RESTRICTEDWORLD TRADE
ORGANIZATIONIP/Q3/ZAF/1
2 October 1998
(98-3818)
Council for Trade-Related Aspects of
Intellectual Property RightsOriginal:  English
REVIEW OF LEGISLATION IN THE FIELDS OF PATENTS, LAYOUT-DESIGNS
(TOPOGRAPHIES) OF INTEGRATED CIRCUITS, PROTECTION OF
UNDISCLOSED INFORMATION AND CONTROL OF
ANTI-COMPETITIVE PRACTICES IN
CONTRACTUAL LICENCES
SOUTH AFRICA1
The present document reproduces the introductory statement made by the delegation of
South Africa, the questions put to it and the respons es given in the review of legislation on patents,
layout-designs (topographies) of integrated circuits, protection of undisclosed information and controlof anti-competitiv e practices in contractual licences at  the Council's meeting of 26-30 May 1997.
2
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I. INTRODUCTORY STATEMENT
Patents
The law of patents in South Africa is governed by the Patents Act No. 57 of 1978 ("the
Patents Act") which came into force on 1 January 1979.
Broadly speaking, the Patents Act was based on the previous Patents Act No. 37 of 1952,
which in turn was mode lled largely on the British Patents Act of 1949.  Hi storically, South African
patent legislation has generally followed British law, and the Sout h African Patents Act of 1978 has
many provisions which are similar to the corres ponding provisions of the British Patents Act of 1977.
However, other provisions again deviate from the position in Britain, and reflect the South Africanposition which developed from previous South African legislation and case law.
There is at present amending legislation pending before Parliament, namely the Intellectual
Property Laws Amendment Bill, No. B1/97.  The Bill is in the process of being debated byParliament, and is expected to co me into force in the course of 1997.  The B ill contains extensive
amendments to the Patents Act, to bring it in line with the provisions of the TRIPS Agreementpertaining to Pate nts.  The Amendment Bill al so contains provisi ons to enable South Africa to accede
                                                     
     1As regards laws and regulations relevant to the areas under review and notified by South Africa under
Article 63.2 of the Agreement, reference is made to do cuments IP/N/1/ZAF/1, IP/N/1/ZAF/P/1-2, IP/N/1/ZAF/D/1-2,
IP/N/1/ZAF/O/1.
     2The minutes of the meeting have been circulated in document IP/C/M/13.IP/Q3/ZAF/1
Page 2
to and implement the Patent Cooperation Treaty, and initially contained provisions to enable South
Africa to accede to the ARIPO Treaty.  The enabling provisions in regard to ARIPO were, however,removed from the Bill, inter alia  as a result of representations made to Parliament by the intellectual
property practitioners of South Africa.
South Africa acceded to the Paris Convention on 1 December 1947, and ratified the
Stockholm revision.  The South African Patents Act is  generally in line with the substantive provisions
of the Paris Convention, but the Amendment Bill is aimed at addressing any shortfalls in this regard.
Layout-designs (topographies) of integrated circuits
The law of industrial designs in South Africa is governed by the Designs Act No. 195 of 1993
("the Designs Act") which came into force on 1 May 1995, and by the Design Regulations of 1995.
Historically, South African design legislation has had a close relationship with British design
law.  The Designs Act No. 57 of 1967 was broadl y based on the Br itish Registered Designs Act of
1949.  South African design law has now to some extent set its own course with the current DesignsAct No. 195 of 1993.
The Designs Act 1993 repealed the previous Designs Act No. 57 of 1967.  In drafting the
Designs Act 1993, cognisance was taken of international developments in regard to the protection ofindustrial designs, in particular the design provisi ons as contained in th e British Copyright, Designs
and Patents Act 1988.  Certain aspects of the South African legislation, namely to provide forprotection of functional designs, were prompted by recent developments in South Africa itself, where
the effect of a legislative amendment of the Copyright Act was that copyright could no longer berelied upon to prevent the reproduction of three-dimensional articles of a utilitarian natu re.  Unlike the
position in the UK, however, the Designs Act 1993 provides for registration rights in respect offunctional designs.  In drafting the Designs Act 1993, an attempt was also made to comply with the
provisions of the draft TRIPS Agreement as it existed at that time.  However, as a matter of policy,where provisions of the 1967 Act were not in conflict with the TRIPS Agreement, such provisionswere retained in the Designs Act of 1993.
There is at present amending legislation pending before Parliament, namely the Intellectual
Property Laws Amendment Bill 1997 ( No. B1/97).  The Bill ha s already been approved by the
portfolio committee of Trade and Industry, the par liamentary committee charge d with considering new
legislation within its field.  The Amendment Act is expect to come into force before the end of 1997and is intended to amend inter alia  the Designs Act 1993 to bring it in line with the relevant
provisions of the TRIPS Agreement.
South Africa acceded to the Paris Convention on 1 December 1947.  The Designs Act 1993 is
generally in line with the substantive provisions of the Paris Convention insofar as designs areconcerned.
II. REPLY TO THE GENERAL QUESTION ON PRIORITY RIGHTS
3
Does your country recognize a right of priority on the basis of an earlier patent
application filed in any other WTO Member by a national of a WTO Member?
                                                     
     3At the meeting of the TRIPS Council of 27 February 1997, Members agreed to respond to this question in the
context of the present review (document IP/C/M/12, paragraph 18).IP/Q3/ZAF/1
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The current position is that South Africa recognizes in Section 31 of the South African Patents
Act a right  of priority based on an earlier patent application filed in "a convention country".  In termsof Section 2(vi) of the Patents Act "a convention country" is defined as a country which the President,with a view to the fulfilment of any treaty or convention, has by proclamation declared to be aconvention country.
At present, the countries so declared to be convention countries are all member countries of
the Paris Convention.  South Africa is in the process of preparing an amplified list of countries,including all WTO Member countries, to form part of an appropriate proclamation.
III. REPLIES TO QUESTIONS POSED BY THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES
1. Is "offering for sale" of a patented article (either accompanied or not accompanied by
possession of the article) an act of infringeme nt of the patent (Article 28 of the TRIPS
Agreement)?
Is "importing" (for the purposes of making, using, offering for sale or selling) a patented
article, an act of infringement of the patent (Article 28 of the TRIPS Agreement)?
4
Section 45(1) of the Patents Act at present provides as follows:
"The effect of a patent shall be to grant to the patentee in the Republic, subject to the
provisions of this Act, for the duration of the patent, the right to exclude other persons frommaking, using, exercising or disposing of the invention, so that he shall have and enjoy thewhole profit and advantage accruing by reason of the invention."
Although the South African Courts have not yet had the opportunity of interpreting the term
"dispose of" in the context of section 45(1), it is expected that the ordinary grammatical meaning willbe attached to the term, so that it will be interpreted to be wider in scope than "selling" and wouldprobably include letting, distribu ting, donating, selling, and offeri ng for sale.  Accordingly, it is
expected that the "offering for sale" of a patented article would be actionable in South African law asit presently stands.
At present, the importation of a patented article is not clearly covered by the provisions of
section 45(1).  However, the term "exercising" has a wide scope, and the phrase "so that he shall haveand enjoy the whole profit and advantage accruing by reason of the invention" is regarded asindicative of the intention of the legislature that only the patentee should stand to benefit under thepatent.
To remove any uncertainty, the Intellectual Property Laws Amendment Bill currently before
Parliament, includes in clause 40 an amendment of section 45(1) of the Patents Act, to expresslymention the acts of "offering to dispose of" and "importing" the invention as acts of infringement.Once this Bill is approved by Parliament, section 45(1) will be fully compatible with Article 28 of theTRIPS Agreement.
                                                     
     4The delegation of South Africa has indicated that the following reply also applies to question No. 2 from the
US and question No. 2 from Japan.IP/Q3/ZAF/1
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As regards the phrase "so that (the patentee) shall have and enjoy the whole profit and
advantage accruing by reason of the invention", the current interpretation is that this phrase operatesin a manner to expand the exclusive rights given to the patentee, rather than to restrict theenforcement of the rights.
[Follow-up question from the EC]
What is the time frame foreseen for the adoption of the new Bill?The Intellectual Property Laws Amendment Bill was considered by the Portfolio Committee
for Trade and Industry, a parliamentary committee, on 12 and 19 May 1997.  According to availableinformation, the Bill will be put before the General Assembly of Parliament on 29 May 1997.
Thereafter it has to be referred to the Council of Provinces for consideration and approval.  After that,certain administrative steps have to be attended to, whereupon the Act will be published andpromulgated.  This is expected before the end of the Parliamentary session of this year.
2. It is understood that moves are afoot for South Africa to accede to the ARIPO Protocol
and that, in that event, an ARIPO patent will have the same effect in South Africa as a patentgranted under the South African Patents Act.  Such a patent would not be in proper compliancewith South Africa's obligations under TRIPS.  In particular, such an ARIPO patent, havingeffect in South Africa, seems to be in non-compliance with the provisions of the TRIPSAgreement contained in:
Article 2 read with Article 5 bis(1) of the Paris Convention (late payment of renewal fees);
Article 28.2 (right to assign, transfer or licence patent rights);Article 32 (judicial review);Article 62 (acquisition and maintenance).Could the Government of South Africa please explain?It should be stressed that South Africa has not yet acceded to the ARIPO Treaty.
3. Are the provisions of the South African Patents Act relating to compulsory licences:
- in respect of dependent patents, in compliance with Article 31(l) of the TRIPS
Agreement;  and
- in the case of abuse of patent rights,
in compliance with Article 31(a), (d), (e) or (g)?  Please explain.
5
Dependent Patents
The present provisions of section 55 of the Patents Act in regard to compulsory licences in the
case of dependent patents, are not fully in compliance with Article 31(l) of the TRIPS Agreement.
                                                     
     5The delegation of South Africa has indicated that the following reply also applies to question Nos. 3, 4 and 5
from the US and to question Nos. 3 and 4 from Japan.IP/Q3/ZAF/1
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However, in clause 44 of the Intellectual Property Laws Amendment Bill currently before Parliament,
section 55 of the Patents Act is amended by the addition of the following provision:
"Provided that the Commissioner shall not grant such a licence unless:(a) the invention claimed in the dependent patent involves an important technical advance
of considerable economic significance in relation to the invention claimed in the priorpatent;
(b) the proprietor of the dependent patent granted the proprietor of the prior patent on
reasonable terms a cross-licence to use the invention claimed in the dependent patent;and
(c) the use authorised in respect of the prior patent is not assignable except with the
assignment of the dependent patent."
It is submitted that this amendment will bring section 55 of the Patents Act in line with the
requirements of Article 31(l) of the TRIPS Agreement.
Abuse of Patent Rights
Section 56 of the Patents Act in its present form is not fully in compliance with Article 31(a),
(d), (e), and (g) of the TRIPS Agreement.  Clau se 45 of the Intellectual Property Laws Amendment
Bill at present before Pa rliament, introduces severa l amendments into section 56 to bring it into
compliance with Article 31 of the TRIPS Agreement.  More specifically the following will beamended:
- Section 56(4)(a) is amended to provide that the Commissioner (of Patents) shall
consider the application for a compulsory licence on its merits - to comply withArticle 31(a) of the TRIPS Agreement.
- Section 56(5) is amended to provide that any compulsory licence granted shall be
non-exclusive and shall not be transferable except to a person to whom the business orpart of the business in connection with which the rights under the licence wereexercised, has been transferred - to comply with Article 31(d) and (e) of the TRIPSAgreement.
- Section 56(4) is amended by the insertion of a paragraph (c) to provide that a
compulsory licence shall be terminated if the circumstances which led to its grantcease to exist and, in the opinion of the Commissioner of Patents, are unlikely torecur - to comply with Article 31(g) of the TRIPS Agreement.
It is submitted that the amendments to section 56 to be effected by clause 45 of the Intellectual
Property Laws Amendment Bill will bring the South African law on compulsory licences in substantialcompliance with Article 31 of the TRIPS Agreement.
In response to question No. 3(b) from the US, it is repeated that section 56(4) of the Patents
Act as amended now obliges the Commissioner of Patents to consider the application for a compulsory
licence on its merits, and further provides that a compulsory licence granted shall be terminated if theIP/Q3/ZAF/1
Page 6
circumstances change.  This means that the Commissioner is obliged to hear the evidence of both
parties before exercising his discretion.
In response to question No. 3(c) from the US , in regard to the granting of a compulsory
licence in circumstances where the patented product is being imported rather than produced withinSouth Africa, the following should be noted:
In the first place, the Intellectual Property Laws  Amendment Bill provides, in clause 45, for
the deletion of section 56(2)(b) of the South African Patents Act, which at present provides for thegranting of a compulsory licence in circumstances where the working of the invention in South Africais prevented or hindered by the importation of the patented product.  A co mpulsory licence may still
be granted, in terms of section 56(2)(e) of the South African Patents Act, in circumstances where thepatented product is being imported and the price of such patented product is excessive in relation to
the price charged therefore in other countries where the patented product is being manufactured.  It is
submitted that the granting of a compulsory licence in these circumstances would be in the interest ofthe public.
The granting of a compulsory licence in circumstances where there is a failure to work the
patented invention on a commercial scale within prescribed time limits, is in compliance with Article 5of the Paris Convention, and specifically Article 5(2) and (4).
It should further be noted that there is no reported case in South Africa yet in terms of which
a compulsory licence has been granted.
More specifically in response to question No. 4 from Japan, it may be explained that use of a
patented invention without the authorization of the patentee is permitted by the Patents Act in thefollowing instances:
Section 4: It is provided that a patent shall have the same effect against the State as it has
against a person, provided that a Minister of State may use an invention forpublic purposes on such conditions as may be agreed upon with the patentee,or in default of agreement, on such conditions as are determined by theCommissioner of Patents on application by such Minister and after hearingthe patentee.  It is evident that the patentee is given an opportunity to beheard and to contest the application for use by the Minister. There is norecorded instance of this provision being employed.
Section 55: Provision is made in this section for the granting of a compulsory licence in
the case of a so-called dependent patent.  As explained above, the section isbeing amended by the Intellectual Property Laws Amendment Bill to be incompliance with Article 31 of the TRIPS Agreement.
Section 56: This section provides for the granting of a compulsory licence in the case of
abuse of patent rights.  As explained above, this section is being amended bythe Intellectual Property Laws Amendment Bill to be in compliance withArticle 31 of the TRIPS Agreement.
Section 78: In terms of this section, the Minister (of Trade and Industry) may acquire, on
behalf of the State, any invention or patent on such terms and conditions asIP/Q3/ZAF/1
Page 7
may be agreed upon with the patentee. It is evident that this section
specifically envisages the authorization or agreement of the patentee.
Section 79: This section provides for the assignment of an invention relating to
armaments as defined in the Armaments Development and Production Act,1978, to the Minister of Defence, acting on behalf of the State.  Again thecooperation of the proprietor of the invention/patentee is necessary to achievesuch assignment. In terms of section 79(8), the said Minister shall pay to theproprietor of the invention or patent such reasonable compensation as may beagreed upon, or in the default of agreement, as may be determined byarbitration or by the Commissioner of Patents.  It is submitted that theprovision of section 79, relating to armaments as defined in the ArmamentsDevelopment and Production Act, is in the public interest. Again there is norecorded instance of this provision being invoked.
Section 80: This section provides for the possibility that where the Minister is of the
opinion that it is in the national interest that a patent application,specification, drawing or other document relating to an invention should bekept secret, he may acquire the invention on behalf of the State, inaccordance with the provisions of section 79 of the Act.  In terms of section80(3) provision is made for the payment of reasonable compensation to theproprietor of the invention, where such proprietor has suffered loss ordamage.  The compensation will be as agreed upon with such proprietor, or,
in default of agreement, may be determined by arbitration or by theCommissioner of Patents.
The explanation given above in regard section 4 of the South African Patents Act, also applies
specifically to question No. 5 from the US.  As explained, the provisions of section 4 are seen to be incompliance with Article 30, which provides that Member states may provide limited exceptions to theexclusive rights conferred by a patent.  The fact that provision is made in section 4 for an agreementwith the patentee or, in default of agreement, for conditions to be determined by the Commissioner ofPatents after hearing the patentee, is seen as providing the patentee an opportunity of presenting andpursuing his legitimate interests.  This is viewed as falling within the provisions of Article 30 of theTRIPS Agreement.
[Follow-up question from the EC]
What is the time frame foreseen for the adoption of the new Bill?Is the act of importation of the patented product from a WTO country considered equal
to the exploitation of the patent in South Africa as required by Article 27.1 of the TRIPSAgreement?
Could the Government of South Africa explain how the sentence "a compulsory licence
may still be granted, in terms of section 56(2)(e) of the South African Patents Act, incircumstances where the patented product is being imported" is compatible with Article 27.1 ofthe TRIPS Agreement?  What criteria will be used to determine that the price of an importedproduct is "excessive"?  Which is the competent authority for performing this task?IP/Q3/ZAF/1
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Is there a more detailed definition of the terms "national interest" as provided in
section 80 and/or does case-law exist on this issue?
(a) As regards the excepted time frame for the adoption of the new Bill, see the reply to
the follow-up question to question No. 1.
(b) Section 56(2) of the South African Patents Act provides for the granting of a
compulsory licence in circumstances where "the working of the invention in theRepublic on a commercial scale or to an adequate extent is being prevented orhindered by the importation of the patented article".  Clause 45 of the IntellectualProperty Laws Amendment Bill provides for the deletion of this subsection.
Once the amendment is promulgated, importation of the patented product will no longer
constitute a ground for th e granting of a compulsory licence, but will in effect  be considered equal to
the working of the patent in South Africa, as  required by Article 27.1 of the TRIPS Agreement.
In the case of section 56(2)(e), however, the circumstances in which patent rights will be
deemed to be abused, thus providing grounds for the granting of a compulsory licence, do not relateto mere importation as such.  The circumstances as set out in section 56(2)(e) are that:
- the demand for the patented product in South Africa is being met by importation; and
- the price charged by the patentee in South Africa is excessive in relation to the price
charged by the patentee in the country of manufacture.
A comparable provision is containted in section 56(2)(c) in respect also of domestically
produced products, where it is provided that the rigths in a patent will be deemed to be abused wherethe demand for the patented product in South Africa is not being met to an adequate extent and onreasonable terms (which would include a reasonable price).
The competent authority for considering the application for a compulsory licence, and thus for
determining whether or not the local price of the imported product is excessive, would be theCommissioner of Patents (section 56(1) as amended by clause 45 of the Intellectual Property LawsAmendment Bill).  The Commissioner of Patents is a Judge of the High Court of South Africa(Section 8 of the Patents Act 57 of 1978).
The  Commissioner of Patents must consider the application for a compulsory licence on its
merits (section 56(4)(a) of the Patents Act as amended by Clause 45 of the Amendment Bill).  If theCommissioner is of the opinion that the grant of a compulsory licence is not justified, he may refusethe application (section 56(4)(b) of the Patents Act).
It is not possible to predict what criteria will be used to determine whether the price for an
imported product is excessive, since this is within the discretion of the Commissioner.
No reported case is available in which a compulsory licence has been granted on the basis of
section 56(2)(e).
As regards the provisions of section 80, there is no detailed definition of the concept "national
interest" as used in section 80.  There is no recorded case in which section 80 has been invoked.IP/Q3/ZAF/1
Page 9
[Follow-up question from the US]
Section 56(2)(e) of the Patents Act imposes a modified local working requirement that is
based on the price of the product.  In light of the requirement in Article 27(1) of the TRIPSAgreement that importation satisfy all local working requirements without exception, how is thiscompatible with the TRIPS Agreement?  Furthermore, how can South Africa justify treatingimported patented products less favourably than domestically produced patented products underthe general national treatment obligations of the TRIPS Agreement and the GATT 1994?
Section 56(2)(e) of the South African Patents Act sets out circumstances in which the rights
under a patent are deemed to be abused, and on the basis of which a compulsory licence may begranted.
The existence of section 56(2)(e) in the light of the provisions of Article 27.1 of the TRIPS
Agreement is justified on the following basis:
(a) Section 56(2)(e) does not result in the forfeitu re of the patent concerned, so that patent
rights continue to be available to the patentee;  nor does it results in the patentee beingdeprived of the right to exploit the patent, so that patent rights continue to beenjoyable by the patentee, as provided for in Article 27.1 of the TRIPS Agreement.
(b) In terms of section 56(5) as amended by Clause 45 of the Intellectual Property Laws
Amendment Bill No. B1/97, any compulso ry licence granted w ill be non-exclusive,
so that the patentee is not deprived of his right to exploit the patent, by importation ofpatented products or otherwise.
(c) In terms of sections 56(4) and (7) any compulsory licence granted may be subject to
conditions, including a condition precluding the licensee from importing patentedproducts into South Africa in competition with the patentee, and including the termsand conditions (e.g. appropriate remuneration) usually stipulated in voluntary licencesto ensure appropriate reward to the patentee.  Accordingly, the patentee will continueto enjoy benefits under the patent.
(d) Mere importation of patented products by the patentee does not provide a ground for
section 56(2)(e) to be invoked;  the fact of importation has to be coupled with the factof excessive pricing in comparison to the price in the country of manufacture.Section 56(2)(e) does not entail discrimination on the basis of mere importation;  theabuse being addressed by section 56(2)(e) is importation coupled with excessivepricing.
(e) Once the abuse addressed by section 56(2)(e) ceases to exist, e.g. if the local pricing
of imported products is no longer excessive, the compulsory licence shall beterminated in terms of section 56(4)(c) as amended by Clause 45 of the IntellectualProperty Laws Amendment Bill.
(f) Section 56(2)(e) is in line with the provisions of Article 5 of the Paris Convention, in
particular Article 5(2).
(g) Imported patented products are not d ealt with less favourably than domestically
produced patented products.  Section 56(2)(c) provides that patent rights are deemedIP/Q3/ZAF/1
Page 10
to be abused where the demand in South Africa for the patented product is not met to
an adequate extent and on reasonable terms.  This subsection is applicable todomestically produced patented products;  if the demand for such articles is not meton reasonable terms (e.g. as regards price), the patent rights will be deemed to beabused.
4. In terms of Section 43(3) of the South African Patents Act, a Convention patent
application automatically becomes open to inspection after the lapse of eighteen months from theearliest priority date claimed.  No equivalent provisions exist for a non-Convention applicationautomatically becoming open to public inspection after the lapse of an eighteen month period.Does this not mean that, in many cases, the requirements of Article 2 of the TRIPS Agreement,read with Article 2 of the Paris Convention, would not be met?  Please explain.
It is correct that section 43(3) of the Patents Act provides that a Convention patent application
automatically becomes open to public inspection eighteen months after the earliest priority dateclaimed.  A non-Convention application, on the other hand, becomes open to public inspection when itis published in the Patent Journal pursuant to acceptance.  Such acceptance must take place withineighteen months from the date of the application (except in certain specified circumstances).  It isemphasized that the aforegoing differentiation is not made on the basis of the nationality of theapplicant, but on the basis of the nature of the application (i.e. whether convention priority is claimedor not).  Applicants of South African nationality are treated in the same manner as applicants who arenationals of other countries in regard  to the type of application filed.
Article 2 of the Paris Convention requires that national treatment should be extended also to
nationals of other Member countries.  Article 2 of the TRIPS Agreement requires that this principle be
adhered to.  It is subm itted that the South African position is  in accordance with this principle.
[Follow-up question from the EC]
Could the Government of South Africa confirm that national treatment is also extended
to nationals from all WTO countries, even if these countries are not Members of the ParisConvention?
At present time it is only in regard to the recognition of priority rights that national of Paris
Convention Member countries get treatment different from the nationals of other countries.  SouthAfrica is in the process of preparing a suitable proclamation for publication to provide that thenationals of WTO Member countries will al so enjoy recognition of priority rights.
In regard to all other aspects, national treatment is accorded to the nationals of all other
countries.
5. No exception from the general acts of infringement of a design right is made in the
South African Designs Act in the case where a registered design, in the form of an integratedcircuit topography, is made by a third party for private purposes or for the sole purposes ofevaluation, analysis, research or teaching.  Is th e absence of such an exception not contrary to
Article 35 of the TRIPS Agreement read with Article 6(2) of the Treaty in Respect of IntegratedCircuits (1989)?  Please explain.
Clause 72 of the Intellectual Property Amendment Bill amends section 20 of the Designs Act
by the addition of the following subsection:IP/Q3/ZAF/1
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"(3) Notwithstanding subsection (1), the rights of the registered proprietor of a registered
design in the form of an integrated circuit topography shall not be infringed by aperson who-
(a) makes an article embodying the registered design or a design not substantially
different from the registered design for private purposes or for the solepurpose of evaluation, analysis, research or teaching;
(b) imports or disposes of an integrated circuit embodying the registered design
which has been unlawfully produced or an article incorporating such anintegrated circuit and proves that at the time of acquiring the integrated circuitor article he or she was not aware and had no reasonable grounds ofbecoming aware that the integrated circuit or article embodies a registereddesign which had been unlawfully produced:  Provided that when the personreceives sufficient notice that the registered design was unlawfully produced,the person may dispose of any stock of such integrated circuits or articles butshall be liable to pay to the registered proprietor a sum calculated on the basisof a reasonable royalty which would have been payable by a licensee orsub-licensee in respect of the registered design concerned."
After the publication of the Amendment Bill, it was noted that the words "for private purposes
or" were accidentally omitted from paragraph (a) of the proposed amendment;  these words have sincebeen inserted.
It is submitted that, once the Amendment Bill is passed and section 20 of the Designs Act
amended, the provisions will be in line with Article 35 of the TRIPS Agreement.
6. It is understood that South Africa intends to accede to the ARIPO Protocol and that, in
that event, an ARIPO registered design, relating, for example, to an integrated circuittopography, will (at the option of the applicant) have the same effect in South Africa as aregistered design granted under the South African Designs Act.  Would such a registered designbe in proper compliance with South Africa's obligations under the TRIPS Agreement?  Inparticular, would such an ARIPO registered design, having effect in South Africa, be incompliance with the provisions of the TRIPS Agreement contained in Articles 35, 36 and 37?Please explain.
As explained above in regard to patents, South Africa has not yet acceded to the ARIPO
Treaty.
7. How does the fundamental right that everyone has the right of access to:
(a) any information held by the States;  and(b) any information that is held by another person and that is required for the
exercise or protection of any rights,
as formulated in Section 32(1) of South Africa's  new Constitution Act 108 of 1996, accord with:
- Articles 39.1 and 39.2 of the TRIPS Agreement, andIP/Q3/ZAF/1
Page 12
- Section 17 of the South African Fertilizers, Farm Feeds, Agricultural Remedies
and Stock Remedies Act 36 of 1947 and Section 34 of the Medicines and RelatedSubstances Control Act 101 of 1965 read with Article 39.3 of the TRIPSAgreement?  Please explain.
It is correct that Article 32 of South Africa's Constitution Act provides that everyone has the
right of access to information held by the State, and to information held by another person that isrequired for the exercise or protection of any rights.
However, it should be noted that Article 32(2) provides that national legislation must be
enacted to give effect to this right, and such national legislation has not yet been enacted.Furthermore, Article 36 of the Constitution provides that the rights granted as part of the Bill ofRights (including the right of access to information) may be limited in terms of laws of generalapplication and to the extent that the limitation is reasonable and justifiable in an open and democraticsociety based on human dignity, equality and freedom, taking into  account all relevant factors
including-
(a) the nature of the right;(b) the importance of the purpose of the limitation;(c) the nature and extent of the limitation;(d) the relation between the limitation and its purpose;  and(e) less restrictive means to achieve the purpose.It is submitted that laws such as the Fertilizer, Farm Feeds, Agricultural Remedies and Stock
Remedies Act 36 of 1947, and the Medicines and Related Substances Control Act 101 of 1965 arelaws of general application which are on the st atute book of South Africa.  Furthermore, it is
submitted that the continued confidentiality of information held in terms of these Acts is reasonableand justifiable in an open and democratic society.  Accordingly, it is submitted that the position inSouth Africa in regard to the access to confidential information is in substantial compliance withArticle 39 of the TRIPS Agreement.
[Follow-up question from the EC]
Could the Government of South Africa indicate whether plans exist to introduce national
legislation to give effects to Article 32(2) of the South African Constitution Act and if not, inwhat time frame?
South African legal jurisprudence has developed in administrative law, in particular around
sections.
The legislature, mindful of th is fact, enacted section 240 of the Constitution, which provides
for a transitional arrangement.  Section 23 of Schedule 6(3), it is submitted, empowers the relevantdepartment to enact a legislation in this regard within three years after coming into effect of the
Constitution (i.e. February 1997 – February 2000).  In view of the above, relevant legislation will be
enacted in due course.IP/Q3/ZAF/1
Page 13
8. In relation to the execution of an Anton Pillar order, please describe the safeguards
provided to prevent, in line with Article 39.2 of the TRIPS Agreement, the person granted theorder from obtaining confidential information not covered by the order.
The formulation of the order, and the execution of the order in Anton Piller proceedings are
strictly controlled by the Courts in South Africa, specifically in view of avoiding possible abuse byapplicants.  The purpose of an An ton Piller proceeding in South Afri ca is to protect evidence, not to
serve as a discovery tool.  The order is usually formulated to permit a Sheriff to list and copy relevantdocuments, whereafter confidentiality can be imposed by a Court order obtained by the defendant,before the documentation is made available to the applicant.  South African jurisprudence as appliedby our Courts in fact enforces the necessary safeguards in the formulation and execution of an AntonPiller order, to maintain confidentiality of information.
9. What measures are in place in South Africa to counteract exclusive grantback
conditions, conditions preventing challenges to validity and (especially but not only in the filmindustry) coercive packaging licensing in the statutory provisions relating to patents,trademarks, copyright and designs (Article 40 of the TRIPS Agreement)?  Please explain.
Article 40 of TRIPS records the Agreement of members that some licensing practices or
conditions pertaining to intellectual property rights,  which restrain competition, may have adverse
affects on trade and may impede the transfer and dissemination of technology.  South Africa confirmsthis position.
Article 40.2 provides that members will not be prevented from specifying in their legislation
certain practices or conditions which may constitute an abuse of intellectual property rights.  Membersmay adopt appropriate measures to prevent or control such practices.
The South African Patents Act has the following relevant provisions:Section 57: This section provides that any contract, insofar as it relates to a licence under
a patent, shall terminate on the date on which the patent under which thelicence was granted, expires, is revoked or otherwise ceases to protect theinvention.
Section 90: This section provides as follows:
(1) Any condition in a contract relating to the sale of a patented article or
to a licence under a patent of which the effect will be:
(a) to prohibit or restrict the purchaser or licensee from
purchasing or using any article or class of articles, whetherpatented or not, supplied or owned by any person other thanthe seller or licensor or his nominee;
(b) to prohibit or restrict the licensee from using any article or
process not protected by the patent;IP/Q3/ZAF/1
Page 14
(c) to require the purchaser or licensee to acquire from the
seller, licensor or his nominee any article or class of articlesnot protected by the patent;
(d) to require or induce the purchaser to observe a specified
minimum resale price in respect of any article or class ofarticles protected by the patent;  or
(e) to prohibit or restrict the making, using, exercising or
disposing of the invention concerned in any country in whichthe invention is not patented,
shall be null and void.
(2) Nothing in this section shall-
(a) affect any condition in a contract whereby a person is
prohibited from selling any goods other than those of aparticular person;  or
(b) affect any condition in a contract for the lease of or a licence
to use a patented article, whereby the lessor or licensorreserves to himself or his nominee the right to supply suchnew parts of the patented article, other than ordinary articlesof commerce, as may be required to put or keep it in repair.
No corresponding provisions appear in the Trade Marks Act, Copyright Act or Designs Act.It should be pointed out that South Africa has a well-developed common law system of
unlawful competition, on the basis of which anti-competitive practices may be challenged.  SouthAfrica also has on its statute book the Maintenance and Promotion of Competition Act 96 of 1979, in
terms of which certain anti-competitive practices may be challenged.
10. Is it correct to say that the provisions of South Africa's Maintenance and Promotion of
Competition Act 96 of 1979:
- run counter to the import of Article 40 of the TRIPS Agreement,  and- place the intellectual property rights acquired under the statutory provisions
relating to patents, trademarks, copyright and designs into a category aboveother similar rights?
It is correct that section 2 of the Maintenance and Promotion of Competition Act excludes
from the provisions of the Act any right acquired under the Trade Marks Act, Designs Act, Patent Actand Copyright Act.  However, in terms of section 2(2) of the Comp etition Act, the exclusion shall be
construed so that any person shall not retain or be granted any right of enhancing or maintainingprices or restricting competition directly or indirectly by way of a restrictive practice as defined in theAct.IP/Q3/ZAF/1
Page 15
It is evident, therefore, that although the statutory rights are in fact placed in a category
separate from similar common law intellectual property rights, the limitation of section 2(2) applies tothe statutory rights, i.e. they may not be used in a manner to constitute a restrictive practice.
It should be understood that the Maintenance an d Promotion of Compe tition Act is intended to
promote free and fair competition, and such is not perceived to be contrary to the spirit of Article 40of the TRIPS Agreement.  Although an exception is made in relation to statutory intellectual propertyrights, abuse of such ri ghts will not be tolerated, in accord ance with section 2(2) of the Act.
11. The changes to the South African patent legislation provided by Clause 15C of the
recently passed Medicines and Related Substa nces Amendment Bill applies only to
pharmaceutical products.  Please explain how these changes comply with the requirement ofArticle 27.1 of the TRIPS Agreement which states that patent rights shall be enjoyable withoutdiscrimination as to the field of technology?
12. Could the South African authorities confir m that Clause 15C of the Medicines and
Related Substances Amendment Bill provides all the rights  prescribed in Arti cle 28 of the TRIPS
Agreement, including the right to prevent third parties, not having the consent of the patentholder, from importing a patented product?
13. It is the understanding of the Community and its Member States that if the price
structure of patented medicines is such as to unduly interfere with the obligations of the South
African Department of Health to provide affordable medicine of a high quality to the people ofSouth Africa, then the Minister of Health can disregard the rights conferred by a patent.  Pleaseexplain how this practice complies with the limited exceptions to the patent rights conferred, as
provided in Article 30 of the TRIPS Agreement.
Answer to questions 11, 12 and 13
Section 15c to be introduced into the Medicines and Related Substances Control Act 101 of
1965 by the Amendment Act No. 90 of 1997, grants th e Minister of Health the power to determine
that the rights granted in terms of the Patents Act to the patentee of a patented medicine will not applyin certain circumstances, namely to acts in respect of such medicine which has been put onto themarket by the owner of the medicine or with his consent.
This is viewed (e.g. by pharmaceutical manufacturers) as being contrary to South Africa’s
obligation in terms of Articles 27 and 28 of TRIPS.
However, TRIPS does allow the use of patent ed subject matter without the authorisation of
the patentee, under certain circumstances (Articles 30 and 31).  TRIPS also allows the adoption bymember countries of measures necessary to protect inter alia  public health, and measures to prevent
the abuse of intellectual property rights by right holders (Article 8).
It should be noted that the Medicines Amendment Act has not yet been put into effect, partly
because regulations to provide for its implementation have not yet been finalised.  Accordingly, theparameters within which the power granted to the Minister of Health will be exercised, are still to belaid down.  Until such time as the regulations have been finalised, a more complete response to thisquestion is not possible.IP/Q3/ZAF/1
Page 16
IV. REPLIES TO QUESTIONS POSED BY JAPAN
1. In your country, are the following subject matters protectable by patent:  (1) plants and
animals, and (2) plant and animal varieties?
In terms of section 25(4)(b) any variety of animal and plant shall not be patentable under the
Patents Act, nor any essentially biological process for the production of animals or plants.  Plantvarieties can be protected under the Plant Breeders' Rights Act No. 22 of 1964.
 [Follow-up question from the US]
Please confirm that microorganism and non-biological and microbiological processes for
the production of plants and animals fall into the scope of patentable subject matter in South
Africa.
It is confirmed that micro-organisms, and non-biological and microbiological processes and
the products thereof constitute patentab le subject matter  in South Africa.
Section 25(4)(b) of the Patents Act provides as follows:"(4) A patent shall not be granted
(a) ...(b) for any variety of animal or plant or any essential biological process for the
production of animals or plants, not being a micro-biological process or theproduct of such a process".
This provision is interpreted to mean that the following do not fall within the exclusion:- micro-organisms- micro-biological processes and the products of such processes- non-biological processes for the production of animals or plants.
2. In your country, is the act of offering for sale included in the exclusive rights of patent?
See reply to question No. 1 from the EC.
3. In your country, what kinds of acts are recognized as exceptions to the exclusive rights
conferred by a patent right?
See reply to question No. 3 from the EC.
4. In your country, in which case is use without the authorization of the right holder
permitted, including use by the government or by third parties authorized by the government?
See reply to question No. 3 from the EC.IP/Q3/ZAF/1
Page 17
5. In your country, how is the obligation under Articles 34.1 and 34.2 of the TRIPS
Agreement regarding the shift of the burden of proof in civil proceedings for patentinfringement related to a process patent implemented?
The general principle in infringement proceedings is that the patentee has the onus of proving
infringement.  However, the burden of proof is shifted in the case of a patent for a process ofobtaining a new product, but only in regard to proving that such a product produced by a third party
was obtained by the patented process.
In this regard section 67(2) and (3) provides as follows:"67.(2) If the invention for which a patent is granted is a process for obtaining a new product,
the same product produced by a person other than the proprietor of the patent or a licenseeunder that patent shall, unless the contrary is proved, be deemed, in any proceedings, to havebeen obtained by that process.
(3) In considering whether any person has discharged the onus imposed upon him by
subsection (2), the commissioner shall not require him to disclose any secret process used byhim in producing the product concerned, if it appears to the commissioner that it would beunreasonable to do so."
6. Please explain how undisclosed information is protected in your country, as required by
Article 39.2 of the TRIPS Agreement.
In terms of the common law of South Africa, confidential information or trade secrets are
given protection against unauthorised disclosure or use by others.  The requirements to rely on suchprotection on the basis of common law principles are in substantial compliance with the provisions ofArticle 39.2 of TRIPS.
[Follow-up questions from the US]
Please indicate in what manner the protection of undisclosed information under the
common law of South Africa deviates in any w ay from the requirements of Article 39.2 of the
TRIPS Agreement.
More specifically, does South Africa provide protection against the unauthorized use of
trade secrets by third parties?
In the response to Japan in reply to the question regarding the protection of undisclosed
information, it is indicated that confidential information (including trade secrets) is protected againstunauthorized disclosure or use on the basis of the common law in South Africa.
Insofar as the use in the response of the terms "substantial compliance" in regard to
Article 39.2 of the TRIPS Agreement may have created uncertainty, the request is made for the word"substantial" to be cancelled from the relevant paragraph of the response.
The relevant common law principles require, for undisclosed information to qualify as
protectible subject matter in the absence of express contractual provisions providing for
confidentiality, that the information should meet  with requirements in acco rdance with the standardsIP/Q3/ZAF/1
Page 18
set out in Article 39.2 of the TRIPS Agreement.  The legal position does not deviate from the
provisions of Article 39.2.
The protection extends to unauthorized use of trade secrets by third parties.Please describe the manner in which South Africa protects test data submitted with
applications for marketing approval of pharmaceutical and agricultural chemical productsagainst (a) disclosure and (b) unfair commercial use in accordance with Article 39.3 of theTRIPS Agreement, including protection against the direct or indirect reliance on such data tosupport later-filed applications.  Are there any ci rcumstances under which such test data would
not receive protection against disclosure and unfair commercial use?
Specific provision is made for the preservation of confidentiality in regard to information
submitted by an applicant for purposes of the registration of a pharmaceutical substance or anagricultural chemical in the following manner:
5.1 Medicines and Related Substance Control Act No. 101 of 1965:Section 34 provides as follows:"Preservation of secrecy
34. No person shall, except for the purpose of the exercise of his powers or the
performance of his functions under this Act, or for the purpose of legal proceedingsunder this Act, or when required to do so by any competent court or under any law,or with the written authority of the Director-General, disclose to any other person anyinformation acquired by him in the exercise of his powers or the performance of hisfunctions under this Act and relating to the business or affairs of any person, or usesuch information for self-gain or for the benefit of his employer."
5.2 Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act No. 36 of
1947:
Section 17 provides as follows:"Preservation of secrecy
17. Any person who discloses except to the Minister or to any other person for
the purpose of the performance of his duties or the exercise of his functions under thisAct or when required to do so by any court or under any law, any informationacquired by him in the exercise of any duty or function under this Act, in relation tothe business or affairs of any other person shall be guilty of an offence and liable onconviction to a fine not exceeding five hundred pounds or imprisonment for a periodnot exceeding twelve months."
Unfair commercial use is not addressed expressly, except for the prohibition on self-gain or
any benefit to the employer in the Medicines Act.
The circumstances under which such information could be disclosed are set out in the two
sections quoted above.IP/Q3/ZAF/1
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V. REPLIES TO QUESTIONS POSED BY THE UNITED STATES
1. Article 25 of the South African Patent Law states that "computer programs" shall not be
an invention for the purposes of the South African Patent Act. Please explain whether, underthis provision, inventions within the categories specified below are not eligible to be patentedunder South African law, notwithstanding the fact that the invention is novel, involves aninventive step, and is useful:
(a) process inventions which, in whole or in part, consist of steps that are performed
by a computer and are directed by a computer program;
(b) product inventions consisting of elements of a computer-implemented invention,
including in particular:
(i) machine-readable computer program code stored on a tangible medium
such as a floppy disk, computer hard drive or computer memory; and
(ii) a general purpose computer whose novelty over the prior art arises
primarily due to its combination with a specific computer program.
If any of these types of inventions are excl uded from eligibility to be patented, please
explain how the South African patent law complies with the obligations of Article 27 of theTRIPS Agreement, which mandates patent eligibilit y for all categories of invention without
discrimination.
It is correct that section 25(2) of the South African Patents Act provides that computer
programs shall not constitute inventions for the purposes of the Act.  However, section 25(3) providesthat subsection (2) shall prevent such a program to be treated as an invention "only to the extent towhich a patent or patent application relates to that thing as such".
This position is in line with the position in Britain.It is submitted that the instances as set out in question No. 1(a) and (b) from the US could
qualify for patent protection in terms of South African law, inasmuch as these instances do not relateto mere computer programs as such.
Accordingly, it is submitted that the South African position complies with Article 27 of the
TRIPS Agreement, inasmuch as inventions based on or involving computer programs are patentable.
2. Article 28 of the TRIPS Agreement enumerates the rights that each Member country
must confer to a patent owner.  Included among these rights are the rights to prevent thirdparties from making, using, offering for sale, selling and importing the patented product.Article 45 of the South African patent law vests patent owners’ with the right "to exclude otherpersons from making, using, exercising or disposing of the invention so that he shall have andenjoy the whole profit and advantage accruing by reason of the invention".  It is not clearwhether the patent owner is granted the right to control the importation, offering for sale, andsale of the patented product.  Also, it is not clear whether the phrase - "so that he shall have and
enjoy the whole profit and advantage accruing by reason of the invention" - operates in a
manner that restricts enforcement of the rights.  Please explain how the South African patentIP/Q3/ZAF/1
Page 20
law grants a patent owner the rights of importing, selling and offering for sale and whether
Article 45 imposes and limitations on the patent owner’s exclusive rights.
See reply to question No. 1 from the EC.
3. Articles 55 and 56 of the South African Patent Law establish a system for the grant of
compulsory licences.  Please answer the following questions in relation to this system.
(a) Article 56(5) specifies that, other than compulsory licences granted for failure to
adequately work an invention, a compulsory licence may be an exclusive licenceto practise the patented invention.  Please explain how this provision complieswith Article 31(d) of the TRIPS Agreement, which specifies that any compulsory
licence granted by the Government shall be non-exclusive in nature.
(b) Articles 56(4)(a) and (b) authorize the Commissioner to set the terms of a
compulsory licence as he sees fit.  No provisions of the South African patent lawappear to constrain the discretion of the Commissioner to as to require specificconditions for every compulsory licence granted.  Please explain whether theterms and conditions specified in Articles 31(a) to (l) are imposed with respect toevery compulsory licences granted in South Africa.  If not, please explain howSouth African law complies with the requirements of each of the paragraphs ofArticle 31 of the TRIPS Agreement.
(c) Article 56(2)(a) specifies that failure to work the patented invention on a
commercial scale or to an adequate extent within the Republic of South Africacan be a grounds for issuance of a compulsory licence.  Article 56(2)(b) specifiesthat if importation results in a hindrance of working of the patented invention inthe Republic of South Africa, it also can serve as a basis for issuing a compulsorylicence.  Article 56(2)(e) specifies that a compulsory licence can be granted ifimportation is satisfying market demand but the price of patented products isexcessive.  Each of these provisions represents a discrimination in the enjoymenton patent rights based on the fact that the patented product is being importedrather than produced within South Africa.  Please explain how these provisionscomply with the requirements of Article 27.1 of the TRIPS Agreement, whichprohibits discrimination in the enjoyment of patent rights based on whetherproducts are produced locally or imported.
(d) Article 55 of the South African Patent Law permits the issuance of a compulsory
licence to enable the practice of a dependent patented invention.  The provisionprovides discretion to the Commissioner to set the terms of the licence.  It is notclear from this provision whether dependent patent compulsory licences areavailable only in situations where the dependent patented invention represents animportant technical advance of considerable economic significance in relation tothe dominant patented invention, or whether the Commissioner is required togrant to the dominant patent holder a cross-licence under the dependent patent.Please clarify if these conditions are imposed in all situations where a dependentpatent compulsory licence is granted, and if not, how South African law complieswith the requirements of Article 31(l) of the TRIPS Agreement.
See the reply to question No. 3 from the EC.IP/Q3/ZAF/1
Page 21
4. Please indicate how many compulsory licences on a yearly basis have been granted in
South Africa since 1 January 1993.
See the reply to question No. 3 from the EC.
5. Article 30 of the TRIPS Agreement allows Member countries to provide limited
exceptions to the exclusive rights granted by the patent provided these exceptions do not"unreasonably conflict with a normal exploitation of the patent and do not unreasonablyprejudice the legitimate interests of the patent owner". Article 4 of the South African patent lawprovides for an exception to a patent owner’s rights for "public purposes".  Please explain howthis provision is interpreted and applied in practice, and how it complies with Article 30.
See the reply to question No. 3 from the EC.
__________