In a significant legal development, the Delhi High Court has pronounced a crucial arbitration judgment in the case involving WinZO and Hike Singapore. This ruling sets a precedent in the realm of intellectual property rights and dispute resolution. Keep reading for a deep dive into this consequential legal battle.
Facts
- WinZO is a digital gaming platform boasting over 175 million registered users.
- The dispute arose when Hike Singapore launched an app called ‘Rush’ that competes with WinZO.
- WinZO claims that key features of their app have been imitated by the Respondents.
- WinZO holds all intellectual property rights associated with its platform.
- WinZO entered into multiple agreements with Hike Global Pte. Ltd., including the First SHA and Second SHA.
- The relationship between WinZO and Hike Singapore was terminated through a Term Sheet Agreement.
Arguments
- The Petitioner alleges misuse of confidential information and violation of its IP rights by the ‘Rush’ app that has similar features to WinZO.
- The Petitioner seeks relief by requesting the Respondents to be restrained from using any confidential information or IP belonging to WinZO.
- Hike Singapore filed a patent application for an algorithm titled ‘A Method And System For Determining Compatible Contenders For A Contest’, dated 21 December 2020, which the Petitioner claims imitates and uses their proprietary match-making algorithm.
- The Petitioner states that they were coerced into including a clause in the Second SHA that waived the non-compete restriction for Hike Singapore.
- Respondent’s counsel argues that Respondent Nos. 2, 3, and 4 are not parties to the arbitration agreement and should not be impleaded in the Section 9 petition.
- The individuals in question, Respondent Nos. 3 and 4, are not significant contributors to the ‘Rush’ app launched in 2020, and the recruitment of one game developer does not constitute a breach of confidentiality.
- No allegations have been made against the ‘Rush’ app despite multiple iterations on both IOS and Android platforms.
- Coercion regarding the Non-Compete Clause is disputed and was deleted after negotiations between the parties.
- The issue of patent applications and any opposition to them should not be part of the arbitral proceedings as per the Respondent’s submission.
Analysis
- The Third Agreement, the Term Sheet, contains a clause stating that any disputes shall be resolved through arbitration under the Arbitration and Conciliation Act 1996 with the seat and venue in New Delhi, India.
- The Term Sheet being the final agreement between the parties, all disputes are to be referred to arbitration in Delhi with the appointed arbitrator being Justice Gautam S. Patel (Retd.).
- The First SHA also has clauses related to governing law, jurisdiction, and dispute resolution, stating that the Agreement is governed by Indian laws and disputes are to be resolved through arbitration with exclusive jurisdiction in New Delhi.
- The arbitration proceedings will be limited to WinZO and Respondents No. 1 and 2 only.
- Any disputes related to the First Agreement will be settled through arbitration following SIAC Rules.
- The seat of arbitration will be in Singapore with the venue in New Delhi.
- Arbitration will be conducted under the Delhi International Arbitration Centre (DIAC).
- Declaratory relief and specific enforcement of the Agreement can be awarded by the Arbitral Tribunal.
- Individuals who are not parties to the Agreements will not be included in the arbitration.
- Arbitrator’s fees will be paid as per the 4th Schedule amended by DIAC Rules, 2023.
- WinZO is free to pursue remedies under the Patents Act, 1970 for the patent applications of Respondents No. 1 and 2.
- Changes in the shareholding pattern have been noted.
- Any conduct needing demonstration based on allegations may be raised before the Sole Arbitrator.
- The objection regarding Hike Private Limited not being a party to the arbitration agreement will be considered by the Sole Arbitrator.
- The ‘Group of Companies’ doctrine as per Cox and Kings Ltd. v. SAP India Pvt. Ltd. & Anr. may be applied for impleading Hike Private Limited in the arbitration proceedings.
- The Sole Arbitrator will have the authority to adjudicate on the issues related to confidentiality and misuse of WinZO’s proprietary information.
Decision
- WinZO’s algorithm and Respondent’s algorithm to be placed in sealed covers with the Registrar General.
- Parties may request access to the source code or algorithm through the Sole Arbitrator.
- Arbitration proceedings to be conducted in English.
- Documents filed by WinZO to be retained in sealed cover with the Registry.
- Sole Arbitrator may request source codes of the apps for arbitral proceedings.
- Interim direction for source codes of WinZO and Rush to be placed with Registrar General.
- Seat of arbitration in Singapore, venue in New Delhi.
Case Title: WINZO GAMES PRIVATE LIMITED Vs. HIKE GLOBAL PTE. LTD. AND ORS. (2024:DHC:3800)
Case Number: O.M.P.(I) (COMM.)-144/2024
