IPR - PFRD ACT – Friend or Foe? An Insider's View

IPR - PFRD ACT – Friend or Foe? An Insider's View

The Intellectual Property Rights from Publicly Financed Research and Development Act (the “IPR-PFRD Act”) remains a hot topic for debate and has, to date, received mixed reviews. We, at the National Intellectual Property Management Office (NIPMO; an office established in terms of the IPR-PFRD Act) believe firmly that much of the negativity around the Act has stemmed from misinformation and as such are touting the mantra that “information is power” and aim to demonstrate that the IPR- PFRD Act is merely a misunderstood friend and should not be regarded as a foe.

The objects of the IPR Act closely mirror those of its American 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” (emphasis added).

To further understand the overarching aims and application of this Act, let us visit each of these emphasised terms in turn:

i) Publicly financed research and development (R&D) – who does the Act apply to?

    The 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 any individual, institution or the like, who has received funding (also known as a “recipient”) from any form of state body will fall within the scope of the Act and will need to comply with one or more of the requirements thereof.

    ii) 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 (BSA) with the inventor. This brings out one aspect of the “friendly face” of the IPR-PFRD Act in that specific provision is made to incentivise the creation of intellectual property 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 which 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 resistant-tubercolosis (MDR-TB) is developed. The core active compound, as well as the pharmaceutical formulation for administration of this compound, amongst others, may form the subject of a patent application. The requirements for filing the patent application are regulated by a statute, namely the South African Patents Act. The name of the pharmaceutical formulation and thus the trade name under which the product is marketed may qualify for trade mark registration in terms of a different statute, namely the South African Trade Marks Act. Thus in this brief scenario, two forms of registrable IP arise, namely a patent and a trade mark. 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.

      iii) Utilised, commercialised and benefits – what steps does the Act require me to do and who is eligible to benefit?

        To date one has 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 which 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 Act now requires the applicants to such an application 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 public good. In fact, the Act 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 Act 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 Act, namely to ensure that all South Africans benefit from IP generated by publicly funded R&D, and are aligned to broader economic objectives of Government.

        Having all this knowledge to hand, it becomes apparent that the IPR-PFRD Act although sometimes perceived as foe, is designed as friend to each and every South African and aims to ensure that some benefit to taxpayers results for the continued investment made into R&D by the Government through its various departments, such as Science and Technology and Trade and Industry and its various agencies.

        This article constitutes the first of a series of articles in which we will thrash out the nitty-gritty bits and bobs of the Act in an effort to further empower all researchers. Further topics, include “What can NIPMO do for me?”, “What channels are available in the event that I do not agree with a decision taken my NIPMO” and “Are the requirements of the Act and open source technology mutually exclusive?”.

        Please do not hesitate to contact us as the NIPMO should you have any questions in this regard or any related matter, on 012 844 0211 or kerry.taylor@dst.gov.za.

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