Intellectual Property Rights from Publicly Financed Research Bill: briefing

Meeting report

The Committee was addressed by Mr Phil Mjwara, Director General of the Department of Science and Technology (DST) on the Intellectual Property Rights from Publicly Generated Research Bill. (The Bill) [B46-08] The Bill provides for intellectual property developed from publicly financed research to be effectively managed, utilised and commercialised for the benefit of South Africans. He spoke about the South African innovation chasm where there needed to be carry-through, that is, successful commercialisation of publicly financed research. Also, the State’s rights over intellectual property secured with public financing, had to be established but at the same time there had to be a requirement that small enterprises and Broad-Based Black Economic Empowerment entities in particular have preferential access to opportunities arising from publicly financed research. The National Intellectual Property Management Office (NIPMO) would manage this (see document for full briefing).

Dr Joseph P Allen, President of Allen and Associates, an American organisation, presented “30 Years of US Technology Policy in 30 Minutes (along with thoughts on the future)”. He introduced the presentation by noting that it was a variation on a presentation originally designed for an USA policymaker audience but that he hoped that it would provide lessons that South Africa could benefit from in the field of intellectual property protection.

He noted that in 1979 the US economy had stagnated – traditional industries were losing market share to Japan and Germany, and there was an expectation from the public that the President act to change things. The world economy was moving in the direction of knowledge economy and that knowledge needed to be protected just as products were.

He referred to De Soto, who claimed that ownership of wealth was key to creating wealth, and noted that South Korea and Egypt were at similar economic positions in the 1950s but whereas South Korea had boomed, Egypt’s economy had stagnated. In Egypt, it was extremely difficult to gain legal ownership of buildings and they could not be bequeathed to children. The same principle applied in respect of knowledge production.

He explained that the USA government funded most university research. However, any knowledge or inventions were the property of the US government. The rationale was that the taxpayer was funding the research and therefore the taxpayer should benefit by having such results made freely available. The consequence was that it destroyed any incentive to create something and the taxpayer did not benefit.

He emphasised that universities did early stage research, they did not create products. It typically took five to seven years to turn an idea into a product. In the last 20 years companies had ceased to do long term research. In the last 20 years, industry in the form of companies has worked with universities to turn early stage research and ideas into a product.

The Bayh-Dole Act was passed in 1980 to encourage these partnerships with business and to provide incentives for everyone involved. Companies would get a product, universities would get funding and the individual professors would also be paid.

Dr Allen then proceeded to provide figures and statistics to show the success and importance of this Act. One needed to have a system that allowed universities to allow knowledge economy to start evolving, which would bear fruit only in five to seven years from now.

He concluded by highlighting key lessons learnt from Bayh-Dole. Partnerships should be with the best partners, not the richest. One of the key killers of innovation was bureaucracy and red tape.

Discussion
In reply to a question regarding the long history behind the Bill, Mr Mjwara said that when the process was restarted, there had been a change of guard who were driving the process and that there was a gap of a year. They did not wish to rush the process as they knew it would be a controversial one. They also took time to benchmark and compare the experiences of other countries.

He noted that the countries that had the best law of this nature were the USA and Canada. Canada had a law in the early 1970s which they abandoned after four years as it did not work, and the Department wanted to see what did not work. US universities have offices of technology, which create income for the universities. The Department had examined what they do, the federal and institutional support they received and how they operate.

He pointed out that the Memorandum at the back of the Bill contained an extensive list of the stakeholders consulted and the work done in drafting this Bill. After the benchmarking process, a budget had been developed, which included a patent support fund of 50%, as universities would be unwilling to carry the cost burden alone.

Dr Allen commented that in India patents were initially considered as a colonial remnant after independence, but after an exodus of scientists to other nations, there was a drastic change in their laws and today there was a growing knowledge generation sector, and it was particularly strong in software development.

He noted that China had no political freedom but did have economic freedom, which included the commercialisation of technology.

Mr Mjwara was asked how this Bill would be synchronised with similar acts and other structures dealing with intellectual property. How would the ordinary person benefit, especially the poor, with particular regard to medical devices?

Mr Mjwara replied that the Bill provided guidelines for all institutions that receive public funds for intellectual property development and that it was irrelevant to which department it reported. This Bill would have implications for various organisations falling under, for example, the Departments of Agriculture and Minerals and Energy.

A representative from the Department of Trade and Industry answered the second question, stating that they hoped this Bill would enable the creation of more jobs locally and that they would benefit from protection of South African generated technology, as well as products that may become available.

A committee member sought clarity on the difference between the Companies and Intellectual Property Registration Office (CIPRO) and NIPMO (National Intellectual Property Management Office), to be established under clause 8(1) of the Bill.

Mr Mjwara replied that CIPRO was concerned with the registration of patents while NIPMO would be established to protect and manage intellectual property rights of recipients of public funding.

Mr C Morkel (ANC) noted that copyright protection in the conventional academic context was excluded from the application of the Bill. He wanted to know what exactly “conventional” meant in this sense and who would exercise the discretion as to whether it would be excluded. He further noted that some publicly financed research recipients would include state owned enterprises, some of which where undergoing full-scale privatisation and some were almost completely privatised. He wanted to know how this would affect their obligations.

A Department representative replied that it was an international standard that the ownership of academic writings remained with the author and that during the first round of public comments, this was a concern raised by almost all researchers. Regarding state owned enterprises, as long as it received public funding for development and research, the intellectual property would be covered by the provisions of the Bill, hence the need for disclosure to NIPMO.

A Committee member expressed concern that the proposals would weaken academic freedom and knowledge generation at universities.

Mr Mjwara responded that the Bill did not define areas where research would be stopped but was enabling legislation that sought to identify research that had commercial value, and to put in place systems and incentives to maximise this.

Dr Allen emphasised that he was not proposing an environment where this would destroy the generation of knowledge and academic freedom that currently existed.

The meeting was adjourned.

Appendix:
Memorandum On The Objects Of The Intellectual Property Rights From Publicly Financed Research And Development Bill
The Intellectual Property Rights from Publicly Financed Research and Development Bill came as a result of a need for a proper framework for the effective management of intellectual property arising from publicly financed research.

The Bill seeks to provide for the effective utilisation of intellectual property derived from publicly financed research and development. In order to achieve this, the Bill provides for the following:

(a) The creation of an obligation, by intellectual property creators using public finances, to declare potential intellectual property.
(b) The sharing of benefits derived from the successful commercialisation of intellectual property with the creators of such property.
(c) The granting of a right to institutions to secure income from successful commercialisation of publicly financed research.
(d) The creation of institutional arrangements to manage such processes at institutions centrally, through the requirement for the creation of a designated function of an Office on Technology Transfer (OTT) at each institution.
(e) The establishment of the State’s rights in intellectual property secured with public financing.
(f) The establishment of a requirement that small enterprises and Broad-Based Black Economic Empowerment entities receive preference in respect of transactions involving intellectual property derived from publicly financed research.
(g) The establishment of a requirement for preference for commercialisation of intellectual property derived from publicly financed research in the Republic, including regulating commercialisation of such intellectual property outside the Republic.
(h) The establishment of the criteria under which intellectual property derived from research that is partially publicly financed can be managed and commercialised.
(i) The creation of an office function in respect of intellectual property rights from publicly financed research and development, under the Department of Science and Technology, to be called the National Intellectual Property Management Office (NIPMO).
(j) NIPMO’s main functions will be to—
(i) record declarations of intellectual property by recipients of public funds for research and development;
(ii) track the registration of intellectual property emanating from public financed research and development and intellectual property transactions in respect of intellectual property derived from publicly financed research;
(iii) assist institutions in establishing institutional arrangements;
(iv) operate an intellectual property fund for supporting the protection of intellectual property; and
(v) assess intellectual property transactions which are concluded outside the Republic.