Revisiting Eli Lilly v. Canada: Judicial Interpretation of IP Law and Exposure to Investor-State Disputes

Eli Lilly v. Canada was an investor-state dispute settlement (ISDS) case widely noted for signaling a regime shift in intellectual property (IP) protection from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to ISDS. Its true yet often overlooked significance, however, lies in being a case of first impression on whether judicial interpretation of IP law may serve as a basis for state responsibility independent of denial of justice. To bridge that gap, this Note undertakes a close reading of the novel doctrinal discussion in Eli Lilly and related precedents, drawing implications for the broader theory of state responsibility arising from substantive judicial acts. It then applies those implications to domestic IP regimes through a comparative lens, with particular attention to common law jurisdictions, where judicial interpretation plays a central role in developing IP law. This Note argues that Eli Lilly suggests judicial lawmaking may be reviewable by ISDS tribunals as a basis for state responsibility, akin to legislative or executive acts, thereby exposing common law IP regimes to heightened risk of investor-state disputes. Nevertheless, the “regulatory chill” of which scholars have warned as a result of Eli Lilly may be overstated. Any reading of the decision as offering a promising pathway to overturn domestic judicial lawmaking solely on the basis of reduced IP protection is likely too optimistic.