Patent Amendment Bill (Submitted by Mrs Kalyan on 9 November 2001)
MEMORANDUM
It is hereby notified that the introduction of a Bill in terms of Section 73(4) read with section 76(2) of the Constitution will be made. This memorandum contains:
Particulars of the proposed legislation;
The objectives of the proposed legislation; and
An indication of the financial implications of the proposed legislation and an indication of whether such implications may be a determining factor in the consideration of the proposed legislation.
The required legislation is set out herein.
PARTICULARS OF THE PROPOSED LEGISLATION
The following amendments to the PATENTS ACT 1978 (ACT 57 OF 1978) [hereinafter referred to as "the Act"] are proposed:-
1. Insert the following definitions in section 2 (the definitions section) of the Act:-
"President" means The Head of State as referred to in section 83 of the Constitution (Act 108 of 1996). "petitioning Minister" for the purposes of section 56A and 56B means a Minister referred to in section 91 of the Constitution who applies for a compulsory license. "national emergency" shall be declared by the President in terms of section
56B(...)
"reasonable period of time" shall be deemed to be a period of three calendar months unless circumstances justify acting within a shorter period. "Cabinet" is as defined by section 91 of the Constitution. "Public non-commercial use" shall include all projects and provision of goods and services which are completely funded by government and/or donors for the benefit of the general public at large and no fee shall be payable by members of the public to benefit from such goods and services.
2. Insert a new section after section 56 to be numbered section 56A, to deal with the issue of compulsory licenses for public non-commercial use.
Compulsory license for public non-commercial use
56A (1) A petitioning Minister may apply to the Commissioner for a compulsory license under a specified patent in circumstances where,
(a) The license is required for public non-commercial use; and
(b) The license is required for the health, welfare or security of the nation and the threat faced by the nation is of such a nature that given the resources of the State it cannot reasonably be dealt with by any other measures in the ordinary course of events; and
(c) Agreement could not be reached, within a reasonable period of time, between the petitioning Minister and the patentee regarding the terms under which the license was to be granted.
(2) The Board of Trade shall make a determination of the remuneration to be paid to the patentee and the manner in which such remuneration is to be paid. In making such determination the aforesaid Board shall consider:
(a) The economic value of the license.
(b) The cost of developing the patented article.
(c) How and by whom the cost of developing the patented article was paid.
(d) The economic and financial position of the State.
(e) The need for which the license is required.
(f) Representation from the patentee.
(3) The aforesaid determination shall be lodged together with the application to the Commissioner for a compulsory license and the commissioner shall be bound by such determination unless the patentee can show that such determination is not equitable in the circumstances.
(4) The petitioning Minister shall, in the application to the Commissioner, set out the purpose for which such a license is required and the time period for which the license is required.
(5) The Commissioner may issue the license under such terms and conditions, relating to the remuneration and duration of the license, as are just and equitable in the circumstances.
(6) Any license issued under this section shall be non-exclusive, and may not be assigned, and goods produced under such a license shall only be used and distributed within the Republic for non-commercial public use.
(7) The patentee may apply to the Commissioner, on good cause shown, to revoke a license granted under this section.
(8) The patentee may apply to the Commissioner, on good cause shown, to vary the conditions under which such a license is granted in terms of this section. This shall specifically include the right to apply for a variation of the determination made in terms of subsection 2 above.
(10) Nothing contained herein shall derogate from the patentee's right to take any ruling or decision of the Commissioner on appeal or review. However, subject to the patentee's right to claim damages, lodgement of such an appeal or review shall not suspend the operation of such license pending the outcome of the appeal or review proceedings.
3. Insert a new section after section 56A to be numbered section 56B, to deal with the issue of compulsory licenses in cases of national emergency.
Compulsory license in cases of national emergency 56B (1)
The President may, after consultation with the Cabinet, declare a national emergency in circumstances where the health, welfare or security of the nation warrant urgent remedial action.
(2) The President shall issue a notice setting out the nature and extent of the national emergency. Such notice shall be published in the Government Gazette and, if circumstances allow, shall be delivered to a patentee whose patented article may be required to deal with the national emergency.
(3) The petitioning Minister who is responsible for dealing with the national emergency concerned must lodge with the Registrar of Patents a copy of the aforesaid notice.
(4) The Minister of Trade and Industry acting in conjunction with the Minister of Finance, shall make a determination of the remuneration to be paid or compensation to be made to the patentee and the manner in which such remuneration is to be paid or compensation made. In making such determination the aforesaid Minister shall consider:
(a) The economic value of the license
(b) The cost of developing the patented article,
(c) How and by whom the cost of developing the patented article was paid,
(d) The economic and financial position of the State,
(e) The nature and extent of the national emergency,
(f) The need for which cense is required, and
(g) Representation from the patentee, if time and the prevailing circumstances allow.
(5) The petitioning Minister must lodge an application with the Registrar together with the determination made by the Ministers of Trade and Industry and Finance.
(6) Subject to the patentee's right to subsequently claim damages should a license not be confirmed, or should a license be revoked, once such an application is lodged with the registrar it shall be deemed that a license has been issued on the terms requested in the application.
(7) The application shall then in due course be referred to the Commissioner for determination, who must:
(a) If satisfied that the President has issued the certificate of national emergency lawfully, and
(b) If satisfied that the determination of the Minister's of Trade and Industry and Finance is just and equitable in the circumstances, confirm the license deemed to have been issued.
(8) In the event that the Commissioner is not satisfied with the determination by said Ministers, the Commissioner may confirm the license under such terms and conditions as are just and equitable.
(9) Any license issued or ruling made by the Commissioner may be appealed or reviewed in accordance with the laws of the Republic. (10) Should the petitioning minister or the President be found to have abused their discretion by a competent court of law they shall be liable for damages, including punitive damages.
(11) Subject to the patentee's right to claim damages, any appeal or review that is lodged shall not suspend the operation of such license until the relevant court has finally determined the matter.
(12) The patentee may apply to the Commissioner, on good cause shown, to vary the conditions under which a license is granted in terms of this section.
(13) Any license issued in terms of this section shall be non-exclusive and non-assignable.
(14) Goods produced under such a license shall be predominantly for consumption within the Republic.
(15) The license shall lapse when the President withdraws the certificate of national emergency or when the patentee proves in court that the circumstances in which such certificate was issued have ceased to exist.
B. THE OBJECTS OF THE PROPOSED AMENDMENTS
Although these amendments are not aimed exclusively at any field in particular, the HIVIAIDS pandemic has clearly illustrated the need for amendments of this nature. The intention is to provide a mechanism to secure technology or patented articles where either the State cannot afford such technology or patented articles for consumption by the State or where there are circumstances which amount to a national emergency. The intention is to tailor the terms and conditions under which such licenses are issued to the circumstances in which the licenses are required.
C. FINANCIAL IMPLICATIONS The proposals are amendments to existing legislation. No new agencies are required to implement these amendments. The amendments should not place any undue strain on the existing agencies that have to implement them. Although there may be financial implications, they are not so significant as to affect the desirability of such amendments. The need for this type of legislation outweighs the consideration of possible financial implications, which are likely to be secondary in nature.