[Ecommerce] Intellectual property in investment agreements: The TRIPS-plus implications for developing countries

[Sasha Costanza-Chock]

Intellectual property in investment agreements: The TRIPS-plus
implications for developing countries

In this analytical note, the South Centre examines the implication of
the emerging approaches relating to the fair and equitable treatment and
the national and most-favoured nation (MFN) treatment in investment
agreements for the overall regimes for the protection and enforcement of
IP in developing countries.

South Centre, Geneva, May 2005

Intellectual property in investment agreements: The TRIPS-plus
implications for developing countries

South Centre Analytical Note
SC/TADP/AN/IP/5
SC/TADP/AN/INV/2
23 pp.

Executive Summary

In an era characterised by the proliferation of forums for norm-setting
in intellectual property (IP) and a growing understanding by developing
countries of the implications of IP rules on their socio-economic and
cultural development, the North-South investment agreements are
increasingly being used as additional and/or alternative route for
enhancing and expanding the protection and enforcement of IP. The
investment agreements are being used to protect and enforce IP by
including IP rights, licenses and intangible property in the definition
of =91investment=92 and =91royalty=92 payments related to the use of IP in =
the
definition of =91return=92. In this context, investment agreements are bein=
g
employed to promote stringent IP protection and enforcement, to sustain
the expansion of the scope of coverage of IP and to undermine the
flexibilities available to developing countries under the World Trade
Organization=92s (WTO) Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) and other international IP agreements.

In order for developing countries to take appropriate action, it is
imperative to examine the trends of IP protection under the investment
agreements to identify the implications for the multilateral processes
of norm-setting in IP, dispute settlement and determination of the
applicable law, protection of biodiversity, traditional knowledge and
folklore, implementation of policies for technology transfer, education,
public health, public moral and other policies for sustainable development.

In this analytical note we examine, in particular, the implication of
the emerging approaches relating to the fair and equitable treatment and
the national and most-favoured nation (MFN) treatment in investment
agreements for the overall regimes for the protection and enforcement of
IP in developing countries. Based on fairly extensive desktop research,
the Analytical Note arrives at the following major findings and
recommendations:

Summary of the Major Findings

- The bilateral investment agreements (BITs) and Investment chapters of
free trade agreements (FTAs) protect IP by including IP, licenses and
intangible property in the definition of =91investment=92 and =91royalty=92
payments related to the use of IP in the definition of =91return;=92

- There is a conscious and increased use of investment agreements by
developed countries to undermine the provisions of the TRIPS that
provide exceptions and flexibilities for developing countries and to
circumvent the resistance by these countries at multilateral forums;

- It is doubtful whether there is a substantial causal relationship
between the existence of an investment agreement and the flow of
investments to developing countries;

- The extension of the fair and equitable standard treatment to IP of
covered investment is a major TRIPS-plus aspect of investment agreements;

- The kind of proprietary interest of investors protected under
investment agreements is broader than the proprietary rights of IP
holders recognised under TRIPS and hence, expanded national and MFN
treatment is provided for IP of investors;

- Even where investment agreements attempt to accommodate the exceptions
and flexibilities of the multilateral IP instruments, the legality of
measures against IP of investors could be open for challenge under the
investment dispute settlement mechanisms. Furthermore, disputes on the
grounds of the fair and equitable standard of treatment or the expanded
interpretation of international minimum standards as applied to IP of
covered investment could be ground for investment disputes.

Policy Recommendations

- Developing countries should not sign BITs, and investment chapters of
FTAs except where there is a demonstrable long-term benefit for them.
Since there is no clear evidence of a causal relationship between the
existence of investment agreements generally or those with strong
protection of IP with the levels of investment flows to developing
countries, they should reconsider the reasons for signing investment
agreements which have significant implications with respect to the
protection and enforcement of foreign IP rights.

- Where developing countries decide to enter into BITs, protection and
enforcement of IP should be excluded from application of these
agreements and the definition of investment should be subject to
nationals laws and regulations, thereby limiting the IP of investors to
the extent recognised under the domestic laws;

- The investment agreements should clearly stipulate that the protection
and enforcement of IP shall not exceed what is required under the TRIPS
Agreement and/or other multilateral agreements to which the parties are
signatories except where there is clear evidence that the overall
economic and social benefit to the developing country of any new rules
would exceed the costs;

- An explicit clause is also required to prevent resort to the
investor-to-state dispute settlement mechanism on disputes arising from
the protection and enforcement of IP of covered investment, and
implementation of =91waivers,=92 exceptions and flexibilities under
multilateral IP agreements.

source link: South Centre


Printed from http://www.bilaterals.org/article.php3?id_article=3D1999