Court Upholds Arbitration Clause in Assignment Agreement, Dismissing Plaintiff's Injunction Plea, Emphasizing Arbitration as Appropriate Forum for Copyright Disputes
In a significant judgment delivered on September 1, 2026, the Madras High Court, presided over by Justice K. Kumaresh Babu, has ordered the parties in a copyright infringement dispute involving Eros Technologies Digital FZE and Ayngaran International Media Private Limited to resolve their issues through arbitration. This decision underscores the binding nature of arbitration clauses within assignment agreements concerning intellectual property rights and clarifies the applicability of arbitration in copyright infringement cases.
The dispute arose when Eros Technologies, the plaintiff and copyright assignee, filed a suit seeking an ad interim injunction to restrain the first three defendants, including Ayngaran International and its group companies, from exploiting certain cinematograph films without authorization. Eros Technologies alleged that the defendants, despite having assigned their rights, continued to exploit the works on various social media platforms, causing irreparable harm including loss of revenue and dilution of rights.
The defendants contested the injunction, invoking Clause 18 of the Deed of Assignment dated March 23, 2018, which contained an arbitration agreement. They argued that since the parties had agreed to arbitrate disputes, the Court should refer the matter to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996. The defendants further contended that the plaintiff, being a subsequent assignee through a chain of assignments originating from Ayngaran International, was bound by the arbitration clause. The clause also stipulated that the laws of the United Kingdom govern dispute resolution, emphasizing the international dimension of the agreement.
Eros Technologies challenged the applicability of the arbitration agreement, submitting that the suit was a statutory claim under the Copyright Act, 1957, and thus non-arbitrable. The plaintiff also asserted that the defendants 1 to 3 were not parties to the arbitration agreement and that a multi-party suit could not be fractured by referring some parties to arbitration while others remained before the Court. Additionally, the plaintiff urged that Section 55 of the Copyright Act mandated a civil suit for copyright infringement and that arbitration should not circumvent this statutory remedy.
In its detailed analysis, the Court observed that the plaintiff's rights stemmed from an assignment agreement executed by Ayngaran International Limited on behalf of its group companies, including the defendants. The Court emphasized that the arbitration clause in the assignment agreement binds not only the original parties but also their successors-in-interest, including the plaintiff who obtained rights through successive assignments.
Further, the Court clarified that civil remedies for copyright infringement under Section 55 of the Copyright Act could be pursued through arbitration if the parties so agree. It rejected the plaintiff's contention that the defendants were third parties not covered by the arbitration clause, referencing Section 56 of the Copyright Act, which mandates including the copyright owner in infringement proceedings.
The Court found no prima facie evidence to declare the assignment agreement null, void, or incapable of performance. It reasoned that if the agreement were invalid, the plaintiff would not have a cause of action to sue for infringement, thus reinforcing the agreement's validity.
Consequently, the Court allowed the defendants' application under Section 45 of the Arbitration and Conciliation Act to refer the parties to arbitration and dismissed the plaintiff's application for an injunction. The plaint was ordered to be struck off and returned, with no costs awarded to either party.
This ruling highlights the judiciary's recognition of arbitration as an effective and speedy alternative dispute resolution mechanism in intellectual property disputes, provided that parties have contractually agreed to it. It also clarifies the interplay between statutory civil remedies under the Copyright Act and arbitration agreements, affirming that arbitration does not preclude statutory rights but serves as an alternative forum when consented to.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 45 Parties to a suit involving copyright infringement referred to arbitration when there exists an arbitration clause in the assignment agreement, and no prima facie evidence exists to declare the agreement null, void, inoperative, or incapable of being performed.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Section 45, Copyright Act, 1957 Sections 55, 56
