Reconceptualizing ISDS : When is IP an Investment and How Much Can States Regulate It?

Recent victories by states in two investor-state dispute settlements (ISDS), one involving Uruguay’s regulation of tobacco trademarks and the other challenging a doctrine of Canadian patent law, have suggested to some that ISDS is not a threat to state regulation involving intellectual property rights. In this paper, we dispute that notion. We show how these awards open pathways for future disputes and we argue that neither the resolution of these cases nor changes in more recent investment agreements meaningfully alter the threat of ISDS and the chill it imposes on legitimate regulatory activity. We suggest that there would be fewer disputes and less interference with regulatory authority if tribunals took into account the intangibility of intellectual property rights when determining their locus and deciding whether an investment has been made in the host state. Additionally, tribunals should consider the contingent nature of intellectual property rights when calculating the appropriate remedy (if, in short, compensatory relief were substituted for expectation damages). We also argue that if the class of investors entitled to bring ISDS challenges included those who invest in reliance on the limits of protection, right holders would be exposed to the consequences of the principles they advocate and may become less inclined to challenge state action