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International Court of Arbitration, New Delhi

THE 2010 LAWASIA MOOT COMPETITION

GOOD HELTH COMPANY v. DIRECTOR OF INTELLECTUAL PROPERTY, THE GOVERMENT OF MARU

Memorial for Respondent The Government of Maru NOVEMBER 2010

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CONTENTS CONTENTS ............................................................................................................................... 1 INDEX OF AUTHORITIES ..................................................................2错误！未定义书签。 STATEMENT OF JURISDICTION .......................................................................................... 4 QUESTIONS PRESENTED ...................................................................................................... 5 SUMMARY OF PLEADINGS .................................................................................................. 9 STATEMENT OF FACTS ......................................................................................................... 6 PLEADINGS ........................................................................................................................... 11 PART A. WHETHER THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT WAS VALID AND JUSTIFIABLE AS PER “DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH (ADOPTED ON 14 NOVEMBER 2001) AND IMPLEMENTATION OR PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AND PUBLIC HEALTH (DECISION OF 30 AUGUST 2003) ............................... 11 1.THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT WAS VALID AND JUSTIFIABLE UNDER “DECLARATION OF THE TRIPS AGREEMENT AND PUBLIC HEALTH” .......................................................................................................... 11 2.THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT WAS VALID AND JUSTIFIABLE UNDER IMPLEMENTATION OF PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AND PUBLIC HEALTH .......................................... 12 2.1 The purposes of this decision ................................................................................... 13 2.2 Conditions for uses of the waiver ............................................................................ 13 2.3 Waiver of the remuneration...................................................................................... 14 2.4 Difficulties for implementation of the decision and the future ................................ 14 PART B. THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT OF MARU WAS VALID AND JUSTIFIABLE UNDER TRIPS IN GENERAL AND ARTICLE 31 OF TRIPS IN PARTICULAR..................................................................................................... 16 1. COMPULSORY LICENSE .......................................................................................... 16 1

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1.1 Prior Negotiation ...................................................................................................... 16 1.2 Waiver of the term “Predominantly for the domestic market” ................................ 18 1.3 Notification .............................................................................................................. 21 1.4 Compensation .......................................................................................................... 21 1.5 Scope and duration ................................................................................................... 22 1.6 Non-assignment ....................................................................................................... 23 1.7 Reviews by Judicial or Distinct Higher Authority ................................................... 23 PART C. WHETHER THE FAILURE OF COURT OF MARU TO RECOGNIZE ANY INFRINGEMENT BEYOND THE LITERAL TERMS OF PATENT VIOLATES ARTICLE 23 OF TRIPS ........................................................................................................................ 24 1.GHC SHALL ENJOY HER RIGHT UNDER ARTICLE 28 UNDER THE PRTECTION OF MARU .................................................................................................. 24 2.MARU SHALL HAVE THE RIHGHT TO DETERMINE THE LEGAL PRACTICE AND LEGAL IMPLEMENTATION ................................................................................ 24 2.1 THE ABSENCE OF RECOGNITION OF NON-LITERAL INFRIGEMENT DOES NOT DIRECTLY LEAD TO THE VIOLATION WITHIN ARTICLE 28 ARTICLE OF TRIPS ............................................................................................................................. 25 3.THE RULING OF IP COURT IN THE “SURE CURE” CASE IS REASONABLE AN D FAIR .............................................................................................................................. 26 3.1 The whole procedure of judgment in Intellectual Property Court of Maru is fair and justified under the TRIPS Agreement in accordance with the Article 4.(2)&(3), 48(2) 26 3.2 The ruling of IP court of Maru itself is justified and reasonable .............................. 26 3.21 Three step test and Doctrine OF equivalent ........................................................... 27 PART D. IF THE ACTIONS OF INTELLECTUAL PROPERTY DEPARTMENT OF MARU ARE NOT JUSTIFIED UNDER (A) AND/OR (B) AND/ OR (C) THEN WHAT REMEDIES SHOULD BE AWARDED TO GHC/GHC – MARU. .................................... 30 PRAYER FOR RELIEF ........................................................................................................... 31

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INDEX OF AUTHORITIES

CASES Kirin-Amen Inc. v. Hoechst Marion Roussel, [2004] UKHL 46 Graver Tank& Marnufacturing Co. v. Linde Air Products Co.,[1950] 339 U.S. 605 Catnic Components Ltd. v. Hill & Smith Ltd. [1982] R.P.C

ARTICLES Sudip Chaudhuri, TRIPS and Changes in Pharmaceutical Patent Regime, Working Papter No 533, Indian Istitute of Management Calcutta ;January, 2005 Venessa Bradford Kerry, Kelly Lee, TRIPS, the Doha declaration and paragraph 6 decision: what are the remaining steps for protecting access to medicines?, Globalization and Health ; 2007 Commission for Macroeconomics and Health: Macroeconomics and Health: Investing in Health for Economic Development, World Health Organization, Geneva; 2001.

BOOKS Nuno Pires de Carvalho, , (2nd, Kluwer Law International) Peter van den Bossche, , (2nd, Cambridge University Press) , (Cambridge University Press) Daniel Gervais,< The TRIPS Agreement Drafting History And Analysis>, (2nd, Thomson sweet&maxwell) 3

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STATEMENT OF JURISDICTION

Good Health Company jointly on one side, and Director of Intellectual Property, State of Maru on the other, have submitted the following dispute by special agreement for settlement to International Court of Arbitration, New Delhi pursuant to the “Understanding on Rules and Procedures Governing the Settlement of Disputes” of WTO.

The parties have accepted jurisdiction of the International Court of Arbitration, New Delhi. All parties shall accept the judgment of this Court as final and binding and shall execute it in good faith in its entirety. A three member panel was constituted with the consent of GHC/GHC-Maru and intellectual Property Department of Maru.

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QUESTIONS PRESENTED

1. Whether the action of Intellectual Property Department of Maru was valid and justifiable under TRIPS in general and Article 31 of TRIPS in particular 2. Whether failure to recognize any infringement beyond the literal terms of patent violates Article 28 of TRIPS 3. Whether the action of Intellectual Property Department was valid and justifiable as per “Declaration on the 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)” 4. If the actions of Intellectual Property Department of Maru are not justified under (a) and/or (b) and/or (c) then what remedies should be awarded to GHC/GHC-Maru.

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STATEMENT OF FACTS

Maru is a small developing country which receives wide recognition of eco-tourism. Its economy significantly relies on tourism, hotel and retail business. In early 2009, diversity of economy was brought in Maru with “open door” policy. “Good Health Company” (GHC), multinational pharmaceutical company, owns patens on a wide range of medical and pharmaceutical products. The headquarters of GHC is in Hori, which is one of the welldeveloped countries.

In 2006, GHC invented a drug of flu virus treatment named “The Miracle Cure”. It is protected by a number of patents covering the chemical composition of the drug, including its method of manufacture and its manner of use. While GHC assured the high effectiveness of “The Miracle Cure”, its effectiveness on human was doubted by large number of scientists. Furthermore, it has not even been approved for use by the Hori Food & Drug Administration. Its patent right was also monopolized by GHC. Given the lack of manufacturing capacity of Maru, GHC decided to take this great opportunity and set up company GHLC-Maru for manufacturing and local research activity. Maru expected that it would encourage greater domestic and foreign investment. GHC was paid US $20 for remuneration from Maru by providing clinical trial. US $ 20 was apparently not affordable since it was more than the earning of a week for people in Maru.

All of sudden, unknown epidemic disease named as “killer flu” was spread over the main tourist destination. Maru, therefore, had to suffer from this health crisis. Eventually, “killer flu” was found in the neighboring country as well. To meet the global demand, the Director 6

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of Intellectual Property made an authorization to GHC for export of Miracle Cure.

To take a necessary measure to handle this health crisis for public benefit as well as to keep up with the demand, Director of Intellectual Property Department of Maru (IPD of Maru), at the request of the Minister of Health, authorized Fizer Pharma to manufacture the “Miracle Cure” in Porta. Relevant Technical information of “Miracle Cure” was given to Fitzer’s facility in Porta to facilitate production of Miracle Cure to deal with the anticipated spread of “killer flu”, given its seriousness of emergency. Prior negotiation between IPD of Maru and Fizer was made not to interfere with the manufacture of the Miracle Cure in Porta. Fizer, however, had an understanding that it would produce the Miracle Cure for the distribution and use in Porta and neighboring countries as long as the purpose of curing “killer flu” is accomplished. Meanwhile, 20$ per vaccine was paid to GHC. GHC expressed they are furious about the act of Maru. Fearing GHC’s blocking of the access to the like-saving treatment at affordable price would endanger human health in Maru, IPD of Maru invited Bettter Life Pharmaceutical (BLP) from Ulka to produces “Sure Cure” which is quite paralleled but not the same as “Miracle Cure”. IPD of Maru agreed to pay BLP US$50 per unit for each unit delivered to Maru.

The court in Hori holds that “Sure Cure” infringes the GHC Patent under the “doctrine of equivalents”. GHC claimed for a preliminary injunction in the Intellectual Property Court and requested and immediate hearing, but the IP court denied it as Sure Cure does not literally infringe Claim 1 of the Patent-in-suit following the ruling of Kirin case1. Even though GHC claims the infringement under the doctrine of equivalents, petition was denied. GHC, as it has

1

Kirin-Amen Inc. v. Hoechst Marion Roussel, [2004] UKHL 46 [hereinafter Kirin case] 7

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suffered economic damage, requested the solution to this problem. Both of them agreed to follow a procedure of arbitration.

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SUMMARY OF PLEADINGS The action of Intellectual Property Department of Maru (IPD of Maru) is fair and reasonable within “Declaration on the TRIPS Agreement and Public Health” (Declaration on the TRIPS) and Implementation of Paragraph 6 of the Doha Declaration on the TRIPS and Public Health. (Implementation of paragraph 6 of the Doha Declaration). The goal of this declaration is to strike a balance between the private rights of patentees and the socio-economic needs, underlying public policy objectives and the special needs of the developing countries to have flexibility in implementing the provisions of TRIPS. In the light of this declaration, IPD of Maru shall enjoy the rights and exceptions to get an appropriate access to affordable medicine with purpose of public health since Maru is categorized as a developing country with insufficient manufacturing capacity.

The action of IPD of Maru is valid and justifiable under TRIPS and Article 31 of TRIPS in particular. Compulsory license within Article 31 is valid and justifiable. The waiver of prior negotiation with GHC shall be given to Maru, based on the fact that Maru was in a “national emergency” in accordance with Article 31 (b). In addition, The Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health establishes a mechanism under which the restriction of Article 31 (f) will be waived for an exporting Member when it is requested by an eligible importing Member to supply products under compulsory license issued in the exporting country. Moreover, the requirement of notification, compensation, scope and duration is met under the TRIPS Agreement.

The ruling of court of Maru to recognize any infringement beyond the literal terms of patents 9

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does not violates Article 28 of TRIPS. GHC shall enjoy the exclusive rights under Article 28 under the protection of Maru. Maru also shall be free to determine the legal practice and implementation of TRIPS. The court of Maru followed the ruling of three-step test in Kirin Case, rather than adopting the doctrine of equivalents, with reasonable reasons. Thus the Absence of recognition of non-literal infringement does not directly lead to the violation within Article 28 of TRIPS.

The ruling of Maru’s Court in the “Sure Cure” case is reasonable and fair. Firstly, the whole procedure of judgment in Intellectual Property Court of Maru is fair and justified under the TRIPS Agreement in accordance with the Article 4.(2)&(3), 48(2). Secondly, the claim of patent must be read in a “purposive” manner that focuses on the essential features of the patent which is represented as a “strict literalism”. Thus this leads to a point that three step test is entitled to protect exclusive rights under TRIPS Agreement, on the basis of element-toelement approach, as Better Life Pharmaceutical used corn oil instead of palm oil. Lastly, using the method of three-step test enables drawing a balance between protecting the private patent right and protecting public health since Doctrine of Equivalent could bring negative effects from discouragement of invention to threatening public health policy.

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PLEADINGS

PART

A.

WHETHER

THE

ACTION

OF

INTELLECTUAL

PROPERTY

DEPARTMENT WAS VALID AND JUSTIFIABLE AS PER “DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH (ADOPTED ON 14 NOVEMBER 2001)

AND

IMPLEMENTATION

OR

PARAGRAPH

6

OF

THE

DOHA

DECLARATION ON THE TRIPS AND PUBLIC HEALTH (DECISION OF 30 AUGUST 2003)

1. THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT WAS VALID AND JUSTIFIABLE UNDER “DECLARATION OF THE TRIPS AGREEMENT AND PUBLIC HEALTH” The Preamble to the agreement recognizes that Intellectual Property Rights are private rights. But it also recognizes the underlying public policy objectives and the special needs of the developing countries to have flexibility in implementing the provisions of TRIPS. In the light of certain developments and apprehensions expressed, the Ministerial Conference at Doha adopted a special declaration on issues related to TRIPS and public health in November 2001. The Doha Declaration clarified and confirmed that member countries have the rights under TRIPS to take appropriate measures to protect public health. In short, the Doha Declaration clarifies the right to engage in compulsory licensing and parallel importing. The goal of this declaration is also to strike a balance between the private rights of patentees and the socioeconomic needs and objectives.

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Developing country Developing country or least developed country is a designation created by the United Nations to determine which countries are in greatest need of aid. It is generally determined according to criteria such as low income, weak human resources and low level of economic diversification. Maru shall be listed as a developing country taking into account that it just started the “open door” policy which shows that scale of economic has yet not established firm basis. Furthermore, lack of domestic R&D capacity and purchasing power was a lack of drug development to meet significant health needs. It is especially critical to Maru under severe resource constrains facing killer flue. On the other hand, Maru is a thinly populated country that has lack of infrastructure with weak human resources. This indicates that Maru is one of the developing countries that its public health shall be protected in particular under the Doha declaration of the TRIPS agreement and public health.

2. THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT WAS VALID AND JUSTIFIABLE UNDER IMPLEMENTATION OF PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AND PUBLIC HEALTH

Paragraph 6 of the Doha Declaration recognized the problem that countries with insufficient or no manufacturing capacity in the pharmaceutical sector have in making effective use of compulsory licensing, and directed the TRIPS Council to recommend an expeditious solution. On August 30, 2003, following nearly two years of negotiations, the General Council adapted the Decision, preceded by the reading of a Chairperson’s Statement. The Decision is intended d to allow countries with manufacturing capacity to make and export pharmaceutical products to counties with public health needs, notwithstanding Article 31 (f) of TIRPS that limits 12

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compulsory licensing predominantly to the supply of the domestic market.

2.1 The purposes of this decision Paragraph 1 of the Decision defines “pharmaceutical product” broadly, and does not limit application of the solution to specific disease conditions. It requires Members other than least-developed country Members to submit a notification of their intention to use the system in sale, which notification may be modified at any time. This notification establishes the Member as an “eligible importing Member”. IPD of Maru was thus an eligible importing member because it is categorized as a developing country in accordance with this paragraph. This subsequent decision has virtually broadened the scope of compulsory license

2.2 Conditions for uses of the waiver Paragraph 2 of the Decision establishes conditions for uses of the waiver. Maru’s circumstance as a national emergency meets the condition for the operation set forth. It is true that Maru had no sufficient time establishing the basis of manufacturing. Obviously, the demand and supply for this killer flu was not matched since Maru had an insufficient manufacturing capacity. While GHC was producing a certain number of flu vaccine for people in Maru, Maru had a reasonable reason to believe that it could be used as a threat to reducing its producing since GHC/Maru’s power of monolopy. This insufficient capacity result in granting compulsory license to Fizer and BLP when it was apparent that the distribution of vaccine could be delayed if the manufacturer, GHC/Maru, cannot ensure consistent high quality vaccine for the target populations. It also appears the fact that the countries like Maru reliant on trade with powerful trading partners have often remained 13

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reluctant to exercise available flexibilities for fear of incurring their wrath in other trade areas. Therefore Doha decision shall be used as a measure which protects public health, thus enabling people to receive free or affordable treatment.

2.3 Waiver of the remuneration Paragraph 3 provides a waiver of the remuneration requirement of the importing country. GHC/Maru was paid for Miracle cure taking into account the economic value to Maru. The obligation of remuneration shall be waived since it is paid previously.

2.4 Difficulties for implementation of the decision and the future The experiences to date suggest that there remains general reluctance among LMICs to fully test the flexibilities for compulsory licensing available under TRIPS. In an increasingly global economy, maintaining one's standing as a trading partner committed to IPR protection has so far taken precedence over access to medicines. The strong reaction to the Thai government's action by the US and transnational pharmaceutical industry reflects the degree of pressure on countries to resist the use of TRIPS flexibilities. Doha Declaration nor Paragraph 6 decision shall not be used measures to provide the patent right holder monopoly status during which time it can market is product without competition, but to improve access to affordable medicines for developing or least-developed countries as shared goal from the very beginning. Major industrialized countries, seeking to protect the interests of transnational pharmaceutical companies, have pursued only profit . There is need to consider how the public health community and government of developing or least developing

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countries must act to prevent the goal of access to medicines from being further undermined.2

The problem of access to medicines in developing world is indeed linked to wider development needs, and undoubtedly may become less pressing as economic and social progress is achieved. However, as argued by the WHO Commission on Macroeconomics and Health, good health is an essential ingredient to poverty reduction and socioeconomic development.3Fighting disease is vital to economic success. The collective neglect of public health needs in developing countries maintains the vicious cycle of poor health and underdevelopment. Finding ways of improving access, correspondingly, can contribute to an upward spiral of better health and more rapid development. For pharmaceutical companies, the creation of new markets in LMICs may offer longer term sustainability and growth.

2

Venessa Bradford Kerry, Kelly Lee, TRIPS, the Doha declaration and paragraph 6 decision: what are the remaining steps for protecting access to medicines?, Globalization and Health 2007, available at 3 Commission for Macroeconomics and Health: Macroeconomics and Health: Investing in Health for Economic Development, World Health Organization, Geneva; 2001. 15

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PART B. THE ACTION OF INTELLECTUAL PROPERTY DEPARTMENT OF MARU WAS VALID AND JUSTIFIABLE UNDER TRIPS IN GENERAL AND ARTICLE 31 OF TRIPS IN PARTICULAR. Article 31 of TRIPS dealing with compulsory licensing, does not place any restriction on the grounds under which a compulsory licenses can be given. The Doha Declaration has made it clear that “Each member has the right to grant compulsory license and the freedom to determine the grounds upon which such licenses are granted”.4 1. COMPULSORY LICENSE Compulsory license is an authorization granted by a government to a party other than the holder of a patent on an invention to use that invention without the consent of the patent holder.5 The purpose of compulsory license is to restrain the exercise of those private rights in the public interest. It acknowledges that in various contexts the public interest in having technical knowledge more immediately accessible should take precedence over the patent interest.

1.1 Prior Negotiation TRIPAS Article 31(b) requires that a party seeking a compulsory license first undertake negotiations with the patent holder for a voluntary license on “reasonable commercial terms

4

Sudip Chaudhuri, TRIPS and Changes in Pharmaceutical Patent Regime, Working Papter No 533, Indian Istitute of Management Calcutta, (January, 2005) 24.

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and conditions and that such efforts have not been successful within a reasonable period of time”. Under certain condition, however, prior negotiation with the patent holder need not be pursued. These are the cases of; “national emergency”; “other circumstances of extreme urgency”; or “public non-commercial use”. This requirement is inherently flexible since the concept of reasonable terms and period of time will depend on context. Furthermore, Maru has the right to determine what disease conditions constitute a national emergency.

In the case of Maru, the situation shall be considered as a “national emergency”. “national emergency” generally refer to situation which endanger public health at a national level. The health crisis started from a young boy of age 7 when he died of known disease named as “killer flu”. A great number of people started show the same symptoms and it quickly spread all over the province which is the main tourist destination in Maru. Maru also was suffered from economic damage during this period of time. Even if it is not a national emergency, it also forms a scope of “other circumstances of extreme urgency”. When the unpredicted killer flu spreads in an instant, it was obligation of Maru, as a major healthcare provider, to provide life-saving drug.

The waiver of prior negotiations also applies when patents are used for “public noncommercial use”. The term “public” could refer to use by a government, as opposed to private. Thus, the action of Intellectual Property Department of Maru shall be considered as public non-commercial use based on (b) of article 31 of TRIPS. Infectious diseases such as “killer flu” are a scourge of the developing country, but few people in developing countries have access to effective treatment at affordable prices. This lack of access would endanger 17

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human health in Maru if Intellectual Property Department did not take a necessary measure in the mist of health crisis. It is agreed that least-developed countries will not obliged to comply with the patent and trade secret parts of TRIPS until 2016 at the earliest. This leads to a conclusion that public non-commercial use shall be the basis of waiver of commercial negotiations in advance. Besides, Maru also met the requirement that adequate compensation be paid to GHC.

1.2 Waiver of the term “Predominantly for the domestic market” TRIPS Article (f) states that “any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use”. On August 30, 2003, the General Council of the WTO adopted the Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. The Decision establishes a mechanism under which the restriction of Article 31 (f) will be waived for an exporting Member when it is requested by an eligible importing Member to supply products under compulsory license issued in the exporting country.

Since the scope of the compulsory license must be limited to the purpose for which it was granted (Article 31 (c)), the quantities of the patented article to be produced and offered for sale under the license must be compatible with the levels of the national demand. However, it is admitted that eventual surpluses and unintended surpluses may be exported.6 As to the word “predominantly,” this notion has to be examined on a case-by-case basis. Probably, the

6

NUNO PIRES DE CARVALHO, , (2ND, KLUWER LAW INTERNATIONAL), 330. 18

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concept of “predominant” may arise from the intention of the manufacturer.7 In the case of Maru, there was understanding of Fizer, the manufacturer, that all the Miracle Cure produced in Porta would initially be sent to Maru. Furthermore, Dr.Francis agreed not to interfere with the manufacture of the Miracle Cure in Porta. Thus, Intellectual Property Deparment of Maru and Fizer had no intention that the vaccine would be exported to other countries. It was merely Fizer’s understanding that it would eventually be entitled to other neighboring countries which is in need.

One may argue that parties shall minimize the grant of compulsory licenses in order not to impede adequate protection of patent rights. However, the grant of compulsory licenses of Maru was only be granted to address, during it existence, “national emergency”; “other circumstances of extreme urgency”; or “public non-commercial use”. These arguments leads to the point that compulsory license itself is valid in the light of Article 31.

In the process of compulsory license, the relevant information including know-how and test result is informed to Fizer by Maru. While GHC complains that this is the release of business secret, it was merely used for the distribution to Maru. In practice, access to such data substantially reduces time, expense, and effort needed for registering new drugs, thus enabling people to avoid vaccine shortage and distribution delay.

Moreover, the General Council adopted, on 30 August 2003, the Doha Declaration on the TRIPS Agreement and Public Health whereby the obligations of Article 31(f) were waived in order to allow Members to export medicines produced under compulsory license to Members

7

Ibid, 331. 19

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with “insufficient manufacturing capacity”.8 Given the fact that Maru’s heavy reliance on GHC-Maru for the distribution of Magical Cure, Maru was lack of sufficient manufacture capacity. “Insufficient” this term shall be interpreted on the basis of two way; time and amount. Considering how quickly the flu has struck Maru, Maru was fear of distribution delay. More importantly, shortage of life-saving vaccine was the main reason why Maru had to take further steps to make a requirement to Fizer and BLP to produce more vaccine other than merely depend on GHC/Maru. Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, ANNEX, (ii) states that “it is currently insufficient for the purposes of meeting its needs”. Maru did not have sufficient manufacturing capacity to fully satisfy with the demand of peoples in Maru. Moreover, distribution of flu vaccine by GHC was insufficient enough to meet the socio-economic needs of Maru. One should bear in mind that the protection of the rights of the patentees, however is not the sole concern of TRIPS. TRIPS did provide flexibilities for governments to fine tune the protection granted in order to meet social and economic goals (WTO 2001, p. 2). Maru made an adequate decision by granting a compulsory license to avoid vaccine shortage and distribution delay which could result in a great number of peoples’ lives. The scope for compulsory licensing and parallel importing has been a particular focus of TRIPS restrictions, narrowing the circumstances when parties are permitted to use these measures. For instance, under negotiations for a Free Trade Agreement of the Americas (FTAA) it is proposed that compulsory licensing would only be permitted when the patent on a product has expired or in situations of "national emergency", with a body to be set up over and above the WTO to rule on disputes. Grounds permitted under agreements between the 8

PETER VAN DEN BOSSCHE, , (2ND, CAMBRIDGE UNIVERSITY PRESS), 791. 20

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US and Australia, Jordan and Singapore are limited to anticompetitive practices, public noncommercial use, national emergency or other circumstances of extreme urgency. Under the US-Australia FTA, drugs produced under compulsory license in Australia are excluded from parallel importation, even to alleviate a public health crisis in a neighboring country. Similar measures have been agreed between the US and Morocco, and US and Singapore, and are being discussed in US negotiations with dozens of additional countries. The same concerns arise under trade agreements negotiated by EFTA and the European Union with the Southern African Customs Union (SACU), Chile, Morocco, Mexico, the Palestinian Authority and Jordan .

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1.3 Notification In cases of national emergency or extreme urgency, the government is obligated to notify the patent holder of the grant of the compulsory license as soon as reasonably practicable according to Article 31 (b). Reasonable practicability will depend on the circumstances of the case, and need not precede grant of the license. For instance, U.S law allows government to use without advance notice to patent holders.10

1.4 Compensation In regard with compensation, the patent owner shall be compensated under Article 31 of the TRIPS. The general rule is in 31.(h); “(h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization”.

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Oxfam International: Undermining access to medicines: Comparison of five US FTAs. available at 10 , (CAMBRIDGE UNIVERSITY PRESS), 427. 21

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In many respects, this is the most fundamental obligation in Article 31. It is clear that countries have considerable discretion in setting compensation. Article 1 of the TRIPS says that countries - "shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice."

Like most Article 31 issues, the most important issue is to provide a fair process for reaching a reasonable result. There is no question about the power of states to stop IP rights in order to assure affordability and access, but in the process of doing so, governments are advised to provide compensation. In this case, the Intellectual Property Department of Maru agreed to pay GHC $20 per vaccine which was more than a earning of a week for peoples in Maru. Obviously it was not an affordable price for peoples in Maru to get a access to life-saving drug.

The argument that the TRIPS Agreement blocks developing country access to medicine is a favorite of critics of the WTO by providing GHC an IP monopoly over medicines essential to fight health crisis like “killer flu”. The TIRPS Agreement and the WTO are essential to even begin to tackle health in the developing world. TRIPS Agreement does not and should not prevent Members from taking action to protect public health. The level of royalty will also depend upon either the proven or anticipated success of the product in the market place.

1.5 Scope and duration Determining the scope of the license and is another issue. The compulsory license of Sure Cure was only used for the purpose which it was authorized by government of Maru om accordance with TRIPS Article 31(c). The duration of the license was also limited in terms of purpose which is covering the killer flu under control to avoid vaccine shortage and 22

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distribution delay.

1.6 Non-assignment Virtually, Maru is permitted to grant compulsory license to Fizer and BLP. The use of compulsory license was entitled to enhance its value in the market. The action of Fizer and BLP does not represent the action of Maru shall be infringed.

1.7 Reviews by Judicial or Distinct Higher Authority In the process of granting the compulsory license to Fizer and BLP was justified under the TRIPS Article 31(i), (j). decisions to grant, continue, renew compulsory licences as well as decisions concerning the level of the adequate remuneration of the patent owner must be subject to judicial review or review by an authority higher than that which granted the license.

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PART C. WHETHER THE FAILURE OF COURT OF MARU TO RECOGNIZE ANY INFRINGEMENT BEYOND THE LITERAL TERMS OF PATENT VIOLATES ARTICLE 23 OF TRIPS

1. GHC SHALL ENJOY HER RIGHT UNDER ARTICLE 28 UNDER THE PRTECTION OF MARU Article 1 of TRIPS Agreement clearly shows that “Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice”. When “members” are referred to in this Agreement, they shall be deemed, in the case of a separate customs territory member of the WTO. Since Maru, Hori, Porta and Ulka are members of WTO, TRIPS Agreement shall be adopted as the proper law.

Article 28 obliges Members to ensure that patent owners enjoy exclusive rights, and details the minimum content of such rights, which may be exercised with regard to acts performed during manufacturing as well as to acts performed after manufacturing.11Patents are granted in relation to products and processes, dealt with in paragraphs 1 and 2 of Article 28. It embodies standards that may be considered fairly common in industrialized nations.

2. MARU SHALL HAVE THE RIHGHT TO DETERMINE THE LEGAL

11

Ibid., 414. 24

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PRACTICE AND LEGAL IMPLEMENTATION As discussed above, Maru has the right to a narrow construction of Article 1 might suggest that the words “appropriate method” refer to legal procedure by which a Member implements its TRIPS obligations. A broader construction acknowledges the flexibility inherent in the text of TRIPS. It refers not only to method, but also to the “legal system and practice” of each Member of WTO. Article 8 (1) also described general principles of TRIPS, stating that “Members may, in formulating or amending, their law and regulations adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development”. It provides that necessary measures must be “consistent with” the Agreement.

2.1 THE ABSENCE OF RECOGNITION OF NON-LITERAL INFRIGEMENT DOES NOT DIRECTLY LEAD TO THE VIOLATION WITHIN ARTICLE 28 ARTICLE OF TRIPS

The judgment by Intellectual Property Court of Maru to decided not to recognize non-literal infringement, nevertheless, protect the exclusive rights listed under Article 28 of TRIPS. Whether to determine, in the judgment, to adopt non-lateral infringement or other method is the matter shall be left up to national legislators. At this point, it is noteworthy that Lord Diplock said in the ruling of Kirin case12 that “There is, in my view, no such dichotomy; there is but a single cause of action and to treat it otherwise… is liable to lead to confusion.”

12

Kirn case, supra note 1. 25

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Thus substantial issue shall be determined on the case-by-case basis.

3. THE RULING OF IP COURT IN THE “SURE CURE” CASE IS REASONABLE AND FAIR 3.1 Firstly, the whole procedure of judgment in Intellectual Property Court of Maru is fair and justified under the TRIPS Agreement in accordance with the Article 4.(2)&(3), 48(2)

Article 41 (2) introduces a general clause relating to procedures concerning enforcement. It prescribes a rather general but important obligation: procedures concerning the enforcement of IPRs must be “fair and equitable”. The principle of fairness and equity was applied in the process of ruling by IP court of Maru. Article 41 (3) requires that “decisions on the merits of a case shall preferably be in writing and reasoned”. It also establishes a transparency obligation with regard to the parties to a proceeding. Apart from this, the requirement of establishing a proper procedure for evidence submitted by the parties, as the only sources to be based, is met in Maru case.

Article 48 (2) establishes an obligation with regard to the administration of nay law pertaining to the protection or enforcement of IPRs. The purpose of the provision is to ensure that public authorities and officials are subject to liability where actions has been taken or intended in bad faith. Since the IPD of Maru’s actions were not conforming to the law, but adopted in good faith, may be examined for the remedial measures mandated in this Article.

3.2 The ruling of IP court of Maru itself is justified and reasonable 26

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3.21 Three step test and Doctrine OF equivalent

It is provided that the judgment of Maru was based on ruling of Kirin Case. The issue and ruling of Kirin case shall be examined at this point. Kirin case was determined by the House of Lords of England and Wales. It shall be pointed out that the United Kingdom has never employed a doctrine of equivalents approach. As a signatory to the European Patent Convention (EPC), the UK follows the Protocol on the Interpretation of Article 69 of the EPC.

The issue of Kirin case was whether the claims of a European patent granted to Kirin-Amgen, Inc. were infringed by Transkaryotic Therapies Inc. and Hoechst Marion Roussel Ltd in a situation where there was a remarkable similarity between the technologies employed by the two parties for producing the hormone erythropoietin. Infringement was not found due to the language used in the claims of the Amgen patent.

The reasoning in the judgment has formed a basis for the current practice of the UK intellectual Property. Thus the United Kingdom has never employed a doctrine of equivalents approach. The case and subsequent judgment affirmed principles from a prior Catnic case.13 In Catnic case, the judge held that there was an infringement under the “pith and marrow” doctrine. The Court of Appeal overturned the ruling as although it held that the “vertical” requirement was an exact and essential element of the patent, the effect did not change. The court affirmed the use of purpose constructions to patent interpretation and found an infringement. Lord Diplock said that the solution was to adopt a principle of construction which actually gave effect to what the person skilled in the art would have understood the

13

Catnic Components Ltd. v. Hill & Smith Ltd. [Hereinafter Catnic case] (1982) R.P.C. [hereinafter Catnic case] 27

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patentee to be claiming. Decision in 'Improver Corp v Remington Consumer Products Ltd' (1990) has found widely-used three-step test for deciding infringement.

In the case of Maru, Sure Cure does not literally infringe Claim 1 of the Patent-in-suit as it does not use palm oil as the dispersant as required by the precise language of Claim 1. 14

However, GHC claims that it infringes the patent under the doctrine of equivalents (DOE)15.

Although the use of the doctrine of equivalents originated in 1853, the doctrine found its place in modern patent law in 1950 through Graver case. According to this DOC, judges and juries may find infringement even when the defendant’s device or process does not infringe the literal language of the patent claims. In the Graver case, it was stated that “the doctrine of equivalents is founded on the theory that, if two devices do the same work in substantially the same way and accomplish substantially the same result, they are the same, even though they differ in name, form or shape”. To determine Equivalence, an important factor is whether persons reasonably skilled in the art would have known of the interchangeability of an ingredient not contained in the patent with one that was.16 The purpose of the doctrine of equivalents was “to temper unsparing logic and prevent an infringer from stealing the benefit of the invention”17. This doctrine is a legal rule in most of the world’s patent systems that allows a court to hold a party liable for patent infringement even though the infringing device or process does not fall within the literal scope of a patent claim, but nevertheless is equivalent to the claimed invention, which requires member states to draw a balance between interpreting patent claims with strict literalism with the description and drawings only helping resolve ambiguity and regarding the claims as a mere guideline only. It must be born in mind that there is a substantial different between palm oil and corn oil as 14 15 16 17

Moot problem, page 6, para 18, line 10-12. Graver Tank& Marnufacturing Co. v. Linde Air Products Co.,(1950) 339 U.S. 605 [hereinafter Graver case]. Ibid. Kirin case, supra note1. 28

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ingredients of vaccine while these vaccine treatment has the similar effectiveness. In accordance with UK case law, the patent claim of Sure Cure shall be interpreted with strict literalism with the description and drawings only helping resolve ambiguity and regarding the claims as a mere guideline only. As Lord Diplock pointed out, the claim of patent must be read in a “purposive” manner that focuses on the essential features of the patent. Thus this leads to a conclusion that three step test is entitled to protect exclusive rights under TRIPS Agreement.

Moreover, DOC doctrine even has several negative effects when it is used as a measure to determine any infringement. Firstly, given the facts of the Graver litigation, the case did not present the typical situation in which the DOC is applied in order to broaden a claim to cover something the Patent Trademark Office had not confronted or validated during the original examination process. Secondly, it also could threaten public health policy since this standard could block the access to the affordable medicine to the developing countries. Lastly, adapting the DOC could discourage invention as it broadens the scope of infringement regardless of the author’s origin intention to the claim.

In conclusion, it has been an ongoing dispute that which method between so-called three step test and the DOC shall be used to determine infringement. The purpose of these methods is entitled to protect the exclusive rights under the TRIPS Agreement. Since Maru followed the ruling of Kirin case with fair and justified reason, the judgment of IP court of Maru does not violate the Article 28 of TRIPS Agreement.

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PART D. IF THE ACTIONS OF INTELLECTUAL PROPERTY DEPARTMENT OF MARU ARE NOT JUSTIFIED UNDER (A) AND/OR (B) AND/ OR (C) THEN WHAT REMEDIES SHOULD BE AWARDED TO GHC/GHC – MARU.

The purpose of the TRIPS Agreement is to limiting the possibilities and narrows the conditions under which compulsory licenses may be granted, so as to enhance the protection of patent rights.

It should be borne in mind that Maru was forced to protect IP rights against their fundamental self-interest in order to serve the welfare of Maru. Maru has right to claim for remedy of reputation damage caused by GHC/GHC-Maru. Thus remedy shall be awarded in regard to its worldwide reputation.

It might involve higher prices and paying royalty payments to GHC. However, it should be borne in mind that Maru was forced to protect IP rights against their fundamental self-interest in order to serve the welfare of Maru. Furthermore, in the Draft of July 23, 1990 (W/76), 1A states that “Notwithstanding the other provisions of this Part, when a government is used for infringement of an intellectual property right as a result of the use of that right by or for the government, PARTIES may limit remedies against the government to payment of [full] [adequate] compensation to the right holder.”18 This holds that Maru should offer only minimum remedies to GHC/ GHC-Maru.

18

DANIEL GERVAIS, THE TRIPS AGREEMENT DRAFTING HISTORY AND ANALYSIS, (2ND, THOMSON SWEET&MAXWELL), 299. 30

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PRAYER FOR RELIEF The Government of Maru

Declare that the action of Intellectual Property Department of Maru is valid and justifiable under the TRIPS Agreement

Declare that the compulsory license is valid and reasonable in accordance with “Declaration on the TRIPS Agreement and Public Health” and “Implementation of Paragraph 6 of the Doha Declaration on the TRIPS and Public Health”.

Declare that non-recognition of the court of Maru to recognize infringement beyond the literal terms of patent does not violate Article 28 of TRIPS Agreement

Respectfully Submitted. The Representative of The Government of Maru

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