CHAPTER 5: SOUTH AFRICAN INTELLECTUAL PROPERTY POLICY AND LEGISLATIVE ENVIRONMENT
“Today, in many developing and former communist nations, property law is no longer relevant to how the majority of people live and work. How can a legal system aspire to legitimacy if it cuts out 80% of its people? The challenge is to correct this legal failure.” – Hernando de Soto (2000)
South Africa became a member of the WTO on 1 January 1995, and has acceded to the TRIPS Agreement.42 In addition, South Africa is a member of most international treaties on IP law, including the Paris Convention, the PCT, the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure, the Berne Convention for the Protection of Literary and Artistic Works, the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), to name but a few.
As detailed in Kaplan (2009:1), South African IP law finds its origins in the Patents, Designs, Trade Marks and Copyright Act No 9 of 1916. Over the years, South African IP law has been amended, developed and adapted in line with South Africa’s accession to various international treaties. It now comprises the following: the Patents Act 1978 (Act No. 57 of 1978) as amended up to the Patents Amendment Act 2002)43, the Trade Marks Act 1993 (Act No. 194 of 1993),44 as amended, the Designs Act 1993 (Act No. 195 of 1993, as amended by the Intellectual Property Laws Amendment Act 1997),45 and the Copyright Act 1978 (Act No. 98 of 1978, as amended up to the Copyright Amendment Act 2002).46
Other legislation (as amended) relevant for inventions include: the Intellectual Property Rights from Publicly Financed Research and Development Act 2008 (Act No. 51 of 2008) (the IPR-PFRD Act); the Medicines and Related Substances Act 1965 (Act 101 of 1965),47 the Competition Act 1998 (Act 89 of 1998),48 and the Armaments Development and Production Act 1968 (Act No. 57 of 1968). A detailed discussion of the nuances in respect of these legislations will be provided below.
The extent to which the South African patent system has incorporated the TRIPS flexibilities (discussed in Chapter 4 supra and in Section 5.4 infra) into the Patents Act will also be discussed, bearing in mind South Africa’s accession to the TRIPS Agreement.
Until 2013, South Africa had not made public any attempts or drafts of an overarching national intellectual property policy. On 4 September 2013, the first draft National Intellectual Property Policy, the Draft IP Policy (2013) was published by the Minister of Trade and Industry (the dti) for public comment. Subsequently, almost three years after this first draft, on 6 July 2016, the Cabinet approved the Intellectual Property Consultative Framework, the IP Policy Framework (2016), which, according to the dti, “aims to facilitate what will be continuous engagement with governmental partners and society at large towards the formulation of South Africa’s IP policy.”49 Both the Draft IP Policy (2013) and the IP Policy Framework (2016) will be discussed in Section 5.5 below.
Policy statements in respect of a national policy governing intellectual property emanating from publicly financed R&D go back as far as 2002, despite the absence of an official National IP Policy to date. In this regard, the NRDS (2002:67), developed by the then Department of Arts, Science and Technology (now the DST), stated that:
“At present, South Africa has no formal policy framework for intellectual property protection of publicly financed research. One of the consequences of this is considerable uncertainty (among institutions and individuals) about intellectual property rights and their management, particularly when the research is publicly financed”.
The NRDS (2002:68) advocated an approach whereby “institutions to protect intellectual property developed from publicly financed research should be established.”
Following extensive public consultations, a policy framework, the IP Policy Framework (2006), governing intellectual property emanating from publicly financed R&D, was approved by the South African government in June 2006. This policy framework gave rise to the development and promulgation of the legislation proposed in the NRDS (2002), the IPR-PFRD Act. Although promulgated in 2008, the IPR-PFRD Act only came into effect in August 2010, following finalisation of its implementation regulations.
INSTITUTIONAL ARRANGEMENTS AND INFRASTRUCTURE
Companies and Intellectual Property Commission (CIPC)
In May 2011, the CIPC was established under the Companies Act 2008 as an independent juristic person reporting to the Minister responsible for the dti. The CIPC incorporated two pre-existing institutions, the Companies and Intellectual Property Registration Office (CIPRO) and the Office of Companies and Intellectual Property Enforcement (OCIPE).50 Kaplan (2009:2) discloses that the CIPRO had been established in 2002 following a merger of two former directorates of the dti, as the registrar of patents, designs and trademarks and custodian of the registers of associated rights. The CIPC is the custodian of intellectual property registration and is headed by a Commissioner. According to the CIPC Annual Performance Plan, CIPC (2013:4), it has an important element to its mandate, namely:
“It administers, regulates and protects South Africa’s Intellectual Property assets in accordance with the provisions of a range of legislation enacted over a number of decades.”
Accordingly, the CIPC is responsible for registration of patents in South Africa and its responsibilities include:
Registration of Companies, Co-operatives and Intellectual Property Rights (trademarks, patents, designs and copyright) and maintenance thereof;
Disclosure of information on its business registers;
Promotion of education and awareness of Company and Intellectual Property Law;
Promotion of compliance with relevant legislation;
Efficient and effective enforcement of relevant legislation;
Licensing of business rescue practitioners; and
Reporting, researching and advising the Minister on matters of national policy relating to Company and Intellectual Property Law.51
It is thus evident that the CIPC has a broad mandate. In relation to intellectual property matters, the CIPC houses or acts as the patents office referred to in the Patents Act.52 The Commissioner also acts as the Registrar of Patents.53 However, the dti still has the primary responsibility for policy matters relating to intellectual property, and it provides the framework for registration and granting of rights, as per Kameri-Mbote (2005).
National Intellectual Property Management Office (NIPMO)
NIPMO, as stated by Ncube et al (2014:292), oversees the implementation of the IPR-PFRD Act; this office was established in 2010 in terms of Section 8 of the IPR-PFRD Act with the responsibility of promoting the objects of the IPR-PFRD Act. In particular, as highlighted by Chetty (2009), in alignment with Section 9 of the IPR-PFRD Act, NIPMO is responsible for ensuring the identification, protection and commercialisation of intellectual property emanating from publicly financed R&D.54 Other authors, such as Kraemer-Mbula et al. (2011:37) articulate NIPMO’s role as being:
“to put in place mechanisms to encourage, monitor and quantify intellectual property resulting from publicly financed R&D; and directly support the development of TTOs at public HEIs [Higher Education Institutions] and public research institutions to identify, protect and, where applicable, commercialise their intellectual property.”
NIPMO reports to the DST, which is responsible for issues relating to innovation and, in particular, for funding and promoting research, science and innovation. Accordingly, the fact that it does not report to the dti, the ministry responsible for IP matters in South Africa, is an IP policy conundrum. That being said, as articulated by Teljeur (2003:50), legislation affecting intellectual property rights can originate in or involve the participation of a number of government departments. Some of these include the Department of Agriculture, which is responsible for Plant Breeders’ Rights; the Department of Environmental Affairs, which is responsible for administering South Africa’s obligations in terms of the Convention for Biodiversity and bio-prospecting regulations;55 the Department of Health, in respect of the Medicines and Related Substances Control Act, 1965, which allows for parallel importation of medicines.56 As per Gregory (2008:7), the fact that there are ministries or government departments other than the dti involved with intellectual property policy and legislation is not surprising, given the cross-cutting nature of IP.57 That being said, the lack of coordination poses a real policy conundrum.
An analysis of Section 9 of the IPR-PFRD Act suggests that NIPMO’s role is both an enabling one, in terms of establishing capacity at publicly financed institutions and enabling commercialisation of IP, as well as a compliance one, in respect of the reporting of IP that falls under the IPR-PFRD Act.58 In terms of the former role, NIPMO has the primary responsibility of providing incentives for IP creators;59 assisting with the establishment of Offices of Technology Transfer (OTTs) at publicly financed institutions;60 assisting the institutions with intellectual property transactions and commercialisation; and providing guidelines on management and commercialisation of intellectual property.61 In addition, NIPMO is mandated to establish and manage an IP Fund62 to provide financial assistance to institutions for IP protection. In terms of its compliance role, this comprises monitoring, evaluating and reviewing of recipients’ IP management; protection, reporting and commercialisation obligations;63 intellectual property transactions;64 acquiring IP on behalf of the State65, owing to a recipient’s failure to disclose or commercialise IP; as well as regulating the calculation of full cost funding of R&D to give effect to the provisions of s15(4) of the IPR-PFRD Act. In an analysis of the effects of the IPR-PFRD Act on value generation at HEIs, Ncube et al. (2014:299) argue that NIPMO compliance requirements are far too onerous. However, they also point out that this could be mitigated by improved administrative practices at the OTTs, as already seen by the use of databases by the University of Cape Town. In addition, NIPMO’s financial assistance in capacity enhancement is also seen as a mitigating factor to the onerous reporting burden.
Offices of Technology Transfer (OTTs)
Offices of Technology Transfer (OTTs) have been established in a number of institutions in South Africa to give effect to Sections 6 and 7 of the IPR-PFRD Act, essentially to manage IP at the institutions, as stated in Kraemer-Mbula et al. (2011:37). At the time of writing this thesis, South Africa had 23 HEIs and 10 statutory institutions including research institutes listed in Schedule I of the IPR-PFRD Act.66 In general, OTTs are relatively new structures at both HEIs and research institutes, as detailed in Sibanda (2009:130). Wolson (2009) notes that the OTTs at the CSIR, MRC, University of Cape Town, Stellenbosch and Pretoria have been functioning for much longer, prior to the promulgation of the IPR-PFRD Act.
According to the NIPMO, of the 23 HEIs and the 10 Schedule 1 institutions, NIPMO had, by the end of 2014, approved all the HEIs’ IP Policies (except at the University of Venda), as well as seven of the Schedule 1 institutions’ IP Policies (except for the NRF, HSRC and WRC).67 As detailed in Chetty (2009:81), most of these institutions have, with the support of NIPMO, established OTTs to manage intellectual property in accordance with the IPR-PFRD Act. Three new HEIs are currently being established and it is too early to expect them to have any IP Policies at this stage, as they still have to admit students. In a recent position paper, SiMODISA (2014:49) points out that the IPR-PFRD Act:
“enhances the ‘triple helix’ by introducing formal structures at research institutions, such as technology transfer offices (TTOs). These structures act to ensure technology transfers and knowledge flows between research institutions and industry so that technology is further developed and commercialised.”
Other than the IPR-PFRD Act scheduled institutions, other public entities that had consulted NIPMO on development of their IP Policies, included Eskom, the South African National Biodiversity Institutions (SANBI), the National Health Laboratories Services (NHLS), the South African Weather Services, the South African National Space Agency (SANSA), the Square Kilometre Array South Africa (SKA-SA), the Development Bank of Southern Africa (Green Fund), the Iziko Museums of South Africa, and Transnet (NIPMO, 2014).. Wilson (2005) advances the view that OTTs are an important component of effectively commercialising IP at publicly financed institutions. This view has been investigated further as part of this study and the findings are presented in Chapters 8 and9.
Intellectual Property Education
IP is offered at undergraduate level as an elective rather than as a compulsory course in undergraduate law degree studies at South African HEIs. Over the past few years, a number of chairs in IP have been established at the Universities of Cape Town, South Africa, Stellenbosch and Pretoria. The establishment of these chairs has been driven by the recognition of the growing importance of IP, not only for lawyers, but also for innovation; consequently, the need to develop course material for non-legal students has been recognised. Accordingly, there has been an increase in post-graduate certificate, diploma and degree courses in IP, offered by, inter alia, the University of Stellenbosch, the University of Cape Town, the University of South Africa, the University of the Witwatersrand, the University of Pretoria and the University of the Western Cape.
The South African Institute of Intellectual Property Law (SAIIPL)68, which is a member-based organisation, offers the IP industry courses for prospective IP practitioners and for patent attorneys in collaboration with the statutory Patent Examination Board (PEB)69, which is administered by the dti. The Patents Act provides that any person entitled to practice as an attorney in South Africa may, on passing the examinations set by the PEB, be registered to practice as a patent attorney.70
Notwithstanding the above, there is still a need for IP to be taught to scientific and engineering students, in an integrated manner, perhaps through a prescribed course that covers essential topics, such as copyright, trademarks, patents and industrial designs. The principles need to be incorporated into student course work and projects as part of science and engineering undergraduate degrees. Given the growing importance of IP in society, introducing these principles at much earlier stages, say at high school, for instance, may also assist in developing an IP and innovation culture.
LEGISLATIVE AND POLICY FRAMEWORK
Patents Act of 1978
The Patents Act regulates the protection of inventions in South Africa. A critical review of this legislation and the criteria that an invention must comply with for a valid patent to be granted is detailed in Burrel (1999:10). In this regard, s25(1) states that a patent may be granted for:
“any new invention which involves an inventive step and which is capable of being used or applied in trade or industry or agriculture.”
In terms of this definition, three requirements must be met for an invention to be deemed patentable: it must be novel, involve an inventive step and have industrial applicability. In respect of novelty, as disclosed in Pechacek (2012:203), the invention must not form part of the state of the art immediately before the priority date of the first filing of a patent application covering the invention. The test, as detailed in WIPO (2011:59) and Burrel (1999:151), is one of absolute novelty, except where the disclosure has been made fraudulently without the patentee’s consent. As stated in the Study on Patents and the Public Domain in WIPO (2011:109), “prior [public] knowledge and use by a single [person] is sufficient” ground for any prior knowledge that was not protected at the time to comprise the public domain and hence destroy the novelty of the invention.71 Given that s25(8) of the Patents Act regards secret use …. and on a commercial scale of an invention
as part of the state of the art, it would appear that an invention that is used “secretly and not on a commercial scale” would not comprise the state of the art, as in the AECI Explosives case.72 In the case of inventive step, s25(10) of the Patents Act requires that the invention not be obvious to a person skilled in the art, having regard to any matter forming the state of the art immediately before the priority date.73
S25(2) then provides a list of what are deemed not to be inventions, thereby providing limitations. In particular, the following are deemed not to be inventions and therefore not patentable in terms of South African law:
a scientific theory;
a mathematical method;
a literary, dramatic, musical or artistic work or any other aesthetic creation;
a scheme, rule or method for performing a mental act, playing a game or doing business;
a program for a computer; or
the presentation of information.”
In essence, the above subject matter fails the test for invention in most cases for a number of reasons, including the extent of determining novelty (e.g. in the case of a discovery, as in essence, a discovery is something that has existed but that has not yet been located), and not involving technical character (e.g. presentation of information and the creation of a program for a computer, both of which are protected by copyright), as per Klopper et al. (2010:273).
S25(3) of the Patents Act goes on to provide an explanatory qualifier in respect of the subject matter of s25(2) and states that it “relates to that thing as such.”74 Until 2013, South African courts had not considered the case of patentability of any of the subject matter falling within the scope of s25(2). In particular, an interpretation of “that thing as such” qualifier, which is a vague phrase had not been before any of the South African courts for consideration. In 2013, the Supreme Court of Appeal was presented with an opportunity to pronounce on the meaning of “as such” when considering the patentability of a computer program in the Standard Bank of SA v 3MFuture Africa case,75 but it failed to do so. The case involved 3MFuture’s patent for a ‘Transaction Authorisation System’ designed to solve the problem of bank card fraud in transactions, particularly but not necessarily where the card holder and the supplier are in different locations. In the trial court, Standard Bank and MTN had alleged that the patent was invalid. The trial court found three of the claims to be valid and the others invalid; consequently, gave 3MFuture an opportunity to amend the claims. Standard Bank and MTN further challenged the validity of the patent. In determining the matter, the court took the view of only addressing the claims found to be valid and deciding instead to deal with the issue of novelty, without going further to pronounce on the meaning of “as such” in the Patents Act.
“I assume for present purposes that the method is indeed an invention, and need only deal with the objection against novelty, because I consider it to be decisive of the appeal, which means lack of inventiveness does not arise.”
Accordingly, to date, there has not been any litigation or South African case law in terms of the meaning of “that thing as such.”
Table of Contents
GLOSSARY OF TERMS, ABREVIATIONS AND ACRONYMS
LIST OF FIGURES
LIST OF TABLES
CHAPTER 1: INTRODUCTION
1.2 DEFINITION OF CONCEPTS
1.3 STATEMENT OF THE PROBLEM
1.4 RESEARCH OBJECTIVES
1.5 POINTS OF DEPARTURE, ASSUMPTIONS AND HYPOTHESES
1.6 SUMMARY AND STRUCTURE OF THE THESIS
CHAPTER 2: RESEARCH DESIGN AND METHODOLOGY
2.2 PRIMARY AND SECONDARY DATA
2.4 LIMITATIONS OF THE STUDY
CHAPTER 3: SOUTH AFRICA’S MACROECONOMIC ENVIRONMENT
3.2 CONTEMPORARY SOUTH AFRICA
3.3 DOMINANT ECONOMIC SECTORS, EXPORTS, IMPORTS AND BALANCE OF PAYMENTS
3.4 SOUTH AFRICA’S RELATIVE GLOBAL POSITIONING
3.5 SOUTH AFRICAN DEVELOPMENT POLICY ENVIRONMENT AND FUTURE OUTLOOK 50
CHAPTER 4: INTERNATIONAL LEGAL INSTRUMENTS RELATING TO INTELLECTUAL PROPERTY
4.2 PARIS CONVENTION
4.3 PATENT COOPERATION TREATY (PCT)
4.4 AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (“TRIPS Agreement”)
CHAPTER 5: SOUTH AFRICAN INTELLECTUAL PROPERTY POLICY AND LEGISLATIVE ENVIRONMENT
5.2 INSTITUTIONAL ARRANGEMENTS AND INFRASTRUCTURE
5.3 LEGISLATIVE AND POLICY FRAMEWORK
5.4 TRIPS FLEXIBILITIES AND APPLICATION IN SOUTH AFRICAN PATENT LAW
5.5 NATIONAL INTELLECTUAL PROPERTY POLICY
CHAPTER 6: SOUTH AFRICAN NATIONAL SYSTEM OF INNOVATION
6.2 NATIONAL SYSTEM OF INNOVATION
6.3 INSTITUTIONAL ARRANGEMENTS AND INFRASTRUCTURE
6.4 LEGISLATIVE AND POLICY FRAMEWORK
CHAPTER 7: PERFORMANCE OF THE SOUTH AFRICAN INTELLECTUAL PROPERTY SYSTEM
7.2 DOMESTIC PATENTING IN SOUTH AFRICA
7.3 PCT PATENT APPLICATIONS
7.4 USPTO GRANTED PATENTS
7.5 EPO PATENTS
7.6 COMPARATIVE PERFORMANCE AMONGST THE BRICS COUNTRIES
CHAPTER 8: PERFORMANCE OF THE SOUTH AFRICAN INNOVATION SYSTEM
8.2 KNOWLEDGE PRODUCTION AND R&D EXPENDITURE
8.3 HUMAN CAPITAL DEVELOPMENT
8.4 COMMERCIALISATION AND TECHNOLOGY TRANSFER SUPPORT AT INSTITUTIONS 272
8.5 INSTITUTIONAL ARRANGEMENTS IN COMMERCIALISATION
8.6 IP COMMERCIALISATION IN INSTITUTIONS
8.7 SELECTED LIST OF 10 CASE STUDIES OF COMMERCIALISATION OF SOUTH AFRICAN TECHNOLOGIES
8.8 GLOBAL PERFORMANCE INDICES
CHAPTER 9: CONCLUSIONS AND RECOMMENDATIONS TOWARDS AN IP-ENABLED INNOVATION ECOSYSTEM
9.2 INTERNATIONAL ARRANGEMENTS AND DOMESTIC IP SYSTEM
9.3 SOUTH AFRICAN IP SYSTEM AND TRIPS FLEXIBILITIES
9.4 BOOSTING USE OF THE IP SYSTEM AND PARTICIPATION BY SMES IN THE NSI
9.5 IP MANAGEMENT AT PUBLICLY FINANCED INSTITUTIONS
9.6 PATENTING IN TECHNOLOGY SECTORS AND THE NSI
9.7 IP ENABLED TECHNOLOGY TRANSFER AS MECHANISM FOR STRENGTHENING THE NSI
9.8 A FRAMEWORK MODEL BASED ON LESSONS FROM SOUTH KOREA FOR AN IP ENABLED INNOVATION ECOSYSTEM FOR SOUTH AFRICA
9.9 IS THERE A POSSIBLE CASE FOR REPOSITIONING OF THE SCIENCE COUNCILS? . 354
9.10 COMPARATIVE POSITION OF SOUTH AFRICA AMONGST THE BRICS COUNTRIES 355
9.11 AREAS FOR FURTHER RESEARCH
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