This article covers a timely set of issues concerning the relationship between intellectual property rights (“IPRs”) associated with foreign investments, state-authorized compulsory licenses, trade law (in particular, the TRIPS Agreement), and claims for indirect expropriation that might be brought in investment arbitration. I focus, as a case study, on compulsory licenses and claims of indirect expropriation. Compulsory licenses bear an inherently contentious character. This government authorized license often presents a clash between significant opposing interests – on one side, the legitimate expectations of patent based foreign investors founded on the international investment agreement (“IIA”) and a patent regime that, for well established reasons, provides relatively strong protection during the patent’s term, and on the other side, the strength of the public interest in exceptional cases, such as a public health crisis. The circumstances that may be commonly associated with the issuance of a compulsory license, in which an investor’s existing IP rights and investment position are severely impacted, provide the seeds for a dispute and strong incentive for the investor to seek recourse through available means of dispute settlement. In this context, the compulsory license in relation to IP based investments and claims of indirect expropriation illustrates two levels of complexity for international investment law. First, the tension between investor’s rights and government action in the area of compulsory licensing is but a specialized example of a broader recurrent public policy issue in international investment law. The broader question concerns the appropriate balance between the rights and responsibilities of investors and those of governments. The investor is entitled to have its legitimate expectations with regard to the operation and return on its investment respected by the host state. However, the host state must be able to pursue legitimate regulatory goals without risk of 'regulatory chill.' The investment dispute context for a compulsory license brings these countervailing interests to a head, as these issues coalesce around questions of how much leeway governments should have to take actions that may interfere with IPRs and IP-based investments, whether these actions contravene the standards of protection established for foreign investors under national patent laws and IIAs, and whether such measures are otherwise defensible as consistent with non-investment law treaty provisions, such as Article 31 of the TRIPS Agreement. The reference to the TRIPS Agreement raises the second point of complexity: the compulsory license provides a case in point to show the interplay between two different treaty-based regimes. A compulsory license-based claim for indirect expropriation against a host state under an IIA may implicate several strands of public law that can be complimentary or competing, integrated or overlapping. International investment law as channeled through the IIA confronts intellectual property law as established through national law or the TRIPS Agreement. The compulsory license brings this confluence of competing legal regimes into stark focus. If a foreign investor believes that a host state has improperly authorized a compulsory license with respect to its patent-based investment, it may face not only a choice of forum in which to vindicate its rights, but also choice of law issues in making out a claim of indirect expropriation. Because investment agreements such as bilateral investment agreements (BIT) stand side-by-side with the WTO multilateral trading system, these respective regimes may afford different levels of protection and different remedies to the foreign investor in a dispute where the investor’s home State and the host State are both members of the WTO, or where the IIA itself makes reference to the TRIPS Agreement. While there has been ample scholarly examination in the areas of investment arbitration and international trade law and related public health issues, much less has been written about intellectual property issues arising under BITs, and even less so in relation to intellectual property (including compulsory licenses) in the context of investor-State arbitration. For this reason I believe my article offers an interesting case study, and makes an important scholarly contribution that would be of interest both to academics and to the broader international dispute settlement community
