1 INTELLECTUAL PROPERTY RIGHTS FROM PUBLICLY FINANCED RESEARCH AND DEVELOPMENT BILL Response to the Select Committee on Education & Recreation following the public hearings on the IPR-PFRD Bill: 19 August 2008

2 …CONTENTS 1.Recap: The IPR Bill development process 2.Matters arising following the public hearings and the Portfolio Committee deliberations: i.Regulations ii.Definitions iii.International R&D Collaboration iv.Benefit Sharing v.Public Good vi.Dispute Resolution vii.Classification of institutions 3.Concluding remarks

3 Published For Public Comments May 2007 DESKTOP STUDY OF BEST PRACTICES APPOINTMENT OF AN INTERNATIONAL EXPERT REVIEW TEAM BENCHMARK EXERCISE Specific clauses and issues IPR STAKEHOLDER WORKSHOP FEBRUARY 08MARCH 08 INTERNATIONAL BENCHMARKING STUDY: USA & CANADA REVIEW EXPERTS CANADA – Marcel Mongeon INDIA – Prabudhaa Ganguli SOUTH AFRICA – Adi Paterson USA – Todd Sherer / Joe Allen PUBLIC COMMENTS WERE NEGATIVE AND NECESSITATED A RE-THINK ON KEY ISSUES JANUARY 08 DEC 07 RECAP: THE IPR-PFRD BILL DEVELOPMENT PROCESS

4 REGULATIONS … (1/2) The DST supports the following principle articulated by both the Portfolio Committee and Select Committee during public hearings: “Regulations are there to support implementation of the law and not the other way round”

5 REGULATIONS … (2/2) To balance matters for implementation, recommend amendment to:  5(1)(c) “ensure that personnel involved with the research and development make a disclosure to it within 90 days or such longer period as may be prescribed …”  5(1)(e) “refer disclosures for which it elects not to retain ownership or not to obtain statutory protection to NIPMO within 30 days or such longer period as may be prescribed …”

6 DEFINITIONS … (1/4)  “funding agency” means the State or an organ of the State or a State agency that funds research and development  “nett revenue” means the revenue less the expenses incurred for intellectual property protection and commercialisation of the intellectual property, as may be prescribed”

7 DEFINITIONS … (2/4)  “intellectual property” means “any creation of the mind that is capable of being protected by law from use by any other person, whether in terms of South African law or foreign law, and includes any rights in such creation, but excludes copyrighted works such as a thesis, dissertation, article, handbook, or any other work, in the ordinary course of business, is associated with conventional academic work”  Balance to ensure that traditional academic outputs are not threatened by legislation

8 DEFINITIONS … (3/4)  Technology Transfer – while an important concept, it is not used anywhere in the Bill, and is understood as “commercialisation” for the purposes of this legislation.  Commercialisation – this definition should NOT include references to the “defensive use of patents”.  The use of public funds for defensive and strategic use cannot be deemed acceptable.  contrary to essence of the Bill

9 DEFINITIONS … (4/4)  “Non-monetary” (to be defined in regulations): any non-monetary gross, or receipt (including, but not limited to, securities or other equity interests in any entity) and the value of such non-monetary benefit or consideration shall be the value considered by the parties as a fair consideration in respect of the intellectual property transaction”  There is always a value where non-monetary consideration is an exchange for IP in an IP transaction

10 INT. R&D COLLABORATION … (1/2) Use of terminology questioned:  11(e) the reference to “throughout the world” is in support of the intent that where intellectual property is created with public funds, this is not limited to South Africa and that government should have a right to exploit this IP for emergency needs of the Republic  e.g. Manufacturing capability may lie outside the Republic

11 INT. R&D COLLABORATION… (2/2)  Concern that Bill may create “disincentive” to foreign researchers:  It is proposed that the references to “South African citizens and ordinary residents” in the benefit sharing sections, be removed on the understanding that if foreign nationals are prevented from owning some of the IP, people will not have an incentive to work with SA institutions

12 BENEFIT SHARING … (1/2) At present, Bill proposes at least 20% of gross revenues and takes cognizance of “heirs”. Section 10(2) therefore reads: “Intellectual property creators at an institution and their heirs are entitled to the following benefit sharing: a)At least 20 per cent of the revenues accruing to the institution from such intellectual property for the first one million rand of revenues, or such higher amount as the Minister may prescribe; and b)Thereafter, at least 30 per cent of the nett revenues accruing to the institution from such intellectual property”

13 PUBLIC GOOD … (1/2)  Public good intent of the Bill to be enhanced in section 2 (Objects):  2(1) “The object of this Act is to make provision that intellectual property [developed] 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 a social, economic, military or any other benefit”

14 PUBLIC GOOD … (2/2)  2(2) This Act furthermore seeks to ensure that – a)a recipient of funding from a funding agency assesses, records and reports on the benefit for society of publicly financed research and development; b)a recipient protects intellectual property emanating from publicly financed research and development from appropriation and ensures that it is available to the people of the Republic

15 DISPUTE RESOLUTION …  Sections 3 & 4 of the Promotion of Administrative Justice Act (PAJA), deal with dispute resolution mechanisms.  Office of the Chief State Law Advisor and the DST of the view that PAJA provides for adequate dispute resolution procedures

16 …CLASSIFICATION OF INSTITUTIONS  A number of institutions (e.g. Eskom, and SANERI) have requested consideration for classification in terms of Schedule 1 of the IPR Bill.  Public Entities are classified as “institutions” as far as they: oare established by an Act of Parliament; and oare funded by the State; and oundertake their own R&D  Public Entities classified as “funding agencies’ or ‘private entity or organisation” as far as they fund R&D at an Institution

17  Amended Bill provides good balance of incentives and obligations.  Balance of interests of institutions and IP creators  Balance of interests of the State and recipients of public funds  Amendments effected now provide good law from which to develop appropriate regulations. …CONCLUDING REMARKS

18 …CONCLUDING REMARKS (cont.) The Stakeholder Summary report:  Annexure 1: A more comprehensive response to various submissions by stakeholders to assist you in your deliberations  Annexure 2: is summary of comprehensive amendments to the Bill proposed by the DST

19 Thank You