Book Review: The Protection of Intellectual Property Rights Under International Investment Law

This Kat has had the pleasure to review “The Protection of Intellectual Property Rights Under International Investment Law”, co-authored by Simon Klopschinski, Christopher Gibson and Henning Grosse Ruse-Khan (Oxford University Press, 2021, 592 p.).

The book discusses the treatment of intellectual property rights in the context of investor-state dispute settlement (ISDS), an area that is drawing the increasing attention of governments, lawyers and academics alike. By investor-state dispute settlement, we mean a mechanism through which an investor from one state can bring arbitral proceedings against a different state, in which it has invested.

Back in 2011, Simon Klopschinski, one of the book’s co-authors, published a German-language PhD thesis on this issue, which quickly became a seminal work in the field. The 2021 publication is an English edition based on that research (much to the joy of non-German-speaking readers!). It is enhanced with contributions from Christopher Gibson and Henning Grosse Ruse-Khan, and thoroughly updated with discussions of the legal developments that have taken took place in the last 10 years.

The book includes 8 chapters that are structured around the key questions that surround IP-based investment arbitration. After an introduction in Chapter 1, Chapter 2 presents an overview of the interrelations between international investment law and IP. The authors explain how, in recent years, enforcement of IP rights is shifting from the WTO adjudicative system and national litigation to investment tribunals, and why this development has created tensions with public policies (including on public health) and international IP law.

Chapter 3 addresses procedural matters that arise in an investment claim and briefly considers four early IP investment disputes: Phillip Morris v. Australia, Phillip Morris v. Uruguay [commented by Simon Klopschinski for The IPKat here], Eli Lilly v. Canada, and Bridgestone v. Panama [also covered by Simon for The IPKat here]. These four cases, together with the more recent Einarsson v. Canada, are reviewed in greater detail in the following chapters of the book. Moreover (and this is one of the book’s main added values), the authors continuously draw parallels with non-IP arbitration cases, WTO dispute settlement and the European Court of Human Rights case-law, all of which allows them to interpret provisions that remain untested in IP-based disputes.

In Chapter 4, the authors discuss the extent intellectual property rights (including a mere application for registration) can be qualified as protected investment under international investment agreements (IIA). The analysis of treaty practice is built on norms found in bilateral investment treaties (BIT) and free trade agreements (FTA). The definition of investment under the Salini test (used in ICSID arbitration to define an investment) is discussed as applied to intellectual property rights. The authors further consider different sources of applicable law in an IIA dispute and their role in determining IPRs as a protected investment.

Chapter 5 addresses relative standards of protection: national treatment (NT) and most-favoured-nation (MFN). The analysis looks into how the interpretation of NT and MFN standards in arbitration cases can be informed by the practice developed in international IP law. Throughout the chapter, the authors also discuss which justification and defences can be invoked by the host state, if the breach of non-discrimination standards is invoked by the investors.

Chapter 6 looks into two of the absolute standards of protection: fair and equitable treatment (FET) and full protection and security (FPS). The authors first introduce readers to the main elements of the two standards. They then proceed with discussing how recent arbitration practice is drawing attention of states, which are now drafting more detailed provisions on FET and FPS, including closed lists of state actions that may constitute a breach. Two specific applications of the FET standard are analysed, namely protection of legitimate expectations (including sources of such legitimate expectations) and denial of justice. Just as in the preceding chapter, Chapter 6 closes with a section where possible justifications and defences for the host states are addressed, as well as the balancing mechanisms that can be useful when drafting future IIAs.

Chapter 7 singles out another absolute standard in IIAs, that of protection from unlawful expropriation. The breach of this standard was invoked by investors in most of the IP-based cases. The chapter addresses direct and indirect expropriation claims, discussing which economic interests are capable of expropriation, when do state measures amount to expropriation, and the level of compensation due to the investor. For indirect expropriation claims, elements relied upon to establish the existence of expropriation are reviewed. The authors then analyse how the expropriation claim has been interpreted in the existing IP-based cases. In a separate section, they discuss whether compulsory patent licensing may be regarded as indirect expropriation (a question especially salient in COVID-19 times).

Chapter 8 closes the book with a forward-looking analysis: the authors look at the paths that investment arbitration in general, and IP-based cases in particular might take in the future. They review developments on the procedural level, including ISDS reform, which is currently prepared under the umbrella of UNCITRAL, and the EU plans to create a multilateral investment court.

The authors also contemplate how the approaches of ISDS tribunals to IP-based cases might change in the future to reflect underlying IP public policies. They conclude with a discussion on how investors may soon start challenging the decisions of regional IP bodies, such as the EPO, the EUIPO and any future UPC.

In the early pages of the book, the authors mention how litigation of IP-based investment disputes is complicated by the fact that arbitrators often do not have an IP background. This book certainly fills this void. Whether you are an IP specialist with limited knowledge of investment law or an expert on ISDS who needs to familiarise himself with the specificities of IP-based cases, this book will provide answers to your questions in an advanced, yet understandable, manner.

Published: 2021
Format: Hardback
Extent: 592 pp.
ISBN: 9780198712268