Intellectual Property Rights from Publicly Financed Research and Development Act, 2008: Towards Improved IPR Management and Value Extraction from Public Funding of Research and Development in South Africa

Intellectual Property Rights from Publicly Financed Research and Development Act, 2008: Towards Improved IPR Management and Value Extraction from Public Funding of Research and Development in South Africa

McLean Sibanda

In December 2008, the President of the Republic of South Africa signed into law the Intellectual Property Rights from Publicly Financed Research and Development Act, 2008 (Act No. 51 of 2008). This act, known as the IPR Act, was championed by the Department of Science and Technology (DST), and signified a very important milestone towards improving management of intellectual property (IP) emanating from publicly financed research and development (R&D).

The object of the IPR Act is ‘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 a social, economic, military or any other benefit’. The IPR Act finds its basis from the 2002 National R&D Strategy which identified a need for a policy and legislative framework for managing IP emanating from publicly financed R&D.

The IPR Act is one of a number of interventions by government to enhance innovation in South Africa and address some of the concerns in publicly financed R&D. From an IP management perspective, these concerns included the lack of a harmonised approach to managing intellectual property emanating from publicly financed R&D. This has often resulted in IP leakage from publicly financed institutions with the public getting very little benefit. Further, most higher education institutions have not had policies regulating declaration of IP from publicly financed R&D, ownership of such IP, commercialisation of such IP and disposal of such IP. The lack of benefit sharing policies to reward the creators of such IP also meant that there were no incentives for the IP creators to disclose such IP. The lack of a harmonised approach has also been a source of uncertainty on IP matters by third parties when transacting with publicly financed institutions.

Furthermore, as set out in the 2007 Innovation Fund Special Report on the State of Patenting in South Africa, over a 15 year period, South African institutions accounted for around 4% of all patent applications originating from South Africa. This is a very low patenting rate considering this comprises the biggest concentration of knowledge workers in the country. The lack of appreciation by researchers of the value of IP emanating from their research, has also characterised itself in some of the most internationally cited and recognised patents emanating from South African institutions being sold to off-shore entities with meagre returns to the country.

The IPR Act regulates IP developed by publicly financed institutions and small businesses (recipients) with public funds. There is considerable public funding in innovation, particularly by the DST, through instruments such as the Innovation Fund, the Advanced Manufacturing Technology Strategy (AMTS), Tshumisano Trust, and the Biotechnology Regional Innovation Centers (LIFElab, BioPAD, Plantbio, Cape Biotech, NBN), which will be migrated into the newly created Technology Innovation Agency (TIA) before the end of 2009. In the light of this public funding, the IPR Act is ideally positioned to emphasise the potential of IP to contribute to economic development, wealth creation and social upliftment in work to be funded by the TIA. The public is demanding more accountability by the public regarding government spending and the IPR Act plays an important role in ensuring such accountability.

So what does this mean for publicly financed institutions, and in particular, higher education institutions? 

Since IP is in essence property, the best way is to look at IP management practices required of the IPR Act as being similar to any prudent management practice in respect of property. Recognising that recipients are beneficiaries of public funding, the IPR Act gives the recipients the right of ownership to the IP, on the understanding that in the event that a recipient does not wish to retain such a right, government may acquire such IP if this was in the national interest. Incentives for IP creators at publicly financed institutions for improved research practices and IP disclosure are entrenched through minimum benefit sharing arrangements. Institutions and IP creators may negotiate and agree on higher benefit sharing. With the right to own IP emanating from their R&D activities funded with public funds, recipients have an obligation to ensure that such IP does not gather dust on the shelves but is commercialised so that the benefits flow to the broader society. In order to address the loss of IP to off-shore jurisdictions with little to no benefit to South Africa, the IPR Act requires that certain conditions must be complied with before an exclusive licence or assignment of IP to an off-shore party can be effected.

Government now has a right to IP developed with public funds where this is required for the emergency needs of the Republic, in a manner that does not prejudice the recipients or licensees to such IP. The IPR Act has established the National Intellectual Property Management Office (NIPMO). NIPMO’s primary purpose is to ensure effective implementation of the IPR Act through appropriate capacity development, advisory services, funding of IP costs, exercising public rights in respect of IP governed by the IPR Act, and regulatory measures required in terms of the IPR Act. NIPMO will assist in the establishment of Offices of Technology Transfer, and where such offices exist, NIPMO will, as needs dictate, provide support and work with such offices to inculcate best practices in IP management and commercialisation.

The effective implementation of the IPR Act should result in increased awareness of the value of IP and lead to improved IP management and commercialisation practices throughout the country. For the institutions, this may mean increased stature in respect of research practices. It will also add economic relevance to such research. This act has the potential of spurring a number of economic activities, including new technology-based start-up businesses, higher out-licensing revenues, employment opportunities and increased R&D activities. This will ensure that IP emanating from public funds contributes to economic activity in the country.

About the author:

McLean Sibanda is a partner at Sibanda and Zantwijk Attorneys and an executive director of the Innovation Fund. He holds BSc Eng and MSc Eng degrees from the University of the Witwatersrand (Johannesburg), and LLB and LLM  (Commercial Law) degrees from UNISA. He has wide legal experience in intellectual property and commercial law, with particular interests in patents, copyright, commercialisation of intellectual property and deal structuring. McLean qualified as a patent attorney after serving articles with Adams & Adams Attorneys. He also spent close to seven years at De Beers Industrial Diamonds Division (now Element 6) as a Senior Research Scientist and Intellectual Property Team Leader. McLean has authored and co-authored a number of scientific and intellectual property articles and serves on a number of boards in the capacity of a non-executive director.

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