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June 9, 2020

All Trademark And Copyright Disputes Are Not Non-Arbitrable

Author: Siddharth Varshney

In the matter of M/S Sagar Ratna Restaurants Pvt. Ltd. v. M/S D S Foods and Ors. [C.S. Comm No. 40 of 2020], the Saket District Court, vide its order dated February 27, 2020, held that all trademark and copyright disputes cannot be non-arbitrable and courts must determine arbitrability on a case-to-case basis.

The instant dispute arose over the Plaintiff’s termination of its franchise agreement with the Defendants, whereby it had licensed its trademark SAGAR RATNA to the Defendants. The Plaintiff claimed that it had rightfully terminated the agreement and had communicated the termination to the Defendants via e-mail. The Plaintiff further submitted that the Defendants continued to use its trademarks even after the termination. Accordingly, the Plaintiff had brought the instant suit seeking a permanent injunction restraining the Defendants from using the SAGAR RATNA marks.

The Defendants submitted that the Plaintiff illegally terminated the agreement and such termination was never communicated to the Defendants. The Defendants further contended that the instant suit was not maintainable as the dispute was to be resolved through arbitration as per the arbitration clause in the franchise agreement. The Plaintiff countered that the nature of the dispute was such that it could not be referred to or settled through arbitration. Therefore, the issue before the Court was whether such trademark disputes are arbitrable.

The Court analysed the jurisprudence and noted that judicial intervention should be very limited and minimal in cases where there is a clear and unambiguous arbitration clause. The Court observed that in the instant case, there is a specific arbitration clause in the franchise agreement and held that the dispute is arbitrable as the relief sought is not an ‘action in rem’ exercisable against the world at large but is an ‘action in personam’ solely against the Defendants. Dismissing the suit and referring the parties to arbitration, the Court noted that “…it is altogether too broad a proposition to accept that no action under the Trade Marks Act or the Copyright Act can ever be referred to arbitration…in the present case, no question arises of those disputes being non arbitrable…plaintiff is seeking a specific particularized relief against a particular defined party i.e. defendants and not against the world at large”.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

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