federal Arbitration Act, 1947 to enforce arbitration agreements and recognise
the validity of arbitral awards.[11]
Although Arbitration Act was in force, copyright disputes were confined to
Federal Court as it fell within the ambit of public policy. In Kamakazi Music
Corporation v. Robbins Music Corporation, the Court permitted arbitration of
copyright infringement, when the dispute did not pertain to copyright validity.[12]
The Congress made procedural changes to the framework and introduced Copyright
Arbitration Royalty Panel.[13] Although,
the courts have permitted arbitration of copyright disputes, a copyright
infringement claim requires to be registered in the U.S. Copyright Office.[14]
The Supreme Court of Canada in
Desputeaux v. Éditions Chouette (1987) Inc.[15]
has held that a dispute arising from a copyright contract maybe referred to
arbitration. It further held that copyright disputes are arbitrable as long as
the relief sought is not intended to bind third parties.
In Italy, all contractual disputes,
excluding the ones related to non-disposable rights can be arbitrated.[16]
The law does not expressly bar arbitration of intellectual property rights.
However, copyrights are partially regarded to fall under non-disposable rights.
Arbitration of disputes arising from infringement leading to economic loss is
permitted.[17]
In France, earlier, Courts had
exclusive jurisdiction over copyright disputes. Further, all intellectual
property suits were required to be approved by the public prosecutor prior to
institution of the suit. In 1972, the French Civil Code was amended and
permitted the use of arbitration for intellectual property disputes, except
matters of public policy.[18]
Article 2059 of French Civil Code
provides a general rule for submission of disputes related to rights which are
in a person’s full disposition to arbitration and Article 2060 enumerates
exceptions to the same. It excludes disputes related to civil status of a
person, divorce, public entities and public policy. Therefore, disputes arising
from a contract pertaining to copyright, such as licensing, assignment etc.,
where claim is for damages or breach of terms and conditions can be arbitrated,
while criminal infringement and validity of copyright cannot be arbitrated.[19]
In Egypt, a consolidated law for
protection of intellectual property rights was enacted in 2002 in line with
international conventions.[20]
The Act directs the aggrieved party to approach Courts for adjudication of all
disputes relating to copyright.[21] Arbitration
law in Egypt was a combination of Sharia and European law and it was uncodified.
Promulgating the Law Concerning Arbitration in Civil and Commercial Matters
enacted in 1994 is based on UNCITRAL Model Law.[22] Article
2 of the Law permits arbitration of commercial transactions where the dispute
pertains to legal relationship of an economic nature arising out of a contract
or not. Although the arbitration law permits settlement of contractual disputes
having financial dimension, the Courts are vested with sole rights to
adjudicate under the intellectual property law.[23]
A member of the World Trade
Organisation can approach the WTO dispute settlement system for redressal of
the dispute or to determine whether the measure taken by one of the member nations
is against the principles of WTO. Arbitration is one of the methods of dispute
settlement mechanism recognised by the WTO.[24]
The Director General of WTO has the authority to appoint arbitrator and the
arbitrators have the power to determine the mandate.[25]
The World Intellectual Property
Organisation (“WIPO”) provides procedure for arbitration of disputes
under WIPO Arbitration Rules, 2021. Arbitrations that are conducted under the
WIPO are consensual, confidential, neutral and award is final and enforceable. In
case an agreement containing arbitration clause is referred to WIPO for dispute
resolution, the rules shall govern the arbitration procedure. Disputes related
to digital environment such as breach of license agreements can be arbitrated
under WIPO.
Indian
scenario
The Arbitration and Conciliation Act,
1996 (“Act”) provides that certain disputes for which special law and
enforcement mechanisms are provided may not be submitted to arbitration.[26]
However, the Act does not enumerate the category of disputes that are
non-arbitrable. The issue of arbitrability is required to be decided by the
Courts.[27]
The Courts are empowered to set aside an arbitral award if it is pertaining to
a non-arbitrable dispute.[28]
The issue of arbitrability was dealt
in detail in the case of Booz Allen &
Hamilton Inc. v. SBI Home Finance Ltd.[29]
The learned Judge enumerated three facets of non-arbitrability and provided
examples of non-arbitrable disputes. It is stated that disputes relating to
rights in personam can be referred to arbitration, whereas disputes relating to
right in rem are required to be adjudicated in Courts. However, disputes
arising from right in personam derived from right in rem can be arbitrated. Criminal
offences, matrimonial disputes, guardianship, insolvency and winding up
matters, testamentary matters, eviction or tenancy matters governed by special
statues where the tenant enjoys statutory protection against eviction and only
the specified courts are conferred jurisdiction to grant eviction or decide the
dispute are some of the disputes that are non-arbitrable. Further, the learned
Judge opined that the standard of test of arbitrability must be based on the
nature of reliefs sought rather than mechanically testing the subject matter of
the dispute as a whole.
The Supreme Court in Vidya Drolia and
Others v. Durga Trading Corporation, has laid down four-fold test to determine
arbitrability of disputes. Disputes that relate to actions in rem and affect
third party rights are not arbitrable. It has held that arbitrability is a
matter of national policy and a statute may expressly or impliedly prohibit
arbitration of certain disputes. However, Justice N V Ramana has pointed out
that under Section 34, arbitrability and public policy are two separate grounds
for an arbitral award to be challenged.[30]
The Bombay High Court in Eros
International Media Limited v. Telemax Links India (P) Ltd.[31]
has dealt with the issue of arbitrability of copyright disputes. In this case,
the Plaintiff had exclusive rights in respect of certain feature films. The
Defendant entered into a ‘Long Form Agreement’ with the Plaintiff for marketing
and distribution rights. Subsequently, the Plaintiff filed a suit under Section
62 of the Copyright Act alleging exploitation of copyright by the defendant.
The Plaintiff also challenged the arbitrability of such a claim. The Court
dealt with the question of whether Copyright Act will oust jurisdiction of
arbitral tribunal. The Court held that although Copyright Act is a special act,
it does not prevent the parties from submitting their dispute to an arbitral
tribunal. It further held that the dispute was based on the contract between
the parties and the remedy sought in the suit was ‘in personam’ and hence
arbitrable. The Hon’ble High Court of Bombay has heavily relied on the nature
of remedy sought, which is not a rigid rule.[32]
The Court has clarified in Onyx
Musicabsolute.com Pvt. Ltd. & Others v/s Yash Raj Films Pvt. Ltd. &
Others[33]
that the parties cannot initiate both litigation and arbitration in respect of
the same dispute as it may result in conflicting decisions. It has also
clarified that arbitration claim cannot be maintained against parties who are
not party to the copyright agreement containing arbitration clause.
The Courts were examining
arbitrability of disputes under Section 8 and 11 prior to 2015 amendment. The
2015 amendment was enacted with the intention to curtail judicial interference.
Hence, the courts are permitted to only prima facie opine on the existence of
valid arbitration agreement and not deal with the arbitrability of disputes.[34] It
can be observed that there is an increase in the trend of referring suits to
arbitration on filing of an application under Section 8 of the Arbitration and
Conciliation Act, 1996 on the ground that Section 8 is peremptory in nature and
the Courts are mandated to refer the dispute to arbitration.[35]
Conclusion
Copyright law has expanded with
expansion and development of information and technology. The advent of
artificial intelligence has also posed threat to copyright infringement on the
internet. Due to greater penetration of internet, there is greater potential
for infringement causing economic losses to the owner of the work and
possibility of distortion of moral rights is higher.
Arbitration
is chosen as a preferred mode of dispute settlement as copyright disputes as
the unique challenges that are present in such disputes can be effectively
redressed. A neutral person having technical expertise in music or art or
cinematography can be appointed as an arbitrator, who will have the technical
knowledge to appreciate and distinguish the nuances in the work. Arbitration
will ensure confidentiality of scripts, lyrics etc. as the Court proceedings
are public and confidentiality cannot be maintained. Arbitration is flexible
mechanism as the rules of procedure can be altered as per the needs of the case
unlike traditional courts. It also permits the parties to decide the venue and
place of arbitration to avoid conflict of laws. It provides timely resolution
of disputes, which is final and binding on parties.
It is
observed that although the legal technicalities of arbitration may differ from
country to country, the general principles governing the arbitration, whether
international or national, are consistent. The countries make a distinction
between public law and private law and have permitted arbitration of disputes
within the purview of private law and restricted arbitration of disputes within
the purview of public law. It is prudent to permit arbitration when
adjudication of the disputes does not affect third party rights or impose
liability on third parties.
The copyright
disputes can also be arbitrated by online mode. Remote hearings will reduce
cost of travel, venue, environmental impact, arguments will be shorter and
effective. However, it would involve issues of risk of witness misconduct, credibility
of witness, difficulty in effective cross examination, increase in cost to
adopt technology, audio and visual clarity, network connectivity etc.[36]
Institutional
arbitration centres have been set up in various states aid and assist in
efficient conduct of arbitration, with structured rules, panel of arbitrators
and infrastructure. In view of development in the field of arbitration, the
parties entering into a copyright contract are opting arbitration as the
dispute resolution mode by waiving their right to approach Courts. Since
contract gives party autonomy to choose jurisdiction, it must be upheld, unless
the claim is regarding validity of copyright or orders may adversely affect
public policy.
[1] Paris Convention for the
Protection of Industrial Property, 1884 (signed 20 March 1983 and came into
effect 7 July 1884) Art. 1 (2); Agreement on Trade-Related Aspects of
Intellectual Property Rights, 1994 (concluded 15 April 1994, came into effect 1
January 1995) Art. 1 (2) and Convention Establishing the World Intellectual
Property Organization, 1967 (signed 14 July 1967, came into effect 16 April
1970) Art. 2 (viii).
[2] Upendra Baxi, ‘Copyright Law and
Justice in India’ (1986) 28 (4) JILI, 497, 505.
[3] The Copyright Act, 1957, s. 2 (p).
[4] Supra note 2.
[5] Jatindra Kumar Das, Law of
Copyright (2 PHI Learning Private Limited, Delhi, 2015) 1-15.
[6] Berne Convention for the
Protection of Literary and Artistic Works, 1971 (came into effect on 9
September 1886).
[7] Agreement on Trade Related Aspects
of Intellectual Property Rights, 1995 (concluded
15 April 1994, came into effect 1 January 1995).
[8] P J Fitzgerald, Salmond on
Jurisprudence, (12 Sweet & Maxwell, South Asian, 2021) 421-424.
[9]
Id at 235-238.
[10] Id.
[11] Title 9, U.S.C., 1947, 392, 61
Stat. 669.
[12] 684 F.2d 228 1982 U.S. App.
[13]The Copyright Royalty and
Distribution Reform Act, 2004, 17 U.S.C ss. 801-803.
[14] Fourth Estate Public Benefit
Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881.
[15] (2003) 1 SCR 178.
[16] Italian Code of Civil Procedure,
1940, Art. 806.
[17] Laura Coriddi, Arbitrating
Intellectual Property Disputes (in Italy), available at: https://portolano.it/en/newsletter/litigation-arbitration/arbitrating-intellectual-property-disputes-in-italy
(accessed 15 October 2023).
[18] French Code of Civil Procedure,
1804, Art 2060.
[19] DELOS, Guide to arbitration
places, available at: https://delosdr.org/wp-content/uploads/2018/06/Delos-GAP-2nd-edn-France.pdf
(accessed 18 on October 2023).
[20] Pertaining to the Protection of
Intellectual Property Rights, 2002.
[21] Id. Arts. 144, 151, 179 & 181.
[23]Islam Mohamed, Arbitrating
Copyright Disputes in Egypt, available at: www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1105&context=etd
(accessed 20 October 2023).
[24] Francois Dessemontet, “Dispute
Resolution Proceedings in World Trade Organisation and International Commercial
Arbitration: A Comparision” (2017) IJAL 174, 187.
[25] United States — s. 110(5) of the
US Copyright Act, Recourse to Arbitration under Article 25 of the DSU,
WT/DS160/ARB25/1, §§ 2.1 - 2.7 (9-11-2001).
[26] The Arbitration and Conciliation
Act, 1996, s. 2(3).
[27] Ajar Rab, ‘Defining the Contours
of the public policy exception – a new test for arbitrability in India’, (2019)
IJAL 161, 162.
[28] Kushagra Sharma, Shivangi Sinha,
et.al, ‘Arbitrability of Intellectual Property Disputes in Indian Context’, (2023)
(8) IJERT 12, 14.
[29] (2011) 5 SCC 532.
[31] 2016 SCC Online Bom 2179.
[32] Vidhi K Tiwari and Suman Shetty,
Eros International Media Limited v. Telemax Links India Private Limited – A
step ahead, (2016) RSRR 65.
[33] 2008(6) Bom CR 418.
[35] Tandav
Films Entertainment Private Limited v. Four Frame Pictures and another, 2009 SCC OnLine Del 3930; Hindustan
Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503; Rashtriya
Ispat Nigam Limited v. Verma Transport Company, (2006) 7 SCC 275.
[36] Yashraj Samant & Chirag Balyan,
Specialized Arbitration, (Thomson Reuters, Legal, India, 2021) 359-360.
Article Information
ARBITRABILITY OF COPYRIGHT DISPUTES: BALANCING RIGHT IN REM AND RIGHT IN PERSONAM
Authors: AKHILA M S
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/03/15
- Issue 7
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International Journal for Legal Research and Analysis
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