How Will You Safeguard Your Intellectual Property Rights Under International Investment Law?

The expansion of FDI or Foreign Direct Investment, which played a progressively vital role in global economic development and activity, has reinforced the field of International Investment Law. Another similar crucial area that has been exponential growth is Intellectual Property, which has become the primary aspect underlying international and national business, investment, and trade.

When it came to the four most successful companies globally in 2019 – Apple, Microsoft, Amazon, and Alphabet (which is owned by Google) – their essential worth is not based on real estate ownership and physical assets. Instead, their value is determined by their creativity, inventions, ideas or concepts and other knowledge-based goods, all of which are safeguarded by different types of IPRs (Intellectual Property Rights).

In this blog, we will look at some problems that have emerged as a result of Intellectual Property Protection under the International Investment Law.

Definition of Intellectual Property Rights

IPR or Intellectual Property Rights are the rights that refer to the minds’ creation. They usually permit the distinctive inventor rights to use their creativity for a limited period. Some IP Rights consist of:

• Patent;
• Industrial Designs;
• Trade Secrets;
• Geographical Indications;
• Copyright;
• Trademark.

What is the Meaning of International Investment Law?

International Investment Law is the body of law that controls alliances between foreign investors and states. There is no centralised deal or institution in the International Investment Law System. There are 3200 BITs (Bilateral Investment Treaties) and investment chapters in preferential trade agreements in this law field (collectively mentioned here as “Investment Treaties”). Such treaties are augmented by a plethora of investment contracts between foreign investors & government bodies and domestic investment regulations.

Investment treaties seek to attract Foreign Direct Investment to boost the development of the economy by furnishing certain protections to foreign investors & their investments, consisting of some that go far from those available to local investors. These may entail responsibilities on the part of the home state not to confiscate property, not to differentiate against the investor and to treat the investor in a “Fair and Equitable” fashion. Through a process is known as ISDS (Investor-State Dispute Settlement), investment agreements often permit foreign investors to directly bring lawful issues against the Government of State in which their investment is held.

Provisions of Intellectual Property in International Investment Law Arrangements

Following are some provisions of Property in International Investment Law Arrangements:

1. There are many multilateral treaties on Intellectual Property;
2. Intellectual Property related provisions are also common in BITs (Bilateral Investment Treaties) and PTIAs (Preferential Trade and Investment Treaties);
3. The most famous is the WTO (World Trade Organisation) Agreement on TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) which was reached at the time of the Uruguay Round of trade talks. This agreement sets ups necessities that World Trade Organisation members should follow, with a few exceptions;
4. The Registration of Intellectual Property-related clauses in PTIAs and BITs highlights the significance of Patent Registration, Copyright Registration, Trade Secrets, Trademark Registration and other Intellectual Property Rights registrations in International Trade Relations. It is also an important area where fierce bargaining takes place.

Intellectual Property as Investment in BITs – IPRs Under International Investment Law

Intellectual Property Rights are mostly covered under the meaning of investment in most Bilateral Investment Treaties (BITs). It represents how vital it is to safeguard one’s intangible assets from the inclusion of Intellectual Property Rights in the meaning of investment in Bilateral Investment Treaties. Intellectual Property can be a precious strategic asset, which is especially vital given the rapid development of advanced industries like pharmaceuticals & biotechnology, which react on Trade Secrets, Patents, and know-how protection.

The clear words referring to Intellectual Property Rights in the meaning of Bilateral Investment Treaties investment has developed over time. From the 1960s to the 1980s, Bilateral Investment Treaties regularly distinguished between Copyrights & Industrial Property Rights and other concerning subject matter like technical processes. Currently, Bilateral Investment Treaties usually refer to “Intellectual Property Rights” in a specific list of assets to be safeguarded.

Following are some vital clauses in the Bilateral Investment Treaties (BITs):

1. MFN Treatment (Most-Favoured Nation): Most-Favoured Nation clauses are standard in almost all Bilateral Investment Treaties. This clause permits an investor to assert any beneficial right available to any other state that has a Bilateral Investment Treaty with the host state. Investors have used provisions of MFN to state the benefit of more useful procedural and substantive protects founds in the host nation’s BIT with other nations, with mixed outcomes.
2. FET (Fair & Equitable Treatment): This is the basic idea that is commonly invoked in global law. It is also a significant treatment standard under Bilateral Investment Treaties and is registered into the TRIPS Agreement^[1]. Fair & Equitable Treatment of IPR enforcement processes are requested in the TRIPS Agreement. FET principle sets out the lowest treatment benchmarks that the host state should meet. A lot of optimistic investment claims have been based on an infringement of the Fair & Equitable Treatment standard. In broad terms, the principle of FET needs states to have a steady and reliable lawful structuring regulating investment that fulfils investors’ realistic expectations.
3. Expropriation: It is extensively acknowledged that host nations have limited conditions under which they can expropriate foreign investment. A legal expropriation should fulfil the following criteria:
   • It shouldn’t be unreasonable or unjust;
   • It should be carried out in compliance with due process;
   • It should serve a public benefit;
   • It should be supported by appropriate compensation.

There are two different types of expropriation:

1. Direct Expropriation: It occurs when the host state legally obtains proprietorship of the expropriated asset.
2. Indirect Expropriation: This happens when there is vital and long-term interference with the investment that removes the investor from a slew of benefits.

Conclusion

The amount of overseas investment in Intellectual Property Rights is increasing as global economic amalgamation grows. Nowadays, almost no overseas investment will take place unless intangible assets are contained as part of the property value of the investor. The investments value in Intellectual Property Rights is rising, with increased international movement and the wish of many corporations to create internationally recognised brands. Considering the importance of Intellectual Property Rights as one of the most vital assets of many businesses, it is clear that safeguarding this property is of significant significance to businesses both locally and in their international operations.

The association between International Investment Law and IP is disjointed, complex, and chiefly unresolved.  The role of local law in determining the outlines of Intellectual Property Rights safeguarded by IIAs is unknown, as is the extent to which the use of Intellectual Property should benefit a host-state to meet the criteria as a safeguarded investment. However, current developments show an intentional effort at productive amalgamation of International investment Law and IP law. These consist of the efficient subservience of expropriation standards to rights under the Intellectual Property treaty in some current IIAs as well as the detailed and precise attaching of safeguarded Intellectual Property Rights to their survival under the Domestic Law. Such attempts are still disconnected and may only give slight clearness.

Read our article:An Overview of Start-ups Intellectual Property Protection (SIPP) Scheme