This article has been written by Mr. Daniel Samy, a law graduate in 2023-year, student at M.S. College of Law, Thane.

INTRODUCTION-

Intellectual property rights (IPRs) are one of the most valuable properties to any domestic or international conducting business entities. These intellectual properties like patents, copyrights, trademarks, designs, geographical indication etc. need to be protected against illicit usage in the current economy. 

There are many different agreements to protect the intellectual property rights and in which one of them is Trade-Related Aspects of Intellectual Property Rights (TRIPS) and now emerging is the bilateral agreements with strong intellectual property (IP) provisions. The Bilateral Investment Treaty (BITs) in simple terms is an agreement made between two nations which helps to protect foreign private investments in each other’s domain. The terms and conditions mentioned in the agreement help to protect foreign investments by giving a powerful private right to investors against a host government in the event of not fulfilling the mentioned obligations. Powerful rights include applicability, unbiased treatment and providing protection, settling the disputes between the two states. 

BRIEF–

In India, Bilateral Investment Treaty was started in the mid of 90’s for the development of the nation and to start welcoming foreign investors with controlling rights in the hands of Indian Government. 

As per the observations made by the Indian Government from their past bilateral investment treaties, the applicability of the BIT’s is not same with all the nations. Some of the treaties have limited scope and their applicability is only to the investments which have arisen after the treaty has come into force. The disputes that may have arisen prior to these BITs are excluded.

Technology is an outcome from a scientific innovation it can be through raw material which can be useful for creating some new designs, products in any manufacture. Hence, this technology is another form of scientific research and development. In research organizations and manufacturing sector, Intellectual property rights provides security towards intellectual property of researchers and scientists. In addition to that the IPRs are useful for providing the conditions for transfer of technology amongst a few entities.{1}

Regarding Dahbol Project, India had an unpleasant experience. To attenuate the protections accorded to foreign investors, India has been contemplating to amend BITs. In future a lot must be seen as in the increasing knowledge and publicity of BITs as a lot more companies are interested in knowing more about and using it.

There are so many benefits, under IPR which can be seen as follows:

• It can strengthen the Institutional mechanism.
• It helps in clearing backlogs or any pending IP application.
• It can also help in increasing the trademark filling.
• It has given path for creating Technology and Innovative support centers.

There are few benefits of BITs as follows:

• Through BITs there is a right to foreign investors to transfer their funds in and outside the country without delay through market rate exchange.
• Regardless of Nationality, BITs usually provide the right to foreign investors to engage in the top managerial personnel.
• BITs also give the investors a private right of action, the right to submit a dispute arises in an investment with the host.
• The disputes that arise under BITs are governed by the relevant treaty and international law not compulsory by the law specifically provided in contacts related to investments.

Indian Bilateral Investment Treaty consist of fair and equitable treatment which is an ethically strong principle. Though this ethically strong principle has a minimum standard of treatment which must be followed by the host state. As in any other treaties, the investors’ expectations are protection of their investments, transparency and stability, non-denial of justice and prohibition of coercion and harassment. This principle also includes complete protection and security in terms of physical violence, and against the assets of the investments. Not all the countries follow the complete protection and security clause.

Looking the BITs from the lenses of national treatment and most favored nation treatment than the most favored nation treatment principal is not present under the investment chapter of CECA with country like Singapore and comprehensive economic partnership agreement with Korea. However, again both MFN and National Treatment clauses are not absolute in nature and are subject to conditions and restrictions in some respects.

As per the legal expropriation of BITs the following the conditions should be satisfied-

• Having a public purpose.
• No discrimination or arbitrary.
• Due process must be followed while conducting it.
• There should be adequate compensation.

The Indian BIT is going parallel with the international standards and is usually followed uniformly. An interesting point to look at in BIT is that an investor can directly initiate arbitral proceedings against a State without approaching its own government. Though India is not the party to the ICSID convention, still the investors have an option of approaching ICSID or initiating arbitration under the UNCITRAL rules. The arbitration can be done through the Additional Facility Rules of ICSID.

Case Law– 

Union Of India versus Vodafone Group UK, on 7 May 2018 

UNION OF INDIA            …. Plaintiff

Versus

VODAFONE GROUP PLC UNITED KINGDOM & ANR              …. Defendants

Facts –

In 2007, 67% of stakes of Hutchison Whampoa was bought by Vodafone and included the cellular services and other possessions of Hutchison in India. The Income Tax Department raised the demand of Rs. 7990 crores with respect to the profit generated from the capital holdings. The Vodafone Group challenged the demand notice in the Bombay High Court. But the judgement came in favor of the Income Tax Department. Vodafone Group made an appeal before the Supreme Court of India and then the matter was decided in the favor of Vodafone Group with the decision of that the Vodafone Group is not entitled to pay the taxes for the gains in stake purchase deals.

It was in 2012, when the Parliament of India came up with an amendment in the Finance Act which altered the conditions in stake purchase deals including of having retrospective applicability. The amendment was giving authority to the Income Tax Department to demand tax even for stake purchase deals.

Now, by invoking the clause 9 of the BIT signed between the India and Netherlands, the Vodafone Group served a notice of arbitration for the settlement of disputes. Responding to the notice of arbitration, Union of India stated that dispute related to taxation is not covered under the Bilateral Investment Protection Agreement. Vodafone Group then served notices multiple times to the Union of India, but the last notice was served under the India-UK BIPA. After receiving several notices, the Union of India approached Delhi High Court to put injunction and restrict the Vodafone Group from initiating arbitration under India-UK BIPA.

Issues – 

• Courts have jurisdiction to discuss the dispute under arbitration.
• Ways to approach to treaty obligations and the interpretation treaties was dealt.
• Law governing the matters of BIT arbitrations was ascertained from amongst either the private international law or other system of law including the domestic laws.
• Abuse of process and courts had power to restrain the BIT arbitrations.
• Whether the consolidation of arbitral proceedings was an option for settlement to the abuse of process by Vodafone.

Judgement –

The Hon’ble High Court of Delhi recognized the international principle of kompetenz kompetenz i.e., powers of arbitral tribunal to rule on its own jurisdiction, and its limited power to intervene in BIT arbitrations. The present suit was dismissed with liberty to the Plaintiff-Union of India to raise the issue of abuse of process before India-UK BIPA which will decide the issue on its own merit.

The Tribunal while deciding the said issue considered the Defendants’ undertaking to this court that if the Plaintiff-Union of India gives its consent, it would agree to consolidation of the two bilateral agreement lawsuits previous to the India and United Kingdom Bilateral Investment Promotion and Protection Agreement Tribunal. Correspondingly, the ex-parte interim order dated 22nd August 2017 stands repeal. There was no order as to costs. 

As we are aware that the intellectual property rights (IPR) are the rights given to the individual for his/her creations. Also, Article 27 of the Universal Declaration of Human Rights states that the right to benefit from the protection of moral and material interests resulting from authorship of scientific, literary or artistic productions. It was first recognized in the Paris Convention for the Protection of Industrial Property (1883) and in the Berne Convention for the Protection of Literary and Artistic Works (1886).

The need of IPR is to protect and encourage new creations which is for human progress and well-being. Additionally providing protection and promotion of IPR leads to economic growth and which also leads to the enhancement of life.

Intellectual property rights are a must to safeguard the creation and creators, it also promotes innovation and creativity and ensures ease of doing business. It facilitates the transfer of technology in the form of foreign direct investment, joint ventures and licensing. 

India is a member of the World Trade Organization and committed to the Agreement on Trade Related Aspects of Intellectual Property (TRIPS Agreement).

India is also a member of WIPO, an organization responsible for the promotion and protection of IPR’s throughout the world.

However, India is also a member of the following important WIPO which administers International Treaties and Conventions relating to Intellectual Property Rights.

• Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure
• Paris Convention for the Protection of Industrial Property
• Convention Establishing the World Intellectual Property Organization
• Berne Convention for the Protection of Literary and Artistic Works
• Patent Cooperation Treaty
• Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks- Madrid Protocol
• Washington Treaty on Intellectual Property in respect of Integrated Circuits
• Nairobi Treaty on the Protection of the Olympic Symbol
• Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
• Marrakesh Treaty to facilitate Access to Published Works by Visually Impaired Persons and Persons with Print Disabilities.

Case Law- 

Clinique Laboratories LLC &Anr v. Gufic Ltd. &Anr. (2009) Delhi HC

This case is related to breach of trademark and passing off by falsely fabricating which belong to someone else. Already the plaintiff had a registered trademark ‘Clinique’ and when it came to their knowledge about a similar trademark ‘Derma Cliniq’ registered by the defendant. After this the plaintiff filed a petition for cancellation with the registrar of trademarks. Later, the plaintiff also filed for the injunction regarding infringement of its trademark and for hindering from the passing off its goods as that of the plaintiff’s.

Pursuant to the section 124 (1) of The Trademarks Act, 1994 any suit with regards to infringement should be stayed by the court till the cancellation petition is finally decided and disposed of by the Registrar of Trademarks. The plaintiff thus filed for a stay of the present suit and had sought permission to apply for removal of the trademark from the trademarks register which was registered by the defendant.

Also, as per section 124 (5) of The Trademarks Act, 1994 makes a provision through which the court has the authority to pass an interlocutory order. Thus, the court exercising this power held that it has the authority to pass interlocutory orders in the form of injunction, attachment of property, the appointment of a receiver, order for account keeping, etc. if is prima facie convinced of invalidity of a registered trademark.

The court held that identical and similar trademarks, though registered later, can be challenged by the owner of an earlier registered trademark. The court further held that pending cancellation petition or breach of suit the court is allowed to pass such interim orders as it deems necessary and proper. The court therefore upon being primarily convinced about the invalidity of the registration of the defendant’s trademark restrained the defendant from using its registered trademark till the disposal of a rectification/cancellation petition by the Registrar of Trademarks.

For website article or blog references: This article was originally published on the below website. The link for the same is herein.

1. Singh AK, Kumar S. Expert’s perception on technology transfer and commercialization, and intellectual property rights in India: Evidence from selected research organizations. Journal of Management, Economics, and Industrial Organization. 2022;1–33.doi:10.31039/jomeino.2022.6.1.1  
2. https://www.sidley.com/en/global/services/global-arbitration-trade-and-advocacy/investment-treaty-arbitration/sub-pages/the-basics-of-bilateral-investment-treaties/
3. https://www.wti.org/media/filer_public/c5/47/c5475d4a-f97c-4a8b-a12a-4ae491c6abb3/the_protection_of_iprs_through_bits.pdf
4. https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Bilateral_Investment_Treaties_and_India.pdf 
5. http://www.unctad.org/en/docs/webiteiit20052_en.pdf
6. https://dea.gov.in/sites/default/files/ModelBIT_Annex_0.pdf 
7. https://www.drishtiias.com/to-the-points/paper3/intellectual-property-rights 
8. https://lexpeeps.in/10-landmark-cases-on-intellectual-property-rights/#:~:text=The%20court%20while%20interpreting%20Section,ordered%20the%20removal%20of%20video.