Why is South Africa not interested in compulsory licences?

Despite options at its disposal and large-scale health crises, the South African government has chosen not to go down the compulsory licensing route, as Marco Vatta of Spoor & Fisher explains.

Under the South African Patents Act 57 of 1978, the South African government is able to acquire or make use of a patent. However, the government has never made use of these provisions in order to free itself from the limited monopoly granted to a patentee, despite the challenges the country has faced in the area of medicine such as during the HIV/AIDS crisis in the early 2000s when the HIV/AIDS epidemic accelerated. In 2018, there were approximately 7.7 million people now living with the virus in the country.

South Africa, as is the rest of the world, is again faced with a crisis in the wake of the COVID-19 outbreak. It will be interesting to see what action, if any, the South African government will take in acquiring or using a patent for technology or medication that may alleviate the pressures the country is faced with in light of the pandemic.

South Africa and other developing countries are unable to keep up with the high demand for personal protective equipment, hospital beds, testing kits, reagents and ventilators during the pandemic. At the beginning of June 2020, the country had a backlog of 100,000 tests waiting to be processed, with pressure mounting on public laboratories.

This raises the concern that South Africa, with an already strained public healthcare infrastructure, will not be able to meet the demand for essential health services and respond adequately to the crisis. Additionally, resources are being shifted away from fighting the pre-existing HIV and tuberculosis (TB) epidemics with a resultant 50% decrease during the nationwide lockdown in the number of TB tests conducted, as well as a decrease in HIV and TB patients accessing their therapies.

Patents over prophylaxis?

The world’s hope in combating SARS-CoV-2, the virus which causes COVID-19, is in the successful development of a vaccine, but as mentioned in an open letter, published on May 18 and co-authored by 80 academics to South African President Cyril Ramaphosa, many products, possibly including a potential vaccine, required to combat the global pandemic are, or soon will be, protected by patents, which may hinder access to the products for the prophylaxis of disease or treatment of South Africans.

However, the government does have a trump card. Section 4 of the South African Patents Act 57 states: “A patent shall in all respects have the like 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 (the commissioner of patents is a designated high court judge) on application by or on behalf of such minister and after hearing the patentee.”

It is interesting to note from section 4 of the Act that the word “use” alone is mentioned, which is only one of the actions provided in section 45 of the Act. This section provides that “the effect of a patent shall be to grant to the patentee ... the right to exclude other persons from making, using, exercising, disposing or offering to dispose of, or importing the invention”. Furthermore, section 4 is predicated on a negotiated use of the patented invention, or at least after the court has applied the audi alteram partem doctrine—the right for the other party to be heard.

In addition to section 4 of the Act, section 78 provides that: “The minister of economic development may, on behalf of the state, acquire, on such terms and conditions as may be agreed upon, any invention or patent.”

It is clear from sections 4 and 78 of the Act that the use of or acquisition by the state of a patent requires some form of negotiation between the state and the patentee, rather than a unilateral acquisition of rights to use or expropriate a patent by the state. Some may argue that the negotiated acquisition may be a hindrance to the state when public interest is paramount.

At present, South African legislation does not provide for the waiving of the negotiated acquisition in the case of a national emergency or other circumstances of extreme urgency, or in cases of public non-commercial use, even though the South African legislation could include this in terms of article 31(b) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which was adopted in 1994 and entered into force the following year. TRIPS is administered by the World Trade Organization and is binding on all of its members, including South Africa.

The TRIPS Agreement does authorise member states to “provide limited exceptions to the exclusive rights conferred by a patent” so long as these do not “unreasonably conflict” with normal patent exploitation or “unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties”.

TRIPS and the ‘public interest’

The Doha Declaration of 2001, which reaffirms the provisions of the TRIPS Agreement, clarifies ambiguities in the application by governments of the principles of public interest and stresses the importance of public health. It allows each member “the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency”. The global COVID-19 pandemic comes to mind.

On March 15 this year, a National State of Disaster was declared by Co-operative Governance Minister Nkosazana Dlamini-Zuma and announced by President Ramaphosa. At the time of writing, South Africa is still in an extended state of disaster.

Despite the flexibilities granted in terms of article 31(b) of TRIPS, and the mention thereof in the IP Policy of the Republic of South Africa that was approved by the South African Cabinet on May 30, 2018, the provisions have not been used in the South African context (or many other countries), nor have they been adopted into South African legislation.

The Act also allows for a ‘catch-all’ provision where the above mechanisms afforded to the state may not necessarily be the correct fit. The use of compulsory licensing in terms of section 56 of the Act empowers the commissioner of patents to grant a compulsory licence to an “interested party”, including a government agency, without the consent of the patentee in instances where there is an abuse of patent rights.

In particular, a compulsory licence seeks to counter the following abuses by a patentee:

  1. The patentee is not working the patented invention in South Africa;
  2. The demand for the patented article is not being met;
  3. The patentee refuses the grant of a voluntary licence, in particular, where it is in the public interest to do so; and
  4. Excessive pricing in comparison to other countries.

The onus is on the applicant seeking a compulsory licence to prove that at least one of the above abuses has occurred by the patentee.

Despite the HIV/AIDS crisis, and other public health issues in South Africa, as well as the perennial arguments that access to medicine is hindered by high prices, no compulsory licence has ever been granted under a South African patent, even though there have been several applications to date. This is likely because the applicants had failed to discharge the evidential burden of the often narrowly interpreted provisions of section 56.

The government has recognised a need to reform its regime insofar as it relates to compulsory licensing, as the following extract from the IP policy indicates: “South Africa’s unique challenges, including especially vulnerable populations and urgent development concerns, will require the scope of compulsory licences to be strengthened and clarified in a manner that is fair and compliant in relation to both international obligations and national law.

“Following due process, guidelines will be introduced, including legal process for government use, and a renewed effort to facilitate the process of exporting IP goods, such as medicines, to the African continent.”

It is clear that the South African government has an arsenal of interventions at its disposal, and that it has these on its radar, but it is unclear why it hasn’t used the provisions of the Act, nor introduced even further-reaching legislation, particularly in light of the burgeoning health issues.

In line with the 2010 FIFA World Cup slogan, perhaps “Ke Nako” (it is time). Regardless of the government’s rationale, it does seem that the needs of the public can be addressed within the existing structures available.

Marco Vatta is a senior associate patent attorney at Spoor & Fisher in South Africa. He can be contacted at: m.vatta@spoor.com

 

This article was first published in the World Intellectual Property Review.

Date published: 24/07/2020
Author: Marco Vatta, Spoor & Fisher

Tags: South Africa compulsory licensing Cyril Ramaphosa COVID-19 SARS-CoV-2 HIV AIDS pandemic virus