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Intellectual Property Rights


IP AND INTERNATIONAL INVESTMENT AGREEMENTS: UNDERSTANDING THE OLD AND NEW ARGUMENTS

February 1, 2023

* Ms. Ipsita Sarkar

In the growing economic-centric global scenario, there has been a steady increase in Intellectual Property (IP) involvement in international transactions. From facilitating factor of these international relations, it has now become a trading good which brings out the reconceptualization of how IP has changed.

International Investment Agreements (IIAs) over time have steadily seen a great involvement of IP chapters and clauses which are detailed and corporate-oriented. These IIAs include bilateral investment treaties as well as free trade agreements. In international disputes revolving around IP, especially focusing on the present-day scenario, international investment laws and treaties have been a protective shield against IP disputes.

In the high-profile investor-state disputes of Philip Morris v Uruguay, Eli Lilly v Canada, and Bridgestone v Panama, investment tribunals decided disputes involving trademarks and patents through Investor-State Dispute Settlement (ISDS) mechanism.

Moving to the inception of this concern, even a brief study of this treatment would make it clear that the impact of IP in attracting Foreign Direct Investments (FDI) started way before the adoption of TRIPS by the different countries in their regimes. However, the treatment of IP rights played a huge role in these indispensable principles in international trade. The reason being these principles ensured predictability and stability in the flow of international trade, further contributing to more secured research and development. R&D is directly an implication of a service-centric economy, which means that it directly caused an increase in the transfer of technology and trade secrets, again causing an immense need for stronger IP legislation in any nation.

The dichotomy that now establishes is that, in earlier times IP has always been a way of protecting the rights of the subsidiaries. It is the system that could safeguard and facilitate the FDIs as well as the innovation and production of different inventions. This is the main reason why TRIPS never defined IP as an investment. Along these lines, it never mandated but provided an option for the member states as a liberal choice to adopt the TRIPS standards. Thus, Article 1 uses the phrase "may, but shall not be obliged to, implement in their law more extensive protection than is required by this agreement, provided that such protection does not contravene the provisions of this agreement".

Due to such non-homogenized standards that vary from territory to territory, in bilateral trade agreements, often the "TRIPS-plus" standards are adopted. Through this, the recent agreements such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA), the US-Mexico-Canada Free Trade Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), among others, have included IP or categories of IP under the definition of an investment.

The criticisms which arise, are concerned with the ISDS as an adjudication mechanism. IIAs which treat Intellectual Property as investment directly bring them under their ISDS. The issue with ISDS is that they are always in a direct legitimacy crisis concerning States’ regulatory power. Investment arbitration is criticised for its inconsistent decision-making, precedent-setting, wide interpretation, and possibility for bias. When enforced, there is a high chance of it destabilising, along with practices used in the investor's favour. The scope of national treatment also goes down in this situation.

On the other hand, international arbitration considers IP as one of the essential driving forces of international economic governance, leading IIA arbitrators as law experts to handle extreme intricacies of IP policies, equally competent to look at matters of investment disputes. This leads to a rift between both contrasting views and an ever-going debate. Although there are no concrete established suggestions to curb this issue, but various research states that the ISDS mechanisms should not be allowed to treat IP as an investment as this directly comes through its non-compliance with the TRIPS agreement. Researchers also believe that IIAs’ investment chapters do not set autonomous substantial standards for IPR protection as to establish them would be an intricate task. Thus, what is needed are standards where IP chapters could be combined with substantial and procedural provisions to govern such situations and eliminate the difficulties which arise there.

References:
  1. 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 (2016).
  2. Eli Lilly v Canada, Case No. UNCT/14/2 (2017).
  3. Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc. v Republic of Panama, ICSID Case No. ARB/16/34 (2020).
  4. Pratyush N Upreti, Intellectual Property Rights in Investment Treaty Arbitration: A Critical Examination of the Philip Morris & Eli Lilly Awards, 67 Ttlf Working Paper 1, 3 (2020), See also Gabriel M. Lentner, International Investment Law and Data, Copyrights and Performance Requirements: A Closer Look at Einarsson v Canada, Stanford-Vienna Ttlf Working Paper 92 1, 2 (2022).
  5. Huala Adolf, Trade-Related Aspects of Intellectual Property Rights and Developing Countries, 39 The Developing Economies, 49, 57 (2001).
  6. Pratyush N Upreti, supra note 4 at 9. See also Lee Branstetter, Does Intellectual Property Rights Reform Spur Industrial Development? 83 Journ Int Econ 28, (2011).
  7. TRIPS § 1 (1995).
  8. Christine Haight Farley, TRIPS-Plus Trade and Investment Agreements: Why More May Be Less for Economic Development, Am Uni Wa Col.Law 1061,1063 (2014).
  9. Gabriele Gagliani, International Economic Disputes, Investment Arbitration and Intellectual Property: Common Descent and Technical Problems, 51 Jour. World Trade 335, (2017).
Author:

* Ms. Ipsita Sarkar
4th year Student - B.B.A. LL. B.(Hons.)
Alliance School of Law, Alliance University

Disclaimer: The opinions expressed in the article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of the Alliance Centre for Intellectual Property Rights(ACIPR) and the Centre does not assume any responsibility or liability for the same.