Guest post by Joanne van Harmelen, Spoor and Fisher

The Intellectual Property from Publicly Financed Research and Development Act came into effect on 2 August 2010 when the regulations were promulgated.

The Act should be interpreted in terms of South Africa’s National Research and Development Strategy, which creates a framework for encouraging research, development and intellectual property (IP) protection. The strategy also aims to encourage government investment to close the innovation gap in scientific research and development.

Given these strategic goals, the objective of the Act is to ensure that IP developed from publicly financed research is used and/or commercialised for the benefit of all South Africans.

The Act applies to any creation of the mind that is capable of being protected by any law from use by any other person, where public funding has been received for the research. As a starting point, the Act views the funding recipient as the owner of the IP; it also provides for co-ownership in cases where there are partnerships between private and public entities. In these situations, certain requirements must be met, including benefit sharing provisions for the inventors and that a commercialisation plan must be in place. Private entities will retain full ownership of IP if they have provided research funding on a full-cost basis.

The Act contains provisions that aim to ensure that IP from publicly financed research is identified and commercialised. Institutions such as science councils and universities must set up technology transfer offices to do this. A National Intellectual Property Management Office (NIPMO) has been established to assist with these requirements.

The Act recognises and rewards human ingenuity and creativity, in that a share of the royalties received from publicly funded research IP must be given to the inventors. The inventors in an institution are entitled to 20% of the gross revenues accruing to the institution for the first R1 million, and thereafter 30% of the net revenues.

The Act also recognises the importance of publication for researchers; but before findings can be published, researchers must disclose any IP to the funding recipient to assess whether the IP warrants protection, and if so, to apply for protection prior to publication.

The Act has a number of provisions that aim to ensure that all South Africans benefit from publicly funded research. For example, the Act provides that there should be a preference for licensing agreements with SMEs and BBBEEs, and for commercialisation and manufacturing to be in South Africa. Although private entities can become exclusive licensees or assignees of IP from public financed research, it must be shown that they can manage and commercialise the IP in a manner that benefits South Africa. In addition, in the case of an assignment, it must be shown why an alternative agreement, such as an exclusive license, would not suffice. Furthermore, if the IP is to be assigned locally or offshore, or exclusively licensed offshore, approval must first be obtained from NIPMO, and it is necessary that the benefit to the country arising out of such an agreement be shown. In the case of such offshore agreements, it must also be shown why the commercialisation cannot occur locally. Where agreements are entered into by a recipient of public funding that are contrary to the requirements of the Act, these agreements will be null and void from the start.

Finally, the State has a non-exclusive, royalty-free right to use the IP developed with public funding, as long as this is necessary and in the interests of South Africans.

The team at Spoor & Fisher has an excellent knowledge of the Act and working with the public sector. Members have variously facilitated public consultation workshops held during the drafting of the Act, worked for the Department of Science and Technology, and have experience with public policy documents and legislation pertaining to R&D. Please do not hesitate to contact us if you need any further information or clarification about the Act.