[A2k] ITweb: SA legal reform vital for global trade

Thiru Balasubramaniam thiru at keionline.org
Fri Feb 21 00:54:06 PST 2014


SA legal reform vital for global trade
By Jon Tullett<http://www.itweb.co.za/index.php?option=com_content&view=author&id=11515>,
Editor: News analysis
Johannesburg, 18 Feb 2014

South Africa is changing its intellectual property legislation in an
attempt to strengthen local business.

Spearheaded by minister Rob Davies and the Department of Trade and Industry
(DTI), these efforts could have profound effects on local business, and the
technology sector, in particular.

Last year saw the publication of the draft National Policy on Intellectual
calling for sweeping reform of all areas of IP, notably patents and
copyrights, but extending to numerous other areas of law such as
pharmaceuticals, sporting events, agriculture and more.

Since then, we've seen the first result: the recent amendment of copyright
laws, attempting to tackle the specific issues surrounding indigenous
knowledge. That amendment was panned by
but opinion of the overall draft National Policy on IP remains broadly
positive. SA is at the conjunction of rapidly evolving technology, with IP
laws strained beyond breaking point, and frantic IP reforms taking place in
other countries.

'Dodging bullets'

The draft IP policy, if it delivers its promises, could be hugely important
to the country. "SA is dodging multiple bullets," says Andrew Rens, a South
African lawyer specialising in intellectual property.
"There is ongoing external pressure for SA to commit to a number of
treaties, and change its laws to suit multinational corporations." Failing
to stand up to pressure could be disastrous for the country, he says.

Internationally, entities such as the World Intellectual Property
Organisation (WIPO) and the World Trade Organisation (WTO) are working to
coordinate discussion around IP, as a facilitator of innovation and fair
trade. But the efforts have been strongly influenced by commercial
interests, such as the wrangling over theAnti-Counterfeiting Trade
which sparked widespread protests, prompting the EU to reverse its original
decision to accept the treaty. The controversial and secretive
Trans-Pacific Partnership (TPP - of which SA is not a member) is another.

SA vs the world

SA's IP policy is setting the country up as a leader in progressive IP
protection, observers note. Dr Tobias Schonwetter, who teaches copyright
law at the University of Cape Town, noted in a response to the draft
"we believe that the intention of the Draft National Policy on Intellectual
Property is good: it is grounded in a developmental approach appropriate to
our country, and seeks to eliminate the many perverse outcomes of IP
protection which are detrimental to the broader society".

Schonwetter told ITWeb he was optimistic that the DTI "fully understands
the implications of international law and policy-making".

"SA has been a leader, together with Brazil, Argentina and India at the WTO
and WIPO in efforts to make international IP law more friendly to
developing countries," Rens says. "The US trade representative has
responded to the developing countries by going outside of WIPO and the WTO
to try and conclude treaties. ACTA, which was thoroughly rejected by the
European Parliament, was one of those treaties, the Trans-Pacific
Partnership is another. In the US, Congress is currently refusing to give
the authorisation that will be necessary to conclude the TPP."

Emerging markets have a particular interest in taking a strong stance in
IP. National interests must be protected against international corporate
giants, while not deterring those corporations from conducting business
here. Difficult areas, like allowing local pharmaceutical manufacturers
access to generic antiretroviral medication for AIDS treatment, put
national interests directly at odds with big international businesses and
their lobbying might.

"SA may find itself under immense pressure from other countries and regions
(usually the US and Europe) to ratify and implement treaties that are not
in the national interest, or to agree to bilateral trade agreements that
contain similar provisions," Schonwetter says. "Resisting such pressure is
very difficult and may appear costly if the refusal can lead to the
termination of trade negotiations or - as is often threatened - the exodus
of IP-based industries.

Earlier this year, health minister Aaron Motsoaledi reacted with fury after
leaked documents showed international pharmaceutical companies
proposing a coordinated
attack on IP reform in
"SA is now ground zero for the debate on the value of strong IP
protection," the leaked document states. "It may also provide the model for
other developing nations, inside and outside Africa, including such
important aspiring economies such as India and Brazil."

The latter two have been making major strides in their own IP reform,
particularly around pharmaceuticals, and the industry is clearly
uncomfortable. The South African groups named as partners in the leaked
documents hastened to distance themselves from it, saying they had rejected
the proposal.

With some firms threatening to pull out of the country entirely if a
favourable IP regime is not implemented, Schonwetter says the country
should call their bluff. "I simply don't buy the argument that private
companies would leave SA if we did not strengthen out IP protection
further. SA is too important a market to leave behind (and competitors
would quickly fill the gap) and offers exemplary infrastructure for
conducting business."

Patent reform

Patents are a key enabler of innovation, and SA has traditionally lagged in
its protection for inventors. The draft IP policy attempts to correct, at
long last, many of the areas of concern. "The South African patent system
currently does not examine patents," Rens says.

"Anyone can patent anything, provided that he pays a patent lawyer to
submit the documents. Then he can send you a letter telling you that your
product or service violates his patent and you must stop what you are doing
or pay up. If you don't he could sue you. If you have R2 million to spare
you could go to court and argue that the patent is invalid, or you could
pay up. Examination, pre- and post-grant opposition will reduce, even if
they don't eliminate, abuse of the patent system."

In the technology world, software patents are the elephant in the room,
with billion-dollar
 andpatent trolls<http://arstechnica.com/tech-policy/2013/01/how-newegg-crushed-the-shopping-cart-patent-and-saved-online-retail/>
de rigueur. That is one of the bullets SA is dodging, Rens says.

The US opened Pandora's Box in 1972, with landmark decisions allowing
software patents to go forward. The result was a flood of patents, and then
a flood of litigation. "In the US, a government report found
'software-related patents accounts for about 89% of the increase in
defendants between 2007 and 2011, and most of the suits brought by PMEs
[patent monetisation entities - colloquially known as patent trolls]
involved software-related patents'. In the US, there is a heated debate
about the appropriate response to the problem created by software patents,
but that there is a problem is no longer disputed."

The US is now desperately trying to get matters back under control - with
some success. The "America Invents Act" passed in 2011, and included
several key legislative changes intended to encourage innovation, while
throttling back abuse.

In SA, software patents are explicitly forbidden, though Rens notes that
some may have sneaked through. The proposed reforms should clamp down on
those further, and will bring SA into accordance with other nations taking
similar action. "New Zealand, like SA, has prohibited software patents in
principle for decades, but last year amended its law to prevent abusive
attempts to get software patents. SA should take note," Rens says.

And in that regard, SA can join other developing countries in taking bold
strides in IP innovation, he adds. "India's reform of its patent
legislation is the most innovative in the world. Brazil is currently
engaged in a patent reform process which builds on the Indian example. The
draft policy indicates that SA will adopt many of the features of the
Indian patent reform. It will also be possible for SA to go beyond these
features, learning from Brazil and others."

Copyleft, copyright

In the copyright arena, the draft IP policy also makes clear note of the
need for balanced reform. Dominant creative industry bodies, such as the
RIAA and MPAA, have been instrumental in the passage of US-based
legislation such as the DMCA, which attempted to stamp out piracy through
wide-reaching provisions, such as a ban on reverse engineering. US trade
officials have pushed hard for similar provisions in other countries.

The draft policy makes explicit mention of this, though it mislabels the
relevant legislation as "the DCMA". "SA... should not follow the path of the
DCMA and EU database directive as these instruments are restrictive and,
therefore, bad models for copyright legislation of a developing country
like SA," the draft policy says. It also calls for specific allowance to be
made for software reverse engineering, to "allow software to be adapted to
local needs", and makes provision for fair use in Internet works. This is a
growing area of dispute, locally and abroad - it is, for example, the
central issue in the current legal fight between Moneyweb and
reuse of content.

"Fair use", though a vague term, allows for flexibility in copyright
issues, and can underpin innovation, Rens argues. "Fair use has enabled US
courts to adapt copyright law to fast-changing technology. For example,
Google uses thumbnails of images to show the results of an image search.
It's simply impossible to write a law that will predict that kind of
innovation and allow it. Instead, the law has to have open-ended provisions
that allow the courts to adapt to changing technology. South African
copyright legislation, which dates to 1978, does have some exceptions, but
research has found these to be inadequate. The draft policy approves fair
use, but there is no suggestion of any timetable or urgency to enact a fair
use provision in South African law. The current copyright act could be
easily amended by copying the US fair use provision. A major advantage
would be that no country would dare claim that it's contrary to SA's treaty

Lingering concerns

Although the draft policy is a good start, there are lingering concerns.
Schonwetter notes that some areas are unclear and may fail to achieve
change without clarity. "It is too vague in some places to effectively
promote any policy's key objective of harmonising legislative activity," he

"The policy itself states that currently 'departments that deal directly or
indirectly with IP approach the system differently. To ensure coherence,
there is a need for a coordinated approach'. But a coordinated and
harmonised approach becomes impossible if a policy is too vague on crucial
issues - then we are essentially back at square one and can save ourselves
the efforts of formulating a policy altogether."

Intellectual property is the central concept of the information age, and
SA's ability to formulate, and enact, clear IP policy will be a major
factor in SA's place on the stage. All eyes will be on the DTI as it
proposes further amendments, with plenty of sabre-rattling expected from
foreign governments and industry bodies.

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