U.S. Company Pursues International Investment Arbitration against Panama over Trademarks

By Gabriel M. Lentner

The U.S.-based Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc.  lodged a claim against Panama over trademarks at the International Centre for Settlement of Investment Disputes (ICSID).

The claim relates to a decision rendered by the Supreme Court of Panama concerning Bridgestone’s trademarks in Panama and is based on the Panama-US Trade Promotion Agreement (TPA). The arbitral tribunal is currently dealing with “Expedited Objections”.

A key issue in this dispute is whether the ownership of the FIRESTONE trademark and rights to sell, market and distribute BRIDGESTONE and FIRESTONE branded products in Panama constitute “investments” under Art 10.29 of the TPA, as argued by the claimants. Under this provision the term “investment” is defined as “means every asset that an investor owns or controls, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk.  Forms that an investment may take include: … (f) intellectual property rights; (g) licenses, … and similar rights conferred pursuant to domestic law” In a footnote it is clarified that “Among the licenses, authorizations, permits, and similar instruments that do not have the characteristics of an investment are those that do not create any rights protected under domestic law.”

Bridgestone argues inter alia that its licenses are to be considered intellectual property rights and therefore covered investments. In addition, they contend that these licenses create rights protected under Panamanian law, since they concern trademarks registered in Panama.

Panama on the other hand challenges these arguments stating that Bridgestone does not have an “investment” within the meaning of the ICSID Convention (Art 25) and the TPA. Rather, Panama views the activities of Bridgestone as ordinary commercial transactions outside the scope of investment arbitration. More specifically responding to the Claimant’s argument, Panama disputes that the three licenses at issue do have the characteristics of an investment as they do not create any rights protected under Panamanian law.

Still pending, this case as it adds to the growing number of international investment disputes involving intellectual property rights (see cases of Philip Morris v Australia and Philip Morris v Uruguay, Eli Lilly v Canada). There is still a lot of uncertainty in this area of law and hence it will be interesting to see the final outcome and the reasoning of the tribunal dealing with the issue of investment and IP.

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