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LAWASIA MOOT COMPETITION 2010

IN THE INTERNATIONAL COURT OF ARBITRATION

NEW DELHI, INDIA

2010

GOOD HEALTH COMPANY

Claimant

v.

DIRECTOR OF INTELLECTUAL PROPERY, STATE OF MARU

Respondent

MEMORIAL FOR THE RESPONDENT

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TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................................. 1

INDEX OF AUTHORITIES ........................................................................................................ 4

STATEMENT OF JURISDICTION ........................................................................................... 8

QUESTIONS PRESENTED ........................................................................................................ 9

STATEMENT OF FACTS ......................................................................................................... 10

SUMMARY OF PLEADINGS .................................................................................................. 13

PLEADINGS ............................................................................................................................... 15

I. THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT (“IPD”)

WERE VALID AND JUSTIFIABLE UNDER TRIPS IN GENERAL A ND ARTICLE 31

OF TRIPS IN PARTICULAR ................................................................................................... 15

A. Interpretation of the TRIPS Agreement ...................................................................... 15

B. The IPD’s actions were consistent with and provided for under the objectives and

principles of TRIPS................................................................................................................ 16

C. The actions of the Respondent have complied with Article 31 of TRIPS. .................. 17

1. Article 31(b) ............................................................................................................... 18

2. Article 31(c) and Article 31(g) ................................................................................... 21

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3. Article 31 (h) .............................................................................................................. 22

4. Article 31(i) and Article 31(j) ..................................................................................... 22

II. THE FAILURE TO RECOGNIZE ANY INFRINGEMENT BEYOND TH E

LITERAL TERMS OF THE PATENT IS NOT A VIOLATION OF A RTICLE 28 OF

TRIPS. .......................................................................................................................................... 25

A. Maru has autonomy to determine the scope of protection to be afforded to patent

right holders. ......................................................................................................................... 25

B. The doctrine of equivalents amounts to and encourages anti-competitive practices. 26

1. The regulation of anti-competitive practices under TRIPS and Maru’s law .............. 26

2. Doctrine of equivalents amounts to an anti-competitive practice .............................. 27

C. The literal approach to patent claims construction is more relevant today ............... 28

III. THE ACTION OF THE INTELLECTUAL PROPERTY DEPART MENT WAS

VALID AND JUSTIFIABLE AS PER THE “DECLARATION ON TH E TRIPS

AGREMENT AND PUBLIC HEALTH (ADOPTED ON 14 NOVEMBER 2001) AND

IMPLEMENTATION OF PARAGRAPH 6 OF THE DOHA DECLARATI ON ON THE

TRIPS AND PUBLIC HEALTH (DECISION OF 30 AUGUST 2003) ................................. 30

A. Maru is allowed to import Miracle Cure from Fizer Pharma under Doha Declaration 31

1. Doha Declaration as a waiver to Article 31(f) ........................................................ 31

2. Maru has no manufacturing capacity ...................................................................... 32

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B. In the alternative that the Claimant’s manufacturing capacity is taken into account,

the importation from Porta is still within the ambit of Para 2 of the Implementation

Decision. ................................................................................................................................ 34

C. Lastly, Maru is allowed to import Miracle Cure from Porta on public policy

grounds. ................................................................................................................................. 35

IV. REMEDIES THAT SHOULD BE AWARDED TO GHC/GHC-MARU ASSUMING

THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU

ARE NOT JUSTIFIED UNDER (I) AND/OR (II) AND/OR (III ). ........................................ 36

A. In relation to the Respondent’s action in engaging Fizer Pharma to manufacture the

Miracle Cure. ........................................................................................................................ 36

1. The remuneration of USD20 per unit is more than sufficient because a state has a

right under international law to take regulatory measures without compensation. ........... 36

B. In relation to the Respondent’s action in importing Sure Cure from BLP .................... 40

1. Injunction should not be granted. ............................................................................... 40

2. No compensation should be made because the Claimant did not suffer any loss ... 41

PRAYER FOR RELIEF............................................................................................................. 42

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INDEX OF AUTHORITIES

TREATIES AND CONVENTIONS

Agreement on Trade Related Aspects of Intellectual Property Rights, Annex 1C of

the Marrakesh Agreement Establishing the World Trade Organization, signed in Marrakesh,

Morocco on 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization,

The Legal Texts: The Results Of The Uruguay Round Of Multilateral Trade Negotiations 320

(1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994) .............................. 15, 16, 17, 26, 28, 31, 41

The Canadian Foreign Investment Promotion and Protection Agreement. .................................. 39

Vienna Convention on the Law of Treaties, May 23, 1969, art 31.1, 1155 U. N. T. S. 331, 34 .. 15

WORLD TRADE ORGANIZATION (WTO) DOCUMENTS, PUBLICATI ONS AND

PANEL DECISIONS

Canada Patent Protection of Pharmaceutical Products, WT/DS114/R (March 17, 2000), at 7.91

(hereinafter known as the “Canada Dispute”) ..................................................................... 17, 19

Doha WTO Ministerial 2001, Declaration on the TRIPS Agreement and Public Health, adopted

Nov. 14, 2001, WT/ MIN(01)/ DEC/ 2 (Nov. 20, 2001) ............................ 18, 19, 20, 31, 32, 35

Implications of the Doha Declaration on the TRIPS Agreement and Public Health, World Health

Organization, (WHO/ EDM/ PAR/ 2003.3). ............................................................................. 33

United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate

Body WT/DS2/AB/R (April 29, 1996) at 17. ........................................................................... 16

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World Trade Organization, Implementation of Paragraph 6 of the Doha Declaration on the

TRIPS Agreement and Public Health, WT/L/540 (Aug. 30, 2003) .................................... 32, 34

INTERNATIONAL CASES AND ARBITRATION DECISIONS

Interhandel Case (Switzerland v. United States of America) (separate opinion of

Judge Cordova), ICJ Reports 1959 ........................................................................................... 24

SGS Société Générale de Surveillance S.A. v. Republic of the Philippines ICSID Case No.

ARB/02/6, 29 January 2004, 8 ICSID Reports 518 .................................................................. 24

The Lotus Sea Case. PCIJ Series A, No 10 .................................................................................. 37

The North Sea Continental Shelf Cases (FRG v Denmark; FRG v The Netherlands) (1969) ICJ

Rep 3 ......................................................................................................................................... 37

MUNICIPAL CASES AND LAWS

Brazil Industrial Property Law Act ............................................................................................... 20

Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605 (1950).................. 28

Indian Patents Act 1970 ................................................................................................................ 41

Kirin-Amgen v Hoechst Marion Roussel 2004 UKHL 46 ..................................................... 26, 29

Medicines and Related Substances Control Amendment Act of South Africa ............................ 20

Monopolies and Restrictive Trade Practices Act 1989 of India ............................................. 27, 28

TREATISES, DIGESTS AND BOOKS

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A.A. Cançado Trindade, The Application of the Rule of Exhaustion of Local Remedies in

International Law, Cambridge, Cambridge University Press, 1983 ......................................... 24

Arthur W. Rovine, “Contemporary issues in international arbitration and mediation: The

Fordham papers 2007”, 2nd Conference of Fordham University School of Law in June 2007,

Martinus Nijhoff Publishers. ..................................................................................................... 40

C. Wilfred Jenks.[London: Stevens and Sons Ltd.; Dobbs Ferry, New York: Oceana

Publications. 1964. xl ................................................................................................................ 24

Chittharanjan Félix Amerasinghe, Local remedies in international law (1990), Cambridge

University Press ......................................................................................................................... 24

The International Law on Foreign Investment by M. Sornarajah ................................................. 37

JOURNALS AND ARTICLES

David Palmeter & Petros C. Mavroidis, “The WTO Legal System: Sources of Law” 92 AM. J.

INT’L L. 398, 399-413(1998) ................................................................................................... 16

Hannes L. Schloemann & Stefan Ohlhoff, “Constitutionalization” and Dispute Settlement in the

WTO: National Security as an Issue of Competence”, 93 AM. J. INT'L L. ............................. 19

Johanna Kiehl, "TRIPS Article 31(B) and the HIV/AIDS Epidemic", (2002) 10 J. Intell. Prop. L.

143 ............................................................................................................................................. 18

Mark C. Lang, “What a Long Strange TRIPS It’s Been: Compulsory Licensing from the

Adoption of TRIPS to the Agreement on Implementation of the Doha Declaration” 3 J.

Marshall Rev. Intell. Prop. L. ii 2003-2004 .............................................................................. 20

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Thailand’s issuance compulsory licences as chronicled in Peng Jiang, Fighting the AIDS

Epidemic China’s Options under the WTO TRIPS Agreement 13 ALB. L.J. SCI. TECH. 223,

239 (2002) ................................................................................................................................. 20

OTHERS

CRS Report for Congress, Influenza Antiviral Drugs and Patent Law Issues (Nov. 18 2005) .... 31

Harvard Draft Convention on the International Responsibility of States for Injuries to Aliens .. 37,

39

OECD Report published Organization for Economic Corperation and Development ........... 37, 38

Press Release, Office of the Unites States Trade Representative, United States and Brazil Agree

to Use Newly Created Consulative Mechanism to Promote Cooperation on HIV/ AIDS and

Adress WTO Patent Dispute (June 25, 2001), at http://www.ustr.gov/releases/2001/06/01-

46.htm. ....................................................................................................................................... 19

Re-Statement of Foreign Relation Law of the United States. ....................................................... 37

The Concise Oxford Dictionary .................................................................................................... 33

the Multilateral Agreement on Investment Negotiating Text ....................................................... 37

UNITED NATIONS DOCUMENTS AND PUBLICATIONS

Draft Articles on the Responsibility of States for Internationally Wrongful Acts; Report of the

International Law Commission on the work of its Fifty-third session, Official Records of the

General Assembly, Fifty-sixth session, Supplement No. 10 (A/56/10), chp.IV.E.1 ................. 24

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STATEMENT OF JURISDICTION

Good Health Company (“GHC”) and the Director of Intellectual Property, State of Maru

(“Maru”) (collectively known as “the Parties”) have submitted the present dispute before this

Arbitral Tribunal, pursuant to the Arbitration Agreement entered into by the parties. The

arbitration shall be conducted pursuant to the Understanding on Rules and Procedures Governing

the Settlement of Disputes of WTO (“DSU”). The Parties shall accept any Judgment of the Court

as final and binding upon them and shall execute it in its entirety and in good faith.

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QUESTIONS PRESENTED

I.

Whether the actions of Intellectual Property Department were valid and justifiable

under TRIPS in general and Article 31 of TRIPS in particular;

II.

Whether failure to recognize any infringement beyond the literal terms of the patent violates

Article 28 of TRIPS.

III.

Whether the action of Intellectual Property Department was valid and justifiable as per

“Declaration on TRIPS Agreement and Public Health (adopted on 14 November 2001) and

Implementation of Paragraph 6 of the Doha Declaration on the TRIPS and Public Health

(Decision of 30 August 2003).

IV.

The remedies that should be awarded to GHC/GHC Maru if the actions of Intellectual Property

Department of Maru are not justified under I and/or II and/or III .

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STATEMENT OF FACTS

THE PARTIES

Maru, a country populated by 500,000 people has its economy centered on tourism, hotel,

restaurants and retail businesses. In 2009, the newly elected Government announced its intention

to diversify Maru’s economy.

Good Health Company (“GHC”) of Hori is one of the largest pharmaceutical companies

in the world. In 2009, GHC established a new company, GHC-Maru as part of its investment in

Maru. Their manufacturing and research plant in Maru was due to be operational in one year’s

time from the groundbreaking ceremony.

MIRACLE CURE AND THE KILLER FLU

Miracle Cure was developed in 2006 by GHC to treat a variety of new flu viruses. The

patent claims of Miracle Cure encompass the chemical composition of the drug, its method of

manufacture and its manner of use. Miracle Cure contains an extract of Climbing Nightshade, a

toxic plant, combined with palm oil which neutralizes the toxic effect and is administered orally.

Before setting up their manufacturing base in Maru, GHC started the clinical trial of the

Miracle Cure in Maru which was reported as a breakthrough in medical science.

At the end of 2009, the Killer Flu attacked Maru, killing a 7 year-old boy. The following

day, twenty people were reported to have Killer Flu-like symptoms. In the next few days, a large

number of people from the same province fell sick. Soon, people from other provinces were

reported to have exhibited the same symptoms. Fearing the disease, tourists raced to leave Maru,

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carrying the virus to neighboring countries. A travel advisory was issued by WHO against

traveling to Maru.

Miracle Cure was found to be able to treat the Killer Flu. The Chairman of GHC,

anticipating the increase of demand and the opportunity to make huge profits ordered the efforts

to set up the plant and produce more Miracle Cure in Maru be doubled. The Director of

Intellectual Property of Maru (“the Director”) also authorized GHC-Maru to produce Miracle

Cure to be exported.

THE GRANT OF COMPULSORY LICENCE TO FIZER PHARMA (“F IZER”)

Fearing that GHC might not produce enough Miracle Cure to combat the Killer Flu in

Maru, the Director invited Fizer, GHC’s largest competitor to manufacture Miracle Cure in their

manufacturing base in Porta to for Maru. GHC-Maru was notified of this when it was directed to

provide all information regarding the manufacture of Miracle Cure to Fizer. Fizer immediately

began manufacturing Miracle Cure in Porta. The Intellectual Property Department (“IPD”) paid

GHC $20 per drug sold, being the estimated cost to produce Miracle Cure, which will be

reimbursed by Fizer.

GHC filed a formal protest with the Director, who dismissed the complaint. GHC then

brought a patent infringement suit against the Government of Maru. The Government justified

their actions based on public health reasons. This was accepted by the Court, which held that the

USD20 compensation was “more than fair”. When it was later revealed that the Presiding Judge

was the classmate of the Chairman of Fizer at law school, GHC requested that the Presiding

Judge disqualify himself and reset the matter for another hearing but the motion was denied.

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IMPORTATION OF SURE CURE FROM BETTER LIFE PHARMACEU TICAL (“BLP”)

In anticipation that GHC will prevent Maru from having access to Miracle Cure, the

Director took further steps by importing Sure Cure from BLP in Ulka, a drug which is very

similar but not identical to Miracle Cure. It uses corn oil as the neutralizing agent for Climbing

Nightshade, instead of palm oil. BLP is paid USD50 for each Sure Cure imported into Maru.

Sure Cure is an infringement GHC’s patent under the doctrine of equivalents in Hori.

GHC requested a preliminary injunction and an immediate hearing before the Maru court. GHC

conceded that Sure Cure does not literally infringed Miracle Cure, as it uses corn oil and not

palm oil as the dispersant. GHC however claimed that Sure Cure is an infringement under the

doctrine of equivalents. The Court denied the request, on the basis that Maru’s law has never

recognized any form of non-literal infringement. A subsequent appeal writ to the Constitutional

Court was dismissed without opinion.

THE DISPUTE

Upon the request for assistance from GHC, the Commerce Minister of Hori called upon

his counterpart in Maru to reach an amicable resolution. It was agreed that the matters should be

resolved through private arbitration pursuant to a written agreement executed by the Parties.

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SUMMARY OF PLEADINGS

I. The actions of the IPD are valid and justifiable under TRIPS in general and Article 31 of

TRIPS in particular. IPD has acted consistently with the objectives and principles of TRIPS

contained in Articles 7 and 8. IPD has complied with Article 31 in relation to the grant of

compulsory licence. IPD is allowed to grant compulsory licence without the authorization of

GHC under subsection (b) as it was a case of national emergency and extreme urgency and GHC

has been duly notified of the grant. Further, IPD has complied with subsection (c) as the scope

and duration of the compulsory licence to Fizer Pharma was only for the period of the spread of

Killer Flu; and under subsection (g), it will be terminated once the Killer Flu ceased to exist and

is unlikely to recur. IPD’s action has also complied with subsection (h) as GHC was paid

adequate remuneration which is the USD20 for every unit of Miracle Cure produced under the

compulsory licence. Lastly, IPD’s action was in compliance with subsections (i) and (j) as the

court that reviewed the legal validity of the authorization and remuneration was independent.

II. The failure to recognize any infringement beyond the literal terms of the patent is not a

violation of Article 28 of TRIPS. Maru has the autonomy to determine the scope of protection to

be accorded to patent right holders under its domestic law. Thus, the refusal to recognize any

form of non-literal infringement including the doctrine of equivalents does not violate Article 28

as the IPD has fulfilled the minimum standard required of by TRIPS that is the literal

infringement standard. In the alternative, the refusal to recognize non-literal infringement in the

form of doctrine of equivalents is justified as a measure to restrict anti-competitive practices.

III. The actions of IPD were valid and justifiable as per “Declaration on TRIPS Agreement

and Public Health and Implementation of Paragraph 6 of the Doha Declaration. Firstly, the

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importation of Miracle Cure from Fizer Pharma under the compulsory licence is justified as

Maru has no manufacturing capacity to produce the drugs. Even if GHC’s manufacturing

capacity is taken into account, the import is still justified as GHC has insufficient manufacturing

capacity. Lastly, IPD’s action to import Miracle Cure from Porta is valid and justified on public

policy grounds.

IV. The remedies that should be awarded to GHC/GHC-Maru in relation to IPD’s grant of

compulsory licence to Fizer Pharma is USD20 as per the original compensation. In reality, no

compensation is due as the IPD’s action was a regulatory measure in international law. Therefore,

the USD20 remuneration rate offered by IPD is more than sufficient. In relation to IPD’s action

in importing Sure Cure from BLP, an injunction should not be granted as it would deny the

people of Maru their access to life-saving medicine. Further, no compensation is to be awarded

to GHC as they have not suffered any losses a result of the importation.

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PLEADINGS

I. THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTM ENT (“IPD”)

WERE VALID AND JUSTIFIABLE UNDER TRIPS 1 IN GENERAL AND ARTICLE 31

OF TRIPS IN PARTICULAR

A. Interpretation of the TRIPS Agreement

According to Article 31 of the Vienna Convention of the Law of Treaties,2 a treaty is to

be interpreted in accordance with the ordinary meaning of the terms of the treaty, in their

context, and in light of the treaty's object and purpose. Subsequent agreements between the

parties regarding the treaty's interpretation or application, subsequent practice in the application

of the treaty that establishes agreement regarding its interpretation, and any relevant rules of

international law applicable in the relations between the parties are also to be taken into account.3

Further, supplementary means of interpretation may be used to confirm the meaning resulting

from application of Article 31 or to determine the meaning when interpretation yields

ambiguous, obscure, absurd, or unreasonable results.4

Although it is unclear as to whether the parties involved are signatories to the Vienna

Convention, the principles in the Convention are applicable in our present case. Pursuant to

1 Agreement on Trade Related Aspects of Intellectual Property Rights, Annex 1C of the Marrakesh Agreement

Establishing the World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, The Legal Texts: The Results Of The Uruguay Round Of Multilateral Trade Negotiations 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994) (hereinafter known as “the TRIPS Agreement”).

2 Vienna Convention on the Law of Treaties, May 23, 1969, art 31.1, 1155 U. N. T. S. 331, 34 (hereinafter known as “the Vienna Convention”).

3 Article 31(2)(a) of the Vienna Convention. 4 Article 32 of the Vienna Convention.

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Article 3.2 of the WTO’s Dispute Settlement Understanding, the existing rights and obligations

of the member states must be interpreted based on the customary interpretation rules of public

international law. Customary international law in WTO jurisprudence would include the Vienna

Convention.5

Therefore, the TRIPS Agreement should first be interpreted according to its text and

preamble. It is also to be interpreted according to prior decisions interpreting the Agreement,

customary international law, other relevant rules of international law. If reasonable interpretation

is unavailable through other means, one may also look at the preparatory work and

circumstances of the Agreement to construct the meaning of the provisions in the Agreement.6

Paragraph 5(a) of the Doha Declaration further provides that in applying the customary rules of

interpretation of international law, each provision of the TRIPS Agreement must be read in light

of its object and purpose, being Articles 7 and 8.

B. The IPD’s actions were consistent with and provided for under the objectives and

principles of TRIPS

It is submitted that the Respondent has at all material times acted consistently with the

principles and objectives of TRIPS as contained in Article 7 and Article 8 of TRIPS respectively.

Article 7 provides that:

“The protection and enforcement of intellectual property rights should contribute

to the promotion of technological innovation and to the transfer and

5 United States – Standards for Reformulated and Conventional Gasoline, Report of the Appellate Body

WT/DS2/AB/R (April 29, 1996) at 17. 6 David Palmeter & Petros C. Mavroidis, “The WTO Legal System: Sources of Law” 92 AM. J. INT’L L. 398, 399-

413(1998).

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dissemination of technology, to the mutual advantage of producers and users of

technological knowledge and in a manner conducive to social and economic

welfare, and to a balance of rights and obligations.”

The rights of the State to disseminate technology “in a manner conducive to the social

and economic welfare” of the public and the State as provided under Article 7 is further

supported by Article 8. Article 8.1 of TRIPS which lays out the principle of TRIPS states that:

“Members may, in formulating or amending their laws and regulations, adopt

measures necessary to protect public health and nutrition…”

The WTO Panel Report in Canada Patent Protection of Pharmaceutical Products7 stated

that Article 7 of TRIPS makes “the balance between the intellectual property rights created by

the Agreement and other important socio-economic policies of WTO Member governments” one

of the TRIPS key goals. According to the Panel, Article 8 also elaborates the socio-economic

policies in question, particularly to health and nutritional policies.8

Pursuant thereto, Member States can adopt measures necessary to protect public health,

the only proviso being that their actions are compliant with the TRIPS Agreement and that it has

balanced the rights and obligations of the parties affected. It is submitted in our present dispute,

public health must come first and the actions of the Respondent were consistent with the

objectives and principles of TRIPS to protect public health.

C. The actions of the Respondent have complied with Article 31 of TRIPS.

7Canada Patent Protection of Pharmaceutical Products, WT/DS114/R (March 17, 2000), at 7.91 (hereinafter known

as the “Canada Dispute”). 8 Ibid, at 7.24.

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Article 31 provides that, where the law of a Member allows for other use of the subject

matter of a patent without the authorization of the right holder, including use by the government

or third parties authorized by the government, requirements set out in subsections (a) to (l) be

respected by the Member State authorizing the use. It is submitted that the government has

complied with all the requirements set out, the contentious ones being (b), (c), (g), (h), (i) and (j).

1. Article 31(b)

Subsection (b) states that the use of a compulsory licence “…may only be permitted if,

prior to such use, the proposed user has made efforts to obtain authorization from the right

holder on reasonable commercial terms and conditions and that such efforts have not been

successful within a reasonable period of time.” The requirement to obtain authorization can be

waived “in the case of national emergency or other circumstances of extreme urgency” This is

provided that the right holder shall, nevertheless, be notified as soon as reasonably practicable. It

is submitted that our present case is one of national emergency and extreme urgency which

allows the Respondent to waive the requirement of authorization by the patent holder in Article

31(b).

The precise meaning of Article 31(b) has not been defined by WTO Panel. Declaration

on the TRIPS Agreement and Public Health, adopted Nov. 14, 2001,9 issued at the Doha

Ministerial Conference in November 2001, though not legally binding, may influence or compel

some Member States to utilize Article 31(b) by enacting public health legislation.10 In fact, a

petition by the United States against Brazil to the WTO’s Dispute Settlement Body (DSB) on a

9 Doha WTO Ministerial 2001, Declaration on the TRIPS Agreement and Public Health, adopted Nov. 14, 2001,

WT/ MIN(01)/ DEC/ 2 (Nov. 20, 2001) (hereinafter known as “the Doha Declaration”. 10 Johanna Kiehl, "TRIPS Article 31(B) and the HIV/AIDS Epidemic", (2002) 10 J. Intell. Prop. L. 143.

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compulsory licencing dispute has been withdrawn in light of the developments of the Doha

Declaration.11

It is conceded that though there is no express definition of “emergency” in international

law to conclude that it includes a public health emergency.12 It is further recognized that it is not

explicit on Article 31(b) that “national emergency” or “extreme urgency” includes public health

emergency.

However, States in the Doha Declaration agree that epidemics such as HIV/AIDS,

malaria and tuberculosis meet the definition of “national emergency”.13 It is submitted that

Article 31(b) must be interpreted purposively to establish that “national emergency” includes

cases of public health emergency. This is achieved by reading the whole of Article 31, and the

objective and purpose of the TRIPS agreement and any subsequent agreements – whether it

approves of public health objective.

Article 7 of TRIPS makes “the balance between the intellectual property rights created by

the Agreement and other important socio-economic policies of WTO Member governments as

one of the TRIPS’ key goals.”14 Meanwhile, Article 8 elaborates the socio-economic policies in

question, particularly on health and nutritional policies.15 Accordingly, it is clear that public

11 Press Release, Office of the Unites States Trade Representative, United States and Brazil Agree to Use Newly

Created Consulative Mechanism to Promote Cooperation on HIV/ AIDS and Adress WTO Patent Dispute (June 25, 2001), at http://www.ustr.gov/releases/2001/06/01-46.htm.

12 Hannes L. Schloemann & Stefan Ohlhoff, “Constitutionalization” and Dispute Settlement in the WTO: National Security as an Issue of Competence”, 93 AM. J. INT'L L. at 445.

13 Para 5(c) of the Doha Declaration. 14 Canada Patent Protection of Pharmaceutical Products WT/DS114/R (March 17, 2000), at 7.91. 15 Ibid, at 7.24.

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health is given weight under TRIPS. Pursuant to this, States have interpreted TRIPS as to allow

the issuance of compulsory licence for public health purposes.16

The Doha Declaration further underscores the importance of public health in TRIPS. It

reaffirmed the rights of Member States to interpret and implement TRIPS in a manner consistent

with the protection of public health and access to medicine for all.17 Para 5(c) of Doha

Declaration states that:

“Each member has the right to determine what constitutes a national emergency

or other circumstances of extreme urgency, it being understood that public health

crises, including those relating to HIV/AIDS, tuberculosis, malaria and other

epidemics can represent a national emergency or other circumstances of

extreme urgency [emphasis added].”

Therefore, based on Articles 7 and 8, with the Doha Declaration, that “national

emergency” would include public health crisis such as the Killer Flu as declared by the

Government of Maru. Hence, the issuance of the compulsory licence without obtaining the

authorization of the Claimant was justified under Article 31(b) of TRIPS.

Further, the Para 5(c) of the Doha Declaration recognizes that each member has the right

to determine what constitutes to national emergency or other circumstances of extreme urgency,

it being understood that public health crises. Therefore, there must be deference to the state’s

16 Article 68 of Brazil Industrial Property Law Act; Medicines and Related Substances Control Amendment Act of

South Africa; Thailand’s issuance compulsory licences as chronicled in Peng Jiang, Fighting the AIDS Epidemic China’s Options under the WTO TRIPS Agreement 13 ALB. L.J. SCI. TECH. 223, 239 (2002) and Mark C. Lang, “What a Long Strange TRIPS It’s Been: Compulsory Licensing from the Adoption of TRIPS to the Agreement on Implementation of the Doha Declaration” 3 J. Marshall Rev. Intell. Prop. L. ii 2003-2004.

17 Doha Declaration, para 4-5.

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judgment and Maru’s determination of the Killer Flu pandemic as “national emergency” should

not be called into question.

With the Killer Flu pandemic pending, not only has it affected the rice bowl of the

country, which is that of tourism,18 it is also killing people.19 The WHO had even issued a travel

advisory against travelling to Maru because of the Killer Flu.20 This was clearly a situation of

national emergency and one of extreme urgency.

Having justifiably waived this requirement, the Claimant was notified very promptly as

required when they were told to make available all test results and ‘know-how’ regarding the

manufacture of the Miracle Cure to Fizer Pharma.21

2. Article 31(c) and Article 31(g)

It is stated under subsection (c) that the scope and duration of the compulsory licence

“…shall be limited to the purpose for which it was authorized…”. Further, subsection (g)

provides that “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.;”

It is submitted that the authorization to produce Miracle Cure was given to Fizer Pharma

only to prevent the Killer Flu in Maru and not for distribution to other countries.22 It is further

submitted that the compulsory licence was going to be terminated once the Killer Flu ceases to

18 Moot Problem, Para 8, line 4-5. 19 Moot Problem, Para 7, line 5. 20 Moot Problem, Para 8, line 2-3. 21 Moot Problem, Para 13, line 11-14. 22 Moot Problem, Para 13, line 4-6.

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exist and is unlikely to recur, as per subsection (g). There was a unilateral understanding on the

part of Fizer Pharma that they will be able to distribute the drug after the flu has subsided, but

this has never been expressly or impliedly communicated to them by the Respondent. In fact, it is

the Respondent’s position that Fizer Pharma cannot use the compulsory licence to produce the

Miracle Cure for distribution outside of Maru after the Killer Flu has subsided. If the Claimant’s

stand is that the Killer Flu has ceased to exist and is unlikely to recur, they can in fact make

motivated requests for competent authority to review the continued threat of the Killer Flu.

3. Article 31 (h)

Subsection (h) states that “the right holder shall be paid adequate remuneration in the

circumstances of each case, taking into account the economic value of the authorization.”

The Intellectual Property Court of Maru had held that the compensation of USD20 to the

Claimant for every unit of Miracle Cure that Fizer Pharma produces to be “more than fair”. The

decision was made after hearing the Claimant’s submissions and the Director’s reply on the

adequacy of the compensation.23 The deliberation by the Court clearly involved consideration of

all the relevant factual circumstances of the case, the position the parties and all the submissions

of the parties. The Claimant is enjoying USD20 net profit as they do not incur any cost of

producing the Miracle Cure that Fizer Pharma supplies. Hence, it is submitted that the Claimant

was paid adequate remuneration, which is more than fair.

4. Article 31(i) and Article 31(j)

23 Moot Problem, Para 16, line 8-9.

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Subsection (i) states that “the legal validity of any decision relating to the authorization

of such use shall be subject to judicial review or other independent review by a distinct higher

authority in that Member.” Further, subsection (j) states, “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;”

It is submitted that the Respondent has at all material times complied with these

subsections as the Court that review the legal validity of the compulsory licence and the

consequent remuneration was independent and fair.

(a) The decision of the Maru Court was fair and independent pursuant to subsections

(i) and (j)

The Court that reviewed the legal validity of the authorization and remuneration was

independent. On the facts, the Presiding Judge made his decision based on the Director’s reply,24

thus taking into account all facts that were presented before him. The Claimant was given a fair

hearing and a chance to make their submissions before the court. There was no evidence that his

judgment was impaired by virtue of him being the classmate of the Chairman of Fizer Pharma at

law school.

(b) Any allegation of appearance of bias is inadmissible as the Claimant has not

exhausted local remedies on this matter

It is submitted that the decision of the Court cannot be disputed before this Arbitral

Tribunal based on the doctrine of exhaustion of local remedies. It is a settled principle of

24 Moot Problem, Para 16, line 8.

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international law that where a State and an alien agree to arbitrate their disputes, any local

remedies must first be exhausted. 25 The main reason for the existence of this doctrine is the

absolute necessity of harmonizing international and national jurisdictions, ensuring the respect

due to the sovereign jurisdictions of States to which foreigners are subject.26

The fact that the Respondent has submitted to the jurisdiction of this Arbitral Tribunal

does not bar the application of the principle of exhaustion of local remedies. A Tribunal may

have jurisdiction over a case, but it nevertheless may decide that a certain claim is

inadmissible.27 It is submitted that the allegation of bias concerns the admissibility of the case,

and it is challengeable regardless of submission to jurisdiction.

Thus, the Claimant’s failure to exhaust all local remedies by appealing to the highest

court in relation to the allegation of bias precludes them from claiming the same before this

Honourable Arbitral Tribunal. It is this submitted that this Honourable Arbitral Tribunal should

not consider any allegation of bias in determining whether the review of the compulsory licence

was independent pursuant to subsections (i) and (j).

25 Article 44(b) of the Draft Articles on the Responsibility of States for Internationally Wrongful Acts; Report of the

International Law Commission on the work of its Fifty-third session, Official Records of the General Assembly, Fifty-sixth session, Supplement No. 10 (A/56/10), chp.IV.E.1; C. Wilfred Jenks.[London: Stevens and Sons Ltd.; Dobbs Ferry, New York: Oceana Publications. 1964. xl and 777 and 28; A.A. Cançado Trindade, The Application of the Rule of Exhaustion of Local Remedies in International Law, Cambridge, Cambridge University Press, 1983, 527-37; Chittharanjan Félix Amerasinghe, Local remedies in international law (1990), Cambridge University Press.

26 Interhandel Case (Switzerland v. United States of America) (separate opinion of Judge Cordova), ICJ Reports 1959.

27 SGS Société Générale de Surveillance S.A. v. Republic of the Philippines ICSID Case No. ARB/02/6, 29 January 2004, 8 ICSID Reports 518.

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II. THE FAILURE TO RECOGNIZE ANY INFRINGEMENT BEYON D THE

LITERAL TERMS OF THE PATENT IS NOT A VIOLATION OF A RTICLE 28 OF

TRIPS.

A. Maru has autonomy to determine the scope of protection to be afforded to patent

right holders.

Article 28(1) states that:-

“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;”

The Claimant has claimed that the Respondent’s failure to recognize Sure Cure’s

infringement of Miracle Cure’s patent based on the doctrine of equivalents28 is unjustified

pursuant to Article 28 of TRIPS. However, it is submitted that that the Respondent has not acted

in violation of the obligations imposed by Art 28 by refusing to recognize any form of non-literal

infringement of the patent in question.29

The purpose of TRIPS is to harmonize intellectual property norms by providing universal

minimum standards to be implemented in the domestic law of the Member States. TRIPS do not

28 Para 18 of the Moot Problem. 29 The patent in question is “Miracle Cure, Patent No. 9,876,543” issued by the Maru Patent Office on January 5

2010, per Appendix A to the Moot Problem.

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however mandate uniform law. Thus, Member States have the autonomy to impose increased

standard of protection if they desire but they should not be penalized for not doing so.30

It is submitted that the minimum standard should be the literal infringement as it provides

sufficient protection for patent right holders. As such, the refusal to recognize any infringement

beyond the non-literal claims of the patent on our facts is not unjustified as recognition of literal

infringement is the minimum standard that is required of by Article 28. The Respondent is not

compelled to impose an increased standard of protection in the form of protection against non-

literal infringement.

Patent law is intended to give the patentee the full extent, but not more than the full

extent of the monopoly which a reasonable person skilled in the art, reading the claims in

context, would think the patentee was intending to claim.31 The literal-infringement approach in

Kirin-Amgen that was applied by the Maru court could more than enough protect the patent

rights of the Claimant. However, the Claimant themselves have conceded that the Sure Cure does

not literally infringe the Miracle Cure’s patent.32 Had they not conceded, the court may have held

in their favour based on the standard of literal infringement that was enunciated in the case of

Kirin-Amgen. Thus, it is submitted that the standard of literal infringement is a sufficient

standard of protection, and the Respondent has thus complied with Article 28.

B. The doctrine of equivalents amounts to and encourages anti-competitive practices.

1. The regulation of anti-competitive practices under TRIPS and Maru’s law

30 Article 1(1) of TRIPS. 31 Kirin-Amgen v Hoechst Marion Roussel 2004 UKHL 46, Para 48. 32 Moot Problem, Para 18, line 10-12.

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The Preamble of TRIPS states that care has to be taken so that “measures to enforce

intellectual property rights do not themselves become barriers to legitimate trade”. It is explicit

from Article 8(2) and 40(2) that TRIPS allows Member States to implement measures to control

and mitigate anti-competitive practices.

Article 8(2) provides that Member States may adopt appropriate measures which “may be

needed to prevent the abuse of intellectual property rights by right holders or the resort to

practices which unreasonably restrain trade or adversely affect the international transfer of

technology.”

Article 40(2) provides that TRIPS shall not “… prevent Members from specifying in their

legislation licensing practices or conditions that may in particular cases constitute an abuse of

intellectual property rights having an adverse effect on competition in the relevant market.”.

Thus, TRIPS allows for Member States to impose measures to regulate and restrict anti-

competitive practices. Furthermore, under Maru’s law, every monopolistic trade practice is

presumed to be prejudicial to public interest per se.33 Thus, Maru’s law itself allows for the

regulation of anti-competitive practices that are prejudicial to public interest.

2. Doctrine of equivalents amounts to an anti-competitive practice

It is submitted that the Respondent’s refusal to recognize the doctrine of equivalents is

allowed and justified under TRIPS. This is because the application of the doctrine of equivalents

would amount to the endorsement of anti-competitive practices which is inconsistent with the

33 S. 32 of the Monopolies and Restrictive Trade Practices Act 1989 of India, which Maru’s law is pari materia with.

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TRIPS regime.34 The doctrine that is said to protect against practicing a ‘fraud on a patent’ is

used to extend a patent to a composition which could not be patented. A monopoly is thus

obtained on an unpatented and unpatentable article.35

Extending protection beyond the literal terms of the patent through the doctrine of

equivalents creates substantial uncertainty about where the patent monopoly ends. As a result,

competitors are unable to determine what an infringing act under the doctrine of equivalents is or

what a legitimate alternative to the patented product is. Hence, it is submitted that the doctrine of

equivalents amounts to and encourages anti-competitive practices. The Respondent’s refusal to

recognize it is allowed and justified under Article 8(2) and Article 40(2) of TRIPS.

Further, the insistence to apply the doctrine of equivalents is prejudicial to Maru’s public

interest, and offensive towards the sovereignty of Maru to regulate its own public interests. The

Respondent is thus justified in not recognizing the doctrine of equivalents.36

C. The literal approach to patent claims construction is more relevant today

It is submitted that the literal approach adopted by the Maru court is more relevant today

in relation to the construction of patent claims, as opposed to the doctrine of equivalents. The

doctrine of equivalents has lost its appeal today and the literal approach as established in the case

of Kirin-Amgen37 is more relevant. The case of Graver Tank which established the doctrine of

34 Article 8(2) and Article 40(2) of TRIPS. 35 Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605 (1950) (hereinafter known as “Graver

Tank”). 36 S. 32 of the Monopolies and Restrictive Trade Practices Act 1989 of India. 37 Supra note 31.

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equivalents was decided in sixty years ago.38 This was when the United States was experiencing

the industrial revolution. Many corporations were coming up with new inventions and these

corporations obviously did not want their inventions copied by others. Unfortunately, patent law

was not yet developed at that time to provide sufficient protection for these corporations. As a

result, many competitors got away with making insubstantial changes to the invention and

calling it their own. This proved detrimental as there was no longer any incentive for inventors to

invent new technology. Because of this, the Supreme Court established the doctrine of

equivalents. This doctrine served the United States well for the latter part of the twentieth

century, but it is no longer relevant in our world today.

The case of Kirin-Amgen was decided very recently in 2005 in the House of Lords.

Previously, the courts in the United Kingdom recognized the “pith and marrow” principle which

was similar to the doctrine of equivalents. However, their Lordships in Kirin-Amgen put an end

to the “pith and marrow” principle.39 Their Lordships stated that with the development of patent

law today, patentees will have adequate legal advice when drafting a patent claim. This would

mean that the comprehendible alternatives to the ingredients of the invention would have been

included in the patent claim by the lawyer. Lord Hoffman stressed in the case that patent law

does in fact seek to provide the full extent of monopoly that is claimed, but not more than that. If

the alternative ingredient is not even comprehended by the patentee when drafting his patent,

there is no reason the courts should afford protection of the patentee’s patent to the extent of the

aforesaid alternative ingredient, although it is an insubstantial substitution.

38 Supra note 35. 39 Paragraph 34 of Kirin-Amgen, supra note 31.

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It is further submitted that the literal approach is a better approach as the doctrine of

equivalents does not encourage technological development and advancement. The doctrine of

equivalents looks at the end product and not the patent claim. If the alleged infringing product

does substantially the same thing in substantially the same way, it would be held to be an

infringement of the patented product although it may differ in form or shape. This would mean

that even if the alleged infringing product is made with more superior technology, with higher

efficiency and minimum wastage of raw material and resources hence making it cheaper for the

consumer, it would count for nothing as the manufacturer of the alleged infringing product will

not be able to manufacture his product because it will be held to be an infringement of the

patented product. This would make the patent claim redundant, and stifle innovation and

advancement of technology.

It is thus submitted that although the doctrine of equivalents was necessary at the time it

was established, with the vast development of patent law over the past six decades, modern

patent law is now competent to provide sufficient protection for patent right holders by looking

at the patent claim literally. By not adopting the literal approach and actually looking at the

patent claim, it would be a mockery of the development of patent law over the years. Therefore,

the Respondent’s rejection of any form of non-literal infringement, specifically the doctrine of

equivalents is justified and in line with modern patent law.

III. THE ACTION OF THE INTELLECTUAL PROPERTY DEPART MENT WAS

VALID AND JUSTIFIABLE AS PER THE “DECLARATION ON TH E TRIPS

AGREMENT AND PUBLIC HEALTH (ADOPTED ON 14 NOVEMBER 2001) AND

IMPLEMENTATION OF PARAGRAPH 6 OF THE DOHA DECLARATI ON ON THE

TRIPS AND PUBLIC HEALTH (DECISION OF 30 AUGUST 2003)

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A. Maru is allowed to import Miracle Cure from Fizer Pharma under Doha

Declaration

1. Doha Declaration as a waiver to Article 31(f)

Article 31 of the TRIPS Agreement allows Member States to grant compulsory licence

for other use of the subject matter of a patent without the authorization of the right holder,

including use by the government or third parties authorized by the government.40 In our present

case, the Respondent has granted a compulsory licence to Fizer Pharma, a pharmaceutical

company based in Porta. The grant of compulsory licence to a company outside of Maru to

produce the Miracle Cure to be imported back to Maru is inconsistent with Article 31(f). Article

31(f) provides that the compulsory licence shall be authorized predominantly for the supply of

the domestic market of the Member authorizing such use.41 This means, all the Miracle Cure

produced by Fizer Pharma can only be used and distributed in Porta, and not Maru.

The effect of Article 31(f) is to prohibit productions of generic drugs for export to

countries without manufacturing capabilities. This leaves many poor and developing states which

have no manufacturing capacity without access to generic medicine as they cannot utilize

compulsory licences to manufacture their own drugs in another state that has superior

manufacturing capacity for their domestic use.42

40 Article 31 of the TRIPS Agreement. 41 The TRIPS Agreement. 42 CRS Report for Congress, Influenza Antiviral Drugs and Patent Law Issues (Nov. 18 2005); World Trade

Organization, Declaration on the TRIPS Agreement and Public Health, Para. 6, WT/MIN(O1)/DEC/2 (adopted Nov. 20, 2001) (hereinafter referred to “the Doha Declaration”).

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Paragraph 4 of the Doha Declaration states that the TRIPS Agreement does not and

should not prevent Members from taking measures to protect public health. Accordingly, while

reiterating the commitment to the TRIPS Agreement, the Doha Declaration affirms that the

TRIPS Agreement can and should be interpreted and implemented in a manner supportive of

WTO Members' right to protect public health and, in particular, to promote access to medicine

for all.43

Hence, the WTO General Council issued a decision in 200344 that allows Member States

to import generic versions of drugs produced using compulsory licences under certain strict

conditions, thus permitting a waiver of Article 31(f). Therefore, states that could not manufacture

generic drugs domestically for urgent needs can now issue compulsory licences to

pharmaceutical companies in other countries, and these drugs can in turn be imported back into

the state for their domestic use.

Therefore, it is submitted that Respondent’s importation of the Miracle Cure

manufactured by Fizer Pharma from Porta for their domestic use under the compulsory licence is

allowed under the Doha Declaration and the Implementation Decision.

2. Maru has no manufacturing capacity

Pursuant to Paragraph 2(a)(ii) of the Implementation Decision, Member States can import

drugs produced under the compulsory licence as an eligible importing member if they have

established that they have insufficient or no manufacturing capacity. It is submitted that the

43 The Doha Declaration, Para 4, supra note 3. 44 World Trade Organization, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and

Public Health, WT/L/540 (Aug. 30, 2003) (hereinafter referred to “the Implementation Decision”).

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Respondent is permitted to import Miracle Cure produced by Fizer Pharma in Porta for the

domestic market of Maru because Maru has no manufacturing capacity.

The Annex to the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS

Agreement and Public Health is to be referred to determine whether a state has insufficient

manufacturing capacity. Pursuant to Para (ii) of the Annex, “any capacity owned or controlled

by the patent owner” in the pharmaceutical sector has to be excluded from consideration when

assessing the manufacturing capacity of the state. This exclusion is justified as the patent owner,

being a private company, can at any time withdraw its investment in the Member State.

Assuming that the patent owner’s capacity is taken into account, the withdrawal of the

investment would leave the state without any manufacturing capacity. This would leave the

Member State without any recourse as they cannot rely on the Implementation Decision despite

having insufficient manufacturing capacity after the patent owner withdrew its investment. Thus,

the Annex prevents this by excluding from the onset the patent owner’s manufacturing capacity.

It is submitted that with the exclusion of the Claimant’s manufacturing capacity, the state

of Maru in itself would have no manufacturing capacity as defined under Para 2(a)(ii).

“Manufacturing” is the making of articles by physical labor or machinery, especially on large

scale.45 The “capacity” in the pharmaceutical sector includes the capacity to either produce active

ingredients or the availability of pharmaceutical formulations, or both.46

45 The Concise Oxford Dictionary, pg 617. 46 Implications of the Doha Declaration on the TRIPS Agreement and Public Health, World Health Organization,

(WHO/ EDM/ PAR/ 2003.3).

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The economy of Maru centers on tourism, hotels, restaurants and retail businesses.47

There is no evidence of a pharmaceutical industry, state-owned pharmaceutical plant, or state

owned pharmaceutical machinery in Maru. Therefore even if Maru possesses the active

ingredients to produce the Miracle Cure, they do not have the “manufacturing capacity” to do so

as they do not have any manufacturing facility in the state, having excluded the Claimant’s

manufacturing facility in this case.

Hence, Maru is allowed under Paragraph 2 of the Implementation Decision48 to import

Miracle Cure from Porta.

B. In the alternative that the Claimant’s manufacturing capacity is taken into account,

the importation from Porta is still within the ambi t of Para 2 of the Implementation

Decision.

It is submitted in the alternative that even if the Claimant’s manufacturing capacity is to

be taken into account, the importation of the Miracle Cure from Fizer Pharma is still justified as

the Claimant has insufficient manufacturing capacity based on Paragraph 2(a)(ii) of the

Implementation Decision.

In fact, the Claimant has acknowledged its own lack of manufacturing capacity. The

Chairman of GHC in the Board meeting has stated that their current manufacturing plant in Hori

cannot meet the demand of the Miracle Cure in light of the spread of the Killer Flu, which

necessitated them to begin manufacturing in their uncompleted factory in Maru. 49 It was further

47 Para 1 Moot Problem, line 3. 48 The Implementation Decision, supra note 5. 49 Para 12 Moot Problem, line 13- 14.

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stated that the Claimant needed one week before the factory in Maru can start manufacturing the

Miracle Cure, and it would have taken them at least a month to produce sufficient Miracle Cure.

It is imprudent for the Respondent to wait for the same when the people’s lives are at stake. It

was reported that a boy died within a day after contracting the Killer Flu. Subsequently, twenty

people were reported to have the same symptoms. 50 In the next few days, a large number of

people from the same province fell sick and the number of patients infected with the Killer Flu

was increasing day by day.

The lives of the people of Maru should not be subjected to such a wait. It is an unjustified

risk to force the people to have to wait for a month in order to obtain access to the Miracle Cure.

Many might have died by that time because of the insufficient supply of drugs to combat the

pandemic. Therefore, as the Claimant has insufficient manufacturing capacity, Maru is an

eligible importing member. Hence, the Respondent is allowed under the Para 2 of the

Implementation Decision to import drugs manufactured by Fizer Pharma in Porta.

C. Lastly, Maru is allowed to import Miracle Cure from Porta on public policy

grounds.

Paragraph 4 Doha Declaration states that TRIPS Agreement does not and should not

prevent members from taking measures to protect public health. Accordingly, the TRIPS

Agreement can and should be interpreted and implemented in a manner supportive of WTO

members' right to protect public health and, in particular, to promote access to medicine for all”51

for public policy reasons.

50 Para 7 Moot Problem, line 5. 51 2001 Doha Declaration, specifically Para 6 of Doha Declaration.

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The Respondent’s action in granting the compulsory licence to Fizer Pharma clearly falls

within the ambit of Paragraph 4. The compulsory licence is firstly granted in order to protect the

public’s health and secondly to ensure that the people are able to get access to the Miracle Cure.

Maru and its neighboring states are facing a public health crisis as the Killer Flu is spreading

quickly and the Claimant was not able to manufacture sufficient Miracle Cure for the people to

combat this pandemic.52

The Claimant indicated that they needed one week before more Miracle Cure could be

produced. The Miracle Cure is needed immediately as the Killer Flu is capable of killing a

person within a day of infection. In order to ensure there is sufficient supply of the Miracle Cure

without having to wait, the only reasonable step is thus to engage Fizer Pharma to produce the

Miracle Cure at the same time. The Claimant should not be given the benefit of doubt when the

people’s lives are at stake. In such a grave situation, the Respondent's action is reasonable for the

interest of the public, and as a matter of public policy.

IV. REMEDIES THAT SHOULD BE AWARDED TO GHC/GHC-MARU ASSUMING

THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU

ARE NOT JUSTIFIED UNDER (I) AND/OR (II) AND/OR (III ).

A. In relation to the Respondent’s action in engaging Fizer Pharma to manufacture the

Miracle Cure.

1. The remuneration of USD20 per unit is more than sufficient because a state has a right

under international law to take regulatory measures without compensation.

52 Para 12 Moot Problem, line 14- 15.

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(a) The right to regulatory takings without compensation is an inherent right of the

state in international law.

Customary international law allows a state to take non-discriminatory regulatory

measures to take an alien’s property without compensating the party under certain circumstances.

This customary international law53 is established based on a widespread state practice and opinio

juris that has developed over the years.54 The circumstances that allow for a non-compensable

regulatory taking include protection of public interest or maintenance of public order, public

health and morality.

Article 10(5) Harvard Draft Convention on the International Responsibility of States for

Injuries to Aliens recognizes the existence of a category of non-compensable takings. It states

that an uncompensated taking of an alien’s property or a depravation of the use or enjoyment of

property of an alien by the State in the maintenance of public order, public health or morality

shall not be considered wrongful. Also, the Organization for Economic Co-operation and

Development (OECD) quoting The Canadian Foreign Investment Promotion and Protection

Agreement (FIPA) states that non-discriminatory regulatory actions are the state’s right to

regulate and hence, no compensation is required to be made.55 The OECD, quoting Article 3 of

The Multilateral Agreement on Investment (MAI) Negotiating Text also states that a contracting

party may adopt, maintain or enforce any measure that it considers appropriate to ensure that the

53 Crystallized from widespread state practice and opinio juris - The Lotus Sea Case. PCIJ Series A, No 10; The

North Sea Continental Shelf Cases (FRG v Denmark; FRG v The Netherlands) (1969) ICJ Rep 3. 54 inter alia The International Law on Foreign Investment by M. Sornarajah, pg. 127; Article 10(5) Harvard Draft

Convention on the International Responsibility of States for Injuries to Aliens; OECD Report published Organization for Economic Corperation and Development; the Multilateral Agreement on Investment Negotiating Text; Re-Statement of Foreign Relation Law of the United States.

55 Working Papers on International Investment Number 2004/4 - "Indirect Expropriation" and the "Right To Regulate" in International Investment Law).

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investment activity is undertaken in a manner sensitive to health, safety or environmental

concerns.56 Such exercise is within the power of the state and hence no compensation is required.

Lastly, the Re-Statement of Foreign Relations Law of the United States stated that a

regulatory measure is justified only if it is non-discriminatory. And it being a regulatory

measure, the state is not responsible for loss of property or other economic disadvantages

resulting from bona fide regulation commonly accepted as within the power and rights of the

state.

Such a right must be given to the states to prevent the state from being exploited. If the

state has no right over an alien’s property, the foreign investors can at any time revoke their

investments or refuse to allow the States to use their properties even in situations of national

emergencies. Thus, a state’s right to take regulatory measures is to for the interest of the state

and its people.

(b) The grant of the compulsory licence to Fizer Pharma is a regulatory measure.

It is submitted that the Respondent’s action in engaging Fizer Pharma to manufacture

Miracle Cure is a regulatory measure. As submitted above,57 the grant of the compulsory licence

was for the interest of the health of the people of Maru generally, which falls under the ambit of

circumstances that constitutes as a regulatory measure.58 It is therefore submitted that no

compensation is in fact needed, provided that the regulatory taking is non-discriminatory.

(c) The regulatory taking was non-discriminatory 56 Ibid. 57 Page 35 of this Memorial. 58 Harvard Draft Convention on the International Responsibility of States for Injuries to Aliens; The Canadian

Foreign Investment Promotion and Protection Agreement.

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An action is considered to be non-discriminatory under the WTO regime if it is

consistent with the National Treatment and Most Favoured Nation (MFN) principles. These

principles are embodied in Article 3 and Article 4 of the TRIPS Agreement respectively.

The National Treatment principle under Article 3 provides that each Member shall accord to the

nationals of other Members treatment no less favourable than that it accords to its own nationals

with regard to the protection of intellectual property. The MFN principle under Article 4

provides that any advantage, favour, privilege or immunity granted by a Member to the nationals

of any other country shall be accorded immediately and unconditionally to the nationals of all

other Members.

It is submitted that there is no evidence on the facts to show that the Respondent has

treated the Claimant less favourably than Maru’s own nationals, nor was there evidence to show

that the Claimant was deprived of any advantage, favour, privilege or immunity that has been

granted to the nationals of other countries.

The only fact that could tangentially suggests any disparity of rights and privilege is the

fact that BLP from Ulka was paid USD50 for every unit of Sure Cure imported to Maru, whereas

the Claimant was paid USD20 for every unit of Miracle Cure produced by Fizer Pharma in Porta

under the compulsory licence. However, it is submitted that the difference in remuneration and

payment is justified. Firstly, Sure Cure and Miracle Cure are two different products altogether,

the former using corn oil as its delivery agent and the latter using palm oil.59 In addition, there

are many variables (e.g import fees, manufacturing costs, custom levy etc) that could account for

the difference in pricing for both products. Therefore, it is inconclusive to suggest that the

disparity in the payment for Sure Cure and Miracle Cure is an evidence of unfair treatment.

59 Para 17 Moot Problem, line 9-10.

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It is further submitted that the Respondent has at all material times accorded the

Claimant fair treatment consistent with the principles of National Treatment and MFN. The

Respondent has not deprived the Claimant of any of its economic rights. The decision to license

out the Claimant’s patent was not made based on the Claimant’s nationality, but on a logical

appreciation of the fact that the Miracle Cure was the only known medicine at that time that

could combat the Killer Flu. It is further asserted that the decision to issue the compulsory

licence and to import Sure Cure was not made discriminatorily as it was made in light of the fact

that the Claimant could not produce enough Miracle Cure for the pandemic.

B. In relation to the Respondent’s action in importing Sure Cure from BLP

1. Injunction should not be granted.

An injunction is an equitable remedy in the form of a court order, whereby a party is

required to do, or to refrain from doing, certain act.60 A patent holder whose patent rights have

been infringed may seek for injunctive relief to prevent further infringement to his or her patent,

and it is to be granted at the discretion of the judicial authority.61

It is submitted that injunction on the importation of Sure Cure should not be granted

because it will leave the people of Maru with no cure for the Killer Flu. In light of this, the

importation of the Sure Cure ensures that the people of Maru to have access to life-saving drugs.

In the event that the injunction is granted, the people of Maru will lose their only alternative to

the Miracle Cure.

60 Arthur W. Rovine, “Contemporary issues in international arbitration and mediation: The Fordham papers 2007”, 2nd Conference of Fordham University School of Law in June 2007, Martinus Nijhoff Publishers. 61 Section 108(1) of the Indian Patents Act 1970; Article 44(2) of the TRIPS Agreement.

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2. No compensation should be made because the Claimant did not suffer any loss

The Claimant may claim for compensation which is assessed based on either recovery

of profits, or damages for infringement to their patent.62 Following this, the quantum of

compensation should be assessed based on the profits that the Claimant would have made had it

not for the alleged infringement i.e the loss that they have suffered due to the alleged

infringement.

It is contended that the Claimant did not suffer any loss. Based on this, the Claimant

should not be entitled to any compensation. The Claimant could not have produced enough

Miracle Cure even if the Respondent had not imported Sure Cure from BLP. Thus, the

importation of Sure Cure did not cause the Claimant to suffer any loss. In fact, the Respondent is

already buying all the Miracle Cure that could be produced by the Claimant. Hence, the Claimant

is not entitled to any compensation since the Claimant did not suffer any loss.

62 Article 45 of the TRIPS Agreement and S. 108 of the Indian Patents Act 1970.

F2010-R

42

PRAYER FOR RELIEF

On the basis of the foregoing facts and points of law, Good Health Company respectfully

requests this Arbitral Tribunal to:-

I. Declare that the actions of the Intellectual Property Department were valid and justifiable

under TRIPS in general and Article 31 of TRIPS in particular;

II. Declare that the failure to recognize any infringement beyond the literal terms of the

patent is not a violation of Article 28 of TRIPS.

III. Declare that the action of the Intellectual Property Department was valid and justifiable

as per “Declaration on TRIPS Agreement and Public Health (adopted on 14 November 2001)

and Implementation of Paragraph 6 of the Doha Declaration on the TRIPS and Public Health

(Decision of 30 August 2003).

IV. To award remedies as prayed submitted by the Respondent if the actions of the

Intellectual Property Department of Maru are not justified under I and/or II and/or III.

Respectfully submitted,

Counsel for the Respondent.