India: Arbitrability of IP issues

Managing IP is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

India: Arbitrability of IP issues

In a recent judgment of October 2017, a Division Bench of the Madras High Court in Lifestyle Equities CV v QDSeatoman Designs Pvt. Ltd & Ors has held that IP issues could be subject to arbitration. The fundamental point at dispute was whether and to what extent are IP related rights arbitrable given that they tend to have effect in rem.

The case concerned a commercial agreement between the parties, whereby QDSeatoman Designs Pvt Ltd, and Quintessential Designs India Pvt Ltd (collectively referred to as "QDS") were engaged by Lifestyle Equities for certain creative services, relating to apparel and garments. This obviously covered IP. This agreement contained an arbitration clause. Certain disputes arose between the parties, though the judgment is not entirely clear on the exact details and circumstances.

Lifestyle Equities invoked the arbitration clause in the matter whereas QDS opposed the same on the ground that the disputes involve IP issues and thus, non-arbitrable. Instead, QDS wanted the Court to permit the filing of a civil suit.

In its judgment dated October 13 2017, the Court held that the issue boiled down to whether the issues being raised would result in a judgment / award in rem or in personam; the former is not arbitrable, but the latter is. According to the Court, the distinction between a right in rem and a right in personam is very old and well-defined one – a judgment in personam refers to a judgment against a person, whereas a judgment in rem refers to a judgment against a thing, right or status or condition of property. In the context of IP, the Court held that a patent licence issue may be arbitrable, but validity of the underlying patent may not be arbitrable.

On facts, the Division Bench agreed with the opinion of the Learned Single Judge, which was under appeal, that the fundamental dispute between the parties related to who had the better right of usage vis-a-vis the other and that this was clearly an issue in personam.

Even though the Hon'ble Court concluded that the dispute between the parties was arbitrable, the Arbitral Tribunal so constituted nevertheless had the jurisdiction to decide its own competence and thus, the final decision on the issue would have to be that of the Arbitral Tribunal.

R Parthasarathy

Lakshmi Kumaran & Sridharan

B6/10 Safdarjung Enclave

New Delhi 110029, India

Tel: +91 11 41299800

Fax:91 11 41299899

vlakshmi@lakshmisri.com

www.lslaw.in

more from across site and SHARED ros bottom lb

More from across our site

Daniel Tarr explains why returning to his former firm could help him establish his personal brand, and predicts what’s on the horizon for AI litigation
A call to reinstate the European Commission's controversial SEP proposal and a trademark row involving Stanley cups were also among the top talking points
Susman Godfrey and Polsinelli secured victory for power systems manufacturer Vicor at the US International Trade Commission
Longi’s actions against JinkoSolar are the latest in a growing number of patent infringement disputes involving solar technology
Former solo practitioner Merlyne Jean-Louis explains why she moved to the newly formed Pierson Ferdinand, which operates as a virtual firm
With the India IP office headquarters moving from Mumbai to Delhi, forum shoppers and firms in the capital could benefit
David Stone, a highly influential figure at legacy firm Allen & Overy, has joined White & Case in what is a major move early in 2025
While business has been tough, foreign law firms with IP practices that have decided to stay put in China reveal why they are optimistic
Managing IP will host a ceremony in London on April 10 to reveal the winners of the EMEA Awards 2025
The Intellectual Property Judges' Association wrote to the European Commission just days before the proposals were shelved, it can be revealed
Gift this article