Wednesday, August 01, 2007

Publicly financed intellectual property: drawing the line
Dr W Alberts

Another controversial Bill relating to intellectual property is being proposed by the government, being the Intellectual Property Rights From Publicly Financed Research Bill. The legislation, if enacted, could inhibit joint research ventures, for instance, between universities and companies in the mining, chemical or pharmaceutical industries. The Bill revolves around the concept of "publicly funded research", which refers to research undertaken by institutions using funds allocated by the government or any of its funding agencies. The Bill makes provision for the establishment of an Institutional Intellectual Property Management Office (IPMO) for various institutions. These include universities and public research institutes such as the Medical Research Council, Human Sciences Research Council, the South African Bureau of Standards and the Water Research Commission.

The functions of the IPMO will be carried out by personnel who have inter-disciplinary knowledge, qualifications and expertise in at least two of the following fields: law, natural science, engineering, economics or business. It is not clear whether it will be a simple task to find persons who have these qualifications, as most would be engaged in private practice. All in all, the various institutions will require 32 such persons (leaving aside the persons to be employed on a national basis). The filling of these positions, which are oriented towards patent attorneys, could mean that there will be head-hunting of existing intellectual property firms’ personnel. That is, of course, if experienced attorneys are required. It is not obvious that the financial remuneration that these various IPMO’s will be able to offer will be sufficient to draw such persons to the various institutions. More such persons will probably be required for the National Intellectual Property Management Office, which will also be established in terms of the eventual legislation.

This National Intellectual Property Management Office will have various functions. These include the protection of intellectual property, information management and also the difficult task of introducing measures to standardise and create uniformity in the approach to dealing with intellectual property, while at the same time providing enough flexibility for institutions to provide custom-made solutions in particular circumstances. This appears to be more akin to a mission or vision statement than a clear judicial function. Amongst the various restrictions on the commercial exploitation of intellectual property derived from publicly financed research, is the requirement that intellectual property may not be moved off-shore, unless it is proven that South Africa does not have capacity to develop or exploit the intellectual property, and, of course, obtaining approval from the Reserve Bank in terms of Exchange Control Regulations. The Bill also provides for certain "walk-in rights" by the government, having regard, amongst other things to the provisions of the Competition Act. In specified circumstances the government can have the patent assigned to the state.

The controversial part of the Bill relates to the ownership of intellectual property. The Bill provides that institutions may accept funding from private entities and enterprises for the purpose of research and development which could result in the generation of new intellectual property. The funding concerned may either be project specific and funded on a full cost model. It can also be non-specific, that is of a general nature or partially of a general nature. Funding of a non-specific general nature shall be deemed to be publicly financed research. This implies that if a donation is made to a university and the purpose of the donation is not specified, intellectual property generated would belong to the university and not the donor. This will also be the case where a private entity allocates funds without an expectation of a specific outcome, or does not carry the full cost of the research.

In the case of a project specific or full cost model, an institution would be approached by a private entity or enterprise to engage in specific research with specified results, the full cost of such research being borne by the private entity. In such an event, the funding entity may become the owner of the intellectual property, provided that the funding agreement makes provision for sharing of royalties on a minimum ratio determined by the Minister.

One of the effects of the proposed legislation could be that private companies will simply do research in-house instead of using the full cost model. Another option is, of course, to have research done overseas. This could, in turn, have negative consequences on the giving of research grants or the undertaking of combined research projects with a university or other public institution. It must be conceded that the facilities at the relevant public institutions were established with state funds. However, many universities, for instance, have equipment of considerable value that has been provided by the private sector. One must not kill the golden goose. There is thus a clear need for further discussion of the matter.