Khóa luận tốt nghiệp: Protection of intellectual property rights through investment treaties

EU-Canada Comprehensive Economic and TradeAgreementCompulsory LicensesComprehensive and Progressive Agreement for Trans-Pacific Partnership Dominican Republic-C entral American Free Trad

HANOILAW UNIVERSITY

LUONG MAI LINH

453055

PROTECTION OF

INTELLECTUAL PROPERTY RIGHTS

THROUGH INVESTMENT TREATIES

HANOILAW UNIVERSITY

LUONG MATLINH

453055

PROTECTION OF

INTELLECTUAL PROPERTY RIGHTS

THROUGH INVESTMENT TREATIES

GRADUATION THESIS

SUPERVISOR

LLM NGO TRONG QUAN

Hanoi - 2024

STATEMENT OF AUTHORSHIP

1 with this, declare that I have written the submittedBachelor’s Thess independently The conclusons and

datain the Bachelor's Thess are truthful and reliable./

Confirmation of supervisor Author of Bachelor's Thess

LLM Ngo Trong Quan Luong Mai Linh

With the culmination of my graduation thesis, I express my sincere appreciation

to those who have been instrumental in the realisation of this research andthroughout my academic journey

I want to express my gratitude to my thesis supervisor, LLM Ngo Trong Quan,for his kind acceptance in supervising my thesis, for his patience in helping me withthe draft of my thesis and for giving me insigHffil comments His immense knowledgehas significantly shaped this shidy

I would like to thank the professors, lechers and library staff of Hanoi Law

University for their enthusiastic mentorship and insightfid lessons cdiaing my study I

am grafeftl for being promptiy provided the necessary information regarding the

thesis by Hanoi Law University, which motivated me to complete the thesis on time

Without their help I would encounter many difficulties in implementing my thesis

research

Iam gratefil to my family and friends (especially Ngo Thanh Hang) who haveencouraged and supported me diaing my study and thesis completion To my family,Iam indebted for their endless love, encotnagement, and understanding I am deeplythanlftl to my friends and colleagues for their companionship and the countlessdiscussions that enriched my knowledge of the subject matter

This thesis would not have been possible without the collective efforts and

encouragement of all those mentioned and many others who have touched myacademic journey in various ways Thank you for your invaluable contributions./

Luong Mai Linh

Hanoi Law University, 2024

EU-Canada Comprehensive Economic and TradeAgreement

Compulsory LicensesComprehensive and Progressive Agreement for Trans-Pacific Partnership

Dominican Republic-C entral American Free TradeAgreement

exempli gratia (for example)

et cetera (and so forth)

EU - Viet Nam Investment Protection AgreementFriendship, Commerce and Navigation

foreign direct investmentfair and equitable treatmentFree Trade Agreements

id est (that is)

intellectual propertyintellectual property right

investor-state dispute settlement

low-to-middle income countriesnational and most-favored-nation treatment

Ministry of Planning and Investment

North American Free Trade Agreementpage

RCEP : Regional Comprehensive Economic Partnership Agreement

SAFTA :_ Ñingapore- Australia Free Trade Agreement

SPR : Single Presentation Requirement

SSDS : State-to-State Dispute Settlement

TIP : Treaties with Investment Provision

TPP : Trans-Pacific Partnership

TTMRA : Trans-Tasman Mutual Recognition Arrangement

TRIPs : Agreement on Trade-Related Aspects of Intellectual

Property Rights

UNCTAD : United Nations Conference on Trade and Development

WHO : World Health Organization

WIPO : World Intellectual Property Organization

WTO : World Trade Organization

TABLE OF CONTENTSSTATEMENT OF AUTHORSHIP

SS 2D Diana onaiics to0 ste teen sass Se, US Oe Neier ae a Se1.2.2 The legal characteristic of intellectual property states 15

1.3 The protection of IPRs in investment treaties ste ee)

1.3.1 The inclusion of IPRs in investment defiyitions meer ĐỠ"1.3.2 The relevant standards of treatment for protecting IPRs 181.3.3 The use of investor-state dispute settlement for protecting IPRs 21CONCLUSION FOR CHAPTER 1

CHAPTER 2: ARBITRAL PRACTICE ON PROTECTION OF

INTELLECTUAL PROPERTY RIGHTS THROUGH INVESTMENT

TREATIES

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CONCLUSION FOR CHAPTER 2

CHAPTER 3: SOME RECOMMENDATIONS FOR VIETNAM TOAVOID IPR-RELATED DISPUTES THROUGH INVESTMENT

tin n0 le 423.1 Negotiation and drafting of investment treaties cman eA3.1.1 Exclusion of IPR-related measures from eXpropriafiow 423.1.2 Inclusion of public interest provisiows đỔY3.2 Issuance and Implemention of domestic laWs, 4Ø3.3 Settlement of investor-state đisputes cái CONCLUSION FOR CHAPTER 3

CONCLUSION

LIST OF REFERENCES

Over the last few decades, international investment law has rapidly progressed,characterized by the expansion of a complex network of investment agreements and

a substantial body of case law resulting from investor-state arbitrations This hasgiven tise to an influential field of international law that intersects with privateenterprise, cross-border capital, investment flows, and the public policies of host

states Regarding the protection of intellectual property rights (IPRs), whereas

international treaties like the Paris Convention or Agreement on Trade-Related

Aspects of Intellectual Property Rights (TRIPs) specifically deal with intellectual

property, investment treaties include intellectual property as a definition ofinvestment, giving the investor an alternate forum to enforce their IPRs underinternational tribunal Although the system of investor-state dispute settlement

(SDS) emerged in the 1950s as part of bilateral trade and investment agreements},

since 2010, only some investors have started using investment treaties to defend theirintellectual property rights against host state interventions through this ISDS

mechanism?

From a practical perspective, the trends of globalization and integration havecreated favorable conditions for extensive foreign investment in Vietnam However,alongside the economic benefits, the government also faces challenges regardinginvestment disputes In the past decade, the ISDS mechanism has enabled foreign

investors to bring claims against host states, raising concerns for legislators and the

Vietnamese government regarding investment reception According to statistics fromthe United Nations Conference on Trade and Development, there have been 696known cases of international investment disputes In Vietnam, there have been 13cases where foreign investors have sued the Vietnamese government in international

! The Germany-Pakistan BIT is often cited as the world’s first BIT and dates back to 1959 See Marc

Bungenberg (2016), “A History of bwestment Arbitration and Bwvestor- State Dispute Settlement in Gemuny”, CIGI ISA Paper No 12.

3 See Phalip Morris Prodirts SA & Abal Hermans SA v Oriental Republic of Uruguay ICSID Case No.

ARB/O/7, Aotard (uly 8, 2016); 3 LMv cod Company v The Government of Canada, UNCITRAL ICSID

Case No UNCT/14/2, fuvard (Mar 16,2017); Bridgestone Licensing Services, Inc & Bridgestone Americas,

Inc tị Republic of Pemana,TCSID Case No ARB/16/34 , Decision on Expedited Objections (Dec 13,2017).

arbitration? Furthermore, the number of investor notifications of intent to initiate

proceedings is increasing In 2016 alone, there were four investor notifications, not

to mention cases where foreign investors initiated proceedings against local

authorities Regarding IPRs-related disputes, it is noteworthy that the challenged

measures often share similarities in terms of public welfare Examples include theTobacco Plain Packaging case (Philip Morris v Australia 201), the patentinvelidation based on utility testing case (Eli Lilly v Canada 2013), and the

disclosure of seismic data case (Hinarsson v Canada) While Vietnam has not yet

recorded any disputes related to IPRs protective measures through investment

treaties, the increasing trend of international investment disputes, including complex

and protracted cases with substantial compensation claims by foreign investors, is acause for concer, especially for developing countries like that attract significantforeign investment

In parallel with the practical situation, from a legal perspective, in fact, thereare only afew cases in which IPRs lie at the core of investment arbitration, which has

often been sought through claims of expropriation and fair and equitable treatment’.

Among these few cases, tribunals tend to dismiss claims brought by investors®

However, it is worth noting that despite the limited disputes, there have beennumerous debates on this topic, primarily concerning the interaction between IPRs

and ISDS or IPRs and international investment law’ In fact, there are few focused

studies on developing solutions for host states regarding how to prevent and cope

with IPRs-related disputes through investment treaties While the majority of cases

> See ups //mwestmentpolicy xnctad orgfawe stment-dispute-settlement/country/220hvietmam, accessed on 30/3/2024

3 Tran TÌM Nguyat, “Ture trung tranh chap đầu tư quốc tế và giã: quyét tranh chấp đầu tư quéc tế ở Việt Nam”,

https mao} gov vzgtfcaccktuyetecjpt/Pagesjpho-bien-pl-doani.nghiep aspxiItemID=50, accessed ơn 30/3/2024

Ý Upreti Pratyush Nath (2021), Intellectual Property Rights mn Investor-State Dispute Settlement: Comecting the Dots through the Philip Morris, Eli Lilly and Bridgestone Aavards, The American Review of Buternational

Arbitration Vol 31,p 342

° Nguyen Thi Anh Tho & Nguyen Minh Huyen (2023), “Sntemational awvestment disputesrelated to intellectual

property rights - Some notes for Vitram: ( Tranh chấp đầu tư quốc te liền quan tới quyền sở hữu trí tuệ - Một

số Xru ý đôi với Việt Nam)”, Legal Science Journal, Vb\ 1 ,p 29

` Pratyush Nath Upreti (2022), 'Teeallactual Property Objectives in Intemational Investment Agreements”:

Simon Klopschinski, Christopher Gibson, Haming Grosse Ruse-Khan (2020), ““The Protection of Intellectual

Property Rights Under Intemational bwestment Law”?

Concerns of countries wanting to implement similar policies without being sued by

investors still remain constantly? Recommendations on preventive measures and

how to deal with related disputes have not been thoroughly and extensivelyresearched, especially in Vietnam Therefore, through an analysis of disputes whereinvestors use investment agreements to sue the host government to protect theirintellectual property rights, the author will focus on synthesizing and analyzing

considerations that the Vietnamese government should take into account to avoid

1 “International Investment Agreements and Protection of Intellectual Property

Rights of Foreign Investors” by Ngo Trong Quan! explores the possibility of using

the ISDS mechanism to litigate IPRs-related investment disputes This article alsoprovides extremely useful recommendations for the Vietnamese government toprevent similar claims during the negotiation of investment treaties and disputesettlement process

* Just three months after the arbitration decision in Fi Lilly vị Canada, the Canadim Supreme Cowt made a

significant clung? to ts establidued promise Amility doctrme in the AstraZeneca Canada Ine v: Apotex Inc.

case This chang: represents a significant loosening of the doctrine , ndicating a shift in Canada's approach to

patent protection and potentially impacting future disputes awolving plummaceutical conpaniss See Baker, Brook K and Geddes, Katrina (2017),““The Incredible Shrinking Victory: #E Lily v Canada, Success, Judicial

Reversal, and Contaming Threats from Phamuceutical ISDS”, Loyola University Chicago Law Jornal, Vol.

49, Northeastem University School of Law Research Paper No 296-2017,p 481

* With the concem of being suing, Thailand and New Zealand took about 6-7 years to implement new policies about tobacco control (See: Cohen, J E., Zhou, $., Goodchild, M., and Albrright, S (2020) ‘Phinpadagng

of tobacco products: Lessons for the next round of impkmentng countries Tobacco Induced Diseases”,

18 (November), 94 hetps //doiorg/10 19332833/130379; Jane Kelsey, “Regulatory Chill: Learnings From New

Zaaland’s Plan Packaging Tobacco Law”, UT Law Review Vohunt 17 (2) Special Issue : Plan Packaging of Tobacco Product Nov 24, 2017,page 23) , India constantly expressed concems about IP-related challengng neasires when issuing Compulsory Licenses ơn drug patent (See: Prabhash Ranjan (2017), “Phammaceutical Patents amd Expropriation in Indian Bilateral Investment Treaties”, Cambridge University Press https papers san com/sol3 fpapers fan tabstract_id=204610 lpaper-references-vidget )

‘© Ngo Trang Quan (2023), “Các hiệp định đầu tư quốc ti và vin dé bảo hô quyền sở hữu trí tuệ của nhà đầu

trrrước ngoài”, State cond Leow Review ,No 3(419)

2 “International investment disputes related to intellectual property rights Some considerations for Vietnam” by Nguyen Thi Anh Tho and Nguyen Minh

-Huyen!!, aims to analyze several international investment disputes involving IPRs

and assess their impacts on the State’s consideration in promulgating and makingpolicies for the public interest, then examine the definition of “investment” ininvestment agreements compared to Vietnam

2 “Intellectual Property Rights in International Investment Agreements: AnOverview” by Liberti, L (2010) gives an overview of the inclusion of IPR provisions

in investment agreements, the variation in these provisions, the need to balance

investor rights and public interest, and raises some challenges in interpretation and

enforcement of IPRs provisions

In terms of giving opinious about the arbitral practice

1 “The Incredible Shrinking Victory: Eli Lilly v Canada, Success, JudicialReversal, and Continuing Threats from Pharmaceutical ISDS” by Baker, Brook K.,and Geddes, Katrina highlights the complexities and challenges associated with ISDS

in the pharmaceutical sector It underscores the need for careful consideration of thebalance between investor rights and the public interest, as well as the importance of

© Nguyen Thi Anh Tho & Nguyen Mish Huyen (2023), “anh chip đầu tư quốc tế lên quan tới quyền sở hiệu

tríttệ - Một so hmy doivei Việt Num”, Legal Science Jounal, Vol?

maintaining robust domestic legal systems to effectively address investor-state

disputes.

2 “The Protection of Intellectual Property Rights Through InternationalInvestment Agreements: Only a Romance or True Love?” by Markus Perkams andJames M Hosking explores the basic norms of IPRs protection in internationalinvestment agreements and then highlights some significant problems

3 Objectives of research

The objectives of this research are two-fold:

First, the study aims to provide an overview of the protection of IPRs ininternational investment agreements It does so by examining the provisions related

to the protection of IPRs in international investment agreements, taking into accountboth treaty practice and arbitral practice This analysis helps to understand the currentstate of IPR protection within these agreements and identify any gaps or areas for

improvement.

Second, this research aims to offer some recommendations for the host state,especially Vietnam, on preparing claims through investor-state dispute settlementmechanisms It focuses on three aspects: (1) Negotiating and drafting investmenttreaties, (2) Implementing domestic law, and (3) Dispute resolution

4 Scientific and practical significance of the research

4.1 Scientific significance of the research

Firstly, it will serve as a comprehensive reference on the protection of

intellectual property rights in investment agreements, covering topics such as IPRs as

a covered investment and the application of investment standards Secondly, it willprovide valuable insights and recommendations for host states, addressing potentialchallenges and suggesting some preparation to avoid the risk of being sued by foreign

investors.

4.2 Practical significance of the research

This research will address practical issues concerning foreign investors bringingclaims against governments to protect their IPRs under international investmentagreements It will explore potential limitations and challenges faced by host statesthrough the analysis of relevant case law and the experiences of several countries

around the world.

The research subject of this course is the protection of IPRs in investmenttreaties, specifically (i) the regulations of IPRs in different investment agreementsand (ii) the arbitral practice on the settlement of IPRs-related investment disputes.

5.2 Scope of research

The scope of the research encompasses investment treaties worldwide It also

includes an examination of the policies implemented by India and Thailand in their

efforts to mimmize the risk of IPRs-related disputes and investor-state claims

In terms of the temporal scope, the research covers investment treaties fromtheir inception in the 18th century to the present day, providing a comprehensiveanalysis of the evolution and current state of these treaties

6 Research methodologies

The doctrine research method is used to focus on the analysis of legal doctrinesand how they are formulated, interpreted, and applied This method is used whenexamining the “public interest” and “public power doctrine” in case laws andinvestment treaties in order to provide recommendations to the state in terms of treatydrafting and dispute resolution

One commonly used methodology is the comparative method, which involvesanalyzing and contrasting different case-law disputes and awards to identifysimilarities and differences In this thesis, when examining the decision of two

caselaw, the comparative method helps researcher identify to what extent, a

challenged measure will violate the standard of protection in investment treaties

7 Structure of the dissertation

The thesis consists of three parts: (i) introduction, (ii) the main contents,including three chapters, and (iii) conclusion There are three chapters as follows:

Chapter 1 Overview of the relationship between intellectual property rights and

INTELLECTUAL PROPERTY RIGHTS AND INVESTMENT TREATIES

The relationship between IPRs and investment treaties is a significant area ofstudy that explores the intersection between international investment law andintellectual property law Within the context of investment treaties, the coverage ofIPRs varies Some investment treaties explicitly include provisions that address the

protection of intellectual property, while others may only indirectly touch upon IPRs

The extent of IPR coverage under investment agreements has implications for thetights and obligations of both host states and foreign investors, as well as the legalremedies available in case of disputes related to intellectual property By offering acomprehensive overview of the relationship between intellectual property rights andinvestment treaties, this chapter aims to provide an understanding of scholars,policymakers, and practitioners in both fields

1.1 Investment treaties

1.1.1 Definition

According to the Vienna C onvention on the Law of Treaties, Article 2.1.a states:

** "Treaty' means an international agreement concluded behveen States in writtenform and governed by international law, whether embodied in a single instrument or

in tvo or more related instruments and whatever its particular designation”?

Based on that, in the term “investment treaty”, Jeswald W Salacuse assumedthat: “An investment treaty is an agreement embodied in one or more writtendocuments by which two or more states agree to certain legal rules to governinvestments undertaken by nationals of one treaty party in the territory of another

treaty party”?

`? Vienna Convention on the Law af Treaties (adopted 22 May 1969, entered into force 27 Jamury 1980),

hts /fisgalm orgfile Revas/instrments/engiiclvconventions/1 1 1969 pdf accessed on 30/3/2024.

`! Jesvvald W Salacuse (2010), “The Law of Investment Treaties”, Oxford Intemational Law Library, 126

agreements regarding a State’s treatment of investments made by individuals or

companies from another State.”

In summary, investment treaties are legally binding agreements between two ormore countries that aim to promote and protect foreign investments

The primary purpose of international investment agreements is to reinforce

economic cooperation between the contracting parties.’ These agreements aim to

establish a framework that encourages and facilitates investments made by one party

in the territory of the other party By doing so, they create favorable conditions for

cross-border investments, including providing legal protections and safeguards for

investors

However, beyond the immediate economic benefits, the underlying purpose ofthese agreements is to promote joint economic prosperity and development Theyseek to foster mutually beneficial relationships between countries, encouragetechnology transfer, stimulate job creation, and enhance overall economic growth Bypromoting investment flows, these agreements aim to contribute to the long-termdevelopment and welfare of the contracting parties while also fostering closereconomic ties and partnerships on a global scale

1.1.2 History background

Although the number of agreements increased remarkably after 1990,

international agreements relating to investment have a long history of three separate

eras.!© The first, the colonial era, began in the late eighteenth century and continued

until the end of the Second World Wer The second, the postcolonial era, began withthe end of the war and continued until approximately 1990, with the collapse of the

“ The text is svailble at website of Worldbank, https //icsid worldbank orgnode/20271, accessed on

30/3/2024.

© Dr Alexander Bohmer (2008), #ữe??vdiơnal bwestuent Agreements: Strategies (oxi Content IRAQ:

International baeatueyt Treaty Programme , High level Iraq meeting, OECD Private Sector Development

Division, Paris, $ July 2008, hts /JAvuroecd orghenalconmetitiveness/$1052844 paf, accessed on 30/3/2024.

'* Vandevelde , Eerueth J (2009),'A Brief History of Etermationa] Investment Agreements', The Effect of

‘Brearies on Foreign Direct bwestuent: Bilateral bwestuent Treaties, Dorible Taxation Treaties, and

Swestuent Flows, New York, Oxford Academic , 1 May 2009),p (2009),'A Brisf History of International

Investment Agreements', The Effect of Treaties on Foreign Direct bwestment: Bilateral bwestuent Treaties,

Double Revation Treaties, aod brestuent Flows New York, Oxford Acadamix ,1 May 2009),

3, https://doi org/10.1093 /aqprat :050/9780195388534.003 0001 , accessed om 30/3/2024.

to the present.

Prior to World War II, international agreements focused mainly on traderelations rather than protecting foreign direct investment However, some agreementsdid include provisions for protecting the property of nationals in other countries Forexample, the United States established bilateral treaties called "Friendship,Commerce and Navigation" (FCN) in the 18th century, which included guarantees of

“special protection” or “full and perfect protection” to the property of nationals

of one partyin the territory of another party Since the end of World War II, the nations

of the world have been engaged in establishing a worldwide framework treaty aimed

at safeguarding the foreign investments of their citizens by means of negotiatinginvestment treaties Later, on 25 November 1959, Germany was commonly cited as

the first state to develop a BIT program and sign the world’s first BIT with Pakistan.”

This created the trend in which investment agreements have been drafted betweendeveloped and developing countries, with developed countries usually exportingcapital to the developing countries The idea was to secure justice for foreigninvestors while creating incentives for foreign investors to invest in developing

countries While in the postcolonial era, investment agreements were intended to

protect the investment of developed countries in the territory of developing countriesprimarily against expropriation, in the global era, investment agreements increasinglyare intended to liberalize investment flows According to the United Nations

Conference on Trade and Development (UNCTAD), the total number of all

+ General Convention of Peace, Amity, Navigation and Conmurce, U.S.-Colombia, Article Tenth, Oct 3, 1824; Treaty of Peace , Friendship, Conmurce, and Navigation, U.S.-Bolivia, at 13, May 13, 1858, 12 Sut 1003; General Treaty of Amity, Commerce and Consular Privilege , U.S.-El Salvador, art 13th, Dec 6, 1870,

18 Nat 725

!9 Traaty of Friendship , Commerce , and Navigation, U.S -Para., art DX, Feb 4, 1859, 12 Stat 1091; Treaty of Friendship, Conmurce , and Navigation, U.S.- Arg art VIL, aly 27, 1853, 10 Stat 1005; Treaty of Friendship, Coumurce , and Navigation, U.S.-Costa Rica, art VII, Xủy 10, 1851, 10 Stat 916

“ See Marc Bungenberg (2016), “A Histary of bwestment Arbitration and hwestor-State Dispute Settlement

in Germany”, CHƠI ISA Paper No 12.

2° Mattias Kimm (2015), “An Eupze of Ca pital? Transathmtic Investuent Protection as the Institutionalization of Unpustified Privilege”, 4(3) ESIL Insights 1,2

2! Intemational Investment Agreements Navigator, https /mvestmentpolicyxumctad

org/mtemutional-westment-agreements, accessed on 31/5/2024.

investment treaties by May 2024 is 2835 BITs and 462 Treaties with InvestmentProvisions (TIPs), of which 2222 and 388 ones are in force, respectively Besides,approximately 180 countries have signed at least one of them.

1.1.3 Types of investment treaties

Investment treaties consist principally of three types”: (1) bilateral investment

treaties, commonly known as 'BITS, (2) bilateral economic agreements withinvestment provisions, and (3) other investment-related agreements involving morethan to states

BITs have historically been entered into between a developed state and adeveloping state Germany has by far concluded the most BITs with 139, of which

126 are in force China follows as second with more than 100 such treaties? Since

1980, Vietnam has signed a total of 67 Bilateral Investment Treaties and 28 Treaties

with Investment Provisions, out of which 51 have come into force.**

Regarding two later types of investment treaties, they are often referred to asTreaties with investment provisions, which contain a chapter on investmentprotection that sets out standards broadly commensurate with those found in BITs.Notable instances of regional Free Trade Agreements (FTAs) include the NorthAmerican Free Trade Agreement ("NAFTA") established in 1994, which involvesCanada, the United States, and Mexico Another recent example is the Dominican

Republic-C entral American Free Trade Agreement ("DR-CAFTA'), which involves

the United States and several C entral American nations Apart from DR-CAFTA, theUnited States has also entered into various bilateral FTAs These include agreementswith Latin American countries such as Chile, Peru, and Colombia, as well as withAustralia, Singapore, Korea, and Oman Besides, In the Asia Pacific region, theSingapore-Australia Free Trade Agreement (SAFTA), ASEAN Comprehensive

* Jeswald W Salacuse (2010), “The Law of Investment Treaties”, Oxford Intemational Law Library,p 141.

» Norah Gallagher, W&xtra Shan (2009), Chinese investment Treaties: Policies amd Practice, Oxford University Press, doi:10.1017/S2044251310000238.” Norah Gallagher, Wenkma Stun (2009), Chinese Investment Treaties: Policies amd Practice, Ozford University Press, doi:10.1017/52044251310000238., accessed on 30/3/2024

TM $&e —_https://investmentpolicy wxtad org/intenutional- awe staent-agreements/cowntries/229Ariet-ram, accessed on 30/3/2024

Investment Agreement (ACIA), and ASEAN-Australia-New Zealand Free TradeArea (AANZFTA) are also significant instance of investment treaties.

1.1.4, The scope of application of investment treaties

The scope of application of investment agreements is delineated by four primaryelements: “its geographical scope its temporal application, the subject matter of the

agreement, and the persons covered by the agreement “>

Firstly, the geographic scope of investment agreements is primarily determined

by the territory of the contracting parties In international law, the term "territory"typically encompasses not only the land and internal waters of a state but also its

airspace and territorial sea, over which the state exercises sovereign rights

Additionally, it may include other areas over which the country exercises exclusive

jurisdiction 27

Secondly, the temporal framework within which the investment refers to thetime period during which the investment is initiated, established, or ongoing Thereare two matters that arise in relation to this The first one pertains to whetherinvestments made before the BIT came into effect are includedin the agreement Thesecond aspect focuses on the length of time that the agreement remains in effect

Thirdly, investment agreements encompass investments made by both naturaland legal persons Regarding legal entities, the agreement's definition of an "investor"specifies the types of corporate entities that are included under the agreement Ininternational law, it is widely recognized that the nationality of an investor, as anindividual, is determined based on the national law of the country for which they

claim nationelity"® However, certain investment agreements may introduce

additional criteria, such as a residency or domicile requirem ent ® On the other hand,

different investment treaties employ varying criteria to establish the necessary

** Fulien Chaisse (2017), “Jextbook on duternational investment leew”, Chapter 1,p_38

Julien Chasse ,p Julien Chaisse ,p 42

*' Camada-Peru BIT, Article 1.

**0ECĐ 2008, Jnternational önestmert Law: Uurataxăng Concepts and Tracking movations ,chapter 1, p10.

?° ƯS-Ưmguay BIT defines national to mean: “a) For the United States, anatural person who is a national of

the United: States as defined in Title LÍ of the Iumigration and Nationality Act; b) For Uruguay, a natural

person possessing the cinzenshap of Unugucy, in accordance with its lees.”

connection between a legal entity seeking protection under the treaty and thecontracting state from which the investor seeks that protection There is no uniformtest universally applied across all investment treaties to define this link Each treatymay have its own specific requirements or factors that determine the eligibility of a

legal person for protection under the treaty provided by the contracting state.39 In fact,

there are some common tests: 2 the place of the constitution in accordance with thelaw in force in the country, ii) the place of incorporation or where the registered office

is, 1) the country of the seat, i.e where the place of administration is, and iv) less

frequently, the country of control 3!

Lastly, the multiplication of definitions of investment thus results from the

proliferation of different sources 32 The concept of investment determines the assets

included within the agreement's scope In simpler terms, it addresses the question ofwhich types of investments are covered by the agreement There are two types

including: asset-based definition and enterprise-based definition ?? The

enterprise-based definition focuses on the investor's intention to establish a long-termrelationship with the host country's economy This is achieved by acquiring a lasting

interest in either the ownership or management control of an enterprise * Regarding

asset-based definition, investment agreements adopt a broad definition that refers to

“every kind of asset,” suggesting that any economic value is covered by theagreement Besides, some treaties have included language in their agreement to

'° Judge Jessup, m his Separate Opinion in Barcelona Traction said: “there are two standard tests of the

‘nationality’ of & corporation The place of incorporation is the test generally favoured in the legal systems of

the conmon law, while the siege social is more generally accepted in the civil lav systems.”

* Supa note 22,p 19.

» Ph Khan (2007), “Les awvestissements intenutionaux, nouvelles dommes: vers vì droit transmational de

Dinwestissement”, in Ph Kalm, Th Wilde (eds), Neyr Aspects of Intemational Investment Lavy, Martins Nijhoff Publishers, Le iden/Boston, p 17-19.

` Supa note 19, p 51-55

* For examph , Denmark-Poland BIT of 1990 defines awestment as: “all nwestments m companies made for

the purpose of establishing lasting economik relations between the investor and the company and giving the

rwestor the possibility of exercising significant nfhnence on tht mumagement of the company concemed”

clarify the scope of the term “investment,” such as maintaining an open-ended list of

assets that have “the characteristics of an investment.”3°

1.2 Intellectual property rights

1.2.1 Definition

Intellectual property rights are the rights given to persons over the creations oftheir minds They usually give the creator an exclusive right over the use of his/her

creation for a certain period of time TM Intellectual property rights were first developed

as national and territorial rights, and are becoming increasingly global assets that areprotectedin more countries The entry into force of the Agreement on Trade-Related

Aspects of TRIPS in 1995 marked a turning point in the globalization of IPRSs 3?

According to the World Intellectual Property Organization (WIPO) and WorldTrade Organization (WTO), intellectual property rights are customarily divided into

two main areas:*® (2) Copyright and rights related to copyright and (b) Industrial

property (which includes, among others, trademarks, geographical indications,patents, industrial designs and trade secret)

Regarding copyright and rights related to copyright, copyright is a legal termused to describe the rights that creators have over their literary and artistic works.Works covered by copyright range from books, music, paintings, sculpture, and films

to computer programs, databases, advertisements, maps, and technical drawings Inprinciple, copyright protection extends only to expressions and not to ideas,procedures, methods of operation, or mathematical concepts as such Copyright may

or may not be available for a number of objects, such as titles, slogans, or logos,

depending on whether they contain sufficient authorship 3°

With regard to industrial property, industrial property encompasses severalforms of intellectual property rights that play significant roles in various industries

`° US Model BIT of 2012, Article 1 states that: “investment” means every asset that an investor ovms or controls, directly or indirectly, that has the characteristics of an investment, mchuding such dluracteristics as the conmuiment of capital or other resources, the expectation of gain or profit, or the assumption of risk.”

ˆ* See WTO: latps:/nwurwito orgienglidvtratop_¢frips_e/mtell_¢ hm, accessed on 30/3/2024

`! Daniel Gervais (2008), The TRIPS Agreement: Drafting History and Analysis

* See hưtbs:JAxvrtr vto org/englidvtatop e/frips e/imtell + hom , accessed on 30/3/2024

* See WIPO https /Amnrwipo au/copyright/ev , accessed on 30/3/2024.

Firstly, trademarks are signs capable of distinguishing the goods or services of oneenterprise from those of other enterprises They serve as distinctive signs that enable

the differentiation of goods or services between different enterprises Secondly, a

geographical indication (GI) is a sign used on products that have a specificgeographical origin and possess qualities or a reputation that are due to that origin Inorder to function as a GI, a sign must identify a product as originating in a given

place *! Thirdly, patents grant exclusive rights to inventors, allowing them to control

the use and distribution of their inventions Patent owners have the authority to

determine how or if their inventions can be utilized by others, and they disclosetechnical information about their inventions through publicly available patent

documents *? Fourthly, industrial designs focus on the ornamental or aesthetic aspects

of an article They can encompass three-dimensional aspects, such as shape or

surface, aswell as two-dimensional elements, like patterns, lines, or colors Fifthly,

trade secrets are intellectual property rights that protect confidential information,which can be sold or licensed Unauthorized acquisition, use, or disclosure of suchconfidential information in a manner contrary to honest commercial practices is

considered an unfair practice and a violation of trade secret protection * Lastly,

regarding layout-designs (topographies) of integrated circuits Members shallconsider unlawful the following acts if performed without the authorization of thetight holder: importing, selling, or otherwise distributing for commercial purposes aprotected layout-design, an integrated circuit in which a protected layout-design is

incorporated, or an article incorporating such an integrated circuit only in so far as it

continues to contain an unlawfully reproduced layout-design

“See Article 15.1, SECTION 2: TRADEMARKS, Pat 2, TRIPS; WIPO,

tứtbs /ÁAvvrw ipo mtiradenurks/en/ , accessed on 30/3/2024.

“ See Article 22.1, SECTION 3: GEOGRAPHICAL INDICATIONS, Pat I, TRIPS; WIPO,

hitps JAmvvrivpo aw/geo_aulications/en/ , accessed on 30/3/2024.

* See Article 27-28, SECTION 5: PATENTS, Part I, TRIPS; WIPO, lứtps:/Arvvrvrvripo awipatentsien! ,

accessed on 30/3/2024

4#! See Article 25-26, SECTION 4: INDUSTRIAL DESIGNS, Pat HH, TRIPS; WIPO,

lưtps J6rvmT srpo mwidesigns/av , accessed on 30/3/2024

** See Article 39, SECTION 7: PROTECTION OF UNDISCLOSED INFORMATION, Part Il, TRIPS; WIPO,

hitps Jnr iripo mtitradesecrets/en/ , accessed on 30/3/2024.

1.2.2 The legal characteristic of intelectual property

As intangible rights, IPRs differ from other property rights, particularly withrespect to their recognition, their scope, and their temporal and territorial

limitations *

Firstly, the existence of an IPRs is established and recognized only whenlegislation within a specific jurisdiction acknowledges and defines the conditions forits existence The legal system of each country establishes the framework in which

intellectual property rights (IPRs) are granted and safeguarded As a result, every

national framework differs significantly when outlining the criteria, processes, and

restrictions involved in obtaining and preserving these rights For instance,

copyrights typically do not require registration, *” whereas patents necessitate aformal

application and only come into existence after the application has been approved and

the patent has been granted by the respective national patent authorities.

Secondly, IPRs give an exclusive right to the owner The scope of rightsbestowed upon an IPRs holder bear similarities to those associated with physicalproperty, such as the right to prevent others from utilizing reproducing, selling ordistributing the protected innovation It is worth mentioning that certain restrictions

on IPRs can be implemented to address concerns related to anti-competitive practices

or other matters that serve the greater public interest For instance, limitations may

‘be imposed to safeguard public health or uphold ethical considerations In particular,Article 31 of TRIPS determines the conditions under which a compulsory license on

a patent can be issued This will be discussed further in the next chapter

Thirdly, intellectual property rights are limited to the territory of the country

where they have been granted.” These states customize their national intellectual

property laws according to their technological and economic advancements Inessence, this principle grants countries the flexibility to design their intellectual

4% Murkus Pexkems and James M Hosking (2009), “The Protection of Intellectual Property Rights Through

ng Investment Agreemunts: Only a Romance or Tue Love 9”, Hieaunational Dispute Management, P.

“Dips.

*) Artic]e 5.2, Beme Convention for the Protection of Literary and Artistic Works

© Artic]e 4, Paris Convention for the Protection of Industrial Propaty

+ Lydia Lumdstedt (2016), “Tertoriality in Intellectual Property Law”, Stockholm University p 91.

property law sin a way that aligns with their specific societal objectives For instance,countries can tailor their laws to foster the growth of domestic industries or prioritizethe protection of public health This principle acknowledges the diversity of nationalcontexts and enables countries to adapt their intellectual property frameworks to suittheir specific needs and goals.

Lastly, not only the territorial scope but also the duration of IPRs is typicallyconstrained The majority of IPRs are temporary rights Once the designated time

period of an IPRs has elapsed, the invention, trademark, design, or artistic work

becomes accessible to the public for unrestricted use As per the TRIPS agreement,patents should have a minimum duration of 20 years, while copyrights generally

extend for the lifetime of the author plus fifty years “2

1.3 The protection of IPRs in investment treaties

1.3.1 The inclusion of IPRs in investment definitions

The vast majority of investment treaties stipulate the coverage directly byexplicitly enumerating IPRs within the categories of property protected under the

treaty”! Therefore, there may be some variations in the specific wording and

formulation of these provisions Overall, there are two common approaches todetermining the scope of covered investment in investment treaties

First, investment treaties can include IPRs under their scope by explicitly

enumerating the kind of IPRs thet is covered under the agreement For example,

Asticle 1 of German Model BIT of 2008 lists all the covereditems under the definition

of investment means: “d) intellectual property rights, in particular copyrights andrelated rights, patents, utility-model patents, industrial designs, trademarks, plantvariety rights; (e) trade- names, trade and business secrets, technical processes,know-how, and good-will; ” Article 1 of China - Turkey BIT (2015) regulates in thesimiler manner: “(d) industrial and intellectual property rights such as patents,

industrial designs, technical processes, as well as trademarks, goodwill, know-how,

© TRIPS, Art, 33 (patents) and Art 9, 12 (copyright); Beme Convention Art 7 (1).

*! James David Mortenson (2009), “intellectual Property as Trmsutional Investment: Some Prelimiury

Observations,” Fansnational Dispute Memagement 6,No.2

©? Varhommeker, L (2021) Intellectual Property Rights in Intentional Investment Agreements In: Chaisse,

J., Choukroune ,L , Jusoh, S (eđs) Handbook of Intermutional Investment Lav and Policy Springer, Singapore.

https doi org/10.1007/978-981-13-3615-7 ,p 9, accessed on 30/3/2024

and other similar rights;” Besides, Article 12h of EU - Viet Nam InvestmentProtection Agreement (2019) specified “intellectual property right” in footnote 2,page 10 that: “intellectual property rights refer at least to all categories of intellectualproperty that are referred to in Sections 1 to 7 of Part II of the TRIPS Agreement,namely: (a) copyright and related rights; (b) trademarks; (c) geographicalindications; (d) industrial designs; (e) patent rights; (f) layout-designs(topographies) of integrated circiats; (g) protection of tmdisclosed information; and

(h) plant varieties “

Some treaties, nevertheless, broadly providing for ‘intellectual property rights’

under the term ‘investment’ without listing each specific type of IPRs that should be

included For instance, Article 1 of UK- Ecuador BIT (1994) only refer to

“Intellectual property rights and goodwill” included in “every kind of asset” list.Besides, apart from the Qatar-V:etnam BIT (2009), most of the Bilateral InvestmentTreaties (BITs) that Vietnam has participated in include provisions regarding

intellectual property rights (IPRs) with a specific list of protected assets In

particular, Article 2.d of Qatar-Vietnam BIT state that: “ “SnvestmentTM means everykind of asset established or acqdred including changes in the form of stichinvestment in accordance with the national laws of the Contracting Party in whoseterritory the investment is made and in particular, though not exclusively, includes:4) intellectual property rights in accordance with the relevant laws of the respectiveContracting Party;* Furthermore, Article 14.1 of Agreement between the United

States of America, the United Mexican States, and Canada (2018) also only refer to

“{ntellectual property rights while determining the scope of investment

When being brought to arbitration, IPRs are commonly assessed by arbitral

tribunals whether considered as “invesment” or not through some criteria, also knownasSalini test This test primarily focuses on contribution, duration, risk, and economic

development in the host state’ Before examining if the IPRs fulfills the Salz test,

the arbitral tribunals must assess the validity and scope of IPRs investment based onnational laws This is more relevant in the case of IPRs, as they are territorial Thatmeans rights and obligations are derived from national laws In other words, onlythose IPRs which are “protected” at the national regime should be treated asinvestment.

1.3.2 The relevant standards of treatment for protecting IPRs

Under investment treaties, foreign investors guaranteed a certain standard ofprotection which grant specific safeguards to foreign investors and establish

guidelines on how the host nations should handle them In general, these are some

following standard:‘? a) protection against expropriation or measures equivalent to

expropriation without fair compensation; 6) fair and equitable treatment, c) fullprotection and security, d) protection against arbitrary and discriminatory treatment,e) national and most-favored-nation treatment (MEN); f) free transfer of funds and

assets.

Although the TRIPS Agreement provides similar substantive standards (e g,MEN and national treatment), the standards that frequently arise in IPRs-relatedinvestment disputes, including those related to IPRs, are primarily expropriation andfair and equitable treatment (FET) Therefore, these two standards will be analyzed

in detail below

a Protection against unlawful expropriation

Expropriations refer to cases of taking by a government of an investor'sproperty with a view to transferring ownership of that property to another person,

usually the authority that exercised its power to do the taking “® It must be noted that

expropriations are not prohibited as such, but they must meet certain conditions to belegal When an investment is appropriately expropriated or nationalized through

% Jalin Chaisse, Poneeth Nagaraj (2014), “Changing Lanes: Intellectual Property Rights, Trade and

Investment” Hasnings Jiternational and Comparative Law Review 37,no.2,p.247

© Nigel Bladaaby, Constantine Partasides QC, Alan Redfem, and Martin Hunter (2015), “Redfem and

Hunter on International Arbitration”, Oxford: Oxford University Press ,p 470

© Nigel Bladaby, Constantine Partasides QC, Alan Redfem, and Martin Hunter (2015), “Redfem and

Hunter on International Arbitration’, Oxford: Oxford University Press,p 470

`* OCED Report (2004), “Indirect Expropriation and Right to Regulate in Intemational Investment Law”,p 5.

physical seizure or the formal transfer of title, it can be referred to as direct

expropriation ® On the other hand, indirect expropriation takes place when a state’s

administrative or legislative measures do not confiscate property directly butinterferes with the enjoyment of the property, and has the same effect or impact on

the property and the title remains intact with the foreign investor 6`

Regarding protection of IPRs in investment treaties, there are constantdiscussions on the expropriation provisions under investment agreements, which

restrict the grounds for the issuance of compulsory licenses, the revocation of patents,

or parallel importation, ultimately interfering with the protection of public interests

such as health? In the absence of explicit provisions excluding certain scenarios, it

can be contended that there might be an obligation to provide compensation in caseswhere a compulsory license is granted to facilitate access to essential medicines orwhen a patent is revoked Similarly, potential expropriation claims may arise whenparallel imports result in a devaluation of intellectual property rights (IPRs) or areduction in the market share of the IPRs owner These actions, aimed at promotingpublic health or facilitating market competition, may be seen as interfering with theexclusive rights and economic value of the IPRs owner, potentially triggering claims

of expropriation Without specific carve-out provisions, disputes may emergeregarding the extent of compensation owed to the affected parties in these situations

One approach taken by certain post-TRIPS international investment agreements

is to address the possibility of challenging compulsory licenses based on investors

rights This is achieved by specifically excluding the granting of compulsory

licenses that are in compliance with the TRIPS Agreement from being consideredexpropriation under the scope of the agreement By implementing this provision,these investment agreements seek to ensure that investors are protected and theirtights are not infringed upon when compulsory licenses are issued for intellectualproperty This approach aims to strike a balance between the need to safeguard public

°° SD Miers, ic vị Government of Canada UNCITRAL , Putial Asrard, 13 November 2000, para 280.

© OCED Report (2004), ‘indirect Expropriation and Right to Regulate in Intemational investment Law”.

* Liberti, L (2010), “Intellectual Property Rights in Intentional Investment Agreements: An Overview”, OECD Workng Papers on Intemational investment, 2010/01, OECD Publishing,p.6.

© Tb, Lberti, L 2010),p 6

health and promote access to essential medicines, while also respecting the legitimateinterests of investors Take United States-Mexico-Canada Agreement for instance,paragraph 6 of article 14.8 states that expropriation “ does not apply to the issuance

of compulsory licenses granted in relation to intellectual property rights inaccordance with the TRIPS Agreement, or to the revocation, limitation or creation

of intellectual property rights, to the extent that the issuance, revocation, limitation,

or creation is consistent with Chapter 20 (Intellectual Property) and the TRIPS

Agreement.” This also the main object in IPRs-related disputes in international

investment arbitration, and thus, some recommendations on this will be discussedin

the third chapter.

b Fair and equitable treatment

Fair and equitable treatment (FET) is one of the key standards regularly found

in investment treaties Under the TRIPS Agreement, fair and equitable treatment isrequested with regard to the procedures for enforcing IPRs, but not as compulsorystandard of treatment Enforcement must not be unnecessarily complicated or costly,

and it cannot entail unreasonable time limits or umvarrented delays.

However, under investment treaties, FET is considered as one of the mostimportant absolute treatment standards Firstly, fair and equitable treatment has oftenbeen understood as an absolute requirement for governments to refrain from

interfering with an investor's legitimate expectations 55 This requirement expands on

the principle of good faith, although it is not exclusively confined to it The notion of

investors legitimate expectations has emerged as a fundamental concept in the field

of international investment law There are ongoing discussions regarding whatinvestors can reasonably anticipate, the foundations upon which these expectationscan be established, the timing of these expectations, and the policy changes that

investors are reasonably expected to accept following their investment Secondly,

BITs sometimes include a requirement for treatment in accordance with international

Article 41 (2), Part IIL, TRIPS Agreement.

2* ICSID (2003), Remicas Medioambientaies Tecmed S.A v the United Mexican States ICSID - CASE No ARB (AF)0/2.

** André von Walter, “The Ínvestors Expectations m Intemational hwestment Arbiration,” in Intemational

Investment Lai in Context, 2008,p 173

1aw Ế? This raises the question of whether this provision could be used to incorporate

substantial bodies of international intellectual property law, such as the TRIPSAgreement or WIPO conventions, into the scope of the BITs The key issue is theintended meaning of “international law" in this context - whether it refers only tocustomary international law, or extends to the full range of international legal sources.When a similer provision came up under NAFTA, the contracting parties clarifiedthat their intent was to reference only custom ary international law, which wouldlikely

exclude the application of international IP law However, this matter has not been

definitively testedin the context of IPRs protected under BITs, and a plain reading ofthe standard could potentially allow for a broader interpretation that includes morethan just customary international norms The scope of “international lav" in BITprovisions therefore remains an open and unresolved question when it comes to thepotential incorporation of international IP legal frameworks

1.3.3 The use of investor-state dispute settlement for protecting IPRs

In the context of investment treaty arbitration, there are two different kinds ofdispute settlement procedures: (1) State - to - State Dispute Settlement and

(2) Investor — State Dispute Settlement 6

State-to-state procedures require prior consultation between the states and thenarbitration procedures in case there isno amicable solution after consultation SSDSfrequently have been established to handle disputes between nations regarding the

“interpretation or application” of the treaty However, these procedures have rarely

been used

ISDS, nevertheless, is animportant component of most International InvestmentAgreements and have significant influence on how disputes between States and

investors are resolved.” However, not all investment treaties include this dispute

*' Bertram Bois (2010), “The Protection of Sutellectual Property Rights trough Bilateral brestment Treaties:

Is there a TRIPS-plus Dimension?”, Working Paper No 2010/19 ,p 19.

* Julien Chaisse (2017), “Extbook on internxational investuent leew”, Chapter 1,p 78.

o*See Andrea Roberts (2014), ‘State-to- State Irwestroert Treaty Arbiration: A Hybrid Theory of bterdependent

‘Rights and Shared Interpretative Authority’, 55 HARV INTLL J i

© Sho Patrick Armsưong, Jurgen Kutz, Luke Nottage and LeonTraloum (2013), “The Rindamental

Importance of Foreign Direct investment in Australia mthe Twenty First Century: Refining Treaty and Dispute

Resohttion Practice”, Siiney Law School Le gal Sudies Research, Paper No 13/90

resolution mechanism’! Once investment treaties encompass intellectual property

rights as an investment and include provisions for ISDS, investars are allowed tobring forward claims inISDS proceedings against host state measures that affect their

IP rights This mechanism gives foreign investors the right to sue governments forcompensation if laws, policies, court decisions or other actions interfere withexpected profits from investments, even if these government actions are inaccordance with the public interest

The scope of ISDS is determined in different places in the agreement and may

take various forms, notable three ones:’? () Core provisions determining the scope of

ISDS; (ii) Additional provisions that limit the scope of ISDS; and (4) Provisions

determining the scope of the treaty Besides, in disputes related to intellectualproperty rights (PRs), claimants frequently invoke expropriation clauses,

73

particularly in cases involving compulsory licenses’? and the revocation or

invalidation of IPRs.” These actions may be claimed to constitute instances of

“indirect expropriation"

The dispute resolution mechanisms outlined in investment treaties often requireinvestors to choose between two options for asserting their treaty rights: “(1) in anarbitration proceeding initiated through the relevant investment treaties and (2)litigating those claims in a local court or other fortan (referred to as taking a ‘fork

in the road ”)°/2 Investors prefer using the first choice because they have concerns about the fairness and effectiveness of domestic courts,” Even if they win a domestic

lawsuit, they may still pursue arbitration if they believe the court's decision violated

`! For example: US-Australia BIT, Japmn-Philppines Economic Patnership Ageement

* UNCTAD (2014), 'Ewvestor-Sate Dispute Settlement ”, UNCTAD Series on Issues in Intentional Inwestmert Agreements Il, New Youk and Geneva, p37 , https:/Amctad orgisystemMiles/official-

documentidiaein2013d2_enpdf , accessed on 30/3/2024

» Tsai-Ya Lin, “Compulsory Licenses for Access to Medicines, Expropriation and Inwvestor-State Arbitration Under Bilateral bwvestment Agreements — Are There Issues Beyond the TRIPS Agreement?” ITC 2009,p.152; Ciristopher Gibson (2010), “A Look atthe Compulsory Licenst in investment Arbitration: The Case of Indirect Exqropriation”, 25 AM U INTL L REV 357.

* Marie Louise Seelig (2009), “Can Patent Revocation or invalidation Constitute a Form of Expropriation?””,

Bansnational Dispute Management 6 no 2 ,p 3.

* Supra note 33,p 14

Peter K Yu 2017), “The Investment-Related Aspects of Butellectual Property Rights”, American University Law Review, Vol 66: Issat.3, Article 4,p 847.

investment treaties For example, in Hinarsson [Geophysical Service Inc.] v Canada,the claimants sued the Canadian government for copyright infringement before, butthe court's ruling was seen as a violation of the NAFTA investment chapter, leadingthe claimants to seek arbitration.

ISDS provisions are frequently included in the treaty sample — 96% of thetreaties in the sample contain such provisions, including almost all of the recently

concluded treaties.” Regarding IPRs in dispute settlement, according to statistic

published from UNCTAD website, out of the 1332 ISDS cases based on treaties, only

9 cases are directly related to investment disputes concerning intellectual propertyŠ

Among these public cases, 5 were decided in favor of the state,”? 1 was decided in

favor of the investor, 1 was settled out of cout S1 1 was discontinued early,®? and 1

case is still pen 3,

The disputes revolve around determining whether IPRs qualify as investments

or not, as seenin the case of F-IV Oil Interests, Inc v Republic of Trimidad & Tobago

or Shell Brands International AG and Shell Nicaragua Š A v Republic of Nicaragua.They also involve determining if measures regulated by host states regardingintellectual property of foreign right holders violate standards such as expropriation

or FET, as demonstrated in cases like Philip Morris Products S.A (Switzerland) andAbal Hermanos S‘A (Uruguay) v Oriental Republic of Uruguay, Philip Morris AsiaLimited v The Commonwealth of Australia Eli Lilly v Canada

Generally, while public statistics indicate that state measures to protect IPRs are

typically deemed lawful and justified by adjudicating bodies, there is one case where

” See httos:JAvvrvr ov cd org/daf fnw/awrestaent-policy/WP-2012 2 paf,p 10, accessed on 30/3/2024

** See https://awestmentpolicy xx tad org/mwve stment-dispute-settlement , accessed on 31/5/2024.

” FLW Oi Interests, nc v Republic of Trondad & Tobago (ICSID Cast No ARBIDI/14); Bridgestone Americas, Inc and Bridgestone Licensing Services, Ine v Republic of Panama (CSD Case No ARBI16I34);

Philip Moris Brand Séoi (Switzerland), Philip Morris Products ŠA (Switcerland) and Abal Hermanos SA

(Urugucy) +: Oriental Republic of Uruguay (CSID Case No ARB/10/7); Pialip Morris Asia Limited v The Commornceaith of Australia PCA Case No 2012-12); 3 Lilly and Company’ v Canada (CSID Case No.

UNCT/142)

3° CME Ccech Republic 8 v The Coech Republic

“ Shell Breoxls International AG coxd Shell Mcavagua SA v Republic of Ncaragua (CSD Case No.

ARB/06/14).

33 Erbil Serterv French Republic (CSID Case No ARB/1322).

`) Harold Pdad Sincasson, Russell John Sinarsson cal Theodore David Sinerssonv Canada TCSTD Case No.

UNCT/20/6).

the investor prevailed, highlighting the possibility for investors to successfully arguetheir case and obtain a favorable outcome inIPRs-related disputes throughinvestmenttreaties Additionally, even in cases where the host states have won, they have set aprecedent and established a burden of proof that foreign investors can apply to wincases, as seen in Eli Lilly v Canada In this case, rather than focusing on the ultimateoutcome, it’s highlighted that Eli Lillys main claim was dismissed only due to asingle reason: the company’s failure to provide essential evidence Rather than closing

the door to an interpretation of the law that would allow Big Pharma to sue for

“expropriation”, where intellectual property norms are altered or reformed for

legitimate legal and policy reasons, the tribunal, as will be explained, opened the door

even wider *

Therefore, host states need to carefully consider the potential implications oftheir actions and policies regarding IPRs While they may have the authority toimplement measures to protect their own interests, they must also ensure that thesemeasures are in compliance with their obligations under investment treaties The casewhere the investor prevailed serves as a reminder that investors can effectively utilizeinvestment treaties to challenge and seek remedies for alleged violations of theirIPRs This outcome underscores the importance of providing adequate protection andenforcement mechanisms for intellectual property, as failure to do so may expose hoststates to potential legal liabilities and financial consequences Furthermore, evenwhen host states have successfully defended their actions in IPRs-related disputes,

they should be mindful of the precedents they set and the burden of proof required to

justify their measures

“ Rob House (2017), “Eli Lilly v Canada: A Pynlúc Victory Against Big Phamaa”, biternational Economic

Lew and Policy Blog https :/hielp worldtradelawnet/, access on / 12024 Rob House (2017), ‘Eli Lily v

Camda: A Pynhx Victory Agamst Big Phuma”, Siternational Economic Law axd Policy Blog hitps sitlp worldradeawae, Liberti

CONCLUSION FOR CHAPTER 1

In conclusion, Chapter 1 provided an overview of the relationship betweenintellectual property rights IPRs) and investm ent treaties It discussed the definition,historical background, and types of investment treaties It also explored the definitionand legal characteristics of IPRs, emphasizing their importance in fosteringinnovation and economic development

The chapter focused on the protection of IPRs in investment treaties, including

their inclusion in investment definitions and the standards of treatment for their

safeguarding Additionally, it examined the role of IPRs in dispute resolutionmechanisms within international investment agreements

Overall, this chapter serves as a roadmap for understanding the interplaybetween IPRs and investment treaties It lays the groundwork for further analysis ofthis relationship in the context of international investment law

CHAPTER2ARBITRAL PRACTICE ON PROTECTION OF INTELLECTUAL

PROPERTY RIGHTS THROUGH INVESTMENT TREATIES

As điscussedin Chapter 1, IPRs encompass a range of different types However,investment disputes regarding protecting intellectual property rights throughinvestment agreements primarily focuses directly on industrial property, especiallytwo main categories: trademarks and patents Therefore, this chapter will delve into

a detailed analysis of these two types, shedding light on a high-profile caselaw

example for each

2.1 Investment disp utes related to trademark

In the past, it was uncommon for trademark rights to be claimed against states.However, the legal environment has undergone a transformation since 2010, first

cases against states before international investment arbitration was filed by

investors.*’ Investors have started initiating trademark cases against statesin response

to governmental regulations that impose restrictions on the use of trademarks andbrandsin commercial activities Some disputes related to trademarks are Bridgestone

v Panama Shell v Nicaragua Philip Morris v Uruguay, and Philip Morris v.Australia This shift in the legal landscape has led to the emergence of trademarkdisputes involving investors and states The first dispute also known as Philip Morris

v Uruguay, whichis also one of high-profile cases regarding trademark disputes, will

be analyzed in detail below

2.1.1 The factual backgrounds

On 19th February 2010, Philip Morris requested investor state arbitrationagainst anti-smoking legislation in Uruguay Philip Morris (‘PM’), a companyheadquartered in Switzerland, and its Uruguayan subsidiary, Abal Hermanos S.A.(‘Abal’), claimed that two tobacco control packaging and labelling measuresimplemented by Uruguay in 2009 and 2008 violated a BIT between Uruguay andSwitzerland

* Pototnik, M (2019) “Chapter 1: Trade mark awestment disputes: case studies”, In Arbitrating Broovis,

Cheltenham , UK: Edward Elgar Publishing, https //doi org/10.43379781788971812 00008 ,p 22

The first measure was the Single Presentation Requirement (SPR) regulationimplemented through Ordinance 514 of the Uruguayan Ministry of Public Health in

2008, which limits each cigarette brand to a single variation in order to preventingthe ‘false impression that a particular tobacco product is less harmful than othertobacco products’ in line with the obligation in WHO FCTC art 11 1(@) Thiseliminates brand families and variants such as ‘gold’, ‘silver’ or ‘blue’ which replaced.misleading terms such as ‘light’ and ‘mild’ The SPR addresses evidence that these

variants can mislead consumers and falsely imply some cigarettes are less harmful

than others Š6

The second one was the 80/80 Regulation implemented through the PresidentialDecree No.287/009 in 2009, which initially required health warnings to be printed on

50 per cent of the area of cigarette packages, then under a 2009 presidential decree,

the health warnings were to cover up to 80 per cent Š?

“Philip Moris vã Uruguay, ICSID Case No ARB/10/7, fvvard, para 108-120,

Iittps /Arvn italaw.comm/sites default files ase-documents /ftalaw7417 pdf, accessed ơn / /2024.108-120,

Inttps /Avvnw italawy.comm/sites default files/case-documents /talaw7417 pdf , accessed on 30/3/2024.

*' Phalip Morris v Uruguay, foard, para 121-132

or not, and Whether Respondent failed to observe commitment as to the use oftrademarks under Article 11 of the Treaty or not.

2.1.3 Main findings

2.1.3.1 Jurisdiction

According to statistic in Uruguay, more than 5,000 people die each year fromsmoking-related illness and estimated direct health costs of smokers in Uruguay

amount approximately to US$ 150 million per yearŸŠ Respondent argued that

“Claimants’ activities have harmed and continue to harm Uruguay's economic

development, still less do they serve the State's public interest”, due to the lack of

contribution to the host state’s economic development, Claimant's activities failed to

be satisfied under the “Salini test” to meet the definition of investments protected bythe ICSID Convention

However, according to the Tribunal's perspective, the absence of any of the four

elements listed in Salini test does not automatically result in a lack of jurisdiction, as

these elements are not considered as “a set of mandatory legal requirements“ * On

2 July 2013, the Tribunal issued a decision dismissing Uruguay's jurisdictionalobjections about the covered investment

2.1.3.2 Merit

On 8 July 2016, the Tribunal handed down its Award on the merits The case

was decided in favour of Uruguay on all points

a Regarding the expropriation

Asticle 5(1) of the BIT refers to “any other measure having the same nature orthe same effect” as an expropriation or a nationalization In order to be considered anindirect expropriation, the government’s measures interference with the investor’s

rights must have a major adverse impact on the Claimants’ investments.°! In order to

establish whether the Claimants’ investments have been expropriated, the Tribunalwill deal in turn with the following questions: “J Did the Claimants own the banned

`* Philip Morris v, Uruguay, Decision on Kwisdiction,pare 181.

*+ Philip Mormis v Uruguey, Decision on Kwisdiction,pare 180.

” Phukip Moris v Uruguep, Decision on Jurisdiction, para 206.

” Phulip Moris v Uruguay, Aerard, Đưra 192

trademarks? 2 Does a trademark confer a right to use or only a right to protectagainst use by others? 3 Have the challenged measures expropriated the Claimants *

trweshnent?'%2,

Firstly, the question of ownership of the trademarks was raised by Respondentsince under Uruguayan Trademark Law, “[oJnce the application is submitted no

modifications will be allowed to the representation of the mark “.°? The Tribunal has

taken note that according to Dr Carvalho, even if Article 13 of the Trademark Law

requires that any alterations to a mark be subject to new registration, the Law “does

not deny protection to alterations based on the first registration “** Therefore,

considering its other discoveries concerning the expropriation claim, the Tribunal

assume that a definite conclusion regarding the Claimants’ ownership of theprohibited trademarks is unnecessary The assumption is made, without making afinal determination, that the trademarks remained protected under the Uruguay

Trademark Law.**

Within the second question, the central issue over the trademarks is what rights

a registered trademark accords its owner under Uruguayan law In the Tribunal’sview, both Parties have focused on a dichotomy between a right to use and a right toprotect However, it may be more fruitful to view the case as a question of an absoluteversus exclusive right to use Ownership of a trademark does, in certaincircumstances, grant a right to use it It is a right of use that exists vis-a-vis otherpersons, an exclusive right, but a relative one It is not an absolute right to use that

can be asserted against the State qua regulator Then the Tribunal concludes that

“under Uruguayan law or international conventions to which Uruguay is aparty thetrademark holder does not enjoy an absolute right of use, free of regulation, but only

an exclusive right to exclude third parties from the market so that only the trademark

› Philip Morris v Uruguay, Avvard,,para 235.

» gaticle 31, Uroguaym Trademark Law

*+ An expat on belulf of the Respondent.

Phakip Morrk v Uruguep, Sorard,,Para 254

"+ Phulip Moris v Uruguay, Sovard Đưra 267

holder has the possibility to use the trademark in commerce, subject to the State's

regulatory power ad

In respect of the third question, The Tribunal found that neither the 80/80Regulation nor the single presentation requirement constituted an indirectexpropriation under the BIT due to (i) the absence of proof of “substentialdeprivation” and (ii) the valid exercise of police power for protecting public welfare

(i) Substantial deprivation

Regarding the 80/80 Regulation in the Tribunal’s view, there isnot even aprima

facie case of indirect expropriation A limitation to 20% of the space available to suchpurpose could not have a substantial effect on the Claimants’ business since itconsisted only in a limitation imposed by the lay on the modalities of use of therelevant trademarks The claim that the 80/80 Regulation breached Article 5 of the

BIT consequently fails Regarding the SPR, at the time of its imposition in 2009,

the Claimants manufactured and sold thirteen variants within its six brand families®®,

which is considered by Claimants that each of these “brand assets” is an investmentprotected by the BIT and they pointed to the fact that “each brand asset is an

individual investment in its own right, and each has been expropriated "100 The

Tribunal believes that in order to determine whether the SPR had an expropriatorycharacter in this case, Abal’s business is to be considered as a whole since “themeasure affected its activities in their entirety”, rather than individual assets In fact,Abal's response to mitigate the effects of the SPR involved implementingcountermeasures that impacted its entire business, including price increases andsubsequent decreases, resulting in market share losses across its entire product

portfolio Although the profit Claimants gained not as much as they had expected to,

they are still profitable and even more since 2011.191 According to the Tribunal, when

” Philip Moris v Urugnep, Aerurd, Para 271.

* Philip Morris v, Unuguep, Arurd, Para 276

ˆ* Morboro (a funily comprised of Marlboro Red, Marlboro Gold, Marlboro Bhi and Marlboro Fresh Mint);

Fiesta (a family comprised of Fiesta , Fiesta Blue ,and Fiesta 50 50), Philip Momis (a family comprised of Philp

‘Momis and Philip Morris Blue); Premizy (a family comprised of Premier and Premier Extra); Galaxy (which

vias comprised of only one product, Galaxy); and Casino (which was comprised of only one product, Caso)

“© Phahip Morri v Urugup, Clainunts’ Reply on the Merits dated 17 April 2015.

°° Palip Morrb v Uruguy, Aavud, Para 283-285

it comes to a claim of indirect expropriation, as long as there is still enough valueremaining after the implementation of the challenged measures, it cannot be

considered as expropriation © Therefore, the Tribunal found that the effects of this

measure “were far from depriving Abal of the value of its business or even causing a

“substantial deprivation” of the value, use or enjoyment of the Claimantsinvestments, according to the standard that has been adopted for a measure to be

considered expropriatory "103

(ii) Police power for protecting public welfare

The Tribunal considers Uruguay's adoption of the challenged measures as avalid exercise of its police powers, leading to the rejection of the expropriation claimunder Article 5(1) of the BIT In the Claimants’ view, the State’s exercise of policepowers does not constitute a defense against expropriation, or exclude the

requirement of compensation!+ The Tribunal disagrees and note that “protecting

public health has since long been recognized as an essential manifestation of the

State's police power” 05,

According to international customary lew, this opinion is evidenced by variety

of investment treaty decisions from 1961 till 2012195, It also has constituted a trend

to differentiate the exercise of police powers from indirect expropriation since

20001” In short, it held that these provisions “twhether or not introduced ex

abundanti cautela, reflect the position inder general international law “1#! The term

‘expropriation’ in the Swiss - Uruguay BIT therefore needed to be interpreted

consistently with general international law in relation to police powers In order to

constitute a valid exercise of police powers, a State’s action must meet the following

°° Piglip Morris v Unuguep, Aavard, para 286.

!9 Plahip Morris v Uruguay, #erard,pera 284

‘ Phatip Morrk v Urugugy, Claimants” Memorial on the Merits dated 3 March 2014, para 208

09 Plalip Morrb v Uruguay; Asvard, Para 201

“© Pyuhip Mormis v Uruguep, #avard, Para 292-204; 300, Examples: Article 10 (5) The 1961 Harvard Draft

Convention on the bntemational Responsid: ‘States for Injury to Aliens; Third Restatement af the Foreign Relations Law of the United States of 1987, 2004 and 2012 Canada Model BITS.

\ Phalip Morris v Uniguep, #avard, Para 295-209, Examples: Methanex v United States, Teamed v Mexio,

Chenstura v Canada and Sahba v Czech Republic

` Plalip Moris v Uruguay, Aavard,para 301

conditions: “being taken bona fide to protect the public welfare, being

non-discriminatory and being proportionate” After being considerated, both measures

sastisfy these conditions.!!° Although the effect is quite difficult to evaluate, the fact

remains that by implementing these measures, the incidence of smoking in Uruguay

has declined, notably among young smokers.!!! In the Tribunal’s view, that is

sufficient for the purposes of defeating a claim under Article 5(1) of the BIT

b Regarding fair and equitable treatment

The Claimants alleged that by enacting the challenged measures, the

Respondent has subjected their investments to unfair and inequitable treatment inviolation of Article 3(2) of the BIT because “(i) the regulations are arbitrary becausethey “fail to serve a public purpose and yet at the same time they cause substantialharm to the Claimants;” (ii) the measures undermine the Claimants* legitimateexpectations with respect to the use and enjoyment of their investments, including theClaimants‘ expectation that they would be permitted to use their valuable brandassets; and (iii) the regulations “destroy the legal stability that Uruguay pledged inthe BIT and on which Abal has relied on when developing and deploying its brand

is fair and equitable depends on the circiastances of the particular case “115 Some

principles are listed as covered by the FET standard according to some opinions, somecases and State conduct Briefly, it will deal with the (i) “arbitrariness” and (1)

“legitimate expectations” and “stability of the Uruguay legal system” as components

of the FET standard

\ Phahip Moris v Uruguay, Asvard,pare 305.

“° Philip Morris v Uruguay, Asvard Para 305.

!!! Phalip Moris v Uruguay, WHO Amicus Brief,para 136-139

°° Phulip Moris v Urugugy, Asvard,para 309

`? Amard, Pare 316

' Amard, Pare 319

!! Amard, Para 320