Arbitrability of IP disputes in India

Despite pro-arbitration reforms, India continues to face challenges in fully adopting arbitration for IP disputes. The core issue is whether state-granted IP rights, which are public and in rem, can be arbitrated when most commercial IP disputes arise from private, in personam contracts. The key question is whether arbitration can resolve IP disputes without compromising public interest or sovereign authority. This article explores the doctrinal foundations, key rationales, non-arbitrable categories, and recent judicial developments to clarify this issue.

The arbitrability of IP disputes in India is grounded in the distinction between rights in rem and rights in personam, articulated in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (5) SCC 532. The Supreme Court in this case held that disputes concerning rights in rem, which operate against the world at large and affect third-party and public interests, are generally non-arbitrable, whereas disputes concerning rights in personam, or inter se rights flowing from in rem rights, may be resolved through arbitration.

This position was refined in Vidya Drolia v. Durga Trading Corporation AIRONLINE 2020 SC 929, where the Hon’ble Court formulated a four-fold test of non-arbitrability: a dispute is non-arbitrable if it: (i) involves rights in rem without any 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 Court in this case emphasised a strong presumption in favour of arbitrability in commercial matters.

In the context of IP disputes, matters such as grant, validity, revocation, and rectification of rights, patent revocation under Section 64 of the Patents Act, 1970, and trademark rectification under Section 57 of the Trademarks Act, 1999 are actions in rem and hence non-arbitrable. Conversely, disputes arising from contracts governing the exploitation of IP, including licensing, assignments, royalties, and negative covenants, involve inter se obligations and are arbitrable.

Arguments based on sovereign authority and exclusive statutory jurisdiction have also been diluted. While IP rights are statutory monopolies, Vidya Drolia (supra) clarifies that their contractual exploitation remains a private law matter. Further, the mere conferment of jurisdiction on Civil Courts under provisions such as Section 62 of the Copyright Act, 1957, and Section 134 of the Trademarks Act, 1999, does not exclude arbitration unless the statute creates non-waivable public rights or vests exclusive adjudicatory power in a specific forum. The post-IPAB regime reinforces this position, limiting non-arbitrability to disputes with erga omnes or public law consequences.

Arbitration offers clear advantages over litigation in India's overwhelmed judicial system for IP disputes. It helps reduce procedural delays, such as lengthy injunction battles. Arbitration provides quick, customised, and private resolutions, especially for cross-border issues involving trademarks, patents, or copyrights.

The main benefits are that arbitration provides a single neutral venue and that its awards can be enforced under the New York Convention. This helps avoid litigation in multiple jurisdictions. It also protects trade secrets and proprietary information, which is crucial in IP disputes. Arbitration's flexible timelines lead to faster outcomes than Court proceedings, and parties can choose specialists in areas such as patent law or software copyright law. This ensures informed decisions on technical matters. Worldwide, WIPO reports strong growth in IP ADR filings, showing increasing acceptance for licensing and technology transfers. In India, this trend aligns with the pro-arbitration policy of the Arbitration and Conciliation Act, 1996 and with institutions such as The New Delhi International Arbitration Centre (NDIAC).

However, certain IP disputes remain non-arbitrable due to public policy, in rem character, and sovereign functions, failing Vidya Drolia's (Supra) four-fold test.

As mentioned, actions in rem that affect public registers, such as validity, subsistence, registration, rectification, or cancellation, are excluded from Arbitration. Examples include patent revocation or trademark rectification under the relevant statutory provisions. Tribunals cannot alter public registers or issue erga omnes declarations, as only State authorities (now High Courts post-2021 IPAB dissolution) exercise sovereign powers.

Pure infringement and passing-off actions without a contractual basis are non-arbitrable. Standalone claims under Section 62 (Copyright Act) or Section 135 (Trademarks Act) seek enforcement worldwide, with remedies such as injunctions having erga omnes effect. Though incidental infringement from contractual breaches is arbitrable.

Criminal IP proceedings are absolutely barred from being referred to arbitration, as offences such as trademark counterfeiting (Section 103, Trademarks Act, 1999) or copyright piracy (Section 63, Copyright Act, 1957) attract penal sanctions and fall within the exclusive criminal Court jurisdiction.

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, where they stem from inter se contractual obligations and do not involve challenges to the validity or subsistence of the mark. Applying Vidya Drolia (Supra), the Hon’ble Court treated the dispute as in personam and reaffirmed that allegations of fraud or incidental involvement of statutory IP rights do not bar reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.

In Anand Khosla v. Punam Kumari Singh 2025:BHC-OS:26726, the Bombay High Court upheld an arbitral tribunal’s refusal to decide copyright ownership in software developed under an LLP Agreement, holding such ownership to be a right in rem and hence non-arbitrable. While contractual disputes between partners were arbitrable, the determination of statutory IP ownership was excluded, reflecting a restrictive approach and permitting bifurcation of causes of action.

The law now distinguishes between contractual IP disputes which are arbitrable, and matters of statutory validity, erga omnes enforcement, or criminality, which are not. K Mangayarkarasi (supra) affirms this pro-arbitration stance, while Anand Khosla (supra) reflects a restrictive in rem approach that permits bifurcation and creates doctrinal uncertainty.

Overall, Indian jurisprudence is moving towards an arbitration-friendly regime for private, commercial IP disputes, with arbitration increasingly recognised as a suitable forum for technology-driven and innovation-centric conflicts.

About the authors: Zeeshan A Khan is a Partner and Keshav Yadav is an Associate at Shardul Amarchand Mangaldas & Co.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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