IPR as protected investments in the TTIP – a potential threat to EU’s regulatory powers?

2-3/2018 22.8.2018

Intellectual property is often included in the list of the investments protected by free trade agreements and can thus be potentially subject to an Investor-State dispute settlement procedure. Professor Christophe Geiger reflects upon possible consequences particularly in the case of the TTIP Agreement.

The protection of investments is becoming more and more frequent in free trade agreements. Initially, the aim has been to prevent enterprises that invest in a country’s infrastructure being subsequently expropriated, specifically by means of nationalisations. Gradually, intangible assets have been included in the list of protected investments, without it being clear what the relationship between the protection of intellectual property according to the international IP rules and investments agreements would be.

Could IPR legislation infringe investment rights of companies?

The Transatlantic Trade and Investment Partnership TTIP contains one chapter dedicated to intellectual property. There are a few commitments in geographical indications – an area where the concepts and rules applicable in the EU and in the US differ considerably – and a limited number of specific aspects in the field of copyright. Other sections contain a list of international agreements, recall basic principles and lay down the objectives in the field of cooperation, specifically with respect to technical assistance to third countries on the question of intellectual property enforcement. Hence, much ado about nothing?

The copyright system of the United States and the EU and many of its Member States differ considerably.

The worries derive from the chapter concerning the investment protection. The TTIP Agreement proposes an elaborate framework to protect investments. The crucial question is: could a regulation of intellectual property by the EU or one of its Member States, which would affect the scope of intellectual property rights held by private companies, be considered as a potential infringement of their protected investments? And accordingly, could it lead to proceedings being lodged against the European Union or one of its Member States? This would considerably limit the power of European institutions to regulate to implement a balanced and effective legislative framework for intellectual property.

Will EU or its member states be limited when passing IPR legislation?

The enforcement of investment protection in the TTIP is entrusted to a dispute settlement mechanism between states and investors through international arbitration in a procedure called the “Investor-State Dispute Settlement” or ISDS. In the definition of the investments protected, IPR are specifically included. Towards 2010, litigation began to be brought before international arbitration tribunals, specifically in a number of well-publicised cases in the field of trademarks and patents. In all these cases, a multinational company brought an action claiming that a legislation or a judicial decision impacting on the scope of the IPR in a party state constituted an infringement of the company’s protected investments, irrespective of the fact that the regulation was adopted for reasons of public health or general interest.

To date, there has not been any decision or case in copyright. Accordingly, it is only possible to extrapolate and imagine what might be the areas of friction with investment protection. The copyright system of the United States and the EU and many of its Member States differ considerably.

Who owns, who has the moral rights to a creations like films?

The protection of moral rights, for instance, is practically inexistent in the US. It was in France that John Huston prevailed before the French Supreme Court by using the right of integrity of his work to prevent the post-colouring of his black and white movie “Asphalt Jungle”. In the future, will Hollywood studios be able to bring an action before the arbitration tribunals, on the grounds of a danger to their investment in the film? Another area of friction could be the ownership of the work: in the US, copyright often vests ab initio in the investor or the employer in because of the doctrine “work made for hire”. In Europe, on the other hand, the creator in most cases remains the holder of the rights to his creation, independently of his employment situation. Could this give rise to litigation because of the negative effect on the investments made?

Will the European Union be able to introduce specific contractual protections for creators (a so-called “EU copyright contract law”), like they already have in many EU states? Finally, what would happen to the creation of new copyright exceptions and limitations to the benefit of libraries, educational establishments and archives or for the digitisation of out-of-commerce works, or other exceptions currently under discussion within the framework of the proposed current copyright reform in the digital single market? Will these provisions be regarded as “expropriations” in the sense of the investment protection mechanisms of the TTIP?

In the US, copyright often vests ab initio in the investor or the employer in because of the doctrine “work made for hire”.

Many of these questions will probably remain unresolved as long as intellectual property is included in the list of the investments protected by the TTIP and other bilateral trade agreements. It is thus necessary to engage in an open and transparent debate on the appropriateness of such an inclusion and on the relationship between intellectual property and investment protection. Intellectual property law does not protect investments as such, but only those leading to a creation, thus resulting in an added value for society. Some investments can have negative social consequences as the recent financial crisis showed. Consequently, the European Union should be cautious before embracing a new logic that might significantly reduce its regulatory powers in the future.

Aiheet: Muut

Kirjoittajat

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