Complex is the right word to describe the relationship between foreign investment and the protection of intellectual property. There are studies claiming that intellectual property protection can aid the growth of the global economy, especially in developing countries. However, on the other hand, there are also studies concluding that strong intellectual property protection can hinder a country's growth. This debate stems from the inherent nature of intellectual property protection, which grants monopolistic rights to its owners. Meanwhile, one of the aspects making foreign investment attractive to developing countries is the opportunity to acquire new technology in a beneficial way, which can drive economic growth. However, regimes of intellectual property protection tend to prioritize the interests of the creators, artists, or inventors.

Kascheeva, in 'The role of foreign direct investment in the relation between intellectual property rights and growth,' presents the debate among academics about the influence of intellectual property protection on foreign investment's impact on economic growth. The results of the study indicate that further examination is needed on the level of foreign investment in a developing country to determine the impact of intellectual property regulation on the country's welfare. Intellectual property protection is considered to stimulate investment, but there are other factors that also attract investment. Therefore, if a developing country can attract foreign investment without tightening intellectual property protection, there is potential to increase total production in the country's economy. This finding does not negate the importance of intellectual property protection but rather highlights the need to pay attention to intellectual property at all. Governments should periodically review the impact of intellectual property protection regulated within the framework of foreign investment on the country's economy.

In its history, intellectual property protection in foreign investment activities began in the mid-1960s to 1970s. The need for this protection arose due to technology transfer to develop the global economy, multinational companies desiring intellectual property protection when doing business abroad, including within the GATT/WTO and UNCTAD agendas. Based on this, the origins of the international legal framework created by the WTO in intellectual property protection can be seen. This need was responded to by the WTO, resulting in The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs), which Indonesia ratified through Law Number 7 of 1994.

Regulation regarding international intellectual property protection within the scope of investment has proven to be necessary for those involved in investment activities. This can be seen in investment disputes related to intellectual property. One such dispute is Philip Morris vs. Uruguay, resolved through the International Centre for Settlement of Investment Disputes (ICSID) in 2010. Philip Morris claimed that the Uruguayan government had expropriated its cigarette business by banning Philip Morris from using its original cigarette packaging in the Uruguayan market, resulting in losses.

As of the writer's knowledge, there have been no disputes between Indonesia and foreign investors related to intellectual property. However, there is still a possibility of this occurring given the numerous intellectual property violations in Indonesia. Indonesia is placed on the Priority Watch List (PWL) issued by the United States Trade Representative (USTR). This position indicates that Indonesia's image regarding intellectual property protection is not favorable enough.

The debate on the influence of intellectual property protection on investment on economic growth, especially for developing countries, makes discussing Indonesia's regulation on intellectual property protection in investment agreements or Bilateral Investment Treaties (BITs) with other countries interesting. This regulation can provide a general overview, Indonesia's perspective on the influence of intellectual property protection on foreign investment on the country's economy. So, how is the regulation on Intellectual Property Protection in the framework of Indonesia's bilateral investment treaties with other countries?

The United Nations Conference on Trade and Development (UNCTAD) has a platform that presents data related to international investment agreements worldwide, including Indonesia. This platform is in the form of a website accessible via the URL https://investmentpolicy.unctad.org. The data presented on this platform include the title, status, parties involved, signing date, effective date, and the agreement documents themselves. Throughout the UNCTAD website, the platform referred to is a subsection named the International Investment Agreements Navigator.

Based on the UNCTAD navigator platform, Indonesia has 43 BITs. The BITs that are in force are 29, while the rest are signed but not yet in force. The platform also shows terminated BITs, which are 31. Regarding these terminations, an article in the Indonesia for Global Justice forum in 2015 states that assessments and revisions of international investment agreements are made to prioritize national interests. The article is based on a dialogue with the Director of Economic, Social, and Cultural Agreements of the Ministry of Foreign Affairs, Abdulkadir Jailani, who stated that with BITs, the country has lost its sovereignty. It is further explained that the Indonesian government struggles to formulate policies and legislation emphasizing national interests. Based on this, it can be understood that there are efforts by the government to ensure the country's interests are prioritized in foreign investment. Considering this exposition, linked with the narrative that strong intellectual property protection can hinder growth, it can be argued that the impact of intellectual property protection in BITs is also one of the aspects evaluated.

BITs represent the latest wave of intellectual property protection development. BITs are bilateral agreements, usually between a developed and a developing country, that commit to protecting intellectual property rights based on obligations already contained in TRIPs and other agreements. However, bilateral BITs do not replace multilateral TRIPs; rather, they work alongside each other. Although BITs have existed since 1959, agreements signed since 1995 have had the most significant influence on international intellectual property protection. These agreements continue to evolve to create intellectual property protection that exceeds the minimal standards set by TRIPS. Therefore, BITs often add 'TRIP-plus' provisions to add additional commitments beyond what is agreed upon in TRIPs.

In the document published by UNCTAD titled 'Intellectual Property Provisions in International Investment Arrangements,' it explains that the level of intellectual property protection based on BITs will be influenced by how the term 'intellectual property' is defined. The narrower the definition, such as in the Benin-Ghana BIT, the more limited the potential scope of its claims. Countries interested in limiting liability for intellectual property claims based on BITs can also make efforts by restricting the protected assets to patents, copyrights, and trademarks registered with their national intellectual property authorities. The definition of intellectual property or intellectual property in BITs between Benin and Ghana quoted in the article reads:

'Investments’ means every kind of asset and in particular, though not exclusively, includes:
…
(iv) intellectual property rights, goodwill, technical processes and know-how and all similar rights recognized by the national law of both Contracting Parties..'

Based on this finding, Indonesia's support for intellectual property protection can be seen from the formulation of intellectual property in the investment definition.

The author has conducted a brief review of 27 Indonesian BITs in the UNCTAD platform's database and found that all 27 BITs have defined intellectual property as investments within their scope. However, the formulations of what is included in intellectual property protection vary. There are three models of intellectual property coverage formulation. Here are the three models:

Model 1
'Investment... though not exclusively, includes:
…. intellectual property rights, technical processes, goodwill, and know-how;'

Model 2
'Investment… though not exclusively, includes:
… intellectual property rights including copyright, commercial trademark, patents, industrial designs, know-how, trade secrets and trade names, and goodwill;

Model 3
'Investment... though not exclusively, includes:
Intellectual property rights including but not limited to patents, copyrights, trademarks, geographical indications, industrial designs, layout design of integrated circuits, trade secrets, and rights in plant varieties, as well as business names, technical processes, know-how, and goodwill;'

Based on the comparison of these three models, it can be seen that the formulation of intellectual property coverage in Indonesian BITs varies in breadth and narrowness. Among the 27 BITs reviewed, the use of the first model is more common than the second and third models. This implies a potentially large claim for investors regarding intellectual property protection.

The findings in this article show that Indonesia, in its BITs with other countries, indeed regulates intellectual property as an investment, indicating Indonesia's support for the importance of intellectual property protection. Referring to Kascheeva's research that there is a camp supporting that intellectual property protection can have a positive impact on a country's growth, it can be interpreted that Indonesia's reason for regulating intellectual property in its BITs is to attract investors to invest in Indonesia to stimulate development more efficiently.

Thus, several conclusions can be drawn from the condition of Intellectual Property Protection Regulation in the framework of Indonesia's Bilateral Investment Treaties:

1. Regulation regarding intellectual property protection can be one aspect of reviewing Indonesia's BITs with other countries;
2. BITs represent the most modern manifestation of international intellectual property protection;
3. The review of intellectual property protection in Indonesian BITs must be conducted through how BITs define intellectual property as an investment;
4. There are at least 3 (three) different models in formulating intellectual property as an investment protected by BIT;
5. Intellectual property protection regulation in Indonesian BITs with other countries tends to be broad, thus providing a potentially large claim for investors.
6. Indonesia supports the idea that intellectual property protection can have a positive impact on economic growth by stimulating investor interest in investing.

References

Kashcheeva, Mila. “The role of foreign direct investment in the relation between intellectual property rights and growth”, Oxford Economic Papers Vol. 65, No. 3 (July, 2013): 701. https://www.jstor.org/stable/23463384

Leonard, Jessica., Amalia, Prita., Chandrawulan, An An. “Indonesian Perspective on The Investors-State Dispute Settlement Mechanism for Foreign Investment Dispute Settlement in The Field of Intellectual Property Rights”, Indonesia Law Review Vol. 10, No. 1 (April, 2020), 19. https://scholarhub.ui.ac.id/cgi/viewcontent.cgi?article=1021&context=ilrev

Anderson, Alan M.., Razavi, Bobak. “The Globalization of Intellectual Property Rights: TRIPs, BITs, and The Search for Uniform Protection”, Georgia Journal of International and Comparative Law Vol. 28, No. 2 (2010): 277. https://digitalcommons.law.uga.edu/cgi/viewcontent.cgi?article=1122&context=gjicl

Directorate General of Intellectual Property Rights, Ministry of Law & Human Rights R.I. “Efforts by DGIP to Remove Indonesia from USTR Priority Watch List”, https://dgip.go.id/artikel/detail-artikel/upaya-djki-keluarkan-indonesia-dari-priority-watch-list-ustr?kategori= , (accessed on December 3, 2023).

Indonesia for Global Justice, “Indonesia Has Terminated 18 BITS”, https://igj.or.id/indonesia-sudah-menghentikan-18-bits/ (accessed on December 3, 2023).

UNCTAD. “Intellectual Property Provisions in International Investment Arrangements”, https://unctad.org/system/files/official-document/webiteiia20071_en.pdf (accessed on December 3, 2023).