Introduction

 

With the current advancements in technology, AI that is, Artificial Intelligence has gained popularity and the same has witnessed astonishing advancements in recent times. We all are now familiar with several forms of generative AI tools and the emergence of various other generative AI still continues to this day. AI has transformed our lives by entering into various sectors such as education, space, aviation, health, and the entertainment industry including music, art, etc. People thereby nowadays depend a lot on AI to complete the various tasks in their respective fields. It is now believed that AI has the potential to take away people’s jobs in the near future. However, this is still a debatable topic as AI, though a powerful tool, has its limitations to it. As helpful as AI may be for individuals, it has become an issue in the intellectual property world, especially in copyright law. AI-generated works can often be unrecognizable from human-created works, raising problems regarding their authorship and ownership. Under copyright law, the one who creates the work is ultimately the author of the specific work. However, if we take this forward in the world of AI, there would be a dilemma as to who would be the actual author of the AI-generated work thereby, becoming a challenge under the copyright law.

 

AI v. Human Creativity

 

When it comes to music copyright, the ‘author’ is the original creator of the work; for example, in the case of a songwriter, an author is the one who writes the lyrics whereas the ‘owner’ is the one who currently has the rights to the copyrighted work. With the advancements in AI, it can easily write a song and even compose for that matter within a span of a few seconds. Generative AI tools, also known as Large Language Models (LLMs) such as ChatGPT, JukeBox, MusicLM, etc. can produce poems, songs, and music that are hard to distinguish from human-authored work. This therefore creates a problem for the professionals in the music industry as it takes away their jobs and thereby restricts the human intellect to be used efficiently and produce their works.

 

This therefore creates a problem for the professionals in the music industry as it takes away their jobs and thereby restricts the human intellect to be used efficiently and produce their works. This undermines the fundamental purpose of copyright law, which is to foster human creativity by safeguarding their original works of expression. Anyone who understands or knows prompt engineering may easily ask AI to create a song. When asked by ChatGPT to write a song for a person, the AI tool suggested the following verse:

 

  “In the silence of the night, I hear the whisper of the stars, Their melodies so tender, echoing from afar. With every beat of my heart, a rhythm starts to flow, Guiding me through the darkness, where dreams and shadows grow.”

 

 

 

Above para is only a verse from the whole song written by the AI tool. This verse demonstrates that it is now quite easy for a person to get a brand-new song without utilizing any human intellect; all you need is some knowledge of prompt engineering and you are good to go! However, one cannot claim authorship rights over this verse. Sec. 2(d) of the Copyright Act, 1957 defines ‘author’ as a person who causes the work to be made, which includes a human or a legal person but excludes an AI system. Hence, in this case as well, we cannot say that the person who used prompt engineering to generate this song can claim authorship rights over it u/s 2(d) of the Copyright Act, and the same cannot be copyrighted. AI-generated works are therefore unable to receive copyright protection as generative AI is not an ‘author’ in the usual sense.

 

Naruto v. David Slater, famously known as the ‘Monkey Selfie’ case, addressed the question of whether non-humans, such as a monkey or an AI, can claim copyrights to their creation. The prime takeaway from this case was that human innovation, intervention, and participation are sine qua non for copyright protection. In early April 2023, a song called ‘Heart on My Sleeve’ created by an anonymous musician named @ghostwriter went viral on social media platforms. The track allegedly contained vocals by Drake and The Weeknd, however, the @ghostwriter behind ‘Heart on My Sleeve’ claimed in a now-deleted TikTok that they used Generative Artificial Intelligence to imitate the artists’ voices. However, Andres Guadamuz, a professor of intellectual property law at Britain’s University of Sussex believes that the song does not violate copyright as the composition was new and only the sound of the voice was familiar and thus, “you cannot copyright the sound of someone’s voice”.

 

Ownership and authorship of AI-generated works remain a hotly debated topic to this day. There is a conflict between the coder (the person who created the code for the AI), the AI system (that generated the work), and the user (the person who issued the command via prompt engineering) over who should get the right over the work generated. If we take sec. 2(d)(vi) of the Copyright Act, 1957, it expressly mentions that an ‘author’ means “in relation to any literary, dramatic, musical or artistic work is computer-generated, the person who causes the work to be created”. Hence, if an AI develops any content with human participation, ownership of the same would depend on who caused the creation of the work. So, if a human, such as a programmer or an artist, programmed and supervised the AI to generate the work based on their instructions or input, then, that person would be granted authorship rights and would normally own the copyright.

 

Amidst the ongoing debate, India granted copyright protection to AI works, only to withdraw it later. In 2021, Mr. Ankit Sahni, the owner of RAGHAV, an AI-based painting app, submitted two copyright applications for ‘Suryast’, the AI-generated artwork. The first copyright registration application was made in RAGHAV’s name, but it was straight-up rejected by the copyright registry. The other registration application was filed in Mr. Sahni’s name, with RAGHAV acting as a co-author. While the second application was registered, the Copyright Office disagreed and canceled it. The Copyright Office denied the registration due to a lack of human authorship required to support a copyright claim. The Review Board of the US Copyright Office reaffirmed this decision.

 

In India, the present copyright law frameworks lack mechanisms to support inventorship, authorship, and ownership of an AI. It solely protects human-produced works, hence music or songs created by AI without human intervention cannot be copyrighted under the Copyright Act of 1957. In Navigators Logistics Ltd. v. Kashif Qureshi and Ors., the issue was whether a copyright can be claimed for a computer-generated list that they claimed to be a ‘literary work’. The Hon’ble Delhi High Court observed that for a piece or a work to be a literary work, the author must be a natural person and not an artificial one, and moreover, no copyright can be claimed in the absence of usage of any skill, labor, or any human intervention and therefore, the case was dismissed.

 

In another case of Stephen Thaler v. Shira Perlmutter, Register of Copyrights and Director of the United States Copyright Office, et al., the Columbia District Court agreed with the Copyright Office that only human beings qualify as authors under US copyright law, and thereby the submission made by Thaler of an AI-generated work for copyright protection was rejected.

 

 

Conclusion

 

As human civilization advances, the country’s law attempts to keep pace. However, the conflict between AI and copyright remains a hot topic, and the country’s law should also take into account works created by Artificial Intelligence. Rapid breakthroughs and developments in technology and AI provide a huge challenge to copyright laws. The current copyright law focuses on human creativity and intellect, leaving AI-generated art in an ambiguous legal landscape. With advancements in technology and AI, it is high time for lawmakers to look into this issue and provide elaborative and comprehensive guidelines that balance the core concept of copyright law while also aligning with modern societal requirements and advances. While doing so, the employment of the people should not be jeopardized; rather, AI and human creativity should coexist together under the copyright law. Hence, the policymakers should uphold the idea of innovation and creativity, and encourage the citizens to engage their intellect to the fullest extent possible, maximizing their potential while also serving and adapting to the technological advances.

 

Sanjay Sethiya is the Founding Partner at Law Square, Advocates & Solicitors.

Malvika Rajeevan is a BA LLB IPR Hons. student at Alliance University, Benagluru

 

Note: This article was originally published in the Alliance Centre for Intellectual Property Rights (ACIPR) Bulletin.

Insolvency Proceedings at a Glance

The Insolvency and Bankruptcy Code was enacted in 2016 to provide a time-bound and structured resolution mechanism for distressed companies and individuals. The Insolvency and Bankruptcy Code replaced the fragmented and protracted processes that previously governed the insolvency processes. However, despite its many successes, it did not meet the expectations as its implementation has revealed many challenges, including delays, high litigation costs and inefficiencies in resolution processes. According to the latest statement by the minister of state for corporate affairs, there have been 19,770 cases pending before the NCLT as of June 2024. Since such a huge backlog of cases exists, an alternative to litigation will be beneficial. One of the alternative modes which proves to have great potential in resolving disputes relating to insolvency and bankruptcy is mediation.

 

Understanding Mediation as an Alternative Method of Dispute Resolution

Mediation is a voluntary and confidential process in which an impartial third party, the mediator, facilitates communication and negotiation between disputing parties to help them reach a mutually acceptable resolution. Unlike arbitration or litigation, mediation focuses on collaboration rather than adversarial proceedings, making it an effective tool for resolving disputes without resorting to lengthy court battles.

 

Mediation has been successfully employed in various legal and commercial contexts, including family law, labour disputes, and commercial contract disputes. However, its application in insolvency cases, is still evolving and holds immense potential, particularly in complex jurisdictions like India. Mediation has been made a mandatory step in divorce matters wherein the main aim is to enable to parties to arrive at an amicable settlement. Along similar lines, mediation might prove an important tool for enabling the parties under insolvency proceedings to arrive at a settlement and enable for early disposal of the matter.

 

Scope of Mediation Under the Existing Framework of Insolvency Proceedings

The Insolvency and Bankruptcy Code 2016 was enacted to serve as a mechanism for restructuring or liquidating distressed companies to protect the rights of the Creditors of such companies. The enactment has pretty much achieved the objective with which it was introduced. However, the rate of disposal of proceedings under the said act is relatively low. Mediation as an alternative method of dispute resolution can be the key to this. Under the present Insolvency framework, the NCLT appoints a Resolution Professional who takes over the distressed company’s management. Then, the Resolution Professional forms a committee involving all the Creditors of the said company. Then, the Committee of Creditors, along with the Resolution Professional, come up with a plan known as the Resolution Plan wherein they work out the ways in which the Creditors’ debt may be cleared. In this whole process, the say of the original management of the company is extremely limited. Mediation may provide a solution to such situations. With mediation, the management of the distressed company, along with the creditors of the company, can come up with an amicable settlement wherein they could work out ways in which the debts of the creditors could also be cleared without the substantive loss of interest of the company itself. This could reduce the number of cases proceeding to the insolvency stages and subsequently reduce the burden on the National Company Law Tribunal.

 

Several countries have successfully integrated the process of mediation into their insolvency frameworks. In the United States of America, mediation is widely used in bankruptcy cases under Chapter 11 of the Bankruptcy Code. Further, Singapore has actively promoted mediation as a part of its broader dispute resolution strategy. The Singapore International Mediation Centre (SIEC) and the Singapore Mediation Act provides a robust framework for mediation in commercial and insolvency proceedings.

 

Mediation, as an alternative method of dispute resolution, will play a crucial role in making the present insolvency framework more efficient by enabling the resolution of disputes involving multiple creditors and helping to reach an agreement between various stakeholders. This will help to increase the chances of successfully restructuring the businesses and provide for better returns to the creditors. Mediation will particularly help during the “pre-insolvency” stages when a business that is distressed financially but has some chance of surviving can seek informal solutions outside the Court.

 

In both the liquidation and restructuring processes, mediators play a vital role ensuring adherence to procedural norms as well as managing the creditor claims. This results in avoiding an expensive and prolonged that could deplete the assets of the litigants as well as prevent effective rescue methods from being adopted. Mediation also becomes particularly effective in cross border claims, where the creditors who are across diverse jurisdictions across the globe having varying insolvency laws. Conflict in jurisdictions and laws can pose a serious challenge and in such cases Mediation might prove to be an important tool that would help the litigants resolve their disputes without divulging deep into the technicalities and procedures of litigation

 

With a view of integrating mediation under the existing framework of Insolvency and Bankruptcy Code the Insolvency and Bankruptcy Board of India constituted an eight-member committee on 06.03.2024 to examine the scope of use of mediation in respect of processes under the Insolvency and Bankruptcy Code and submit its report. The committee in its report introduced the concept of voluntary mediation as an alternative method of dispute resolution under the framework of Insolvency and Bankruptcy Code. This framework shall be independent and flexible allowing for quick adaptation.  

 

Due to the involvement of public interest and in-rem rights in the IBC process, the committee suggests that the Mediation Act, 2023, should be specifically amended, or a notification should be issued under First Schedule Entry 13 of the Mediation Act, to allow for an exemption. This approach recognizes the nature of insolvency cases and the importance of a customized mediation framework. The committee further suggested that the Central Government and the Insolvency and Bankruptcy Board of India shall be empowered to make the rules and set up the infrastructure and further define the role of the National Company Law Tribunal (NCLT) as the adjudicating body for giving effect the voluntary mediation under the Insolvency and Bankruptcy Code, 2016.

 

 

Conclusion

Mediation can potentially transform India’s insolvency process by reducing delays, lowering costs, and fostering collaboration among stakeholders. By integrating mediation into the IBC framework, India can address the systemic challenges that currently hinder the efficiency of its insolvency regime. Drawing on international best practices and tailoring them to India’s unique legal and cultural context, mediation can become a cornerstone of a more effective and efficient insolvency resolution system. With the proper legislative, institutional, and cultural support, mediation can play a pivotal role in streamlining India’s insolvency process and encouraging and supporting economic development.

 

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.

~ Varun Jain is an Associate at Law Square, Advocates & Solicitors

In the global era of international arbitration, emergency arbitration clauses have bloomed exponentially and have revolutionized the landscape of dispute resolution. These clauses serve as a beacon of hope for the parties embroiled in disputes requiring urgent decisions to safeguard their rights, thus allowing them to seek interim relief before an arbitrator. This article delves into the practical implications of the emergency arbitration clauses, their procedural dynamics and their significance within the Indian legal system.

 

The Concept of Emergency Arbitration: A Complicated Labyrinth
Emergency arbitration refers to a mechanism that enables the parties to request an urgent interim measure from an arbitrator prior to the formation of a full-fledged arbitral tribunal. This process is paramount in situations where an immediate action is necessary to prevent irreparable loss or to prevent the status quo. The emergence of the emergency arbitration clause has been monumental in addressing situations where traditional court interventions are inadequate, thus ensuring that parties to the dispute can secure timely relief in an efficient and confidential manner. 

 

Inception of Emergency Arbitration Clause
In the current fast moving global era, where time is of the essence, arbitration is valued for its speed, but complex commercial cases often dampen this assumption. Certain delays can cause the parties to struggle to enforce awards, henceforth in such dreadful scenario, obtaining urgent interim relief becomes pivotal to protect one’s subject matter in a dispute. The Arbitration and Conciliation Act, 1996 does not explicitly provide for any emergency arbitration clause. Therefore, it can only be invoked if the parties agree to an institutional arbitration proceeding that provides this option. 

 

In 2014, amendments to the Arbitration and Conciliation Act were proposed by the Law Commission of India in their 246th Report. The rise of emergency arbitration was taken into account and the commission suggested that an emergency arbitrator be included in the definition of arbitral tribunal in section 2(1)(d) of the Act, provided that the rules of an arbitral institution allowed for such an appointment. This was similar to the Singaporean approach where an emergency arbitrator was included in the definition of an arbitral tribunal. However, when the Indian government presented the proposed amendments to Parliament in 2015, the recommendation to include emergency arbitrators was not included, despite being in line with the Law Commission’s report. [i]  

 

The concept of emergency arbitration had its landmark foundation in the case Amazon.com NV Investment Holdings LLC vs Future Retail Ltd.  The legal framework of emergency arbitration was largely very murky before the Amazon- Future dispute.  Judgments like Rafes Design v Educomp, saw the Delhi High Court rule that an emergency arbitrator’s order could not be enforced under Section 17 of the Act in a foreign-seated arbitration. This decision of the Delhi High Court diluted the essence of the EA order, leaving parties with no option but to seek recourse under Section 9 of the Act.

 

This was followed by conflicting observations by the Delhi High Court in Ashwani Minda v U-Shin Limited and the Bombay High Court in Plus Holdings v Xeitgeist Entertainment Group, where the courts held that intervention under Section 9(3) of the Act was unnecessary if an emergency arbitrator had already been appointed under the Institutional Rules. Such conflicting judgments created uncertainty shrouding the legal status of emergency arbitration orders in India. [ii]

 

The bleak and murky waters surrounding the enforceability of this concept was finally cleared by this significant judgment held in the Amazon vs Future.

 

Implications on Interim Relief
Interim relief refers to a temporary measure that is ordered by an arbitrator to protect the rights of the parties involved in a dispute while awaiting a final resolution. In an arbitration proceeding, this can take shape into many forms such as granting injunction, freezing assets or orders maintaining status quo.

 

One of the critical implications of interim relief is its enforceability. Generally, decisions made by emergency arbitrators are considered interim binding, meaning they can be varied or suspended by the full tribunal once it is formed. However, the enforceability of these decisions can vary significantly across jurisdictions.

 

In India, recent judicial developments have clarified the status of emergency arbitrators and their decisions. The Delhi High Court’s ruling in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd [iii] established that emergency arbitrators are recognized as arbitral tribunals under Section 17 of the Arbitration and Conciliation Act, 1996. This recognition allows for the enforceability of interim measures granted by emergency arbitrators as if they were issued by a fully constituted tribunal. [iv]

 

The procedural framework for obtaining an interim relief through an emergency arbitration is designed to be expedited. Typically, an emergency arbitrator is appointed swiftly, often within a few days to address the urgent requests for relief. The process allows for limited hearings or submissions, enabling parties to present their cases without extensive delays.

 

One of the primary purposes of granting interim relief through emergency arbitration is to preserve the status quo between disputing parties. By obtaining urgent orders, parties can prevent actions that could exacerbate disputes or lead to irreversible changes in circumstances. For example, in commercial contracts involving significant financial stakes or time-sensitive projects, interim relief can protect assets and ensure that business operations continue without disruption. [v]

 

A Complicated Labyrinth

Despite its advantages, the concept of emergency arbitration suffers from certain defects:

1. While many jurisdictions recognize emergency arbitrator decisions, enforcement can be problematic if local laws do not provide clear mechanisms for recognizing such orders.
2. Emergency arbitrators may have limited powers compared to full tribunals; thus, they might not be able to grant all forms of relief sought by parties.
3. There exists a risk that parties may misuse emergency arbitration provisions for tactical advantages or delay proceedings.

Conclusion
The introduction and the proliferation of emergency arbitration clauses signify a pivotal shift in how disputes are managed, in both national and international context. Its ability to provide timely interim measures has made them quite indispensable for the parties seeking to navigate urgent situations efficaciously.

 

In this economy, where legal practitioners and businesses continue to embrace this mechanism, it is imperative that they remain cognizant of its implications be it both beneficial and challenging. In sum and substance, while emergency arbitration presents a robust framework for obtaining interim relief, its successful implementation hinges on careful navigation through the procedural intricacies and understanding its limitations.

 

References

i. Thakur, N. H. (n.d.). EMERGENCY ARBITRATION UNDER INDIAN LAW: NAVIGATING A COMPLICATED MAZE. Retrieved from iamch.com

ii. Ibid

iii. AIR 2021 SUPREME COURT 3723

iv. Srivastava, S. (n.d.). The Role of Emergency Arbitration in India: Navigating Urgent Relief in Arbitral Proceedings. Retrieved from thearbitrationworkshop.org.in and Thakur, N. H. (n.d.). EMERGENCY ARBITRATION UNDER INDIAN LAW: NAVIGATING A COMPLICATED MAZE. Retrieved from iamch.com

v. Emergency Arbitration. (n.d.). Retrieved from jusmundi.com

 

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.

~ Akshatha Prasad M D is a Senior Associate at Law Square, Advocates & Solicitors

The vibrant tapestry of India’s entertainment industry is interwoven with the golden threads of creativity, culture, and innovation. As one of the largest entertainment sectors globally, producing around 1,500 to 2,000 films annually across multiple languages, it is a testament to the nation’s artistic prowess. However, this flourishing landscape faces significant challenges, particularly concerning the protection of intellectual property rights. The safeguarding of music, film, and art through powerful IPR mechanisms is not merely a legal necessity; it is a moral imperative that ensures creators receive due recognition and financial rewards for their ingenuity.

The Crucial Role of Intellectual Property Rights

Intellectual property rights encompass various legal protections that empower creators to control the use of their works. In this entertainment industry context, IPR primarily manifests through copyrights, trademarks, and patents. Each category plays an indispensable role in preserving the integrity of the creative expressions of the artists. Copyrights serve as the cornerstone of protection for artistic works. They grant creators exclusive rights over their literary, musical, and artistic outputs. For instance, a filmmaker holds copyright over their film, preventing unauthorized reproduction or distribution. [i] [ii]

Trademarks, on the other hand, protect brand names, logos, symbols, designs, and slogans that distinguish one company from another. In this economy where branding is crucial for consumer loyalty and recognition, trademarks safeguard the reputation of production houses and music labels alike. [iii] [iv]

For example, well-known entities like Yash Raj Films and T-Series rely heavily on trademark protections to maintain their brand integrity.

Now coming to the Patents, they offer protection for innovative processes or technologies utilized in the creation of entertainment content. [v]

Economic Implications of IPR in Entertainment

The economic ramifications of an effective IPR are profound. The Indian entertainment industry significantly contributes to the national economy by generating employment and attracting eye-catching investments. A strong IPR framework ensures that creators can reap fair returns on their investments, thus encouraging further innovation and content creation. [vi] [vii]

Moreover, as Indian cinema gains global traction—evidenced by international collaborations and distribution deals—robust IPR becomes essential for maintaining competitiveness in international markets. Creators can secure their work against unauthorized use abroad, facilitating smoother entry into global markets. [viii] [ix]

Challenges

Despite the established legal frameworks designed to protect intellectual property rights, piracy remains a huge issue within the Indian entertainment landscape. Unauthorized duplication and distribution of films and music lead to substantial revenue losses for creators. [x] [xi]

The Need for Legal Reforms

To combat these challenges effectively, there is an urgent need for continuous legal reforms that adapt to the evolving landscape of digital media. Strengthening the enforcement mechanisms for effective legal reform is paramount, and this can be done by addressing the prevailing piracy issue and curbing the same. By this, the creators are protected and so is the content they produce. [xii] [xiii]

Subsequently, raising awareness among creators about their rights under IPR laws is the need of the hour, as many artists remain unaware of their rights and how to protect their work adequately or navigate licensing agreements.

The case surrounding the film Kantara and its song “Varaharoopam” has drawn significant attention due to allegations of copyright infringement. This legal dispute primarily involves the popular Kerala music band Thaikudam Bridge, which claims that the song from Kantara is a copy of their earlier work, “Navarasam.” The case has traversed various courts, leading to a series of rulings that highlight the complexities of copyright law in the Indian entertainment industry.

Cultural Preservation Through IPR

Beyond economic considerations, IPR plays a vital role in preserving India’s rich cultural heritage. Traditional art forms, folk music, and regional cinema are integral components of India’s identity. Copyrights help protect these cultural expressions from unauthorized exploitation while ensuring that original creators receive recognition and financial benefits when their works are used. [xiv] [xv]

For instance, traditional folk artists can secure copyrights for their performances or compositions, preventing commercial exploitation without consent. This not only protects individual artists but also contributes to the preservation of diverse cultural practices within India.

A Collaborative Approach

Fostering a collaborative approach between stakeholders  in the entertainment industry—creators, producers, legal experts, and policymakers—is essential for cultivating a robust IPR ecosystem. This collaboration can lead to innovative solutions that address current challenges while promoting creativity. Additionally, embracing technology can enhance IPR protection efforts. Digital watermarking and blockchain technology offer promising avenues for tracking ownership and usage rights in real time. Such advancements can streamline licensing processes  and ensure that creators are compensated fairly for their contributions. [xvi] [xvii]

Conclusion

In conclusion, intellectual property rights are indispensable for protecting music, film, and art within India’s dynamic entertainment industry. They not only safeguard creators’ rights but also foster economic growth and cultural preservation. As this sector continues to evolve amidst global competition and technological advancements, strengthening IPR frameworks will be crucial for ensuring that India’s creative talents flourish. By prioritizing robust protections for intellectual property, India can secure its position as a leader in global entertainment while nurturing its rich cultural heritage—ensuring that creativity thrives now and into the future.

REFERENCES:

i.The Role And Need of Intellectual Property in the Entertainment     Industry in India. (19 August 2024). Retrieved from Mondaq

ii.Saxena, S. (27 Sep 2023). Intellectual Property Rights And The Indian Film Industry. Retrieved From Corpbiz

iii.  The Role of IPR in the Entertainment Industry. (9 December 2019).

Retrieved From Iptse

iv.Role Of Intellectual Property In Entertainment Industry. (6 February 2024). Retrieved From IIPRD

v.Role Of Intellectual Property in Entertainment Industry., supra.

vi.The Role And Need of Intellectual Property in the Entertainment     Industry in India. Supra

vii.The Role of IPR in the Entertainment Industry, supra

viii.Saxena, S, supra

ix.Intellectual Property Rights Issues in the Entertainment Industry. (28- 09-2024). Retrieved From J P ASSOCIATES

x.The Role And Need of Intellectual Property in the Entertainment     Industry in India, supra

xi.Role Of Intellectual Property In Entertainment Industry, supra

xii.Role Of Intellectual Property In Entertainment Industry, supra

xiii.Intellectual Property Rights Issues in the Entertainment Industry, supra

xiv.The Role And Need of Intellectual Property in the Entertainment     Industry in India, supra.

xv.Saxena, S, supra

xvi.Role Of Intellectual Property In Entertainment Industry, supra

xvii.Intellectual Property Rights Issues in the Entertainment Industry, supra

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.

~ Sumedha Srinath is a Senior Associate at Law Square, Advocates & Solicitors.

Introduction

The Insolvency and Bankruptcy Code (IBC) introduced in 2016, marked a watershed moment for India’s economic and financial landscape. It represented the government’s bold initiative to tackle corporate distress and unlock value in ailing businesses, thereby breathing life into the nation’s economy. However, as with any ambitious legislation, the IBC’s initial phase was challenging. Eight years later, as India’s corporate environment continues to evolve, so too must its insolvency framework. Enter IBC 2.0, a second-generation reform aimed at addressing the shortcomings of the original code while enhancing its effectiveness in a more complex and interconnected business world.

 

The Success of IBC 1.0

Over eight years since its enactment, the IBC has largely fulfilled its intended objectives, given the circumstances and constraints of the ecosystem of its introduction in 2016. While it has proven successful in many respects yet, new challenges have emerged thus, raising the expectations of stakeholders. These expectations now focus on improving the percentage of asset recovery, shortening the time required for resolution, reducing the costs involved and minimizing the duration of prolonged litigation. The evolving landscape has heightened the demand for a more efficient and streamlined insolvency process to meet these growing demands.

 

The Insolvency and Bankruptcy Board of India has proactively in addressed the issues and difficulties arising during the corporate insolvency resolution process (CIRP). Judicial pronouncements, occasionally, have resolved many interpretational and legal hurdles. Insolvency Professional Agencies (IPAs) like Indian Institute of Insolvency Professionals of ICAI (IIIPI) have done considerable work in capacity building of Insolvency Professionals (IPs) and creating awareness in understanding different stakeholders about IBC and their respective roles. IPs have done very well in translating IBC into a reality at ground level, overcoming teething troubles. In substance, IBC has played an essential role in creating an ecosystem for resolving stress in the industry, reducing time in resolution thereof and salvaging the economic value of distressed assets. [i]

 

However, as with any first-generation reform, there were gaps that became more evident as stakeholders experienced the process firsthand.

 

The Emergence of New Challenges

While the IBC has been a game-changer, its implementation has revealed certain structural and procedural inefficiencies over the years. Stakeholders, including creditors, debtors, and investors, voiced their concerns regarding several key aspects of the insolvency process. The most pressing issues were the time taken for case admission, the percentage of realization for creditors, the overall cost of resolution, and the delays caused by prolonged litigation.

 

One of the central concerns was the time-bound admission process. Though the IBC prescribed a specific time frame for the resolution process, the reality was fundamentally different, as the cases often lingered in courts for much longer due to various procedural bottlenecks. For instance, Amitabh Kant, former CEO, NITI Aayog, GOI, noted that insolvency resolution at the NCLT averaged 716 days in the last financial years, up from 654 days in FY23. He highlighted that the average time taken for the admission of cases increased from 468 days in FY21 to 650 days in FY22. The recovery rate fell to 27% in FY24 from 36% in the previous year, pulling down the cumulative recovery since the IBC was introduced in 2016 to 32%. [ii] This delay in admission not only hampered the resolution process but also discouraged potential investors.

 

The Promise of IBC 2.0

IBC 2.0, the second-generation reform, seeks to address these challenges head-on. The proposed amendments aim to plug the gaps in the original framework while introducing new mechanisms that cater to the evolving needs of the business environment. At the heart of these reforms is the desire to make the insolvency process more efficient, transparent, and accessible to a broader range of stakeholders.

 

One of the key amendments in IBC 2.0 is the expansion of the pre- packaged insolvency resolution process, currently applicable only to Micro, Small, and Medium Enterprises (MSMEs). By extending this framework to larger companies, the government aims to create a quicker and more cost-effective resolution mechanism for stressed assets. This shift will allow larger corporations to take advantage of a pre-arranged resolution plan without requiring lengthy judicial intervention, making the process more streamlined.

 

Another major reform under IBC 2.0 is the introduction of group insolvency. In today’s corporate world, businesses are often part of larger corporate groups, with assets and liabilities spread across multiple entities. Group insolvency seeks to address this by allowing for the consolidated resolution of insolvency proceedings for corporate groups. This simplifies the process and ensures a more holistic resolution, improving outcomes for all stakeholders.

 

Fast-Tracking Corporate Insolvency

The government is also focusing on redesigning the fast-track corporate insolvency resolution process to permit financial creditors to drive the insolvency process outside of the traditional judicial framework. This would allow financial creditors to resolve distressed assets more quickly while still retaining some level of judicial oversight to ensure legal certainty.

 

Strengthening the Insolvency Ecosystem

IBC 2.0 also aims to strengthen the framework for individual insolvency, particularly in the case of guarantors of corporate debtors. By focusing on individual insolvency, the reform ensures a comprehensive approach to resolving financial distress, protecting the interests of both creditors and debtors alike.

 

Cross-border insolvency is another area of focus in the second-generation reforms. As businesses increasingly operate across borders, there is a growing need for a framework that addresses insolvency cases involving assets and liabilities spread across multiple countries. The inclusion of cross-border insolvency in IBC 2.0 is a crucial step toward creating a more globally relevant insolvency regime that can handle complex, multi- jurisdictional cases.

 

Conclusion

IBC 2.0 is a natural progression of India’s insolvency framework, born out of the lessons learned from the original code and the evolving demand of stakeholders. By addressing key gaps in the system and introducing new and innovative mechanisms, IBC 2.0 promises to enhance the efficiency, transparency, and accessibility of the insolvency process.

 

References:

i. i. Haldia, A. (2022). IBC – PREPARING FOR VERSION 2.
Retrieved from https://www.iiipicai.in/wp-content/uploads/2023/10/Article-by-Dr.-
Ashok-Haldia.pdf

ii. Mittal, M. (2024, July 19). Amendments for IBC 2.0 to be a part of Union Budget 2024?
Retrieved from MoneyControl:
https://www.moneycontrol.com/news/business/budget/amendment s-to-ibc-2-0-may-be-a-part-of-union-budget-2024-12762731.html

 

Additional References:

iii. REPORT OF CBIRC-II ON GROUP INSOLVENCY. (2021).
Retrieved from ibbi.gov.in:
https://ibbi.gov.in/uploads/resources/9ff4f639c0d2a29ea188fd0cba 332273.pdf

iv. Chabbra, P. (2024, March 19). Navigating Cross-Border Insolvency: A Critical Analysis of India’s Framework and Its Impact on Foreign Investment.
Retrieved from legalserviceindia:
https://www.legalservicesindia.com/law/article/39646/40/Navigatin g-Cross-Border-Insolvency-A-Critical-Analysis-of-India-s-Framework-and-Its-Impact-on-Foreign-Investment

 

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.
~ Sumedha Srinath is an Associate at Law Square, Advocates & Solicitors.

Introduction

In the realm of international arbitration, awards issued by arbitral tribunals are generally considered final and binding on the parties. However, there are circumstances under which an arbitral award can be challenged or set aside. One such instance is when an award is issued by means that undermine the legitimacy and fairness of the arbitral process, such as copying substantial parts of an award passed in an earlier proceeding into the current award —commonly referred to as “copy-paste awards.” The Singapore International Commercial Court (SICC) has set a landmark precedent by setting aside such awards and raising important legal questions about the sanctity of the arbitral process, procedural fairness, and the scope of judicial intervention in arbitration.

 

This article will explore the legal implications of the SICC’s decision to set aside “copy-paste” arbitration awards, focusing on the potential impact on arbitral integrity, the grounds for setting aside awards under Singaporean law, the role of judicial review, and the wider international arbitration landscape.

 

Background of the Decision Given by the SICC

DJO, a special purpose vehicle that is responsible for operating and maintaining  freight corridor in India, entered  into a contract for the Western Dedicated Freight Corridor  in India with a Consortium of 3 companies referred to as Consortium X in the award, out of which 2 were Indian and 1 was a Japanese Company. Certain disputes arose between the parties regarding the pay to the employees, and the matter was referred to  Arbitration,  which was to be seated in Singapore and governed by the ICC Arbitration Rules, 2021. The dispute was referred to a tribunal of 3 arbitrators. One of the arbitrators of the current proceeding was also an arbitrator in two other proceedings with similar facts and circumstances as the matter at hand. The arbitration concluded, and the award was passed by the Arbitral Tribunal. However, DJO challenged the said award before the Singapore International Commercial Court, stating that substantial award was copied from awards passed in the other 2 proceedings presided over by the said Arbitrator. The SICC held that   more than 200 paragraphs of the 451-paragraph award were copied from the other awards,  and the Arbitral tribunal failed to consider the uniqueness of the present matter in hand and set aside the award, deeming it to be a “Copy-Paste” award, which is against public policy and the principals of natural justice.

 

Reasoning and Analysis Behind the Setting Aside of the Award

Arbitration is a private dispute resolution mechanism often chosen for its speed, finality, and expertise in specialized matters. The authority of arbitral tribunals arises from the consent of the parties, but their legitimacy is contingent on the principles of fairness, independence, and impartiality. These principles ensure that the tribunal’s decisions are based on an impartial evaluation of the facts and arguments presented by  both parties. The award passed by the tribunal is generally considered final and binding on both parties, and there is very little scope for the intervention of the courts in such awards.

 

Under the Singapore International Arbitration Act (Section 24), which incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law on  International Commercial Arbitration (Article 34), an arbitration award can be set aside on specific grounds. The grounds for setting aside any arbitral award include:

1. The Arbitration agreement was invalid;
2. The party was not given proper notice of the appointment of arbitrator or was not allowed to present its case;
3. The award deals with a matter not falling within the terms of the submission to the arbitration;
4. The Arbitral Tribunal was not appointed as per the terms of the Arbitration Agreement;
5. The subject matter is not capable of settlement by arbitration;
6. The award is in conflict with the public policy of the state;
7. The award is against the principles of natural justice.

A “copy-paste” award—where large sections of a prior award are copied into the final arbitral award without proper independent analysis—threatens these foundational principles. In the case of a “copy-paste” award, the most relevant grounds for setting  aside would likely be procedural irregularity and the award being contrary to public policy. The tribunal’s role is to assess the evidence impartially and issue an award based on a reasoned, independent evaluation of the issues. Copying extensive portions of an earlier  passed award without adequate reasoning may give the impression that the tribunal failed to carry out this role.

 

In setting aside such an award, the SICC has reinforced the belief that an arbitral tribunal must not only be impartial but must also be seen to be impartial. This distinction is critical; justice must not only be done but also be seen to be done, especially in an international commercial environment where parties from different jurisdictions seek neutral adjudication of their disputes. The SICC’s decision serves as a reminder that even though arbitration is intended to be a final and self-contained process, the integrity of that procedure must be preserved, or the courts may intervene.

 

Impact on International Arbitration

The SICC’s decision to set aside a “copy-paste” award has significant implications for international arbitration. First, it underscores the importance of procedural integrity in arbitration, reminding arbitrators to conduct a thorough and independent             assessment of each case separately without venturing into past awards, as each case has its own unique element. Second, it sends a message to parties involved in arbitration that courts will intervene if the arbitral process is fundamentally flawed.

 

However, the decision also raises concerns about the potential for increased challenges to arbitral awards on procedural grounds. Parties dissatisfied with the outcome of an arbitration may be tempted to seek judicial review by alleging that the tribunal has substantially reproduced parts of an earlier award. While the SICC has sought to limit judicial intervention to extreme cases, there is a risk that the decision could encourage more challenges to arbitral awards, particularly in cases where parties feel that the tribunal has copied substantial parts of an award into another without applying its mind on the matter at hand.

 

Conclusion

The SICC’s decision to set aside a “copy-paste” arbitration award has far-reaching   legal implications for both the arbitration community and the broader commercial world. It highlights the importance of arbitral tribunals conducting their duties impartially and   fairly, ensuring that awards reflect independent consideration of the parties’ submissions   and the materials on record rather than mere repetition of portions of another award. While judicial intervention in arbitration should remain limited, the SICC’s decision serves as a vital reminder that the courts have a critical role to play in safeguarding the integrity of the arbitral process.

 

Ultimately, the SICC’s ruling strengthens Singapore’s position as a leading jurisdiction for international arbitration by reaffirming its commitment to both finality and fairness in the arbitral process. However, it also serves as a warning to arbitrators and parties alike: the independence and impartiality of the arbitral process must be scrupulously maintained or risk the possibility of judicial intervention.

 

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.

~ Varun Jain is an Associate at Law Square, Advocates & Solicitors.

Introduction

Imagine the following scenario: You come up with an idea, put your soul into it, cultivate a prototype and finally turn it into a product which is backed by investors and that the customers will buy. Out of nowhere – a rival or a former employee says it was their idea. You now realize that you don’t have any evidence to showcase that the idea, prototype/product is actually yours.

 

It’s an entrepreneur’s absolute nightmare, which, sadly, happens all the time.

 

Mark Zuckerberg famously spent years battling the Winklevoss brothers over who owned Facebook and ended up settling for $65 Million. To avoid such hassles and to protect what’s yours, one must understand how to safeguard one’s “Intellectual Property”, a term that applies to things as diverse as your business plans, your algorithms, your Company’s name and logo.

 

IP rights protect one’s creation and innovation from unauthorized replication by a competitor. Thus, it is absolutely imperative that a startup must protect its IP assets. IP serves as a cornerstone for a startup by setting it apart from its counterparts due to its uniqueness.

 

Registration for a startup is approved only for companies engaged in developing products and services. Technically, any organization or company working towards finding a solution through innovation for an already existing problem can register itself as a startup. Subsequently, protecting innovations through IP rights becomes essential.

 

IP rights serve as a safeguard, ensuring that the unique ideas and technologies developed by startups are legally protected from unauthorized use by imitation. By securing patents, trademarks, copyrights, and trade secrets, startups can maintain their uniqueness and continue innovating without fear. This protection is not just a legal formality but also a necessity for sustaining the startup’s growth.

 

How does such IPR protect startups?

You don’t have to be Isaac Newton to create something worthy of a patent. Patents can apply to everything from a design, an algorithm, software, a chemical drug, and even a game. IP is the product of an individual’s intellect; thus, it is indispensable and needs to be protected. IP can be protected by obtaining exclusive yet transferable rights over the property and enforcing the associates’ rights under the IPR regime. Patents safeguard inventions and unique processes; copyrights protect creative works, trademarks secure brand identity, and trade secrets encompass confidential business information that gives you a competitive edge.

 

Assessing IP value

The prima facie step towards developing a sound IP strategy is to appraise the startup’s IP assets. This involves identifying which business aspect is unique and how they contribute to a competitive advantage.

 

Prioritization

Given the multifariousness of intellectual assets, prioritizing which IP to protect first is critical. This decision should primarily align with the startup’s resource allocation and business goals.

 

IP Audits

IP audits are crucial for maintaining effective protection of the IP. They help identify new assets that require protection, making it easy for the  startup to have a clean organization and record keeping.

 

Patent filing

The patent filing process involves an exhaustive patent search coupled with preparing a detailed application. Subsequently, this also involves responding effectively to any office actions.

 

Trademark selection

Choosing a unique brand name and logo is indispensable for any startup. A unique or creative trademark of a startup serves as a beacon for its popularity and helps customers identify its product. Subsequently, securing them through trademark registration is vital as this establishes dominance over the said logo or words used in the mark. This way, any rival cannot use the startup’s logo, and if infringement happens, the startup can institute a legal proceeding against the infringer.

 

Copyrights and Trade secrets

Copyrights protect creations, whilst trade secrets protect confidential business information. Both are of utmost importance for any startup as these play a pivotal role in ensuring the startup has a successful career in the future.

 

IP in the business sphere

A strong IP portfolio can notably enhance a startup’s attractiveness to investors, highlighting its potential for innovation and market dominance. IP assets can be leveraged through licensing agreements, partnerships, and other commercial arrangements, turning them into valuable revenue streams.

 

Government Initiatives for Startups

Startup Intellectual Property Protection (‘SIPP’) is a scheme launched by the

Department for Promotion of Industry and Internal Trade to clear the way for protecting patents, trademarks, and designs for startups involved in innovation.

 

Patents – Startups can benefit from fast-tracking patent applications to expedite the realization of their IPRs. Under the SIPP scheme, a panel of facilitators assist the startups in filing their IP applications. The central government covers all the expenses of these facilitators so that the startups solely focus on paying statutory fees for their IPs. Furthermore, Startups can receive an 80% rebate on patent filing fees compared to other companies, thereby providing additional benefits to Startups.

 

Trade Marks – The central government, under the SIPP scheme, pays the statutory fees for a trademark filing on behalf of the startup. Further, the Trademark Rules, 2017, were recently amended to provide a 50% rebate on the Trademark filing fee to startups.

 

Industrial Designs – Under the SIPP scheme, the central government pays the statutory fee for filing a design application on behalf of the startup, protecting any design produced by the startup.

 

Conclusion

IP protection in India for any growing startup is not just about securing mere legal rights but more so about creating a foundation for sustainability and competitive advantage on a long-term basis. Conducting IP audits, registering IP, monitoring and enforcing the rights, using IP to fuel further growth, educating the team, and considering global strategies are all ways startups can effectively protect their innovations and improve their market position.

 

Of course, it is daunting, but a little planning with the right resources can help one navigate the fine print of IPR. A startup should delicately build its IP into an asset that drives growth, attracts investment, and shores up a strong position in the market. In other words, IP and its management form vital steps toward a sustainable and successful enterprise in a fast-moving business environment.

 

~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.

~ Akshatha Prasad M D is an Associate at Law Square, Advocates & Solicitors