IP Arbitration in India: Can IP Disputes Be Arbitrated?

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⚖️ Did You Know? India’s IP-intensive industries contribute over 36% of GDP and employ hundreds of millions. Yet most IP disputes in India take 5 to 10 years to resolve in courts. Arbitration can resolve the same dispute in 6 to 18 months, in complete confidentiality, before a specialist arbitrator of the parties’ own choosing. The question is not whether to arbitrate IP disputes, but which IP disputes can be arbitrated.

Introduction

Intellectual property disputes in India have historically been routed to the courts: the Trade Marks Registry, the Copyright Office, the Patent Office, the Intellectual Property Appellate Board (now dissolved, with jurisdiction transferred to High Courts), and specialised IP benches of High Courts. This framework was designed for a world where IP rights were primarily government-granted monopolies, and disputes about them were public law matters requiring judicial determination.

That world has changed. India’s IP landscape in 2026 is dominated by commercial transactions: technology licensing agreements, franchise arrangements, brand co-existence agreements, film and music distribution contracts, software development agreements, joint ventures with IP components, and e-commerce seller agreements. Most IP disputes that Indian businesses actually face are not disputes about whether a patent is valid or a trademark should be registered, but disputes about whether a licensee paid royalties, whether a franchisee used the mark beyond its authorised scope, or whether a party breached a technology transfer agreement.

With the increasing commercialisation of intellectual property in India, disputes concerning trademarks, copyrights, patents and related rights frequently arise from complex contractual arrangements such as licences, franchises, coexistence agreements, joint ventures and technology transfers. Traditionally, IP disputes were perceived as unsuitable for arbitration because intellectual property rights are statutory monopolies, often characterised as rights in rem. However, over the past decade, Indian courts have adopted a more nuanced and arbitration-friendly approach, recognising that not all IP disputes are alike, and that many are in fact arbitrable when they concern private, inter-party obligations.

This guide explains the current Indian legal framework on IP arbitrability: what the law says, what the Supreme Court has decided, which specific IP disputes can and cannot be arbitrated, the landmark cases that shaped the current position, the 2025 Supreme Court developments, and the practical steps for businesses and IP owners who want to use arbitration to resolve IP disputes efficiently.

The Foundational Question: What Makes a Dispute Arbitrable?

Before examining IP disputes specifically, it is essential to understand the general framework for arbitrability under Indian law.

The arbitrability of IP disputes in India is grounded in the distinction between rights in rem and rights in personam, articulated in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532.

Rights in rem are rights that operate against the entire world, not just against specific parties. A registered trademark, patent, or copyright gives its owner rights against everyone who might infringe it. These rights are granted by the state, affect third parties who are not part of any private agreement, and have erga omnes effect (binding on all).

Rights in personam are rights that arise from a private agreement between specific parties and bind only those parties. A licensing agreement, a franchise contract, a royalty payment obligation, and a non-compete clause in an IP assignment agreement are all rights in personam.

The Supreme Court in Booz Allen 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 single distinction, refined over a decade of case law, is the master key to understanding IP arbitrability in India.

The Vidya Drolia Four-Fold Test: The Current Standard

The next major development came in the Supreme Court’s constitution bench decision in Vidya Drolia v. Durga Trading Corporation (2020).

In Vidya Drolia v. Durga Trading Corporation, the Supreme 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 judgment clarified that arbitrability depends on the nature of the relief sought and not merely the subject matter of the dispute.

This is the crucial refinement. The fact that a dispute involves a trademark, patent, or copyright does not automatically make it non-arbitrable. What matters is:

• What relief is being sought?
• Does the claim affect only the parties to the agreement, or does it affect the public or third parties?
• Is the dispute about the existence or validity of the IP right (which is a state function), or about the contractual obligations between the parties (which is a private matter)?

In contrast, disputes that regulate how parties may exercise or restrict IP rights between themselves are treated as private and arbitrable. Indian courts have recognised that several categories of IP disputes are arbitrable, particularly when they arise from contracts and concern rights in personam.

What IP Disputes CAN Be Arbitrated in India

1. IP Licensing Disputes

Licensing agreements are the most common source of arbitrable IP disputes. When two parties have a licence agreement covering a trademark, patent, copyright, or design, disputes arising from that agreement are contractual disputes between the parties, not disputes about the IP right itself.

Arbitrable licensing disputes include:

• Non-payment or underpayment of royalties
• Breach of scope of licence (licensee using IP beyond permitted use)
• Breach of quality control provisions
• Dispute over minimum guaranteed royalty payments
• Breach of exclusivity provisions
• Dispute over sub-licensing rights

In Indian Performing Right Society Ltd. v. Entertainment Network (India) Ltd., the issue arose whether copyright infringement problems under a licence agreement were subject to arbitration. Under the terms of their agreement, IPRS gave ENIL the right to air music by its members in exchange for royalties. Disputes arose between the parties over royalties, and an arbitral award was the outcome. This case established that infringement disputes arising under a licence agreement are arbitrable because they concern the contractual obligations between the parties, not the underlying copyright right itself.

2. IP Assignment and Transfer Disputes

When IP rights are assigned (fully transferred) from one party to another, and a dispute arises about the assignment transaction itself, that dispute is arbitrable.

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. The 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.

Arbitrable assignment disputes include:

• Non-payment of consideration for assignment
• Breach of representations and warranties in an assignment agreement
• Dispute over scope of rights assigned
• Dispute arising from a business sale where IP was part of the transferred assets

3. Technology Transfer Agreement Disputes

Technology transfer and know-how licensing agreements, common in manufacturing, pharmaceutical, and software industries, generate contractual disputes that are consistently held to be arbitrable. These include:

• Breach of technical assistance obligations
• Confidentiality breaches
• Non-compete violations
• Payment disputes for technology access fees

4. Trademark Co-existence and Family Settlement Disputes

The Delhi High Court in Hero Electric Vehicles Pvt. Ltd. v. Lectro E-Mobility Pvt. Ltd. was confronted with the issue of arbitrability of a trademark infringement and passing off dispute between two family groups in terms of a Family Settlement Agreement and Trademark and Name Agreement. The court held that IP disputes involving rights assigned in agreements are rights in personam and thus arbitrable. This principle was upheld in Golden Tobacco Limited v. Golden Tobie Private Limited and Vijay Kumar Munjal v. Pawan Kumar Munjal.

This line of cases is particularly important for Indian family businesses where IP rights have been informally or formally divided between family members through settlement agreements. Disputes about who can use which trademark or trade name, governed by a family settlement, are contractual and arbitrable.

5. Franchise Agreement Disputes

Franchise agreements in India routinely contain arbitration clauses covering disputes about:

• Unauthorised use of the franchisor’s trademark or brand outside the franchise territory
• Breach of quality standards affecting the licensed brand
• Royalty and fee disputes under the franchise agreement
• Termination of the franchise and post-termination use of the brand

These are all contractual disputes between franchisor and franchisee, not disputes about the validity of the underlying trademark. They are arbitrable.

6. Copyright Royalty and Distribution Disputes

Copyright licensing disputes in the entertainment industry, particularly disputes between content creators, producers, distributors, and broadcasters over royalties, distribution rights, and streaming rights, are commonly resolved through arbitration.

7. Software and IT Agreement IP Disputes

Software development agreements, source code escrow arrangements, and SaaS agreements commonly contain arbitration clauses. Disputes about whether developed software infringes the client’s or developer’s IP, whether deliverables meet the contracted specifications, or whether IP ownership provisions in the agreement were complied with, are generally arbitrable when they arise from the contractual relationship.

What IP Disputes CANNOT Be Arbitrated in India

1. Validity and Cancellation of IP Rights

The validity of a patent, the registration of a trademark, or the subsistence of a copyright are determined by statute and by state authorities. A challenge to the validity of a patent (Section 64, Patents Act) is filed before the High Court or IPAB (now High Court). A trademark cancellation petition (Section 57, Trade Marks Act) is filed before the Trade Marks Registry or High Court. These proceedings affect the rights of all potential competitors and the public, not just the parties to a private agreement, and are non-arbitrable.

In Anand Khosla v. Punam Kumari Singh (2025), 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.

2. Registration Proceedings

Applications for trademark registration, patent grant, copyright registration, and design registration are all administrative proceedings before statutory authorities. These are not disputes between parties and cannot be referred to arbitration.

3. Criminal IP Proceedings

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.

Counterfeiting, piracy, and criminal infringement are criminal offences prosecuted by the state. No arbitration clause can redirect a criminal complaint to an arbitral tribunal.

4. Standalone Infringement Actions Against Third Parties

When IP infringement is committed by a person who has no contractual relationship with the IP owner, the infringement action is a rights in rem proceeding. A trademark owner suing a counterfeiter who has never signed any agreement with the owner cannot refer the infringement action to arbitration, because there is no arbitration agreement and the dispute is not in personam.

Merely labelling a claim as infringement does not oust arbitration if the controversy concerns whether a party’s use is permitted under an agreement. But where there is no contract between the parties, the infringement action is non-arbitrable.

5. Disputes Where Defendant Challenges IP Validity

A critical nuance: even in a licensing dispute (which would otherwise be arbitrable), if the defendant challenges the validity of the underlying IP right as a defence, the validity issue may not be arbitrable. The arbitral tribunal can decide the contractual dispute but cannot conclusively determine IP validity (which remains with the statutory authority).

If in an infringement suit the defendant contends the validity of the trademark, then such defendant is questioning a sovereign action. The arbitral tribunal cannot conclusively determine IP validity, which binds only the state authority.

The In Rem vs In Personam Matrix for IP Disputes

This table summarises the current Indian position on which IP disputes fall on which side of the line:

Key Cases: The Judicial Journey

Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011)

The Supreme Court established the foundational rem vs personam distinction. Disputes concerning rights in rem are non-arbitrable; disputes in personam are arbitrable. This decision established the architecture for all subsequent IP arbitrability analysis.

Eros International Media Ltd. v. Telemax Links India Pvt. Ltd. (2016, Bombay High Court)

The Bombay High Court held that a copyright infringement dispute arising from a licensing agreement is a dispute in personam between the contracting parties and is arbitrable. The court rejected the argument that Section 62 of the Copyright Act (which gives jurisdiction to a District Court for infringement suits) bars arbitration. Section 62 only prescribes the court hierarchy for suits; it does not expressly or impliedly bar arbitration.

Vidya Drolia v. Durga Trading Corporation (2020, Supreme Court)

The constitution bench refined the Booz Allen framework with the four-fold non-arbitrability test and clarified that arbitrability must be assessed on a case-by-case basis. The judgment clarified that arbitrability depends on the nature of the relief sought and not merely the subject matter of the dispute. However, the court made observations about patent and trademark grants having erga omnes effect that temporarily created uncertainty about whether all IP disputes were non-arbitrable.

Hero Electric Vehicles Pvt. Ltd. v. Lectro E-Mobility Pvt. Ltd. (2021, Delhi High Court)

The Delhi High Court resolved the post-Vidya Drolia uncertainty. It held that a trademark infringement and passing off dispute arising under a Family Settlement Agreement and Trademark Agreement between family members is arbitrable, because it concerns inter-party contractual rights, not the validity of the trademark itself. This case established the clear principle that contract-based IP disputes are arbitrable even when they involve trademark infringement claims.

Golden Tobacco Limited v. Golden Tobie Private Limited (2022, Delhi High Court)

Confirmed and extended the Hero Electric principle. IP disputes between parties with a contractual relationship concerning rights assigned under agreement are in personam and arbitrable.

K Mangayarkarasi v. NJ Sundaresan (2025, Supreme Court)

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. 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.

This 2025 decision is the most recent Supreme Court clarification and represents the settled position: contractual IP disputes are arbitrable; validity and registration challenges are not.

Anand Khosla v. Punam Kumari Singh (2025, Bombay High Court)

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. The law now distinguishes between contractual IP disputes which are arbitrable, and matters of statutory validity, erga omnes enforcement, or criminality, which are not.

This case illustrates the important principle of bifurcation: within a single agreement between parties, some disputes may be arbitrable (contractual obligations) while others may not (ownership of IP as a statutory right). An arbitral tribunal can decide the former but must leave the latter to the courts.

Benefits of IP Arbitration Over Court Litigation

Confidentiality

IP disputes frequently involve sensitive information: trade secrets, proprietary technology, unreleased products, licensing terms, and commercially sensitive financial data. Court proceedings in India are public. Arbitration proceedings are confidential by default.

For a technology company disputing a software licensing agreement, for a pharmaceutical company in a patent licensing dispute, or for a brand owner resolving a franchise termination, confidentiality protects commercially sensitive information from competitors and the market.

Speed

A commercial dispute filed in a civil court today can take 7 to 10 years to reach a final judgment. The same dispute referred to arbitration can be resolved in 12 to 18 months.

For IP disputes where time is critical (infringing products are in the market, royalty payments are accumulating, licensing relationships are deteriorating), the speed advantage of arbitration is enormous.

Technical Expertise

IP disputes often require specialist knowledge: patent claim interpretation, software architecture assessment, brand valuation, royalty rate benchmarking. Parties in arbitration can choose an arbitrator with the specific technical and IP law expertise their dispute requires. Courts are generalist; arbitral tribunals can be specialist.

Finality

Arbitral awards in India are final and subject to challenge only on very limited grounds (Section 34, Arbitration and Conciliation Act, 1996). The grounds for challenge do not include the merits of the decision. IP court judgments can be appealed through multiple levels, each potentially adding years to the resolution timeline.

International Enforceability

India is a signatory to the New York Convention. An arbitral award made in India in an IP dispute is enforceable in over 170 countries under the Convention. This is particularly valuable for international IP licensing disputes where the counterparty or its assets are outside India.

How to Include an IP Arbitration Clause in Your Agreements

The most effective way to ensure IP disputes are arbitrated is to include a carefully drafted arbitration clause in every IP agreement you sign. A poorly drafted clause can create uncertainty about its scope, leading to satellite litigation about whether a particular dispute falls within the clause.

Sample IP Arbitration Clause:

“Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, including any dispute relating to the use, scope, royalties, or breach of any intellectual property licence or assignment granted hereunder, shall be resolved by arbitration in accordance with the rules of [Name of Arbitral Institution, e.g., Delhi International Arbitration Centre / IIAM] in force at the time of the dispute. The seat of arbitration shall be [City, India]. The arbitral tribunal shall consist of [one / three] arbitrator(s). The language of arbitration shall be English. The award shall be final and binding on the parties. Nothing in this clause shall prevent any party from seeking urgent interim relief from a court of competent jurisdiction.”

Key elements to include:

The arbitration clause should clearly specify: what disputes are covered (use “arising out of or relating to” for maximum scope), the arbitral institution and applicable rules, the seat of arbitration (which determines the supervisory court and the law governing the arbitration), the number of arbitrators (one for lower-value disputes, three for high-value complex disputes), and the language.

The carve-out for urgent interim relief preserves the right to seek an injunction from a court when a party needs immediate relief to prevent ongoing infringement while the arbitration proceeds.

Practical Scenarios: IP Arbitration in Action

Scenario 1: Franchise Trademark Dispute A Mumbai franchisor grants a franchise agreement to a Pune operator for a food chain, including a licence to use the franchisor’s trademark. The Pune operator begins using the trademark for a new product category outside the authorised scope without permission. The franchise agreement contains an IIAM arbitration clause. The franchisor files for arbitration. The arbitral tribunal, comprising an IP lawyer as sole arbitrator, holds that the Pune operator’s use is outside the licence scope and awards the franchisor damages of ₹18 lakh plus injunctive relief in the arbitration award. The entire process takes 8 months.

Scenario 2: Technology Licensing Royalty Dispute A Bengaluru software company licenses its proprietary AI engine to a Delhi-based enterprise under a multi-year agreement with royalty payments. After 2 years, the Delhi company stops paying royalties, claiming the software did not meet the contracted specifications. The agreement contains an arbitration clause with DIAC (Delhi International Arbitration Centre) as the institutional home. The arbitral tribunal, consisting of one arbitrator with IT and IP expertise, reviews the technical specifications and payment history and awards the Bengaluru company ₹72 lakh in unpaid royalties with interest. Total duration: 11 months.

Scenario 3: Family Business Trademark Split Two brothers split a family business under a Family Settlement Agreement that allocates specific trademarks and geographic markets to each. One brother begins operating in the other’s exclusive territory using the allocated mark. Applying K Mangayarkarasi (2025), the dispute is referred to arbitration under the FSA’s arbitration clause. The arbitral tribunal decides the contractual question (was the territory exclusive?) without determining trademark validity. Award issued in 6 months.

Scenario 4: What Cannot Be Arbitrated A Hyderabad FMCG company discovers a small manufacturer in Punjab selling products under a mark deceptively similar to their registered trademark. The Punjab manufacturer has no contractual relationship with the Hyderabad company. There is no arbitration agreement between them. The Hyderabad company must file a trademark infringement suit in the appropriate High Court. This dispute is in rem, there is no contract between the parties, and it cannot be arbitrated.

Institutional Arbitration for IP Disputes in India

Several Indian arbitral institutions handle IP disputes with specialist panels and expedited procedures:

Delhi International Arbitration Centre (DIAC): The flagship arbitration centre of the Delhi High Court. Experienced in commercial and IP disputes. Maintains specialist arbitrator panels.

Mumbai Centre for International Arbitration (MCIA): Handles high-value commercial and IP disputes with international parties. MCIA rules are modelled on international best practice.

Indian Institute of Arbitration and Mediation (IIAM): One of India’s oldest institutional arbitration providers. Has specific rules for IP disputes and a panel of registered IP arbitrators.

WIPO Arbitration and Mediation Centre (International): For cross-border IP disputes, the World Intellectual Property Organization’s arbitration and mediation centre in Geneva (with offices in Singapore) handles international IP licensing and technology transfer disputes under specialist IP arbitration rules. WIPO arbitration is recognised by Indian courts and awards are enforceable in India.

Supreme Court’s 2026 Clarification: Pre-Litigation Mediation Not Mandatory for Continuing IP Infringement

A significant 2026 development specific to IP disputes is worth noting.

The Supreme Court held that pre-litigation mediation is not mandatory in cases involving continuing infringement of intellectual property rights.

Under Section 12A of the Commercial Courts Act, pre-institution mediation is generally required before a commercial suit can be filed. However, the Supreme Court has clarified that where IP infringement is ongoing (a party is actively and continuously infringing your trademark, patent, or copyright), the urgency of the situation exempts the IP owner from the mandatory pre-litigation mediation requirement. The IP owner can go directly to court for an urgent interim injunction without first completing mediation.

This clarification is important for businesses facing ongoing infringement: it confirms that the pre-litigation mediation mandate does not prevent immediate court action to stop active, continuing infringement.

Frequently Asked Questions

Conclusion

The position of Indian law on IP arbitrability in 2026 is clear, settled, and commercially significant: the type of IP right involved does not determine arbitrability; the nature of the dispute and the relief sought do.

The law now distinguishes between contractual IP disputes which are arbitrable, and matters of statutory validity, erga omnes enforcement, or criminality, which are not.

For businesses with IP-intensive operations, the implications are direct. Every IP licensing agreement, franchise agreement, technology transfer contract, software development agreement, and co-existence arrangement should contain a carefully drafted arbitration clause. When a dispute arises under that agreement, arbitration delivers specialist determination, confidentiality, speed, and international enforceability that courts cannot match.

Build the arbitration clause into your IP contracts today. When a dispute arises, assess whether it is contractual or regulatory. If contractual, choose the right institutional arbitration provider, appoint an arbitrator with IP expertise, and resolve your dispute in months rather than years.

Know the line between what can and cannot be arbitrated. Draft your IP agreements accordingly. Protect your IP with the right dispute resolution mechanism.

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Anjali Pandey

Anjali is a Digital Marketing Expert at Quick Startup India  who builds websites that rank and convert. She specializes in SEO-driven web development, helping people find the right legal help online.