Phase I of South Africa’s IP Policy – What you need to know

26 Jul 2018

The South African government recently approved the first phase of the long awaited Intellectual Property (IP) Policy, after incorporating input from the stakeholders’ submissions and representations.

The government has earmarked the IP Policy as one of the core elements needed to thrust South Africa toward a knowledge economy. This objective is believed to be a cornerstone of the government’s broader National Development Plan which includes a greater emphasis on innovation, improved productivity and better exploitation of comparative and competitive advantages.

According to the IP Policy, although South Africa has made substantial progress in the just protection, administration, management, and deployment of IP, the country still requires a comprehensive IP Policy to promote and contribute to its socio-economic development. The IP Policy is thus aimed at promoting local manufacture, utilising and preserving the country’s resources, encouraging innovation and empowering the domestic stakeholders to take advantage of the IP system.

The IP policy confirms the establishment of the Inter-Ministerial Committee on Intellectual Property (IMCIP) which serves as a consultative forum and drafting team aimed at achieving a coordinated approach to implementation of the IP Policy. It was decided the IP Policy would be implemented in phases, with segmentation being decided on immediate issues, medium term issues and issues requiring monitoring and evaluation. Phase I focuses on two main issues in the immediate term identified by government as:

• IP and public health; and
• International IP cooperation

IP AND PUBLIC HEALTH

As the IP Policy points out, disputes surrounding the intersection of IP and public health was identified in 1997 and came to the forefront during the 1999 case, PMA vs the President of the Republic of South Africa (the PMA case), where pharmaceutical manufacturers challenged amendments to the Medicines and Related Substances Act 101 of 1965 (the “Medicines Act”). This case sparked a global dialogue regarding the intersection between intellectual property rights and access to public health. The South African Constitution recognises the progressive realisation of access to health care services, however, it also enshrines the prevention of arbitrary deprivation of property rights.

The IP Policy acknowledges there is no correlation between an increase in protection of IP and an increase in innovation. However, government believes a stronger framework is required to ensure other objectives are met, including access to public health. In the IP Policy, the government considers the following to be necessary reforms to the IP protection framework:

Substantive Search and Examination

South Africa is currently a depository patent system, which means that patents are examined for compliance with the formal requirements only. The IP Policy considers this to result in weak patents being granted which is perceived to be detrimental for both patent holders and consumers. The IP Policy thus empowers the IMCIP to implement substantive search and examination at the South African Patent Office.

The IP Policy acknowledges the limitations of resources available to the Patent Office and as such only a range of strategic sectors will initially be subject to full substantive examination and as the capacity within government expands, other fields will be identified and included. The Patent Office has already appointed examiners and has been working closely with the European Patent Office to ensure their competency. The IP Policy leaves the determination of the relevant sectors to the IMCIP, in consultation with industry and civil society. There is an indication that initial examination will include, but not be limited to, the health sector.

Patent Opposition

Currently, South African patent law does not allow for opposition of a patent during or after prosecution at the South African Patent Office. The IP Policy considers the inclusion of the public in the patent application process, both pre- and post-grant, to be important in supplementing substantive examination through harnessing all information for examiners to consider in granting a valid patent. The government also believes it will encourage domestic inventors to increase their expertise by actively engaging with patents filed in their field and limit expensive court-mandated invalidation proceedings.

The IP Policy acknowledges the resource restrictions of the Patent Office and identifies three different forms of opposition proceedings. First, it makes provision for the least resource-intensive third-party observation mechanism, whereby written submissions can be made by an interested party opposing the grant of a patent. Secondly, the more resource-intensive pre-grant opposition, and thirdly, the most resource-intensive post-grant opposition mechanism. Importantly, all of these mechanisms will require development and promulgation of regulations and in some instances, potentially, enactment of legislation.

Interestingly, the IP Policy indicates a post-grant opposition process is already in force by way of administrative review of the Registrar’s decision to grant a patent in terms of the Promotion of Administrative Justice Act 3 of 2000.

Patentability Criteria

At present the Patents Act 57 of 1968 (the “Patents Act”) defines the patentability criteria as novel, involving an inventive step and being capable of being applied in trade or industry. The Patents Act does not, however, go further to indicate how each of these criteria are to be assessed, leaving this instead to the South African courts.

The IP Policy recommends statutorily codifying various approaches to assessment of the patentability criteria, with examples being taken internationally but still considering South Africa’s unique circumstances.

Disclosure Requirements

As South Africa is a depository patent system there is no duty to disclose any related state of the art, or other relevant information to the South African Patent Office. To facilitate the move towards substantive examination, the IP Policy recommends obliging applicants to furnish pertinent information to the Patent Office during prosecution.

Parallel Importation

The dispute in the PMA case centered around the parallel importation of branded pharmaceutical products by the Minister of Health. This case was later withdrawn and as such the question as to whether South African Patent law allows for parallel importation of patented inventions remains uncertain. In terms of the Patents Act, there is an unrestricted exclusion of other persons from importing a patented invention.

The IP Policy intimates that this is an overly narrow interpretation of the Patents Act and considers the TRIPS flexibilities to be adequate support to allow for parallel importation of products where a counterbalancing objective is weighed, such as access to public health. It further indicates that parallel importation should be limited to circumstances where overarching regulations providing for it have been promulgated, as with the Medicines Act.

Exceptions

The IP Policy reiterates the advantages of the provisions of the Patents Act which allow for limited working of a patented invention, during the subsistence of the patent, for regulatory approval purposes only.

The IP Policy advises broadening this exception to include the working of a patented invention, during the subsistence of the patent, for research and experimental purposes.

Voluntary and Compulsory Licenses

The IP Policy reiterates the current South African position in respect of patentees voluntarily licensing patented products and seeks to encourage such transactions to be fair and in the case of the health sector, to adequately balance the need for access to medicines.

The IP Policy, however, considers voluntary licenses as unable to provide the necessary level of access in certain disease areas (save for HIV/AIDS) in South Africa and thus suggests a broader set of policy options for instances where voluntary mechanisms prove insufficient. Currently, the Patents Act provides for an application for a compulsory license but this involves a judicial process.

The IP Policy suggests that government is empowered in terms of the Patents Act to use a patented invention for public purposes in accordance with the TRIPS Agreement, but also acknowledges that currently this is limited to prior negotiation, and, absent agreement, conditions set by the courts. The IP Policy indicates that the prior negotiation is not required in terms of TRIPS. It is also unclear from the IP Policy whether government is considered to be constrained by the compulsory license provisions in the Patents Act.

IP and Competition Law

As IP rights create a monopoly in favour of the rights holder an obvious intersection between IP and competition law exists. The IP Policy point out that in terms of the Competition Act 89 of 1998 (the “Competition Act”), certain agreements may be exempt of the provisions of the Competition Act upon request to the Competition Commission, including those rights pertaining to various forms of IP.

The IP Policy suggests that this intersection between IP and competition law could be used to intervene in the instance where IP rights are used to distort the market to the detriment of the welfare of the consumer, such as in the health sector.

Rule of Law and Legal Certainty

In rounding off the section on Public Health and the suggested reforms, the IP Policy seeks to confirm the constraint of government through the rule of law in bringing about these reforms. Including the need for the reforms to be rational and not an abuse of executive power, as already provided for in terms of our law. These constraints coupled with the reforms themselves, it believes, will give legal certainty to the patent system.

INTERNATIONAL IP COOPERATION

The IP Policy states that multiple overlapping opportunities will be evaluated, including updating compliance with existing signed treaties and conventions, identifying treaty opportunities to help South African society as well as protecting traditional knowledge, and fostering continental and international cooperation in IP.

It is now up to the IMCIP to further implement and develop Phase I of the IP Policy and to promote a balanced and coordinated approach to the IP Policy formulation process. It is clear that phase I will not be completed overnight and the progress of the formulation process will be followed closely by all relevant stakeholders.

See also:

• Important considerations of protection in Africa
• PAIPO – Concerns from a brand holder’s perspective
• Is parallel importation lawful in South Africa?

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)