Draft Intellectual Property Policy of the Republic of South Africa – Phased Implementation – IP and Public Health – Part III

On August 25, 2017, the Draft Intellectual Property (IP) Policy (Draft IP Policy) of the Republic of South Africa was published for public comments by November 17, 2017.  This Draft IP Policy follows from the IP Consultative Framework that was approved by the South African cabinet on July 6, 2016.  In this multi-part series, we address the need for the policy, the goals, the strategies to meet the goals, and the phases of implementation.  In the third part of this series, we focus on the phased implementation of the Draft IP Policy as it relates to IP and Public Health.  In part one, we provided an introduction and the goals of the Draft Intellectual Property Policy.  In part two, we provided information on the strategies and key reforms of the Draft IP Policy.

In order for the South African government to pursue urgent action in certain areas, conduct further in-depth study and consultation in other areas, and respond to a fast-evolving discipline, the Draft IP Policy will be implemented using a dynamic, two-phase approach.  Phase 1 will focus on:  1) IP and Public Health; and 2) International IP Cooperation.

The key components of IP and Public Health are as follows:

  • Local manufacture and export in line with industrial policy;
  • Patent–substantive search and examination;
  • Patent opposition;
  • Patentability criteria;
  • Disclosure requirements;
  • Parallel importation;
  • Exceptions;
  • Voluntary licensing;
  • Compulsory licenses; and
  • IP and competition law.

“International Cooperation” refers to the international treaties that South Africa will consider joining.  Specifically, South Africa will explore legal instruments and international treaties that are critical to advance the objectives of the Draft IP Policy. These will include:

  • Locarno Agreement Establishing an International Classification for Industrial Designs (1968);
  • Strasbourg Agreement Concerning the International Patent Classification (1971);
  • Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks (1973);
  • Nice Agreement Concerning the International Classification of Goods and Services for Marks (1979);
  • Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989); and
  • Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled (2013).

Phase 2 will focus on:

  • Intellectual Property Rights (IPRs) and the informal sector;
  • Branding of South African goods and services (collective marks, certification marks and GIs);
  • Safeguarding South Africa emblems and national icons;
  • Commercialization of IP;
  • Enforcement;
  • IP localization and beneficiation;
  • IP awareness and capacity building;
  • IPRs and the environment/climate change/green technologies; and
  • IP in agriculture, IP and biotechnology, genetic resources and genomic sovereignty.

As mentioned previously herein, this post will focus on phase 1, specifically, on IP and Public Health.  A future post will focus on phase 2.

a) Local manufacture and export in line with industrial policy

An overreaching goal of the Draft IP Policy will be to increase the local production of pharmaceuticals to meet domestic needs in South Africa.  In addition, the increase in production will lead to export opportunities throughout Africa and beyond.  This aspect of Phase 1 is in line with the National Development Plan (NDP), as well as the National Industrial Policy Framework (NIPF), and implemented through the Industrial Policy Action Plan (IPAP).  Substantive policy recommendations that follow in the NDP are designed to boost local production and export.  It has been recommended that additional policy measures be implemented, so that domestic industry is encouraged to take full advantage of the opportunities offered in the Draft IP Policy.

The pharmaceutical industry is one of the priority sectors identified by Industrial Policy Action Plan (IPAP).  The pharmaceutical market in South Africa is a two-tier pharmaceutical market, which is divided into a public and a private market.  This market is the largest in Sub-Saharan Africa, and worth a total estimated R40 billion (approximately $3 billion USD) annually.  However, the South African pharmaceuticals sector is still relatively small by international standards.  This sector constitutes a mere 0.4% value and 1% volume of the global market.  The contribution of this industry to South Africa’s GDP has also declined from 1.6% to 1.1% over the past six years.  Despite the decline, the sector provides direct employment to approximately 10,000 people, and the downstream segment provides approximately 25,000 jobs.  Thus, there is tremendous potential for this sector to grow and contribute value-added jobs to the South African economy.  The availability of employment opportunities is critical to whether a student or researcher channels her or his efforts toward a particular scientific area.  Thereupon, growth of the pharmaceutical production sector is important to developing and maintaining the science and technology community in South Africa.

Growth of the South African pharmaceutical industry will also contribute to the sustainability of supply and allow the country to fulfil key health objectives as outlined in the National Drug Policy.  Specifically, the growth of the industry will ensure the availability and accessibility of essential drugs.  Currently, approximately 65% of the demand for pharmaceuticals in South Africa, by value, is met by imports.  It has also been reported that medical products are the fifth largest contributor to South Africa’s trade deficit.  Imported pharmaceuticals have played an important role in improving public health.  However, increasing locally produced pharmaceuticals in South Africa will ensure the availability of medications specific to the country’s unique disease burden.  In order to treat many of the diseases in South Africa, medications are needed that require specific active pharmaceutical ingredients (APIs), of which global supply is limited.  Therefore, formulating an appropriate IP Policy and implementing the corresponding legal framework will contribute to significantly strengthening the local industry and meeting local needs.

b) Patent–substantive search and examination

Currently South Africa employs a deposit system for patent applications.  Therefore, patent applications are not subjected to a substantive search and examination (SSE) procedure.  A discussion on the proposed SSE was discussed in part two of this series.

c) Patent opposition

Currently, there is no opposition procedure in South Africa.  A patent may only be challenged after grant in an application for revocation, which must be brought before the Commissioner of Patents who is a High Court Judge.  Patent oppositions afford an opportunity for public intervention in the patent application process.  The Draft IP Policy recommends that participation in the process be made open in order to maximally benefit the state and South African industry.  Optimally, opposition proceedings will be enacted in the law, both prior to and after, the grant of a patent.  In the interim, owing to capacity constraints, the Draft IP Policy recommends that South African patent law recognize a third-party submission system or “observation” to stand in place of the pre-grant opposition process and that existing provisions in administrative law to be used in lieu of post-grant oppositions.

By their nature, opposition proceedings can achieve a range of policy aims in respect of substantive patent examinations.  Importantly, such proceedings seek to ensure that only those inventions that meet domestic statutory requirements for patentability are granted patent protection. Given the purpose of such proceedings, no legitimate public purpose would be served by limiting the class of persons who may participate.  Put differently, no specific standing requirements should have to be met in order to oppose the grant of a patent.  From the perspective of the South African government, the choice of recognizing any particular opposition proceeding has implications for human and financial resources. Thus, the third-party observation mechanism is the least resource-intensive, as it does not trigger any specific procedure involving the third-party once the relevant information has been submitted.  Pre-grant opposition proceedings are potentially more resource-intensive as they require the South African government to put in place an administrative procedure that makes provision for the active participation of applicants and third-parties.  However, by harnessing available information and expertise relevant to the application for or grant of a patent, the state’s resources may effectively be supplemented.

The IP Policy aims to make a provision for a third-party observation mechanism in terms of which all self-identified parties would be entitled to make written submissions opposing the grant of any particular patent.  A provision will also be made for a post-grant opposition mechanism that would require the development and promulgation of regulations.  This would allow all such oppositions to proceed by way of administrative review, in accordance with the provisions of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”).  This provision would be available for as long as the contemplated system of post-grant opposition is not yet in force.  In addition, a legislative provision has been suggested  to allow for the introduction of pre-grant opposition proceedings once the Minister of Trade and Industry is satisfied that there is sufficient capacity within the substantive examination system to make appropriate use of such proceedings.

d) Patentability criteria

The Draft IP Policy states that, in line with emerging best practice, patentability criteria will be developed in order to promote genuine innovation through the patent system in South Africa, and the criteria will be implemented through the process of patent examination.  The criteria should form part of the Patents Act and also regulations and guidelines for patent examination.  The Draft IP Policy states that Article 27.1 of the TRIPS agreement allows South Africa the flexibility to interpret and implement patentability requirements in a manner consistent with its constitutional obligations, developmental goals, and public policy requirements.  Amongst other things, this would include the adoption of patentability criteria that address the country’s health and environmental concerns, as well as industrial policy objectives.  The Draft IP Policy mentions Australia, which in 2012 adopted legislation that upwardly adjusted the standards of patentability in Australia.

e) Disclosure requirements

Applicants are required to adequately disclose the nature of the invention therein, in order to gain a full and fair understanding of a patent application.  To assist in the process of examination of such applications, in addition to the existing disclosure requirements in the Patents Act, it is recommended that Applicants be asked to provide information regarding the status of similar and related applications filed in other international jurisdictions.

The Draft IP Policy provides that in terms of Article 29(1) of the TRIPS agreement, an Applicant for a patent disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art. The patent law in South Africa already provides that a complete patent specification must sufficiently describe, ascertain and, where necessary, illustrate or exemplify the invention and the manner in which it is to be performed.  The Draft IP Policy recommends that Applicants be asked to provide information regarding the examination of corresponding patent applications in other countries.  This will assist the examiners during the search and examination procedure.

f) Parallel importation

South Africa’s unique developmental needs, particularly in public health, require the exploration of every legal opportunity to support the viability and expansion of the public health system.  In the case of patented products, such as medicines, this includes the ability to purchase said medicines from any external territory that is necessary.  The implementation of parallel importation will be undertaken in a controlled manner pursuant to consultations with respective stakeholders.

The parallel importation of medicines in South Africa is governed by the 1997 amendments to the Medicines and Related Substances Act 101 of 1965 (Medicines Act).  This legislation is administered by the National Department of Health (DOH).  The relevant provision applies notwithstanding any rights conferred in terms of the Patents Act.  A narrow interpretation of section 45(2) of the Patents Act in its current form could potentially give rise to challenges, should parallel importation be pursued.  Thus, there is a need to clarify that parallel importation of medicines in the manner prescribed in the Medicines Act does not constitute an infringement of the Patents Act.  Doing so would allow Ministries responsible for specific sectors to sanction sector-specific parallel importation in a controlled manner.  This importation would be pursuant to consultations with their respective stakeholders.  The result would be striking a balance between access and the interests of nascent industries.

g) Exceptions

The TRIPS Agreement explicitly states that the objective of promoting and enforcing IPRs is to contribute to the promotion of technological innovation and to the transfer and dissemination of technology.   This is to be done to the mutual advantage of producers and users of technological knowledge alike, and in a manner conducive to social and economic welfare, thus achieving a balance of rights and obligations.  As a means of striking a balance between the rights of owners and users of IPRs, Article 30 of the TRIPS Agreement allows members to provide limited exceptions to patent rights.  The Draft IP Policy mentions Bolar exemptions and research exceptions.  The Bolar exemption allows a party to obtain regulatory approval for a product prior to the expiry of a patent covering the product.  Currently, the South African Patents Act does not include a research exemption.  The Draft IP Policy appears to go further than a research exemption, stating, with reference to pharmaceutical products, that it is essential to facilitate research, development and testing of IP products in the commercial and industrial sectors prior to the expiry of the patent term.

 h) Voluntary licensing

A voluntary license occurs when a patent holder offers, on his or her own accord, a license to a third party to produce, market, and distribute the patented product.  In the South African public health context, the third-party has tended to be a domestic generic producer, or the Medicines Patent Pool (MPP), which acts as a public health intermediary to ensure generic producers voluntary licenses with access-friendly terms and conditions.  The Draft IP Policy recognizes that voluntary licensing has contributed to generic competition, lower prices and accessibility, particularly where antiretroviral drugs (ARVs) used in the treatment of HIV/AIDS are concerned.  The document recommends greater transparency in respect of the terms of these licenses, and encouragement to conclude such license agreements.

 i) Compulsory licenses

Draft IP Policy mentions that compulsory licenses are an important mechanism to ensure affordability of essential goods and to restrain anti-competitive practices.  The grant of a compulsory license is subject to an expensive judicial process and infers that there should be a less expensive and less complicated administrative process to apply for a compulsory license.  The Draft IP Policy mentions that, currently Section 4 of the Patents Act entitles a Minister of State to use an invention for public purposes, but requires negotiation on conditions of use, and if agreement cannot be reached then the State may approach the Commissioner of Patents to determine the conditions.  The Draft IP Policy suggests that prior negotiations and determination by the Commissioner of Patents should not be required, and that the law should be amended so that the State can take advantage of flexibilities provided in the TRIPS agreement.  The Draft IP Policy states that the South African Government is fully aware of the limitations of “Paragraph 6”, and will engage stakeholders to find ways of ensuring simpler implementation.  This is a reference to the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health which relates to compulsory licenses for local manufacture and export.

 j) IP and Competition Law

The Draft IP Policy mentions recent competition law cases involving IP and public interest.  In 2001, instead of using the provisions of the Patents Act, a complaint was lodged with the Competition Commission against pharmaceutical companies which held patents on a number of ARV pharmaceuticals in South Africa.  This led to a settlement and the patentees agreed to license the patents to South African pharmaceutical companies and, as a result, these pharmaceuticals have been made available successfully in SA.  The Draft IP Policy recommends the clarification of the scope of intersection between competition law and IP.  In this regard, the document states that both competition law and patent law can be used to implement competition-related TRIPS flexibilities and advance consumer welfare.

Please continue to watch the BRIC Wall Blog for the remainder of the series on the Draft Intellectual Property Policy of the Republic of South Africa.

This post was written by Lisa Mueller and Kate Merath of Michael Best and David Cochrane of Spoor & Fisher.


Draft Intellectual Property Policy of the Republic of South Africa – Strategies and Key Reforms – Part II

On August 25, 2017, the Draft Intellectual Property (IP) Policy (Draft IP Policy) of the Republic of South Africa was published for public comments due by November 17, 2017. This Draft IP Policy follows from the IP Consultative Framework that was approved by the South African cabinet on July 6, 2016.  In this multi-part series, we address the need for the policy, the goals, strategies to meet the goals, and the phases of implementation.  In the second part of this series, we focus on the strategies and key reforms of the Draft IP Policy.  In part one, we provided an introduction and the goals of the Draft Intellectual Property Policy.

As discussed in part one, the goals of the Draft IP Policy are:

  • To consider the development dynamics of South Africa and improve how IP supports small institutions and vulnerable individuals in society, including in the domain of public health;
  • To nurture and promote a culture of innovation, by enabling creators and inventors to reach their full potential and contribute towards improving the competitiveness of South African industries;
  • To promote South African arts and culture; and
  • To solidify South Africa’s various international obligations, such as the Convention on  Biological Diversity (CBD) and the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (Nagoya Protocol on ABS), in the service of genetic resources and traditional knowledge associated with genetic resources.

The primary strategies that will be employed in the Draft IP policy to achieve the above-listed goals, include:

  • Advancing a balanced and coordinated approach to IP that regulates intellectual property rights (IPRs) in line with the South African Constitution;
  • Introducing key policy reforms that account for the developmental dynamics of South Africa;
  • Promoting an innovation and knowledge economy; and
  • Leveraging competitive and comparative advantages to advance the transformation of the South African economy.

One of the key reforms will be the introduction of substantive search and examination (SSE) for patents. The introduction of this key reform will aid in ensuring that genuine innovation is stimulated within South Africa. A major benefit to the public at large will be ensuring that patents, and hence market exclusivity, are only granted when appropriate.  A major benefit to patent holders is that they will be granted rigorously assessed rights that are more likely to withstand validity challenges.

Initially, SSE will be applied in the health sphere due to capacity constraints and resources of the South African Patent Office (SAPO). However, as the capacity of SAPO progressively increases, SSE will be expanded to other fields.  The decisions on the initial fields in which SSE will occur will be decided by the Inter-Ministerial Committee on Intellectual Property (IMCIP) in consultation with a diversity of stakeholders.  Although the draft policy document states that these will not be the only technical areas that will be examined, the pharmaceutical and life sciences areas will be one of the initial fields to undergo SSE.  In anticipation of these changes, the South African Patent Office has hired 20 recruits who are currently undergoing training to become patent examiners.  These recruits have degrees in physics, chemistry, and life sciences.

Another key reform focuses on ensuring that South Africa protects IP rights, while simultaneously promoting public health, local manufacture, research and development, innovation, food security, environmental considerations, transfer of technology, and overall socio-economic development. This reform will be addressed by the leveraging of flexibilities contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

The promotion of economic through implementation of a “utility model” is another key area of reform. It is important to note that the term “utility model” may be addressed differently in other countries.  Other frequently used terms are “petty patents”, “short-term patents”, and “innovation patents.”  Exclusivity is enacted similar to a patent right, which is granted to an inventor or the inventor’s assignee, by the state, for a fixed period of time.  In contrast to a typical “original” patent, the terms and conditions for granting a utility model include a shorter term of protection and less stringent patentability requirements.  This utility model will support the registration of patents by resident small, medium, and micro-enterprises (SMMEs), historically disadvantaged individuals, and companies who are operating in the informal sector.

In order to protect nationally-owned IP related to indigenous resources, traditional innovation, and traditional knowledge, South Africa is taking a coordinated approach to create awareness about IP among its citizens. Specifically, South Africa will create a system for the protection of traditional knowledge that will not only safeguard such knowledge from misappropriation and exploitation, but will also promote research and development in the area of products and services based such knowledge.  The situation with the protection of traditional knowledge in South Africa currently is quite complicated.  The National Environmental Management: Biodiversity Act 10 of 2004 (NEMBA) provides for benefit sharing, and the Patents Act was amended in 2005 to provide for disclosure in the event that indigenous (i.e. indigenous to South Africa) biological or genetic resources were used in the development of the invention, and to ensure compliance with NEMBA.  In 2013, the Intellectual Property Laws Amendment Act 28 of 2013 was promulgated in an attempt to amend the current IP laws to allow protection for indigenous knowledge.  Regulations have not been promulgated and the IP Laws Amendment Act have not come into effect.  In fact, the IP Laws Amendment Act has been criticized, because the current IP laws cannot be amended to cater for indigenous knowledge.  Another bill that provides a sui generis system for the protection of indigenous knowledge has been proposed.  Many in South Africa hope that the IP Laws Amendment Act will be repealed and replaced by the proposed bill.

Additional key reforms addressed by the Draft IP Policy include the promotion of cooperation and integration on IP, a commitment to all relevant international obligations that South Africa is party to, and the promotion of international best-practices in IP that align with South Africa’s development strategies. 

Please continue to watch the BRIC Wall Blog for the remainder of the series on the Draft Intellectual Property Policy of the Republic of South Africa.

This post was written by Lisa Mueller and Kate Merath of Michael Best and David Cochrane of Spoor & Fisher.


Mexico Faces Renewed Pressure to Implement the 1991 Act of the UPOV Convention

In 1997, as a result of the commitments arising from the North American Free Trade Agreement (NAFTA), and after the publication of the Federal Law on Vegetal Varieties drafted in accordance with NAFTA, Mexico officially adopted the International Union for the Protection of New Varieties of Plants (UPOV) Act of 1978.

As with all UPOV member states, the criteria for the protection of plant varieties in Mexico is that the plant variety be: (1) new, (2) distinctive, and (3) uniform and stable. However, the enforcement of plant breeder rights in Mexico substantially differs from other jurisdictions. As a signatory of the UPOV Act of 1978, instead of the updated 1991 Act, the term of protection for plant varieties is shorter than in most countries, namely, 18 years for perennial species (forest and fruit trees, vines and ornamentals) and their rootstocks) and 15 years for all other varieties.

In 2012, there was an attempt to approve a new Federal Law on Vegetal Varieties to bring Mexico in line with the UPOV Act of 1991 (1991 UPOV Act).  Unfortunately, due to the fragile state of the Mexican agricultural system along with several other issues, approval of the 1991 UPOV Act did not occur.  In 2012, the fragile state of Mexico’s agricultural system was due to the lack of regulations to properly address the social and economic complexities associated with the system as well as the challenges associated with obtaining access to financial resources to further develop the system within the country.

However, the recent negotiations of the Trans-Pacific Partnership (TPP) as well as the current renegotiation of the NAFTA Agreement have resulted in new initiatives from the agroindustry in Mexico to modify the law and implement the 1991 UPOV Act.  Implementation of the 1991 UPOV Act would provide additional rights for plant breeders and improve the economic development of the agricultural industry.

Regarding the new initiatives, three particular areas are specifically being highlighted

a) Extension of the term of protection from 15 to 18 years to 20 to 25 years (depending on the species), in order to provide an equitable remuneration for the breeder and also to distribute the cost of the investment

b) Extension of the scope of protection to cover not only propagating material but also the product resulting from the harvest; an

c) Incorporation of the concept of “essentially derived variety” for the purpose of encouraging

The main objective of these proposed initiatives is to increase the competitiveness of Mexican developed varieties by improving the research programs available for Mexican native species, strengthening the enforceability measures available for protected varieties in order to promote an environment of innovation and investment as well as facilitate access and the transfer of technologies.

The most recent initiative is currently under internal review by the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA), however, there is a chance these may addressed sooner by the Mexican Congress.  However, the pace of the renegotiation of NAFTA will likely set the timetable for any movement on these initiatives.

This post was written by Lisa Mueller and Abraham Díaz and Erwin Cruz of Olivares.

Healthcare Reform in the Ukraine and Investment Opportunities for the Private Sector

Since the time of the Soviet Union (USSR) and pursuant to Ukraine’s Constitution, medical care in Ukrainian public hospitals (most hospitals are public hospitals) is supposed to be “free of charge” for all citizens.  However, unlike the USSR, Ukraine is simply unable to sufficiently finance the extremely high costs associated with providing such free healthcare as well as maintain the outdated infrastructure of a number of public healthcare facilities. As a result, many patients in the Ukraine must pay for their healthcare, although these payments are often made “unofficially” (e.g., directly to doctors). Given this tension, as well as other weaknesses of Ukrainian healthcare system, many have called for its reform.

In November 2017, the Ukrainian Parliament approved a new law implementing this much awaited and needed healthcare reform.  As a result of this new law, the market in Ukraine for new pharmaceuticals is expected to grow fairly significantly due to the diversified funding for various medical services and drugs as well as a new drug reimbursement program.  Additionally, the diversified funding for healthcare in Ukraine will create a number of investment opportunities for the private sector which are expected to help grow the Ukrainian economy.  Highlights of the new law, the potential investment opportunities for the private sector, the timeline for implementation and unanswered questions and potential challenges regarding this new law are discussed in more detail below:

Highlights of the new law:

  • Diversified funding. The concept of universal and theoretically free healthcare, as inherited by Ukraine from the USSR, will now be limited. Specifically, Ukraine will annually allocate at least 5% of its GDP to guarantee full tax-funded coverage for a limited list of medical services and drugs (“guaranteed package”). Any medical services or drugs falling outside of the guaranteed package may be financed through official payments from patients, private medical insurance or other channels.
  • Service-based payments. Ukraine will directly pay providers of the guaranteed package for their services. Such payments will be based on nationwide tariffs and will be administered through agreements between providers and the National Health Service of Ukraine (“NHSU”).
  • Provider competition. Public and private healthcare providers will be equally eligible for state funding of the guaranteed package.
  • Drug reimbursement. Currently in the Ukraine, with respect to drugs, the market operates as follows:
    • the government and public healthcare institutions purchase drugs via public procurements;
    • a certain percentage of drugs are covered by an existing pharmacy-based reimbursement program; and
    • all remaining drugs are paid for by patients who purchase the drugs through pharmacies.

The new law is expected to make the market more balanced and flexible. The limits of drug coverage by the Government will be more clearly defined. Additionally, although Ukraine has implemented a pilot pharmacy-based reimbursement program for a limited number of pharmaceuticals and disease areas (such as cardiovascular diseases, diabetes and asthma), in view of the new law, this program will be significantly expanded. Specifically, beginning in 2020, drug reimbursement will automatically become a part of the guaranteed package. Moreover, the scope of pharmaceuticals subject to reimbursement will be defined based on the National Essential Medicines List and approved annually by the state budget law together with other elements of guaranteed package. Patients receiving ambulatory medical care will receive pharmaceuticals covered by the scheme through retail pharmacies based on reimbursement agreements with the NHSU.

Investment opportunities for the private sector based on the future diversified funding of healthcare in Ukraine:

  • Payment for medical services by the government and third parties will make involvement of the private sector in healthcare commercially viable.
  • National tariffs for the guaranteed package should make the economics of healthcare sector more predictable and permit longer term financial planning for service providers and investors in Ukraine.
  • Performance-based Public Private Partnership (PPP) contracts (based on the combination of availability of service-based payments and direct user charges) may be available. These PPP contracts will provide flexibility for the public and private partners in the management, control and upgrade of healthcare facilities.
  • Market practices relating to the guaranteed package will become transparent and unified. Specifically, equal payment terms and a competitive environment are expected to improve the cost-efficiency and quality of healthcare services available in the country.
  • A new drug reimbursement scheme should make the state funding of the Ukrainian pharmaceutical market more flexible and predictable, thus raising its investment attractiveness.

Timeline for implementation of the new law:

The new law will be implemented in stages, beginning on January 1, 2018 and continuing through 2024.  The key stages of implementation are provided below in more detail.

  • 2018:
    • Primary medical care (e.g., first level general consultations, diagnostics and treatment of most common diseases and conditions, preventive measures, referral for specialist care, etc.)
    • Procedures, the guaranteed package and tariffs to be approved by the Government
    • Partial financing will be available through traditional budget subsidies
  • 2018-2019:
    • Transition period for other levels of medical care (e.g., emergency, specialized, highly specialized, palliative, pregnancy and childbirth medical care, medical rehabilitation)
    • Gradual implementation of reform through pilot projects for selected regions, helathcare facilities and various types of medical services
    • Procedures, the guaranteed package and tariffs to be approved by the Government
    • Partial financing will be available through traditional budget subsidies
  • 2020:
    • All levels and types of medical care will be covered by the reform
    • Drug reimbursement becomes part of the guaranteed package
    • Guaranteed package and tariffs to be approved by the state budget law
  • 2024:
    • From 2018 through 2024, there will be a 20% limit on the scope of medical services that can be charged by public healthcare providers directly to patients

Unanswered questions and potential challenges of the new law:

  • Implementation of a new regulatory framework. Implementation of healthcare reform will require additional legislative changes and by-laws, the timing of which is currently unknown. In parallel, amendments to the PPP regulatory framework (including those involving concessions) are in the process of being developed to allow for the efficient implementation of PPP projects.
  • Constitutional concerns. The Ukrainian Constitution guarantees free medical care which is to be provided by the public healthcare institutions. It is unclear whether the new law comports with the constitutional requirements. Confirmation by the Constitutional Court of Ukraine may be required to settle this question.
  • Paying for such an extensive guaranteed package. The general scope of the guaranteed package, as described in the law, is broad and includes all types of medical care. This creates a concern as to whether the Ukrainian budget will provide sufficient resources necessary to ensure adequate coverage under the new law. More clarity is expected once the proposals by the Government are released on the specific services and drugs (including their volumes) to be included in the guaranteed package.

Continue to watch the BRIC Wall Blog for further updates on healthcare reform in Ukraine.

This post was written by Lisa Mueller and Viktoriya Podvorchanska, Roman Stepanenko and Kateryna Oliynyk of EPAP Ukraine.

The Patent Prosecution Highway (PPH) Pilot Program and the Brazilian PTO – Recent Updates


The Brazilian Patent and Trademark Office (Brazilian PTO, also known as the Instituto Nacional da Propriedade Industrial (INPI)), has made two major announcements regarding the Patent Prosecution Highway (PPH) Pilot Program in Brazil since the beginning of November.

PPH Program with the European Patent Office

On November 7, 2017, the Brazilian PTO published Rule #202/2017 implementing the PPH Pilot Program (Program) with the European Patent Office (EPO).  The hope is that the implementation of the Program will result in faster examination of pending Brazilian patent applications having a counterpart allowed by the EPO.

Logistically, the Program will accept applications belonging to patent families whose earliest application has been filed in the Brazilian PTO or the EPO, or for PCT applications, where either the Brazilian PTO or EPO was used as the Receiving Office.  All applications are eligible with one notable exception.  Specifically, while applications in the field of chemistry or related technologies applied to medicine may be eligible for the Program, drug-related patent applications are specifically excluded.  More specifically, the application must be classified under the International Patent Codes (IPC) listed in the below table to be accepted.  However, applications classified under any of the group of A61K subclass, with the exception of group A61K8, are also excluded from the program.  Generally, IPC group A61K relates to preparations for medical, dental, or toilet purposes.  Group A61K8 relates to cosmetics or similar toilet preparations.

Basic Chemistry A01N, A01P, C05#, C06#, C09B, C09C, C09D, C09F, C09G, C09H, C09J, C09K, C10B, C10C, C10F, C10G, C10H, C10J, C10K, C10L, C10M, C10N, C11B, C11C, C11D, C99Z
Organic and fine chemistry C07B, C07C, C07D, C07F, C07H, C07J, C40B, A61K8¹, A61Q
Polymeric and macromolecular chemistry C08B, C08C, C08F, C08G, C08H, C08L
Medical technologies A61B, A61C, A61D, A61F, A61G, A61H, A61J, A61L, A61M, A61N, H05G

To be accepted in the Brazilian PPH program, an application must:

  1. Have a notification of filing or entry in the national phase in Brazil published by the Official Gazette of the Brazilian PTO;
  2. Already have been published (which can be effected by international publication (such as by a PCT application, if applicable);
  3. Have submitted a request for examination;
  4. Have all annuity fees duly paid;
  5. Have no pending Office Action awaiting response by the Applicant;
  6. Not have been accepted in any other fast-track examination program in Brazil;
  7. Not have been involved in a lawsuit in Brazil; and
  8. Not be a divisional application (except in the situation where the divisional application results from an original parent application due to a rejection due to a lack of unity of invention).

A request for participation in the Program must be made by all the Applicants in electronic form.  In addition to the other documents required by Rule #202/2017, an Applicant must submit, together with the request:

  1. Documents proving that the application meets the requirements of the Program;
  2. A table providing the correspondence between the claims in the Brazilian application and the allowed claims in the European application; and
  3. A copy of any non-patent prior art documents.

The Brazilian PTO will evaluate applications based on the date on which the request is filed.  Any applications that do not meet the requirements will receive an Office Action setting a sixty (60) day period to allow for any irregularities to be corrected or will be otherwise be denied participation in the Program.  Any application denied participation will be examined according to the normal procedures of the Brazilian PTO.  An applicant denied participation in the Program has an opportunity to appeal such a decision within 60 days of receipt of notification of denial.

The Brazilian-EPO PPH Pilot Program will begin on December 1, 2017 and will receive applications for a period of two (2) years.  A maximum of 300 applications will be accepted each year during the two (2) year period (for a total of 600 applications).

Brazil and the Chinese Patent Office 

On November 13, 2017, the Brazilian PTO and the Chinese Patent Office (SIPO, also known as the State Intellectual Property Office of the People’s Republic of China) signed a memorandum of understanding establishing a future PPH Pilot Program (Program) between the two offices.  Much like the Program described above in connection with the EPO, Applicants will be able to request faster examination for a Brazilian patent application whose Chinese counterpart has already been approved.

A rule setting for the requirements for eligibility for the Program is expected to be published in February.

Please continue to watch the BRIC Wall Blog for further updates on the PPH Pilot Program in Brazil.

This post was written by Lisa Mueller and Roberto Rodrigues Pinho (https://www.linkedin.com/in/roberto-rodrigues-pinho/)

Draft Intellectual Property Policy of the Republic of South Africa – Introduction and Goals

On August 25, 2017, the Draft Intellectual Property Policy (Draft IP Policy) of the Republic of South Africa was published for public comments by November 17, 2017.  This Draft IP Policy follows from the IP Consultative Framework that was approved by the South African cabinet on July 6, 2016.  In this multi-part series, we will address the need for the policy, the goals, strategies to meet the goals, and the phases of implementation.  In this first post, we will focus on an introduction and the goals of the Draft IP Policy.   

South Africa’s National Development Plan (NDP) calls for a greater emphasis on innovation, improved productivity, an intensive pursuit of a knowledge economy, and the better exploitation of comparative and competitive advantages.  Intellectual Property (IP) is an important policy instrument in promoting innovation, technology transfer, research and development (R&D), creative expression, consumer protection, industrial development, and more broadly, economic growth.   Knowledge, innovation and technology are increasingly becoming the drivers of progress, growth and wealth.  Thus, there is a need to for South Africa to transition towards a knowledge economy and IP will play an imperative role in this transition.  

There has been significant progress made in the development of IP within South Arica, which has in in part, ensured that it has a legislative framework that protects IP.  However, there is a need for a comprehensive IP  Policy  that  will  promote  a  holistic,  balanced,  and  coordinated  approach  to  IP  that is mindful of the many obligations mandated under the South African Constitution.  The policy will aim to promote and contribute to South Africa’s socioeconomic betterment by encouraging innovation, promoting local manufacture, preserving and leveraging the country’s resources and heritage, and empowering domestic industries and individuals who seek to take advantage of the IP system.  

One factor of particular importance, in which South Africa aims to address with the Draft IP Policy, is the intersection of IP and public health.  A key issue has been the role of IP in delivering public health, making it not only an IP issue, but also a human rights issue.  Specifically, a substantial issue with optimizing the role of IP in public health is that South Africa does not conduct substantive search and examination prior to the grant of patents.  The South African patent laws and implementing regulations are such that the Registrar of Patents, housed within the Companies and Intellectual Property Commission (CIPC), only conducts examination in relation to the formalities of the application.  South Africa employs a so called “depository system.”  Under the depository system, the subject of a patent application is only examined against the substantive criteria of novelty, inventive step, and industrial applicability if the patent is challenged in litigation.  This challenge could be in relation to infringement or revocation. 

The depository system for patents was instituted in South Africa due to resource constraints, whereby the cost of substantive examination is placed on parties that are directly interested in the patent.  The State is then able to direct scarce technical skills toward infrastructure and other key developmental areas.  However, there are substantial drawbacks for both producers and users of IP.  For producers of IP, the lack of examination may call into question the integrity of their patents, since the grant of a patent does not guarantee that the subject of the patent meets patentability criteria in the country, or that it does not contain subject matter excluded by law.  Another study conducted at a leading South African university, recently found that a significant number of patents granted in South Africa would not be granted under an examining system.  For users of IP, subject matter that should be in the public domain may be unfairly monopolized by exclusive rights.  An underlying policy rationale of patents is to serve as an incentive to stimulate innovation.  Granting an exclusive right, in the absence of genuine innovation, goes against the bargain that the patent holder is supposed to strike with society, namely, disclosure in return for monopoly protection.  This may result in a disadvantage to society and overall negative consequences for both access and innovation. 

The Draft IP policy cites a recent comparative study conducted by scholars from Columbia and Harvard Universities.  The study revealed that South Africa grants a far higher percentage of patents from all applications filed in the country than virtually any other comparable country.  On average, 93% of patents applied for in South Africa were granted, as compared to 61% in the United States of America, 53% in Mexico, 51% in the European Union (51%), and only 29% in Japan.  World Intellectual Property Organization (WIPO) statistics demonstrate that within comparable developing countries, the figures from India and Brazil show even lower rates of granting: in 2015, India granted 19% of all patent applications, while Brazil granted a14%. 

Beyond compliance with international obligations, South Africa aims to play its part in shaping the global order at various forums where IP is discussed such as in World Intellectual Property Organization WIPO, the World Trade Organization (WTO), the World Health Organization (WHO), the Group of Twenty (G20), political formations such as the Brazil, Russia, India, China and South Africa form (BRICS) and in African regional organizations.  This requires a coordinated South African approach to IP that is informed by South Africa’s development imperatives.  International cooperation must aim to make IP a tool to achieve sustainable development within the country. 

In general, the South African Constitution provides a balanced approach to property rights by affording protection against arbitrary deprivation of property, while also taking into account the public interest.  Public interest includes the nation’s commitment to bring about reforms that promote equitable access to services and products involving IP, such as public health.  The Draft IP policy will be an instrument of addressing the aforementioned issues.  

The goals of the Draft IP Policy are:

·        To consider the development dynamics of South Africa and improve how IP supports small institutions and vulnerable individuals in society, including in the domain of public health;

·        To nurture and promote a culture of innovation, by enabling creators and inventors to reach their full potential and contribute towards improving the competitiveness of South Africa’s industries;

·        To promote South African arts and culture; and

·        To solidify South Africa’s various international obligations, such as the Convention on  Biological Diversity (CBD) and the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (Nagoya Protocol on ABS), in the service of South Africa’s genetic resources and traditional knowledge associated with genetic resources.

The Draft IP policy includes strategies for meeting the outlined aims and key reforms.  The implementation of the comprehensive IP Policy will be implemented in a phased approach with this document, in Phase 1, focusing on IP and public health, coordination in international forums, and the implementation of commitments undertaken in international agreements.  This will be followed by a second phase that will focus on several remaining core concerns around IP.

Please continue to watch the BRIC Wall Blog for the remainder of the series on the Draft Intellectual Property Policy of the Republic of South Africa. 

This post was written by Lisa Mueller and Kate Merath of Michael Best and David Cochrane of Spoor & Fisher

Understanding Brazil’s Service Guideline #37 for the Examination of Patent Applications Claiming Pharmaceutical Products and Processes

On September 25, 2017, the Director of the National Sanitary Surveillance Agency (ANVISA) issued internal guidelines (Orientação de Serviço #37/2017) regarding the procedures to be used by the agency when examining patent applications claiming pharmaceutical products and processes in light of public health (in accordance with Article 229-C of Patent Statute #9,279/96, Resolution RDC #168, of 2017, the Joint Ordinance ANVISA/INPI #001, of 2017, and Ordinance GM/MS #736, of 2014).  According to these guidelines, ANVISA will follow the following procedures when reviewing applications claiming pharmaceutical products and processes.

  1. Upon receipt of a patent application from the Brazilian Patent Office (Instituto National da Propriedade Industrial (INPI)), ANVISA will assess the subject matter of the application to verify compliance with the provisions of Article 229-C of IP Law #9,279/96. Article 229-C provides that pharmaceutical patent applications shall receive a prior approval by ANVISA (often referred to as “prior approval” or “prior consent”). Specifically, Article 229-C provides that: “The grant of patents for pharmaceutical products and processes shall depend upon the prior approval from the National Sanitary Vigilance Agency.” 
  1. Once it is determined that prior approval or prior consent by ANVISA is required, an application is assessed with respect to its (1) health risk; and (2) interest under the drug or pharmaceutical assistance policies within the Brazilian Unified Health System (SUS). 
  1. The health risk of the application is assessed by determining whether the pharmaceutical product or process claimed comprises or results in substances included in List E (which is a list of prohibited plants which may give rise to narcotic and/or psychotropic substances) or List F (a list of substances banned in Brazil) based on Ordinance SVS/MS #344, of 12 May 1998, which relates to plants and substances (including salts and isomers thereof) that are prohibited for use in the country. Applications which do not claim a pharmaceutical product or process that comprise or result in substances included in Lists E or F are not considered to present a health risk.  If the application is considered to present a health risk, ANVISA will deny prior consent or prior approval and return the application to INPI, which will dismiss the application. 
  1. After determination of the absence of health risk, the application is reviewed to determine whether or not the pharmaceutical product or process is of interest to the drug or pharmaceutical assistance policies under SUS. An application is determined to be of interest to the drug policy or pharmaceutical assistance policy under SUS when:
    • The subject matter is related to one of therapeutic applications defined by Ordinance MS/GM #736, of 2014 as listed in Annex I (provided below); or
    • It is related to a product incorporated into SUS (except for drugs that are part of the Basic Component of Pharmaceutical Assistance (CBAF), which is guided by the National List of Essential Medicines (RENAME) in force); or
    • It is related to a product of potential interest to the SUS according to Annex II (provided below).

If the application is of no interest to the healthcare policy, ANVISA will grant prior consent or prior approval and send the application back to INPI for further processing.  However, if an application is determined to be of interest to the drug or pharmaceutical policies under SUS, ANVISA will send the application back to INPI for further processing along with a report providing an analysis of the patentability requirements to be used by INPI during examination.

An important take away is that according to the service guidelines, ANVISA is able to provide an opinion addressing the patentability requirements of applications claiming pharmaceutical products or processes.  Regrettably, this is a continued attempt by ANVISA to try and  work around case law that has clearly established that the agency is not allowed to evaluate the patentability requirements of such applications under Article 229-C.

Annex I 

Viral Diseases (antiviral and antiretroviral diseases)

Neglected diseases:


Chagas Disease


Rocky Mountain spotted fever





Systemic mycoses


Neurodegenerative diseases




Rheumatoid arthritis

Transplant rejection

Mental diseases (antipsychotics/anticonvulsants)


Psychosis / Schizophrenia

Neoplasias / Cancer (Oncology products)

Products obtained by biological routes

Provided that the therapeutic application is included in ordinance GM/MS 736/14

Vaccines and sera

Vaccines of the National Immunization Program

BCG vaccine

Hepatitis B vaccine

Diphtheria, tetanus, pertussis, hepatitis B and Haemophilus Influenza B vaccine

Diphtheria, tetanus and pertussis vaccine

Polio vaccine (VIP / VOP)

Pneumococcal vaccine (Pneumo 10, PN 23)

Human rotavirus vaccine

Meningococcal C vaccine

Yellow Fever vaccine

Hepatitis A vaccine

Measles, mumps and rubella vaccine

Measles, mumps, rubella, and varicella vaccine

Diphtheria and tetanus vaccine

HPV vaccine

Influenza vaccine

Rabies vaccine

Vaccines for sexually transmitted diseases

Vaccines for neglected diseases

Vaccines for cancer


Plasma concentration of factor VIII

Von Willebrand factor

Prothrombin complex (partially activated or human)

Recombinant activated factor VII concentrate

Plasma and recombinant factor concentrate

Plasma concentration of factor IX

Factor XIII concentrate

Excluded:  Fibrinogen, Tranexamic Acid and Desmopressin Acetate

Annex II

            Roadmap to identify patent applications of potential interest for SUS

  1. The patent application, to be identified as of potential interest to SUS, in addition to complying with Article 6 herein, should also comply with at least one of the following criteria:
    • Be related to a product registered with a sanitary authority of any country or region;
    • Be related to a substance under an active phase II clinical trial or higher, in any country or region, for a therapeutic application of interest to SUS;
    • Be related to high-cost drug that is part of the Specialized Component of Pharmaceutical Assistance (CEAF);
    • Be related to the drug provided in Partnership for Productive Development (PDP) or equivalent;
    • Be related to a request for priority examination made by the Ministry to Health to the INPI;
    • Has been filed with INPI less than six years ago.
  2. The patent application included in item A above may be exempted from a patentability examination for the purposes of supportive data if the application satisfies any of the below:
    • The product has its incorporation into SUS denied by the National Commission for the Incorporation of Technologies (CONITEC); or
    • The product is excluded from SUS; or
    • The invention is unlikely to be incorporated into SUS after conducting a prospective analysis.

Please continue to watch the BRIC Wall Blog for further updates on ANVISA and prior approval or consent in Brazil.

This post was written by Lisa Mueller and Roberto Rodrigues of Licks Attorneys.