Innovations & Inventions
Description
Intellectual Property (IP) is a term that describes the application of the mind to develop something new or original. There are various types of IP available and they can exist in various forms; a new invention, brand, design or artistic creation.
Some IP rights require a formal process of application, examination and registration. Companies and Intellectual Property Commission (CIPC) administer the following IP domains in South Africa: trademarks, patents, designs and copyright (films only).
Differentiating attributes
Main types of IP protection in South Africa:
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Trademark
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Patent
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Aesthetic designs & functional designs
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Copyright.
Protecting and managing your IP is important when establishing your product or service in the market and is often the difference between success or failure. The existence of IP rights restricts competitive market forces for a set period.
IP rights include:
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encourage owners to engage in innovative activities that benefit society
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reward the innovator's effort and skills
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promote wider access to innovations and advance further research and development by others
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provide a set period of protection
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provide competitive advantage
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provide a number of competitive advantages for their owners. For example: give the owner the right to determine who can use the IP and how it can be used.
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can provide an extremely valuable bargaining tool and in most cases can be sold for financial gain.
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may help their owner compete on the basis of the reputation associated with a product rather than on price alone.
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provide the owners with a number of options in the event that the owner cannot afford to manufacture the IP, or position themselves competitively in all potential markets. The most common way of commercialising IP is through licences.
The fact that IP rights are not physical means that they can be used many times without being diminished. That means, for example, that the same IP can be licensed to a number of different licensees.
IP reduces the chances of your products and/or services being replicated and passed off as those of a rival trader, and can open up new opportunities. The key attributes of IP rights are that they may be restricted and are exclusive. IP rights also entail the qualities of ownership, transferability, territoriality and volatility.
Exclusive rights
Registered IP rights provide you with exclusive rights. However, they are restricted in both their duration and scope.
Each IP right has its own restriction in terms of duration. For instance, patents last for 20 years, designs for 10/15 years subject to payment of renewal fees, and copyright for 50 years after the death of the 'author' (no renewal fees).
Note: annual renewal fees must be paid to ensure patents and designs remain in place for these periods. Trademarks can remain in force indefinitely, provided the renewal fees are paid every 10 years.
IP laws protect the innovator while still allowing newcomers to enter and compete in a mature market. For example, patents protect only a specific invention, designs protect only the particular visual appearance of a product, copyright protects only the form of an idea's expression (not the idea itself), and know-how is protected only when it can be shown that there is an obligation of secrecy between relevant parties.
Different Countries
Most IP rights are territorial, meaning they have to be dealt with in each new territory where you intend to trade. For example, a patent, trademark or design granted in South Africa is only valid in South Africa.
Copyright is the only IP right that is automatically recognised in the global market. All other forms of IP need to be specifically assessed and approved in each country or region in which you intend to do business.
Ownership
Ownership is based on being able to show that you are the 'inventor', 'author' or 'creator' of the IP. You may also become the owner by having the IP rights assigned to you.
An IP ownership does not have the same 'indefensibility' quality as does the title to land or other assets. IP is always open to a challenge in court from another person who believes that they can show that certain criteria were not met in the original application process. The best defence against this is proper planning and management.
Transferability
Like any other business asset, IP rights are negotiable and can be used for commercial advantage. As a business tool, IP can be closely linked to market position and this provides the capacity to negotiate the advantage to your benefit.
IP rights can generally be bought, sold, licensed, given away or made freely and widely accessible. How you sell or license your IP is limited only by your business and negotiation skills. Beware however, that there may be tax implications such as stamp duty, capital gains tax and GST.
Table 2: IP statutes to be consulted to determine the IP creator of a specific statutory protectable IP
IP creator example(s) IP right statute (where applicable)
Inventor
Invention (including genetically modified plant varieties)
Patent
Patents Act No. 57 of 1978 (as amended)
Author/ Proprietor
Functional or aesthetic design
Design
Designs Act No. 195 of 1993 (as amended)
Breeder
Plant variety
Plant Breeders’ Right
Plant Breeders’ Rights Act No. 15 of 1976
Proprietor
Mark
Trade mark
Trade Marks Act No. 194 of 1993
Author
Literary/Musical/Artistic works Cinematograph films; Sound recordings; Broadcasts; Programme- carrying signals; Published editions; Computer programmes
Copyright
Copyright Act No. 98 of 1978 (as amended); Registration of Copyright in Cinematograph Films Act, No. 67 of 1977
Useful resources
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SMME Toolkit: Intellectual Property.
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An IP Primer for Start-Ups in South Africa.
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IP Protection Checklist for Tech Start-ups.
Requirements for setting up: Achieving Freedom to Operate
For a business to be able to practice its intellectual property rights, it will be necessary to secure freedom to operate (FTO). FTO is the ability of a business to develop, make, and market products without legal liability or risk concerning the infringement of third party’s intellectual property rights.
Related topics
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