At a conference on intellectual property in Durban last week, Science and Technology Minister Derek Hanekom noted in his keynote address: “Intellectual property can be an effective lever for development, particularly for a country like ours, with the commitment we have made to migrate from a resource-based economy to a knowledge-based one.”
There can be no doubt that South Africa’s strong intellectual property stance has helped the country develop the most advanced economy in sub-Saharan Africa. But the government is far from aligned on the value of strong intellectual property protections.
The Department of Trade and Industry continues to push national policy reforms that undermine established intellectual property protections, creating uncertainty for aspiring hi-tech sectors and investors.
In September, the Department of Trade and Industry released a draft policy on intellectual property – a confusing hodgepodge of proposals that would expand the government’s power to arbitrarily break patents and ignore other forms of intellectual property protections.
The draft policy gives the government the power to issue “compulsory licences” for pharmaceuticals, a practice that allows competitors to produce patented medicines at a fraction of the cost. This provision is already covered in the Medicines and Related Substances Control Amendment Act. The government has yet to exercise this authority, not because the process is too complicated – as the draft policy implies – but because the decision would put investments at risk and should not be taken lightly.
Hanekom’s message was very simple. Any industry that derives value from ideas must make substantial and sustained investments to produce a marketable product, and that product must be protected by robust intellectual property laws to recoup the cost of those investments. Without such protections, the threat that such ideas can be taken and reproduced by almost anyone keeps any significant investments from being made.
This was the logic behind the creation of the Intellectual Property Rights from Publicly Funded Research and Development Act in 2010, which is the government’s law to protect taxpayers’ investments in government institutions – and to which the new draft policy on intellectual property makes no reference whatsoever.
Referring to this act at the conference, Hanekom said: “The introduction of this legislation was brought about by the realisation that South African publicly funded research institutions collaborate on a global scale with countries that have strong intellectual property regimes. In cases where our intellectual property regimen shows signs of not being watertight, intellectual property may be lost through collaboration agreements.”
He referred to the case of the dolos, which was invented by a South African to dissipate the force of waves and thereby protect harbours, but was never patented. Hanekom noted: “[The dolos] was never protected and it is found all over the world today and is worth billions… our efforts to create a strong intellectual property regime are geared towards ensuring that such avoidable losses never again occur.”
All countries, companies and individuals require strong intellectual property protections for their inventions to recoup the enormous costs of investment. Last year, South African researchers at UCT, in collaboration with the Medicines for Malaria Venture, identified a new malaria drug candidate. The researchers were quick to patent the candidate compound because, no doubt, they are acutely aware that it will cost between R4.2 billion and R16.7bn and could take several years to develop the potential compound through clinical trials to final approval.
The Department of Trade and Industry’s draft policy takes us in the wrong direction. We cannot expect our trading partners to respect the intellectual property we create if we do not respect theirs.
Strong intellectual property protections will attract committed investors and dynamic innovators who can drive South Africa’s economic growth and human development long into the future. Without them, we will never make the transition from a resource-based economy to one based on knowledge and ideas.
* Jasson Urbach is a director of the Free Market Foundation.