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Intellectual Property Rights as Foreign Direct Investments

Intellectual Property Rights as Foreign Direct Investments

From Collision to Collaboration

Elgar International Investment Law series

Lukas Vanhonnaeker

This discerning book examines the interface between intellectual property and foreign direct investments to consider one key question: how does the international investment law framework and the international legal regime regulating intellectual property converge? The book scrutinizes circumstances in which and to what extent international investment law’s traditional protective standards apply to intellectual property rights investments and contributes to debate surrounding the fragmentation of international law, arising from its expansion and diversification.

Chapter 5: The National Treatment principle and intellectual property investments

Lukas Vanhonnaeker

Subjects: law - academic, intellectual property law, international economic law, trade law, international investment law


The National Treatment (NT) principle, which belongs to the ‘standard repertoire of bilateral investment treaties’, imposes the obligation on Host States to ‘protect [foreign investors] against discrimination, whether de jure or de facto, on the basis of nationality’. Its purpose is to ‘require[] that a host country treat an investor or an investment . . . no less favourably than they treat their own national investors or investments made by their own nationals’. As a consequence of its highly protective characteristic as far as the legal status of investors is at stake, the NT standard of protection has been described as: perhaps the single most important standard of treatment enshrined in international investment agreements (IIAs). At the same time, it is perhaps the most difficult standard to achieve, as it touches upon economically (and politically) sensitive issues. NT provisions typically provide that: Each Party shall accord to investors of the other Party treatment no less favourable than that it accords, in like circumstances, to its own investors. Such provisions, and the ‘relative homogeneity of the clauses in BIT practice’, all highlight the relative, contingent or fact-specific aspect of the standard, which is also the main weakness associated with it, as emphasized by Professor Bjorklund: ‘[t]heoretically, at least, national treatment obligations could provide no protection to foreigners should nationals be treated badly. This potential drawback illustrates the weakness of national treatment provisions.

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