This article dwells into the importance of Alternative Dispute Resolution Mechanisms in the field of Intellectual Property disputes thereby enabling the right holders to enforce their rights in a more efficient, cheap, less time consuming manner.
Intellectual property is an intangible creation of the human intellect. In the present era, individuals want their ideas, innovations, discoveries and processes to be valued. Intellectual Property would encourage creation of wide variety of goods only if an individual’s intellect is protected. The law only protects the intellectual rights of an individual for a limited period of time. During that period if a third party infringes the intellectual rights of the right holder, than the right holder has the right to enforce such rights against the infringer by taking recourse to a legal action. Resolution of IP disputes depend upon the nature of the IP right. In most of the Intellectual Property dispute, the plaintiff seeks for an interim injunction, which ultimately decides the outcome of the dispute. More often the infringement suit may last longer than the period for which the protection is actually granted by law. Thus, an individual fails to enjoy his intellectual property rights against the third person in a manner that he so desires. Therefore, there arises a need to combat such failures through other alternative dispute resolution mechanisms such as arbitration, mediation, conciliation, Early Neutral Evaluation, etc.
ALTERNATIVE DISPUTE RESOLUTION MECHANISM
ADR mechanism is set of approaches and techniques which aims to resolve the disputes in a non-confrontational manner. This mechanism aims to shift from the more traditional method of litigation and provide various alternatives. Arbitration, mediation, settlement and conciliation are some of the alternatives to court based litigation. ADR provides an expeditious determination of a dispute. The advantages of alternate dispute resolution are not only limited to speedy remedy, but also, to the flexibility, cost effectiveness, confidentiality and business oriented results. This method of resolving disputes is more party-centric as the parties can appoint their own adjudicator in order to ensure neutrality. ADR mechanism stresses on minimal court intervention and this in particular reduces the burden of the Judiciary.
INTELLECTUAL PROPERTY RIGHTS
Intellectual property rights are natural rights given to persons over the creations of their minds. It usually gives the creator an exclusive right over the use of his/her creation for a certain period of time. The period of protection accorded to the right depends on the nature of the mark that is affixed to such right. For instance, a patent right is protected up to a period of 20 years and a copyright protection lasts for at least the life of the author plus 50 years. In India, different intellectual property rights are recognized and protected under different legislations such as the Copyrights Act, 19571 (amended in 2002), the Designs Act, 20002, the Trademarks Act, 19993, and the Patent Act, 1970 (amended in 2005) (Registration and Protection) Act, 1999 Farmers’ Rights Act, 2001.
NEED TO ADOPT ADR MECHANISM IN IPR MATTERS
The alternative dispute resolution mechanisms provide a shift from the conventional method of litigation process. Today Judiciary is overburdened with the various cases. In particular there are excessive delays whereby the parties have to wait for long for enforcing their rights. In IP matters, delays can play a very negative role because of the fact that the IP rights are only granted for a limited period of time. And quite often the IP matters go on for years even after the protection so granted by law is absolved. The following points render why the traditional method of litigation in IP matters is baneful for the right holders which calls for a quick shift to the alternatives:
- Excessive Delays frustrates the need for immediate relief as the offences in IP dispute are of continuing nature which demand quick action.
- IP matters require expert knowledge. Thus it calls for special adjudicating officers in IP matters.
- Hiring of various scientific and technical experts is expensive.
- Traditional method is not flexible.
- Appeals in the normal court proceeding is also frustrating and time consuming.
- There is a threat to confidential information.
JUDICIAL PERSPECTIVE OF IPR MATTERS
The judiciary at times has acknowledged the shortcomings of resolving the disputes in a timelier manner. The judiciary is also of the view that the litigation in matters related to IPR goes on for years and years and the result is that the suit is hardly decided finally. In Shree Vardhman Rice and Gen M/ills vs. Amar Singh Chawalwala the Hon’ble Supreme Court was of the view that in the matters relating to trademark, copyright and patents the hearing shall proceed on a day to day basis and the final judgment should be given normally within four months from the date of the filing of the suit. It also recognized that the proviso to Order XVII Rule 1(2) C.P.C. should be strictly complied with by all the Courts which call for day to day hearings unless in exceptional cases the adjournment of the hearing beyond the following day is necessary.
The Hon’ble Supreme Court in Bajaj Auto Limited vs. TVS Motor Company Limited while referring to its earlier judgment in Special Leave Petition (C) No. 21594 of 2009 held that, “experience has shown that in our country, suits relating to the matters of patents, trademarks and copyrights are pending for years and years and litigation is mainly fought between the parties about the temporary injunction. This is a very unsatisfactory state of affairs, and hence we had passed the above quoted order in the above-mentioned case to serve the ends of justice. We direct that the directions in the aforesaid order be carried out by all courts and tribunals in this country punctually and faithfully.”
The Hon’ble Delhi High Court in Bawa Masala Co. vs. Bawa Masala Co. Pvt. Ltd. and Ors. stressed on Mediation as an alternative mechanism. It held, “ENE is, thus, a different form of alternative dispute resolution and I see no reason why this process cannot be resorted to towards the object of negotiated settlement in pursuance to Section 89 of the Code of Civil Procedure, 1908 specially when the parties volunteer for the same. The provisions of the said section inter alias provide for Alternative Dispute Resolution Mechanism, which inter alias includes mediation. ENE, also broadly follows the same process as a mediation, though the concept is not a negotiated settlement, but a neutral assessment.”
Thus, the Judiciary has also paved a way to resolve the dispute through alternative dispute resolution mechanism mainly mediation, in the matters of copyright, patents and trademarks. This in their view will lead to timely remedy, would be cost effective and most importantly, it would satisfy both the disputed parties.
SECTION 89 C.P.C: A TOOL TOWARDS ACHIEVEMENT
Delay being the major cause of concern for the Judiciary and its stake holders, is said to have been overcome by ADR. ADR was formulated with a purpose of reducing the burden of the burdened system and render expeditious justice. Legislature has also contributed towards the need of resorting to the ADR mechanisms. In this context it is important to refer to the Malimath Committee Report and the Law commission of India Report which focused on reducing the influx of commercial litigation in the courts of civil nature.
It was suggested by Law Commission of India that the Court may require attendance of any party to the suit or proceedings to appear in person with a view to arriving at an amicable settlement of dispute between the parties and make an attempt to settle the dispute between the parties amicably. Malimath Committee recommended making it obligatory for the court to refer the dispute, after issues are framed, for settlement either by way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat. And it was only when the parties failed to get their disputes settled through any of the alternate dispute resolution method that the suit could proceed further.11 Section 89 had been introduced for the first time for settlement of disputes outside the Court, with the only objective of providing speedy justice.
In Salem Advocate Bar Association, TN vs. Union of India the constitutional validity of section 89 C.P.C was challenged before the Hon’ble Supreme Court on the grounds of practical impossibilities. The SC upheld the constitutional validity of the provision because the object behind the provision was laudable and sound. But to combat the defects of the provision, the SC constituted a committee to frame suitable rules for smooth implementation of section 89 of CPC.
The Hon’ble SC in Afcons Infrastructure Ltd. vs Cherian Varkey Construction Co. Pvt. Ltd. had laid down a more clearer picture of section 89 C.P.C in the following words:
“If Section 89 is to be read and required to be implemented in its literal sense, it will be a trial judge’s nightmare. It puts the cart before the horse and lays down an impractical, if not impossible, procedure in sub-section (1). It has mixed up the definitions in sub-section 92). In spite of these defects, the object behind Section 89 is laudable and sound. Resort to ADR processes in necessary to give speedy and effective relief to the litigants and to reduce the pendency in and burden upon the courts. As ADR processes were not being resorted to with the desired frequency, the Parliament thought it fit to introduce Section 89 and Rules 1A to 1C in Order X in the Code, to ensure that ADR processes were preferred to commencement of trial in suits. In view of its laudable object, the validity of Section 89, with all its imperfections, was upheld in Salem Advocate Bar Association case reported in (2003) 1 SCC 49 – for short, Salem Bar (1) but referred to a Committee, as it was hoped that Section 89 could be implemented by ironing the creases.”
ADVANTAGES OF ALTERNATIVE MECHANISMS IN IPR MATTERS
The ADR mechanism, which aims at quick, efficacious, neutral and party-centric resolution, can be fruitful in the Intellectual property right suits. The advantages of ADR mechanism in IP matters are as follows:
Simple/ Flexible: The traditional approach of litigation is not only time consuming but also very complex for the people to understand. It is because, they are not well versed with the long procedures that the courts follow. And on the other hand the ADR mechanism is simple as the parties have procedural flexibility. The parties can decide their own venue according to their comfort. This also reduces the cost of litigation for the parties and the parties can reach out for an amicable resolution without going into the complex procedures of filing various documents in the courts.
Expert Knowledge: The Intellectual Property rights dwells into complex issues which require scientific and technical expertise. The judges cannot be expected to be expert in each and every sphere. And on the other hand ADR provides the parties to choose an expert who with his knowledge and experience would adjudicate the issues between the parties. This not only saves the precious time of the judiciary but also gives satisfaction to the parties. The expert knowledge helps the parties to negotiate in a more effective manner.
Diverse Solution: Litigation is a process where the courts determine the rights of one party over the other, and the outcome is weighed heavily on the side of the party whose rights are determined. The other party still is not satisfied against whom those rights are to be enforced. The ADR mechanism helps the parties to come out with diverse solution such as both the parties can agree to use the IP rights upon a consent agreement whereby the actual right holder gets some percentage of the profit or maybe they can agree to exercise their rights in different jurisdictions. This helps both the parties to reach a level of understanding such that it is a win-win situation for both. Thus, the possibilities of diverse solution are much higher in the ADR mechanisms than in the traditional system of litigation where only one party is satisfied.
Less Time Consuming: Litigation, as we all know is very time consuming. The courts especially in the IP matters have to seek expert knowledge and they also have to understand the entire concepts, no matter how technical they are. Seeking expert advice not only increases the expenses but also consumes a lot of court’s precious time. On the other hand the parties in the ADR can choose their own expert who already possesses the expertise. This helps the parties to save their time by going to the courts and wait until the finality of the matters. And if the parties resort to ADR as a mechanism to resolve their issue, then the entire proceedings would be governed by the Arbitration and Conciliation Act, 1996, which ensure effective remedies within a stipulated time period.
Finality: In the IP matters most of the cases are of interim injunction. After the interim injunction is granted, the party against whom such injunction is granted files an appeal to the higher forum. In case where the higher forum reverses the decision of the lower court, the party in whose favor the lower court had granted injunction would prefer an appeal to the higher court. And the main matter is still at the lower court while the parties are endlessly fighting for the intermin injunction. Therefore, before finality can be arrived at the valuable time of the courts and the parties is consumed. On the other hand, ADR seeks to ensure minimal court intervention. Thus, the decisions rendered by the adjudicator in ADR mechanisms are final and there is only a limited scope of appeal. If the appeals are filed, the courts would not go into the merits of the case but will only look at the mere technicalities as mentioned in section 37 of the Arbitration and Conciliation Act, 1996.
Confidentiality: As per section 75 of the Arbitration and Conciliation Act, 1996, the confidentiality can only be maintained in the conciliation process. However, the amendment bill of 2019 seeks to insert confidentiality as a clause in Arbitration proceedings by virtue of section 42 A of the Arbitration and Conciliation (Amendment) Bill, 2019. Confidentiality can help the parties from sharing important commercial information and ensure party autonomy in the ADR mechanisms. Importantly, confidentiality of the process has the capacity to reach the public policy as referred to in section 34 of the Act and is very helpful to maintain the party autonomy. The only exception to the confidentiality is the discloser of the award for its enforcement.
INTERNATIONAL PERSPECTIVE OF ADR MECHANISM IN COMERCIAL MATTERS
ADR is gaining much importance in the international disputes or the cross-border commercial disputes. It here becomes important to highlight the role of the WIPO (World Intellectual Property Organization). WIPO is an international forum, which was established in 1967, for the IP services, policy and information. It is a non- profit organization of the United Nations. At present, WIPO has 193 member countries. The aim and objective of the WIPO is to lead to the development of the international IP system that enables creativity and befits to all.
In recent times cross border transactions relating intellectual property have increased a lot leading to the economic development of the countries. The cross-border transactions carry the risk of dispute that may arise between the countries. WIPO helps the countries to provide with time and cost-effective resolution of the IP disputes through ADR. The WIPO facilitates quick resolutions procedure under the WIPO Mediation, Expedited Arbitration, Arbitration and Expert Determination Rules (WIPO Rules). It advices the private parties and the companies involved in cross- border IP dispute to settle the same outside the courts. Moreover, the disputes so resolved by the WIPO Arbitration and Mediation Centre attain finality and can easily be enforced in their respective jurisdictions through the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958 which is known as the New York Convention. And the domestic courts need not go into the merits of the case. The parties just have to fulfill certain pre-requisites in order to make the awards make enforceable.
It is a fact that the quality of the awards depend upon the quality of the adjudicator (mediator, arbitrator or expert). WIPO has 1500 qualified experts who are neutral from across 70 different countries. It also provides regular training to the experts. It organizes conferences and workshops for the companies across the globe to provide knowledge and benefits of the outside court settlement.
CONCLUSION
In the recent past, there has been an increased use of arbitration in India. This has reduced the burden on the Judiciary. The only requirement of adopting Arbitration as a mode of dispute resolution mechanism is that there should be an arbitration agreement between the parties. This requirement eases to adopt arbitration for settling the disputes. In cases, especially in IPR related matters, arbitration is merely a impossibility as the right holder and the infringer cannot in advance apprehend a situation that may arise. And IP rights are against the general public and not the individual. In such cases, where the matters reach the courts, the courts can use section 89 of the Civil Procedure Code to suggest the parties to opt for mediation as a dispute resolution mechanism. This increases the chance of using Mediation as a most popular method to settle the disputes in IP matters.
JURISTIC LEGAL 