Document Type : Research Paper

Authors

• Soroosh Falahati ¹
• Mirghasem Jafarzade ²

¹ Ph.D. Student, International Trade and Investment Law, Law Faculty, Shahid Beheshti University, Tehran, Iran

² Associate Professor of International Trade Law and Intellectual Property Law and Virtual Space Law, Law Faculty, Shahid Beheshti University, Tehran, Iran

Abstract

Introduction

In the field of intellectual property rights, host states’ policies, and accordingly, the approach of the relevant treaty towards expropriation and intellectual property rights play a key role when separating expropriation from regulatory measures. This article will analyze these issues as well as the approach adopted by Iran in this regard, while also discussing the necessity of changing the approach adopted in Iran's foreign investment protection treaties. It then continues to examine Philip Morris v. Uruguay because, firstly, although the relevant treaty contained expropriation provisions similar to those of most treaties to which Iran is a party, eventually Uruguay managed to win the case. Therefore, Uruguay’s defenses can be helpful for Iran in similar cases. Secondly, it will be shown that issuance of a favorable award for the host state in this case provides no guarantee that other


tribunals follow the approach adopted by that tribunal. Therefore, the article suggests specific clauses to be inserted into investment treaties of Iran that can be interpreted to the benefit of public interest and, as such, reduce the possible instances that require compensation to be paid by the government.
Research Question
- Which aspects of the host state’s defenses in Philip Morris v. Uruguay can be utilized by Iran in similar expropriation claims?
- When faced with similar expropriation disputes, would it suffice for Iran to rely on defenses similar to those of Uruguay in the said case?
- What is the best possible approach for Iran to adopt in its foreign investment promotion and protection treaties to avoid compensation in expropriation disputes?

Literature Review

The Persian legal database contains few studies examining the Philip Morris v. Uruguay case. They mostly contain overviews of the case and discuss the restrictions imposed on trademarks as a method of expropriating industrial property rights. However, no prior article has examined how the defenses used by Uruguay could be of use to Iran’s government when faced with similar expropriation claims. In this regard, the authors explain the importance of the state’s regulatory and policing powers and their degree of interference in the foreign investor’s property rights. Nevertheless, this piece indicates that the host state’s defenses in the Philip Morris v. Uruguay case cannot be relied upon in all similar instances, especially considering that Iran seems to have adopted the “high protection” policy towards foreign investments and has consequently opted not to discuss and define the connection between expropriation and governmental measures in the field of intellectual property rights in most of its BITs. The article suggests that Iran adopt the “increased predictability” or “qualified”


policy and set apart intellectual property rights-related regulatory measures from the scope of expropriation. A similar suggestion can only be found in an article written by the authors of this article titled “Legal Nature of Compulsory Licensing under Patent Law:  A Regulatory Measure or Expropriation?”. However, the said suggestion, unlike the suggestions in this article, was primarily focused only on a single regulatory measure of the host state i.e., compulsory licenses.
  3. Methodology
This article uses a descriptive and analytical method and the authors have resorted to library research to gather the relevant resources. A wide range of resources including the most recent books, articles, dissertations, cases, and regulations have been used to author this piece. In particular, it has been attempted to examine different treaties on the protection and promotion of foreign investment so that the article would be of a comparative nature.

Conclusion

Treaties on the promotion and protection of foreign investment contain different views concerning the relationship between expropriation and governmental measures that are taken regarding foreign investors' intellectual property rights. Considering that the exclusion approach reduces the instances in which the host states would have to pay compensation, this article concludes that Iran's government should adopt this approach when drafting these treaties and set aside its current approach which is unclear about the relation between expropriation and regulatory measures in the field of intellectual property. Until then, due to the similarities between the approaches adopted by Iran and Uruguay regarding the relation between expropriation and governmental measures in the field of intellectual property rights, Uruguay's defenses in Phillip Morris v. Uruguay can be utilized by Iran in similar expropriation claims filed against it.

Keywords

• Police Powers Doctrine
• Expropriation
• No-reference Approach
• Exclusion Approach
• Limitation for Trademarks

Main Subjects

• International Law