Trademark disputes and arbitration: The Supreme Court’s definitive position

Introduction

In our earlier article, we examined how Indian courts—particularly the Delhi and Bombay High Courts—have opened the door to arbitration in trademark disputes, especially when such disputes arise from contractual relationships. Further, we explored the distinction between rights in rem and rights in personam, and how this distinction has shaped the arbitrability of intellectual property rights.

This sequel builds on that foundation by analyzing a landmark decision from the Supreme Court of India (SC) in K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr. (SLP (Civil) No. 13012 of 2025; Order dated 9 May 2025) (Mangayarkarasi). This decision is pivotal in arbitration jurisprudence, particularly in its interplay with trademark law, as this definitively sets out the SC’s position that trademark disputes arising out of purely contractual relationships are amenable to arbitration. 

Although, as stated in our previous article, there are High Court decisions holding similar views, one need not solely rely on these High Court decisions anymore as there is now a SC decision to this effect. In, India, the jurisdictions of High Courts is territorially limited to only one or more States or Union Territories. They do not have jurisdiction throughout the territory of India. Therefore, the binding nature of their decisions is also limited. On the other hand, the SC has jurisdiction throughout the territory of India and its decisions are binding precedent throughout India. Article 141 of the Constitution makes it very clear that “the law declared by the Supreme Court shall be binding on all courts within the territory of India”.

Brief facts 

The Respondents countered the suit by filing an application under Section 8 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). In this Application, the Respondents invoked two Deeds of Assignment and stated they claimed their rights to use the trademarks through these Deeds. Further, they also pointed out to the Commercial Court that these Deeds contained arbitration clauses, and any dispute thereunder had to be referred to arbitration. 

In response to this application, the Petitioners contended that the case pertained to the scope of trade mark registration and thus, any decision on the same would operate in rem. Further, the Petitioners alleged that there was a fraud in the execution of the Deeds of Assignment. The Commercial Court dismissed the contentions of the Petitioners and held that the dispute was contractual and was therefore, amenable to arbitration.

Aggrieved by the decision of the Commercial Court, the Petitioners approached the Madras High Court (HC) by way of a Revision Petition. The Petitioners raised the same contentions before the HC as were raised before the Commercial Court. The HC too dismissed the Petitioners’ contentions and upheld the decision of the Commercial Court.

The decision of the HC was appealed to the SC. 

The case before the SC

Before the SC, the Petitioners once again argued that the dispute involved fraud and trademark infringement, which were non-arbitrable. The SC, relying on previous cases including Booz Allen and Hamilton Inc. v. SBI Home Finance Limited & Ors. (2011) 5 SCC 532 and Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1, dismissed the arguments of the Petitioner and held that the dispute in the present case were not actions in rem, but were purely contractual, which could be decided by way of arbitration. The following passage from the decision is very instructive and captures the essence of the decision:

The assumption that all matters relating to trademarks are outside the scope of arbitration is plainly erroneous. There may be disputes that may arise from subordinate rights such as licences granted by the proprietor of a registered trademark. Undisputedly, these disputes, although, involving the right to use trademarks, are arbitrable as they relate to rights and obligations inter se the parties to a licence agreement.

With respect to allegations of fraud, the SC reiterated that mere allegations of fraud or criminal do not oust the jurisdiction of the arbitral tribunal to resolve a dispute arising out of a civil or contractual relationship on the basis of an the arbitration agreement. The SC was of the view that the claims of fraud in the present case were private in nature and could be addressed by the arbitral tribunal.

Overall, the SC drew a clear distinction between disputes that affect the public at large (e.g., trademark registration or cancellation) and those that concern only the parties involved (e.g., contractual use of a trademark) and held categorically held that the latter are arbitrable. The SC also reinforced the sacrosanct nature of an arbitration agreement and held that in applications filed under Section 8 of the Act, the Courts are “under a positive obligation to refer parties to arbitration by enforcing the terms of the contract”.

Our Thoughts

The decision in Mangayarkarasi is a welcome one, and is a step in the right direction as it puts to rest the ambiguity surrounding resolution of intellectual property disputes arising out of contractual relationships. It affirms that arbitration is not merely a procedural detour, but a legitimate and robust forum for resolving complex commercial disagreements, including those involving trademarks. It is also a reaffirmation of the principle that party autonomy and contractual sanctity lie at the heart of modern dispute resolution.

For businesses, this judgment is a green light to embrace arbitration as a viable mechanism for resolving IP-related contractual disputes. Businesses can now draft trademark licensing and assignment agreements with greater confidence, knowing that arbitration clauses therein will be upheld even in the face of complex disputes. Further, by limiting the ability to derail arbitration through vague fraud allegations, the SC has closed a loophole often exploited to delay proceedings.

The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law LLP disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident, or any other cause.