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Reforms proposed in the draft South African policy on intellectual property and public health that has just been put out for consultation have been welcomed, with some caveats, by industry and health activists alike. In this first instalment of a two-part article we look at plans to tighten up on the way that patent applications are examined, granted and opposed. The second part will examine other aspects of the policy in areas like voluntary and compulsory licenses, parallel importation, and boosting local manufacturing.

 

 

 

The South African government has unveiled the first phase of its draft intellectual property policy which is intended to ensure that the country defends IP rights and promotes innovation while also protecting public health and improving access to medicines.

 

 

Among the key proposals are closer scrutiny of patent applications, tighter criteria for patentability, more use of voluntary and compulsory licensing, tougher disclosure requirements, and measures to build up local drug manufacturing capacity.

 

 

The draft policy, which will be put out for a 60-day consultation period once it is published in the Government Gazette, also looks at how competition and patent law can be used together to implement the flexibilities in the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement, and seeks to ensure that South Africa’s regional and bilateral agreements do not incorporate any IP standards that go beyond TRIPS.

 

 

The government freely admits that it has not done enough to implement a fully-fledged IP framework, noting that the intersection of IP and public health “has long been an issue of contention within South Africa, and one without resolution to date.”

 

 

The Department of Trade and Industry says that although there are already many IP protections in place in South Africa, “there is a need for a comprehensive IP policy that will promote a holistic, balanced and coordinated approach to IP.”

 

 

The publication of the draft policy has been welcomed by industry and health activists alike, albeit with some reservations. Konji Sebati, CEO of the South African R&D-based industry body IPASA, said she believed that “in the end it will be a balanced policy that will ensure innovators are rewarded for their biopharmaceutical discoveries while on the other hand ensuring that these innovations are available to those who need the treatments.”

 

 

However, she told the Pink Sheet that IPASA had raised several concerns in some areas and that others still needed clarity, “because we believe the process is not a punitive process as we have been assured, but indeed a process that will ensure balance.” Areas where the association still wanted to engage with the drafters of the policy included patentability criteria (“a continuing source of misconceptions”), parallel importation, exceptions, voluntary and compulsory licenses, patent opposition, and IP and competition law, “to name a few.”

 

 

“Some key aspects, if improperly implemented, could negatively impact producers of innovative medicines and are thus cause for concern” – IFPMA

 

 

The international pharmaceutical industry federation, IFPMA, had similar reservations. While it supported many of the policy’s objectives – such as creating an environment conducive to economic opportunities, attracting investment, promoting R&D and innovation, and increasing public awareness of IP in South Africa – it said that some key aspects, “if improperly implemented, could negatively impact producers of innovative medicines and are thus cause for concern.”

 

 

Ellen ‘t Hoen, a health advocate who was the first director of the Medicines Patent Pool, said that South Africa had been “a champion internationally for public health friendly approaches to the protection of intellectual property,” but that so far this had not been reflected in domestic practices. “The IP policy is clearly set out to change this and fix domestic patent law, ‘t Hoen commented. “It addresses a wide range of issues that has the potential to affect positively the availability of and access to lower priced medicines.”

 

 

The Draft Policy

The overall IP policy is intended to build on key government reforms like the National Development Plan (NDP), the New Growth Path Framework (NGP), and the National Drug Plan. It will be implemented in phases, with this first phase covering IP and public health, coordination in international fora, and the implementation of commitments undertaken in international agreements.

 

 

Intellectual Property is “an important policy instrument in promoting innovation, technology transfer, research and development (R&D), creative expression, consumer protection, industrial development and more broadly, economic growth,” the DTI says.

 

 

It notes that paragraph 4 of the Doha Declaration on TRIPS and Public Health states that the TRIPS agreement does not prevent members from taking measures to protect public health and that it should be interpreted and implemented “in a manner supportive of WTO [World Trade Organization] members' right to protect public health and, in particular, to promote access to medicines for all.”

 

 

Nonetheless, the DTI says, the South African government has not made full use of the flexibilities available in trade rules by pursuing appropriate national policy and legislation, “despite a constitutional imperative to increase access to medicines as a component of the state’s obligation to take reasonable measures toward the realization of the right to healthcare services.”

 

 

The policy therefore aims to ensure that South Africa protects IP rights “and at the same time achieves its objectives of promoting national development imperatives, which include, among others, boosting local manufacturing, promoting innovation and ensuring equitable access to medicines. This will require the development of an appropriate framework for granting patents.”

 

 

Patent Search And Examination

One of the key proposals in the patents area is to tighten up on the examination of patent applications. The government admits that it is “a matter of much debate that South Africa does not conduct substantive search and examination (SSE) prior to the grant of patents.”

 

 

“SSE will ensure that the public interest is served by ensuring that the patent system truly promotes innovation” – draft national IP policy

 

 

The introduction of SSE will result in greater legal certainty for patent owners and “ensure that the public interest is served by ensuring that the patent system truly promotes innovation,” the document says. “It is crucial to work toward the adoption of SSE. The underlying policy rationale of patents is to serve as an incentive to stimulate innovation, and SSE is a key tool to ensure this objective is met.”

 

 

Rejecting concerns expressed by some stakeholders that only patent applications in only one field of technology – pharmaceuticals – would be subject to full substantive examination, the DTI says that in fact the intention is to “identify a range of strategic sectors for full SSE, including and beyond the health sphere, based on capacity within government, as well as development and public interest considerations.” As the government’s capacity expands, the fields subject to full substantive patent examination will be expanded.

 

 

Patent Opposition

Another key reform in the patent area is the introduction of pre- and post-grant opposition procedures, which the government says can help to gather all information and expertise relevant to the application for or grant of a patent, provide “some degree of certainty regarding the validity of a patent,” and save time on “expensive patent revocation proceedings.”

 

 

Most importantly, it adds, “such proceedings seek to ensure that only those inventions that meet domestic statutory requirements for patentability are granted patent protection.”

 

 

The policy recommends that eventually opposition proceedings will be enacted in the law both before and after the grant of a patent. In the meantime, because of “capacity constraints,” it recommends that patent law recognizes a third-party submission system or “observation” to stand in for the pre-grant opposition process and for existing provisions in administrative law to be used in lieu of post-grant oppositions.

 

 

Tighter Patentability Criteria

Also proposed are stronger patentability criteria to be implemented in the process of examining patent applications. These are intended to promote “genuine” innovation, “strike the optimal level of IP protection,” and “balance the rights of IP holders and users alike.” The new criteria would form part of the Patents Act.

 

 

At present, South Africa has a “depository system” where the subject of a patent application is only examined against the substantive criteria of novelty, inventive step, and industrial applicability if the patent is challenged in litigation.

 

 

This, the government says, has “substantial drawbacks” for both producers and users of IP. For producers, the lack of examination “calls into question the integrity of their patents, since the grant of a patent does not guarantee that the subject of the patent meets patentability criteria in the country, or that it does not contain subject matter excluded by law,” according to the draft policy.

 

 

“Indeed, a leading South African university recently conducted a study which found that a significant number of patents granted in South Africa would not pass muster under an examining system,” it says.

 

 

“Users of IP are prejudiced on the other hand because subject matter that should be in the public domain can be unfairly monopolised by exclusive rights. Moreover, the underlying policy rationale of patents is to serve as an incentive to stimulate innovation.”

 

 

The document notes that various countries periodically review and adapt the application of patentability criteria to achieve appropriate levels of patent quality. “One interesting example is Australia, which, in 2012 adopted legislation which upwardly adjusted standards for patentability,” the policy says. A recent report by Australia’s Productivity Commission showed that the 2012 reforms did not adequately “raise the bar” and “hence the same jurisdiction is currently considering further changes to the inventiveness test in its patent law.”

 

 

The draft policy also suggests tighter disclosure requirements whereby applicants would be asked to provide information on the status of similar and related patent applications in other international jurisdictions.

 

 

“Article 29(2) of TRIPS provides that members may require a patent applicant to provide information concerning the applicant’s corresponding foreign applications and grants. South Africa’s patent legislation does not oblige applicants to furnish such information,” the DTI says. “As we move toward SSE, requiring the provision of pertinent information about corresponding patent applications and grants is recommended.”

 

 

Stakeholder Reactions

IPASA’s Sebati said the association supported the proposals for substantive search and examination “because we too do not want to see a country flooded with spurious, falsified and counterfeit medicines. We believe this will also turn the arguments and/or attempts to rubbish incremental innovation on their heads since these incremental innovations will also have to pass the rigorous patentability steps.” She added: “South Africa is also party to several multilateral treaties on IP, and we believe it will not wish to be singled out as non-compliant.”

 

 

The IFPMA similarly said it supported an SSE system in South Africa, but cautioned that there needed to be “appropriate expertise and infrastructure in place.” Timelines for patent examination had to be properly regulated and predictable and the government had to ensure that “technological sectors will not be unfairly treated.”

 

 

On patentability, the federation said the new criteria should be the same as those required for other fields of technology – i.e., novelty, inventive step, sufficiency of disclosure and industrial utility. Requirements going beyond these criteria would “run contrary to South Africa’s international obligations and could have a very negative impact on pharmaceutical innovation.”

 

 

The Fix the Patent Laws Campaign, a group of activist bodies including Médecins sans Frontières, the Treatment Action Campaign and the Cancer Association of South Africa, lauded the planned implementation of a system of SSE in order to ensure compliance with existing law and “to ensure that only applications deserving of patent protection are granted.”

 

 

It agreed with the proposed incremental approach, “which we submit can be achieved by starting with the pharmaceutical sector and by considering outsourcing of the examination of applications for patents.”

 

 

FPLC also gave its support to the proposal for pre- and post-grant opposition procedures, saying that third parties, “which could include generic companies and civil society groups,” would be able to “assist the patent examiner in the decision-making process.” The group called for a cost-effective procedure and “wide access to information concerning patent applications to enable third parties to intervene.”

 

 

“Patentability criteria will lead to fewer poor quality or ever-greening patents being granted in South Africa” – FPLC

 

 

As for the proposal to develop patentability criteria, FPLC said that this would “lead to fewer poor quality or ever-greening patents being granted in South Africa” and “only true innovations will be rewarded with patent protection.”

 

 

‘t Hoen told the Pink Sheet that the most important changes in the policy were those related to plans to “introduce substantive examinations of patent applications and move away from the depository system South Africa has had to date.”

 

 

This, combined with plans to implement strict patentability criteria conducive to public health and provide for pre- and post grant oppositions to patent applications, would “help to improve the quality of pharmaceutical patents, which is good for the IP system and good for public health,” she declared.

 

 

The second part of this article, to be published shortly, will look at other aspects of the draft IP policy, including voluntary and compulsory licenses, the “Bolar” provision, research and experimental use, parallel importation, boosting local manufacturing capacity, and IP and competition law.

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