US puts pressure on SA to abandon pro-generic IP policy

American economist Joseph Stiglitz has pleaded with the South African government to resist US pressure to squash the plans for far-reaching intellectual property (IP) policy reforms set out earlier this year.

In a lecture at Wits University, Stiglitz said the draft IP policy was “one of the most advanced proposals I have seen. I encourage you to pass it.

“You will experience a lot of pushback from the US government. Other emerging markets will follow and they worry about that,” Stiglitz said.

“I’m not talking about anything specific, they just always do it,” he told City Press afterwards.

Stiglitz recently collaborated with the University of Cape Town’s IP unit on a paper making radical proposals for how IP should work in the future, making the overarching point that developing countries’ IP regimes should not be the same as developed countries’ ones.

“It is a myth that IP is at the core of innovation,” said Stiglitz.

In fact, patent laws often inhibit research, he added.

“IP rights are designed to reduce competition. In a knowledge economy, the cost of getting IP wrong is getting higher.”

Meanwhile, the department of trade and industry has received submissions on its draft policy ranging from celebration to vehement rejection.

The crux of the proposals is to make it harder to patent things and easier to challenge or get around patents when it harms the public interest.

City Press understands that US business groups have bashed the policy and called for the department to abandon it.

The draft policy’s first major proposal is to end South Africa’s depository patent system, which has led to South Africa granting patents more freely than just about any other country.

The department instead wants to create a substantive search and examination (SSE) system like those in India and Brazil, where applicants have to fulfil a set of patentability criteria.

Along with this, the policy proposes systems that allow interested parties to challenge patents before and after they get granted.

Fix the Patent Laws, a coalition of 34 civil society groups including Section27 and the Cancer Association of SA, has called for there to be “broad grounds and standing” to oppose patents and rigorous criteria for patentability.

In its submission to the department, the civil society group also calls for easy nonjudicial procedures to tackle bad patents.

The draft IP policy also paves the way for better use of the “flexibilities” allowed for in the Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips).

These are often invoked in battles around access to medicines, but will be increasingly important in the emerging “knowledge economy”, where IP is a growing part of the cost of business.

Over time, the department envisages “adopting extensive Trips agreement flexibilities” to ensure local access to, and research around, green technologies in particular.

A group submission from academics at the University of KwaZulu-Natal’s School of Law lauded the policy and made a detailed submission on how to get maximum traction of out Trips flexibilities that South Africa has not used before, such as compulsory licensing.

Compulsory licensing is when a patent-owner is forced to license a generic manufacturer to make a product and the payment of a royalty gets sorted out later.

Another flexibility is voluntary licensing – a mechanism that was key to making HIV treatment affordable in South Africa.

However, the SA Institute of Intellectual Property Law, representing major law firms, came out against many key proposals, saying the department’s strategy of phasing in the new patent regime one sector at a time could backfire.

Short-term public health benefits could be outweighed by long-term economic consequences in other sectors, it said.

The law firms oppose state intervention in the terms of voluntary licences, which it calls a “free trading vehicle”.

The University of KwaZulu-Natal submission advises that South Africa not only encourage these, but regulate the terms of voluntary licences.

The law firms also oppose the elimination of “incremental innovation” patents, which are patents on modifications of existing technologies or substances, and are the instrument through which companies can “evergreen” patents to last indefinitely.

On the other end of the divide, Fix the Patent Laws calls for these to be explicitly excluded from patentability.

In his talk last week, Stiglitz likened Trips to “state capture” by US pharmaceutical and entertainment industries.

“Trips is not ‘trade-related’ – it is just there to put IP into trade deals,” he said.

The agreement was negotiated when Stiglitz was an adviser to then US president Bill Clinton.

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