Draft rules on intellectual property rights in publicly financed research are stirring significant debate in South Africa between those who say the rules may stifle innovation, breach WHO commitments and be unconstitutional, and others who say concerns are overblown and the measures are needed to boost the country’s economy.

The regulations proposed by the government expand the 2008 IPR from Publicly Financed Research and Development Act, which requires universities to assess and report on all research that could potentially be commercially viable.

Under the proposed regulations, if a university chooses not to seek intellectual property protection, the National IP Management Office (NIPMO), a proposed body with a staff of experts in IP, commercialisation and patents, has the right to reassess the decision. If NIPMO disagrees with the university, it may itself acquire ownership of the research and IP rights. If, however, NIPMO agrees with the assessment, the university is free to assign its rights to the research to the inventor.

Where all direct and indirect costs are borne by a private entity, research is considered privately funded and not subject to the law.

The Department of Science and Technology published draft rules implementing the act in April. The comment period ended 29 May. Draft rules available here [pdf].

Stifling Innovation?

Some have raised concern about the way the government is addressing the issue.

While research policy and administration are “not often in the spotlight, they have important ramifications for education, development and the economy” in South Africa as well as for the nation’s “standing and status in the eyes of the research community all over the world,” the African Commons Project said in an online petition posted 26 May. The organisation helps communities enter the digital economy through collaborative technology.

The act is intended to stop results from publicly funded research from being misappropriated by foreign multinationals, the project said. It is also meant to measure output from publicly financed research, and to enable technology transfer from research entities to industry, it said.

But the negative impact of the regulations far outweigh any benefits, the project argued. The draft rules focus on the use of patenting and other forms of IP protection to commercialise research in the interests of innovation, it said, adding that they are “hostile to, or at the very least suspicious of, open source and open processes.”

The regulations also impose a series of bureaucratic reviews at institutional and national level before open approaches are possible, at the discretion of an advisory board that “appears to be made up of patent lawyers and business experts,” it said. This is at odds with the way many international research consortia work and will put local researchers at a disadvantage, the group said.

Researchers do not appear to have any role in deciding the most effective use of their inventions, the project said. In addition, the regulations give the government “intrusive and invasive march-in rights” retrospectively to reverse decisions made by universities, it said.

Perceived Threat to Health Research

Many of the provisions of the recently adopted World Health Organisation (WHO) global strategy and plan of action on public heath, innovation and intellectual property (IPW, WHO, 22 May 2009) directly contradict the IPR Act and its proposed regulations, said Eve Gray, honorary research associate at the University of Capetown Centre for Educational Technology and director of the OpeningScholarship Project.

Among other things, the action plan argues for the support of basic science including, where feasible and appropriate, voluntary open-source methods, and calls for identification of incentives and barriers, such as IP, that might affect public health research, she said. The WHO recommended more open access to research on public health, and suggested examining the feasibility of voluntary patent pools to spur innovation of and access to health products and medical devices, she said. It also stressed the importance of national, regional and international collaboration and knowledge transfer, she said.

By contrast, the act and regulations aim to lock down South African research, Gray said. The act “casts its wide net to include potential IP and patent protection in any legislation in the world,” she said. Databases, research methods, business processes, software and collaborative research ventures will be subject to scrutiny by NIPMO to ensure that publicly funded research is kept in South Africa, she said.

Following enactment of the US Bayh-Dole Act, many US academic institutions seem to be unduly focused on patenting and licensing basic scientific discoveries despite the fact that such activities “very seldom generate significant financial returns,” Loyola University Chicago Visiting Professor of Law Matthew Herder and Loyola University Chicago School of Law Vickrey Research Professor Cynthia Ho said.

The 1980 Bayh-Dole Act allows exclusive control over many government-funded inventions to be transferred to universities and businesses under federal contracts for development and commercialisation.

There is evidence that increased patenting, and related licensing, industry-sponsored research agreements and use of materials transfer agreements, can slow the flow of knowledge between academic researchers and hamper the public’s ability to access technologies such as diagnostic tests, the law professors said in a 29 May letter [doc] to the South African government. They reiterated concerns raised with the government by Universities Allied for Essential Medicines and suggested changes to address them.

While the act recognises a funding recipient’s right to choose not to seek IP protection, the mandatory process for NIPMO to review that decision and decide whether to step in could take over 200 days, the lawyers said. That is far too long where a recipient chooses not to seek a patent for knowledge generated by research, not because it has no commercial value, but because of its “immediate value to the research community as a foundational discovery, research tool, or platform technology,” they wrote.

The draft regulations also fail to give publicly funded research institutions enough guidance on patenting and licensing practices, including when to forgo patenting, Herder and Ho said. In addition, the current text will limit the government’s ability to invoke its right under the act to use or have the intellectual property used throughout the world for its health, security and emergency needs, they said.

Constitutional Issues

The regulations are unconstitutional, Shuttleworth Foundation IP Fellow and African Commons Project co-founder Andrew Rens blogged on “ex Africa semper aliquid novi” (there is always something new out of Africa).

South Africa’s bill of rights grants a right to freedom of expression, which includes academic freedom and freedom of scientific research, he wrote. But the draft rules require the country’s institutions to ensure that IP from collaborative agreements is commercialised, effectively barring them from taking part in multinational research consortia which have different rules on how research may be used, he said.

Moreover, those involved in collaborative agreements requiring IP to be placed in the public domain or given royalty-free licenses must seek prior approval from the NIPMO, Rens said. Researchers cannot choose to join the only or the best research consortium, but must “cede their academic freedom to bureaucrats” fixated on the sole objective of “patenting whatever they can,” he wrote.

Concerns “Overstated”

Some private-sector representatives are supportive of the proposed regulations, with some possible changes.

In the past, unscrupulous researchers at publicly funded institutions and private-sector parties often snapped up the results of publicly financed research and development (R&D), and the resulting IP, at prices well below market level, to the detriment of taxpayers, said Bouwers Inc. attorney Theo Doubell.

Bayh-Dole required American institutions to take ownership of the results of publicly funded research and the rest of the world is following suit, said Doubell, who responded on behalf of the Licensing Executives Society of South Africa.

Opposition to the draft regulations and the act itself primarily centres on their perceived restrictions on the right to freedom of expression, Doubell said. But the rights to academic freedom and freedom of scientific research are not absolute and can be subject to limitations so long as they are based on democratic values, he said.

The act only regulates those freedoms in so far as they relate to R&D programs funded with public money, he said: “The Constitution does not confer a right to state financial support for specific R&D projects.”

The legislation and regulations could hamper the ability of South African researchers to collaborate with private-sector entities and non-resident, publicly financed organisations, Doubell said. The extent of the impediment will be determined by the “quality of the personnel, systems and processes” of the NIPMO and the technology transfer offices envisaged by the act, he said. And, as with the constitutional argument, the act and rules only limit collaboration in R&D funded with public monies, he said.

The draft regulations are procedural but many of the concerns raised are of a substantive nature and should have been brought up before the act was passed, Doubell said. Worries about the act’s perceived negative effects on collaborative research, and the commercialisation of publicly funded R&D, are “overstated and are not substantiated materially by the law,” he said.

The legislation “represents sound public policy,” said Yasmin Forbes, Microsoft’s South Africa national technology officer. IP protection for basic research enables commercialisation of the research through IP licensing, increasing the likelihood that government-funded inventions will lead to the development of new products and services, she said. That drives economic growth, employment, exports, foreign direct investment and tax revenues, she said. Microsoft has suggested some areas for clarification, she said.