Intellectual Property Rights (IPRs) are private rights guaranteed by States to achieve a desirable social end by encouraging innovation and creation.1 Intellectual property (IP) is classified into two categories: industrial property and copyright. Industrial property usually includes patents, trademarks, industrial design, and geographical indications. Copyright includes literary, artistic, musical and dramatic work. Both, individuals and legal entities could be IP rights’ holders. IP rights provide a right of exclusion. IP rights are exclusive but not absolute. Since IP rights are territorial, their scope is defined in domestic laws and regulations.
World Intellectual Property Organization (WIPO), “What is Intellectual Property?” (https://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf); WIPO, The Intersection of Intellectual Property Rights and Innovation Policy Making- A Literature Review (WIPO Publication, 2015) (https://www.wipo.int/publications/en/details.jsp?id=3944).
II. IPRs as an “investment”
A large number of international investment agreements (“IIA”s) features IPRs in the definition of “investment”. The IIAs often refer to “intangible” or “immovable” property, which is understood to cover IPRs. The inclusion of IPR to protect foreigners has been common since post World War II Friendship Commerce and Navigation treaties. The first Bilateral Investment Agreement (BIT) between Germany and Pakistan in 1959, had explicitly included “patents and technical knowledge” in the definition of investment. Similarly, modern IIAs explicitly include IPRs within the definition of investment and separately define them.2 Some IIAs explicitly include copyright and related rights, trademarks, geographical indications, industrial designs, patents, layout, designs of integrated circuits, undisclosed information as investments.3 The specific incorporation of IP under the definition of investment means that IP could be potentially subject to the general guarantee afforded to investors under IIAs. From the ICSID jurisprudence on assessing investment criteria through Salini test,4 IP fits within that assessment. However, whether IP per se is an investment is highly contested5 because the function of IP law is to achieve a desirable social end by encouraging innovation and creation.
Rochelle Dreyfuss and Susy Frankel, Reconceptualizing ISDS: When Is IP an Investment and How Much Can States Regulate it?, Vanderbilt Journal of Entertainment & Technology, Vol. 21(2) (2018), pp. 377-415; Ruth L. Okediji, Is Intellectual Property “Investment”? Eli Lilly v. Canada and the International Intellectual Property System, University of Pennsylvania Journal of International Law, Vol. 35 (2014), pp. 1121-1138.
III. Litigating IPRs in Investor State Dispute Settlement (ISDS), a recent phenomenon
There are few cases where intellectual property is at the heart of investment arbitration.6 In these cases, protection of IPRs has been sought through claims of expropriation and fair and equitable treatment among others. Besides, several investment arbitration cases feature IPRs indirectly.7
Philip Morris Brands Sàrl, Philip Morris Products S.A and Abal Hermanos S.A v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016 ; Eli Lilly and Company v. Government of Canada, UNCITRAL, ICSID Case No. UNCT/14/2, Award, 16 March 2017; Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc. v. Republic of Panama, ICSID Case No. ARB/16/34; Philip Morris Asia Limited v. The Commonwealth of Australia, PCA Case No. 2012-12, Award on Jurisdiction and Admissibility, 17 December 2015; AHS Niger and Menzies Middle East and Africa S.A. v. Republic of Niger, ICSID Case No. ARB/11/11, Award, 15 July 2013; Shell Brands International AG and Shell Nicaragua S.A. v. Republic of Nicaragua, ICSID Case No. ARB/06/14, proceedings discontinued on 12 March 2007; Les Laboratoires Servier, S.A.S., Biofarma, S.A.S., Arts et Techniques du Progres S.A.S. v. Republic of Poland, Award, 14 February 2012.
Shell Brands International AG and Shell Nicaragua S.A. v. Republic of Nicaragua, ICSID Case No. ARB/06/14, proceeding discontinued on 12 March 2007; AHS Niger and Menzies Middle East and Africa S.A. v. Republic of Niger, ICSID Case No. ARB/11/11, Award, 15 July 2013; F-W Oil Interests, Inc. v. The Republic of Trinidad and Tobago, ICSID Case No. ARB/01/14, Award, 3 March 2006; Apotex Holdings Inc. and Apotex Inc. v. United States of America, ICSID Case No. ARB (AF)/12/1, Award, 25 August 2014; Ethyl Corporation v. The Government of Canada, Award on Jurisdiction, 24 June 1998; Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award, 19 December 2016; Erbil Serter v. French Republic, ICSID Case No. ARB/13/22.
IV. Emerging New Discourse
IP lies at the heart of the transnational business transaction, but it also has inherent social functions and exclusive right is not the only object and purpose of International IP. Therefore, it is likely that IP-ISDS interaction could bring tension between investment protection and regulatory freedom guaranteed by international IP laws. However, the limited cases on the subject do not provide a clear direction, but it has opened the gate for future IP related disputes in ISDS. There are questions which are yet to be tested but debated overwhelmingly, mainly as follows:
Correa, C., and Viñuales, J. E., Intellectual Property Rights as Protected Investments: How Open are the Gates?, Journal of International Economic Law, 2016, pp. 91-120.
Davis Mortenson, J., Intellectual Property as Transnational Investment: Some Preliminary Observations, Transnational Dispute Management, 2009.
Gagliani, G., International Economic Disputes, Investment Arbitration and Intellectual Property: Common Descent and Technical Problems, Journal of World Trade, 2017, pp. 335-355.
Geiger, C. (ed.), Research Handbook on Intellectual Property and Investment Law, 2020.
Grosse Ruse-Khan, H., Challenging Compliance with International Intellectual Property Norms in Investor-State Dispute Settlement, Journal of International Economic Law, 2016, pp. 241-277.
Heath, C., and Kamperman Sanders, A. (eds.), Intellectual Property and International Dispute Resolution, 2019.
Mercurio, B., Awakening the Sleeping Giant: Intellectual Property Rights in International Investment Agreements, Journal of International Economic Law, 2012, pp. 871- 915.
Nath Upreti, P., Enforcing IPRs in Investor State Dispute Settlement (ISDS): A Paradigm Shift in Global IP Practice, Journal of World Intellectual Property, 2016, pp. 53-82.
Nath Upreti, P., Intellectual Property, WTO and Investment: A Historical Account, in Geiger, C. (ed), Research Handbook on Intellectual Property and Investment Law, 2020.
Vanhonnaeker, L., Intellectual Property Rights as Foreign Direct Investments: From Collision to Collaboration, 2015.