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.
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.
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 few of 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
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:
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