Category Article

ACQ Law Awards 2013

We are excited to advise that Gunter Attorneys recently received the ACQ Law Awards 2013 for the best IP Law Firm in South Africa, attracting the highest number of nominations in the category. 

Every year, ACQ magazine gives awards to industry leaders, eminent individuals, exemplary teams and distinguished firms, which they believe represent the benchmark of achievement and best practice in a variety of fields.  ACQ boasts a legitimately independent nomination process and award winners are chosen by the industry itself. acq_law_award The poll is not only designed to reflect actual performance in any particular area of expertise, size of a firm or market share.  Voters were encouraged to base their decisions on addressing expertise, responsiveness, understanding of a business and its needs, cost-effectiveness, civility, customer service, reliability, experience and knowledge, integrity, firm capabilities and transaction performance.   In that sense, this poll is considered to be a reflection of how professionals view a legal practice, individual or related sector supplier in terms of overall quality of service.   87,427 industry peers were requested to vote.  Voting closed on Saturday, 14 September 2013.  The total number of nominations received (for all countries) stood at an amazing 17,426, representing a 19.9% response rate.

We wish to express our sincere gratitude and appreciation towards our esteemed colleagues, associates and valued clients for this prestigious award. We assure you of our continued commitment to bringing you top-level IP services at competitive tariffs.      

South Africa Design Law

On 18 September 2013 the Supreme Court of Appeal handed down a decision in terms of South Africa Design law in the case of BMW v Grandmark.  The case dealt with a very important issue, namely if a vehicle manufacturer can use design registrations to stop third parties from importing and selling so-called “replacement parts”.  Replacement parts are parts that look like the originals, but are in fact made by unauthorised manufacturers.  It is well accepted that replacement parts are typically cheaper than original parts.  For this reason, this judgment has huge implications for the vehicle and replacement parts industries.

The South African Designs Act allows two types of design registrations, namely –

(i)             AESTHETIC designs – i.e. designs having features which appeal to and are judged solely by the eye, irrespective of the aesthetic quality thereof; and

(ii)            FUNCTIONAL designs – i.e. designs having features which are necessitated by the function which the article to which the design is applied is to perform.

In terms of the Act, a functional design cannot cover a spare part for a vehicle, machine or equipment.  There is no similar exclusion in respect of aesthetic designs.

The case was first heard in the North Gauteng High Court and it was subsequently ruled that BMW could not stop Grandmark from selling various replacement parts, because the design registrations were invalid.  There were four AESTHETIC design registrations involved, covering the following parts: a bonnet, a grill, a headlight assembly, and a front fender.  

The Appeal Court said that it was common cause that Grandmark was importing and selling parts that were “exact embodiments of the four designs”.  What it had to decide, however, was whether BMW’s four registrations were valid Aesthetic design registrations.  Grandmark claimed that the designs were invalid because they were functional in nature. Grandmark demanded that the registrations be cancelled, alternatively that the matter be referred to the Competition Tribunal.  Their argument was that to register designs, which are functional in nature, as Aesthetic designs (possibly to circumvent the spare parts exclusion) is an abuse.

The court looked at the major design law cases (there have been very few) to determine just what an Aesthetic design is.  In the South African case of Homecraft Steel Industries v SM Hare the court referred to the seminal British case of Amp v Utilux, where the court said this: “The phrases ‘appeal to’ and ‘judged solely by the eye’ denote features which will influence choice or selection… the feature must have some individual characteristic… it must be calculated to attract the attention of the beholder… there must be in some way a special, peculiar, distinctive or striking appearance – something which catches the eye and in this sense appeals to the eye.”  On the issue of whose eye is to be considered, the court in a later South African case of Swisstool Manufacturing Co v Omega Africa Plastics said that “While the eye is to be the eye of the court, the court should view the design through the spectacles of the customer”.  

This led the court in the BMW case to conclude as follows:  “What emerges from the analysis is, essentially, that aesthetic designs are those that invite customer selection – and customer discrimination between articles – solely by their visual appeal.”

The court was prepared to accept that BMW spends much time, money and expertise on designing the appearance of its vehicles. But it did not accept the argument that simply because a vehicle qualifies for registration as an Aesthetic design, so does its component parts.  The court said that the design of a component must be judged on its own qualities, independently of the design of the entire vehicle.  Vehicle components, said the court, “are not selected by customers for their appeal to the eye”. Rather, they are “selected for the function they perform – which is to replace a component so as to restore the vehicle to its original form.”  The court summarised it as follows: “The eye through which the design must be judged is that of the likely customer, who will choose it so as to maintain the form of the vehicle. Indeed it can be accepted from their nature that most customers will not even see the component before it is fitted to the vehicle, not make any selection at all, other than giving instructions for the restoration of the vehicle.”

So BMW’s AESTHETIC design registrations were invalid.

The implications of this judgement are that vehicle manufacturers can certainly not rely on FUNCTIONAL design registrations to stop the sale of replacement parts, because of the specific exclusion in the Designs Act. And they will now also find it very difficult to use AESTHETIC design registrations.  Some manufacturers may draw comfort from the fact that the court did make a point of saying that there are certain components (e.g. wing mirrors, wheels, seats and steering wheels) which are intended to be interchangeable between vehicles, and that some of these might be registrable as AETHETIC Designs. 

National Policy on Intellectual Property

One of the forms of IP which the National Policy on Intellectual Property ("the Policy") aims to address is PATENTS, and in particular with regard to technoloy transfer, patents relating to public health and the substantive search and examination of new patent applications.

1. Technology

The Policy identifies an outcry by users of the patent system for South Africa to have strong patents that can survive the test of competitiveness throughout the world.  This can be achieved if South Africa impliments a substantive search and examination system.  Licensing approval for technology-transfer contracts are subjected to rules that are not so strong, even if some are heavily regulated technologies.  Certain technologies may be subject to export controls and a maximum cap for precentages (e.g. not more than 5%).  The Policy recommends standardising technology transfer contracts to regulate restricted technologies subjected to export controls and maximum precentages.

2. Patents and Access to Public Health

A patent is an important, economical tool to protect medicines where huge costs are often incurred in respect of research, development and clinical trials.  But patents for medicines need to be valid.  It is contended that if "weak" patents are granted for medicines, even if there is no real innovation over the original patent, it stifles the public's access to proper and affordable health care.  This is one of the problems of South Africa's current depository system for patents, where the possibility exits that inherently weak patents are nevertheless granted.  The Policy recommends amending the South African Patents Act to provide for both pre- and post-grant opposition to effectively foster a spirit of granting stronger patents.  Obviously, implementing a substantive search and examination system in South Africa will result in a significant increase in costs for filing and prosecuting patent applications to grant. The Policy recommends that a cost and benefit analysis should be conducted through the Regulatory Impact Assessment (RIA) process and benchmarks should be based on similar economies, such as India, Brazil and Egypt.  Benefits should, however, not only be calibrated in monetary terms, as access to public health does not necessarily translate into monetary value.

3. Patent Extensions

There is no harmonised approach, internationally, in relation to the registration or approval of medicines.  However, from the users' point of view, registration of a patented medicine may take a long period of time.  For this reason, owners of patented medicines often argue in favour of providing for an opportunity to extend the duration of a pharmaceutical patent beyond its normal 20-year lifespan, in order to compensate for time lost resulting from regulatory delays at the MCC.  (Both innovators and generics aver that there are regulatory delays.)  However, the extension of patents by its nature is not good as it extends the lifespan of a patent and delays market entry for generics.  The Policy recommends that the MCC should encourage transparency in its registration system as allegations of regulatory failures are putting strenous pressure on the DTI to amend the Patents Act to accommodate patent extensions, which in turn may prejudice access to public health.

4. Generic Medicines

In patent law, there exists what is called the "Bolar provision".  In terms of the Bolar provision, despite the existence of valid patent rights, performing research and tests for preparing regulatory approval (e.g. MCC or FDA in the USA), does not constitute infringement for a limited term before the end of the patent term.  Generic medicines are manufactured based on patents that are no longer in force.  Due to a public policy option that is available to the state, the state may allow the working of a patent before its expiry for the purposes of allowing the development of generic medicines.  (Generic medicines should not be confused with counterfeit medicines, which are unlawful.)  The Policy encourages generic companies to optimally utilise the Bolar provision without resorting to stockpiling or commercialisation before expiry of the patent term.  


Police Intellectual Property

The Police Intellectual Property Crime Unit (PIPCU) has been launched in the United Kingdom.  The Police Intellectual Property Crime Unit has been set up to protect UK industries that produce legitimate, high quality, physical goods and online and digital content.  The unit is initially being funded by the Intellectual Property Office (IPO), which is part of the Department for Business Innovation Skills.  The Police Intellectual Property Crime Unit has received an initial funding of £2.56 million for a period of two years.  An operationally independent 19-strong team is based at the City of London Police Economic Crime Directorate. 

The unit will focus particularly on online offences. City of London police said that around seven million people a month visit sites that offer illegal content in the UK, and globally it is estimated that illegally downloaded music, films and software cost the industry around £51bn. That figure is expected to triple by 2015.

Since the launch of the Police Intellectual Property Crime Unit two Birmingham individuals accused of selling counterfeit DVDs have been arrested.  The two men (aged 28 and 29) are said to have imported thousands of counterfeit DVDs worth about £40,000.  They attempted to sell pirated copies of titles such as CSI, Vampire Diaries and Game of Thrones as legitimate products.

City of London police commissioner Adrian Leppard said: "Intellectual property crime is already costing our economy hundreds of millions of pounds a year and placing thousands of jobs under threat, and left unchecked and free to feed on new technology could destroy some of our most creative and productive industries.  Launching PIPCU we are making a statement of intent and sending out a clear warning to organized crime that the UK has just become a more hostile place for those who seek to make criminal capital on the back of others' honest endeavours."


National Policy on Intellectual Property

A draft National Policy on Intellectual Property, 2013, was published in the Government Gazette on 4 September 2013 for public comment. The draft National Policy on Intellectual Property has, inter alia, the following broader objectives:

1. To develop a legal framework on IP that should empower all strata of the citizens of South Africa.

2. To improve and strengthen an enforcement mechanism on IP that will suit all sectors of the IP community.

3. To improve access to IP-based essential goods and services, particularly education, health and food.

4. To increase access to foreign and local technology by local firms and research institutions.

5. To promote research, development and innovation throughout South Africa.

6. To improve the effective protection of IP from South African origin in South Africa and its trading partners through reciprocal arrangements.

7. Introduce a public health perspective into national IP laws and adopt a common and united stand among different government agencies on improving access to medicines.

8. Engender confidence and attract investment.

Comments to the draft National Policy on Intellectual Property, 2013, must be submitted to the Director-General, Department of Trade and Industry, before 4 October 2013.

We will keep you updated on other aspects of the National Policy on IP.  Please feel free to contact us for further information.

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