Alternative Dispute Resolution

The Indian Performing Right Society Ltd. v. Entertainment Network (India) Ltd.

MANU/MH/1597/2016

Facts

The Indian Performing Right Society represented owners of copyright in musical and literary works.
Entertainment Network operated radio broadcasting services.
The parties had commercial arrangements concerning licensing and payment of royalties for use of copyrighted works.
Their agreements contained arbitration clauses.
Disputes arose concerning:
licence fees;
royalty calculations;
contractual entitlement to use music;
alleged infringement after expiry or termination; and
payments due between the parties.
One side argued that copyright disputes were non-arbitrable because copyright is a statutory right in rem.
It contended that:
only civil courts could determine copyright infringement;
the Copyright Act created exclusive statutory remedies;
an arbitral award could not decide ownership or infringement against the world.
The opposing party argued that the dispute concerned only contractual rights between identified parties.

Whether every dispute involving copyright is non-arbitrable.
Whether contractual licensing and royalty claims are rights in personam.
Whether the tribunal could decide alleged infringement arising from the parties’ licence relationship.

Intellectual-property registration and validity may involve rights in rem.
However, disputes concerning:
contractual licences;
royalty payments;
permitted scope of use;
obligations between licensor and licensee; and
infringement alleged only as between contracting parties may be rights in personam and arbitrable.
The court must examine the nature of the relief, not merely the statutory label.
A tribunal cannot:
cancel copyright against the world;
alter statutory registration; or
issue an erga omnes declaration.
It can determine whether one contracting party breached or exceeded a licence.

The parties did not require the tribunal to determine whether copyright existed against every person.
The central dispute arose from their own licensing relationship.
The tribunal would examine:
what uses had been authorised;
the duration of the licence;
the agreed royalty structure;
whether broadcasts exceeded contractual permission; and
what compensation was payable.
Those determinations would bind only:
IPRS;
Entertainment Network; and
persons claiming through them.
The fact that the Copyright Act supplied the background rights did not make every connected dispute exclusively judicial.
Many contractual claims depend upon statutory property rights.
Arbitrability turns upon whether the tribunal is asked to affect third parties or public registration.
Here, the requested relief could be framed as:
contractual payment;
damages;
injunction inter partes; or
declaration of the scope of the licence.
The Court rejected a broad rule that any allegation of “infringement” defeats arbitration.
A licensee’s use after expiry may amount both to:
breach of contract; and
infringement.
Between the contracting parties, the tribunal can decide the private consequences without making a universal ruling on copyright validity.
The approach anticipated the later reasoning in:
Hero Electric;
Deccan Paper Mills; and
Vidya Drolia, which distinguish statutory rights in rem from contractual rights in personam.
The arbitration mechanism was therefore capable of resolving the dispute.

The Bombay High Court held that the licensing and royalty disputes were arbitrable.
The proceedings concerned contractual rights between identified parties, not cancellation or validity of copyright against the world.
The arbitration clause was given effect.
Use this case for: copyright-related royalty and licence disputes are arbitrable where the tribunal determines only inter-party contractual rights.