Intellectual Property Rights as Investment - Tracing the Arc from Philip Morris to Bridgestone Investor State Dispute Settlement Cases -

Abstract

This article provided an analysis of three high-profile ISDS cases involving IPR. One of the fundamental issues in an ISDS case is whether there is a qualifying investment. One must look at the relevant investment treaty and its definition of what an investment is as well as the relevant arbitration rules under which the dispute is brought. In the tobacco plain packaging cases dealing where the IPR in question concerned trademarks, it was acknowledged and reaffirmed that trademark registration grants negative rights and not positive rights requiring minimum use. The case also decided that there was no definitive test as to what constitutes an investment but that it must be analyzed in the context of the relevant investment treaty. In Eli Lilly v Canada, where the investment concerned patents, it was simply assumed by both parties that the IPR in question constituted investments and no discussion was held on the issue. In Bridgestone v Panama, there was a more definitive guidance on when IPR would constitute an investment. The mere registration of a trademark would not amount to an investment but that there must be exploitation of the trademark, either by manufacturing, marketing and selling goods or services bearing the mark, or by licensing the trademark so that others may exploit the mark. However, it is not clear whether contribution to the economic development of the host state was a required element of an investment or whether the standard given in this case could be extended to other types of IPRs. More IP-related disputes are likely to arise under ISDS regime. There is currently an ongoing copyright based ISDS claim brought against Canada. The question of what is a qualifying investment is an unsettled issue even in disputes concerning tangible assets and given the particular nature and characteristics of IPR, the issues can become more complicated. This article provides a summary and some issues to consider when IPR is the subject of covered investment under ISDS regime and suggests that it may be useful for state parties to review the existing definitions of investment in international investment treaties which they have ratified and also suggests that more arbitrators knowledgeable in the subject matter of IPR may be needed.