India, Sept. 23 -- The Indian Patent Office (IPO) has revoked the patent of Novartis for its blockbuster cardiac drug, Vymada, based on a lack of novelty and inventive steps as required under the Patent Act. This revocation will pave the way for the entry of cheaper generics into the market, benefiting patients. Novartis may challenge this revocation in the Delhi High Court. Besides the legality of this issue under the Patents Act, one also needs to understand the ramifications of this action under international law, namely, bilateral investment treaties (BITs) that empower foreign investors to bring claims against host States before an investor-state dispute settlement (ISDS) tribunal. This is relevant because Novartis is a Swiss company whose investment in India is protected under the India-Switzerland BIT. Moreover, globally, there are quite a few cases, such as Eli Lily v Canada and Philip Morris v Australia, where foreign investors have used BITs to challenge the host State's regulatory measures affecting their intellectual patent rights (IPRs). Foreign investors have been able to bring these claims since IPRs are recognised as foreign investment worthy of protection under the BIT. An ISDS tribunal will have jurisdiction to hear a case brought by a foreign investor if it arises directly out of an investment. Thus, the key question is whether Novartis can challenge the revocation of its patent before an ISDS tribunal. To answer this question, one will have to examine several facets. First and foremost, India unilaterally terminated its BIT with Switzerland in 2017. However, the India-Switzerland BIT, due to the sunset clause, remains effective for a further period of 15 years from the date of its termination in respect of investments made or acquired before the termination. Accordingly, protection is available under the BIT to Swiss investment in India till 2032. While Novartis has been operating in India for a long time, the specific patent right that was revoked here was granted in 2022, i.e., after five years of the treaty's termination. If the meaning of foreign investment is restricted to the patent that Novartis had on its Cardiac drug, an ISDS tribunal will not be able to hear the case due to a lack of jurisdiction. However, an alternative, broader interpretation is plausible. As it was held in a case known as CSOB v Slovakia, even if a transaction, standing alone, does not qualify as an investment, the dispute would still be deemed to arise out of an investment if that transaction forms an integral part of an overall operation that qualifies as an investment. In the Novartis case, it is crucial to bear in mind that the patent application was filed in 2007. Thus, if the patent right is seen as an inseparable part of Novartis's ongoing investment that was made before 2017, an ISDS tribunal will have the jurisdiction to hear the case. However, an ISDS tribunal having jurisdiction, if Novartis challenges this patent revocation, is just one part of the story. The other equally relevant part is whether an ISDS tribunal will find such revocation a violation of the rights that foreign investors enjoy under the BIT. There are two substantive rights that Novartis can allege have been breached: The right to fair and equitable treatment (FET) and the right against expropriation. ISDS tribunals have repeatedly held that the FET provision includes the concept of legitimate expectations. So, could Novartis have the legitimate expectation that its patent would not be revoked? The answer is a resounding no. No foreign investor can have a legitimate expectation that a host State shall not act in accordance with its domestic law. The Indian Patent Act allows for the revocation of a patent on post-grant opposition - a fact that Novartis is fully aware of. Thus, patent revocation does not violate the FET provision, unless it can be shown that the law was applied arbitrarily. What about protection from expropriation? ISDS tribunals have recurrently held that establishing unlawful expropriation requires a high threshold of substantial deprivation of foreign investment. Given the extensive operation of Novartis in India and its diverse product portfolio, it is unlikely that revocation of one patent would lead to a substantial deprivation of its investment. Moreover, in Eli Lily v Canada, where the Canadian courts had invalidated the patents held by the foreign investor, the ISDS tribunal, giving deference to Canadian courts, had held that such invalidation did not violate Canada's obligations. This case demonstrates that States need not worry about ISDS claims if they act in a non-arbitrary and non-discriminatory manner. Nonetheless, a key takeaway is that the IPO and other authorities dealing with the IPRs of foreign investors should internalise India's international law obligations so that their decisions are robust and will stand international scrutiny....