Copyright Disputes Can Be Resolved Through Arbitration Despite Remedy Under Copyright Act: Madras High Court

The Madras High Court has ruled that a copyright infringement dispute can be resolved through arbitration when the parties have agreed to that mode of dispute resolution, holding that the civil remedy available under the Copyright Act does not prevent arbitration.

Justice K. Kumaresh Babu ruled,

“It is true that Section 55 provides for a civil remedy in an infringement of a copyright. There can be no doubt that the civil remedy can also be by a process of arbitration, as arbitration is in the form of alternative dispute resolution between the parties, and if agreed between them...”

The ruling came in a dispute over rights in certain cinematograph films claimed by Eros Technologies Digital FZE through a chain of assignments.

The rights originated from an assignment made by Ayngaran International Limited on behalf of its group companies and subsequently passed through successive assignments before reaching Eros.

The March 23, 2018 Deed of Assignment contained Clause 18, an arbitration clause providing for disputes to be resolved through arbitration.

Eros alleged that Ayngaran International Media Private Limited, Ayngaran International Films Private Limited and their Director Kumarasamy Karunamoorthy, had begun exploiting the assigned rights on various social media platforms. According to Eros, this affected the commercial value of the rights and caused continuing loss of revenue and dilution of its rights.

It sought an interim injunction to stop further exploitation of the films, including uploading, streaming, communicating them to the public, distributing and monetising them.

Karunamoorthy then sought to have the dispute referred to arbitration. The application relied on Clause 18 of the March 23, 2018 Deed of Assignment.

Eros opposed the move, arguing that neither it nor Karunamoorthy was a party to the original arbitration agreement. It also contended that its copyright infringement claim could be pursued as a civil action under Section 55 of the Copyright Act, which provides civil remedies for infringement.

Eros further argued that the multi-party dispute could not be split for arbitration because the other parties had not agreed to the arbitration clause.

The Ayngaran companies and Karunamoorthy countered that Eros derived its rights through the same chain of assignments originating from the agreement containing the arbitration clause. As a subsequent assignee, they argued, Eros was bound by that clause.

They also maintained that the availability of a civil remedy for copyright infringement did not rule out arbitration where the parties had agreed to use that mechanism.

Accepting these submissions, the court noted that Eros' rights over the films arose through an assignee in succession from the assignment granted by Ayngaran International Limited on behalf of its group companies.

Rejecting Eros' contention that neither it nor the other contesting parties were bound by the arbitration agreement, the court observed that the contention “cannot hold water.” It noted that the dispute involved alleged copyright infringement by the assignor's group companies under an arrangement containing an arbitration clause.

The court also found no prima facie evidence that the arbitration agreement was null and void, inoperative or incapable of being performed. It observed that if the underlying assignment were null and void, Eros' own claim to the copyrights through the successive assignments would fail.

Likewise, if the agreement were incapable of being performed, Eros' copyright infringement claim itself would lack a cause of action.

Holding that the parties could only be referred to arbitration under Section 45 of the Arbitration and Conciliation Act, the court allowed the application seeking arbitration.

It dismissed Eros' interim injunction plea and directed the Registry to strike off and return the plaint. No costs were imposed.

For Eros Technologies Digital FZE: Advocates Nithyaesh Nataraj, Vaibhav R. Venkatesh.

For Ayngaran International Media Pvt. Ltd., Ayngaran International Films Pvt. Ltd. and Kumarasamy Karunamoorthy: Advocate K. Harishankar.

For Google LLC: Advocate Anand S.