Pharmaceutical IP and competition law in South Africa: overview

A Q&A guide to pharmaceutical IP and competition law in South Africa.

The Q&A gives a high level overview of key issues including patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in South Africa: overview.

The Q&A is part of the global guide to life sciences law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-guide.

Contents

Patents

1. What are the legal conditions to obtain a patent and which legislation applies? Which products, substances and processes can be protected by patents and what types cannot be patent protected?

Conditions and legislation

Patent protection is governed by the Patents Act No. 57 of 1978, as amended (Patents Act) and regulations created under it.

The Patents Act provides that a patent can be granted for any invention which is:

  • New.

  • Involves an inventive step.

  • Is capable of being used in trade, industry or agriculture.

The concept of invention is not strictly defined intrinsically, but the legislation lists a number of exclusions. Medicines and related substances (such as active pharmaceutical agents) are not listed as an excluded category. Medicines and related substances, and the processes by which they are obtained, are therefore patentable under the Patents Act.

The Patents Act provides that an invention consisting of a substance or composition "for use in a method of treatment" of the human or animal body can be patented, even though the substance (or substances) in the composition is previously known. The first medical use of a known substance is patentable: the substance itself cannot be protected a second time.

Scope of protection

Protection granted through patent registration extends to the invention as it is claimed in the patent specification. It is possible to patent a pharmaceutical active agent, a pharmaceutical product containing the active agent, and/or a process for manufacturing the product or agent, provided that these comply with the patentability requirements (see above, Conditions and legislation). Under the Patents Act, any claim directed to a process (or apparatus) for producing a product extends to that product when produced by the process (or apparatus) claimed. Second and subsequent medical uses can be claimed in Swiss form in South Africa.

 
2. How is a patent obtained?

Application and guidance

Application is made to the Companies and Intellectual Property Commission (CIPC). The application fee (excluding professional fees raised by a local agent for attending to the application) is about ZAR590. Guidance on the application procedure is available on its website (www.cipc.co.za/Patents.aspx).

Process and timing

The Patent Office takes about six to eight months to examine an application and accept or reject the specification. No substantive examination occurs. Once the formal requirements have been met, the specification is accepted and notification of the patent is published in the Patent Journal. This publication constitutes the grant of the patent. There is no provision to oppose pending or granted patent applications. However, at any stage after the grant of a patent, any person can apply to the Registrar of Patents to revoke the patent on one or more of a number of statutory grounds for invalidity. If the revocation proceeds, it will be determined before the Court of the Commissioner of Patents, a special court in the High Court that has national jurisdiction at first instance in all litigious patent matters.

The application process can be expedited on the payment of a fee. Acceptance of the specification can be delayed as of right for up to 15 months: further extensions are at the discretion of the Registrar of Patents (who can grant a request for delay indefinitely).

Deposit system

The Patent Office operates on a deposit system and applications are subject to only formal scrutiny. No substantive examination takes place.

 
3. How long does patent protection typically last? Can monopoly rights be extended by other means?

Duration and renewal

A patent is valid for a period of 20 years from its effective filing date (the filing date differs depending on whether the application is made under the WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) or the Patent Cooperation Treaty 1970). Renewal fees are paid annually, and the patent cannot be extended once it has expired. There is no provision to extend the term of a patent, or extend the monopoly rights that it confers.

Extending protection

South Africa does not provide for any form of patent term extension (for example, supplementary protection certificates). There are no statutory provisions in either South African patent law or in the medical regulatory laws which specifically deal with the issue of data package exclusivity. There are, however, provisions relating to the protection of confidential information in general which may be used in this respect.

 
4. How can a patent be revoked?

An application to the Commissioner of Patents can be made to revoke a patent. The Patents Act explicitly provides nine grounds on which a patent can be revoked, including (among other things):

  • The invention to which the patent relates is not capable of being patented because it cannot be used or applied in trade, industry or agriculture.

  • Lack of novelty or inventiveness.

  • Insufficient disclosure.

  • The invention as disclosed cannot be performed or does not lead to the results and advantages set out in the specification.

  • Fraud.

  • Lack of clarity or fair basis of the claims.

  • The invention is contrary to public morals or well established natural laws.

  • The patentee was not entitled to apply for the patent in that it is not the inventor, or did not obtain the right to apply from the inventor.

  • The patentee made a false declaration or representation during the application process which is material and which the patentee knew or ought reasonably to have known to be false when it was made.

There are a number of additional grounds relating to non-compliance with certain requirements.

 
5. How is a patent infringed? How is a claim for patent infringement made and what remedies are available?

Conditions for infringement

A patent is infringed when any person, without the consent of the patent owner, carries out acts in the Republic of South Africa which are exclusively reserved, under the Patents Act, for the patent owner. This includes:

  • Making the invention.

  • Using the invention.

  • Exercising (in the sense of "carrying out", which indicates that this has a particular bearing on methods or processes) the invention.

  • Disposing, or offering to dispose of, the invention.

  • Importing the invention.

Claim and remedies

An action for infringement can be brought in the Court of the Commissioner of Patents. An application for a preliminary injunction to cease the infringement can also be made.

The claimant is entitled, if successful, to:

  • Relief by way of an injunction.

  • Delivery up of any infringing product or article, or any product or article of which the infringing product forms an inseparable part.

  • Damages.

Instead of damages, a claimant can elect to take a reasonable royalty, which would have been payable had the patent been licensed rather than used without consent.

 
6. Are there non-patent barriers to competition to protect medicinal products?

There are no non-patent barriers to competition to protect medicinal products. There are no provisions in South African patent law or in the medical regulatory laws which specifically deal with the issue of data package exclusivity. There are provisions relating to the protection of confidential information in general which may be used in this respect.

 

Trade marks

7. What are the legal conditions to obtain a trade mark and which legislation applies? What cannot be registered as a trade mark and can a medicinal brand be registered as a trade mark?

Conditions and legislation

A medicinal product brand complying with the following requirements can be registered as a trade mark.

Trade mark protection is governed by the Trade Marks Act No. 194 of 1993, as amended (Trade Marks Act), and the regulations created under that Act. A trade mark is defined as any sign capable of being represented graphically, and includes, among other things, a:

  • Name.

  • Signature.

  • Word.

  • Numeral.

To be capable of registration under the Trade Marks Act, a trade mark must distinguish the goods or services for which it is registered (or proposed to be registered) from the goods or services of another person.

A trade mark is capable of distinguishing the goods or services if it is either (at the date of application for registration):

  • Inherently distinctive.

  • Capable of distinguishing by reason of prior use.

A trade mark is inherently distinctive if it does not describe the goods or services, or any qualities of the goods or services, in any way. This category of trade mark includes invented words (for example, NOKIA and KODAK) and also ordinary words with an accepted meaning but which are not descriptive of the goods or services in question (for example, APPLE for computers). In contrast, certain marks that do not possess this inherent capacity to distinguish (because they are descriptive of the goods or services in question), have still acquired distinctiveness through use. Consumers have come to associate the particular mark with one enterprise and no other.

Scope of protection

A trade mark registration entitles the proprietor of that trade mark to prevent the unauthorised use, in the course of trade, of a mark that is identical or similar to a prior registered trade mark in relation to the same or similar goods to which the registered trade mark extends, to the extent that confusion or deception is likely

 
8. How is a trade mark registered?

Application and guidance

Applications are made to CIPC, to the Registrar of Trademarks. The application fee is ZAR590. This fee does not include any professional charges which can be raised by a professional firm engaged to attend to the matter. Guidance on the application procedure is available on its website (www.cipc.co.za/TradeMarks.aspx)

Process and timing

Once filed, the application is examined to determine both whether it both:

  • Is inherently registrable.

  • Conflicts with prior registrations or applications.

It takes about 12 months for the Registrar of Trade Marks to examine the trade mark application and to issue a report on the examination. The Registrar will either accept, reject or provisionally refuse the application. A preliminary refusal will indicate any conditions subject to which the application can be accepted. The applicant then has an opportunity to make representations to address, and overcome, the concerns expressed by the Registrar.

Once a trade mark application is accepted, it is advertised for opposition purposes in the Patent Journal. If no objections are raised by third parties within the three-month period from the date it is advertised, the trade mark is granted and a certificate of registration is issued within about 18 months.

 
9. How long does trade mark protection typically last?

A trade mark registration is valid for ten years and can be renewed for the same period of time, in perpetuity.

A trade mark registration is renewed by making the necessary application to the Registrar of Trade Marks and paying the applicable fee. The application must be filed within the six-month period before the expiry of the registration but can also, subject to the payment of additional fees, be filed within six months following the expiry date.

 
10. How can a trade mark be revoked?

A trade mark can be removed from the Register on application by an interested person, on any of the following grounds:

  • The trade mark is used in a manner which does not comply with any condition entered in the register concerning its registration.

  • The trade mark was registered without any genuine intention to use the trade mark in relation to the goods or services for which it has been registered, and there has been no actual use of the trade mark in relation to those goods or services from three months before the date of the application for removal up to the present time.

  • From three months before the date of the application, a continuous period of five years (or longer) has lapsed from the date of issue of the certificate of registration during which there was no bona fide use of the trade mark in relation to the goods or services for which it is registered.

  • In the case of a trade mark registered in the name of a body corporate, or in a name of a natural person, the body corporate was dissolved or the natural person died no less than two years before the date of the application for the removal of the trade mark, and no application for the registration of an assignment of the trade mark has been made.

  • The trade mark was wrongly entered on the register, or wrongly remains on the register. This will be the case where a mark is inherently unregistrable (for example, because it is offensive or not distinctive) or contrary to the prior rights of a third party.

 
11. How is a trade mark infringed? How is a claim for trade mark infringement made and what remedies are available?

Conditions

A registered trade mark is infringed by any of the following:

  • The unauthorised use, in the course of trade, and in relation to the goods or services in respect of which the trade mark is registered, of an identical mark or a mark so nearly resembling it as to be likely to deceive or cause confusion.

  • The unauthorised use, in the course of trade, of a mark that is identical or similar to a registered trade mark, in relation to goods or services that are so similar to the goods or services in respect of which the trade mark is registered, that such use is likely to cause deception or confusion.

  • The unauthorised use, in the course of trade, of an identical or similar mark to the trade mark registered, where that trade mark is well-known in South Africa and the unauthorised use is likely to take unfair advantage of, or be detrimental to, the distinctive character or repute of the registered trade mark (irrespective of the absence of deception or confusion).

Claim and remedies

A claim for trade mark infringement is made to the High Court. Proceedings can be brought by way of either:

  • Application, on notice of motion, when there is no dispute of fact.

  • An action, with the issuing of a summons, when there is an anticipated dispute of fact.

The available remedies are:

  • An injunction ordering the defendant to refrain from further infringement.

  • An order for the removal of the infringing trade mark from all material and, where the infringing mark is inseparable or incapable of being removed from the material, an order that all such material be delivered up to the trade mark owner.

  • Damages (which can only be claimed in proceedings brought by way of action).

  • Instead of damages, a reasonable royalty (which can only be claimed in proceedings brought by way of action).

  • Legal costs.

 
12. Outline the regulatory powers and enforcement action against counterfeiting in the pharmaceutical sector.

Yes. In terms of the Medicines Act and its Regulations, a medicine can be seized by an inspector that is appointed by the Council, if the medicine is suspected to be counterfeit. In practice, the inspector will have the authority to enter any premises, without the need to obtain a search and seizure warrant, before entering those premises. 

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in South Africa: overview ( www.practicallaw.com/2-504-6252) .

 

IP and competition law issues

13. Briefly outline the competition law framework in your jurisdiction and how it impacts on the pharmaceutical sector. In particular, the competition authorities and their regulatory powers, key legislation, whether pharmaceutical investigations are common, key recent activity and case law.

The main statute in South Africa with respect to competition law is the South African Competition Act 89 of 1998 (Competition Act). The Competition Act applies to all economic activity within or having an effect within the Republic of South Africa and this includes the exercise of intellectual property rights and conduct in the pharmaceutical sector.

The Competition Act sets up various mechanisms for the enforcement of competition law in South Africa. The Competition Act provides for an investigatory body in the form of the Competition Commission to which members of the public can submit complaints to the Competition Commission, who will then take on an inquisitorial role and ultimately decide whether the complaint should be referred to the Competition Tribunal. The Competition Commission can also initiate a complaint on its own. Insofar as the court structure is concerned, the Competition Act provides for the Competition Tribunal which is the court of first instance for competition law matters and its decisions may be taken on appeal to the Competition Appeal Court. Leave to appeal to the Supreme Court of Appeal, the highest court of appeal in South Africa, apart from constitutional law matters, is also possible.

Of importance are the powers of the Competition Commission to conduct market enquiries. It has recently launched an enquiry into the healthcare sector as the Commission believes there are aspects of the sector that distort competition. For further information, see www.compcom.co.za/healthcare-enquiry.

 
14. Briefly outline the competition issues that can arise on the licensing of technology and patents in a pharmaceutical context

The Competition Act applies to all agreements concluded or having an effect in South Africa, irrespective of sector. In so far as licensing and technology transfer is concerned notice must also be taken of the provisions in the South African Patents Act 57 of 1978 (Patents Act) which includes provisions aimed at preventing an unfair distortion of competition through the exercise of a patent.

Sector specific competition law issues include:

  • The nature of patent settlement agreements.

  • Delayed entry agreements.

  • No challenge clauses.

  • Market division and allocation.

  • Tying, rebates and discounts.

  • Exclusive versus non-exclusive licensing.

  • Refusals to license or supply.

  • Price fixing.

  • Information sharing.

  • Standard setting.

  • The question of essential facilities in the context of dominance.

 
15. Are there competition issues associated with the generic entry of pharmaceuticals in your jurisdiction?

The Patents Act provides for a Bolar provision, section 69A, which allows a generic manufacturer to use a patented product to conduct trials reasonably required for the purposes of obtaining regulatory approval. Such conduct will not be considered to result in patent infringement.

From a competition law point of view, patent settlement agreements which include pay for delay or similar such clauses are likely to be considered anti-competitive. Agreements are also likely to be anti-competitive where they result in market allocation, market division or the fixing of a trading condition.

Insfoar as authorised generics are concerned, and their introduction during the pendency of a patent, the application of competition law will only be triggered in the case of dominance. Where dominance can be established, it will be necessary to consider whether the introduction of an authorised generic results in an exclusionary act. Such a finding would be difficult given the Supreme Court of Appeal's apparent approval thereof in Cipla Medpro (Pty) Ltd v Aventis Pharma SA, Aventis Pharma SA and Others v Cipla Life Sciences (Pty) Ltd and Others (139/2012, 138/2012) [2012] ZASCA 108; 2013 (4) SA 579 (SCA) (26 July 2012). The court stated that "Bearing in mind the commercial advantage of first-entry to the generics market, it is common for a patentee of a pharmaceutical product to enter the market shortly before its patent expires with an alternative product that will compete with anticipated generics".

 
16. Have abuse of dominance issues arisen in the pharmaceutical sector in your jurisdiction?

Refusals to license and the question of compulsory licensing of a patent, in the context of an essential facility and dominance, have arisen but have not progressed to the Competition Tribunal. There is therefore no case law on this point. Other abuses of dominance, specifically in the pharmaceutical sector, have not arisen yet.

 
17. Have parallel imports of pharmaceuticals raised IP and competition law issues in your jurisdiction?

Parallel imports have not raised competition law issues so far. Parallel imports are allowed subject to conditions and authorisation.

 
18. Does a patent or trade mark licence and payment of royalties under it to a foreign licensor have to be approved or accepted by a government or regulatory body? How is such a licence made enforceable?

Licence agreements that contain royalty payments which are paid to a foreign entity must be approved by the Department of Trade and Industry.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, see Medicinal product regulation and product liability in South Africa: overview ( www.practicallaw.com/2-504-6252) .

 

Contributor profiles

Danie Dohmen, Partner

Adams & Adams

T +27 12 432 6201
F +27 12 432 6582
E danie.dohmen@adamsadams.com
W www.adamsadams.com

Professional qualifications. South African Attorney, 1998; South African Patent Attorney, 2002; Notary Public, 2004

Areas of practice. Patent litigation; design litigation; commercialisation and opinion work

Non-professional qualifications. BSc (physics and chemistry), 1993, Randse Afrikaanse University; LLB, 1996, Randse Afrikaanse University

Recent transactions.

  • Representing multinational and national clients in the pharmaceutical and other fields, including agriculture, agro chemical, mining, manufacturing, transport, security and safety.
  • Acting in multi-jurisdictional patent and design litigation in several African countries.
  • Represented successful parties in the South African Court of Appeal and before the Constitutional Court, in cases setting the current law on inventiveness, clarity, interim injunctions in patent infringements, contributory patent infringement, public interest in interim injunctions on patents for life saving drugs, evidentiary requirements to prove patent infringement, and requirements for divisional patent applications.
  • IP policy issues on a national and international level, and has represented national and foreign manufacturing groups in both national and international meetings, workshops and seminars on IP policy.

Professional associations/memberships

  • Licensing Executives Society.
  • American Intellectual Property Law Association.
  • South African Institute of Intellectual Property Law, chairperson of the Patent and Design Law Committee.
  • Lecturer and examiner for the Patent Examination Board of South Africa.

Jenny Pienaar, Partner

Adams & Adams

T +27 12 432 6396
F +27 12 432 6556
E jenny.pienaar@adamsadams.com
W www.adamsadams.com

Professional qualifications. South African Attorney, 1994; Trade Mark Fellow of the South African Institute of Intellectual Property Law, 2004

Areas of practice. General commercial litigation; trade mark litigation; domain name registration; litigation relating to copyright, passing-off, unlawful competition, close corporation and company name objections; advertising law and regulatory compliance issues.

Non-professional qualifications. Bachelor of Arts (BA), 1988, University of Stellenbosch; Bachelor of Laws (LLB), 1991, University of Cape Town

Professional associations/memberships

  • South African Institute of Intellectual Property Law (SAIIPL).
  • Business Women's Association (BWA).
  • Licensing Executives Society.
  • Law Society of the Northern Provinces.
  • French/South African Chamber of Commerce and Industry.
  • Chairperson of the Marketing Committee of Global Advertising Lawyer's Alliance (GALA).
  • International Trade Mark Association (INTA).

Alexis Apostolidis, Partner, Head of Competition Law

Adams & Adams

T +27 12 432 6202
F +27 12 432 6582
E alexis.apostolidis@adamsadams.com
W www.adamsadams.com

Professional qualifications. South African Attorney, 2002; South African Patent Attorney, 2004

Areas of practice. Patent litigation; competition law; opinion work and patent litigation in the life sciences, agrochemical, petrochemical, IT and consumer goods sectors.

Non-professional qualifications.

  • Bachelor of Science (Chemistry and Law), University of the Witwatersrand, 1999.

  • Bachelor of Laws (Cum Laude), University of the Witwatersrand, 2002.

  • Postgraduate Degree in European Competition Law (With Merit), King's College, University of London, 2012.

Recent transactions.

  • Litigating on behalf of originator pharmaceutical companies, OEM German car manufacturers, banks and television content providers.
  • Litigation concerning design registrations, the licensing of IP and regulatory matters in the life sciences sector.
  • Litigating competition law aspects of the enforceability of IP rights to the Supreme Court of Appeals in South Africa.
  • Representing clients before the South African Competition Commission and the Competition Tribunal.
  • Advises and represents clients in litigious work in a number of African countries.

Professional associations/memberships

  • Law Society of the Northern Provinces – competition law committee.
  • South African Institute of Intellectual Property Law and convenor of competition law committee.
  • International Bar Association – member and rapporteur for competition law developments in South Africa.

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