As a particular example, it analyzes protection of pharmaceutical regulatory data against the background of the growing public policy campaign for broader access to clinical trial data a
I NTRODUCTION
"Same same but different." This catchphrase, borrowed from Detlev Buck’s film, nicely frames how trade secrets occupy a distinct place in the spectrum of intellectual property (IP) They share the same legal landscape with patents, trademarks, and copyrights, but trade secrets are unique because their protection hinges on maintaining secrecy rather than public disclosure Under international law, trade secrets are recognized as a category of IP safeguarded by a mix of treaty obligations and national laws designed to prevent misappropriation and to provide remedies for injury Unlike patents, trade secrets can endure indefinitely—as long as confidentiality is preserved—yet protection can be eroded by leaks or improper disclosures In today’s global, digital economy, the value and risk of trade secrets intensify, making strong information governance, robust nondisclosure agreements, and rigorous security measures essential for sustaining competitive advantage across borders In short, trade secrets sit alongside other IP forms but differ in secrecy, enforcement mechanics, and duration, shaping how firms innovate and compete worldwide.
Trade secrets differ from other forms of intellectual property in several ways, most notably because protection does not rely on exclusive rights There are no formal qualification requirements for protection, and trade secrets can cover a wide range of information in terms of substantive content, economic value, and function Empirical studies show that in certain sectors firms can rely on trade secrets as much as, or even more than, patent protection to capture returns on R&D investment The pharmaceutical industry is one of these sectors.
Foreign direct investment (FDI) has played a substantial role in shaping the global pharmaceutical industry Among the factors most relevant to attracting FDI, effective protection of intellectual property stands out, underscoring IP protection as a cornerstone of the sector IP protection also influences the domestic regulatory framework governing pharmaceuticals, shaping incentives for research and development, technology transfer, and market entry As the industry evolves, robust IP rights, predictable regulatory processes, and clear enforcement are key drivers that make pharmaceutical markets attractive to foreign investors, supporting innovation and global competitiveness.
Daria Kim is a research fellow at the Max Planck Institute for Intellectual Property and Competition Law (2012–2013) and has served as a Doktorandin there since 2015, with prior experience as a research associate at The Chinese University of Hong Kong, Faculty of Law (2013–2014) She holds an LL.M and an M.A., and can be reached at daria.kim@ip.mpg.de The author wishes to thank Professor Julien Chaisse, Professor Bryan C Mercurio, and Dini Sejko for feedback on the drafts and discussions.
1 S AME S AME B UT D IFFERENT (Boje Buck 2009) Filmhandlung und Hintergrund, KINO.de, http://www.kino.de/film/same-same-but-different-2009/
2 See generally Wesley M Cohen & Richard R Nelson & John P Walsh, Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S Manufacturing Firms Patent (or Not),
NBER Working Papers 7552, National Bureau of Economic Research, Inc (2000); Richard C Levin
& Alvin K Klevorick & Richard R Nelson & Sidney G Winter, Appropriating the Returns from Industrial Research and Development, Brookings Papers on Economic Activity, Economic Studies
Program, The Brookings Institution, vol 18(3), 783-832 (1987)
3 Cohen et al., supra note 2, tables 1, 2
4 T HE U NITED N ATIONS C ONFERENCE ON T RADE AND D EVELOPMENT , W ORLD I NVESTMENT
UNCTAD's 2014 report on restructuring trends and new market-seeking investments in the global pharmaceutical industry shows that foreign direct investment in pharma is mainly driven by cross-border mergers and acquisitions and greenfield investments, with M&A peaking in 2007 and greenfield activity peaking in 2009 It highlights a significant shift toward cross-border M&A targeting developing and transition economies, rising from less than 4% of deals before 2006 to about 10% between 2010 and 2012, and jumping to more than 18% in 2013 The report notes that these investment trends are expected to continue growing.
Two types of intellectual property rights—trademarks and patents—have been tested in investor-state arbitration, highlighting the complexity of IP issues that extend beyond economic and industry concerns (see infra note 54).
This paper addresses protection of another category of IP—trade secrets—in the context of pharmaceutical FDI and international investment agreements The enforcement of trade secret protection has been emphasized by the U.S in the framework of the Trans-Pacific Partnership negotiations In August 2013, the U.S Chamber of Commerce released a report calling for “enhanced legal protections for trade secrets, including criminalization of willful misappropriation and unauthorized disclosure of trade secrets [to be] elevated on the TPP agenda.” 8
The inclusion of the specific obligation with regard to trade secret protection into the investment treaty does not only mean raising the level of the enforcement standard under the national IP law (and, consequently, granting the same level of protection to all WTO Member states due to the national treatment obligation) Protection of IP within an investment bears another important implication; it allows the investor to challenge domestic regulations of a host state that might affect IP-based assets, including confidential business and commercial information, under investor-state arbitration 9
This article analyses the protection of clinical data as part of pharmaceutical FDI, set against the backdrop of a growing international campaign for greater public disclosure of clinical trial reports submitted for regulatory review It highlights the key data-protection challenges, the balance between safeguarding proprietary information and enabling transparency, and the implications for investment decisions in the pharmaceutical sector, while noting how evolving policy and regulatory frameworks shape these dynamics Recently, data sharing has been promoted by initiatives that aim to increase transparency of regulatory submissions and make clinical trial results more accessible, all while safeguarding patient privacy and business interests.
2015 policy of the European Medicines Agency (“EMA”), 10 the 2014/2015 WHO public consultations, 11 and the 2015 Report of the Institute of Medicine of the National
6 Philip Morris Asia Limited v The Commonwealth of Australia, UNCITRAL, PCA Case No
2012-12; Philip Morris Brands Sàrl, Philip Morris Products S.A and Abal Hermanos S.A v Oriental Republic of Uruguay, ICSID Case No ARB/10/7
7 Eli Lilly and Company v The Government of Canada, UNCITRAL, ICSID Case No UNCT/14/2
8 T HE US C HAMBER OF C OMMERCE , T HE C ASE FOR E NHANCED P ROTECTION OF T RADE S ECRETS
IN THE T RANS -P ACIFIC P ARTNERSHIP A GREEMENT 5 (2013)
The agreement provides neutral and transparent international arbitration of investment disputes, paired with strong safeguards to deter abusive or frivolous claims while protecting governments' right to regulate in the public interest, including health, safety, and environmental protection Its procedural safeguards include transparent arbitral proceedings, amicus curiae submissions, non-disputing party submissions, expedited review of frivolous claims with the possible award of attorneys’ fees, a procedure for reviewing interim awards, binding joint interpretations by the TPP Parties, time limits on bringing a claim, and rules to prevent a claimant from pursuing the same claim in parallel proceedings.
EMA/240810/2013, The European Medicines Agency Policy on Publication of Clinical Data for Medicinal Products for Human Use, issued in 2014, outlines the European Medicines Agency's commitment to transparency by publishing clinical trial data for medicines used in humans while ensuring patient privacy and protecting commercially confidential information The policy specifies the types of data to be published, the conditions under which data will be released, and the processes for access, with the full document available at http://www.ema.europa.eu/docs/en_GB/document_library/Other/2014/10/WC500174796.pdf.
11 The World Health Organization, Call for public consultation: WHO Statement on Public Disclosure of Clinical Trial Results, available at http://www.who.int/ictrp/results/en/ (last visited
Academies “Sharing Clinical Trial Data: Maximizing Benefits, Minimizing Risk.” 12
Clinical data sharing yields healthcare improvements and scientific progress by enabling access to clinical dossiers that support a range of research activities, boost the efficiency of drug R&D, enhance transparency and accountability among drug authorities, and reduce the risk of publication bias in trial reporting Among policy initiatives, the European Medicines Agency (EMA) has been a pioneer, becoming the first drug regulatory authority to disclose clinical reports As of January 2015, access to clinical dossiers submitted for regulatory review can be provided after marketing approval of the corresponding drug, without requiring authorization or remuneration to data originators, provided the data are used for scientific, non-commercial research purposes and expressly not for generic drug approval.
From a scientific standpoint, clinical data collected during trials provides key pharmacological insights into a drug’s effects on the human body From a business standpoint, clinical trials are the most investment-intensive and time-consuming phase of drug R&D From a regulatory standpoint, submitting trial results that demonstrate efficacy, quality, and safety is mandatory before a drug can be marketed From a legal standpoint, the legal status and substantive rights related to the various data elements in clinical dossiers remain uncertain Public consultations around the 2015 EMA disclosure policy sparked a heated debate among public-interest groups, the scientific community, and the research-based biopharmaceutical industry; subsequently, the U.S Chamber of Commerce argued that EMA’s policy contrasted with existing international practices.
The legal basis for blanket clinical data disclosure remains unclear, creating uncertainty for sponsors, regulators, and patients Pharmaceutical regulatory data may be protected from disclosure under several mechanisms: trade secrets and unfair competition laws, as well as sui generis data-exclusivity regimes that shield trial and safety data for a defined period Additional protections—confidentiality obligations, privacy laws, and regulatory discretion—can further limit or condition disclosure, making a universal approach difficult to justify.
12 The Institute of Medicine of the National Academies, Sharing Clinical Trial Data:
Maximizing Benefits, Minimizing Risk (2015) available at http://www.iom.edu/Reports/2015/Sharing-Clinical-Trial-Data.aspx (last visited Nov 10, 2015)
International calls for clinical trial data sharing have grown, highlighting the push for data transparency in medical research For a concise overview, see Peter Gøtzsche’s argument in “Why We Need Easy Access to All Data from All Clinical Trials and How to Accomplish It” (Trials, 2011, 12:249, 9–11), which contends that easy access to all trial data is both feasible and vital and offers concrete steps to achieve universal data sharing across all clinical trials.
C LINICAL D ATA AS THE S UBJECT M ATTER OF P ROTECTION U NDER I NVESTMENT
Under international investment law, a claim for investment protection lies within the tribunal’s ratione materiae jurisdiction only if the claimant has made an investment in the host state This raises the question of whether dossiers submitted for drug marketing approval qualify as protected subject matter under investment treaties, and thus fall under the scope of investment protection before arbitral tribunals The answer hinges on the treaty’s definition of an investment and on how tribunals interpret regulatory submissions in the pharmaceutical sector, specifically whether pharmaceutical dossiers can be treated as investments or protected assets against host-state measures.
The Economic Characterization of Clinical Data as Foreign Investment
The Apotex case
Apotex v United States addressed whether a Canadian pharmaceutical company could claim investment under Article 1139 of NAFTA after the U.S FDA rejected its applications for marketing authorization of two generic drugs Apotex contended that its substantial investments included millions of dollars spent each year to prepare Abbreviated New Drug Applications (ANDAs) for U.S filing, along with significant efforts to formulate, develop, and manufacture generic products for sale in the United States and worldwide, which qualified as NAFTA investment The U.S rebutted that Apotex’s activities within the United States were those of an exporter selling the products, not an investor, thereby challenging the investment characterization.
U.S.-based distributors 37 The argument was upheld by the UNCITRAL tribunal which affirmed that the claimant’s activities in relation to drug regulatory approval in the country of exportation did not qualify as “an ‘investment’ in and of itself, within the meaning and scope of NAFTA Article 1139.” 38 Consequently, the case was dismissed due to the tribunal’s lack of jurisdiction
One view contends that Apotex's "critical omission" was its failure to develop a claim that its U.S affiliate, Apotex Corp., was independently a NAFTA investment It further asks whether submitting the claim on behalf of the U.S affiliate would, in principle, change the nature of Apotex's business in the United States—specifically, sales through the affiliated agent and distributor The passage concludes by noting that the tribunal's eventual stance is discussed, but the excerpt ends before that conclusion is revealed.
“unpersuaded” that such affiliate independently qualified as investment of “an interest in an enterprise” for the purposes of NAFTA Art 1139(e) 41
Pharmaceutical multinational corporations frequently conduct the majority of clinical trials in a single country and use essentially the same dataset to secure marketing authorization in multiple jurisdictions This pattern is not unique to clinical data: technologies can be patented and commercially utilized in several jurisdictions irrespective of where the corresponding R&D was conducted.
34 Apotex Holdings Inc and Apotex Inc v United States of America, ICSID Case
35 ANDA stands for an Abbreviated New Drug Application – the term used by the U.S Food and Drug Administration to refer to an application for a generic drug approval
36 Apotex v the United States of America, Notice of Arbitration under Chapter 11 of the NAFTA, ả 111 (Jun 4, 2009)
37 Apotex Inc v United States of America, Memorial on Objections to Jurisdiction of Respondent United States of America, May 16, 2011, ả 44-45 (citation omitted)
38 Apotex Inc v the Government of the United States of America, Award on Jurisdiction and Admissibility, ả 243-245 (Jun 14, 2013)
39 Julian D Mortenson, Apotex v United States: Narrowing NAFTA’s Definition of ‘Investment’,
Case comment, 16 J OURNAL OF W ORLD I NVESTMENT & Trade, 163, 168 (2015)
40 Apotex (Award), supra note 38, ảả 235-6
41 Apotex (Award), supra note 38, ả 238, footnote 108 (noting that “there was no evidence that
Apotex Corp was an “investment” of Apotex, or that Apotex had an interest in it, such as to satisfy NAFTA Chapter Eleven”)
There are ethical arguments against exposing humans and animals to risk if a drug’s clinical trials must be repeated in every jurisdiction seeking marketing authorization, and in some jurisdictions a portion of the trials must be conducted with the local population.
Yet, patents are commonly recognized as a category of assets within the investment definition under IIAs 43
The Apotex decision highlights a key distinction between foreign investment as the business activity and investment as costs incurred to create a business asset, indicating that the protection of an asset mentioned under an IIA should be analyzed in light of the foreign entity’s economic activity If the business activity of the clinical data-holder is recognized as foreign investment, the costs involved in conducting clinical trials can be viewed as related expenditures—akin to a pre-investment that enables operations in the host state However, the interests arising from the investment as resources committed to the host economy, rather than the recovery of asset-creation costs, would fall under protection.
The issue of contribution to the economic development of a host state 236 B The legal characterization of clinical data as an investment
According to the Salini decision, the contribution to the economic development of the host country is an additional criterion for evaluating international investments The developmental dimension of international investment rulemaking has largely been framed as a prospective agenda rather than a description of the current reality, emphasizing future developmental benefits over the actual state of affairs In more pragmatic terms, this perspective calls for assessing tangible development outcomes and policy implications for host countries, not just theoretical aspirations.
Key references on intellectual property provisions in international investment agreements include UNCTAD's IIA Monitor No 1 (2007), Norway’s 2007 Draft Model Agreement for the Promotion and Protection of Investments (Article 2(2)), and the United States Model BIT (Article 1, 2004).
Organization for Economic Co-operation and Development, The Multilateral Agreement on Investment Draft Consolidated Text, DAFFE/MAI(98)7/REV1, at 7 (1998) (noting that “further work
It was necessary to clarify how the MAI (multilateral agreements on investment) relates to other international agreements governing intellectual property, particularly when those agreements require standards of treatment that differ from the MAI or provide for their own dispute settlement mechanisms.
Douglas argues that the idea of a “pre-investment” phase is meaningless, and that the investment definition rests on two decisive factors: first, whether the host-state expenditures relate to acquiring a property right that matches at least one category defined in the relevant investment agreement; and second, whether the economic characteristics of the investment have materialized to commit resources to the host economy, thereby exposing the claimant to risk in pursuit of potential commercial returns.
45 See, e.g., Omar E García-Bolívar, Defining an ICSID Investment: Why Economic Development
Core Element (2012) notes the absence of an explicit textual link in international investment agreements between how investment is treated and the aim of promoting economic development, and it argues that this connection should be made explicit within IIAs See also UNCTAD, Development Implications of International Investment Agreements, IIA Monitor No 2 (2007), which argues that IIAs carry meaningful development implications that policymakers need to consider when shaping investment treaties.
Development considerations in international investment rulemaking remain largely indirect and defensive, intended to shield contracting parties from bearing full responsibility under the agreement UNCTAD's 2008 discussion on Investment Promotion Provisions in International Investment Agreements suggested developing guidelines on corporate economic development contributions to address development concerns From Stephan W Schill's view, international investment law is essentially about securing a cross-border claim to income in hopes of future returns, yet the developmental dimension cannot be ignored It matters for at least two reasons: it provides the interpretive context for international investment dispute resolution and it relates to the balance of commitments, which can be seen as a quid pro quo tied to the host state's aim to foster a favorable environment that supports investors and protects investments.
In the Philip Morris v Uruguay dispute over tobacco plain-packaging legislation, Uruguay challenged the tribunal's jurisdiction, arguing, among other points, that the alleged investment did not satisfy the contribution-to-development criterion of the relevant framework.
Under the Salini test, the claimant argued that their activities imposed huge costs on Uruguay and that the net contributions to Uruguay’s economic development from the Claimants’ interests and activities in Uruguay were overwhelmingly negative The tribunal dismissed this argument.
Salini criteria are jurisdictional requirements, such that the absence of one would imply a lack of jurisdiction The notion of “investment” under Article 25(1) of the ICSID Convention is intentionally unspecified to cover a wide range of economic operations, underscoring the broad scope of its application However, the scope cannot be stretched limitlessly and would not encompass a single commercial transaction, such as the mere delivery of goods against payment The developmental aspect has not been perceived by tribunals as a mandatory legal criterion for the purpose of investment definition and protection, and even if it were, such a requirement would not be problematic for IP-based assets, since contribution to socio-economic and technological development has not been required.
International Development Law, in Y EARBOOK ON I NTERNATIONAL I NVESTMENT L AW AND P OLICY
46 Steffen Hindelang, Balancing the Rights and Obligations of States and Investors by Marrying
Foreign Investment Protection off to Sustainable Development? Speaking Notes, 24th Meeting of the
Energy Charter Conference – Nicosia/Cyprus, at 2 (Dec 5, 2013) available at http://www.encharter.org/fileadmin/user_upload/Conferences/2013_Dec_5-6/4-3_Hindelang.pdf (last visited Oct 22, 2015)
The ICSID Convention acknowledges the need for international cooperation to promote economic development and emphasizes the role of private international investment in achieving that goal By linking development with cross-border investment, it underscores how private capital can contribute to growth within an international legal framework.
According to the Malicorp v Egypt award, investment should be understood in light of the objectives of the relevant treaty and the ICSID Convention: to promote investments by creating conditions that attract foreign nationals to invest and provide services in the host country, while also protecting the fruits of those contributions and services.
49 Philip Morris v Uruguay, supra note 32, ả 177
According to the cited source (50 Id., 182), the Claimants’ own inflated estimate indicates their combined contributions total about US$29 million per year, which is more than offset by direct health-care costs of roughly US$30 million.
Trade secrets have been cited as a key justification for the international system of intellectual property protection, enabling WTO member states to attract greater foreign direct investment and spur technology transfer However, the link between trade secrets and innovation is not formalized in the same way as patent protection, which ties disclosure to the dissemination of technical knowledge The value of trade secrets lies in confidentiality, and their content and worth can vary widely; there is no “trade secret office” akin to a patent office to assess whether information merits protection based on its contribution to innovation When a trade secret covers technical know-how, transferring it to a local subsidiary under a confidentiality agreement can contribute to technological development Regarding clinical data, local partners can learn from the scientific data, methodologies, and know-how contained in clinical dossiers, so clinical trial data can be viewed as contributing to the development of the technical capacity of local subsidiaries.
B The legal characterization of clinical data as an investment
The legal characterization of a foreign investment—encompassing both tangible and intangible assets—depends on securing property rights recognized under the host state's domestic law Protection of trade secrets is perhaps the least harmonized area of intellectual property law, with jurisdictions varying substantially in defining the legal scope and protections available.
Across 54 studies, researchers generally find a positive relationship between the growth of foreign direct investment (FDI) and the strength of intellectual property (IP) protection For an overview of the literature on this expansive subject, see generally The World.
T HE A PPLICABLE S TANDARD OF P ROTECTION
International investment law and intellectual property (IP) law differ in the nature and scope of protection they offer At present, 161 WTO member states are bound by the TRIPS Agreement to implement minimum standards of IP protection, establishing a global baseline In many cases, multilateral free trade agreements (FTAs) go beyond TRIPS and stipulate higher levels of protection, influencing how IP rights are protected and enforced across borders.
63 Apotex v United States, supra note 38, ả 219
65 For an overview of investment agreements that incorporate intellectual property as investment, see, e.g., Liberti, L., Intellectual Property Rights in International Investment Agreements:
An overview of the OECD Working Papers on International Investment (2010) and R.A Lavery's empirical study, Coverage of Intellectual Property Rights in International Investment Agreements: An Empirical Analysis of Definitions in a Sample of Bilateral Investment Treaties and Free Trade Agreements, examine how intellectual property rights are defined and protected within international investment agreements Lavery's work analyzes definitions across a sample of bilateral investment treaties (BITs) and free trade agreements (FTAs), highlighting wide variation in IPR coverage and its implications for investment protection and IP enforcement Together, these analyses inform policymakers about the importance of precise IP definitions in IIA drafting to ensure predictable protections for innovators while supporting cross-border investment.
66 Philip Morris v Uruguay, supra note 32, ảả 221-235 Besides trademarks, assets claimed by Philip Morris as its investment included manufacturing facilities, shares in an enterprise, rights to royalty payments Id., ả 183
Foreign investment, as defined by Sornarajah, involves transferring tangible or intangible assets across borders for use in the host country to generate wealth under the owner's control Clarification is needed on how investment relates to IP protection: do investment agreements grant investors new rights in their IP beyond those protected by IP law? Unlike IP rights, which are absolute, IIAs confer no new in rem rights; they create contractual rights to enforce obligations under the agreement This shift moves IP protection into a different legal paradigm with a different enforcement structure IP protection targets infringements by users, while investment protection can be invoked in disputes relating to state policy measures For example, in IP-related disputes, Philip Morris sought suspension of legislation and compensation for the loss of the commercial value of its trademarks, and Eli Lilly challenged patentability requirements under Canadian patent law.
This section analyzes how expropriation and fair and equitable treatment (FET) standards may apply to investment claims arising from regulatory disclosure of clinical data, focusing on these protections while omitting other investment-protection standards that address arbitrary treatment, on the premise that data-disclosure policies are neutral and applicable to all holders of drug marketing authorization rather than targeted at foreign companies or any specific investor.
The assessment under the Expropriation Standard
The legal status and substantive rights in clinical data vary by jurisdiction However, regardless of how legal title to clinical data is allocated, data disclosure by a drug authority does not entail transferring ownership to the government or to a third party, nor does it create new proprietary rights for the recipient Instead, disclosures are generally governed by applicable laws and regulatory terms that authorize access or use under specific conditions, while ownership remains with the original data holder Such disclosures are typically designed for regulatory oversight, safety monitoring, and research purposes, and are subject to confidentiality, privacy protections, and licensing constraints.
68 For recent statistics on the IP-related pharmaceutical provisions in trade agreements, see
Raymundo Valdés & Maegan McCann, Intellectual Property Provisions in Regional Trade Agreements: Revision and Update, World Trade Organization, Economic Research and Statistics
Division (2014) analyzes a sample of 245 regional trade agreements (RTAs) notified to the World Trade Organization and in force as of February 2014 The study’s statistical analysis highlights a growing trend toward including pharmaceutical provisions—such as patent linkage and clinical data protection—in RTAs, signaling the increasing policy convergence around medicines and regulatory data within regional trade agreements.
Excluding from the count the agreements that established the EEC, EFTA, and the Andean Community makes the pattern clearer, since those early treaties did not themselves contain significant pharma-related provisions but instead created the legal frameworks within which such provisions were later introduced For a comprehensive treatment of the adoption of TRIPS-plus standards through bilateral and regional free trade agreements, see David Vivas-Eugul.
R EGIONAL AND B ILATERAL A GREEMENTS AND A TRIPS-P LUS W ORLD : T HE F REE T RADE A REA OF THE
These works examine bilateralism in intellectual property and its impact on global governance, the WTO framework, and access to medicines They discuss how the FTAA era and other bilateral instruments shape IP norms, with Carlos M Correa arguing that bilateral IP provisions can undermine multilateral commitments to access to medicines; Peter Drahos tracing how BITs and BIPs expand IP protection through bilateral channels; Richard E Feinberg analyzing the political economy behind United States free-trade arrangements and their IP provisions; and Ruth L Okediji describing pendulum swings in international IP protection as policy regimes oscillate between bilateralism and multilateralism Together, they illuminate the tension between innovation incentives and public health access within evolving IP regimes.
69 See TRIPS Agreement art 43-47, 50 (stipulating obligations to provide for remedies against third party’s unauthorized acts)
Within the EMA framework, any applicant’s data submitted for the EMA’s review can be disclosed upon grant of EU marketing authorization, regardless of the applicant’s country of domicile The marketing authorization can be subject to limitations on use or withdrawal based on the submitted data, but there is no direct expropriation What remains uncertain is whether disclosure of data for experimental use could interfere with an investor’s business activity enough to amount to indirect expropriation.
In the Apotex dispute, the company contends that the United States breached NAFTA Article 1110 by interfering with and expropriating Apotex’s property rights in applications for generic drug approval, arguing that U.S actions (i) delayed Apotex’s eligibility for final approval and timely entry into the generic pravastatin market, thereby substantially depriving Apotex of the benefits of its investments in its pravastatin ANDA, and (ii) unlawfully redistributed the financial benefits of its investment to competitors Apotex sought damages of about $8 million The United States replied that NAFTA Article 1110 claims were without merit, first because the generic approvals did not constitute an “investment” under NAFTA Article 1139, and second because there was no support for the assertion that the administrative and judicial decisions by U.S courts and the FDA amounted to expropriation The tribunal did not decide whether the enforcement of drug-approval regulation constituted expropriation, since all claims were dismissed for lack of jurisdiction ratione materiae and ratione temporis.
To support an expropriation claim, an investor must show that the contested regulatory measure impairs the investment Apotex could tie the U.S FDA’s decision not to grant marketing authorization to an impediment in commercializing its products Regarding clinical data, the causal link between a regulatory measure that requires data disclosure for non-commercial, public-interest purposes and the impairment of commercial viability appears less evident Does clinical data disclosure hinder the investor’s ability to use the data as an asset, or deprive the investor of benefits from its own use of the data?
The tribunal must decide whether the challenged policy measure affects the value of data sufficiently to cause loss to the investor’s business or impair enterprise operations In the tobacco-packaging dispute, Philip Morris argued that Australia’s plain-packaging laws amount to expropriation because they deprive the company of the value of its shares—value that hinges on the ability to exploit intellectual property related to tobacco products—and that Uruguay’s regulation restricting trademark rights led to a substantial reduction of the investor’s value.
71 Apotex v the United States, Notice of Arbitration under Chapter 11 of the NAFTA, ả 75 (Jun
72 Apotex v United States, supra note 38, ả 133
73 Apotex v United States, Statement of Defense, ả 44, (March 15, 2011)
74 Apotex v United States, supra note 38, ả 337
In the 2012 UNCITRAL arbitration Philip Morris Asia Limited v The Commonwealth of Australia (PCA Case No 2012-12; Notice of Arbitration dated November 21, 2011), the discussion centers on how regulatory limits on the commercial use of trademark rights can objectively affect an enterprise’s profitability However, applying a similar argument to clinical data disclosure is not straightforward, since clinical data do not have a direct commercial use The primary function of clinical dossiers is to support an application for drug marketing approval, and once approval is obtained, clinical reports are not used in drug production in a way that adds value to the product or contributes to a firm’s profits.
An apt analogy compares the forced disclosure of regulatory data with compulsory licensing of patents: both involve external restrictions on the holder’s rights, but while a compulsory license can diminish a patent owner’s profitability and control, the patent’s validity and ownership remain intact; regulatory data disclosure likewise limits the investor’s discretion over clinical data, with agencies like the EMA providing access without requiring authorization or compensation to the data originator; however, the economic impact differs: the effect of limiting exclusive patent rights is more pronounced for enterprise profitability than data disclosure for non-commercial use, because clinical data, unlike patented technology, does not have a productive use that would allow the data holder to boost market power by excluding competitors in drug manufacture.
Within the public-interest rationale for disclosing clinical data, two distinct purposes emerge: protecting public health and promoting follow-on drug research and development The former applies when an authorized drug may raise safety concerns, potentially producing a prima facie case for disclosure to inform regulators and safeguard patients The latter aims to accelerate innovation by making data available to researchers and industry, supporting the development of safer, more effective therapies.
76 Philip Morris Brands Sàrl, Philip Morris Products S.A and Abal Hermanos S.A v Oriental Republic of Uruguay, ICSID Case No ARB/10/7, Request for Arbitration, ả 87 (Feb 19, 2010)
Extensive evidence from 77 studies shows a positive relationship between trademark use, brand recognition, and customer loyalty with profitability For example, the World Intellectual Property Organization’s 2013 World Intellectual Property Report, Brands—Reputation and Image in the Global Marketplace, analyzes how strong brands influence market performance and corporate earnings These findings underscore the value of investing in trademark strategy and a consistent brand identity to build recognition, foster loyalty, and drive profitability in global markets.
Evidence generally supports a complementary relationship between branding and advertising, but in certain situations a company may find it more profitable to differentiate itself through brand image rather than through product innovation This view aligns with influential work on brand equity, including Simon and Sullivan's financial approach to measuring brand equity and its determinants (Marketing Science, 1993) and the subsequent analyses by Cobb-Walgren and colleagues.
Brand Preference, and Purchase Intent, 24 J OURNAL OF A DVERTISING , 25 (1995); Brand Equity,
E NCYCLOPEDIA OF S TRATEGIC M ANAGEMENT (Mie Augier & David Teece, eds., 2015) (quoting John
Stuart, the co-founder of Quaker Oats, reportedly said that if the business were split up he would give away land, bricks and mortar while taking the brands and trademarks, arguing that intangible assets would help him fare better than his partner This anecdote underscores the idea that branding and IP can drive value beyond physical assets, a theme explored in economic research such as P Askenazy and colleagues’ 2010 working paper Advertising and R&D: Theory and Evidence from France from the Paris School of Economics.
78 Such effect is associated with the referential use of clinical dossiers for the purpose of generic drug approval
79 For instance, the EMA policy differentiates between the purpose of “public scrutiny” and that of the “application of new knowledge in future research.” See the EMA, supra note10, at 3-4
These concerns are usually addressed under pharmacovigilance (post-marketing surveillance) regulations that would permit independent investigators to access clinical dossiers for secondary analyses See the World Health Organization (WHO) for reference.
P HARMACEUTICAL LEGISLATION AND REGULATION IN M ANAGING A CCESS TO M EDICINES AND H EALTH
The assessment under the FET Standard
International IP protection standards for pharmaceutical test data
In trademark and patent disputes, claimants invoke obligations under the TRIPS Agreement as a source of their expectations for investment protection Article 39(3) of the TRIPS Agreement (TRIPS 39(3)) applies to pharmaceutical test data.
CTAG5's Advice to the European Medicines Agency argues against proactive disclosure of clinical trial reports, highlighting that bilateral agreements protect strategic know‑how in product development and usually include confidentiality clauses that are legally enforceable Consequently, the confidential nature of manufacturing and control data, detailed preclinical testing results, and the clinical strategic plan should be respected by competent authorities throughout the regulatory review.
Determining the legal status and substantive rights in data contained in clinical reports is a complex, jurisdiction-specific process In the United States, the regulatory framework for clinical data submitted to the FDA encompasses the Freedom of Information Act, the Federal Food, Drug, and Cosmetic Act, the Federal Trade Secrets Act, state trade secret laws, and the constitutional takings doctrine.
Why the FDA Should Start Disclosing Drug Trial Data, 16 M ICH T ELECOMM T ECH L R EV 511,
A 2010 decision described the regime as confusing, complicated, and sometimes contradictory, arguing that this complexity helps create legal bottlenecks In the European Union, there has not been a CJEU ruling that provides useful guidance on whether highly technical scientific documents—such as clinical and non-clinical study reports—should be treated as confidential by virtue of their nature See Case T-235/15 R, Pari Pharma GmbH v EMA, Order of the President of the Court.
On September 1, 2015, the General Court noted in paragraph 61 that there is no case-law capable of providing a ready answer to the confidentiality questions to be decided in the present case by the future judgment on the substance; in paragraph 62, the court reiterated that there is no precedent allowing an immediate resolution of these confidentiality issues pending the substantive ruling.
102 In this regard, the EMA 2015 disclosure policy sets a precedent, when a drug authority grants access to clinical dossiers submitted for the regulatory review to third parties
According to Eli Lilly v Canada (supra note 86, at 42), Philip Morris v Australia (supra note 75, at 6.6–6.7), and Philip Morris v Uruguay (supra note 76, at 85), data submitted for drug regulatory review is treated as lex specialis The provision stipulates sui generis protection of such data against unfair commercial use and against disclosure, thereby shielding pharmaceutical regulatory information from improper exploitation and ensuring fair competition in the bioscience sector.
When marketing approval for pharmaceutical or agricultural chemical products that use new chemical entities requires the submission of undisclosed test data and other data developed with substantial effort, such data must be protected from unfair commercial use and from disclosure; disclosure is allowed only to protect the public or when appropriate steps are taken to ensure the data remain protected against unfair use.
Ironically, the provision on trade secrets remains opaque and poses an interpretative challenge in defining the minimum international standard for protecting test data The protection obligation hinges on an ambiguous, equivocal notion, making it unclear how and when data must be safeguarded across jurisdictions This ambiguity complicates harmonization of rules, affects enforcement, and leaves stakeholders uncertain about the scope of required protection and the criteria for compliance.
To date, "unfair commercial use" has not been interpreted in WTO jurisprudence The agreement’s travaux préparatoires suggest that protection was originally directed at the referential use of clinical data for the purpose of expedited generic drug approval This, however, does not necessarily mean that this was the final result achieved during the TRIPS negotiations Even if one assumes that "unfair commercial use" implies referential use for generic approval, the debatable issue is whether the TRIPS Agreement stipulates protection in the form it prescribes.
104 This inquiry does not address policy and academic debate regarding the question whether TRIPS 39(3) mandates the WTO member states to prohibit the referential use of data for the expedited generic approval; for such analyses, see, for example, Aaron Xavier, Secrecy, Monopoly and Access to Pharmaceuticals in International Trade Law: Protection of Marketing Approval Data under the TRIPs Agreement, 45 Harvard International Law Journal 443-502 (2004); UNCTAD-ICTSD, Resource Book on TRIPS and Development (2005); Lucas Arrivillaga,
An International Standard of Protection for Test Data Submitted to Authorities to Obtain Marketing Authorization for Drugs, 6 J W ORLD I NTELL P ROP 139 (2005); Jean-Frédéric Morin, Tripping Up
TRIPS Debates: IP and Health in Bilateral Agreements examines how TRIPS interacts with health policy within bilateral arrangements, highlighting tensions between intellectual property protection and access to medicines Shamnad Basheer's Protection of Regulatory Data under Article 39.3 of TRIPs: The Indian Context analyzes how India interprets and implements Article 39.3 to protect regulatory data, with implications for market entry and generic competition Charles Clift's Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals discusses how data protection and data exclusivity regimes shape innovation, pricing, and access in the pharmaceutical and agrochemical sectors within health-related intellectual property management.
A GRICULTURAL I NNOVATION : A H ANDBOOK OF B EST P RACTICES (A Krattiger et al., eds, 2007);
Jerome Reichman, Rethinking the Role of Clinical Trial Data in International Intellectual Property
Law can be framed as a public goods problem, arguing that the governance of information and innovation benefits from shared access and collective stewardship to maximize social welfare The TRIPS Agreement establishes rights for data protection, while scholars analyze how TRIPS-plus standards can alter incentives, access, and competition in ways that may extend beyond the core aims of the agreement The handbook on the Law and Theory of Trade Secrecy further examines how secrecy protections interact with broader IP regimes, influencing knowledge flows, innovation, and policy design in a global economy Together, these perspectives highlight the ongoing tension between safeguarding proprietary information and promoting public welfare, offering a coherent lens for evaluating intellectual property rules in an interconnected world.
C ONTEMPORARY R ESEARCH 568 (Rochelle C Dreyfuss & Katherine J Strandburg, eds, 2011); N UNO
P IRES DE C ARVALHO , T HE TRIPS R EGIME OF P ATENTS AND T EST D ATA (2014)
105 The World Trade Organization, WTO Analytical Index: TRIPS available at https://www.wto.org/english/res_e/booksp_e/analytic_index_e/trips_e.htm (last visited Jan 13, 2016)
In many jurisdictions, the approval of a generic product can be based on bioequivalence studies that demonstrate interchangeability with the innovator drug, without the need for the generic to provide its own clinical data proving safety, quality, and efficacy For definitions of bioequivalence, innovator, comparator, and generic products, see the World Health Organization.
O RGANIZATION , M ARKETING A UTHORIZATION OF P HARMACEUTICAL P RODUCTS WITH S PECIAL
R EFERENCE TO M ULTISOURCE (G ENERIC ) P RODUCTS : A M ANUAL FOR N ATIONAL M EDICINES
Regulatory authorities (NMRAs) in 2011 described two main approaches to data protection: a data exclusivity rule that prevents a generic approval from being granted on the basis of the originator’s data without authorisation, and a liability rule that allows the approval of a generic product without authorisation but with compensation to the data originator These two models illustrate different balances between enabling generic competition and protecting the data originator’s rights.
Notwithstanding the TRIPS Agreement, many countries have adopted pharmaceutical data protection in the form of data exclusivity to meet obligations arising from Free Trade Agreements (FTAs) For example, all U.S FTAs require a minimum five-year period of pharmaceutical data protection that mirrors U.S law, though the exact scope can vary by agreement Notably, the U.S Government itself has expressed uncertainty about whether these FTA data-protection obligations meet or exceed the TRIPS minimum standard, a concern highlighted by the Government Accountability Office.
[w]hether FTA provisions on data exclusivity go beyond TRIPS is less clear There are different interpretations of the obligations under
The proportionality test and balance of interests
Tribunals evaluating legitimate expectations often rely on a proportionality test and a balancing of interests In El Paso, the tribunal described legitimate expectations as the result of balancing rights and interests, noting that its application varies with context and must be considered with due regard to the State’s rights In Oostergetel, the tribunal stressed that stability of the legal and business environment does not equal immutability of the legal framework, and that legitimate expectations must be measured through a balancing test that accounts for specific circumstances This raises questions about how balancing serves as a measure of the legitimacy of expectations and about the relevance of aligning investors’ ex ante protections with subsequent ex post regulatory acts, signaling a tension between investor certainty and regulatory flexibility and the need to tie ex ante assurances to the realities of regulatory change.
In Saluka, the tribunal suggested that obligations under investment treaties cannot be enforced if interpreted too literally because such readings would be inappropriate and unrealistic It also emphasized that the scope of protection against unfair and inequitable treatment cannot be determined solely by foreign investors' subjective motivations and expectations; to be protected, those expectations must rise to the level of legitimacy and reasonableness in light of the circumstances This signals a more contextual approach to treaty interpretation, where fairness and practicality shape the boundaries of investment protection.
Describing the criteria as “inappropriate and unrealistic” offers little guidance for assessment; instead, a tentative rule of thumb can help determine whether protection expectations exceed the state’s discretion to regulate in matters of public concern As the tribunal in S.D Myers v Canada held, the determination of a breach of the investment-protection obligation must be made with a high degree of deference that international law generally affords.
115 For factors bearing on the FDI decision making, see, e.g., John H Dunning, Global
Capitalism, FDI and Competitiveness (2002); Nauro F Campos & Yuko Kinoshita, Why Does FDI
Go Where it Goes? New Evidence from the Transition Economies, International Monetary Fund
Working Paper WP/03/228 (2003); Ashoka Mody & David Wheeler, International Investment Location Decisions: the Case of U.S Firms, 33 (2) J INT ECON 57 (1992); Florence Jaumotte,
Foreign Direct Investment and Regional Trade Agreements: The Market Size Effect Revisited,
International Monetary Fund Working Paper WP/04/206 (2004)
116 El Paso v Argentina, supra note 93, 356
118 Oostergetel, supra note 98, ả 118 (emphasis added)
120 Id extends to the right of domestic authorities to regulate matters within their own borders.” 121 In other words, investors should not expect too much
Balancing can be applied in arbitral analysis for different reasons For instance, the El Paso award illustrates this approach, with the tribunal indicating that the determination of a breach of the FET obligation requires weighing relevant factors and balancing competing interests rather than applying a mechanical test This emphasis on balancing highlights how investment arbitration assesses proportionality, context, and policy considerations to reconcile investor protection with a state's regulatory prerogatives In short, balancing provides a nuanced framework for evaluating whether measures amount to a violation of fair and equitable treatment, guiding tribunals toward outcomes grounded in careful synthesis of competing factors.
Determining whether the protection obligation was breached requires weighing the claimant's legitimate and reasonable expectations against the respondent's legitimate regulatory interests, to assess the impact of a policy measure It also involves evaluating whether the foreign investor's expectations were frustrated in a justified and reasonable way, taking into account the host state's legitimate right to regulate domestic matters in the public interest, i.e., applying a balancing test at the defense stage.
The proportionality test asks whether the loss imposed on an investment by a regulatory measure is proportionate to the public benefits it seeks to achieve, i.e., whether the means are proportionate to the objectives In this sense, proportionality resembles the necessity defense under customary international law In Philip Morris v the Government of Australia, the tobacco company contended that the benefits of the legislation (if any) are entirely disproportionate to the harm caused to PM Asia’s investment, and thus the measure is unfair and inequitable The key question then becomes how to identify comparable values to quantify costs and benefits and how to weigh the harms to a private investor against potential public gains, since these considerations seem to fall into different weight categories.
This article does not analyze how proportionality should be applied to balance investor rights and public interests For the purposes of this discussion, several potential arguments can be identified in response to investor protection claims, whether determining whether a protection obligation has been breached by data disclosure or evaluating whether such a breach is justified.
From the policymaking perspective, access to clinical data can support a range of objectives In the area of public health, it can improve drug safety and quality, contribute to the transparency in decision-making of drug authorities, and reduce the risk of publication bias in reporting trial results 127 Clinical trials are subject to
121 S.D Myers, Inc v Government of Canada, UNCITRAL, Partial Award, ả 263 (Nov 13, 2000) See also, Saluka, supra note 89, ả 305; and Joseph Charles Lemire, supra note 99, ả 505 (both decisions upholding S.D Myers on this point)
122 El Paso, supra note 93, ả 305 (emphasis added)
124 Alec Stone Sweet, Investor-State Arbitration: Proportionality’ New Frontier, 4 (1) L AW &
E THICS OF H UMAN R IGHTS 47, 63 (2010) (arguing “that hindrance [to investment] may nonetheless be mitigated or justified to the extent that the measures taken were not arbitral, and were meant to serve a proper good”)
126 For a comprehensive analysis, G EBHARD B ĩCHELER , P ROPORTIONALITY IN I NVESTOR -S TATE
A RBITRATION (2015); Benedict Kingsbury & Stephan Schill, Public Law Concepts to Balance Investor’s Rights with State Regulatory Actions in the Public Interest - the Concept of Proportionality,
I NTERNATIONAL I NVESTMENT L AW AND C OMPARATIVE P UBLIC L AW (Stephan Schill, ed., 2010)
Based on The Royal Society’s Science as an Open Enterprise (2012), mandatory registration with subsequent results reporting is a cornerstone of trial transparency However, voluntary data disclosure only reveals the tip of the iceberg; the clinical trial dossiers submitted by drug sponsors for marketing authorization contain substantially more detailed records than the publicly available synopses of trial findings.
From an innovation perspective, access to clinical data speeds the development and timely launch of superior products In line with the EMA’s aims, access to clinical trial dossiers helps avoid duplicating trials, spurs innovation, and supports the development of new medicines A key objective of the EMA’s disclosure policy is to enable the wider scientific community to use detailed, high-quality clinical trial data to generate new knowledge for public health In the same spirit, the European Commission, the WHO, and the Institute of Medicine of the National Academy of Sciences advocate for transparency and data sharing to advance public health.
Prominent clinical-trials registries include the EU Clinical Trials Register (https://www.clinicaltrialsregister.eu), containing data on trials conducted in the EU or the European Economic Area after May 1, 2004, and the World Health Organization's International Clinical Trials Registry Platform (http://apps.who.int/trialsearch/); while there is no binding international legal obligation to register trials or report results, international ethical standards for medical research are embedded in the Declaration of Helsinki on Ethical Principles for Medical Research Involving Human Subjects, adopted by the 18th WMA General Assembly in Helsinki, Finland, in June 1964 Paragraphs 35 and 36 of the Helsinki Declaration state that researchers have a duty to make publicly available the results of their research on human subjects and are accountable for the completeness and accuracy of their reports, and that negative and inconclusive as well as positive results must be published or otherwise made publicly available.
129 On the selective and insufficient disclosure of clinical trial results, see Christopher W Jones et al., Non-publication of Large Randomized Clinical Trials: Cross Sectional Analysis, BMJ 347:
Publication bias in clinical trials is evident: of 585 registered trials, 171 remained unpublished, involving an estimated total enrollment of 299,763 participants, and the median time from study completion to the final literature search for these unpublished trials was 60 months This substantial delay highlights the ongoing problem of selective reporting in clinical research For context, this issue has been discussed by Peter C Gøtzsche, who argues for easy access to all data from all clinical trials and how to accomplish it, and by Marcia Angell, who critiques the drug industry and emphasizes the need for transparency and accountability in drug research.
H OW T HEY D ECEIVE U S AND W HAT TO D O A BOUT I T (2005); B EN G OLDACRE , B AD P HARMA : H OW
D RUG C OMPANIES M ISLEAD D OCTORS AND H ARM P ATIENTS (2012)
130 The EMA, Publication of Clinical Data http://www.ema.europa.eu/ema/index.jsp?curl=pages/special_topics/general/general_content_000555. jsp (last visited Oct 31, 2015)
131 The EMA Policy, supra note 10, at 4
All research rests on previous work and hinges on scientists’ ability to access and exchange scholarly publications and data When research results are shared broadly and rapidly, innovation can be accelerated and duplication of effort reduced, though some delay in initial use by researchers or for commercial purposes can be warranted.
133 The World Health Organisation, WHO Statement on Public Disclosure of Clinical Trial
According to the WHO Statement on results reporting in clinical trials (November 26, 2015), facilitating research hinges on greater access to primary datasets and on building an enabling environment that supports data sharing to maximize the value of health research data.