IPR Act: Friend or foe? An insider’s view
Intellectual property law need not be difficult to understand, writes
Laduma Ngxokolo completed his BTech degree in 2010 with majors in textile design and technology at Nelson Mandela Metropolitan University (NMMU). For his final year project he developed a high quality, Xhosa-inspired knitwear range for amakrwala (Xhosa initiates). His work interpreted traditional Xhosa beadwork into knitwear designs using authentic Xhosa colours. Laduma’s knitwear won the 2010 Society of Dyers and Colourists Design Award, an annual international design competition that takes place in London. In February 2011, Laduma was one of six hand-picked international post-graduates invited to present at the 2011 Design Indaba.
Even with these awards and accolades, Laduma struggled to get his business started as he lacked space and funding, as well as access to business expertise. He approached NMMU’s Innovation Office for support. NMMU and Laduma agreed to work together to develop his business and protect the IP that he had developed during his studies. The support provided included filing of design registrations on Laduma’s initial five designs, funding for materials, funding for knitting machines, access to a network of suppliers, mentorship, and space for manufacturing.
After two years, Laduma needed to expand and, with NMMU’s help, found a manufacturer in Cape Town. He set up an online store and also has shelf space in high-end shops in Cape Town and Johannesburg under the brand name “Maxhosa by Laduma”. NMMU continued to provide support to Laduma’s business, assisting with IP maintenance as well as financial administration. In 2015, NMMU assigned the designs to Laduma’s business and exited its interests, as the business was mature enough to continue without their support. Most recently, one of Laduma’s designs won an award for “The most beautiful object in South Africa” at the 2016 Design Indaba.
The Intellectual Property Rights from Publicly Financed Research and Development Act (IPR Act) is fast approaching its seventh birthday but to date, is still often poorly understood and misinterpreted. We, at the National Intellectual Property Management Office (Nipmo), an office established in terms of the IPR Act, believe firmly that much of the uncertainty around the IPR Act is sourced from misinformation, and as such we are touting the mantra that “information is power” to demonstrate that the IPR act is merely a misunderstood friend that should not be regarded as a foe.
The objectives of the IPR Act closely mirror those of its US counterpart, the Bayh-Dole Act, and are expressed rather eloquently as: “to make provision that intellectual property emanating from publicly financed research and development is identified, protected, utilised, and commercialised for the benefit of the people of the Republic, whether it be for social, economic, military or other benefit.”
To further understand the overarching aims and application of this piece of legislation, let us visit each of these emphasised terms:
Publicly financed research and development (R&D): who does the act apply to?
The IPR Act defines this as “any funds allocated by a funding agency”, the latter being defined as “the state, or an organ of state or a state agency that funds R&D”. This is very broad and thus the obligations of the IPR act apply to any individual, institution or the like (also known as a “recipient”), who have received funding from any form of state body, which funding is used to conduct R&D.
Identified and protection: what are the requirements for identification, and does this only relate to a registrable right?
All recipients of public funds for R&D are required to put some sort of mechanism in place to identify IP that may arise during R&D. Typically, the step of identification is a task assigned to an Office of Technology Transfer (OTT), which is established at the institution where funding has been received, and takes the form of an Invention Disclosure Form. The format of this form is determined by the relevant OTT. Thereafter, the individuals at the OTT are responsible for assessing the disclosed invention to assess what, if any, forms of IP may arise from the R&D described. The advantage for any inventor who has championed an invention from R&D, is that the OTT and in particular the umbrella institution are required by law to enter into a Benefit Sharing Agreement with the inventor. This brings out one aspect of the “friendly face” of the IPR Act, in that specific provision is made to incentivise the creation of IP by inventors.
But what is IP and how does one know if they have developed any IP? IP is defined in the act as “any creation of the mind that is capable of being protected by law from use by any other person” and thus is able to take on a number of forms that may be capable of registration in terms of one or other statute, or which may find protection under South African common law. For example, consider the scenario where the R&D is being conducted using public funds in the healthcare sector, and a new drug for treatment of multiple drug resistanttuberculosis (MDR-TB) is developed. The core active compound, as well as the pharmaceutical formulation for administration of this compound, among others, may form the subject of a patent application. The requirements for filing the patent application are regulated by a statute, which in South Africa is the Patents Act.
The name of the pharmaceutical formulation and thus the trade name under which the product is marketed may qualify for trademark registration in terms of a different statute, which in South Africa is the Trade Marks Act. Thus in this brief scenario, two forms of registrable IP arise, namely a patent and a trademark. It may well be that during synthesis of the core active compound, the inventor tweaked a number of steps including, for example, the temperature at which one of the synthetic steps was conducted. This step constitutes a competitive advantage but is not necessarily essential to the invention. It may thus be that this information is of such value that the inventor would not want it in the public domain. This information would thus be regarded as a trade secret and would be maintained as confidential. Although this form of IP is not registrable, it finds protection under South African common law.
Other forms of registrable IP include designs (for example, the shape and configuration of a bottle) and plant breeders’ rights (for example, a hybrid created by crossing two known varieties). Copyright does not require registration in South Africa. Instead the right subsists automatically, provided the requirements of the Copyright Act have been met.
Utilised, commercialised and benefits: what steps does the act require me to do, and who is eligible to benefit?
To date we have found that a number of organisations and institutions have adopted a negative IP strategy or a non-aggressive IP strategy, which merely involves, in particular, filing patent applications to technologies that do not appear to have any commercial application, often for the sake of merely ring-fencing that technology. Notwithstanding that there may be some commercial value in doing so, the IPR Act now requires the applicants to take this one step further and not only file for a registrable right, where possible, but to assure that there is application for the technology contained therein and then to utilise that application for the public good.
In fact, the legislation is quite prescriptive, in that recipients are required to identify commercialisation opportunities for IP from publicly financed R&D and allows for Nipmo to intervene and provide assistance in realising commercialisation opportunities.
The IPR Act also provides for a number of preferences with regards to who is eligible to utilise and exploit the IP generated, with particular preference being granted to BBBEE enterprises and small enterprises, as well as any parties that seek to utilise the IP in ways that provide “optimal benefits to the economy and quality of life of the people of the Republic”. These provisions strongly reflect the overriding aim of this IPR Act, namely to ensure that all South Africans benefit from IP generated by publicly funded R&D.
Having all this knowledge at hand, it becomes apparent that the IPR Act, although sometimes perceived as a foe, is designed to be a friend to each and every South African, and aims to ensure that some benefit to taxpayers results from the continued investment made into R&D by the government through its various departments, such as science and technology, or trade and industry and its various agencies.
Much of the uncertainty around the IPR Act is sourced from misinformation