New IP law to come into effect in South Africa in June or July Special

Posted Apr 13, 2010 by Sharon Davis
A new Act regulating intellectual property from public funded research, with the objective of ensuring the research is protected and commercialised for the benefit of the people of South Africa, is expected to come into effect in June or July this year.
Microbiocide researchers in South Africa
Microbiocide researchers in South Africa
A new Act regulating intellectual property (IP) from public funded research and development is expected to come into effect in South Africa by June or July this year.
The objective of the Act is to ensure that IP developed from publicly financed research is protected and commercialised for the benefit of the people of South Africa, said McLean Sibanda from the Department of Science and Technology’s National Research Foundation.
Sibanda confirmed on Monday, April 12, that the final regulations will be posted on the Department of Science and Technology’s website and sent out to stakeholders within the next two weeks. The public will be given a few months to become familiar with the law before it comes into effect - in June or July at the latest, he said.
Sibanda said that there was a need to show the socio-economic returns on investment in research. This is needed in order to motivate for continued R&D investment in the face of more pressing social issues like housing and health provision, he explained.
Comments on the draft regulations of the Act, which moves the ownership of public funded IP to universities in the first instance and then the state, included concerns about how it would affect collaborative research, the prescriptive approach of the Act which is seen as discouraging investment and an erosion of the principles of academic freedom.
South African IP law firm Spoor & Fisher said the objective of the Act (then in draft form) is to ensure that IP developed from publicly financed research is utilised for the benefit of all South Africans.
Professor Puri Kamal from the Australian Department of Primary Industry and Fisheries said there was a need to protect IP developed in South Africa from being sold to overseas companies, and then buying back the goods invented in finished form, at a premium.
Comments on the earlier draft regulations follow:
The Act seeks to address the situation where intellectual property, developed by researchers, lies idle at universities or is sold off to private companies, often overseas, with no benefit accruing to the university, the government or the South African people,” said Rory Moore, director of the Intellectual Property and Technology Transfer Office at the University of KwaZulu-Natal.
Moore said that legislation passed in the US and UK in the 1980s returned ownership of IP, which had previously vested in government, to the universities. The intent of the South African legislation appears to move ownership from individual researchers up to institution level, and government level in some instances. He suggests this could explain why the legislation has met with the opposition it has.
Under the new Act each institution (Universities, Science Councils, etc.) will have access to a Technology Transfer Office which will determine whether identified IP, developed using public funds, is protectable and worth commercialisation. If deemed protectable and worth commercialisation, the institution can elect to assume responsibility for the costs and benefits of this, with some financial benefit passing on the researchers.
Should the institution elect not to undertake the patenting and commercialisation function the National Intellectual Property Management Office (NIMPO) can elect to protect and/or commercialise the IP on behalf of the state. Should NIMPO pass up the opportunity to do this, the IP is then first assigned to any private entity co-funders of the IP and then to the creators of the IP.
Sibanda noted the Act also rewards ingenuity and creativity and entitles inventors in an institution to minimum 20% of the gross revenues accruing to the institution for the first ZAR 1mn, and thereafter a minimum of 30% of the net revenues.
Moore said that while some people argue that this use of patents to protect IP will stifle rather then encourage research and innovation he believes that there are situations where a failure to apply for patents can constitute a disservice to humanity and points out that without patent protection pharmaceutical companies would not go to the expense of developing life saving drugs.
Cristina Pinto, Business Development and Commercialisation Manager at Wits Enterprise, said that the Act develops a greater awareness of the value of IP and the need for its exploitation for the betterment of society amongst the research community.
It is anticipated that the development of such awareness within the South African research community will permeate the greater African research community,” said Pinto.
She said it also provides a legislative environment in which institutions can negotiate IP rights with private industry where the research has been partially publicly funded, whereas previously private industry often had a ‘take it or leave’ it attitude that resulted in universities sponsoring research for private industry.
Other pluses included the provision of an IP Fund to assist institutions in obtaining statutory IP protections, and the creation of opportunities for the commercialisation of IP by local companies, with a focus on small enterprises.
It is also expected to build both national and institutional capacity through the identification, assessment, protection and commercialisation of IP said Pinto.
Addressing concerns about collaborative research Pinto said that the Act makes provision for joint ownership of IP in instances of collaboration, but says that prior consideration will need to be given to any commercialisation strategy as the Act requires the development or commercialisation of public funded IP to be undertaken by a capable South African business entity.
Wits Enterprises CEO, Dr Charles Marais, said: “There is fairly widespread disappointment at the protectionist style of the legislation and the loss of opportunity to make South Africa a preferred international destination for the development of IP.”
The state has a non-exclusive, royalty-free right to exploit the IP funding, as long as this is necessary and in the interest of South Africans according to Spoor & Fisher.
Pinto suggested that this could be exercised in times of health, security and emergency needs and is the same as the state’s rights in the US, which she understands has never been invoked.
But she added that there is some concern over how it would be applied in practice and the wording of the draft regulations which in effect made the state a silent licensee of all IP from public funded research and development.
The extent to which these concerns were taken into account in finalising the regulations should be known in the next two weeks.