Category Archives: Patents

Top tips for prospective patentees

Once a new invention has come to life, the protection of the invention may often be a daunting task, especially to novice inventors and entrepreneurs. The following simple steps will assist with the protection of a new invention, and also the realisation thereof into a viable commercial tool capable of generating returns to the inventor and other interested parties:

Keep it secret!
To qualify for patent protection, an invention needs to be novel, inventive and capable of application in trade or industry. Novelty means that the invention must not have been published in any way or form, including written, oral, electronic or any other disclosure, by any person before a patent application has been filed in respect thereof. Any disclosure of an invention before the filing of a patent application will destroy the novelty of the invention, which will detrimentally affect the possibility of obtaining a valid and enforceable patent. If you do need to disclose your invention to obtain funding or to manufacture a prototype, ensure that you have a proper non-disclosure agreement (NDA) in place.

Research your idea
Do an internet search for your invention before approaching a patent attorney. This will assist in determining whether or not your idea has been anticipated by someone else before you, and will also assist you in determining the closest prior art to your invention. In doing so, you will be able you to fine tune your invention, which will significantly increase your chances of obtaining an enforceable patent with the widest possible scope of protection for your invention, and will also potentially decrease the time that your patent attorney will have to spend to draft the patent specification.

Be thorough
Accumulate and log as much information as possible on how you came up with the invention, what problems you are aiming to address or improve on by way of the invention, who may have contributed to the invention, what other inventions are available that are close to but different to your invention, etc. This will assist your patent attorney to adequately describe your invention when drafting the patent specification, and also to overcome prior art that may be similar to your invention. By keeping a comprehensive account of your research into the invention, you will also be able to prove ownership of any patents in respect of the invention if a dispute to the ownership thereof arises.

Don’t delay
Ensure that a patent application in respect of your invention is filed as soon as possible. The longer you wait, the more the chances become of your invention being disclosed or even independently invented, and possibly patented, by another person.

Surround yourself with the correct partners
The costs of obtaining a South African patent for your invention is relatively low, but once you pursue international protection, the costs escalate significantly, mainly due to the vulnerability of the Rand against the currencies of the major economic territories. If you do not have the necessary funds, it is imperative that you partner with the correct business associates and investors. It is further crucial that you partner with a firm of intellectual property attorneys that you can trust will realise the value that the invention has to you, and to treat and respect you and the invention accordingly. This includes guiding you towards the best protection strategy in respect of your invention, and by further assisting you to elect the most appropriate countries and/or regions to file patent applications in to obtain the maximum monetary return on your ingenuity and financial investment.

Plan a commercialisation strategy
A patent provides the patentee with a monopoly for a set period during which the patentee can ensure maximum benefit accruing from an invention to the exclusion of others. A patent is therefore of little value commercially if not accompanied by a well defined and structured commercialisation strategy. A commercialisation strategy is not necessarily limited to the manufacturing and marketing of the invention protected under a patent, but could also includes other strategies such as selling the patent, registering the patent in the name of a company and selling shares in the company, licensing the patent to competitors, or various other possibilities.

Develop a branding strategy
A proper branding strategy is imperative to ensure that the invention protected under the patent is associated with a strong brand. A strong and well thought out trade mark will lure potential investors, will create goodwill in the market towards the invention, and will further ensure the longevity of the invention in the market place, long after the patents registered in respect of the invention have lapsed. A solid brand could also lead to other possibilities such as franchising, which further ads to the value of the invention to potential investors, business partners and most importantly, the patentee.

DM Kisch Inc is a full service intellectual property firm that is able to assist in ensuring that the maximum benefit from innovation and ingenuity is obtained. This includes the registration of a patent to protect the invention, the commercialisation of the invention, and the registration and realisation of a solid and profitable brand.

For more information, please contact:

JACO THEUNISSEN
Director
Department: Patent
Tel: +27 11 324 3154
Email: jacot@dmkisch.com

Author: Jaco Theunissen

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

Patent before you “publish or perish”

Publish or perish – the phrase which arguably dictates the sustainability and career advancement of academia. What is however often forgotten is that in the quest for publication, researchers and institutions often neglect consideration for intellectual property protection of their inventions. The phrase should accordingly be expanded to “patent before you publish or perish”.

A recent study conducted by the research organisation Trade & Industrial Policy Strategies (TIPS) suggests that a narrow emphasis on commodification of intellectual property rights seems likely to hinder knowledge sharing between researchers, innovators and cultural workers through publications or incorporation of traditional designs in national cultural products. In addition, TIPS agrees with Ncube et al. (2014) that the recent implementation of the Intellectual Property Rights from Publicly Financed Research and Development (IP-PFRD) Act of 2008 has contributed to this end by burdening researchers and institutions with administrative duties and perceived pressure to protect new knowledge.

They further suggest that the legal framework for patents in South Africa displays a weakness in that “the pressure on universities and other publicly funded researchers to obtain intellectual property rights as a precursor to commercialising knowledge could have the unintended consequence of slowing down research and making it less, not more, accessible for developmental purposes”.

If you, however, look at statistics relating to publication of academic papers by South African universities, it paints a picture of a relatively high publication rate. The 2013 report on South African Science and Technology Indicators by the National Advisory Council on Innovation indicated that 37,237 high impact journal publications occurred between 2008 and 2012. (This number was taken from the universities which make up about 88% of the total South African university publications.)

Interestingly, the document further reports that the number of high impact journal publications by South Africans increased at an average of 10% per year over the 2003 – 2012 period, representing an average growth of around 624 publications per year. This growth is much more rapid than the world average.

In this respect it is clear that the age old notion of “publish or perish” remains significant and that research in South Africa has remained active and well at least during this period, notwithstanding the implementation of the IP-PFRD Act.

Against this background it is interesting to note that according to the Companies and Intellectual Property Commission only around 600 patent applications have been filed by the aforementioned universities between 2008 and 2012. Investigation into how many of these 37,237 publications included inventions which could have been subject to patent protection would certainly be interesting. Clearly however the number of publications far outweighs the number of patent applications and it is accordingly likely that a number of potential inventions were disclosed without the prior filing of patent applications.

The writer has certainly come across a number of instances in which prior publication, whether by brief advertisement, presentation at congresses or full publication, have destroyed the novelty of possibly valuable inventions, leading to the loss of potential protection by way of patents. To quantify the prospective income that could possibly have been derived from such “patents” would certainly be even more interesting!

The debate around the value and effectiveness of the patent system aside, the fact remains that publication, duly authorised by the rightful holders of an invention, prior to filing a patent application irrevocably destroys potential patent protection – not only in South Africa, but worldwide!

The South African patent system provides a useful manner in which to reserve the right to protect potential inventions by way of a provisional patent application. The cost for preparing and filing a provisional patent application is furthermore relatively low and can be done without a substantial delay once an invention is ripe for publication. Such provisional patent application provides the inventor with a period of 12 months, from the date of filing, within which to conduct the necessary investigations into the potential of the invention in terms of both the validity and commercial prospects thereof. Should these investigations indicate that the patent application is not worthwhile pursuing further, the application may simply be abandoned.

The schematic figures below illustrate a philanthropic approach to research and development versus intellectual property protection approach. The philanthropic approach effectively results in a donation of your invention to the public and although admirable, such approach cannot generate any income and is simply not sustainable.

Guarantees of commercial success and/or valid patents are difficult to predict, but a certain guarantee is that publication without a prior patent application for such invention can never lead to any patent protection resulting in a loss of potential income.

Researchers, inventors and the like are therefore urged to patent before they publish or perish.

For more information please contact:

Fredo Ströh
Associate
Department: Patents
fredos@dmkisch.com
011 324 3156

Author: Fredo Ströh

Inventions, utility models and designs: the People’s Republic of China and the Law

Summary and implications of the fourth newly drafted amendment to the Peoples Republic of China Law in regards to inventions, utility models and designs.

China’s patent system became modernized in 1984 under Deng Xiaoping’s Economic Reform Policy. From 1978, China transformed from a planned economy to a market-oriented economy. During the 1980s, the Chinese Intellectual Property system was established through a series of laws: the Trademark Law in 1982, the Patent Law in 1984 and the Copyright law in 1990.

At a glance, the fourth newly drafted amendment to the Peoples Republic of China Law seem to aim to bring the Chinese Law further in line with international standards and agreements, such as provided for by TRIPS. The proposed amendments further decentralize the role of the State Counsel, by empowering the Patent Administration Department and creating an All-China Patent Attorneys Association to regulate the industry at pawn level.

Further positive developments would be clarification of the quantum of penalties payable by infringers and a newly introduced type of contributory infringement in the form of joint liability, for internet providers found to be knowingly assisting in the infringement of a patent right.

Turning to some of the proposed amendments, newly amended Article 14 provides for clarification on the determination of a reward for an employment invention-creation. Article 25, being the intrinsic requirements for the granting of patents, provides for an exclusion on the prohibition of the granting of a patent for a method of diagnosis or treatment of diseases where such methods relate to bred animals.

Article 42 introduces the extension of the duration of a design right from 10 years to 15 years. Article 60 introduces empowering legislation for the confiscation and destruction of infringing products and provides said clarification on the quantum of fines. Article 64 seems to introduce the term wilful infringement and Article 65 provides for increased quantum damages for aforesaid wilful infringement.

Newly added Article 70 introduces internet service provider joint liability, if the internet service provider fails to take the necessary measures after it has received eligible and effective notification of same. Newly introduced Article 76 mandates the Patent Administration Department to promote the exploitation and utilization of patents and to regulate the services of marketing activities and/or operation. Newly added Article 78, provides for a back door for an inventor of an employment invention-creation to obtain a licence should such institution fails to carry out exploitation of the resulting granted patent.

In conclusion, the proposed amendments certainly hint at positive developments in Chinese law and may be seen as to promote increased enforceability of patent rights and further promote self regulation of the industry.

For more information please contact:
Allan John Rabie
Professional Assistant
Department: Patents
ajr@dmkisch.com
011 324 3032

Author: Allan John Rabie

Kiwis undergo Patent Act Revamp: Here is what you need to know

The New Zealand Patent Act of 2013 came into force on 13 September 2013. This Act replaces its predecessor Act of about 60 years, which remained largely unchanged. The move appears aimed at harmonising New Zealand Patent Law to bring it in line with that of the international Patent Community. One of the effects of the new law is the creation of an obligation on patentees to better manage patent portfolios. While this is in itself not unexpected, there are added implications that South African-based New Zealand patentees need to be aware of.

Patents Act 2013
One of the main changes that have been effected is that local novelty as a requirement of patentability has been replaced with that of absolute novelty.

A second major change is that examination has to be requested. Automatic examination subsequent to filing of the application has been repealed.

Software patents are still considered eligible subject matter, but the scope of protection is restricted to embedded uses or control applications. Pure software patents fall outside of the scope of eligibility. This is no different to the South African and UK positions, and appears to also be consistent with the direction of US case law (see Alice Corp v CLS Bank).

Publication shall occur 18 months after filing, which is in line with most other jurisdictions.

Renewal fees will now fall due on an annual basis, as opposed to a tiered structure where payments fell due on years 4, 7, 10 and 13.

A further mechanism (which also applies to patents granted under the old Act) allows direct challenges for re-examination of granted patents. In short, re-examination involves submitting a statement setting out grounds on which the granted patent is challenged to IPONZ. This is the first and last step the challenging party takes in such proceedings. The patentee will then be granted an opportunity to rebut with an argument to have the patent maintained, by challenging the grounds for re-examination, and/or amend the patent. Should the patentee fail to discharge this onus, the patent may be either fully or partially revoked.

Some drawbacks are inherent in this mechanism. The party challenging the patent has no right of rebuttal in answer to the patentee’s argument, and also has no right of appeal the patentee prevails. The patentee, on the other hand has a right of appeal if the challenge is sustained by IPONZ. A related outcome of this application is that a court my refuse to hear any subsequent application for revocation, if the grounds on which a patent is challenged has featured before the IPONZ. Re-examination appears to be exhaustive of a challenger’s right.

It would thus be advisable to utilise the benefit of a re-examination procedure, only if there are clear and compelling grounds for invalidity. If there are debatable grounds for invalidity, and a re-examination procedure is utilised, the challenger runs the risk of facing issue estoppel, should the challenge be defeated, and thus close the doors of the court to his cause.

The above development is a positive step towards harmonisation, and for the South African-based patentee, it simply means that New Zealand as a patent destination should feature more regularly on your patent diary. Often overlooked in favour of Australia as a patent filing destination, New Zealand has featured on Forbes Magazine’s List of Best Countries for Business list in 2012. Net imports slightly exceeded net exports in 2012, and a per capita GDP of 45759 NZD was recorded in the same year. While not the biggest market for patentees, New Zealand remains an important filing destination for patentees having an Australian interest, given that the New Zealand economy is tightly allied to that of Australia.

For more information, please contact:
IZAAN VAN DER MERWE
Candidate Attorney
Department: Patents
Tel: +27 11 324 3008
Email: izaanv@dmkisch.com

Author: Izaan van der Merwe

Time to Move into the Fast Lane

We are moving into an era where technology is developing and changing so rapidly such that there is a concurrent commercial need to obtain expedited grant of patent applications so as to enable innovators to obtain granted patents more quickly and more efficiently.

Furthermore, as the catastrophic effects of global climate change are likely to be the next great challenge in the 21st century, we have seen an increase in the number of patent applications being filed relating to the fields of inter alia energy conservation, the development of alternative and renewable energy sources and greenhouse gas emission reduction. Time is ticking for innovators and world leaders to find tangible solutions to these environmental problems and thus the increasing need for patent holders to obtain expedited grant of patent applications in these fields.

Numerous national Intellectual Property Offices offer various types of fast-tracking programs and a summary overview of a few of these fast-tracking programs is given below.

Certain Intellectual Property Offices have established fast-tracking programs for environmentally-friendly patent applications with the purpose of promoting so-called “green” technologies. The overriding objective of these accelerated patent examination programs is to ensure that patent applications covering green technologies are examined as a matter of priority thereby reducing the time ordinarily taken to obtain a granted patent, from several years to a much shorter period reaching a few months in specific cases.

A further program that is being increasingly used to expedite grant of a patent holder’s international patent portfolio is the Patent Prosecution Highway (referred to as the “PPH”). The PPH program is available for all patent applications in all technological fields (and thus is not only applicable to green technology patent applications).

In terms of this program, where patent claims have been found to be patentable by either the European Patent Office (“EPO”), the United States Patent and Trademark Office (“USPTO”), the Japanese Patent Office (“JPO”) or one of the other participating Patent Offices, accelerated processing of the patent holder’s corresponding patent applications that are pending before said other participating Patent Office(s) may be requested. The various Patent Offices participating in this program refer to and share already existing patent search and examination results as much as possible in such cases. In this way, the program allows patent holders to fast track examination procedures of their foreign patent portfolio through these participating Patent Offices.

The USPTO offers a further program, namely Track One prioritized examination, the goal of which is to assert the grant of a patent application within 12 months from obtaining prioritization status thereof.

Whilst the above succinctly describes a few of the fast-tracking programs available and which are widely used, it is by no means an exhaustive list.

The merit of using fast-tracking procedures is evident by high tech companies, such a Google, which has, to date, secured approximately 875 fast-track patents. It is reported that Google’s attainment of this large number of fast-track patents equates to around 14 percent of the 6,187 expedited patents that have been issued by the USPTO.

As one can see, there are key advantages associated with these fast-tracking procedures.

A first primary advantage is that patent holders will be in a position to commence licensing their patent technology a lot sooner in comparison to going the normal patent examination route which, in turn, will significantly reduce the time that patented technology can be marketed and commercialised.

As for start-up companies, these enterprises can start raising private capital on the strength of their granted patent a lot sooner than would be the case under normal examination.

Of course, these fast-tracking procedures are not without certain disadvantages which one should be aware of.

A fundamental drawback associated with the fast-tracking programs available resides in the difference in each Patent Office’s requirements, rules and procedures. This places a significant burden on patent holders to adequately meet each Patent Office’s requirements and to prepare different patent claim sets suitable for each program.

A further disadvantage that should be borne in mind is the costs pertaining to requesting accelerated examination. These costs differ from program to program and with respect to each different international Patent Office.

A harmonised, global fast-tracking program would inevitably solve the above burdens placed on patent holders and would also encourage more patent holders wishing to participate in expedited patent examination programs.

However, until such time that a harmonised program comes to the fore, should you wish to find out more about capitalizing on the various existing programs for expediting patent examination and grant that are available please contact:

Ursula Baravalle
Director
Department: Patent
Tel: +27 (0)11 324 3065
Email: ursulab@dmkisch.com

Bridging the functionality divide: Chespak v MCG

An earlier report by the writer in respect of a Supreme Court of Appeal decision (BMW AG v Grandmark International (Pty) Ltd 2014 (1) SA 323 SCA) adopted a cautious view on the effect of that judgment on the OEM industry seeking to compete in the South African market. Happily, a further decision (August 2014) on similar subject matter (Chespak (Pty) Ltd v MCG Industries (Pty) Ltd 2014 JDR 1734 (GP)) is now to hand which brings much needed certainty on the question of functionality as this may apply to registered South African designs.

The case concerned an appeal from an a quo decision that granted an interdict against infringement of a registered aesthetic design by a local manufacturer. Two main issues drove the appeal, namely that if any feature of the aesthetic design registration performs any function, that feature is functional in nature and has to be excluded in determining aesthetic design right merit. This applies the moreso, so the argument went, if the design rights holder opted to use a so-called omnibus type definitive statement in defining its monopoly. This type of claim typically reads:

“the features of the design for which protection is claimed reside in the shape and/or configuration and/or ornamentation and/or pattern as applied to article X, substantially as shown in the accompanying illustrations”

The appellant’s contention was that the use of an omnibus type definitive statement identified no specific feature to enable the general public to identify what the scope of protection is, thereby making the right itself a nullity. Further, the appellant contended that the absence of certainty in relation to the claimed monopoly meant that it had to consider every feature resident in the design, which in its view afforded it a basis on which to pry open its argument on functionality of each individual feature.

A three bench sitting of judges of appeal disagreed. In disposing of the appellant’s criticism of the use of omnibus type definitive statements, reference was made to the dictum of Laddie J (as he then was) in Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 422, which was applied with approval by a sitting of the Full Bench in the Supreme Court of Appeal in Clipsal and Another v Trust Electrical 2009 (3) SA 292 at 7, which accepted the omnibus type statement in local practise. Laddie J’s reasoning which was accepted by the present judges included that the omnibus type statement does not isolate any aspect of the design with the object of claiming novelty or originality in any particular feature and that the proprietor can choose to assert the design right in respect of the whole of the design or part thereof. This is as broad as one can permissibly construct the monopoly under the South African Designs Act 193 of 1995.

The Court then turned to deal with the functionality argument. Accepting that any court in determining the scope of a design right, must not consider solely functional features of a design in the context of an aesthetic design registration, the Court put paid to the argument by casting a light over the use of the word “solely” by the Legislature. The Court reasoned that the scope of functionality exclusion within the aesthetic context does not extend to features serving a functional purpose but also having aesthetic appeal. The mere fact that a feature of a design or the design itself performs some function is not decisive. The real test is whether the function which the design or the article to which the design is applied performs, dictates or necessitates its shape or configuration. In other words, the Court in deciding the question must have regard to whether the feature is included as part of the article (or the design) solely or purely for the reason that it performs a function, or if that article or feature has added aesthetic appeal. The fact that the mentioned feature could have been manufactured to look differently added to the Court’s reasoning in finding against the functionality argument.

On the question of infringement, the Court re-stated earlier authority (Brudd Lines v Badsey (2) 1973 (3) SA 975 (T)) that the criterion is one of an impact made on the eye by the whole of the design. A minute analysis for such differences as there may be between the design and the infringing product (in the context of omnibus statements) is inappropriate. No doubt there would be differences in the infringing product as any infringer would attempt to camouflage plagiarism by introducing a difference here or there. If the design, when viewed as whole, shows unmistakeable similarity beyond argument, infringement would be established.

The present decision should bring comfort to the workshops of OEM designers in that it has provided certainty, albeit where such certainty already existed under the cited authorities, in a convenient manner that strings together relevant considerations of the functionality v aesthetic designs argument in a single case. One would indeed be hard pressed to find an aesthetic design that is not completely free of the performance of any function, whether such function is to provide support, embellish or merely look pretty. It is a good decision and in line with our comments made in the BMW case supra.

For more information please contact:

Muhammed Vally
Director
Department: Patent
Tel: +27 (0)11 324 3080
Email: muhammedv@dmkisch.com

Author: Muhammed Vally

Patents: Misrepresentation and revocation

Does an amendment made to a patent application cure an earlier false statement that was made by the patentee? This was the issue that the court had to decide in the 2013 South African case of Gallagher Group Ltd v IO Tech Manufacturing (North Gauteng High Court, Judge Kollapen, still unreported).

The case dealt with section 61(1) (g) of the Patents Act. This section says that a patent can be revoked if the prescribed declaration that the patentee must file ‘contains a false statement or representation which is material and which the patentee knew or ought reasonably to have known was false at the time when the statement or representation was made.’ The prescribed declaration (P3) reads as follows: ‘To the best of my/our knowledge and belief, if a patent is granted on the application, there will be no lawful ground for the revocation of the patent.’

The facts were that a company that had allegedly infringed a patent counterclaimed for revocation of the patent. When the company amended its Particulars of Claim to add – as a further ground for revocation – the claim that the prescribed declaration that the patentee had made contained a false statement or declaration that was material and which it knew to be false (it related to the identity of the inventor), the patentee objected by way of a legal exception. The patentee’s argument was that the proposed amendment did not set out any cause of action for revocation because – even if it had known that the patent was invalid at the time when it was filed – certain amendments that it had made to its patent application after the signing of the declaration cured the invalidity with retrospective effect.

Not so said Judge Kollapen. He gave two reasons for his finding. The first was that the present (1978) Patents Act differs significantly from the old (1952) Patents Act on the issue of revocation – whereas under the old act a patent could be revoked if the application contained a material misrepresentation, under the present act a patent can be revoked if the declaration contained a false statement that the patentee knew or should reasonably have known was false when it was made. As a result, the judge felt that a number of well-known cases that dealt with amendments to patents filed under the old act were of limited value.*

The judge said that Section 61(1) (g) ‘signalled a significant departure in the approach to material misrepresentation as a ground for revocation…. (it) fixes with inflexible rigidity, the timeline in assessing the falsity of a misrepresentation…the operative words are “at the time when the statement or representation was made”…the legislature, in moving beyond the provisions of the 1952 Act, sought to provide a basis for revocation where: a) The patentee knew or ought reasonably to have known of the falsity, and b) Had such knowledge at the time when the misrepresentation was made.’

The judge said that the change introduced culpability, and drew a clear distinction between innocent and culpable misrepresentations. The effect of the change is that innocent misrepresentations no longer serve as a ground for revocation. ‘It must therefore follow that the 1978 Act did in fact represent a significant change in approach to false representations in patent declarations, and while on the one hand it narrowed the scope on which a revocation could be launched by excluding innocent representations, on the other hand it created a higher bar in order to successfully invoke a claim for revocation, namely knowledge of falsity.’ It followed therefore that an ex post facto amendment could not solve the problem: ‘Under those circumstances it would be difficult to convincingly argue in view of the deliberate change of stance by the legislature in isolating and dealing with knowingly making a false representation as a basis for the revocation, that simply amending the patent specification can have the effect of removing the basis for revocation.’

The judge also felt that there were public policy reasons for such an interpretation: ‘From a public policy perspective ensuring that an amendment does not have the effect of curing an invalidity that was knowingly made would go a long way in ensuring that patentees only file patents for inventions which the patentee honestly believes are valid, thereby protecting the system against abuse by dishonest patentees.’

The judge rejected the patentee’s argument that the effect of such a finding would be to remove the right to amend patent applications: ‘The right to amend is left intact… (however) the consequence of such a right can never be to validate a knowing falsity.’

It’s a decision that has serious implications for both existing patents and patent applications that are filed in the future. It’s important to realize that the P3 declaration does not need to be filed together with the patent application and can be filed late. It’s also possible to uplift a P3 that has been filed and replace it with a fresh one. A patentee will, in future, need to consider the filing of the P3 very carefully, taking account of corresponding or international applications that it has filed. For example, although the patentee will need to rectify invalidity that it knows about before it signs the P3, if it signs the P3 before the invalidity comes to light the P3 will be fine, although it will still be necessary to amend the application. This is, of course, an issue that the patentee must discuss in detail with its attorney.

*Cases such as Dresser Industries Inc v South African Inventions Development Corporation 1982 BP 317 (CP), Bendz Ltd and another v South Africa Lead Works Ltd 1963 (3) 797 (A) and Rotaque (Pty) Ltd v General Mining and Finance Corporation and Chamber of Mines of South Africa 1986 BP 534 AD.

For more information please contact:

MUHAMMED VALLY
Director
Department: Patent
Tel: +27 (0)11 324 3080
Email: muhammedv@dmkisch.com

Author: Muhammed Vally

Comments on the South African Draft National Policy on Intellectual Property

The good, the bad and the ugly

South Africa does not (yet) have a formalised policy framework regarding intellectual property (IP) to guide different government departments in their approaches to IP. In a recent attempt to codify a consolidated national approach to IP, Mr Rob Davies, the current Minister of Trade and Industry, published a long-anticipated Draft National Policy on Intellectual Property, 2013 (‘DIPP’) in the South African Government Gazette of 4 September 2013. Public comments on the document were invited to be submitted within 30 days from the date of said publication. The IP fraternity was suddenly sent aflutter, and various efforts were made to comment on the DIPP within the brief time provided. Commentators on the (very polarising) DIPP included, amongst others, individuals, law firms, retired judges, pharmaceutical companies (both innovative and generic) and Non-Governmental Organizations, such as the Treatment Action Campaign, Médecins Sans Frontières and Section 27.

Although the initial aim of the DTI was to present a final IP Policy to Cabinet for approval before the upcoming general elections on 7 May 2014, it has recently come to light that this somewhat optimistic deadline will in all probability not be met. This is an encouraging development, and provides an opportunity for the significant feedback received from industry role-players to be tabled for consideration. The added time available for acceptance will hopefully avoid undue expedition of the DIPP through parliament. This article touches briefly on the parts of the DIPP that are welcomed, as well as those parts that are (or ought to be) open to discussion.

The ‘Good’

The DIPP cites various admirable objectives such as:

“to develop a legal framework on IP that should empower all strata of the citizens of South Africa” and to “engender confidence and attract investment”.

Although all forms of IP are addressed in achieving these objectives, the main focus of the DIPP seems to be the initiation of patent law reform, in the main directed towards the promotion of access to medicines and the improvement of public health.

According to the policy, the current patent deposit system that is used in South Africa is allowing grant of a number of “weak patents”. The main reason cited for the existence of these “weak patents” is the lack of substantive examination infrastructure in South Africa. According to the DIPP, the formal, non-substantive examination of a patent application by the South African Patent Office is being exploited by those seeking to prolong patent monopolies granted in respect of their inventions. The DIPP has singled out pharmaceutical inventions as a prime source of concern. It also leaves no doubt in its vociferous support for the inclusion of flexibilities (such as compulsory licensing and parallel imports) which has basis in the Agreement on Trade Related Aspects of Intellectual Property Rights (‘TRIPS’) (of which South Africa is a signatory). These flexibilities are sought to be included in South African legislation to purportedly prevent patents barring access to health. It is interesting to note that the Patents Act 56 of 1978 (“the Act”) in fact makes provision for compulsory licensing under section 56, and that the Medicines and Related Substances Act 101 of 1965 was specifically (and controversially) amended in 1997 to include section 15C which allows for parallel imports. Neither of these provisions, as far as the authors are aware, have been locally invoked in a pharmaceutical context to date.

An example cited by the DIPP on how the depository patent system is being abused is in the form of the concept of so-called “patent evergreening”, which has emerged from foreign jurisdictions (incidentally where patent examination infrastructure does exist). Parties guilty of patent evergreening, so the argument goes, seek to have several patents, filed in succession and usually close to a preceding patent expiry, granted and which covers the same product, albeit with minor changes to overcome obvious patent invalidity. Another example cited in the DIPP is where pharmaceutical patentees are filing patent applications directed towards second medical indications of known pharmaceutical compounds. According to the DIPP, these actions are frustrating access to generic and more affordable medicines that can be used to combat rampant spread of diseases such as HIV/AIDS, tuberculosis and cancer. The debate at international level rages on, where the opposite side of the evergreening debate argues that such a concept is impossible, given that any person may utilize the technology disclosed under an expired patent. Be that as it may, what is clear is that this debate has reached South African shores and is as topical as it is mired in controversy. In South Africa, patent evergreening is not a ground for the revocation of a patent.

The ‘Bad’

One of the main and recurring recommendations of the DIPP towards achieving its objectives is the establishment of a substantive examination system, the introduction of pre- and post- grant patent opposition proceedings, and the prevention of patents for inventions that involve the new use of a known substance that is not “sufficiently inventive”. Currently, lack of inventive step is one of the grounds for launching post-grant patent revocation proceedings under the Act.

The ideals of a substantive examination system and opposition proceedings during the prosecution of a patent application are generally supported by role-players in the industry. However, pragmatic causes for concern include the need to recruit proper expertise, in a sufficient number, of qualified patent examiners to process approximately 10,000 annual patent applications (both foreign and local) filed in South Africa. It is interesting to note that by comparison, South Africa is ranked 26^th on the list of the world’s largest populations, geographically is 1/8^th the size of the United States, just over 1/3^rd the size of the European Union, is twice as big as France and four times as big as Germany. According to 2013 filing statistics released by WIPO, the USPTO had in the year under review received just over 144 000 PCT national phase entries (not necessarily including local applications), Germany just under 57 000 applications and France just under 28 000 applications.

It is also important to note that patent examiners in foreign patent offices are generally PhD graduates with some level of formal training in patent law. Local cost implications associated with the employment the right number of suitably qualified patent examiners is likely to be a factor holding the prospect of higher official filing fees on the cards (and by implication prosecution fees as a new cost centre). This eventuality could spur on an announcement of substantial increases in patent office official fees, the likely end of which could be placing patent protection beyond the reach of ordinary South Africans, as well as SMME’s and start-up companies. In relation to medicines, the South African market size generally pales in comparison to US and European markets. Raising the cost of patent entry in the local sphere may well discourage foreign investors from placing South Africa on its list of eventual patent filing destinations. As patent filings are sometimes viewed as a measure of a company’s trust to compete within the South African territory, any reduction of patent filings locally may well be accompanied by diminished foreign direct investment.

The ‘Ugly’

Unfortunately, the predominantly noble objectives of the DIPP are completely overshadowed by the disorganised, and factually and legally flawed document that it is presented in, bearing in mind the nearly six years taken for its publication. Unsurprisingly, an overwhelming reaction of criticism to the DIPP is not aimed at the stated objectives, but rather at the apparent lack of sufficiency in the understanding of both local and international IP laws, and the seemingly careless drafting errors that the document displays.

Inherent contradictions present in several places, the most obvious one being the negation of the stated objective of

“engendering confidence and attracting investment”

as against a background statement that reads

“this IP Policy needs to take into account the fact that South Africa is a developing country with the bare minimum of a technological, economic and social base”

a mere two paragraphs later. Not only is such a statement not true, it is seen as an admission that the South African government has no confidence in local talent. This militates against any move to engender confidence in South Africa as a patent filing destination.

Concluding remarks

The objectives of the DIPP towards improving the health of the poorest of the poor are admirable, especially where human rights issues, such as the access to medicines for the treatment of HIV/AIDS and other diseases are prevalent. The implementation of these objectives is however problematic. Honourable Judge LTC Harms (retired Deputy President of the Supreme Court of Appeal) sums up the general feeling of the IP industry in his commentary on the DIPP, where he states

“…the real issue from a legal perspective is not so much the ‘what’; it is the ‘how’… ”

The stated objectives could well be achieved in time, but only if the final IP Policy reflects an understanding and consideration of the concerns towards the DIPP raised by various participants and commentators in the industry. Without substantive industry involvement, the policy will be remembered as a wasted opportunity to develop our law under an avoidable cloud of perceived intransigence. Considering that the DTI spent in excess of six years to formulate the DIPP, it would be beneficial to all interested parties if the DIPP is not rushed from draft format to final format. The importance of the subject justifies a thorough review of feedback received.

For more information, please contact:

JACO THEUNISSEN
Director
Department: Patent
Tel: +27 11 324 3154
Email: jacot@dmkisch.com

MUHAMMED VALLY
Director
Department: Patent
Tel: +27 (0)11 324 3080
Email: muhammedv@dmkisch.com

Author:

Jaco Theunissen

Muhammed Vally