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SCIENCE AND TECHNOLOGY PORTFOLIO COMMITTEE
7 September 2004
INTELLECTUAL PROPERTY AND TECHNOLOGY INNOVATION PROGRAMMES: BRIEFINGS
Chairperson: Mr E Ngcobo (ANC)
Documents handed out
Presentation on Publicly Financed Research
Presentation on Technology and Human Resource for Industry Programme (THRIP)
Presentation on Technology Innovation Programmes of the Department of Trade and Industry
Presentation by Innovation Fund
The Committee was briefed on publicly financed research which outlined the background to the national research and development strategy, its indicator framework, the technology achievement index, United States patent trends for comparator countries, the approach of the strategy, policy issues under discussion and the objectives of the proposed policy. The briefing on the Innovation Fund outlined the economic performance indicators of South Africa, the objectives of the Fund and the beneficiaries of the trust and a summary of the Fund's investment portfolio and its investment per sector. The briefing on Technology Innovation Programmes of the Department of Trade and Industry outlined the Support Programme for Industrial Innovation (SPII), intellectual property rights with regard to SPII, its outputs and outcomes and the industry evaluation of the benefits of SPII. The briefing on Technology and Human Resource for Industry Programme in the Department of Trade and Industry outlined the objectives of the Business and Industry Partnership Programmes (BIPP), its priorities and mechanisms, the funding formula, student and researcher participation in the programme and returns on investment.
During the discussion, Members asked whether South Africa's failure to produce more patents over the next few years would have an impact on the stated objective to improve the quality of life for all South Africans, clarity was sought on the relationship between the SPII programme and the Innovation Fund, a demographic breakdown was requested of the beneficiaries of the programmes and their management structures and an explanation was requested on the need to move towards a new Intellectual Property Act when intellectual property in South Africa was already protected by various pieces of legislation. The Committee expressed its disappointed at the low levels of student participation in THRIP, the delay in finalising the legislation around Indigenous Knowledge Systems (IKS) and the Department was asked to comment on the fact that improved technology has benefited society but has also resulted in a loss of jobs.
Briefing on Publicly Financed Research
Dr Ian Patterson, Chief Operating Officer in the Department, conducted the presentation (document attached) which outlined the background to the national research and development strategy, its indicator framework, the technology achievement index, United States patent trends for comparator countries, the approach of the strategy, policy issues under discussion and the objectives of the proposed policy.
Briefing by Innovation Fund
Dr Eugene Lottering, CEO of the Innovation Fund, conducted the presentation (document attached) which outlined the economic performance indicators of South Africa, shortcomings of the new economic growth theory, the objectives of the Fund and the beneficiaries of the trust, its evaluation criteria, the process from the research concept phase to its entry into the marketplace, the technology transfer process, a summary of the Fund's investment portfolio and its investment per sector.
Briefing on Technology Innovation Programmes of the Department of Trade and Industry
Dr Johannes Potgieter, Chief Director: Innovation and Technology from the Department of Trade and Industry's Enterprise and Industry Development Division, conducted the presentation (document attached) which outlined the Support Programme for Industrial Innovation (SPII), intellectual property rights with regard to SPII, its outputs and outcomes and the industry evaluation of the benefits of SPII.
Briefing on Technology and Human Resource for Industry Programme
Dr Rocky Skeef, Director: Business and Industry Partnership Programmes in the Department of Trade and Industry, conducted the presentation (document attached) which outlined the objectives of the Business and Industry Partnership Programmes (BIPP), its priorities and mechanisms, the funding formula, its industry partners, student and researcher participation in the programme and returns on investment.
Mr K Khumalo (ANC) asked whether the Department was saying that South Africa's failure to produce more patents over the next few years would have an impact on the stated objective to improve the quality of life for all South Africans.
Secondly, he asked the Department to explain whether the intellectual property rights and patents that have been developed by South Africa have contributed to the improvement of wealth creation and quality of life.
Dr Paterson replied that it was fairly clear that intellectual property rights created wealth. Two global approaches have been taken, one of which does not work. The one that does not work occurs when researchers altruistically donate their rights to institutions they think can commercialise them, but very often those institutions have very little incentive to commercialise those rights. The other approach was to recognise that intellectual property rights can lead to products as well as providing a position with which to negotiate the intellectual property rights with others, and this ensured a much stronger negotiating power.
Thus overall globally, even when looking at securing quality of life outcomes, there was an important set of considerations when securing intellectual property rights whenever possible because it creates greater negotiating power with other people with useful intellectual property rights. One of the concerns was when a group of small companies attained an absolutely dominant position in some area of intellectual property as this would distort the basic competitive economics by use of the intellectual property. In a situation such as this where quality of life was involved countries could use two strategies: the first was to use their competition law to insist on the granting of licences to other producers, and this was being done with regard to pharmaceuticals in terms of Anti-retro Virals (ARVs). The alternative would be to have one's own scientists developing alternative technologies and then securing them.
In general the only global long-term sustainable strategy was to develop the capacity to sustain intellectual property that can be used both for wealth creation and in securing greater control over the technologies that directly impact quality of life. The securing of intellectual property by South Africa was improving its competitive position as a nation, and it was therefore important to ensure that those incentives were kept in place.
Mr Khumalo asked Dr Potgieter to explain the relationship between the SPII programme and the Innovation Fund, because there appears to be duplication.
Dr Potgieter replied that, as indicated by Dr Lottering in his presentation, the Innovation Fund was governed by a trust, and the Department of Trade and Industry held a seat on that trust. There was in fact a case in which a matter was referred from the SPII to the Innovation Fund, because it was felt the Innovation Fund was better placed to deal with the matter.
Dr Lottering responded that the Innovation Fund must be seen in a portfolio of government initiatives to foster science and technology in South Africa, following the White Paper on Science and Technology. The Innovation Fund's focus was primarily the promotion of technology, and the definition of innovation in economic terms was the introduction of new products and processes into the market place. Thus the focus of the Innovation Fund was commercially driven.
Mr Khumalo requested a demographic breakdown of the beneficiaries of the programmes, or of the management structures of the people running them.
Dr Potgieter responded that SPII did not have any information on the number of disabled people involved in the programmes. SPII was operative in all provinces other than the Northern Cape and Mpumalanga provinces. Only one female-owned business has applied in the recent past. SPII has similar challenges facing the Innovation Fund when it came to BEE concerns and it has appointed a full time official within the Industrial Development Corporation (IDC) to look at improving the number of BEE applications to the SPII programme. This has proven a success as SPII has received 14 applications this year, as opposed to 1 or 2 in previous years. Furthermore, 7% of the current funding was allocated to black companies, but clearly much work still needed to be done here.
The Department of Trade and Industry was responsible for the policy, strategy and budget of SPII, and a Memorandum of Understanding was concluded between the Department of Trade and Industry and the IDC on how the programme should be run. A panel of adjudicators considered the applications on a monthly basis, and consisted of members from the Department of Science and Technology, the Department of Trade and Industry, the IDC and experts in their fields.
Mr Khumalo stated that Dr Lottering indicated that most of the project leaders were white South Africans, and asked him to indicate the demographic breakdown.
Dr Lottering responded that the mandate of the National Research Foundation (NRF) was to develop human resources in Science and Technology by increasing numbers, and even here there was a struggle to broaden the pipeline. The Innovation Fund has appointed a manager for BEE to go into the education communities, source innovative ideas and help channel them into the Innovation Fund because it was an opportunity for wealth creation.
Mr A Ainslie (ANC) asked Dr Paterson to explain the need to move towards a new Intellectual Property Act when intellectual property in South Africa was already protected by various pieces of legislation. He asked whether existing legislation could not be extended to cover Dr Paterson's concerns.
Dr Paterson responded that this was not legislation that would create a new form of intellectual property, but would instead set a baseline for all publicly financed research. The problem at the moment was that the SPII programme could insist on certain behaviour from the people who entered into those contracts, whereas a university researcher would be subsidised by the Department of Education and no contract would be entered into. Thus the publicly financed research contracted by the Department was not regulated in any fashion. The aim of the legislation was thus to deal with the subsidy formula for the Department of Education, the Department's financing programmes, the National Research Foundation (NRF), THRIP, SPII, the Innovation Fund and also set the baseline correctly for everyone operating in terms of public finances.
One of the benefits was efficiency because the institution would not have to contract to secure the rights, as they would be legislated and regulated in a much more efficient way. At the moment a new set of contracts and rules had to be worked out whenever a new financing mechanism was introduced.
Mr Ainslie asked whether privately funded research was also sufficiently protected under the current dispensation.
Dr Paterson replied that at the moment companies would, in the normal course of events, secure the intellectual property rights they needed to secure. Historically South African companies were not very good at this. He stated that he was not aware of any moves to create a regulatory environment for private research. It was difficult to do and has not been done anywhere else in the world. The Department wanted BEE and SMME companies to benefit from the type of commercialisation functions that existed in the Innovation Fund, because very often those companies simply did not have the capacity to respond to those things.
Mr Ainslie stated that Dr Potgieter indicated that measures were in place to ensure the products of South African research remained in the country, and questioned why those measures were not extended to all forms of research.
Dr Potgieter responded that the big difference was that the SPII programme had a specific contract with each applicant who was in the private sector, and the situation was slightly different when it came to universities and technikons.
Mr Ainslie stated that he was disappointed at the levels of student participation in THRIP because, as he understood it, one of its focuses was on black students. He sought clarity on the obstacles to increased participation of black students.
Dr Skeef replied that the short answer was that this was an unfortunate reflection of the realities of the past system. Furthermore the industrial partner, together with the researchers, selected the project and research partners. The outcome was that, even in THRIP, the majority of projects and funding went to the historically white institutions, and the demographics of the students there do not assist THRIP in improving its black student participation.
The Department of Science and Technology was working with the Department of Trade and Industry to develop an intervention called Maths and Science Teacher Training (MASTT) that would focus on women, black and female learners to get them into the system so that THRIP, amongst others, would benefit.
Dr Paterson responded that one of the major blockages here was the small number of maths and science higher grade graduates at matric level. This was a very significant challenge and a number of initiatives were taken. The Innovation Fund recently began an innovation in schools programme to get young people excited about innovation. The other area involved people who had completed their masters or doctorate degree and were lured away by the private sector. The Department identified this as a major concern and proposed two new programmes to the National Treasury to deal with this. This also involved the introduction of research chairs at universities to attract people into new sectors.
Prof I Mohamed (ANC) asked Dr Paterson to explain why legislation around Indigenous Knowledge Systems (IKS) was taking such a long time to finalise.
Dr Paterson replied that this legislation has made definite advances. The Department of Trade and Industry published a draft amendment to the Patents Act about 3 weeks ago, which outlined and placed a burden on people who patented in South Africa to declare whether they sourced the knowledge from a traditional knowledge holder or whether they took material from traditional knowledge holders in order to secure the underlying invention. The legislation also placed a retrospective burden on existing patent holders to declare if any indigenous knowledge was used. If this were the case the person would have to declare the benefit sharing arrangement with the community that provided the information or material. This was a big step forward.
If good legislation were put in place, the management of the sale of rights overseas would be regulated, because it was currently completely unregulated. The proposed legislation would regulate how rights would be deployed internationally. The Department was very concerned about this because it did not believe that a sound regime was currently in place to ensure that when the South African government financed research, the benefits of that research were located dominantly in South Africa.
Prof Mohamed asked Dr Lottering to indicate which niche products had been developed that would enable South Africa to compete in the global market, as was the stated aim in the White Paper.
Secondly, Prof Mohamed stated that improved technology has benefited society but has also resulted in a loss of jobs in especially lower grade jobs. Thus workers in general feared a loss of jobs. He asked how this problem would be addressed.
Dr Paterson replied to the second question by stating that this was a difficulty that faced all economies. This was a feature of the South African economy that needed to be understood and internalised. However this was normally balanced globally as well as in the South African economy by radical innovations, as entirely new products and services created new sectors and employment. Yet maturing sectors were always shedding jobs, and there was thus a dynamic in the labour market which took people from mature sectors into the new sectors.
Dr Potgieter responded that the Department of Trade and Industry was currently in the process of developing an incentive programme called "training and re-training" because of the introduction of new technology.
The Chair asked whether the solar power project was a new endeavour.
Dr Skeef replied that there would have had to be an innovation, whether it was incremental or not, for that project to have qualified for support. He was however not sure of the exact nature of the innovation.
The meeting was adjourned.
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