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IP Act puts profit first

Government looks to possible profits from patents to drive innovations which benefit everyone.

Publicly-funded research should benefit all of society – and the government has this tough task in mind with its Intellectual Property Rights (IPR) for Publicly Funded Research Act.

The Department of Science and Technology also has a demanding journey ahead, trying to balance private-public interests with greater issues of public interest.

The public versus private debate has always been a sticky one. These two areas are often seen as existing separately, and sometimes, in competition, but always with little common interest. If the public domain is motivated by benefits to society, then the private domain is motivated by the market and profit.

So, licensing and the creation of exclusive rights are often seen as existing within the private sphere and not the public arena.

But as the face of many things change, government has realised that legislative amendments are necessary to find common ground between these two seemingly incompatible arenas. This is where the IPR for Publicly Funded Research Bill comes into play – a legislative attempt by government to introduce market values to public research.

As with most things in life, there are issues which arise. But before one gets accused of being negative or unpatriotic – which often happens when the official view is opposed, it's important to look at what exactly the government is trying to do with the Act.

Benefit for all

Section two states that the object of this Act is to make provision for IP developed from publicly financed research and development to be utilised and commercialised for the benefit of society.

Further, the Act intends to ensure, among others, that human ingenuity and creativity is acknowledged and rewarded. It also aims to ensure small enterprises and BBBEE entities have preferential access to opportunities arising from the production of knowledge from publicly financed research and development and the IP.

Contentious

The public versus private debate has always been a sticky one. These two areas are often seen as existing separately, and sometimes, in competition, but always with little common interest. Audra Mahlong, journalist, ITWeb

IP arising from publicly financed research and development shall be owned by the recipient. If the recipient prefers not to retain ownership of its IP and to not obtain statutory protection for the IP, it must make the choice in accordance with the published guidelines in terms of the Act and the National Intellectual Property Management Office (NIPMO). The Act also establishes management requirements for the recipient.

The Act further provides for the establishment of an office of technology transfer at institutions. It is responsible for undertaking the obligations of the institution in terms of this Act.

The Act also establishes NIPMO and one of its functions is to promote the objectives of this Act, which includes the statutory protection, management and commercialisation of the IP.

IP creators at an institution are granted a specific right to at least 20% revenue that accrues to the institution from their IP for as long as revenues are derived from the IP – provided they are South African citizens or residents, until the rights expire.

The Act also sets out a number of conditions for intellectual property transactions. There are several restrictions on offshore intellectual property transactions; for example, a recipient must advise NIPMO of its intention to conclude an intellectual property transaction offshore.

These transactions may occur only in accordance with set regulations and guidelines. Exceptions to this clause are if the recipient can prove there is insufficient capacity in the country to commercialise the IP locally andthat SA will benefit from the offshore transaction. Any IP transaction, which does not comply with the regulations and guidelines, requires prior approval by NIPMO.

The Act also establishes an intellectual property fund. It allows private companies or organisations to become exclusive licensees of IP emanating from publicly financed research if it has the capacity to manage and commercialise the intellectual property in a manner that benefits the public.

Wealth first

Research is an area that has embraced the benefits of globalisation before any other. Educational institutions, though more common in the area of life sciences, have collaborated with their overseas counterparts for years. The widespread result of this collaboration, according to the government, was that any IP which was developed went to overseas institutions, while locally professors who owned the IP used it for personal use and not for greater public use.

The government decided that if people failed to act in the public interest voluntarily, they would have to be compelled to. The Act introduces an obligation to recipients of public funding research to disclose IP emanating from publicly funded research. The objective is to secure and protect IP and commercialise it – to the benefit of society.

Andrew Rens, intellectual property fellow for the Shuttleworth Foundation, believes the Act works from two flawed premises. The first is that the fundamental purpose of university research is to generate revenue through licence fees and, the second, that patenting leads to profit.

Rens argues for open systems which encourage knowledge sharing and not a singular focus on generating profit from research. Rens also questions the approach government is taking to patenting.

“Instead of creating structures to identify research likely to yield successful commercial products and obtaining registered rights for that specific research, the Bill creates a structure which regards a decision not to obtain registered rights as the exception rather than the rule.”

So IP management gets added to the already long list of university duties. 

However, if the Act can function in its purest form, patented knowledge will be made accessible to the research community and used in innovation – this way patent law promotes the interests of basic research. The strengthening of innovation will see increased research funding in any fields, which are more likely to produce patents and commercialised marketable products.

Restricting access

Rens also notes: “Despite representation, the Bill still fails to make any provision for membership by research institutions in international research consortia.”

Stipulations by the Act that there has to be an attempt, either by the recipient or a government official, to commercialise the research, generally work against participation conditions set by international research consortia. The result, says Rens, will be a decline and possibly even death of multi-country research. In the end, SA will not be an attractive research destination – but who needs the rest of the world, right?

Funding from philanthropic donors will also decline. These donors often provide funding on the condition that research will be openly available. An example set by Rens is the Gates Foundation, focused on addressing diseases affecting the developing world, which requires that research – if funded by it – should be published on open access terms. No university or public research body can agree to that stipulation under the Act.

Open access is not a mere buzzword in government; it is actually policy, such as the policy on free and open source software use in government. But the Act works against such policies. It promotes software patents so that software can be commercially exploited. 

Rens points to the major problem with this: “This requires universities and research councils to obtain software patents; however, SA patent law does not permit software patents.” An oversight, maybe?

So, in the future we could see declines in innovation emanating from publicly-funded research as the focus on profit and IP management stifles research. But, we could see increases in research and development coming from the public domain as public servants view profit from patents as incentives for further innovation. Let's hope for the latter.


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