A Foreign Investment Promotion and Protection Agreement (FIPA) between the People’s Republic of China and Canada is now in the final stages before ratification.  FIPAs are designed to reduce the risk of foreign investment by establishing national obligations to foreign investors.

These obligations can include non-discriminatory treatment, protection against expropriation, and transparency during the process of investing.  Though a FIPA treaty with China has been contemplated since 1994, the process was delayed by China’s accession to WTO.  This FIPA specifically contemplates intellectual property as one area of foreign investment which will benefit from these new protections.  Though China is already party to many WIPO treaties (such as the WIPO Copyright Treaty and the Trade-mark Treaty), which govern international intellectual property rights, FIPA will provide certain additional protections which Canadian investors will benefit from.

Under the terms of the Canada-China FIPA, intellectual property rights will include “copyright and related rights, trade-mark rights, patent rights, rights in layout designs of semiconductor integrated circuits, trade secret rights, plant breeders’ rights, rights in geographical indications and industrial design rights.”  This essentially captures all of the rights that Canada protects under our conception of intellectual property.  For the most part, investments in intellectual property will have the same protections as all other investments under FIPA.  However, certain articles of the agreement will not apply to intellectual property.

The non-intellectual property related articles include the Promotion and Admission of Investment, the Most-Favoured-Nation Treatment, and the National Treatment articles.  These articles relate to the continuing relationships between contracting parties and their respective investors.  Though neither nation will be bound by these specific articles, it is clear that both nations still have to comply with their other international treaties which might regulate these relationships.

The other exception is that certain intellectual property measures such as the granting of compulsory licenses will not be protected against expropriation.  To get a better sense for why these protections will not apply to intellectual property rights in the Canada-China FIPA it is useful to consider one of Canada’s other recent FIPAs.

The 2012 FIPA between Canada and the Slovak Republic also includes intellectual property under the definition of investments.  However, it is clear that the protections relating to Most-Favoured-Nation Treatment, and National Treatment articles do apply to intellectual property rights.  In addition, intellectual property measures such as compulsory licenses are not expressly exempt from the expropriation protections.  In other words, the Slovak Republic FIPA appears to give investors in intellectual property the full protection of the agreement, while the Canada-China FIPA does not.

Is it possible that the increased protection is the Slovak Republic FIPA is simply because they are not members of additional treaties that affect intellectual property rights?  The Slovak Republic is a member of the WIPO Trademark Treaty, as well as the Copyright Treaty and the Patent Law Treaty (which China is not a member of).  It seems that the Slovak Republic is actually subject to additional international intellectual property treaties that China is not a member of.  Therefore this first explanation does not appear to be accurate.

It might also be that the Slovak Republic FIPA is unusual, and simply offers more protection for intellectual property investors than FIPAs with other nations.  The 1991 FIPA between Canada and the “Russian Republic” is more similar in style and limitations to the Canada-Slovak FIPA than to the Canada-China FIPA.  Once again, intellectual property is not specifically excluded from any of the protections under the act.  Again this explanation for the lack of certain protections for intellectual property investors does not appear to have merit.

There must have been something specific about the negotiations between Canada and China which caused the lack of these particular protections for intellectual property investors of both nations.  It also appears that, given Canada’s other FIPAs with foreign nations, the reasons for withholding these protections has something to do with intellectual property rights in China. Whatever the reason, the result is clear, intellectual property investments made between parties in China and Canada will not enjoy the same degree of protection as other investors under the Canada-China FIPA.

Adam Stevenson is a J.D. Candidate from Western University, faculty of law

Posted in IP