Hitting the Ground Running: The Brazilian Patent Office Publishes New Guidelines Relating to the Examination of Chemical Inventions

On January 2, 2018, things got off to a fast start in Brazil with the publication of new guidelines (Guidelines) by the Instituto Nacional da Propriedade Industrial (INPI; also known as the Brazilian Patent and Trademark Office (BRPTO)) relating to patent applications involving chemical inventions. The Guidelines complement several other guidelines issued over the last few years, such as block I (BRPTO Rule #124/2013) and block II (BRPTO Rule #169/2016).

The issued Guidelines add substantive text when compared to the draft published for public comment in March 2017.  Specifically, some highlights of the Guidelines include:

  1. Definition of a chemical compound:  A chemical compound should be defined by its chemical structure or chemical name.  Compounds defined only by their physical, physicochemical or biological properties or by its use or application (functional claiming), will not be accepted.  An example of a type of claim that will not be accepted is:  “A compound characterized by having property Y”.
  2. Examination requirements for N-oxides: According to item 2.4 of Guidelines, a simple description of a N-oxide/salt/ester/ether of a known compound will be considered to be obvious unless the compound is associated with a non-obvious property or an “unexpected technical effect” over the prior art.  INPI uses very specific language in this section of the Guidelines thus giving particularly strong emphasis and meaning to the phrase “unexpected technical effects”.  It is important for applicants to keep this phrase in mind when drafting their applications for filing in Brazil.
  3. Esters, ethers, pro-drugs, solvates, hydrates, clathrates, and co-crystals: These terms alone, in the absence of any specific content (namely, a definition), will be interpreted as generic expressions, and as such, run the risk of receiving an “indefiniteness” type rejection during examination.  Applicants should consider defining these terms in the specification to reduce the risk of receiving such a rejection.
  4. Selection patents:  Comparative data between selected compound(s) claimed in an application and those of close structural similarity known in prior art should be provided for the purpose of demonstrating how the selected compounds are non-obvious over the prior art.  Specifically, applicants should demonstrate how the selected compounds exhibit an unexpected technical effect over the prior art compounds.
  5. Written description of polymorph inventions:  Advanced techniques used to characterize crystalline solid substances that were not foreseen in the Guidelines will be considered, in addition to x-ray diffraction data, by examiners in light of their relevance in the identification of the claimed crystalline solid.  Additionally, a lack of data characterizing a crystalline solid will result in the specification being considered to not clearly and sufficiently describe the claimed subject matter.  Moreover, INPI will consider the submission of further data on the characterization of crystalline solids after the filing date to be added subject matter (or new matter) which will not be accepted (however, such a decision could form the basis of a challenge in the Brazilian court system).
  6. Combination claims:  As discussed in the draft of the guidelines, when assessing the obviousness of a combination claim, the combination should not have been disclosed in the prior art in connection with compounds belonging to the same chemical class.
  7. New medical use claims: The specification should provide evidence supporting a new medical use as of the filing date of the application.  Failure to do so may result in the application being considered to lack an essential technical feature thereby resulting in the invention being considered to be insufficiently disclosed.  According to the Guidelines, extrapolation of “in vitro” tests to support an in vivo effect will only be possible when complementary information  proving equivalence is provided (such as through the use of a scientific publication stating that an in vitro-in vivo correlation exists).  Additionally, studies carried out in animal models must be capable of being extrapolated to humans or the animals being treated.
  8. Submission of additional data during prosecution:  Item 9.1.3 of the Guidelines states that an applicant can submit additional data during examination exclusively to complement the information already contained in the specification as originally filed.  If no experimental data is provided in the specification at the time of filing, there is a risk that INPI may reject the submission of such new data.

This post was written by Lisa Mueller and Roberto Rodrigues Pinho.

Draft Intellectual Property Policy of the Republic of South Africa – Phased Implementation – Phase 2 – Part IV

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 fourth part of this series, we focus on Phase 2 of the phased implementation of the Draft IP Policy.  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 part three, we provided information on the phased implementation of the Draft IP Policy as it relates to IP and Public Health.

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) will focus on International IP Cooperation (See, part three).

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 geographical indications);
  • 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.

a) Intellectual Property Rights (IPRs) and the informal sector

The informal sector in South Africa has provided opportunities for employment for some of the most vulnerable populations in the country.  This sector is not traditionally thought to generate the type of innovation that would require IP protection.  Nonetheless, the Draft IP Policy raises the question as to whether IP is of relevance to the informal sector.  However, that does not mean that this sector may not be empowered and entitled to IPRs.  A key component of Phase 2 will be to explore how IPRs may optimally benefit the informal sector and generate a greater understanding of the costs and benefits.  Specifically, it has been suggested that the IP system could be used to empower this sector of the economy by using intangible assets as a veritable tool for the uplifting of economically marginalized communities.  The benefits of utility models and industrial designs, among others, will be explored.

b) Branding of South African goods and services (collective marks, certification marks, and geographical indications)

A key component of Phase 2 is assessing whether the relevant legislation provides sufficient and appropriate brand protection to South African goods and services.  Three signs used in branding are collective marks, certification marks, and geographical indications.  Collective marks are signs used to distinguish certain valued characteristics common to the products of the members of an association or cooperative.  Certification marks are distinctive signs used to indicate compliance with standards and characteristics pre-established by the owner of the mark, but are not confined to any membership.  Geographical indications are signs that have a specific geographical origin and possess qualities, reputation, or characteristics that are essentially attributable to that place of origin.  Currently, the Trade Marks Act makes provision for both collective marks and certification marks, and for the application of the provisions of the Trade Marks Act to such marks in so far as they can be applied.   With respect to geographical indicators (GI), the Liquor Products Act (LPA) provides protection for wine and spirits.  The Merchandise Marks Act (MMA) protects broader agricultural GIs as an interim measure pending migration of the protection to the Agricultural Products Standards Act.

c) Safeguarding South Africa emblems and national icons

In Phase 2, the Draft IP Policy will evaluate whether legislation is needed to protect South African emblems within the country.  If it is determined that protection is needed, the next step will be to determine the form of the protection.  Other countries have taken similar approaches, such as Australia, whose federal government decided against legislating a system specifically designed for protecting national icons.  This decision was made after Australia’s Advisory Council on IP (ACIP) was tasked with examining the possible mechanisms for doing so.  Currently, emblems and other official signs and hallmarks are protected at the international level by Article 6ter of the Paris Convention.  A party to the Convention, who is interested in obtaining protection, must notify other parties via WIPO of its desire to do so for its identified emblems.  Article 6ter requires that legislation must be enacted to protect other countries’ emblems, but does not require action to protect a country’s emblems domestically.

d) Commercialization of IP

The commercialization of IP is defined as the process, in which IP-protected products or services are brought to market.  Commercialization may be done by the rights holder alone, in partnership with another party, or by another party acting in terms of a license or an assignment of rights.  The process of commercialization as it currently stands, has proven challenging for innovators of varying scale in South Africa.  Phase 2 of the Draft IP Policy will explore options for ways that IP can help in bringing goods and services to market in the country.  Possibly policy interventions that may aide in this regard include: 1) the Department of Trade and Industry’s National Technology Commercialization Strategy; 2) the Department of Science & Technology’s (DST’s) Innovation White Paper; and 3) the Department of Telecommunications and Postal Service’s (DTPS) National Integrated Information Communication Technology (ICT) Policy White Paper.

e) Enforcement

Enforcement is an essential aspect in protecting IPRs.  The legal and institutional framework, in which IPRs are enforced, is provided by the South African government.  The government is also required to take reasonable measures to ensure that constitutionally protected rights are not infringed.  It has been suggested that South Africa may have to play a more active role in the enforcement of certain rights.  Accordingly, Phase 2 of the Draft IP Policy will evaluate the country’s current execution of enforcing the protection of IPRs, and will make modifications where necessary.

f) IP localization and beneficiation

The Draft IP Policy recognizes that IP is both an opportunity and a challenge to South African industry and society.  It is believed that Phase 2 will make use of existing scholarly evidence on the current production of IP within South Africa.  In doing so, and within the parameters of South Africa’s international obligations, the country will be able to create a differentiated system of empowerment and beneficiation for local industry groupings and individuals who seek to take advantage of the IP system in myriad ways.  Such a system will help to empower the people of South Africa.

g) IP awareness and capacity building

In an effort to promote IP awareness and capacity building, it is essential to thoroughly study and understand the opportunities and challenges that are presented by domestic and international IP policies in South Africa.  An optimal way to assess the opportunities and challenges is to garner input from diverse stakeholders from sections of industry, health, civil society, agriculture, and the arts.  This input would aid in remodeling and optimizing the IP system of South Africa.  During Phase 2, the work and coverage of the Companies and Intellectual Property Commission (CIPC) will be scaled up, so that South Africa is better able to communicate with stakeholders, particularly the most disadvantaged stakeholders.  This key element will ultimately help to promote domestic social and economic development.  

h) IPRs and the environment/climate change/green technologies

The development and use of green technologies are essential for meeting South Africa’s obligations with respect to the environment and climate change.  It has been suggested that adopting comprehensive flexibility to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) will be essential for the transfer and diffusion of new green technologies.  These measures will also help to facilitate opportunities for domestic research and generation of green technology.  A goal of Phase 2 will be to determine if there is any relevant flexibility in TRIPS that should be implemented in South Africa’s domestic IP law.  The use of such flexibilities would then be promoted for delivering domestic green technology to the country.

i) IP in agriculture, IP and biotechnology, genetic resources, and genomic sovereignty

The discussion on how to optimally apply IP within agriculture and related fields has been an evolving conversation that parallels that in other developing countries with comparable natural heritage, such as Asia and Latin America.  Thus, decisions made on domestic IP policy will take into consideration international obligations, which include conditions within the Paris Convention and the TRIPS Agreement.  Phase 2 of the Draft IP Policy will consider at least the following four issues: 1) how to reconcile provisions mandated by TRIPS and the Convention on Biological Diversity, especially as it pertains to “access and benefit-sharing” clauses that seek to give control of a region’s natural heritage to residents of that region; 2) Supporting efforts at developing indigenous and international biotechnology, without endangering access to agricultural products and/or limiting plant variety diversity; and 3) ensuring farmers’ rights, as well as implementing constitutional obligations to protect genomic sovereignty within South Africa; and considering other potential protections to boost domestic agricultural production.

The Draft IP Policy will ultimately 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.  The implementation of phases of the Draft IP Policy will be monitored and evaluated to ensure success, which will greatly benefit South Africa and the international community as a whole.

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 – 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.

TECHNICAL AREA IPC CODE
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/)