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