South Centre | Geneva | Research Papers 8 | August 2006
IP rights under investment agreements: the TRIPS-plus implications for enforcement and protection of public interest
Ermias Tekeste Biadgleng
The proliferation of investment and intellectual property (IP) agreements recently has been accompanied by an increasing number and expanded scope of investment disputes. The agreements give rise to
various issues that particularly affect developing countries. One of the issues that has recently started
to influence the negotiations for new investment agreements involves the question of the status of IP
rights and the impact of investment agreements on the rights, obligations and regulatory discretions of
countries under the Agreement on Trade-Related Aspect of Intellectual Property Rights (TRIPS) of the
World Trade Organization (WTO).
IP rights validly acquired in accordance with the domestic law can constitute investment. Domestic law determines the scope, content and form of IP rights that have the characteristics of investment. However, the definition of investment assets under the investment agreements may result in a
higher standard of IP protection when it specifically includes, for example, encrypted program-carrying satellite signals, under an investment agreement involving a country that has not adopted
similar rights under its domestic law or by ratifying multilateral instruments that protect similar rights.
The protection of IP rights under investment agreements gives rise to a TRIPS-plus impact on developing countries in the determination of the scope, the availability and validity of IP rights that constitute investment assets. The investment standards also protect for the activities associated of investment
including the acquisition, protection and enforcement of IP rights. In addition, the investment agreements protect undisclosed data and other information submitted for investment and other approval purpose.
The determination of the extent to which countries can take TRIPS-consistent measures to
protect public interest and regulatory measures like competition policy, compulsory license, and technology transfer faces additional layers of standards under investment agreements. These include adherence to due process and transparency requirements, adoption and implementation of the measures
in good faith and that do not involve arbitrary and unjustifiable discrimination or disguised restriction
on investment, and consistency with specific requirements under the TRIPS or the IP section of the
agreements, as in the case of the U.S. Free Trade Agreements (FTAs). These additional standards open
the possibility of challenging the consistency of the measures and the application of the standards of
compensation under the investment agreements.
The extent of the impact of investment agreements on the flexibilities and obligations of developing countries under the TRIPS Agreement varies depending on the language of each agreement.
However, one general observation of investment agreements is that they leave government measures
open for challenge by utilising the mechanisms for the settlement of investment disputes. In the absence of a clear exclusion of IP disputes from the scope of an investment dispute settlement, arbitration tribunals should give considerable weight to the existence of effective settlement mechanisms,
with specialized expertise, and legal procedures for IP rights. IP issues have their own dimension, jurisprudence and political economy completely different from investments. Finally, the developing
countries should adequately consider the provisions of investment agreements during negotiation and
renewal of existing agreements in order to limit the protection of IP rights to the TRIPS and other
agreements and their respective domestic laws.