Not Patently an Investment: Enforcing Intellectual Property Claims in Investment Arbitration* – Vol. 29 No. 3

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Author: Jerome Newton**

Published: March 2019

Categories of Disputes
Investment Disputes


In March 2017, an arbitral tribunal delivered the first final award on patents in international investment law. The North American Free Trade Agreement (“NAFTA”) Tribunal decided that judicial and statutory changes to Canada’s national law over time, which led to the invalidation of two Eli Lilly pharmaceutical patents, did not defeat the company’s legitimate expectations of protection. By ruling that the mere evolution of regulatory changes could not constitute a violation, the tribunal limited the scope of possible claims under an investment treaty.  The award, however, left unanswered many questions about intellectual property (“IP”) disputes through international investment treaties.

For instance, the tribunal in Eli Lilly v. Canada arrived at its decision through review of alleged “dramatic changes” to the Canadian patent regime, rather than through any recognized standard in international law for determining expropriation. The implication of the tribunal’s analysis—whether it was an unorthodox investigative approach or instead presaged a new standard for the assessment of regulatory changes in national patent laws—remains to be seen.  The award also failed to articulate how, if Eli Lilly’s claim had been sufficiently dramatic, such a finding would connect to a coherent, articulable standard for assessing IP expropriation or unfair treatment claims.

This uncertainty places Eli Lilly among a small constellation of investor-state dispute settlement (“ISDS”) cases that, regrettably for contemporary scholars, account for the entirety of the topic.  These cases hint at the boundaries of an IP claim in ISDS but leave that doctrine unclear. Since none have yet succeeded, potential claimants deciding to use investment treaties for claims are taking an expensive leap of faith.  This does not suggest, however, that states are immune from IP claims, or that the bar is unduly high.  As this article will discuss, none of the past claims made a particularly strong case for breach of an IP investment.  In fact, states seem wary of the possibility of losing and thus, two recent claims alleging expropriation of IP because of compulsory licensing were settled prior to arbitration.

Nevertheless, there is little information for potential investors who want to protect their IP abroad and enforce their rights in case of a violation.  The aim of this article is to make some sense of the extant doctrine and to clarify the landscape of IP in investment treaties and arbitrations.

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**Jerome Newton is a J.D. candidate at Columbia Law School.