What is good for the goose...

“Intellectual Property has become a key tool for economic development and industrialisation, as well as a way of facilitating competition,” said Minister of Trade and Industry, Mr Rob Davies, in his keynote address to the Africa IP Forum held on 26 and 27 February. He also stated that “It was important to use intellectual property laws to protect innovators because if creative minds were not protected, they would be disadvantaged”.

Mr Davies must be applauded for his insights into the importance of protecting intellectual property (IP). His statements will reassure many individuals who are concerned that we may be moving in the opposite direction – relaxing the laws on IP rights protection in South Africa.

Mr Davies’ statements were made days after a potential quagmire developed between various South African companies and a French company that had applied last year to register a number of trademarks incorporating the terms “South African Rooibos” and “Rooibos”. The Minister recognised that should the French trademark application succeed, it would hamper future exports by South African companies of rooibos tea into France. Mr Davies asserted, “Rooibos is as South African as wors... we must be ready to defend South Africa’s trade and intellectual property interests vigorously.”

Last year, South African researchers at the University of Cape Town (UCT), in collaboration with researchers from Medicines for Malaria Venture (MMV), achieved a major breakthrough in the scientific world when they identified a new malaria drug candidate. The researchers were quick to patent the candidate compound because, no doubt, they are acutely aware of the fact that it costs billions of rand – anything between R4.2 billion and R16.7 billion – and could take several years from the date of discovery to develop the potential compound through clinical trials and finally to approval. In short, the South African research team acted no less rationally than any other researcher based in a developed country and sought to protect their innovative discovery.

It is important to note that no pharmaceutical drug has a de facto 20-year patent term. Typically it takes between 10 and 12 years to take a molecule through testing and regulatory approval – all of which occur after a patent has been granted, since no company or research institution would invest in an unpatented molecule. Meanwhile, it can take between one and three years to obtain a patent after filing. Most drugs, therefore, have an effective patent term of six to ten years, often less. Given the huge amount of investment required for bringing a drug to market this window of opportunity does not leave much time to earn a return on investment

With its relatively efficient legal system and a large diverse population base, South Africa has traditionally been a preferred destination amongst developing countries and certainly in Africa for pharmaceutical investment. Indeed South Africa has a proud record of upholding intellectual property rights which was generally lacking elsewhere on the African continent. This one factor significantly contributed toward the image that South Africa was a viable destination for pharmaceutical investment. However, because of the uncertainty surrounding the protection of IP rights and the rising stature of other developing countries competing for this investment, in recent years many large multilateral companies have become wary of investing large sums of money in South Africa and have scaled-back, or simply not expanded, their investment in this country. Others have chosen not to invest here altogether, preferring other countries such as Singapore and Ireland that have a more predictable and stable policy environment.

Of course, the uncertainty around IP laws is not entirely responsible for the lack of investment. The IP environment accounts for just a portion of the variation in the economic indicators. Successful implementation of IP rights regimes depends on complementary factors such as the quality of legal institutions, markets and infrastructure. Simply put, the efficacy of intellectual property reform is ultimately subject to the environment in which intellectual property rights operate.

The recent Africa IP Forum was interrupted by activists claiming that patents effectively block access to medicines. In the past, the South African government has tended to side with the activists. For example, the Medicines Act of 1997 makes provision for “compulsory licensing” which gives the government the power to compel a pharmaceutical company to license a local production company to produce an on-patent drug. The local company would then be able to supply the drug at a reduced price because it would not have to cover a significant proportion of the enormous costs involved with bringing a new drug to market.

Given Mr Davies’ recent comments and the actions of government-sponsored research institutions such as UCT, we can assume that the government has inadvertently revealed that it continues to value creations of the mind and will “vigorously defend” ideas that have been developed by South Africans. To do this requires proper protection of property, including intellectual property. But it will be interesting to see if there is a change of direction in the forthcoming draftIP policy document which seeks to reform patent law in South Africa.

Legislators should be conscious of the fact that South Africa is not going to remain a poor developing country forever, so we hope that the policies adopted will not weaken IP rights and that there will be equal treatment of domestic and international innovations. If government hopes to build up this country’s global trademarks, brands and exports, and if we aspire to be a global player in research and development, manufacturing and exports of high value-added, innovative products, we have to have clear intellectual property rights legislation.

This article was published in the June edition of the Medical Chronicle.


Help FMF promote the rule of law, personal liberty, and economic freedom become an individual member / donor HERE ... become a corporate member / donor HERE