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.

 

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

Be Mindful of Your Claims in Divisional Applications and Patents in South Africa

 

In September 2014, the Supreme Court of Appeal of South Africa (Supreme Court) issued a decision in Pharma Dynamics (Proprietary) Limited (Pharma) versus Bayer Pharma AG (formerly Bayer Schering Pharma AG) and Bayer (Proprietary) Limited (Bayer Pharma AG and Bayer Limited will be collectively referred to as “Bayer”) relating to Bayer’s South African Patent No. 2004/4083 entitled “Pharmaceutical combination of ethinylestradiol (EE) and drospirenone (DSP)” (the 2004 patent).  A copy of the decision is provided here: DECISION.  The decision is important because the Court held that while it is possible to obtain parent and divisional patents in South Africa having overlapping claims of varying scope, coterminous claims (meaning claims of identical scope) are not permitted.

The claims of the 2004 patent relate to a female contraceptive sold by Bayer under the brand name Yasmin® which is a combination of the DSP and EE.  The 2004 patent is a divisional patent of South African Patent No. 2002/1668 (the 2002 patent).  Claim 1 of the 2004 patent recites:

1.  A pharmaceutical composition comprising:

as a first active agent drospirenone in an amount corresponding to a daily dosage, on administration of the composition, of  from about 2 mg to 4 mg, and

as a second active agent ethinylestradiol in an amount corresponding to a daily dosage of from about 0.01 mg to 0.05 mg,

together with one or more pharmaceutically acceptable carriers or excipients,

wherein at least 70% of said drospirenone is dissolved from said composition within 30 minutes, as determined by USP XXIII Paddle Method II using water at 37ºC as the dissolution media and 50 rpm as the stirring rate.

In contrast, claim 1 of the 2002 patent recites that the drospirenone is in micronized form.

In March 2011, Pharma obtained approval from the Medical Control Council in South Africa to import and sell “Ruby”, a generic version of Yasmin®.  Bayer alleged infringement of claim 1 of the 2004 patent by Pharma and sought judicial relief in the form of an interdict and ancillary relief.  Pharma denied infringement and counterclaimed for revocation of the 2004 patent alleging invalidity.  The lower court, a quo, held that the 2004 patent was valid and infringed by Pharma.  The relief requested by Bayer was granted and Pharma’s counterclaim dismissed.  Pharma appealed.  On appeal, regarding invalidity, Pharma argued that the 2004 patent lacked inventive step and was not a “true” divisional of the 2002 patent and thus lacked novelty in view of the disclosure in the 2002 patent.

In South Africa, divisional patent applications are governed by Section 37 of the Patents Act (Section 37) which provides:

1.  Where at any time after an application has been lodged at the patent office and before it is accepted, a fresh application is made in the prescribed manner by the same applicant in respect of part of the matter disclosed in the first-mentioned application, the registrar may, on application made to him in the prescribed manner before that application is accepted, direct that such fresh application be antedated to a date not earlier than the date on which the first-mentioned application was so lodged.

2.  A patent granted on such fresh application shall not be revoked or invalidated on the ground only that the invention claimed in such fresh application is not new having regard to the matter disclosed in the first-mentioned application.

Pharma made several arguments as to why it believed the 2004 patent was not a “true” divisional.  Specifically, Pharma argued that the “body”and the claims of the 2002 and 2004 patents were the same,  and that Section 37 did not allow for a divisional claim to be broader than the claim of its parent.

The Supreme Court rejected all of Pharma’s arguments. First, the Court noted that the very idea of a divisional patent is that it contains the same text as its parent.  From a practical standpoint, this made sense since the invention disclosed in a divisional and parent was the same and the difference between the two resided in their respective claims.  Next, the Court stated that the claims of the 2002 and 2004 patents were not coterminus (namely, the claims of each did not have identical scope).  Specifically, claim 1 of the 2002 patent was expressly limited to DSP in micronized form.  Claim 1 of the 2004 patent did not recite that DSP was limited to any specific form.  Thus, claim 1 of the 2004 patent was broader than claim 1 of the 2002 patent. Finally, the Court examined previous case law and found that there was nothing that prohibited the claims of a divisional application from being broader than the claims of its parent.  Instead, the Court noted that previous case law stood for the proposition that the claims of a divisional application could not be broader than the invention disclosed in the “body” of its parent.

Under South African patent law, a single invalid claim in a patent renders the entire patent invalid and unenforceable until such invalidity has been cured via an amendment.  Therefore, in view of this recent decision and the fact that patent applications are not formally examined in South Africa, applicants should carefully review the claims of any of their divisional patent applications and patents to make sure that none of the claims is identical in scope (coterminus) with one or more parent applications or patents.

This post was written by Lisa Mueller.

The Thorny Problem of Patentable Eligible Subject Matter: Part 9 of a 10-Part Series: South Africa

This is Part 9 of a 10-part series examining patent eligible subject matter in the U.S., BRIC and several non-BRIC countries. To view Part 1 (The Thorny Problem of Patent Eligible Subject Matter: U.S.), click here. To view Part 2 (The Thorny Problem of Patent Eligible Subject Matter: Canada), click here. To view Part 3 (The Thorny Problem of Patent Eligible Subject Matter: India), click here. To view Part 4 (The Thorny Problem of Patent Eligible Subject Matter: Russia), click here. To view Part 5 (The Thorny Problem of Patent Eligible Subject Matter: Brazil), click here. To view Part 6 (The Thorny Problem of Patent Eligible Subject Matter: Europe), click here. To view Part 7 (The Thorny Problem of Patent Eligible Subject Matter: China), click here. To view Part 8 (The Thorny Problem of Patent Eligible Subject Matter: Australia), click here.

Patentable Subject Matter in South Africa

In South Africa, patentable inventions are regulated by Section 25 of the Patents Act 57 of 1978 (Patents Act) as amended. Section 25 provides:

(1) A patent may, subject to the provisions of this section, be granted for any new invention which involves an inventive step and which is capable of being used or applied in trade or industry or agriculture.

(2) Anything which consists of –

(a) a discovery;

(b) a scientific theory;

(c) a mathematical method;

(d) a literary, dramatic, musical or artistic work or any other aesthetic creation;

(e) a scheme, rule or method for performing a mental act, playing a game or doing business;

(f) a program for a computer; or

(g) the presentation of information,

shall not be an invention for the purposes of this Act.

Additionally, Section 25(4)(a) provides that:

[a] patent shall not be granted for an invention the publication or exploitation of which would be generally expected to encourage immoral or offensive behavior.

Moreover, with respect to medical use claims, Section 25(9) provides that:

[i]n the case of an invention consisting of a substance or composition for use in a method of treatment of the human or animal body by surgery or therapy or of diagnosis practiced on the human or animal body, the fact that the substance or composition forms part of the state of the art immediately before the priority date of the invention shall not prevent a patent being granted for the invention if the use of the substance or composition in any such method does not form part of the state of the art at that date.

Finally, Section 25(11) provides that:

[a]n invention of a method of treatment of the human or animal body by surgery or therapy or diagnosis practiced on the human or animal body shall be deemed not to be capable of being used or applied in trade or industry or agriculture.

It is important to note that South Africa does not have any case law under its current Patents Act concerning the subject matter eligibility of naturally occurring products. In fact, the only case that is partly relevant is a 1961 case under repealed Patents Act No. 37 of 1952. Specifically, Section 10(7) of the repealed Act provided.

[w]here a complete specification claims a new substance, the claim shall be construed as not extending to that substance when found in nature.

In the seminal case regarding this section of the repealed Act, American Cyanamid Co v Continental Ethicals (Pty) Ltd 1961 BP 301 CP, it was found that:

[i]n enacting Section 10(7) the legislature recognized that an absolute product claim is perfectly valid, notwithstanding the fact that the substance covered thereby may also be found to exist in nature. The legislature merely enacted that in such a case the scope of the claim should be restricted…In other words, if the plaintiff claims a new substance then it cannot complain of any dealing with that substance when the other party has merely found it in nature and has taken it from where he found it.

Should the South African Court of the Commissioner of Patents be faced with having to address the question of subject matter eligibility of naturally occurring products and the like, it will most likely turn to like judgments from Great Britain and the European Patent Office (EPO), since South Africa’s law closely mirrors the patent law of the United Kingdom and the European Patent Convention (EPC).

Analysis of Examples Under the U.S. PTO Guidance

In view of recent U.S. Supreme Court decisions including Association for Molecular Pathology v. Myriad Genetics, Inc. (Myriad) and Mayo Collaborative Services v. Prometheus Laboratories, Inc. (Mayo), the U.S. Patent and Trademark Office (U.S. PTO) on March 4, 2014 issued guidance for evaluating subject matter eligibility under Section 101 (Guidance). The Guidance superseded the June 13, 2013 memorandum issued on the day of the Myriad decision. While the Guidance was issued without public notice or opportunity for the public to comment, the U.S. PTO held a forum on May 9, 2014 to receive feedback from organizations and individuals regarding the Guidance.

The Guidance is divided into four sections. Part I discusses the 3-part test for determining subject matter eligibility. Part II explains how to determine whether a claim (as a whole) is “significantly different.” This portion of the Guidance provides a list of 12 factors – six that weigh toward eligibility (namely, finding a significant difference) and six that weigh toward ineligibility (namely, a finding of no significant difference). Part III provides seven examples explaining the application of the factors. Part IV provides a new form paragraph for Examiners to use when rejecting claims in accordance with the Guidance.

In addition to the Guidance, the U.S. PTO prepared detailed training materials (containing 93 PowerPoint slides) for Examiners. The detailed training materials contain numerous examples not provided for in the Guidance.

We at the BRIC Wall thought it would be insightful to examine the analysis of subject matter eligibility under South African patent law for several of the examples contained in the Guidance and training materials.

Composition/Manufacture Claim Reciting a Natural Product – Example A – U.S. PTO Guidelines

Claim 1: A stable energy-generating plasmid, which provides a hydrocarbon degradative pathway.

Claim 2: A bacterium from the genus Pseudomonas containing therein at least two stable energy-generating plasmids, each of said plasmids providing a separate hydrocarbon degradative pathway.

Background: Stable energy-generating plasmids exist within certain bacteria in nature. Pseudomonas bacteria are naturally occurring bacteria. Naturally occurring Pseudomonas bacteria containing a stable energy-generating plasmid and capable of degrading a single type of hydrocarbon are known.

Analysis of claim 1: The subject matter of this claim does not contain excluded subject matter. However, the subject matter of this claim is not novel. Specifically, this claim is not patentable by virtue of the fact that stable energy-generating plasmids, which provide a hydrocarbon degradative pathway, are known.

Analysis of claim 2: The subject matter of this claim does not contain excluded subject matter. This claim is novel since the background states that Pseudomonas bacteria containing a (singular) stable energy-generating plasmid capable of degrading a single type of hydrocarbon are known. Thus, a Pseudomonas bacterium containing at least two stable energy-generating plasmids is novel. However, it will have to be shown that the inclusion of two plasmids involves an inventive step. In Diamond v. Chakrabarty, 447 U.S. 303, 305 (1980), (Chakrabarty) scientists added four plasmids to a bacterium, which enabled it to break down various components of crude oil. In the event that the facts are similar to Chakrabarty, South African courts will likely find that an inventive step is present since further inclusion of plasmids into the bacterium gave rise to certain advantages which were not obvious to a person skilled in the art.

Composition vs. Method Claims, Each Reciting a Natural Product – Example B – U.S. PTO Guidelines

Claim 1. Purified amazonic acid.

Claim 2. Purified 5-methyl amazonic acid.

Claim 3. A method of treating colon cancer, comprising: administering a daily dose of purified amazonic acid to a patient suffering from colon cancer for a period of time from 10 days to 20 days, wherein said daily dose comprises about 0.75 to about 1.25 teaspoons of amazonic acid.

Background: The Amazonian cherry tree is a naturally occurring tree that grows wild in the Amazon basin region of Brazil. The leaves of the Amazonian cherry tree contain a chemical that is useful in treating breast cancer, however, to be effective, a patient must eat 30 pounds of the leaves per day for at least four weeks. Many have tried and failed to isolate the cancer-fighting chemical from the leaves. Applicant has successfully purified the cancer-fighting chemical from the leaves and has named it amazonic acid. The purified amazonic acid is structurally identical to the amazonic acid in the leaves, but a patient only needs to eat one teaspoon of the purified acid to get the same effects as 30 pounds of the leaves. Applicant has discovered that amazonic acid is useful to treat colon cancer as well as breast cancer, and applicant has also created a derivative of amazonic acid in the laboratory (called 5-methyl amazonic acid), which is structurally different from amazonic acid and is functionally different, because it stimulates the growth of hair in addition to treating cancer.

Analysis of claim 1: The subject matter of claim 1 is patentable and will be considered novel against the prior art described in the background. Prior to its isolation, it was (presumably) not possible to determine the exact chemical structure of amazonic acid. The background described that the leaf of Amazonian cherry, not the amazonic acid itself, displayed anti-cancerous properties. The fact that amazonic acid was the true active anti-cancerous compound was not known despite many attempts to isolate and determine the chemical composition of the active ingredient. Furthermore, since the amazonic acid has now been isolated from the leaf by the Applicant, it can further be viewed as novel in the sense that it is for the first time separate and distinct from the leaf. However, it should be noted that there is no South African guiding case law regarding whether or not mere “isolation” can impart novelty.

Analysis of claim 2: Because the subject matter of this claim is new, it constitutes patentable subject matter. The addition of a functional group will most likely also be deemed to be inventive since there is no indication in the prior art that such modification will impart hair growth properties and retain the anti-cancerous properties. Predicting the nature of chemico-physical properties of molecular entities remains one of science’s greatest challenges (See, P. Ball, Nature, 1996, 381, 684 and J Maddox, Nature, 1988, 335).

Analysis of claim 3: The claim will need to be amended since claims directed to methods of treatment of the human or animal body by surgery or therapy or of diagnosis practiced on the human or animal body are not patentable under the Patents Act. However, claims directed to a first medical use of a known (or novel) substance or composition are allowable under Section 25(9) of the Patents Act. Claims directed to a second or subsequent medical use of a known substance or composition are not allowable, unless framed in the “Swiss form.” Nonetheless, while “compound for use” claims for a second or subsequent medical use of a known compound are accepted in Europe pursuant to EPC 2000 and the recent changes to the EPO rules, such claims are not acceptable in South Africa.

Since the use of amazonic acid in the treatment of cancer is not previously known, claim 3 will need to be revised to a first medical use claim having the general structure “amazonic acid for use in the treatment of cancer.” While there is no case law in South Africa on whether or not a dosing regime is patentable, the courts are likely to follow the position of Great Britain Patent Office and/or EPO with respect to the patentability of such claims. In Great Britain, in the matter of Actavis v. Merck ([2008] EWCA Civ 444), the court stated at paragraph 29, “Research into new and better dosage regimes is clearly desirable, and there is simply no policy reason why, if a novel non-obvious regime is invented, there should not be an appropriate patent reward.” This is substantially in line with the Enlarged Board of Appeal decision in G02/08 EPO.

Composition vs. Method Claims, Each Reciting Two Natural Products – Example E – U.S. PTO Guidelines

Claim 1. A pair of primers, the first primer having the sequence of SEQ ID NO: 1 and the second primer having the sequence of SEQ ID NO: 2.

Claim 2. A method of amplifying a target DNA sequence comprising:

providing a reaction mixture comprising a double-stranded target DNA, the pair of primers of claim 1 wherein the first primer is complementary to a sequence on the first strand of the target DNA and the second primer is complementary to a sequence on the second strand of the target DNA, Taq polymerase, and a plurality of free nucleotides comprising adenine, thymine, cytosine and guanine;

heating the reaction mixture to a first predetermined temperature for a first predetermined time to separate the strands of the target DNA from each other;

cooling the reaction mixture to a second predetermined temperature for a second predetermined time under conditions to allow the first and second primers to hybridize with their complementary sequences on the first and second strands of the target DNA, and to allow the Taq polymerase to extend the primers; and repeating steps (b) and (c) at least 20 times.

Analysis of claim 1: Under the current Patents Act there is no case law concerning the subject matter eligibility of naturally occurring products. As such, subject matter eligibility will be determined from a novelty and inventiveness aspect taking into account exclusions of “method of treatment” claims. With respect to this claim, there is no indication of the extent of the prior art. As such, the claimed pair of primers are considered novel.

Analysis of claim 2: In this case, there is no indication of the extent of the prior art. As such the claimed method is considered novel.

Process Claims Involving A Natural Principle – Example G – U.S. PTO Guidelines

Claim 1. A method for treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, comprising: exposing the patient to sunlight, wherein the exposure to sunlight alters the neuronal activity in the patient’s brain and mitigates the mood disorder.

Claim 2. A method for treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, comprising: exposing the patient to a synthetic source of white light, wherein the exposure to white light alters the neuronal activity in the patient’s brain and mitigates the mood disorder.

Claim 3. A method for treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, comprising: providing a light source that emits white light; filtering the ultra-violet (UV) rays from the white light; and positioning the patient adjacent to the light source at a distance between 30-60 cm for a predetermined period ranging from 30-60 minutes to expose photosensitive regions of the patient’s brain to the filtered white light, wherein the exposure to the filtered white light alters the neuronal activity in the patient’s brain and mitigates the mood disorder.

Background: It is a well-documented natural principle that white light affects a person’s mood. Exposure to white light changes neuronal activity in the brain, which changes a person’s mood. Sunlight is a natural source of white light. It is well-understood, purely conventional and routine in the art of treating mood disorders to expose a person to white light in order to alter their neuronal activity and mitigate mood disorders.

Analysis of claim 1: The claim is not patentable pursuant to Section 25(11) of the Patents Act. While amending this claim to a first medical use claim is theoretically possible, this presents certain issues as will be discussed in more detail below. Moreover, amendment of this claim to a second medical use type claim is not readily possible.

Claim 1 can be rewritten as a first medical use claim to read as follows: “Sunshine for use in a method for treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, the sunshine being for exposure to the patient, wherein the exposure to sunlight alters the neuronal activity in the patient’s brain and mitigates the mood disorder.”

This rewritten claim will not be considered novel, since it is known that sunshine treats mood disorders. Moreover, this claim may be deemed as contra bones mores since it would afford the Applicant a monopoly over sunshine. As discussed previously herein, the Patents Act provides, at Section 25(4)(a) that a patent shall not be granted for an invention the publication or exploitation of which would be generally expected to encourage offensive or immoral behavior. Additionally, a “Swiss form” claim having the general structure, “Use of sunshine in the manufacture of a medicament to treat mood disorder” would not be possible since the manufactured medicament would need to comprise sunshine.

Analysis of claim 2: As with claim 1, this claim would have to be amended to a first medical use claim. Such a claim could read: “Synthetic white light for use in a method for treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, the synthetic white light being for exposure to the patient, wherein the exposure to white light alters the neuronal activity in the patient’s brain and mitigates the mood disorder.”

Since “it is a well-documented natural principle that white light affects a person’s mood” the mere fact that the white light is synthetic does not distinguish itself from the prior art. Therefore, this claim cannot be seen as novel.

Analysis of claim 3: The claim will also need to be amended. An amendment to a first medical use claim could read: “Filtered white light for use in a method of treating a mood disorder in a human patient, the mood disorder associated with neuronal activity in the patient’s brain, the filtered white light being for exposure to the patient at a distance between 30-60 cm from a source of the filtered white light for a predetermined period ranging from 30-60 minutes to expose photosensitive regions of the patient’s brain to the filtered white light, wherein the exposure to the filtered white light alters the neuronal activity in the patient’s brain and mitigates the mood disorder.”

There is no indication that filtered white light for use in the treatment of mood disorders is known in the prior art. Thereupon, this claim is arguably novel, however, it could be attacked for a lack of clarity, which is a ground of revocation under Section 61(f)(i) of the Patents Act. Because there is no case law regarding dosing regimens in South Africa, it is not possible to ascertain with any degree of certainty whether or not this claim will be seen as novel.

Diagnostic claim from Mayo Collaborative Services v. Prometheus Laboratories, Inc. – Examiner Training Materials

  1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

Analysis of claim 1: Because claim 1 is a method of treatment claim, it will need to be amended into an acceptable format under South African law. There is no case law regarding dosing regimens, and in such cases we shall typically follow the decisions of the United Kingdom and EPO.

Claim from U.S. Patent No. 6,573,103 – Examiner Training Materials

  1. A method of determining whether a pregnant woman is at an increased risk of having a fetus with Down’s syndrome, the method comprising the steps of:

measuring the level of at least one screening marker from a first trimester of pregnancy by:

(i) assaying a sample obtained from the pregnant woman at said first trimester of pregnancy for at least one first biochemical screening marker; and/or

(ii) measuring at least one first ultrasound screening marker from an ultrasound scan taken at said first trimester of pregnancy;

measuring the level of at least one second screening marker from a second trimester of pregnancy, the at least one second screening marker from the second trimester of pregnancy being different from the at least one first screening marker from the first trimester of pregnancy, by:

(i) assaying a sample obtained from the pregnant woman at said second trimester of pregnancy for at least one second biochemical screening marker; and/or

(ii) measuring at least one second ultrasound screening marker from an ultrasound scan taken at said second trimester of pregnancy; and

determining the risk of Down’s syndrome by comparing the measured levels of both the at least one first screening marker from the first trimester of pregnancy and the at least one second screening marker from the second trimester of pregnancy with observed relative frequency distributions of marker levels in Down’s syndrome pregnancies and in unaffected pregnancies.

Analysis of claim 1: Under South African law this claim will contravene Section 25(11) of the Patents Act and will need to be amended. The simplest amendment is to introduce the term “ex vivo” such that the claim is directed to “[a]n ex vivo method of determining whether a pregnant woman is at an increased risk of having a fetus with Down’s syndrome.” In principle, an “ex vivo” method claim will be patentable subject matter as long as the claim is novel and inventive over the prior art.

This post was written by Lisa Mueller of Michael Best and Dario Tanziani (Partner) and Charl Marais (Senior Associate) of Adams & Adams