INTERNATIONAL COURT OF ARBITRATION NEW DELHI, INDIA GOOD HEALTH COMPANY CLAIMANT DIRECTOR OF INTELLECTUAL PROPERTY, STATE OF MARU RESPONDENT

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1 INTERNATIONAL COURT OF ARBITRATION NEW DELHI, INDIA 2010 GOOD HEALTH COMPANY CLAIMANT v. DIRECTOR OF INTELLECTUAL PROPERTY, STATE OF MARU RESPONDENT MEMORIAL FOR THE RESPONDENT

2 TABLE OF CONTENTS TABLE OF CONTENTS...ii-vii INDEX OF AUTHORITIES......viii STATEMENT OF JURISDICTION....x QUESTIONS PRESENTED...xi STATEMENT OF FACTS...xii-xv SUMMARY OF PLEADINGS xv-xvi PLEADINGS INTRODUCTION TRIPS is a WTO agreement which sets out certain rules regarding intellectual property rights Applicable Law Rules and Procedures Governing the Settlement of Disputes Grounds of the Respondent s submissions THE ACTIONS TAKEN BY THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU IS VALID AND JUSTIFIABLE UNDER THE TRIPS AGREEMENT IN GENERAL AND UNDER ARTCLE 31 OF TRIPS IN PARTICULAR TRIPS agreement in general as derived from its preamble, objectives and principles The preamble of TRIPS reflects the intentions and the purposes of the Members upon entering into the agreement...4 ii

3 2.1.2 The objectives of the agreement The principles of the TRIPS Agreement Conclusion The Respondent has acted in accordance with TRIPS in general for the best interests of the people of Maru as well the affected patients from other regions to have sufficient supplies of Miracle Cure throughout the outbreak of the Killer Flu In order to protect the people s interests, the Respondent authorised Fizer Pharma to produce the Claimant s product, Miracle Cure The Respondent s actions are also in accordance with the principles of TRIPS as it is a necessary measure The actions taken by the Respondent are also valid and justifiable under Article 31 of the TRIPS Agreement Introduction of Article 31 which allows for other use of the subject matter of a patent without authorisation from the right holder Relevant provisions of Article The actions taken by the Respondent are in compliance with the provisions laid down under Article a) Paragraph (a) provides that authorisation of such use shall be considered on its individual merits b) Paragraph (b) provides that in the case of a national emergency or other circumstances of extreme urgency, the requirement to obtain authorisation from the right holder shall be waived iii

4 c) Paragraph (c) provides that the scope and duration of the compulsory licence shall be limited to the purpose for which it was authorised...10 d) Paragraph (d) requires that the licence shall be non-exclusive...11 e) Paragraph (e) requires that the licence shall be non-assignable...11 f) Paragraph (f) states that any such use shall be authorised predominantly for the supply of the domestic market of the Member authorizing such use...12 g) Paragraph (g) provides that authorisation for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur...12 h) Paragraph (h) provides that the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorisation i) Paragraph (i) provides that the legal validity of any decision relating to the authorisation of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member j) Paragraph (j) specifies that any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member Conclusion...17 iv

5 3. FAILURE TO RECOGNISE INFRINGEMENT BEYOND THE LITERAL TERMS OF PATENT DOES NOT VIOLATE ARTICLE 28 OF TRIPS Literal infringement and non-literal infringement and how it relates to Article 28 of TRIPS The term "literal infringement" The non-literal infringement Article 28 of the TRIPS Agreement provides that a patent holder has exclusive control to their products; hence, no other party without their consent is able to manufacture, offer for sale, sell and import the same product The literal and non-literal infringement approach works to assess whether a product amounts to the same product manufactured by the patentee The purposive approach gives effect to the question of what a person prior skilled in the art would have understood the patentee to be claiming THE ACTION OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU WAS VALID AND JUSTIFIABLE AS PER THE DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH ( DOHA DECLARATION ) The action of the Intellectual Property Department in inviting Fizer to produce Miracle Cure for export to Maru to curb the spread of killer flu is consistent with the Doha Declaration The purpose of the Doha Declaration...22 v

6 4.1.2 Paragraph 1 of the Doha Declaration recognizes the gravity of the public health problems afflicting many developing and least developed countries Paragraph 2 of the Doha Declaration stresses the need for the TRIPS Agreement to be part of the wider national and international action to address the problems Paragraph 3 of the Doha Declaration recognises the concerns about the effects of the intellectual property protection on prices Paragraph 4 of the Doha Declaration reaffirmed the right of WTO Members to use to the full, the provisions in the TRIPS Agreement, which provides flexibility to take measures to protect public health and, in particular, to promote access to medicines to all Paragraph 5 of the Doha Declaration recognises inter alia the following flexibilities: a) Each provision of the TRIPS Agreement shall be read in the light of its objectives and principles...25 b) Each Member has the right to grant compulsory licences and freedom to determine the grounds upon which such licences are granted...26 c) Each Member has the right to determine what constitutes national emergency or other circumstances of extreme urgency Paragraph 6 of the Doha Declaration recognises that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making use of compulsory licensing under the TRIPS Agreement...27 vi

7 4.2 The action of the Respondent is not inconsistent nor does it offend the Implementation of Paragraph 6 of the Doha Declaration ( Paragraph 6 Decision ) as it is inapplicable and/or not relevant in this case at hand Definition provisions in the Paragraph 6 Decision The purpose of the Paragraph 6 Decision There is no breach by Maru of the requirements under the Paragraph 6 Decision IN THE EVENT THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT ARE FOUND TO BE NOT JUSTIFIED UNDER GROUNDS 1, 2 AND 3 ABOVE, NO REMEDY SHOULD BE GRANTED AS THE COMPENSATION THAT WAS GIVEN IS FAIR, ADEQUATE AND SUFFICIENT The Intellectual Property Department agreed to pay GHC US$20 US per vaccine for all Miracle Cure produced by Fizer in Porta delivered to Maru An injunction should not be granted as there will be limited access to Miracle Cure which will put the people s lives at risk of death PRAYER FOR RELIEF...33 vii

8 INDEX OF AUTHORITIES INTERNATIONAL AGREEMENTS AND DECLARATIONS Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS )...1,4,11,14,25,31 World Trade Organisation Declaration on the TRIPS Agreement and Public Health, adopted on 14 November 2001, Ministerial Conference, Fourth Session, Doha, 9-14 November 2001, WT/MIN(01)/DEC/2, November 20, 2001 ( Doha Declaration )...21 World Trade Organisation Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, Decision of 30 August 2003, WT/L/540, 2 September 2003 ( Paragraph 6 Decision )...27 World Trade Organisation Understanding on Rules and Procedures Governing the Settlement of Disputes available at accessed September 10, BOOK Resource Book on TRIPS and Devlopment (Cambridge University Press, US, 2005) ,15 JUDICIAL DECISIONS Kirin Amgen Inc. & Hoechst Marrion Roussel [2004] UKHL Catnic Components Ltd v Hill & Smith Ltd (1982) R.P.C viii

9 F. Hoffman-La Roche Ltd v Cipla Limited, I.A 642/2008 IN CS (OS) 89/ WEBSITES The Convention of Biological Diversity Objectives at accessed September 5, United Nations at accessed September 5, xiv,28 ARTICLE May 8, Experts Warns Bird Flu-Swine Flu Mix. CBS News Report available at accessed September 5,2010 accessed September 5, JOURNALS Carlos M. Correa,2002, Implications of the Doha Declaration on the TRIPS Agreement and Public Health, available at accessed September 9, Bryan C. Mercurio, 2004, Articles TRIPS, Patents, Access to Life Saving Drugs, available at accessed September 9, ix

10 STATEMENT OF JURISDICTION Good Health Company ( GHC ) and the Director of the Intellectual Property, State of Maru have submitted the present dispute before the International Courtentre of Arbitration, pursuant to the Understanding on Rules and Procedures Governing the Settlement of Disputes of the World Trade Organisation. The Parties shall accept any Judgement of the Tribunal as final and binding upon them and shall execute it in its entirety and in good faith. x

11 QUESTIONS PRESENTED (a) Whether the actions of the Intellectual Property Department of Maru were valid and justifiable under TRIPS in general and Article 31 of TRIPS in particular. (b) Whether failure to recognise any infringement beyond the literal terms of patent violates Article 28 of TRIPS. (c) Whether the action of the Intellectual Property Department was valid and justifiable as per the Declaration on the TRIPS Agreement and Public Health (adopted on 14 November 2001) and the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (Decision of 30 August 2003). (d) If the actions of the Intellectual Property Department of Maru are not justified under (a) and/or (b) and/or (c) then what remedies should be awarded to GHC/GHC-Maru. xi

12 STATEMENT OF FACTS BACKGROUND Maru is a small country governed by a democratic government with a population of just half a million. The country s economy largely depends on the tourism and retail sectors. The people of Maru earn less than 20 US$ weekly. As the country has a small population, low national income and is highly dependent on only one economic sector, Maru clearly falls within the classification of a least developed country 1. In early 2009, the new government made plans for the expansion of Maru s economic sectors in order to boost the country s economic growth. They adopted an open door policy to allow foreign investments. Upon hearing of this new policy, Good Health Company (GHC), one of the largest pharmaceutical companies in the world, decided to take the opportunity to invest in Maru. They established a new company in Maru named GHC-Maru which is to be operational in a year s time. In the meantime, they began conducting clinical trials of their recently patented product, Miracle Cure, in Maru. The clinical trials of Miracle Cure were successful and it was reported as a breakthrough in the field of medical science. 1 As defined by the United Nations, LDCs are low-income countries which face severe structural handicaps to growth. (per capita GDP, share of manufacturing in GDP, adult literacy). xii

13 OUTBREAK OF KILLER FLU At the end of 2009, an unexpected outbreak of flu surfaced in one of the provinces of Maru. The flu first struck a 7-year-old boy who died within a day. Almost immediately, 20 more people complained of the same flu-like symptoms and it began spreading to other provinces of Maru. The flu was labeled as the killer flu by doctors. Tourists began to leave Maru immediately and there were no longer flights coming into Maru. The seriousness of the situation was to the extent that the World Health Organization had to intervene by issuing a travel advisory against travelling to Maru. Fortunately, GHC s Miracle Cure seemed to produce a positive response when administered to the patients who were suffering from the flu. DEMAND FOR MIRACLE CURE In the quest to restore normalcy in Maru, the Health Minister ordered the Director of the Hospital to request for more supplies of Miracle Cure from GHC-Maru, stating that GHC should increase production of the drug if necessary. The tourists that left Maru during the outbreak of killer flu inadvertently spread the virus to their home countries. As the killer flu began spreading in different areas at the same time, the demand for Miracle Cure subsequently increased. GHC s largest manufacturing facility based in Hori could not produce sufficient quantities of the drug as stated by the Chairman of GHC himself. Only then did GHC begin to double their efforts to begin operations at their new manufacturing facility in Maru. However, by then, the outbreak of killer flu had reached its peak and the demand for Miracle Cure was increasing throughout the world. xiii

14 ACTIONS TAKEN BY THE DIRECTOR OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU The Director of Intellectual Property Department of Maru anticipating that GHC-Maru might not be able to produce sufficient Miracle Cure to sustain Maru s domestic needs, directed the management of the GHC-Maru facility to provide all test results and know how for the manufacture of Miracle Cure to Fizer Pharma, one of GHC s largest rivals. Consequently, GHC was greatly dissatisfied and filed action in court to challenge the actions of the Government of Maru, which action failed Fearing that GHC would take further action to prevent the supply of Miracle Cure to Maru, the Director of Intellectual Property requested Better Life Pharmaceutical to distribute their drug, Sure Cure, a similar but not identical drug to Miracle Cure. The Hori court had earlier found that the similar aspects of Sure Cure fall within the scope of the doctrine of equivalents, which is a form of non-literal infringement. However, the state of Maru does not recognise the doctrine of equivalents and therefore did not find Sure Cure to have infringed GHC s patent rights to the Miracle Cure. THE DISPUTE GHC is dissatisfied with the actions taken by the Intellectual Property Department of Maru. The Commerce Minister of Hori then called upon the Commerce Minister of Maru in an attempt to reach an amicable resolution to this dispute. It was agreed by both parties to conduct the arbitration pursuant to the Understanding on Rules and Procedures Governing the Settlement of Disputes of WTO. The dispute is now brought before the Arbitral Tribunal. xiv

15 SUMMARY OF PLEADINGS I. The TRIPS Agreement provides certain flexibilities to WTO Members in order to ensure a balance between protecting public interests and the enforcement of intellectual property rights. In order to take advantage of these flexibilities, Members have to comply with certain conditions. Miracle Cure was needed to combat the killer flu that was spreading fast in Maru and the neighbouring countries. Hence, the Director of Intellectual Property Department of Maru (the Respondent) authorised Fizer Pharma to produce Miracle Cure, without the consent of Good Health Company. The Respondent s actions are valid and justifiable as he was acting under Article 31 of the TRIPS Agreement which allows for other use of the subject matter of a patent without authorisation from the right holder. Furthermore, the Respondent s actions have complied with the need to ensure a mutual advantage among producers and users as it is of vital importance, taking into account the urgency of the situation at hand. II. The Respondent s failure in recognising infringement beyond the literal terms of patent does not violate Article 28 of TRIPS. This matter refers to the actions of the Respondent by importing Sure Cure, an identical drug produced by Better Life Pharmaceutical. The Claimant is of the opinion that Sure Cure was held to have exerted a non-literal infringement upon their patented drug, Miracle Cure. Nevertheless, the Respondent does not recognise such an approach to determine infringement and has therefore found that Sure Cure exerts no infringement whatsoever upon Miracle Cure. This does not constitute a violation of Article 28 as Article 28 does not impose an obligation upon Members to adopt a specific approach in

16 determining infringement. The Respondent is free to apply the purposive approach in determining whether Sure Cure is an infringing product. Furthermore, the purposive approach is indeed the better approach in determining whether there has been patent infringement. III. The Declaration on the TRIPS Agreement and Public Health (the Doha Declaration ) is read together with the TRIPS Agreement which recognises the important need to protect public health. The Respondent has complied with the requirements set out in the Doha Declaration to protect public health and to promote access to medicines for all. The action of the Respondent was necessary to save the lives of the people of Maru in a national emergency and to avoid the occurrence of more deaths. The Respondent had also taken into account the Claimant s interests by providing compensation. IV. Assuming but not conceding that the actions of the Intellectual Property Department of Maru are not justified under TRIPS and the Doha Declaration, remedies should not be granted as the remuneration that has already been provided is fair, adequate and sufficient. If the Arbitral Tribunal sees fit to award the Claimant damages, only nominal damages should be awarded. It has been agreed however that the Tribunal shall not decide on the amount of compensation. xvi

17 PLEADINGS 1. INTRODUCTION This dispute shall be dealt with in accordance with the World Trade Organisation ( WTO ) Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS ). 1.1 TRIPS is a WTO agreement which sets out certain rules regarding intellectual property rights TRIPS came into effect in 1995, becoming an official agreement of the WTO that must be ratified by Member nations respectively. The purpose of the TRIPS agreement is to establish a uniform set of rules across the globe that would provide adequate standards of protection for intellectual property rights. The provisions of the TRIPS Agreement includes in its terms a minimum period of patent protection of twenty years from the date of filing for a patent. 1 Significantly, the TRIPS Agreement provides protection to both the process and product of the patented good. 2 In addition to these provisions, TRIPS provides flexibilities to Members states such as compulsory licensing which allows for use of the subject matter of an invention without the original maker s consent; nevertheless, this is strictly subject to certain conditions. 1 Article 33 TRIPS 2 Article 28 TRIPS 1

18 1.2 Applicable Law With regards to the enforcement of intellectual property rights, Maru, being a WTO Member, is obliged to respect the provisions of the TRIPS Agreement. Thus the TRIPS Agreement shall be the main source of law in this dispute presented before the Arbitral Tribunal. In addition, the laws of Maru are in pari materia with the laws of the Republic of India. Hence, case laws from India will be cited as authorities. Other cases from common law jurisdictions will be cited as authorities as well as the state practice of other WTO nations. 1.3 Rules and Procedures Governing the Settlement of Disputes The parties have agreed to conduct the arbitration pursuant to the Understanding on Rules and Procedures Governing the Settlement of Disputes of WTO. The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. Members recognise that it serves to preserve their rights and obligations under the covered agreements and to clarify the existing provisions of those agreements in accordance with the customary rules of interpretation of public international law. 3 Further, the validity of the arbitration agreement has not been challenged by either party. 4 Upon this the parties shall accept the decision made by the Arbitral Tribunal as binding and shall execute it in its entirety and good faith. 3 Article 3 General Provisions of Understanding on rules and procedures governing the settlement of disputes as provided in the Annex 2 of the WTO Agreement 4 Paragraph 20 of the Moot Problem 2

19 1.4 Grounds of the Respondent s submissions The Respondent will be submitting on the following grounds:- (a) The actions of the Intellectual Property Department of Maru were valid and justifiable under TRIPS in general and Article 31 of TRIPS in particular; (b) The failure to recognise any infringement beyond the literal terms of patent does not violate Article 28 of TRIPS; (c) The action of the Intellectual Property Department of Maru was valid and justifiable as per the Declaration on the TRIPS Agreement and Public Health (adopted on 14 November 2001) and the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS and Public Health (Decision of 30 August 2003); (d) Even if the actions of the Intellectual Property Department of Maru are not justified under the above grounds, no remedies should be awarded to GHC/GHC- Maru as the compensation that was agreed to be given is fair, adequate and sufficient. 2. THE ACTIONS TAKEN BY THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU IS VALID AND JUSTIFIABLE UNDER THE TRIPS AGREEMENT IN GENERAL AND UNDER ARTCLE 31 OF TRIPS IN PARTICULAR 2.1. TRIPS agreement in general as derived from its preamble, objectives and principles 3

20 2.1.1 The preamble of TRIPS reflects the intentions and the purposes of the Members upon entering into the agreement The preamble signifies the desire of Members to promote and enforce adequate protection of intellectual property rights. It is important to note that the term adequate protection is used instead of full protection. The choice of words reflects the flexibility of TRIPS as a whole. The preamble also recognises the special needs of least-developed country Members for flexibility in the domestic implementation of laws and regulations The objectives of the agreement The TRIPS Agreement provides that the protection and enforcement of intellectual property rights should be to the mutual advantage of producers and users of technological knowledge, in a manner conducive to social and economic welfare The principles of the TRIPS Agreement The principles 6 provide that Members may adopt necessary measures to protect public health and nutrition Conclusion In conclusion, the preamble, objectives and principles of TRIPS indicate that the enforcement of intellectual property rights are to cater to the special needs of the leastdeveloped countries as well as ensuring that the interests of users are protected. 5 This can be found in Article 7 TRIPS 6 Article 8 TRIPS 7 Ibid, paragraph 1 4

21 Therefore, TRIPS in general, as derived from the understanding of its preamble, objectives and principles, allows and promotes the enforcement of intellectual property rights in a manner that takes into account the interests of the people and which caters to the special needs of least-developed countries The Respondent has acted in accordance with TRIPS in general for the best interests of the people of Maru as well the affected patients from other regions to have sufficient supplies of Miracle Cure throughout the outbreak of the Killer Flu In order to protect the people s interests, the Respondent authorised Fizer Pharma to produce the Claimant s product, Miracle Cure The authorisation given to Fizer is for the sole purpose of guaranteeing sufficient supply of Miracle Cure for the people and is limited to the duration of the killer flu outbreak. In return for obtaining the data and technological know-how to produce Miracle Cure, the Respondent is paying US$20 per vaccine as compensation to the Claimant. 8 Hence, the Respondent has clearly acted to protect public interest, and, most importantly, they have also not neglected to provide an economic benefit to the Claimant by agreeing to the said compensation. It is submitted that their actions are therefore in compliance with the preamble and the objectives of the TRIPS Agreement. 8 Paragraph 14 of the Moot Problem 5

22 2.2.2 The Respondent s actions are also in accordance with the principles of TRIPS as it is a necessary measure The Claimant has to cater to rising demands for Miracle Cure across the world. Further, it is a fact that the Claimant was, unfortunately, severely affected by the recession in Hori and might have to cease all operations. 9 These facts indicate that the Claimant has to meet increasing global demands. However, with the losses that they have incurred due to the recession, it is reasonable to conclude that there is a high possibility that the Claimant might not be able to obtain enough resources to produce sufficient Miracle Cure for both Maru and the overseas market. The Respondent, recognising that the lives of the people were at stake, could not afford to take the risk of not having sufficient supplies of Miracle Cure. Hence, it was vital to seek the assistance of a third party to produce Miracle Cure for Maru at the least. This would certainly be beneficial for the people. At the same time, it would not be to the disadvantage of the Claimant as the Claimant is not barred from continuing their production of the drug for Maru as well as for global export. In conclusion, as the actions taken by the Respondent have complied with the preamble, objectives and principles of TRIPS, it is submitted that the actions of the Intellectual Property Department of Maru are thus valid and justifiable under TRIPS in general. 9 Paragraph 19 of the Moot Problem 6

23 2.3. The actions taken by the Respondent are also valid and justifiable under Article 31 of the TRIPS Agreement Introduction of Article 31 which allows for other use of the subject matter of a patent without authorisation from the right holder Article 31 regulates the practice commonly known as compulsory licensing. A compulsory licence is an authorisation granted by a government to a third party to use a patented invention without consent from the original patent holder. Article 31 establishes conditions that governments are expected to fulfil when they grant such licence. These conditions that must be respected are provided for under paragraphs (a) (l) of Article Relevant provisions of Article 31 Paragraph (k) of Article 31 deals with anti-competitive practices. This applies only to semi-conductor technology. As such, this provision is not relevant to the dispute at hand. Further, paragraph (l) deals with the involvement of two patents it is also irrelevant to the current dispute and is therefore not applicable. Hence, the provisions which are applicable to this case are paragraphs (a) (j) which will be dealt with below. 7

24 2.3.3 The actions taken by the Respondent are in compliance with the provisions laid down under Article 31 a) Paragraph (a) provides that authorisation of such use shall be considered on its individual merits. The Respondent has authorised Fizer to produce Miracle Cure mainly because he feared that GHC-Maru would not be able to produce sufficient amounts of the medicine for the people of Maru in time to curb and stop the spread of killer flu. This fear was based on good reasons and is not unsupported. GHC-Maru was after all a new facility and the workers are citizens of Maru. The economy of Maru was mainly tourism, hotel restaurant and retail business 10 and not production of pharmaceutical products and therefore its people could not be skilled in running the GHC-Maru factory. Further, as stated earlier, the Claimant was affected badly by the recession to the extent that they might be forced to cease all operations. The Respondent was also forced to take immediate action due to the urgency of the situation. The circumstances did not permit the Respondent to engage in a long period of deliberation prior to granting compulsory licensing as any further delay will only increase the threat to the lives of the people of Maru. It must be kept in mind that the Killer Flu is an unknown disease, with its source or cause still unknown. 11 At that point 10 Paragraph 1 of the Moot Problem 11 Paragraph 7 of the Moot Problem 8

25 of time, there was no known cure for it too. 12 Any loss of proprietary interests may be compensated but the loss of a person s life can never be replaced. Therefore, it is submitted that the Respondent had indeed acted with merit and consequently had also complied with paragraph (a) of Article 31. b) Paragraph (b) of Article 31 provides that in the case of a national emergency or other circumstances of extreme urgency, the requirement to obtain authorisation from the right holder shall be waived. In the context of the current dispute, it cannot be denied that there is an ongoing public health crisis. The Respondent, after consultations with the Minister of Health of Maru had come to the conclusion that the situation amounted to a national emergency. 13 Therefore, paragraph (b) provides that the requirement for the Respondent to negotiate or to obtain consent from the Claimant prior to granting a compulsory licence is waived. Paragraph (b) further provides that the right holder shall nevertheless be notified as soon as reasonably practicable. The Respondent has indeed respected this requirement by directing the management of the Claimant s facility in Maru to make available all test results and know-how regarding the manufacture of Miracle Cure to Fizer. 14 It is submitted that such an order from the Respondent amounts to an effective notification to the Claimant. Further, the severity of the situation outweighs the need for 12 Paragraph 9 of the Moot Problem 13 Paragraph 6 of the Clarifications in the Corrections and Clarifications To The Moot Problem 14 Paragraph 13 of the Moot Problem 9

26 the Respondent to spare time to provide the Claimant with any further notification other than the one already made. It is further submitted that the purpose of the requirement for notifying the right holder is to ensure that the right holder knows that a compulsory licence has been granted and not be taken by surprise. As such, the actions of the Respondent has adequately and sufficiently fulfilled this purpose as the Claimant not only knows that Fizer has been authorised but the management of GHC-Maru had made available all test results and know-how regarding the manufacture of Miracle Cure to Fizer. 15 It is essential to note that nowhere is it stated that the management of GHC-Maru had raised any objections to the Respondent s request nor did they refuse the request. Based on all these grounds, it is submitted that the Respondent has complied with paragraph (b) of Article 31. c) Paragraph (c) provides that the scope and duration of the compulsory licence shall be limited to the purpose for which it was authorised According to the facts of this case, the Respondent granted a compulsory licence to Fizer because he feared GHC-Maru might be unable to produce sufficient Miracle Cure quickly enough to deal with the anticipated spread of killer flu in Maru. 16 As such, the authorisation was clearly for Fizer to produce Miracle Cure to help ensure there were sufficient supplies of it in Maru. Hence, the authorisation was indeed limited to Maru and 15 This is obvious as Fizer would not have been able to produce the Miracle Cure (see paragraph 14 of the Moot Problem) if it was not so. 16 Paragraph 13 of the Moot Problem. 10

27 its duration is for the length of time it takes to produce sufficient Miracle Cure. At most, it will be until the killer flu has been controlled. Although Fizer may have other interests in mind, it is clear that the Respondent has complied with paragraph (c) as they have specifically limited the scope and duration of the authorisation to its main purpose. Besides, the Respondent, as required by paragraph (g) of Article 31, 17 will have to terminate the authorisation given to Fizer as soon as the outbreak settles down and is deemed to be unlikely to reoccur. Therefore, it is submitted that the Respondent has respected paragraph (c) of Article 31. d) Paragraph (d) requires that the licence shall be non-exclusive The facts do not state that the licence granted to Fizer was an exclusive one. In the context of Article 31, non-exclusive means that the licence to produce the invention shall not be restricted to one party. As provided in the facts, it is apparent that Fizer is not the sole producer of Miracle Cure upon being authorised via compulsory licensing. The Claimant has not been restricted from producing and distributing Miracle Cure. Hence, the Respondent has respected paragraph (d) of Article 31. e) Paragraph (e) requires that the licence shall be non-assignable The provisions means that the compulsory licence granted to Fizer cannot be assigned to another party. Based on the given facts, Fizer has not been allowed to and has 17 Article 31 paragraph (g) provides as follows authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances 11

28 in fact not assigned the licence granted to them to any other party. Therefore, paragraph (e) of Article 31 has also been respected by the Respondent. f) Paragraph (f) states that any such use shall be authorised predominantly for the supply of the domestic market of the Member authorizing such use. The word predominantly means that more than fifty percent of what is produced through compulsory licensing should be for the domestic market. Paragraph (f) provides that a government may authorise a compulsory licence to produce for export, provided that the licence includes an undertaking to predominantly produce for the domestic market. 18 Based on the facts and as stated above, Fizer had been authorised to produce Miracle Cure solely for Maru. Therefore, the Respondent has clearly respected paragraph (f) of Article 31 as the compulsory licence granted to Fizer was with the objective to produce Miracle Cure for the people of Maru. g) Paragraph (g) provides that authorisation for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances. Paragraph (g) refers to a period where the circumstances which led to the authorisation no longer exist and are unlikely to recur. In the current case, the Respondent 18 Resource Book on TRPIS and Development (Cambridge University Press, US, 2005)

29 has granted Fizer a compulsory licence with the main purpose to curb the spread of killer flu. Provision G will be an issue only when the outbreak of killer flu stops and is unlikely to recur. Since nothing in the facts indicates the end of the outbreak of killer flu or the beginning of Maru s return to normalcy, Provision G is not of concern for the time being. h) Paragraph (h) provides that the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorisation. The Respondent is providing US$20 per vaccine as compensation to the Claimant. It is submitted that this amount is considered to be adequate remuneration for two reasons. First, the sum compensated is the estimated cost of production by the Claimant in Hori for Miracle Cure 19 and as such, this is adequate remuneration. Paragraph (h) only requires the Respondent to take into account the economic value of the authorisation. It does not require the Respondent to give a sum based on or equivalent to the economic value of such authorisation, nor does it require them to remunerate the Claimant for the cost of research and development. As the TRIPS Agreement itself recognises the special needs of least-developed countries, it is recognised that a least-developed country such as Maru can hardly afford to provide remuneration of astronomical value. Thus, the Respondent s decision to pay US$20 per vaccine to the Claimant should be sufficient and adequate remuneration. 19 Paragraph 14 of the Moot Problem 13

30 Secondly, the sum paid is only for the data and technology to produce Miracle Cure. As stated above, this information will only be used strictly for the purpose of the authorisation i.e. to ensure there is sufficient Miracle Cure in Maru and for a limited duration. As such, it is submitted that this further strengthens the fact that US$20 per vaccine is fair and adequate as is required by paragraph (h) of Article 31. Furthermore and/or in the alternative, it is submitted that there is no need for the Respondent to provide a sum of remuneration higher than the existing one as the Claimant in fact has obtained benefits from Maru. The Claimant has made use of the plant Climbing Nightshade which can only be found in Maru and its neighbouring countries. 20 It is essential to note that The Convention on Biological Diversity recognises the sovereign rights of States over their natural resources in areas within their jurisdiction. The Convention on Biological Diversity ( CBD ) was signed in 1992 at the 1992 UN Conference on Environment and Development (UNCED). It is a comprehensive, binding agreement covering the use and conservation of biodiversity. Article 1 of the CBD provides that the objective of the convention is to ensure fair and equitable sharing of the benefits arising out of the utilization of genetic resources. 21 Genetic resources includes of plant, animal or micro-organisms. Users of genetic resources may include research institutes, universities and private companies operating in 20 Paragraph 17 of the Moot Problem 21 Article 1 of The Convention of Biological Diversity Objectives < 14

31 various sectors such as pharmaceuticals, cosmetics, agriculture, horticulture and biotechnology. 22 Parties who derive benefits from theses resources are to provide monetary benefits to the State that owns the resources. One example of monetary benefits would be the sharing of royalties arising from patented products based on genetic resources. 23 As such, the Claimant is in fact indebted to Maru for having access to the plant Climbing Nightshade which belongs to the state of Maru, to produce their drug, Miracle Cure. Taking this into account, it is submitted that the Claimant should therefore accept US$20 per vaccine as adequate remuneration. i) Paragraph (i) provides that the legal validity of any decision relating to the authorisation of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member. Any review of the granting of compulsory licences and decisions as to remuneration may be undertaken by the court or via independent review by a distinct higher authority. Independent means that the reviewing body should not be subject to any control by the party who initially grants the compulsory licence or who determines the sum of remuneration. The term higher authority indicates that this should be done by a party which is superior to the granting body. Meanwhile, the term distinct enables a person or a body within the same governmental agency that initially grants the licence ibid 15

32 to undertake such reviews, provided that there is an adequate separation of personnel and function among the parties concerned. 24 It is submitted that the provisions of paragraph (i) has been respected. According to the facts of this case, GHC-Maru had filed a formal protest with the Respondent. 25 Thereafter, The Claimant brought an infringement action against the Government of Maru but judgment was given against the Claimant. 26 The Claimant further tried to obtain a re-hearing of the matter but this too failed. 27 All this only goes to prove that the decision of the Respondent was in fact subjected to judicial review and paragraph (i) of Article 31 has been duly respected. j) Paragraph (j) specifies that any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member. In the infringement action brought by the Claimant against the Government of Maru the court also held that US$20 USD per unit compensation was more than fair. 28 Hence, there was a judicial review of the compulsory licence granted and of the compensation that was agreed to be paid by the Intellectual Property Department of Maru. There is no doubt that the decision to pay the compensation is subjected and was in 24 Resource Book on TRPIS and Development ( Cambridge University Press, US, 2005) Paragraph 16 of the Moot Problem 26 Ibid 27 Ibid 28 Ibid 16

33 fact subjected to judicial review by the intellectual property court. Thus, paragraphs (i) and (j) of Article 31 have been respected by the Respondent Conclusion Based on the submissions above and the grounds stated therein, it is submitted that the Respondent has respected all the relevant provisions of Article 31. This renders the actions of the Intellectual Property Department of Maru to be valid and justifiable under Article 31 of the TRIPS Agreement. 3. FAILURE TO RECOGNISE INFRINGEMENT BEYOND THE LITERAL TERMS OF PATENT DOES NOT VIOLATE ARTICLE 28 OF TRIPS 3.1 Literal infringement and non-literal infringement and how it relates to Article 28 of TRIPS The term "literal infringement" Literal infringement means that each and every element recited in a claim has identical correspondence in the allegedly infringing device or process The non-literal infringement The doctrine of equivalents provides that a claim may be infringed if there is a non-literal infringement committed. This means that some other element of the accused device or process performs substantially the same function in substantially the same way to achieve substantially the same result. 17

34 3.2 Article 28 of the TRIPS Agreement 29 provides that a patent holder has exclusive control to their products; hence, no other party without their consent is able to manufacture, offer for sale, sell and import the same product The literal and non-literal infringement approach works to assess whether a product amounts to the same product manufactured by the patentee Once a device manufactured or imported is found to be a similar product of another which has already been patented, it infringes the patent holders rights and automatically amounts to a violation of Article 28. The issue above refers to the facts of the case where the Respondent requested and allowed Better Life Pharmaceutical to distribute Sure Cure in Maru. Sure Cure is similar to Miracle Cure but it is not an identical drug as it contains a different dispersant. The Intellectual Property Court of Maru, in deciding whether Sure Cure exerts any infringement towards the Claimant s product Miracle Cure, has adopted the House of Lords decision in Kirin Amgen Inc. & Hoechst Marrion Roussel. 30 The House of Lords, 29 Article 28 Rights Conferred 1. A patent shall confer on its owner the following exclusive rights: (a) where the subject matter of a patent is a product, to prevent third parties not having the owner's consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product; of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process. 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts. 30 [2004] UKHL 46 18

35 in assessing infringement of a product, applied the purposive approach instead of the doctrine of equivalents The purposive approach gives effect to the question of what a person prior skilled in the art would have understood the patentee to be claiming In the case of Catnic Components Ltd v Hill & Smith Ltd, 31 Lord Diplock held that a patent must be read in a "purposive" manner that focuses on the essential features of the patent. His Lordship stated that a patent specification is a unilateral statement by the patentee, in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention (i.e. "skilled in the art"), by which he informs them what he claims to be the essential features of the new product or process for which the letters patent grant him a monopoly. Hence, the question in each case is whether persons with practical knowledge and experience of the kind of work would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed. Therefore, the purposive approach does not extend the protection to something which does not fall within the scope of the claim. The Intellectual Property Court of Maru by applying the purposive approach held that Sure Cure does not exert any form of infringement towards the Claimant s rights under Article 28. As there has been no infringement of the Claimant s patent rights, there 31 (1982) R.P.C

36 is therefore no violation of Article 28. It is humbly submitted that the purposive approach which was also adopted by the Intellectual Property Court of Maru be applied to determine whether Sure Cure exerts infringement upon the Claimant s rights and whether it does violate Article 28. Three reasons are given to support this submission. a) First of all, the purposive approach would be a fairer and a more balanced approach to adopt in protecting both the interests of the patent holder as well that of the people and other producers. It gives sufficient protection to the patent holder as it does not limit them to the literal words of a patent claim, but provides protection to the extent of what a person with the same expertise would understand what the patentee originally intended to claim. Hence, this ensures that the patentee does not face any difficulty arising from the incapability of language to capture the essence of their innovations. At the same time, the purposive approach also takes into account the interests of others. This is because it will prevent a patentee from claiming that a mere similarity of other products to their invention amounts to an infringement of their patent regardless of whether the patentee originally had such infringement in mind when drafting the patent claim. Hence, the purposive approach prevents the abuse of patent rights and is subsequently to the advantage of other producers. b) Secondly, the purposive approach allows for more complementary products to be in the market. This would increase access to medicines both in terms of 20

37 availability and affordability. It is indeed the most reasonable approach to apply in the current situation. The people of Maru are in dire need of Miracle Cure and since Maru is a least-developed country, this makes it essential that a cure is available to the public at an affordable price. The purposive approach will make this possible for them. c) Thirdly, a patentee who has achieved a potential cure for a deadly illness should not be allowed to monopolise all other ways of obtaining that cure as the lives of the people are at stake. With this, the Arbitral Tribunal is humbly urged to adopt the same stand as the Intellectual Property Court of Maru in finding that since there has been no patent infringement, there has been no violation of Article 28 of TRIPS. 4. THE ACTION OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU WAS VALID AND JUSTIFIABLE AS PER THE DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH ( DOHA DECLARATION ) 4.1 The action of the Intellectual Property Department in inviting Fizer to produce Miracle Cure for export to Maru to curb the spread of killer flu is consistent with the Doha Declaration 21

38 4.1.1 The purpose of the Doha Declaration The Doha Declaration provides further clarity and purpose to the interpretation of TRIPS on the issue of public health and access to medicines 32. As such, it is submitted that the action of the Respondent in inviting Fizer to produce Miracle Cure is consistent with the purpose of the Doha Declaration. By granting the compulsory licence to Fizer, the people of Maru can have greater access to medicines (in this case, Miracle Cure). Such a consequence is as a result of the Respondent taking measures to protect the public health of the people of Maru Paragraph 1 of the Doha Declaration recognizes the gravity of the public health problems afflicting many developing and least developed countries. The Respondent has a responsibility not only towards the citizens of Maru but also to curb the spread of killer flu. In times of emergency, the Respondent has to take immediate action to restore the normalcy of Maru 33 as procrastination will only make the spread of killer flu worse. It cannot be denied that the citizens of any country would want and expect the government to take immediate and effective action for their protection, and this is what the Respondent has chosen to do Paragraph 2 of the Doha Declaration stresses the need for the TRIPS Agreement to be part of the wider national and international action to address the problems November 2001 World Trade Organisation Declaration on the TRIPS Agreement and Public Health, Ministerial Conference,WT/MIN(01)/DEC/2, November 20, 2001 ( Doha Declaration ). 33 Paragraph 10 of the Moot Problem 22