Presented to the Standing Committee on Private Members' Legislative Proposals and Special Petitions on 19 June 2002

The Department of Trade and Industry wishes to express its concerns about the proposed amendments to the Patents Act. The concerns do not primarily relate to the principles and implicit policy contained in the proposal, but rather to the unnecessary duplication that would result, as well as to the practicality of the proposal.

The proposed amendments recommend the introduction of compulsory licensing for non-commercial use of patented articles, as well as for compulsory licensing in the case of a national emergency. The proposed amendments essentially seek to enhance existing provisions in the Patents Act and to promote easier access to the mechanisms contained in the Act by way of introducing an administrative procedure rather than the judicial process currently in place.

It is the view of the Department that the Patents Act currently provides for the State to access patented articles in three different provisions:

1. Section 4 of the Act provides that a Minister of State may use an invention for public purposes on terms and conditions agreed upon with the patentee. The section stresses that if agreement cannot be reached between the patentee and the State, a Commissioner of Patents (a Judge of the High Court) may grant permission to use such invention on terms and conditions determined by him or her.
2. Further provision is also made in Section 56 of the Act for the issuance 6f compulsory licenses under certain circumstances. The honourable member p6inted out the limitations pointed of these circumstances in her submission.
3. Finally, section 78 provides that a Minister may acquire any invention or patent on such terms and conditions, as may be agreed upon.

Thus, the Patents Act currently provides various mechanisms by which the State may acquire the rights or the technology to produce goods for public purposes, essentially the same as for non-commercial purposes. While only Section 56 makes reference to compulsory licensing, the other two provisions give the State broader, more genera] access to patented rights, arguably more useful than the limited application of compulsory licensing. As such, the Act is already in line with Article Bi of the TRIPS Agreement. Furthermore, the proposed amendments, therefore, do not represent a departure from current policy, but rather in the duplication of policy already contained in the Act.

The processes by which rights may be acquired by the State involve a Commissioner of Patents (a Judge of the High Court) in all three provisions. This process, it is averred, is cumbersome and costly, which the Department concedes may be the case. However, the alternative proposed is problematic from a number of perspectives.

Firstly, it is proposed that the Board of Trade, which it is assumed is a reference to the Board of Trade and Tariffs (BTT), fulfil the function of adjudicating whether a patent right can be acquired in the case of a dispute and sets a fair price for the use of such ri2hts. The BTT is the body that evaluates anti-dumping claims and that regulates the implementation of tariffs. It is not clear from the honourable member's motivation why this would be an appropriate administrative body. Furthermore, in the new legislation that will create a Commission for International Trade Administration (CJTA) in the place of the BTT, it is envisaged that CITA will have a wider role in Southern Africa. It is thus questionable whether a body with transitional responsibility for anti-dumping actions should be tasked with the adjudication of compulsory licenses for patented rights.

Secondly, taking the decision about the remuneration for the use of patented lights away from the court in cases where there is no agreement will not ensure that matters are addressed outside of court, as they will almost certainly be referred to the courts on appeal or review. In essence, therefore the introduction of an administrative procedure may only result in further prolonging of disputes. Furthermore, it is questionable whether a body that forms part of the State should adjudicate matters in cases where there is a dispute between the State and a third party.

The Patents Act does not currently provide for the compulsory licensing of patent rights in cases of national emergency. The term "national emergency" is not defined in the proposed amendment and would therefore revert to the provisions in the Constitution on national emergencies. In terms of the Constitution, a (State) national emergency may be declared for a maximum of 21 days and may be extended only 3 times. The 84 days provided therefore through the Constitution would not yield any benefits to the State. Thus; the introduction of a provision on national emergencies may be of little practical use.

The Department is currently involved in preparations for the next round of WTO negotiations. The IPS Agreement is one of the aspects that will be negotiated. The recent DOHA Declaration provides that member states of the WTO should implement strategies, policies and laws that promote access to health. However, the exact nature of these efforts still needs to be negotiated and may result in changes to the TRIPS Agreement that can be implemented once negotiations have been concluded. Efforts to implement changes in line with the DOHA Declaration would be premature at this point in time. Furthermore, the provisions relating to parallel importation in health legislation needs to be implemented and may be of greater use than the introduction of further compulsory licensing provisions in the Patents Act.

In conclusion, therefore, it is the view of the Department that the proposed amendments would result in unnecessary duplication of provisions currently contained in the Act, that there are provisions that would be more easily implemented rather than resorting to the declaration of a national emergency and, finally, that the proposed amendments may undermine the position of South Africa in WTO negotiations. The Department, however, acknowledges the concern by the honourable member that access to patented rights through the courts may be a complex and costly process and will examine this concern within a broader review of the Patents Act and research that is being conducted on compulsory licensing in other jurisdictions.