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LAWASIA INTERNATIONAL MOOT COURT COMPETITION 2010

IN THE INTERNATIONAL COURT OF ARBITRATION, NEW DELHI

2010

___________________________________________________________________

GOOD HEALTH COMPANY (CLAIMANT)

v.

DIRECTOR OF INTELLECTUAL PROPERTY, STATE OF MARU (RESPONDENT)

MEMORIAL FOR THE RESPONDENT

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TABLE OF CONTENTS

INDEX OF AUTHORITIES............................................................................................. vii

QUESTIONS PRESENTED............................................................................................ xiv

STATEMENT OF FACTS ............................................................................................... xv

SUMMARY OF PLEADINGS...................................................................................... xviii

PLEADINGS ...................................................................................................................... 1

I. THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU WERE VALID AND JUSTIFIABLE UNDER TRIPS IN GENERAL AND ARTICLE 31 TRIPS IN PARTICULAR............................................................................................................. 1 A. The actions of the Maru IP Department are consistent with Article 1.1

TRIPS.......................................................................................................... 1

B. The actions of the Maru IP Department are consistent with Article 8.1

TRIPS.......................................................................................................... 2

C. There is a valid exception under Article 31 TRIPS for any

infringement of the patent. .......................................................................... 3

1. The prior authorisation requirement of Article 31(b) does not apply

to Maru. ................................................................................................. 4

a. There is a national emergency in Maru........................................... 5

b. In any event, Maru may waive Article 31(b) for “crown use”........ 5

2. Maru’s obligation to comply with the domestic supply requirement

has been waived. ................................................................................... 5

3. The compensation offered by Maru to GHC is adequate...................... 6

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4. The review of the patent authorisation and remuneration decisions

is consistent with Article 31(i) and (j) TRIPS....................................... 7

II. MARU’S FAILURE TO RECOGNISE ANY INFRINGEMENT BEYOND THE LITERAL TERMS OF THE PATENT IS CONSISTENT WITH ARTICLE 28 TRIPS. ............................ 9

A. Maru's failure to recognise patent infringement by BLP is consistent

with Article 28.1 TRIPS.............................................................................. 9

B. GHC should not be excused for failing to encompass a readily known

equivalent in drafting its claim language. ................................................. 10

C. The Improver standard for determining factual equivalency shows that

corn oil falls outside the scope of the claim.............................................. 12

D. Article 30 TRIPS provides a valid exception for the infringement of

the patent. .................................................................................................. 13

1. The exception is limited. ..................................................................... 13

2. The exception does not conflict with a normal exploitation of the

patent. .................................................................................................. 14

3. The import of Sure Cure in no way prejudices the legitimate

interests of the patent owner. .............................................................. 14

E. Alternatively, there is an exception under Article 31 TRIPS.................... 15

III. THE ACTIONS OF THE MARU IP DEPARTMENT WERE VALID AND JUSTIFIABLE AS PER THE DOHA DECLARATION AND DECISION OF 30 AUGUST 2003. ...................... 16

A. Maru is a country that qualifies as an Eligible Importing Member. ......... 16

1. As a Least Developed Country (“LDC”), Maru is an eligible

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importing member even without authorisation from the WTO. ......... 16

2. Even if Maru is not an LDC, Maru’s failure to notify the Council

for TRIPS does not prejudice its status as an eligible importing

member................................................................................................ 17

3. Maru has not opted out of using the system as an importer................ 18

B. Killer Flu constitutes a national emergency in Maru. ............................... 18

1. Killer Flu is included as an “other epidemic” under the Declaration. 18

2. Even if Killer Flu is not a qualifying disease, Maru has the right to

unilaterally determine that it faces a national emergency................... 20

3. Even if Maru does not face a national emergency, the Declaration

and Decision still apply....................................................................... 20

C. Maru lacks sufficient manufacturing capacity to produce Miracle Cure.. 20

1. Maru can qualify as lacking sufficient manufacturing capacity

notwithstanding any lack of notification to the Council for TRIPS. .. 20

2. In any event, any breach of Paragraph 2 Decision only breaches a

transparency requirement. ................................................................... 21

3. Alternatively, the requirement for demonstrating insufficient

manufacturing capacity is a matter of self-assessment. ...................... 22

4. The requirements of Paragraph 2 do not apply to a LDC member. .... 22

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D. There is no obligation to negotiate with GHC-Maru for importation of

Miracle Cure. ............................................................................................ 22

E. Maru has acted reasonably in preventing re-exportation. ......................... 23

IV. NO REMEDIES ARE APPLICABLE AS THERE HAS BEEN NO BREACH OF TRIPS. ......... 23 There has been no breach of the rights of GHC as Maru has fully complied

with its TRIPS obligations. Therefore, there is no remedy that can be

awarded to GHC by this Tribunal. In particular, the following remedies

are not applicable: ..................................................................................... 23

A. Maru is not obliged to grant an interim or permanent injunction under

Article 44.1................................................................................................ 23

B. GHC has no right to compensation or damages above those already

awarded. .................................................................................................... 24

1. Maru has the right to determine adequate compensation to GHC if

there is a compulsory licence under Article 44.2................................ 24

2. If there is no compulsory licence, Maru has discretion to determine

compensation to GHC under Article 44.2........................................... 24

C. No recovery of damages under Article 45 of TRIPS ................................ 25

1. Article 45.1 GHC may not recover compensation for its injury ......... 25

2. Under Article 45.2 GHC may not recover expenses as this is

optional................................................................................................ 25

D. To remove the goods from circulation or destroy them would fail the

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proportionality test contained in Article 46. ............................................. 26

E. GHC is bound under TRIPS to indemnify the Respondent. ..................... 26

CONCLUSION AND PRAYER FOR RELIEF ............................................................................. 28

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INDEX OF AUTHORITIES

International Treaties

International Law Commission, Responsibility of States for Internationally Wrongful Acts,

UNGAOR, 56th Sess., Supp.No. 10, UN Doc. A/56/10 (2001) ............................................1

Marrakesh Agreement Establishing the World Trade Organization (15 April 1994), 1867

UNTS 3, Article IX:2 ....................................................................................................16, 19

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

Agreement .............................................................................................................................5

Understanding on Rules and Procedures Governing the Settlement of Disputes (15 April

1994), Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Legal

Instruments, Results of the Uruguay Round, 33 I.L.M. 1125 (1994) .............................1, 10

Vienna Convention on the Law of Treaties art. 31, May 23, 1969, U.N. Doc.

A/CONF.39/27A .....................................................................................................16, 19, 21

UN Resolutions and Documents

Bangalore Principles of Judicial Conduct 2002, Article 1.1, <

http://www.unodc.org/pdf/crime/corruption/judicial_group/Bangalore_principles.pdf>.....9

WTO Appellate Body Reports

Brazil-Retreaded Tyres, Appellate Body Report, WT/DS332/AB/R (17 December 2007) ....15

WTO Panel Reports

Argentina-Safeguard Measures on Imports of Footwear, Appellate Body Report,

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WT/DS121/AB/R (12 January 2000) ....................................................................................3

Canada-Patent Protection of Pharmaceutical Products, Panel Report, WT/DS114/R (17

March 2000) ........................................................................................................................13

China – IP Rights, Panel Report ................................................................................................2

European Communities-Protection of Trademarks and Geographical Indications for

Agricultural Products and Foodstuffs, Panel Report, WT/DS174/R (15 March 2005)........3

Korea—Measures Affecting Government Procurement, Panel Report, WTO Doc.

WT/DS163/R (19 June 2000)................................................................................................1

United States - Sections 301-310 of the Trade Act of 1974, WT/DS152/R, Panel Report (27

January 2000), DSR 2000:II, 815..........................................................................................7

US-Section 211 Appropriations Act of 1998, Panel Report, WT/DS176/R (6 August 2001)....2

WTO and other documents

General Council, “Minutes of Meeting Held in the Centre William Rappard on 25, 26 and 30

August 2003”, WT/GC/M/82 [hereinafter Chair’s Statement”] ...................................19, 22

Philippines statement at TRIPS council (28 August 2003) [8]

<http://www.cptech.org/ip/wto/p6/philippines08282003.html>...................................22, 24

UNCTAD-ICTSD, Resource Book on TRIPS and Development: An authoritative and

practical guide to the TRIPS Agreement,

<http://www.iprsonline.org/unctadictsd/docs/RB_2.17-2.26_Patents_update.pdf>.6, 7, 8, 9

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Yu, Peter K., The International Enclosure Movement, 82 Ind LJ (2007), 827........................22

National Court Cases

Caperton et al v A T Massey Coal Co. et al, 556 U. S. Reports (2009) ....................................8

Continental Paper Bag Co. v E. Paper Bag Co. 210 U.S. 405, 419 (1908). ...........................11

eBay Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006)........................................................24

Festo Corp. v Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S.722, 734 (2002) .................11

Improver Corp v Remington Consumer Products Ltd [1990] FSR 181 ............................10, 12

Lawal v Northern Spirit [2003] UKHL 35.................................................................................8

Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1372-75, 30 U.S.P.Q.2d 1621,

1622-26 (Fed. Cir. 1994).....................................................................................................10

Opinion of the Comptroller General of the United States, 159 U.S.P.Q. 298, 301 (1968) .....10

Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1033, 34 U.S.P.Q.2d 1444, 1448

(Fed. Cir. 1995). ..................................................................................................................10

Pinochet (No 2) [2000] 1 AC 119..............................................................................................8

Warner-Jenkinson Co. v Hilton Davis Chem. Co., 520 U.S. 17, 39-40 (1997) .......................11

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Books

Correa, Carlos, Trade Related Aspects of Intellectual Property Rights: A Commentary on the

TRIPS Agreement (Oxford, 2007 ..............................................................................4, 24, 25

De Carvalho, Nuno Pires, The TRIPS Regime of Patent Rights (The Hague, 2005) .............1, 7

Grubb, Philip, Patents for Chemicals, Pharmaceuticals and Biotechnology, 4th ed. (Oxford,

2004)....................................................................................................................................11

Hobér, Kaj, State Responsibility and Attribution, in Muchlinski, Peter et al, eds., The Oxford

Handbook of International Investment Law (Oxford, 2008), 941-2; Noble Ventures, Inc. v

Romania, Award, ICSID Case No. ARB/01/11, (12 October 2005).....................................1

Journal Articles

Abbott, Frederick, The WTO Medicines Decision: World Pharmaceutical Trade and the

Protection of Public Health, 99 Am J Intl L (2005) 317 ..............................................19, 21

Bender, Gretchen Ann, “Clash of the Titans: The Territoriality of Patent Law vs the European

Union”, 40 IDEA 49 (2000), at

<http://www.ipmall.org/hosted_resources/IDEA/40_IDEA/40-1_IDEA_49_Bender.pdf>

.............................................................................................................................................10

Bloche, M., WTO Deference to National Health Policy: Toward an Interpretive Principle, 5 J

Intl Econ L (2002) ...............................................................................................................16

Nottage, Hunter and Thomas Sebastian, “Giving Legal Effect to the Results of WTO Trade16

Pauwelyn, Joost, "The Role of Public International Law in the WTO: How Far Can We Go?",

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95 AJIL 535 (2001) ...............................................................................................................1

Rovira, Joan “Creating and Promoting Domestic Drug Manufacturing Capacities: A Solution

for Developing Countries”, Negotiating Health .................................................................17

Sarnoff, Joshua, "Abolishing the Doctrine of Equivalents and Claiming the Future After

Festo", Berkeley Technology Law Journal, Vol. 19, No. 4, Fall 2004, SSRN

<http://ssrn.com/abstract=586101> (last accessed 6 September 2010) ..............................11

Shanker, Daya, “Brazil, the Pharmaceutical Industry, and the WTO”, (2002) 5:1 J. of World

Int. Prop. 53.........................................................................................................................15

Sykes, Alan, “TRIPS, Pharmaceuticals, Developing Countries, and the Doha Solution,” 3 Chi

J Intl L (2002) 47.................................................................................................................16

Vandoren, Paul and JC Van Eeckhaute, “The WTO Decision on Paragraph 6 of the Doha

Declaration on the TRIPS Agreement and Public Health – Making it Work”, J World Intell

Prop (2003) .............................................................................................................17, 18, 22

Yu, Peter, “The Objectives and Principles of the TRIPS Agreement”, Houston Law Review,

Vol. 46 (2009), 797-1046......................................................................................................2

Miscellaneous

Bermudez, Jorge, Maria Auxiliadora Oliveira and Gabriela Costa Chaves, “Intellectual

Property in the Context of the WTO TRIPS Agreement: What Is at Stake?”, Intellectual

Property in the Context of the WTO Trips Agreement: Challenges for Public Health (Jorge

AZ Bermudez and Maria Auxiliadora Oliveira (eds.) 2004

<http://www.who.int/intellectualproperty/submissions/Tripsingles%20nova%2Oversao%2

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02005.pdf> ..........................................................................................................................22

Chen, Feng-Ying et al, “Pharmaceutical Compositions and Dosage Forms for Administration

of Hydrophobic Drugs,” US Patent Application Number 201000136105 (6 March 2010),

<http://www.faqs.org/patents/app/20100136105#ixzz0ygFa0OLp>..................................11

Correa, Carlos, Implementation of the WTO General Council Decision on paragraph 6 of the

Doha Declaration on the TRIPS Agreement and Public Health (Geneva, 2004),

<http://www.who.int/medicines/areas/policy/WTO_DOHA_DecisionPara6final.pdf>

..................................................................................................................................... passim

Kaplan, Warren, and Richard Laing, “Local Production of Pharmaceuticals: Industrial Policy

and Access to Medicines”, HNP Discussion Paper, (January 2005),

<http://www.who.int/medicines/technical_briefing/tbs/KaplanLocalProductionFinal5b15d.

pdf> .....................................................................................................................................17

Love, James, Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical

Technologies, Consumer Project on Technology, Health Economics and Drugs TCM

Series No. 18, WHO/TCM/2005.1....................................................................................6, 7

Mitta, Manoj, "Judges skirt global norms on conflict of interest", The Times of India (22

October 2009), < http://timesofindia.indiatimes.com/india/Judges-skirt-global-norms-on-

conflict-of-interest/articleshow/5146996.cms>.....................................................................9

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STATEMENT OF JURISDICTION

Good Health Company (“GHC”) and the Director of Intellectual Property Department of the

State of Maru jointly submit the present dispute before the International Court of Arbitration,

New Delhi, pursuant to Article 25 of the Understanding on Rules and Procedures Governing

the Settlement of Disputes of the WTO (“DSU”). The parties to this dispute shall accept the

judgment of this Arbitral Tribunal as final and binding and shall execute it in good faith in its

entirety.

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QUESTIONS PRESENTED

1. 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.

2. Whether the failure to recognise any infringement beyond the literal terms of the

patent violates Article 28 of TRIPS.

3. Whether the actions of the Intellectual Property Department of Maru were valid and

justifiable as per the Declaration on the TRIPS Agreement and Public Health (“Doha

Declaration”, adopted on 14 November 2001) and the Implementation of Paragraph 6

of the Doha Declaration (Decision of 30 August 2003).

4. What remedies should be awarded to GHC/GHC-Maru if the actions of the

Intellectual Property Department of Maru are not justified under (1) and/or (2) and/or

(3).

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STATEMENT OF FACTS

Background of Miracle Cure

The drug Miracle Cure is effective against many types of animal and bird flu. The Good

Health Company (GHC), based in Hori, is one of the largest pharmaceutical companies in the

world and patented the Miracle Cure in Maru on January 5, 2010. The validity and ownership

of the patent are not in dispute.

GHC’s Presence in Maru

In 2009 GHC agreed to build a pharmaceutical company with a research arm for developing

new drugs in Maru. The GHC Chairman stated: “…we promise to the people of Maru that

GHC will help develop the economy of Maru, provide jobs and do everything for the people

of Maru.” GHC used a Maruvian target group to prove Miracle Cure’s success as a

breakthrough in medical science.

The Outbreak of Killer Flu

In 2009 Killer Flu struck one of Maru’s provinces, a main tourist destination. The first victim

was a child of 7 who died within a day. Every day more Maruvians became sick. There was

an exodus of tourists from Maru and WHO issued a travel advisory which affected the

economy of Maru significantly. Some Miracle Cure remained in Maru City Hospital and

were administered to patients with Killer Flu and they showed signs of recovery. The Health

Minister of Maru instructed doctors to use Miracle Cure to stop the spread of Killer Flu and

instructed the Director of Maru City Hospital to ask GHC-Maru to produce more.

The Spread of Killer Flu and GHC’s Response

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One tourist flown out of Maru spread killer flu to other countries and neighbours of Maru

began to have cases of “killer flu”. Despite these obvious health benefits and the national

emergency faced by Maru, the Chairman of GHC made a speech saying that “Killer flu in

Maru and around the world has provided us an opportunity to make huge profits by selling

Miracle Cure at a higher price….Let’s make the most of it.” He encouraged the company to

start its factory in Maru and expand sales to the rest of the world when feasible.

Production of Miracle Cure in Porta

The Minister of Heath, fearing that GCH-Maru would be unable to supply the sufficient

quantities of Miracle Cure for the ailing population, asked the Director of the IP Department

of Maru to invite Fizer Pharma, another pharmaceutical to manufacture Miracle Cure at its

base in neighbouring Porta for export to Maru. IP Director of Porta agreed not to interfere

with the manufacture of the Miracle Cure in Porta. The Director of the Department in Maru

directed the GHC-Maru facility to supply “know-how” to the Fizer facility. The Manager of

GHC-Maru gave relevant technical information to Fizer. Miracle Cure began production in

Fizer-Porta. GHC agreed with the IP Department of Maru to receive 20 per vaccine – the

estimated cost of production by GHC in Hori for Miracle Cure – for vaccines produced by

Fizer in Porta. Fizer-Porta agreed to reimburse the IP Department for its payments to GHC.

The Decisions of the Maruvian IP Department

GHC-Maru filed a formal protest with the IP Department Director against these agreements.

The Director said he had the power to invite other companies to manufacture essential

medicines for the public purpose. GHC then sought to enforce the patent and brought an

infringement action against the Government of Maru. The court agreed with the IP

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Department that the 20 per unit compensation was “more than fair”. GHC requested another

hearing, which was denied by the Presiding Judge.

BLP Imports Sure Cure to deal with Killer Flu

Following this, the Director of IP anticipated that GHC would take other steps to attempt to

prevent the people of Maru having access to the life-saving drug. He contacted Better Life

Pharmaceutical (BLP) from Ulka requesting it to distribute its drug Sure Cure in Maru. The

Director agreed to pay BLP US$50 per each unit of Sure Cure delivered. When this began,

GHC sought a preliminary injunction in the IP Court and wanted an immediate hearing. The

IP Court, after reviewing the documents, denied the request stating: “Sure Cure does not

literally infringe Claim 1 of the Patent-in-suit….The Courts of Maru have never recognised

any form of non-literal infringement”. A subsequent writ of appeal was denied by the

Constitutional Court of Maru. At the request of both Commerce Ministers of Hori and Maru

the two parties – GCH/GHC-Maru and IP Dept of Maru – referred the mater for private

arbitration.

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SUMMARY OF PLEADINGS

The actions of the Intellectual Property Department of Maru were valid and justifiable

under TRIPS in general and Article 31 TRIPS in particular. The issuance of a compulsory

licence for manufacture and importation of Miracle Cure from Fizer-Porta is wholly

consistent with the provisions of Parts I and II TRIPS. Specifically, Maru's issuance of the

compulsory licence does not breach Articles 8.1, 28.1, and 31 TRIPS. Where there has been a

breach, there is a valid legal defence under the Doha Declaration and Decision.

The prior authorisation requirement of Article 31(b) does not apply to Maru because

there is a national emergency in Maru and in any event Maru can waive Article 31(b) for

“crown use”. The scope of the compulsory licence is sufficiently limited and complies with

Article 31(c) TRIPS. Maru’s obligation to comply with the domestic supply requirement has

been waived and the compensation offered by Maru to GHC is adequate. The review of the

patent authorisation and remuneration decision is consistent with Article 31(i) and (j) TRIPS.

Maru’s failure to recognise any infringement beyond the literal terms of the patent is

consistent with Article 28 TRIPS. The courts in Maru have never recognised any form of

non-literal infringement and GHC failed to encompass a known equivalent in its drafting of

the patent. Alternatively, Article 30 or Article 31 TRIPS provides valid exceptions to the

infringement of the patent.

The actions of the Intellectual Property Department of Maru were valid and justifiable

as per the Declaration on the TRIPS Agreement and Public Health (adopted on 14 November

2001) and Implementation of Paragraph 6 of the Doha Declaration on TRIPS and Public

Health (Decision of 30 August 2003). The Doha Declaration has interpretive weight

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and the Decision is legally effective in defending Maru against any allegations of a breach of

article 31 or TRIPS in general. The waiver for compliance with TRIPS contained in

Paragraph 2 of the Decision is available because Maru qualifies as an “Eligible Importing

Member (“EIM”): it is a Least Developed Country (“LDC”) , Killer Flu constitutes a national

emergency covered by the Decision and Declaration, and Maru lacks sufficient

manufacturing capacity for Miracle Cure. Maru has acted reasonably on a “best Endeavour”

basis in preventing re-exportation of Miracle Cure under the compulsory licence.

Since Maru has fully complied with its TRIPS obligations, there is no remedy that can

be awarded to GHC by this Tribunal. In particular, the following remedies are not applicable:

interim or permanent injunctions, damages or to remove the goods from circulation. GHC is

bound to indemnify the respondent for its legal action.

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PLEADINGS

I. THE ACTIONS OF THE INTELLECTUAL PROPERTY DEPARTMENT OF MARU WERE VALID AND JUSTIFIABLE UNDER TRIPS IN GENERAL AND ARTICLE 31 TRIPS IN PARTICULAR.

A. The actions of the Maru IP Department are consistent with Article 1.1 TRIPS.

As a member of the WTO,1 Maru must give effect to the provisions of the TRIPS

Agreement, as specified in Article 1.1, first sentence. As an organ of the State of Maru, the IP

Department's actions are attributable to Maru,2 triggering State responsibility. The ILC

Articles are widely regarded as a codification of customary international law3 and are directly

applicable to the WTO treaties.4

Maru does not dispute the validity and ownership of the patent but acted under a

compulsory licence to import the drug from Porta. The Maru IP Department authorised Fizer

Pharma to manufacture the Miracle Cure at Fizer's manufacturing base in Porta.5 This

constitutes a compulsory licence, which is defined as an authorisation for a third party,

regardless of the patent owner's will, to perform acts that would legally require authorisation

from the patentee.6

1 Compromis, [21]. 2 International Law Commission, Responsibility of States for Internationally Wrongful Acts, UNGAOR, 56th Sess., Supp.No. 10, UN Doc. A/56/10 (2001), Article 5. 3 Hobér, Kaj, State Responsibility and Attribution, in Muchlinski, Peter et al, eds., The Oxford Handbook of International Investment Law (Oxford, 2008), 941-2; Noble Ventures, Inc. v Romania, Award, ICSID Case No. ARB/01/11, (12 October 2005), 69. 4 Understanding on Rules and Procedures Governing the Settlement of Disputes (15 April 1994), Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Legal Instruments, Results of the Uruguay Round, 33 I.L.M. 1125 (1994), Article 3.2; Korea—Measures Affecting Government Procurement, Panel Report, WTO Doc. WT/DS163/R (19 June 2000), [7.96]; Pauwelyn, Joost, "The Role of Public International Law in the WTO: How Far Can We Go?", 95 AJIL 535 (2001), 543. 5 Compromis, [13]. 6 De Carvalho, Nuno Pires, The TRIPS Regime of Patent Rights (The Hague, 2005), 31.1. [hereinafter De Carvalho]

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Art. 1.1 TRIPS, first sentence, states that Members shall give effect to the provisions

of the Agreement, meaning that the TRIPS provisions are obligations where stated.7 Members

must implement the TRIPS provisions in accordance with the principle of good faith8

enshrined in Article 7 TRIPS, which states that the protection and enforcement of intellectual

property rights should contribute "to a balance of rights and obligations." Therefore,

Members must not enact measures that would negate such rights and obligations.9 Maru has

not negated the rights of GHC, merely held them in suspension. It has offered compensation

to the company during a time of crisis.10 Maru has acted in good faith in importing essential

medicines to meet a national health crisis. It has balanced its rights and the rights of its

citizens adequately with the rights of GHC, the patent holder.

The issuance of a compulsory licence for manufacture and importation of Miracle

Cure from Fizer-Porta is wholly consistent with the provisions of Parts I and II TRIPS.

Specifically, Maru's issuance of the compulsory licence does not breach Articles 8.1, 28.1,

and 31 TRIPS. Where there has been a breach, there is a valid legal defence under the Doha

Declaration and Decision (see Section III).

B. The actions of the Maru IP Department are consistent with Article 8.1 TRIPS.

Article 8.1, which provides the normative principles of the TRIPS Agreement,11

establishes certain conditions for public policy on IPRS. The measures must be taken by

means of laws and regulations; must be necessary to protect public health and nutrition and to

7 China – IP Rights, Panel Report, [7.513]. 8 US-Section 211 Appropriations Act of 1998, Panel Report, WT/DS176/R (6 August 2001), [8.57] [hereinafter US-Section 211]. 9 US-Section 211, [8.57]. 10 Compromis, [14]. 11 Yu, Peter, “The Objectives and Principles of the TRIPS Agreement”, Houston Law Review, Vol. 46 (2009), 797-1046, 1008.

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promote the public interest in sectors of vital importance to their socio-economic and

technological development; and must be consistent with the provisions of TRIPS.

The actions of the Maru IP Department were undertaken through laws or regulations.

The IP Department’s authorisation for the disclosure by GHC-Maru of the Miracle Cure

know-how to Fizer-Porta was within the laws of Maru.12

Maru’s actions were necessary to protect public health; Miracle Cure was the only

drug available that was capable of at least controlling Killer Flu and reducing its symptoms.13

As the supplies from the clinical trials were running short, procuring a viable alternative

supply of the drug was necessary to stop the spread of the flu and reduce the panic among

citizens and tourists.

Although the term “necessary” in Article 8.1 is not exactly analogous to the necessity

exception under Article XX(b) GATT,14 the two provisions should be interpreted

harmoniously, since the WTO Agreements are part of an “inseparable package”.15 Thus,

Maru’s actions were consistent with both TRIPS in general and the specific provisions

relating to patents.

C. There is a valid exception under Article 31 TRIPS for any infringement of the patent.

Article 28.1(a) TRIPS confers on patent owners the exclusive right to prevent third

parties from "making, using, offering for sale, selling, or importing" the product that is the

subject of the patent without the right holder’s consent. GHC, the patent owner of Miracle

12 Clarifications, [5]. 13 Compromis, [9]. 14 European Communities-Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Panel Report, WT/DS174/R (15 March 2005), [7.114]. 15 Argentina-Safeguard Measures on Imports of Footwear, Appellate Body Report, WT/DS121/AB/R (12 January 2000), [515].

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Cure, holds the exclusive right to manufacture and distribute the drug.16 The Maru IP

Department decided to allow manufacture of Miracle Cure in Porta for import to Maru.17 The

IP Department concedes that this is a breach of Article 28.1 TRIPS, but would point the

Tribunal to the exception to Article 28 contained in Article 31 TRIPS.

Article 31 TRIPS provides for an exception to the rights granted to the patent owner

in Article 28. Although the TRIPS Agreement does not explicitly use the expression

"compulsory licence", Article 31 specifically deals with circumstances surrounding such

grants.18 Article 31 applies when a patented product or process is used by the "government or

third parties authorised by the government", in this case Fizer, which was authorised by Maru

to do so. Maru's actions are consistent with its obligations under Article 31(b), (c), (f), (h), (i)

and (j) TRIPS. Where there has been a breach Maru has a valid exception and waiver under

the Doha Declaration.

1. The prior authorisation requirement of Article 31(b) does not apply to Maru.

Article 31(b) TRIPS states that the government or authorised third parties should

make efforts to obtain permission from the right holder before the compulsory licence is

issued. While the IP Department offered GHC compensation after the issuance of the

compulsory licence19, it has done so in good faith, offering a fair price for any Miracle Cure

imported by Fizer-Porta.

16 Compromis, [6]. 17 Compromis, [13]. 18 Correa, Carlos, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPS Agreement (Oxford, 2007, 313. [Hereinafter Correa Commentary] 19 Compromis, [14].

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a. There is a national emergency in Maru. The prior authorisation requirement of Article 31(b) can be waived in case of a

"national emergency" or "other circumstances of extreme urgency".20 At the moment, Maru

faces a serious public health crisis. There are many people already infected by Killer Flu and

it has resulted in death.21 The presence of the Killer Flu is a threat to the life of the nation of

Maru since the country relies on its tourism,22 which has suffered since the outbreak.

It is unlikely that GHC-Maru yet has its factory running. The only Miracle Cure left in

Maru when the flu broke out was some samples from the clinical trials held in Maru.23

Therefore, there is a clear national emergency and it may well be that any discussions with

GHC-Maru might be unfruitful, seeing as their manufacturing capacity in the country is not

yet proven. While GHC-Maru could change the landscape of Maru one day, by employing up

to 50,000 people,24 for the moment the predominant industry for employment is tourism and

there is a national emergency.

b. In any event, Maru may waive Article 31(b) for “crown use”. Even if there is no national emergency that complies with the internal waiver set out

in Article 31(b), there is still no need to consult with GHC prior to importation. Using the

Doha Declaration and Decision, Maru may waive the Article 31(b) requirements for

“government use” or “crown use” of Miracle Cure (see Section III).

2. Maru’s obligation to comply with the domestic supply requirement has been waived.

Article 31(f) TRIPS stipulates that use of the patent shall be authorised predominantly

for the supply of the authorising Member's domestic market. Maru concedes that importation

20 Trade Related Aspects of Intellectual Property Rights, Annex 1C to the Marrakesh Agreement, Article 31(b) [hereinafter TRIPS]. 21 Compromis, [7-8]. 22 Compromis, [1]. 23 Compromis, [9]. 24 Compromis, [4].

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of Miracle Cure is prima facie inconsistent with Article 31(f). It meets the conditions of the

waiver from Article 31(f) in Paragraph 2 of the Implementation of Paragraph 6 of the Doha

Declaration (the “Decision”), which waives the obligations of an exporting Member under

Article 31(f) TRIPS with respect to the grant by it of a compulsory licence for importation to

an EIM. The main arguments relating to the Decision are in Section III below.

3. The compensation offered by Maru to GHC is adequate.

Maru has offered adequate compensation to GHC pursuant to Article 31(h) TRIPS.

"Adequate remuneration" is not defined in TRIPS. Rather, WTO Members are free to

determine the appropriate method of implementing the TRIPS, within their own legal system

and practice,25 and this extends to standards for what is considered “adequate”

remuneration.26

Although what constitutes "adequate" compensation depends on the circumstances of

each case,27 the term "adequate" is generally used to indicate something that is sufficient, or

meets minimum standards, but nothing more than that.28 The US$20 per vaccine offered by

Maru,29 which reflects the estimated cost of production by GHC in Hori, meets minimum

standards, as it ensures that GHC will not have to sell Miracle Cure below cost.

The amount of remuneration to companies will generally be lower in countries with a

greater need of the product, taking into account their economic status and public policy or

health concerns. The WHO Remuneration Guidelines provide useful guidance on this matter

by listing national royalty rates as ranging between 0.02% and 4%, with the lower figure

25 TRIPS, Article 1(1). 26 Love, James, Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies, Consumer Project on Technology, Health Economics and Drugs TCM Series No. 18, WHO/TCM/2005.1, 5. [hereinafter Love]. 27 TRIPS, Article 31(h). 28 UNCTAD-ICTSD Resource Book, 475. 29 Compromis, [14].

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applicable to least-developed countries.30 Although Maru is paying for the cost of production

of the drug rather than royalties, there is a strong case that in developing countries in dire

need of medicines, patent owners should not expect to be compensated at full market rate.31

Moreover, there is ample evidence that in order to push for increased compensation,

patent owners make unsupported claims regarding R&D investment costs and overstate the

novelty or efficacy of inventions.32 In this case, GHC plans to explicitly inflate the costs of

Miracle Cure when faced with inelastic demand during a national and international public

health crisis. The Chairman stated that rather than seeking to sell the Miracle Cure at its

regular market rate, GHC would meet increase in demand by increasing prices for the

essential medicine.33 The Tribunal is respectfully requested to apply the customary

international law principle that Maru has set the compensation rate in good faith,34 and that

GHC bears the burden of proving that the US$20 per vaccine is inadequate.

4. The review of the patent authorisation and remuneration decisions is consistent with Article 31(i) and (j) TRIPS.

Article 31(i) and (j) TRIPS set out Members' obligations to grant judicial review or

other independent review proceedings regarding the legal validity of decisions relating to the

authorisation and remuneration of compulsory licences.35

Maru has complied with its obligations to grant GHC an independent review of the

authorisation and remuneration decisions surrounding the compulsory licence against Patent

30 Love, 55. 31 De Carvalho, 31.48. 32 Love, 55. 33 Compromis, [12]. 34 United States - Sections 301-310 of the Trade Act of 1974, WT/DS152/R, Panel Report (27 January 2000), DSR 2000:II, 815, [4.194]. 35 TRIPS, Articles 31(i) and (j).

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9,876,543. Following GHC's formal protest against the issuance of the compulsory licence,

GHC brought an infringement action against the Government of Maru.36

The Intellectual Property Court, the judicial body hearing the case, qualifies as a

"court" under Article 31(i)-(j) TRIPS. Many legal systems employ specialised courts for

particular subject matters, which includes patent courts.37

The fact that GHC learned after the hearing that the presiding judge of the IP Court

was the classmate of the Chairman of Fizer at law school38 in no way compromises the

independence of the review. The term "independent" in Article 31(i)-(j) has been interpreted

to mean that the reviewer should be capable of modifying or reversing the initial decision

without threat of political or economic reprisal.39 Merely being a former classmate of the

Fizer chairman many years ago would not be likely to subject the judge to such a threat or

prejudice his independence.

Maru is under no obligation to disqualify the judge or reinstate proceedings. Since the

law of Maru is in pari materia with Indian common law,40 the following jurisprudence is

persuasive for this Tribunal as they provide useful examples of state practice in common law

countries such as the US and UK. Under English law, the test for whether a judge should be

disqualified from the hearing is that the court must ascertain the circumstances giving rise to

bias, then ask whether a “fair-minded and informed observer” would conclude that there was

a “real possibility” of bias.41 In Caperton v Massey42 the US Supreme Court held that the

appearance of a conflict of interest by the judge in a case constituted a threat to the plaintiff's

36 Compromis, [16]. 37 UNCTAD-ICTSD Resource Book, 478. 38 Compromis, [16]. 39 UNCTAD-ICTSD Resource Book, 478. 40 Clarifications, [4]. 41 Lawal v Northern Spirit [2003] UKHL 35; Pinochet (No 2) [2000] 1 AC 119. 42 Caperton et al v A T Massey Coal Co. et al, 556 U. S. Reports (2009).

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right to due process under the US Constitution since the judge had been the recipient of

campaign contributions from the defendant.

The UN-sponsored Bangalore Principles of Judicial Conduct, adopted in 2002 by

judges worldwide, including in India,43 require a judge to be "free of any extraneous

influences, inducements, pressures, threats or interference, from any quarter or for any

reason".44 Regardless of the fact that they once attended school together there is no evidence

whatsoever of “pressures, inducements, threats or interference” on the Presiding Judge and

emanating from the Fizer-Porta Chairman. There is no indication that there was any bias in

the present case, and the judge was under no obligation to recuse himself.

II. MARU’S FAILURE TO RECOGNISE ANY INFRINGEMENT BEYOND THE LITERAL TERMS OF THE PATENT IS CONSISTENT WITH ARTICLE 28 TRIPS.

A. Maru's failure to recognise patent infringement by BLP is consistent with Article 28.1 TRIPS.

Maru has acted in conformity with its obligations to GHC under Article 28.1(a)

TRIPS. Any exclusive rights that GHC enjoys under the Miracle Cure patent in Maru of

making, using, selling or importing the product do not extend to the scope of another patent,

in this case rival manufacturer BLP’s Sure Cure, which has been found by the Maruvian

courts not to infringe the GHC patent.45

Although Sure Cure has been held to have infringed the GHC patent in Hori, the case

was dismissed in Maru on the ground that the courts in Maru have never recognised any form

of non-literal infringement.46 The principle of territoriality states that a patent granted by a

43 Mitta, Manoj, "Judges skirt global norms on conflict of interest", The Times of India (22 October 2009), < http://timesofindia.indiatimes.com/india/Judges-skirt-global-norms-on-conflict-of-interest/articleshow/5146996.cms> (last accessed 7 September 2010). 44Bangalore Principles of Judicial Conduct 2002, Article 1.1, < http://www.unodc.org/pdf/crime/corruption/judicial_group/Bangalore_principles.pdf> (last accessed 7 September 2010). 45 Compromis, [18]. 46 Compromis, [18].

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country only has effect in that country.47 A patent is granted by a sovereign power and its

rights, privileges and obligations begin and end with the country that issues it.48 Thus, it is the

courts of Maru, not Hori, that have the power to interpret whether the GHC patent in Maru

has been infringed.49

Maru accepts that this Tribunal’s jurisdiction is not determined by reference to

national law but based on that conferred on it by the application of the Rules of the Dispute

Settlement Understanding,50 which applies WTO law. In the absence of WTO or international

law jurisprudence on the doctrine of equivalents, the Tribunal is requested to look to treaties

and conventions as well as cases from various jurisdictions to determine that there is no

recognised international “doctrine of equivalents”.

The Tribunal should instead look to the wording of the patent claim itself (B) as well

as to the objective standards for determining factual equivalency for a determination of an

Article 28 TRIPS violation, including the Improver51 questions of claim interpretation (C).

Even if the Tribunal finds that Maru has violated its obligations under Article 28.1 TRIPS,

Maru can nevertheless invoke the exceptions under Article 30 or 31 TRIPS (D).

B. GHC should not be excused for failing to encompass a readily known equivalent in drafting its claim language.

The doctrine of equivalents states that a product or process that does not literally

infringe upon a patent's express terms may be found to infringe if there is "equivalence"

between the elements of the accused product or process (the “variant”) and the claimed

47 Bender, Gretchen Ann, “Clash of the Titans: The Territoriality of Patent Law vs the European Union”, 40 IDEA 49 (2000), at <http://www.ipmall.org/hosted_resources/IDEA/40_IDEA/40-1_IDEA_49_Bender.pdf>; Opinion of the Comptroller General of the United States, 159 U.S.P.Q. 298, 301 (1968). 48Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1033, 34 U.S.P.Q.2d 1444, 1448 (Fed. Cir. 1995). 49 Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1372-75, 30 U.S.P.Q.2d 1621, 1622-26 (Fed. Cir. 1994). 50 Compromis, [20]. 51 Improver Corp v Remington Consumer Products Ltd [1990] FSR 181 [hereinafter Improver Corp].

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elements of the patented invention.52 Thus, the patent holder's exclusive right is extended to

additional products considered factually equivalent to the embodiments of the construed

language of the claim.53 The "accused product" is Sure Cure, and the element at issue is corn

oil, which corresponds to palm oil in Claim 1(b) of GHC's patent.54

The doctrine of equivalents has been criticised for its tendency to extend a patent’s

monopoly to include claims that are too broad or even unimagined by the patent owner.

Rather, a patent’s claims should define a patent’s scope. Claims, which are formal, written

descriptions specifying the scope of the invention for which patent protection is sought,55

mark the boundaries of the invention.56 The patentee, as author of the claim language, may be

expected to draft claims encompassing readily known equivalents.57

Claim 1(b) of the Miracle Cure patent encompasses a vaccine comprising, inter alia,

of “a delivery agent such as palm oil, mixed with the active ingredient”.58 The prudent drafter

would have anticipated other possible delivery agents with similar properties that are known

in the industry, which includes vegetable oils and other triglycerides59 and included them in

the claim. The meaning of claims must be definite, precise, and unambiguous, and wording

such as “preferably” or “for example” (or “such as” in Claim 1(b)) should not be used.60

52 Warner-Jenkinson Co. v Hilton Davis Chem. Co., 520 U.S. 17, 39-40 (1997). [hereinafter Warner-Jenkinson]. 53 Sarnoff, Joshua, "Abolishing the Doctrine of Equivalents and Claiming the Future After Festo", Berkeley Technology Law Journal, Vol. 19, No. 4, Fall 2004, SSRN <http://ssrn.com/abstract=586101> (last accessed 6 September 2010), 1165 [hereinafter Sarnoff]. 54 Compromis, Appendix A. 55 Sarnoff, 1160. 56 Continental Paper Bag Co. v E. Paper Bag Co. 210 U.S. 405, 419 (1908). 57 Festo Corp. v Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S.722, 734 (2002). 58 Compromis, Appendix A. 59 Chen, Feng-Ying et al, “Pharmaceutical Compositions and Dosage Forms for Administration of Hydrophobic Drugs,” US Patent Application Number 201000136105 (6 March 2010), <http://www.faqs.org/patents/app/20100136105#ixzz0ygFa0OLp> (last accessed 8 September 2010). 60 Grubb, Philip, Patents for Chemicals, Pharmaceuticals and Biotechnology, 4th ed. (Oxford, 2004), 339.

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C. The Improver standard for determining factual equivalency shows that corn oil falls outside the scope of the claim.

The questions for determining equivalency in Improver are a persuasive guide to

claim construction for this Tribunal, regardless of whether or not the doctrine of equivalents

as recognised in the US courts applies. In Improver the court was asked the following key

questions:

(1) Does the variant have a material effect upon the way the invention works? If yes,

the variant is outside the claim. If no?

(2) Would this have been obvious at the date of publication of the patent to a reader

skilled in the art? If no, the variant is outside the claim. If yes?

(3) Would the reader skilled in the art nevertheless have understood from the

language of the claim that the patentee intended that strict compliance with the

primary meaning was an essential requirement of the invention? If yes, the variant

is outside the claim.61

Corn oil is merely a delivery agent,62 so it has no material effect on the way the

invention works. Thus, the answer to (1) is no. Answer (2) is yes, since it is obvious to the

reader skilled in the art that corn oil has no material effect. For question 3, however, a skilled

reader would assume that strict compliance with the primary meaning is an essential

requirement, since Claim1(b) of the Miracle Cure patent states “a delivery agent such as palm

oil”. This implies that it does not include other variants, since the claim drafter did not

explicitly mention any other form of oil to be used. A “yes” answer to (3) would mean that

the variant was outside the claim.

61 Improver Corp, 189. 62 Compromis, Appendix A.

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This approach was cited with approval in Kirin-Amgen,63 where the skilled reader

would not have understood the claim as sufficiently general to include gene activation,

instead understanding it to be limited to the expression of an exogenous DNA sequence.

Similarly, a skilled reader would not have understood “palm oil” to be sufficiently general as

to encompass “corn oil”.

The Tribunal is respectfully requested to use the doctrine of equivalents sparingly, so

as not to excuse careless drafters from their mistakes, and look to the above standards for

determining factual equivalency so as not to unnecessarily widen the scope of the patent

claim and hence the owner’s monopoly.

D. Article 30 TRIPS provides a valid exception for the infringement of the patent.

Outside of Article 31, WTO Members are permitted to provide limited exceptions to

the exclusive rights conferred on a patent holder.64 The Article 30 exception to GHC’s Article

28 rights applies in this case. In order to qualify, three criteria must be satisfied: the exception

must be limited (1); the exception must not "unreasonably conflict with a normal exploitation

of the patent" (2); and the exception must not "unreasonably prejudice the legitimate interests

of the patent owner, taking account of the legitimate interests of third parties" (3). All of

these criteria are fulfilled.

1. The exception is limited.

For an exception to be limited, it must only make a small diminution of the rights in

question.65 Sure Cure is a different drug with a different exposure to the Maruvian market.

Even were it held to infringe the patent of Miracle Cure, this exception is limited by the brand

63 Kirin-Amgen v Hoechst Marion Roussel, [2004] UKHL 46. 64 TRIPS, Article 30. 65 Canada-Patent Protection of Pharmaceutical Products, Panel Report, WT/DS114/R (17 March 2000), [7.30] [hereinafter Canada-Pharmaceuticals].

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itself. Maru has done nothing to influence the exclusive right of GHC to make the patented

product Miracle Cure. Thus, the exception makes only a "small diminution" of the patent

rights, which revolve around the brand of Miracle Cure in the Maruvian market.

2. The exception does not conflict with a normal exploitation of the patent.

"Normal exploitation" pertains to the commercial activity that patent holders employ

to extract economic value from the patent, either by selling the product in a market from

which competitors are excluded, or by licensing others to do so or by selling the patent rights

outright.66 Exclusive manufacturing and exporting are within the bounds of "normal

exploitation".67

By declaring the Sure Cure patent valid and allowing the rival drug to be distributed

in Maru, Maru has done nothing to remove the exclusive rights of GHC to produce, sell, and

export Miracle Cure, a different product with different branding, licensing and manufacture.

There is no conflict here to detract from the economic returns anticipated by GHC from the

patent's grant of market exclusivity for Miracle Cure.68 Aside from the compulsory licence

issued to Fizer-Porta (see Section I), which is a legitimate exception in a time of public

emergency, GHC maintains the sole right to manufacture and distribute Miracle Cure in

Maru. The importation of Sure Cure makes no difference to this right.

3. The import of Sure Cure in no way prejudices the legitimate interests of the patent owner.

The importation of Sure Cure in no way prejudices GHC’s legitimate interests.

Although Article 7 TRIPS states that the legitimate interests of parties to the TRIPS

66 Canada-Pharmaceuticals, [7.54]. 67 Canada-Pharmaceuticals, [7.55]. 68 Canada-Pharmaceuticals, [7.55].

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Agreement involve the protection and enforcement of IPRs,69 this is subject to a manner

conducive to social and economic welfare.

“Legitimate interests of third parties” are construed more broadly than purely legal

interests.70 Few interests are more “vital” and “important” than protecting humans from

health risks.71 Thus, the health of the citizens of Maru and the interests of society in

preventing health crises are objectives that cannot be ignored when assessing what constitutes

“prejudice” to the legitimate interests of a patent owner.

E. Alternatively, there is an exception under Article 31 TRIPS.

Article 31 TRIPS allows for exceptions regarding use “other than that allowed under

Article 30”, which means that the two articles are mutually exclusive. Therefore, in the

alternative, Maru argues that the importation of Sure Cure from BLP-Ulka is a legitimate

exception under Article 31. As demonstrated in Section I, Maru submits that there is a

pressing national emergency justifying the IP Director’s request from both Fizer-Porta for

importation of Miracle Cure under a compulsory licence and importation of Sure Cure from

BLP-Ulka. Thus, exceptions contained in the Doha Declaration and Decision to requirements

to conform to Article 31(b), (f), and (h) TRIPS apply equally to the importation of Sure Cure

from BLP-Ulka. This exception is explained in more detail in Section III, which follows.

69 Shanker, Daya, “Brazil, the Pharmaceutical Industry, and the WTO”, (2002) 5:1 J. of World Int. Prop. 53. 70 Canada-Pharmaceuticals, [7.71]. 71 Brazil-Retreaded Tyres, Appellate Body Report, WT/DS332/AB/R (17 December 2007), [144].

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III. THE ACTIONS OF THE MARU IP DEPARTMENT WERE VALID AND JUSTIFIABLE AS PER THE DOHA DECLARATION AND DECISION OF 30 AUGUST 2003.

The Doha Declaration is a legitimate defence as it carries interpretive weight under the

Vienna Convention on the Law of Treaties as either a “subsequent agreement between the

parties regarding the interpretation” of TRIPS or “subsequent practice in the application of

the treaty which establishes the agreement of the parties regarding its interpretation."72

Moreover, the Doha Declaration is “persuasive authority in the interpretation of TRIPS in the

event of a dispute.”73

The Implementation Decision is effective in defending Maru against the allegations of

any breach of Article 31 or TRIPS in general as a “subsequent agreement” under VCLT

Article 31(3)(a),74 a waiver under WTO Agreement Art IX:375, or, alternatively, a binding

“other decision” as per WTO Agreement Art IV:1 and Art IX:1.76

The waiver for compliance with TRIPS contained in Paragraph 2 of the Decision is

available on condition that the country qualifies as an EIM. Maru qualifies as such because it

is a Least Developed Country (“LDC”) (A), Killer Flu constitutes a national emergency

covered by the Decision and Declaration (B), and Maru lacks sufficient manufacturing

capacity for Miracle Cure (C).

A. Maru is a country that qualifies as an Eligible Importing Member.

1. As a Least Developed Country (“LDC”), Maru is an eligible importing member even without authorisation from the WTO.

72 Vienna Convention on the Law of Treaties art. 31, May 23, 1969, U.N. Doc. A/CONF.39/27A, Article 31 [hereinafter VCLT]; Bloche, M., WTO Deference to National Health Policy: Toward an Interpretive Principle, 5 J Intl Econ L (2002) 825, 842. 73 Sykes, Alan, “TRIPS, Pharmaceuticals, Developing Countries, and the Doha Solution,” 3 Chi J Intl L (2002) 47, 54. 74 VCLT. 75 WTO Agreement Article IX – see also Art IX:4. 76 Nottage, Hunter and Thomas Sebastian, “Giving Legal Effect to the Results of WTO Trade Negotiations: An Analysis of the Methods of Changing WTO Law” 9(4) J Intl Econ L (2006) 989, 1003-10.

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While under the Decision Members should make notification to the Council for TRIPS

of their intention to use the system as an importer,77 this is not a requirement for a Least

Developed Country (LDC) and the Decision defines the “eligible importing Member”

(“EIM”) as “any least developed country that is a WTO Member”.

The LDC system is not defined, but the system was meant to support those countries

that do not have an internally competitive pharmaceutical market. It has been suggested that

countries with a competitive pharmaceutical market are those with a GDP greater than

US$100 billion, a population greater than 100 million and a “net positive pharmaceutical

balance of trade”.78

Maru’s gross national income is less than US $520 Million.79 This figure, combined

with Maru’s reliance on tourism80 and service industries rather than foreign investment or

natural resource exploitation, suggests that Maru’s GDP may well be below US$100 billion.

The population of Maru is only half a million citizens81 and no other pharmaceutical

investments beyond GHC-Maru, which may not yet be fully operational, Maru does not have

a “net positive pharmaceutical balance of trade”.82 Maru would qualify as a LDC for the

purposes of the Doha Declaration and Decision and does not need to make notification to the

Council for TRIPS of its intention to be an EIM.

2. Even if Maru is not an LDC, Maru’s failure to notify the Council for TRIPS does not prejudice its status as an eligible importing member.

77 Vandoren, Paul and JC Van Eeckhaute, “The WTO Decision on Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health – Making it Work”, J World Intell Prop (2003),789. [hereinafter Vandoren] 78 Rovira, Joan “Creating and Promoting Domestic Drug Manufacturing Capacities: A Solution for Developing Countries”, Negotiating Health, 234. 79 Compromis, [6]. 80 Compromis, [1]. 81 Compromis, [1]. 82 Kaplan, Warren, and Richard Laing, “Local Production of Pharmaceuticals: Industrial Policy and Access to Medicines”, HNP Discussion Paper, (January 2005), <http://www.who.int/medicines/technical_briefing/tbs/KaplanLocalProductionFinal5b15d.pdf>, 26.

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The Decision applies to “any other [non-LDC] Member that has made a notification to

the Council for TRIPS of its intention to use the system as an importer.” It also requires a

specific notification about the products and quantities that the Member intends to import.83

Even if Maru does not fall into the category of LDC, its failure to notify the Council for

TRIPS does not prejudice its claim. The notifications “are for the sake of transparency and

information only” and “do not amount to authorization requests; Members concerned will not

need to be approved by any WTO body in order to be able to use the system.”84 The Council

for TRIPS and the WTO are not entitled to reject or review a notification.85

Therefore, even if Maru does not qualify for a waiver on notification to the Council on

the basis of LDC status, such notification is a mere formality and can quickly be remedied.

3. Maru has not opted out of using the system as an importer.

Many WTO Members have chosen to opt out of using the system as importers.86 Maru

has not opted out of using the Declaration and Decision.87 This indicates that Maru has

anticipated that it might need to use the Declaration and Decision in a situation such as that

currently facing the country and lends weight to its classification as an EIM.

B. Killer Flu constitutes a national emergency in Maru.

1. Killer Flu is included as an “other epidemic” under the Declaration.

Paragraph 1 of the Doha Declaration recognises “the gravity of the public health

problems afflicting many developing and least developed countries, especially those resulting

83 Vandoren, 789. 84 Correa, Carlos, Implementation of the WTO General Council Decision on paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (Geneva, 2004), <http://www.who.int/medicines/areas/policy/WTO_DOHA_DecisionPara6final.pdf> (last accessed 5 September 2010) [hereinafter Correa Implementation]. 85 Correa Implementation, 15. 86 Correa Implementation,11-12. 87 General Council, “Minutes of Meeting Held in the Centre William Rappard on 25, 26 and 30 August 2003”, WT/GC/M/82 [hereinafter Chair’s Statement”].

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from HIV/AIDS, tuberculosis, malaria and other epidemics”.88 The negotiations for the

Decision demonstrated that the definition of pharmaceutical products contained in the

Declaration are those used to treat any disease.89 While the immediate concerns for

developing countries were HIV/AIDS, malaria, and tuberculosis, they made it clear that the

Declaration was broad in scope and could not be limited to particular diseases.90 Therefore,

the Doha Declaration can cover Killer Flu.

The Decision can also be applied to Killer Flu. Paragraph 1(a) of the Decision defines

“pharmaceutical product” by reference to “public health problems” of Paragraph 1 of the

Doha Declaration91 and thus incorporates the diseases listed and not listed in the Declaration.

Alternatively, the Decision could be seen as a “subsequent agreement” under VCLT Article

31(3)(a)92 or an authoritative interpretation of the TRIPS Agreement under WTO Agreement

Art IX:2.93 The negotiating history of the Decision confirms this interpretation94 and

demonstrates that the wording of the Doha Declaration and Decision give “context” or

“object and purpose” to the TRIPS Agreement.95

Miracle Cure is a patented pharmaceutical product that is needed to address the

outbreak of Killer Flu in Maru, a public health problem incorporated into the definitions

given in both the Declaration and Decision. Despite the fact that Killer Flu is not specifically

mentioned, the waivers to Article 31 TRIPS contained in the Decision apply to the outbreak

of Killer Flu and to the patented product, Miracle Cure.

88 Declaration. 89 Correa Implementation, 11. 90 Abbott, Frederick, The WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health, 99 Am J Intl L (2005) 317, 328. [hereinafter Abbott] 91 Decision of the General Council, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, WT/L/540 (September 1 2003), 43 ILM 509 (2004). [hereinafter Decision] 92 VCLT, Article 31(3)(a). 93 Marrakesh Agreement Establishing the World Trade Organization (15 April 1994), 1867 UNTS 3, Article IX:2 [hereinafter WTO Agreement]. 94 Abbott, 332. 95 VCLT, Article 31(1), 31(2)(a), or 32.

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2. Even if Killer Flu is not a qualifying disease, Maru has the right to unilaterally determine that it faces a national emergency.

Should this Tribunal find that the diseases covered by the Declaration and Decision are

limited to those listed, Maru may still unilaterally determine that it faces a national

emergency that qualifies it as an EIM for the purposes of the Declaration and Decision.

Paragraph 5 of the Declaration reserved various "flexibilities" for all WTO Members

under the TRIPS Agreement. Paragraph 5(c) states that “Each Member has the right to

determine what constitutes a national emergency or other circumstances of extreme

urgency…”96 Absent any objective standard, Maru may determine for itself that the outbreak

of Killer Flu constitutes a national emergency.

3. Even if Maru does not face a national emergency, the Declaration and Decision still apply.

Paragraph 5(b) of the Declaration states that “Each Member has the right to grant

compulsory licences and the freedom to determine the grounds upon which such licences are

granted”. Therefore, the application of Article 31 TRIPS for compulsory licences and the

procedural waivers contained in the Decision are not restricted to a “national emergency” but

can be granted on other grounds, determined by the nation state itself. Maru has the right as a

WTO Member to determine for itself whether there are “other grounds” necessitating

compulsory licensing or importation of a pharmaceutical product.

C. Maru lacks sufficient manufacturing capacity to produce Miracle Cure.

1. Maru can qualify as lacking sufficient manufacturing capacity notwithstanding any lack of notification to the Council for TRIPS.

The Decision Paragraph 2(a)(ii) elaborates that an EIM should make notification to the

96 Declaration, Paragraph 5.

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Council that the Member lacks sufficient manufacturing capacity.97 The Chair’s Statement

indicates that this might include information on how a Member concluded it had insufficient

manufacturing capacity.98 The Statement, however, does not amend the Decision99 and

cannot provide interpretive force under Article 31(2) nor Article 32 VCLT.

Even if the Chair’s Statement carries interpretative weight, so does the Philippines’

Statement, which states that “the sole prerogative for establishing insufficient manufacturing

capacity was with the notifying Member. … A Member could, therefore, provide as much or

as little information as it deemed relevant.”100 The history of the Decision indicates that many

developing countries were dissatisfied with the detailed requirements contained in the Chair’s

Statement.101 Therefore, even if Maru has provided “as little information as it deemed

relevant” about its manufacturing capacity, its lack of notification to the Council for TRIPS

does not prevent Maru qualifying as an EIM.

2. In any event, any breach of Paragraph 2 Decision only breaches a transparency requirement.

No approval regarding manufacturing capacity is required from the WTO, which has

led many to see the notification requirement as merely a means of promoting transparency.102

If the Tribunal decides that Maru has failed to notify the Council for TRIPS under the

Decision, the Maru IP Department respectfully submits that this is a mere breach of a

transparency requirement. This can be easily resolved by Maru’s providing details of its

calculations for determining that it lacks sufficient manufacturing capacity.

97 Decision 98 General Council, “Minutes of Meeting Held in the Centre William Rappard on 25, 26 and 30 August 2003”, WT/GC/M/82 [hereinafter Chair’s Statement”]. 99 Correa Implementation, 17. 100 Philippines statement at TRIPS council (28 August 2003) [8] <http://www.cptech.org/ip/wto/p6/philippines08282003.html> (last accessed 5 September 2010). [hereinafter Philippines Statement] 101 Yu, Peter K., The International Enclosure Movement, 82 Ind LJ (2007), 827, 875. [hereinafter Yu International Enclosure] 102 Yu International Enclosure, 885; Abbott, 336.

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3. Alternatively, the requirement for demonstrating insufficient manufacturing capacity is a matter of self-assessment.

Because the research into manufacturing capacity can be time-consuming, expensive

and difficult for less developed countries,103 the determination of insufficient manufacturing

capacity is a matter of self-assessment.104 It cannot be challenged by another Member and

cannot be subjected to review or rejected by the Council for TRIPS.

4. The requirements of Paragraph 2 do not apply to a LDC member.

Even if it is determined that Maru has failed to establish or substantiate its lack of

manufacturing capacity and, thus, its qualification as an EIM, this requirement does not apply

to LDCs.105 As mentioned in Section III(A)(1) above, it is highly likely that Maru would

qualify as an LDC Member of the WTO. As such, any requirement for notification to the

Council for its manufacturing capacity is waived.

D. There is no obligation to negotiate with GHC-Maru for importation of Miracle Cure.

Although Paragraph 6 of the Doha Declaration and the Decision refer to “compulsory

licences”, the system established by the Decision applies to any use without authorisation of

the right holder as contemplated in Article 31 TRIPS.106 An importing country may apply the

system on the basis of an authorisation for public non-commercial use, and not necessarily

under a compulsory licence granted to a third party.107 This is also known as “crown use”.

For “crown use” without the authorization of the patent holder, the obligation for prior

103 Bermudez, Jorge, Maria Auxiliadora Oliveira and Gabriela Costa Chaves, “Intellectual Property in the Context of the WTO TRIPS Agreement: What Is at Stake?”, Intellectual Property in the Context of the WTO Trips Agreement: Challenges for Public Health (Jorge AZ Bermudez and Maria Auxiliadora Oliveira (eds.) 2004 <http://www.who.int/intellectualproperty/submissions/Tripsingles%20nova%2Oversao%202005.pdf> 104 Vandoren, 785. 105 Correa Implementation,17. 106 Correa Implementation,19. 107 Correa Implementation,19.

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negotiation with the patent holder under Article 31(b) TRIPS is waived.108 No breach has

therefore occurred in Maru’s TRIPS obligations vis-à-vis GHC.

E. Maru has acted reasonably in preventing re-exportation.

Paragraph 4 of the Decision states that EIMs are to take reasonable measures “within

their means, proportionate to their administrative capacities and to the risk of trade

diversion.”109 The Philippines’ Statement set out the Members “shared understanding” that

“the undertaking assumed by eligible importing countries in the Decision to take reasonable

measures within their means to prevent trade diversion of products imported under the system

was strictly on a “best endeavour basis”.110

Though there is little evidence that Maru has taken steps to prevent re-exportation, this

is “proportionate to its administrative capacities” and “within its means”. There is urgent

need for Miracle Cure in Maru and everything suggests that the domestic market is crying out

for the cure, so there seems to be little risk of re-exportation of Miracle Cure imported from

Porta. There is ample evidence that in the face of a very serious public health crisis, which

threatened both the population of Maruvians and the tourist industry upon which the country

relies, Maru has done what could be considered reasonable on a “best endeavour” basis.

IV. NO REMEDIES ARE APPLICABLE AS THERE HAS BEEN NO BREACH OF TRIPS.

There has been no breach of the rights of GHC as Maru has fully complied with its TRIPS obligations. Therefore, there is no remedy that can be awarded to GHC by this Tribunal. In particular, the following remedies are not applicable:

A. Maru is not obliged to grant an interim or permanent injunction under Article 44.1.

The objective of Article 44.1 TRIPS, which requires the granting of permanent

108 Correa Implementation,19. 109 Decision Paragraph 4. 110 Philippines Statement.

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injunctions, is to “prevent entry into channels of commerce of imported goods that involve

the intellectual property right of another “immediately after customs clearance of such

goods”. Article 44.1 only gives members the obligation to give judicial authorities the power

to grant injunctions, but does not specify in which circumstances. 111

In the decision in Ebay Inc et al v Merexchange LLC, the US Supreme Court held that

“the decision whether to grant or deny injunctive relief rests within the equitable discretion of

the District Courts”.112 As an injunction has not been upheld in Maru, there is nothing under

the TRIPS to stipulate that another court or this Tribunal can overrule the decision. Injunctive

relief is at the sole discretion of Maruvian Courts and has been denied.

B. GHC has no right to compensation or damages above those already awarded.

1. Maru has the right to determine adequate compensation to GHC if there is a compulsory licence under Article 44.2

Article 44.2 stipulates that in the case of government use or compulsory licence of a

patented product, Members may limit liabilities to a remuneration determined in accordance

with Article 31(h). As mentioned above, this can be simply the minimum amount required,

taking into account the financial capacity of the importing country. As such, Maru’s

compensation to GHC for Miracle Cure is more than sufficient. Liability for compensation is

thus limited to this amount under Article 44.2.

2. If there is no compulsory licence, Maru has discretion to determine compensation to GHC under Article 44.2

As Article 44.2 contains an optional provision it would seem that importing Members

can use remuneration different from that under Article 31(h). As discussed above, Maru’s use

of Miracle Cure may take place under the auspices of the Doha Declaration and Decision

111 Correa Commentary, 423. 112 eBay Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006).

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without the need for a compulsory licence, so-called “crown use”. In the US, “government

use” of a patented product the owner can only recover “reasonable and entire compensation”

such as: the owner’s costs, fees for witnesses and attorneys in bringing a claim.113 Members

can determine for themselves what compensation is “adequate” under Article 44.2. 114 Thus

Maru can independently assess what compensation is “adequate” and does not need to adhere

to the minimum standards imposed by Article 31(h).

C. No recovery of damages under Article 45 of TRIPS

1. Article 45.1 GHC may not recover compensation for its injury

Under Article 45.1 the judicial authorities shall have the authority to order the infringer

to pay the right holder damages adequate to compensate for the injury the right holder has

suffered. There has been no injury caused to the right holder as Maru has fulfilled its

obligations under TRIPS and satisfied the waiver provisions of the Declaration and Decision.

In any event, Members’ obligations under Article 45 are satisfied when judges have the

authority to determine compensation, and TRIPS does not delineate a specific conclusion to

be reached as to remedies. Therefore, by enabling the judges of the IP Court and the

Constitutional Court of Maru to determine the level of damages appropriate, Maru has

complied with its obligations under Article 45 TRIPS.

2. Under Article 45.2 GHC may not recover expenses as this is optional.

Under article 45.2 judicial authorities “have the authority” to order the infringer to

pay the right-holder expenses, which may include “appropriate attorney’s fees”. If the

Tribunal finds that Maru has not complied with TRIPS the recovery of legal fees and costs is

113 Correa Commentary, 425. 114 Correa Commentary, 425.

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not a necessary conclusion from the use of Article 45 as this requirement has been found to

be optional in many jurisdictions.115

D. To remove the goods from circulation or destroy them would fail the proportionality test contained in Article 46.

Article 46 provides the remedy to “remove from commercial circulation the infringing

goods” or “dispose of [the product] outside the channels of commerce”. This Article 46

requirement is subject to a proportionality test and judicial authorities need to balance the

seriousness of the infringement and the interests of third parties.116 On the basis of the

proportionality test, in this case such a remedy should be refused by the judicial authorities

and this Tribunal.

Many third party interests will be adversely affected by the removal of Sure Cure

and/or Miracle Cure from commercial circulation, not least of whom are the Maruvian

citizens who are suffering from Killer Flu. Any determination of this remedy must take into

account the right to health of the people of Maru as well as the interests of distributors and

health authorities in Maru.

E. GHC is bound under TRIPS to indemnify the Respondent.

Should this Tribunal find that Maru’s use of the compulsory licence was justified and

there was no infringement of the patent holder’s rights in the importation of Sure Cure, GHC

is required to contribute towards Maru’s costs, including legal expenses. Under Article 48.1

TRIPS the judicial authorities can order the applicant to pay the defendant’s expenses, which

may include appropriate attorney’s fees. Therefore, since this suit has been wholly

unsubstantiated, and Maru’s position thoroughly vindicated under TRIPS and the waivers

contained in the Doha Declaration and Decision, GHC should pay Maru’s fees.

115 Correa, Commentary, 427. 116 Correa, Commentary, 428.

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CONCLUSION AND PRAYER FOR RELIEF

The Director of Intellectual Property of Maru respectfully requests this Arbitral Tribunal to

adjudge and declare that:

I. The actions of the Maru IP Department were valid and justifiable under TRIPS in

general and Article 31 of TRIPS in particular.

II. Maru's failure to recognise any infringement beyond the literal terms of the patent is

consistent with its obligations under Article 28 of TRIPS.

III. The actions of the Maru IP Department were valid and justifiable according to the

Doha Declaration and the Decision.

IV. No remedies should be awarded to GHC/GHC-Maru for the actions of the Maru IP

Department; alternatively, pursuant to Article 44(2) TRIPS, any remedies should be

limited to compensation in accordance with Article 31(h) TRIPS.

Respectfully submitted,

COUNSEL FOR RESPONDENT