Madras HC: Copyright Infringement Claims Not Subject to Arbitration

Dispute Before the Madras High Court

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The case of Eros Technologies Digital FZE Vs Ayngaran International Films Private Limited (OA.454/2026) brought before the Madras High Court centers on a classic conflict concerning the enforcement of intellectual property rights through civil litigation. The plaintiff, Eros Technologies Digital FZE, approached the Court seeking judicial intervention against the defendants, Ayngaran International Films Private Limited and others, to protect its alleged rights over specific copyrighted cinematographic works. At the core of the dispute lies the validity and enforceability of an assignment deed under which the plaintiff claims to have acquired rights from the defendants themselves.

The controversy hinges on whether the existence of an arbitration agreement between the parties can oust the jurisdiction of a Civil Court in a matter involving a statutory claim for copyright infringement. The plaintiff asserts that as an assignee of the copyright, it possesses the legal standing to initiate a suit for infringement, thereby bypassing the alternative dispute resolution mechanism preferred by the defendants. The Madras High Court was tasked with determining the maintainability of the civil suit and the necessity of interim injunctive relief to prevent unauthorized exploitation of these works pending final adjudication.

Relief Sought by the Plaintiff

Eros Technologies Digital FZE filed for an ad interim injunction against the three respondents, who were identified as Defendants 1 to 3. The application was filed under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure (CPC), 1908. These provisions grant the Court the power to issue temporary injunctions where the property in dispute is in danger of being wasted, damaged, or alienated by any party to the suit, or where the defendant threatens to dispossess the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute.

Specifically, the plaintiff sought to restrain the respondents from infringing upon its copyright, which it claims was obtained through a formal assignment from the very parties it is now litigating against. The plaintiff contended that the defendants are acting in violation of the rights transferred, thereby necessitating the Court’s intervention to protect its commercial interests. The requested relief is a standard procedural safeguard in IP litigation, aiming to preserve the status quo and prevent the dilution of the value of the copyrighted works while the substantive issues of ownership and breach are resolved.

Parties’ Contentions and Legal Standing

The primary point of contention revolves around the intersection of private contractual agreements and statutory rights. The defendants sought to dismiss or stay the suit by highlighting the existence of an arbitration agreement. Their position is that the dispute is essentially a commercial breach arising out of their previous association with the plaintiff, and therefore, it must be referred to an arbitrator rather than being litigated in a public forum.

The plaintiff countered this by relying on Section 55 of the Copyright Act, 1957. Section 55 of the Copyright Act provides the specific civil remedies available to a copyright owner, including the right to institute suits for damages and injunctions for infringement. The plaintiff argued that because its claim is a statutory suit for copyright infringement, the underlying issue of infringement is not a matter that can be resolved through arbitration. By invoking Section 55, the plaintiff effectively argued that the protection of copyright is a public interest mandate that cannot be contracted away or relegated to private arbitration when the fundamental right to exclude others from using the protected work has been violated.

Furthermore, the plaintiff clarified its source of title. It explicitly claims the status of a copyright holder through an assignment deed. This deed purportedly transferred the rights in the copyrighted works from the third party, identified in the proceedings as Defendants 1 and 2, to the plaintiff. The plaintiff asserts that the defendants are not merely third parties to the contract, but are the original owners who transferred the rights they are now alleged to be violating. This creates a factual scenario where the defendants are alleged to be infringing the very rights they once assigned to the plaintiff.

The Court’s Approach to Arbitrability

The Madras High Court examined the challenge regarding the arbitration agreement with a focus on the nature of the suit. In the Indian legal , there has been significant debate regarding the arbitrability of intellectual property disputes. The Court’s approach reflects a distinction between disputes that arise purely from a contract and those that involve the enforcement of statutory rights against the world at large.

By positioning the case as a suit under Section 55 of the Copyright Act, the plaintiff successfully framed the issue as an infringement of a right granted by the statute. The Court considered whether a claim of copyright infringement, based on an assignment, is inherently arbitrable. If the core of the grievance is that the defendant is violating the plaintiff’s exclusive rights as recognized under the Copyright Act, the Civil Court is the appropriate forum for seeking injunctive relief. The defendants’ reliance on the arbitration clause was met with the contention that statutory infringement claims fall outside the scope of arbitrable subject matter because they involve rights that affect the sanctity of the IP registry and the statutory protection afforded to owners.

The Court scrutinized the relationship between the parties, noting that the plaintiff claims to be a copyright holder by way of assignment. The identity of the assignor as the defendant adds a layer of complexity to the ownership dispute. The Court’s reasoning acknowledges that when an owner assigns rights and then proceeds to exploit those rights, the resulting dispute is not merely a contract breach but an infringement of the property interest held by the assignee.

Order and Procedural Direction

The Madras High Court, in its order dated September 1, 2026, navigated the procedural impasse. While the full specifics of the final decree remain subject to further evidence, the Court addressed the immediate conflict by validating the plaintiff’s right to pursue the suit under Section 55 of the Copyright Act. The Court rejected the argument that the suit was barred by the arbitration agreement in the context of the copyright infringement claims.

The order indicates that the Court has permitted the civil suit to proceed, effectively holding that the statutory remedy for copyright infringement takes precedence over the contractual obligation to arbitrate in this instance. By doing so, the Court has upheld the principle that owners of intellectual property must have access to the courts to seek urgent interim relief, particularly when the infringement of their exclusive rights is the primary cause of action. The defendants are now required to respond to the merits of the infringement claim rather than relying on the procedural objection regarding jurisdiction.

Also Read: Zee Entertainment v. BSNL: Madras High Court Permits Withdrawal of Copyright Suit

What the Order Means for Practitioners

The decision in Eros Technologies Digital FZE Vs Ayngaran International Films Private Limited offers a significant reminder for practitioners dealing with copyright assignment disputes in the Madras High Court. The order reinforces the robustness of Section 55 of the Copyright Act as a tool for copyright holders. It clarifies that when a party initiates a suit for copyright infringement, the mere existence of an arbitration clause in the underlying commercial contract is not an automatic bar to litigation.

For IP lawyers, the takeaway is clear. When drafting assignment agreements, one must be cognizant of the potential for future disputes and the forum selection. However, if a breach occurs that amounts to infringement of the copyright itself, the statutory remedy remains a potent mechanism for relief. This decision provides a shield for assignees who find themselves in a position where their assignors disregard the transfer of rights. The Court has prioritized the statutory nature of copyright over the private nature of the arbitration agreement.

Practitioners should observe that the Court focused on the characterization of the suit. By framing the dispute strictly as a copyright infringement matter, the plaintiff ensured the suit was treated as a statutory action rather than a private commercial dispute. This distinction is critical. If the suit had been framed merely as a breach of the assignment contract, the outcome regarding the arbitration clause might have differed significantly. Therefore, the drafting of the plaint is as significant as the merits of the evidence provided.

The Madras High Court has indicated a willingness to protect assignees from assignors who act in derogation of the assigned rights. This serves as a cautionary tale for those who seek to assign their copyrights and subsequently ignore those assignments. The judicial process will intervene to protect the value and exclusivity of the assigned work. For students of law, this case exemplifies how statutory provisions such as Section 55 of the Copyright Act operate to maintain the integrity of intellectual property assignments in the face of attempts to relegate such conflicts to private forums.

Finally, the outcome suggests that the Madras High Court continues to uphold the importance of civil proceedings for the immediate protection of intellectual property. The ability to seek an ad interim injunction is essential for plaintiffs, as the value of copyrighted works, particularly cinematographic content, often diminishes rapidly if infringement is allowed to continue unchecked. The Court’s insistence on hearing the merits of the infringement claim reflects an understanding of the commercial realities of the film and digital content industries where time is of the essence.

In summary, the Eros Technologies case emphasizes that statutory IP rights carry significant weight in Indian courts. While arbitration is a preferred route for settling contractual disputes, it cannot be used as a cloak to avoid accountability when the infringement of a property right is established. The court’s decision ensures that the mechanism for protecting and enforcing copyright remains accessible, transparent, and grounded in the substantive provisions of the Copyright Act.