1 INTELLECTUAL PROPERTY RIGHTS FROM PUBLICLY FINANCED RESEARCH AND DEVELOPMENT BILL Response to the Portfolio Committee on Science & Technology during its deliberations on the IPR-PFRD Bill: 5 August 2008

2 …CONTENTS 1.Public consultations (Summary Report) 2.Matters arising 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  The Stakeholder Engagement Summary Report:  Tracks the number of iterations of the draft Bill since May 2007  Provides a record of organisations and individuals consulted  Annexure 1: Matrix of Public Comments (public hearings 29 & 30 July 2008)  Annexure 2: DST proposed amendments to the IPR-PFRD Bill pursuant to review of comments and public hearings PUBLIC CONSULTATION …

5 REGULATIONS … (1/3) The DST supports the following principle articulated by Portfolio Committee: “Regulations are there to support implementation of the law and not the other way round”

6 REGULATIONS … (2/3) 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 …”

7 REGULATIONS … (2/2) To balance matters for implementation, recommend amendment to:  5(1)(h) “report to NIPMO on a biannual basis and as provided for in this Act and in Regulations, on all matters pertaining to the intellectual property contemplated in this Act …”

8 DEFINITIONS … (1/4)  “funding agency” means the State or an organ of the State or a State agency or instrument to the extent that it funds research and development

9 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

10 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

11 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

12 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

13 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

14 BENEFIT SHARING … (1/2)  At present, Bill proposes “at least 20% of gross revenues”  Need to protect the rights of IP creators  Institutions want to first recover the costs associated with protection and commercialisation

15 BENEFIT SHARING … (2/2)  Proposed amendment:  up to the first R1m of revenue, the inventors are entitled to 20% on gross revenues; (addresses the need to incentivise and protect IP creators)  thereafter, the inventor is entitled to 30% of nett revenues (addresses Institutions’ concern)  Regulations will prescribe what are the allowable costs that can be deducted from gross revenues to get to “nett revenues” Informed by the benchmarking exercise conducted by the DST and takes cognizance of a developing country context (i.e. India, 30% of nett)

16 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 society, whether it be for a social, economic, military or any other benefit to the ordinary persons of the Republic”

17 PUBLIC GOOD … (2/2)  2(2) This Act furthermore seeks to ensure that – a)recipients of funding from a funding agency assess, record and report on the benefit for society of publicly financed research and development; b)recipients protect intellectual property emanating from publicly financed research and development from appropriation and ensure that it is available to the people of the Republic

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

19 …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

20  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 …CONCLUDING REMARKS

21 Thank You