Bridgestone Arbitral Tribunal Rules That Trademarks and Trademark Licenses May Constitute Protected Investments

February 27, 2018

In a December 2017 decision, the Arbitral Tribunal in Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc. v. Republic of Panama ruled that trademarks and trademark licenses may constitute protected investments under the United States-Panama Trade Promotion Agreement and the ICSID Convention, provided that the owner or licensee of the trademarks can show that it is actively exploiting them.

The Tribunal explained that manufacturing products bearing a trademark, promoting a trademark through advertisements and sponsorships and other acts of trademark exploitation may give the mark or a license to the mark the necessary characteristics of an investment, such as the commitment of capital, the assumption of risk, the expectation of profit and a contribution to the host state. In the absence of such activities, by contrast, a bare trademark or trademark license would not qualify for protection.

At the same time, the Tribunal showed significant flexibility in considering activity by a claimant’s subsidiaries, including activity conducted largely outside the host state, in assessing whether the trademarks at issue were being exploited.

The Tribunal’s ruling has potential implications for owners and licensees of intellectual property rights, particularly with respect to the protections they can expect for their trademarks under investment treaties and the steps they can take to maximize the likelihood that those protections will be available.