Protection of Intellectual Property Rights Through Bilateral Investment Treaty
Author: Roudro Mukhopadhyay, OP Jindal University.
The incorporation of IP rights in the concept of ‘investment’ in Bilateral Investment Treaties illustrates the significance of many investment operations of securing such intangible assets. In view of the rapid growth of innovative sectors, such as biotechnology and pharmaceuticals, which depend on patent security, IP can be a major strategic advantage and is all the more relevant. The value of patents, trade secrets, trademarks, copyrights, etc in commercial ties between countries is expressed in the incorporation of IP-related clauses in BITs. Although there are relevant provisions in IP, there are also parallels between some sets of arrangements. There are also variations that have significant legal implications.
One of the most valuable commodities in the world market is intellectual property rights (IPRs). Regularly, the bulk of the value of a corporation consists of its intangible assets, such as its IPRs, while its tangible assets, such as the Manufacturing plants have far less significance. The intangible essence of IPRs demands that they be protected from unauthorized duplication, use, or other types of unjust misuse in special disciplines. The current IPR security regime consists of numerous international agreements, most of which are the World Trade Organization (WTO) administered, mainly the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), as well as an increasing number of bilateral agreements with strict protections on intellectual property (IP).[i]
Debates keep taking place on the various standards that are to be met and further security measures that need to be taken. Such debates have a major political component, as the dissemination of the TRIPS-plus clauses in trade agreements can set important international IP norms with far-reaching effects for biotechnology and medicines, especially in the developing countries. Protection of IPRs by International Investment Agreements (IIAs), which include bilateral investment treaties (BITs) and investment chapter FTAs or Regional Trade Agreements (RTAs), are agreements to facilitate and secure mutual investments between Nations. Usually, such arrangements secure the intellectual property by including it in the investment concept.[ii]
Having IP rights in the concept of ‘investment’ in BITs illustrates the significance in several investment operations of securing such intangible assets. In light of the recent growth of advanced industries, such as biotechnology and pharmaceuticals, which rely on patent security and know-how, IP can be a major strategic advantage and is even more relevant.The exact terminology in the concept of investment in BITs that applies to IP rights has changed over time. In general, BITs have sometimes distinguished among “industrial property rights” and “copyrights” from the 1960s through the 1980s, and other similar subjects such as technological techniques or systems. More recently BITs appear to use the umbrella phrase “intellectual property rights”, which is usually included in a particular list of itemized properties to be covered.[iii]
The benefit of incorporating IP in the investment description is that it will theoretically subject the IP to the general assurances provided under the BIT to investors. These includes security in the event of expropriation, national treatment, and treatment of the most-favoured country. In addition, the use of IP in the investment concept could provide a legal ground for international investors to initiate action against the host country for failure to secure their IP. The scope of security within the BIT of an investor’s IP would be influenced by the meaning if at all, of the word “intellectual property” in the treaties. The finer the term becomes, the further limited the space for future claims. For instance, countries involved in restricting responsibility for IP claims under the BIT may also attempt to confine the covered IP to certain licenses, copyrights, and trademarks registered with their national IP officials, thus removing itself from the definition of “investment” decisions by the officials and grant special rights.
In spite of the fact that the investment security provisions in BITs were generally designed for the protection of investments, and the agreements were never aligned or brought into line with the broad body of international economic principle administered by international bodies such as the WTO, the protection provisions in BITs and the protection provisions of the IPRs were intentionally established and they coexist together. Hence, it cannot be ruled out that security requirements for IPRs in BITs or investment chapters of RTAs allow the security for IPRs more rigorous or more much further than the TRIPS Agreement and therefore provide for TRIPS-plus criteria.[iv]
The amount of foreign investment in IPRs is growing with expanded global economic integration. There will not be any foreign investment today without capital investments being used as part of the valuation of the investor’s assets. With the foreign investment in development and the willingness of many enterprises to create globally renowned brands, the value of an asset in IPRs is rising. Few clauses in BITs may stretch beyond the TRIPS Agreement and hence allow for what could be referred to as TRIPS-plus. This requires, for the most part, the flexibilities specified in the TRIPS Arrangement for construction purposes that are not protected by the BITs.
On a few basic topics, such as obligatory permits, the discrepancy between the TRIPS Arrangement and the BITs relies on the topic of the BIT in question. There is vast literature regarding IP clauses of trade and investment treaties, especially those containing TRIPS-plus commitments. Although the BIT and PTIA negotiating starting point sometimes come in the form of a formula or prior arrangement, this does not actually mean that the final agreement is the same between all the nations using the model. Both developed and developing nations appear to have signed Parts of IP security clauses without any understanding of the legal ramifications and potential inconsistencies with regard to multilateral arrangements to which they were contractual parties.
[i]Boie, Bertram, 2010. “The Protection of Intellectual Property Rights through Bilateral Investment Treaties: Is there a TRIPS-plus Dimension?,” Papers 275, World Trade Institute.
[iii]n.d, Intellectual Property Provisions in International Investment Arrangements. 2007, unctad.org/en/Docs/webiteiia20071_en.pdf.
[iv] Bertram, supra.