Dependent Patents
The present provisions of section 55 of the Patents Act in regard to compulsory licences in the case of dependent patents, are not fully in compliance with Article 31(l) of the TRIPS Agreement. However, in clause 44 of the Intellectual Property Laws Amendment Bill currently before Parliament, section 55 of the Patents Act is amended by the addition of the following provision:
"Provided that the Commissioner shall not grant such a licence unless:
(a) the invention claimed in the dependent patent involves an important technical advance of considerable economic significance in relation to the invention claimed in the prior patent;
(b) the proprietor of the dependent patent granted the proprietor of the prior patent on reasonable terms a cross licence to use the invention claimed in the dependent patent; and
(c) the use authorised in respect of the prior patent is not assignable except with the assignment of the dependent patent."
It is submitted that this amendment will bring section 55 of the Patents Act in line with the requirements of Article 31(l) of the TRIPS Agreement.
Abuse of Patent Rights
Section 56 of the Patents Act in its present form is not fully in compliance with Article 31(a), (d), (e), and (g) of the TRIPS Agreement. Clause 45 of the Intellectual Property Laws Amendment Bill at present before Parliament, introduces several amendments into section 56 to bring it into compliance with Article 31 of the TRIPS Agreement. More specifically the following will be amended:
- Section 56(4)(a) is amended to provide that the Commissioner (of Patents) shall consider the application for a compulsory licence on its merits to comply with Article 31(a) of the TRIPS Agreement.
- Section 56(5) is amended to provide that any compulsory licence granted shall be non exclusive and shall not be transferable except to a person to whom the business or part of the business in connection with which the rights under the licence were exercised, has been transferred to comply with Article 31(d) and (e) of the TRIPS Agreement.
- Section 56(4) is amended by the insertion of a paragraph (c) to provide that a compulsory licence shall be terminated if the circumstances which led to its grant cease to exist and, in the opinion of the Commissioner of Patents, are unlikely to recur to comply with Article 31(g) of the TRIPS Agreement.
It is submitted that the amendments to section 56 to be effected by clause 45 of the Intellectual Property Laws Amendment Bill will bring the South African law on compulsory licences in substantial compliance with Article 31 of the TRIPS Agreement.
In response to question No. 3(b) from the US, it is repeated that section 56(4) of the Patents Act as amended now obliges the Commissioner of Patents to consider the application for a compulsory licence on its merits, and further provides that a compulsory licence granted shall be terminated if the circumstances change. This means that the Commissioner is obliged to hear the evidence of both parties before exercising his discretion.
In response to question No. 3(c) from the US, in regard to the granting of a compulsory licence in circumstances where the patented product is being imported rather than produced within South Africa, the following should be noted:
In the first place, the Intellectual Property Laws Amendment Bill provides, in clause 45, for the deletion of section 56(2)(b) of the South African Patents Act, which at present provides for the granting of a compulsory licence in circumstances where the working of the invention in South Africa is prevented or hindered by the importation of the patented product. A compulsory licence may still be granted, in terms of section 56(2)(e) of the South African Patents Act, in circumstances where the patented product is being imported and the price of such patented product is excessive in relation to the price charged therefore in other countries where the patented product is being manufactured. It is submitted that the granting of a compulsory licence in these circumstances would be in the interest of the public.
The granting of a compulsory licence in circumstances where there is a failure to work the patented invention on a commercial scale within prescribed time limits, is in compliance with Article 5 of the Paris Convention, and specifically Article 5(2) and (4).
It should further be noted that there is no reported case in South Africa yet in terms of which a compulsory licence has been granted.
More specifically in response to question No. 4 from Japan, it may be explained that use of a patented invention without the authorization of the patentee is permitted by the Patents Act in the following instances:
Section 4: It is provided that a patent shall have the same effect against the State as it has against a person, provided that a Minister of State may use an invention for public purposes on such conditions as may be agreed upon with the patentee, or in default of agreement, on such conditions as are determined by the Commissioner of Patents on application by such Minister and after hearing the patentee. It is evident that the patentee is given an opportunity to be heard and to contest the application for use by the Minister. There is no recorded instance of this provision being employed.
Section 55: Provision is made in this section for the granting of a compulsory licence in the case of a so called dependent patent. As explained above, the section is being amended by the Intellectual Property Laws Amendment Bill to be in compliance with Article 31 of the TRIPS Agreement.
Section 56: This section provides for the granting of a compulsory licence in the case of abuse of patent rights. As explained above, this section is being amended by the Intellectual Property Laws Amendment Bill to be in compliance with Article 31 of the TRIPS Agreement.
Section 78: In terms of this section, the Minister (of Trade and Industry) may acquire, on behalf of the State, any invention or patent on such terms and conditions as may be agreed upon with the patentee. It is evident that this section specifically envisages the authorization or agreement of the patentee.
Section 79: This section provides for the assignment of an invention relating to armaments as defined in the Armaments Development and Production Act, 1978, to the Minister of Defence, acting on behalf of the State. Again the cooperation of the proprietor of the invention/patentee is necessary to achieve such assignment. In terms of section 79(8), the said Minister shall pay to the proprietor of the invention or patent such reasonable compensation as may be agreed upon, or in the default of agreement, as may be determined by arbitration or by the Commissioner of Patents. It is submitted that the provision of section 79, relating to armaments as defined in the Armaments Development and Production Act, is in the public interest. Again there is no recorded instance of this provision being invoked.
Section 80: This section provides for the possibility that where the Minister is of the opinion that it is in the national interest that a patent application, specification, drawing or other document relating to an invention should be kept secret, he may acquire the invention on behalf of the State, in accordance with the provisions of section 79 of the Act. In terms of section 80(3) provision is made for the payment of reasonable compensation to the proprietor of the invention, where such proprietor has suffered loss or damage. The compensation will be as agreed upon with such proprietor, or, in default of agreement, may be determined by arbitration or by the Commissioner of Patents.
The explanation given above in regard section 4 of the South African Patents Act, also applies specifically to question No. 5 from the US. As explained, the provisions of section 4 are seen to be in compliance with Article 30, which provides that Member states may provide limited exceptions to the exclusive rights conferred by a patent. The fact that provision is made in section 4 for an agreement with the patentee or, in default of agreement, for conditions to be determined by the Commissioner of Patents after hearing the patentee, is seen as providing the patentee an opportunity of presenting and pursuing his legitimate interests. This is viewed as falling within the provisions of Article 30 of the TRIPS Agreement.
