Reportable
Case No 494/2000

In the matter between:

BIOTECH LABORATORIES (PTY) LTD                                Appellant

and

BEECHAM GROUP PLC                                              First Respondent
SMITH-KLINE BEECHAM PHARMA-
CEUTICALS (PTY) LTD

Second Respondent

Coram:
NIENABER, HARMS, ZULMAN, NAVSA and NUGENT JJA
Heard:
4   MARCH 2002
Delivered: 25 MARCH 2002
Subject:
Copyright; State copyright; s 5(2) of the Copyright Act 98 of 1978.

JUDGMENT

HARMS JA/

HARMS JA:

[1] The battle about generic drugs is fought on many grounds – usually
ethical, political, commercial or patent law considerations.  In this particular
case the ground happens to be copyright law.  All turns on the copying of an
approved package insert for a medicine.  The copyist, the appellant (‘Biotech’),
seeks to justify its admitted plagiarism on two grounds namely (a) that the
respondents have failed to prove that the package insert was ‘original’ and (b)
that, if original, the copyright therein vests in the State by virtue of the
provisions of s 5(2) of the Copyright Act 98 of 1978.  In the court below, Swart
J, holding that the insert was an original work and that second respondent
(‘Smith-Kline Beecham’) is the author and owner of the copyright therein,
interdicted Biotech from infringing the copyright.  The appeal is with his leave.
[2] Smith-Kline Beecham markets Augmentin, a medicine consisting of two
substances: amoxycillin (a semi-synthetic penicillin) and potassium clavulanate.
Amoxycillin is an antibiotic and potassium clavulanate protects it against

penicillin resistant organisms.  Augmentin is registered in the name of Smith-
Kline Beecham under the Medicines and Related Substances Control Act 101 of
1965.  This Act prohibits the sale of medicines that are subject to registration
unless registered (s 14 (1)).  Applications for registration have to be submitted
to the registrar appointed under the Act in the prescribed form and have to be
accompanied by the prescribed particulars and samples (s 15(1)).  If the
application complies with the Act and regulations and the Medicines Control
Council (the ‘MCC’) is satisfied that the medicine in question is suitable for its
intended purpose, it ‘shall approve of the registration thereof’.  If it is not so
satisfied, the applicant is notified and given the opportunity of responding to the
reasons of the MCC.  If the MCC is ultimately not satisfied, it rejects the
application. (S 15(3).)  Regulations may, amongst other things, prescribe the
particulars in regard to the use of medicines, which have to be furnished when
they are sold, and the manner in which the particulars have to be furnished (s
35(1)(viii)).

[3] The general regulations1 under the Act require that a package insert must
accompany each package of medicine sold.  They also provide that package
inserts must be in the prescribed format and must contain certain particulars
such as the scheduling status of the medicine, its proprietary name and dosage
form, composition, pharmacological classification and action, indications and
contra-indications, warnings and so forth (reg. 10).   A proviso permits the
MCC (a) to allow an applicant to omit a prescribed heading, (b) to authorise the
applicant upon application to deviate from the prescribed format or content or
(c) to authorise upon application the inclusion of additional material.
[4] An applicant for registration has to submit with its application a package
insert in the format stipulated (reg. 15).  The MCC considers the insert in the
course of the registration process and more often than not proposes to the
applicant amendments or changes, some material and others insignificant.  A
lengthy debate may ensue and the applicant, unless it convinces the MCC, is in

1 These were originally published under Government Notice R532 in the Government Gazette 4594 (Regulation
Gazette 2117) of 21 February 1975 and have since often been amended.

practice obliged to accept the suggestions in order to obtain registration
although on ordinary principles the MCC may not reject a package insert that
complies with the regulations.  The facts of this case are illustrative of the
process.  During July 1980, Smith-Kline Beecham lodged a concept submission
with an insert leaflet.  The concept was approved and the application was
submitted with the original leaflet in September 1980.  Someone discovered that
with the drafting of the leaflet a prescribed section had been omitted and the
leaflet was resubmitted during January 1981.  Since the MCC was not satisfied
with part of the clinical evidence, another leaflet was submitted during
November omitting any reference to the objectionable material.  During January
1982, a discussion took place between Smith-Kline Beecham and the MCC and
as a result a further leaflet was prepared to ‘include recommendations requested
by the Council and an introduction discussed with Prof. Botha [a member of the
MCC] regarding the activity of Augmentin against sensitive organisms’.  So the
process continued until the product and the insert were finally approved.

Thereafter, as data became available, the insert was further amended upon
Smith-Kline Beecham’s request.
[5] The patents that covered Augmentin have lapsed.  The product is
consequently freely marketable by others, provided they also obtain the
necessary registration under the Act.  Biotech applied for the registration of the
same chemical composition but under the name Bio-Amoksoklav.  As a
latecomer it was not subjected to the same stringent registration requirements as
was Smith-Kline Beecham and was entitled to rely on the fact that the scientific
and technical data generated and supplied by the latter to the MCC had
established the acceptability of the drug.  However, Biotech had to submit a
package insert for approval.  Probably at the behest of the MCC, it copied
Smith-Kline Beecham’s package insert and obtained registration.  Bio-
Amoksoklav is sold with this package insert.
[6] ORIGINALITY: The issue is whether the insert, which is a literary work
as defined in the Copyright Act, was ‘original’.  Works are only eligible for

copyright if they are ‘original’ (s 2(1)).2  The genesis of the work was as
follows. The first respondent (‘Beecham’) is Smith-Kline Beecham’s parent
company and, presumably, the inventor of Augmentin.  It prepared a master
data sheet relating to Augmentin and also a uniform data base sheet for use by
its subsidiaries in different countries.  This was done in order to ensure
standardisation in relation to the content of package inserts.  At a later date
Beecham prepared a further data base sheet comprising additional data that had
been generated.  Dr Kritzinger, Smith-Kline Beecham’s erstwhile medical
director and the person responsible for the registration of medicines, made
copious use of these documents in preparing the different inserts, first by
compiling summaries and then by preparing synopses that ultimately comprised
the insert, sometimes taking extracts verbatim from them.  Drafts were also sent
to other entities for comments and those received were incorporated.  What
cannot be gainsaid is that, in spite of this, he and his staff used their own

2 The meaning of the term is discussed in Klep Valves (Pty) Ltd v Saunders Valve Co Ltd 1987 (2) SA 1 (A)
22H-23B.

language and skill to prepare the insert as a whole.  He was able to identify
particular paragraphs he had drafted personally but, in the light of the lapse of
time, was no longer able to identify the lineage of each sentence.  The work is
essentially a compilation, something included within the definition of a literary
work in the Act.
[7] The argument of Biotech on this issue amounts to this: a party claiming
copyright has the evidentiary duty to identify those parts of the work for which
originality is claimed; Smith-Kline Beecham had failed therein.  Biotech relied
upon a passage from Jacana Education (Pty) Ltd v Fransden Publishers (Pty)
Ltd 1998 (2) SA 965 (SCA) 969E where it was pointed out that the existence of
prior material tends to limit the scope of originality and requires more proof of
its existence than would be the case with truly original works.
[8] Under the Act the inquiry is whether the ‘work’, in this case the
compilation as embodied in the insert, was original.  The inquiry is not whether
its parts are original.  A work may even be original if its making involves the

infringement of copyright in some other work (s 2(3)).  A second version of any
work is entitled to its own copyright provided it differs in substance from the
first (i. e. is not a copy).3  Where, as in Jacana, a defendant does not copy the
plaintiff’s ‘work’ but takes from it parts that are primarily commonplace, the
plaintiff’s burden of proving originality in and infringement of his work may be
more difficult than otherwise.  In this case the position is different.  It is
common cause that Biotech substantially copied the ‘work’.  Had it copied only
part of the document the position may have been different.
[9] The argument can be disposed of by means of an extract from Ladbroke
(Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 (HL).  Lord
Reid said (at 469B-E):
‘Broadly, reproduction means copying, and does not include cases where an author or
compiler produces a substantially similar result by independent work without copying.  If he
does copy, the question whether he has copied a substantial part depends much more on the
quality than on the quantity of what he has taken.  One test may be whether the part which he

3 Warwick Film Productions Ltd v Eisinger and Others [1969] 1 Ch 508 presents an illuminating example.

has taken is novel or striking, or is merely a commonplace arrangement of ordinary words or
well-known data.  So it may sometimes be a convenient short cut to ask whether the part
taken could by itself be the subject of copyright.  But, in my view, that is only a short cut, and
the more correct approach is first to determine whether the plaintiff’s work as a whole is
‘original’ and protected by copyright, and then to inquire whether the part taken by the
defendant is substantial.  A wrong result can easily be reached if one begins by dissecting the
plaintiff’s work and asking, could section A be the subject of copyright if it stood by itself,
could section B be protected if it stood by itself, and so on.  To my mind, it does not follow
that, because the fragments taken separately would not be copyright, therefore the whole
cannot be.  Indeed, it has often been recognised that if sufficient skill and judgment have been
exercised in devising the arrangements of the whole work, that can be an important or even
decisive element in deciding whether the work as a whole is protected by copyright.’
[10] STATE COPYRIGHT: The second issue, namely whether the copyright
in the insert vests in the State, depends upon an interpretation of s 5(2) of the
Act.  The whole of s 5 may be quoted for contextual reasons –
‘Copyright in relation to the state and certain international organizations
(1) This Act shall bind the state.

(2) Copyright shall be conferred by this section on every work which is eligible for copyright
and which is made by or under the direction or control of the state or such international
organizations as may be prescribed.
(3) Copyright conferred by this section on a literary or musical work or an artistic work, other
than a photograph, shall subsist for fifty years from the end of the year in which the work is
first published.
(4) Copyright conferred by this section on a cinematograph film, photograph, sound
recording, broadcast, programme-carrying signal, published edition or computer program
shall be subject to the same term of copyright provided for in section 3 for a similar work.
(5) Section 3 and 4 shall not confer copyright on works with reference to which this section
applies.
(6) Copyright which vests in the state shall for administrative purposes be deemed to vest in
such officer in the public service as may be designated by the State President by proclamation
in the Gazette.
[11] The crisp issue is whether the insert was ‘made by or under the direction
or control of the state’, it being accepted that the MCC is an organ of State.
Smith-Kline Beecham in an argument that found favour with Swart J relied for

purposes of interpretation upon a philosophy allegedly underlying the Act,
namely that it seeks to create a system whereby the creator of an original work
is afforded a qualified exclusive right to compensate him for the effort,
creativity and talent expended and to act as an incentive for the creation of
further and better works.  It is convenient to give some background in order to
assess the validity of the argument.  In this regard Frank Muir’s irreverent social
history4 provides a useful introduction.
‘The biggest difficulty facing a would-be professional author at the opening of the
eighteenth century was his lack of legal right to royalties on the sale of his books.  Under the
Romans, and well into the medieval period, the copyright in a manuscript belonged to
whoever owned the piece of material it was written upon; it was a simple matter of owning a
lump of tangible property.  When printing came to England the government made haste to
censor it by giving the Stationers’ Company a monopoly on publishing, thus making the
Stationers’ Company the holder of all copyrights.

4 The Frank Muir Book 141-142.

Pressure built up during the latter part of the seventeenth century against the
Stationers’ Company monopoly, and strong pleas were made to successive governments to
end it.  The campaign eventually succeeded and in 1709 an Act, Statute 8 Anne, c. 19, was
passed, the first in the world to give an author a right to his own property.
The booksellers who were behind the Act had no thought of bringing prosperity to the
trade of author; it was a monopoly-breaking move for the benefit of the bookselling trade and
authors were merely the excuse for it.  By the wording of the act an author owned the
copyright of his work, but the action of having it published gave the bookseller fourteen years
exclusive rights in the work, after which the rights were supposed to revert to the author.  In
effect this meant that once the booksellers had paid the author a few guineas for the
copyright, they could exploit the property, or barter it among themselves, for a period of
fourteen years without necessarily paying anything more to the author:

What Authors lose, their Booksellers have won,

So Pimps grow rich, while Gallants are undone.

Alexander Pope (1688-1744)’
[12] The present Act, in its original form, attempted to be kinder to authors.
The concept of ‘copyright’ was replaced with an author’s right, the ‘ownership’

of which vested principally in the author.  In this and other regards the object
was to move in the direction of Continental law where the emphasis is on the
rights (moral and other) of the author and not on the economic rights of
employers and entrepreneurs.  The good intentions did not last and hardly a year
had passed when the Legislature (by amending s 21) reverted, as far as
ownership was concerned, to the Anglo-American model where commercial
rights tend to reign supreme.  The definition of ‘author’ in s 1 also covers a
large number of persons who, in the ordinary sense of the word, are not authors
but persons with financial interests in the end result.  For instance, the author of
a computer program is the person who exercised control over its making.  One
consequently does not have to be a cynic in order to be sceptical about the
philosophical premise.
[13] It is likewise difficult to establish historically any philosophy behind the
recognition of State copyright.  As Frank Muir made clear, copyright was
initially nothing more than the right to copy and that right related to the right to

print, something the Crown by divine intervention had or approbated.  For
instance, the Crown had the prerogative of printing and publishing statutes.5
The Crown also laid special claim to the perpetual copyright in the Authorised
English Translation of the Bible and the Common Book of Prayer.  The
Copyright Act of 18426 made no reference to Crown copyright and it was then
open to doubt whether the Crown could have enforced a perpetual copyright in
works compiled by its servants, or whether it could only have claimed the term
of copyright granted by that Act.7  It is probably against that backdrop that s 18
of the British Copyright Act of 1911, which became law in South Africa by
virtue of the 1916 Act,8 was enacted.  It provided that where any work was –
‘prepared or published by or under the direction and control of His Majesty or any
Government department, the copyright shall, subject to any agreement with the author,
belong to His Majesty, and in such case shall continue for a period of fifty years from the
date of first publication of the work.’

5  The Attorney-General for New South Wales v Butterworth & Co (Australia) Ltd [1937-1938] 38 NSW State
Reports 195.
6 5 & 6 Vict. c. 45.
7 MacGillivray A Treatise upon the Law of Copyright (1902) 59-61.
8 Patents, Designs, Trade Marks and Copyright Act 9 of 1916, Third Schedule.

[14] Pursuant to the wording used in the 1956 UK Copyright Act, the
Copyright Act 63 of 1965 provided for vesting of copyright in the State if the
relevant work was ‘made by or under the direction or control’ of the
government or State (s 39).  This is the antecedent for the wording used in the
present Act.  The change from ‘prepared’ to ‘made’ does not appear to be of any
significance.
[15] The general structure of the 1978 Act, excluding detail, is the following.
Conferral of copyright and ownership of copyright do not necessarily coincide.
Copyright can be conferred under three alternative circumstances: first, on a
work made by a ‘qualified’ author (s 3); second, if the work is not made by a
qualified author, by first publication (s 4); and third, on a work made by or
under the direction or control of the State (s 5(2)).  The initial ownership of
copyright conferred by s 3 or 4 vests in the author unless the work was made in
the course and scope of an employment contract or was commissioned (s 21(1)).
If conferred by s 5, it vests in the State and not in the author (s 21(2)).

[16] Smith-Kline Beecham argued that it can be deduced from this structure
that State copyright under s 5(2) is only conferred upon works that are ineligible
for copyright under s 3 or s 4 because the State is not a ‘qualified person’
(qualified persons must either be individuals or incorporated juristic persons).  I
disagree.  A work falling under s 3 or 4 and authored by an employee of the
State in the course and scope of an employment would, irrespective of s 5, vest
in the State under s 21(1)(d).  In addition, as far as ranking is concerned, it
should be noted that a work qualifying for State copyright is not entitled to
copyright under either s 3 or 4 (s 5(5)).  This implies that one has first to
consider whether the work was made under the circumstances of s 5(2) and only
if not, under s 3 or 4 but that does not mean that s 5(2) should not be interpreted
restrictively.  Allowing the State without more to reap what it did not sow does
not appear to be in the spirit of our constitutional values.

[17] The UK provisions were the subject of two judgments;9 neither of which
is of material assistance in the present case.  Textbook writers generally only
touch on the topic.  Copyright no doubt vests in the Crown irrespective of
whether the actual author was under a contract of service with the Crown.10 The
provision is broad and may in certain circumstances apply to works made by a
person under contract with the State.11  Some argue that works made by State
employees in the course of their duties are made under the ‘control’ of the State
and that works made by independent contractors are made under the ‘direction’
of the State.12  Whether a commissioned work falls under either appears to be
open to debate.13
[18] It is not that clear whether the phrase ‘by the state’ was intended to cover
works of organs of State only or also the works of employees.  All the statutes
since 1911, when dealing with employees generally, used the hackneyed phrase

9 British Broadcasting Company v Wireless League Gazette Publishing Company [1926] 1 Ch 433; Ironside v
HM Attorney-General [1988] RPC 197 (Ch D).
10 Skone James Copinger on the Law of Copyright 6th ed (1927) at 248-249
11 Alan Smith Copyright Companion 11.
12 Laddie, Prescott and Vitoria The  Modern Law of Copyright and Designs 2 ed I par 22.10.
13 Ibid. Also Lester and Mitchell Johnson-Hicks on UK Copyright Law (1989) 69.

‘in the course of the author’s employment’ (or something similar).  Why a
different wording should have been used in relation to State employees is
unclear.  It is fortunately not necessary to consider the scope of that expression
because Biotech, rightly, did not submit that the work was made ‘by’ the MCC.
Smith-Kline Beecham, however, argued that the use of the preposition indicated
that State copyright could only arise where a work is made ‘for or on behalf of’
the State. The argument loses sight of the fact that the ‘by’ does not govern
either ‘direction’ or ‘control’.  They are governed by the preposition ‘under’.
Clearly, an important pointer in assessing whether State copyright vests or not
may be whether the work was made for or on behalf of the State but that is not
the conclusive indicator.
[19] There was some argument on whether the work was made ‘under the
direction’ of the State.  In my judgment the State did not direct the making of
the insert because it did not initiate its making and it did not prescribe the
manner and means to be employed therein.  The provision is consequently

inapplicable.  That leaves the question of ‘control’.   In this regard Biotech
relied heavily on a number of decisions that deal with the meaning of the word
in other statutory contexts, especially those that held that the power to control
an activity may include the power to restrain and even veto it;14 consequently,
since the MCC had the power to approve or disapprove the insert, it was made
under its control.
[20] Apart from the fact that the ultimate decision whether or not to accept the
MCC’s recommendations or to use the insert is that of the applicant, the major
problem with the approach is that it focuses on the meaning of a word in
isolation.15  The issue is not whether the MCC had the power to approve or
disapprove the insert but whether the insert was made under its control.  This
appears to be a factual rather than a legal issue.  An insert is of the utmost
commercial importance to a pharmaceutical company.  Not only is it required
for purposes of registration of a medicine but it is also the ‘passport’ of the

14 E. g. Van Rooy v Law Society (OFS) and Another 1953 (3) SA 580 (O).
15 Commissioner, South African Revenue Service v Dunblane (Transkei) (Pty) Ltd 2002 (1) SA 38 (SCA) par 13.

medicine because it is the document that prescribing medical practitioners will
have regard to in deciding whether or not to prescribe any particular medicine.
In this case Dr Kritzinger prepared the draft insert in his capacity as employee
of Smith-Kline Beecham.  As soon as it was completed, s 3 conferred copyright
thereon as a literary work of which Smith-Kline Beecham was the owner by
virtue of s 21(1)(d).  Thereafter the draft was submitted to the MCC for its
approval.  During the approval process Smith-Kline Beecham amended the
document, sometimes upon the suggestion or request of the MCC but, as
conceded by Biotech, the MCC did not change the substance of the insert nor
did it co-author the end result.  Copyright once conferred in any particular work
cannot again be conferred on the same work and copyright once vested in a
party remains so vested unless transmitted under s 22.
[21] In order to meet this consequence Biotech submitted that once Dr
Kritzinger conceived of the idea to prepare an insert he thenceforth acted under
the control of the State.  The proposition merely has to be stated to be rejected.

The anomalies abound.  It would for instance mean that if Smith-Kline
Beecham had decided not to submit the insert to the MCC, the copyright therein
would still have vested in the State, it being blithely unaware that it had
controlled the making of the work.  If Beecham had prepared the leaflet in the
UK for use in its UK application and had submitted it to the UK authorities,
copyright would have vested in either Beecham or the UK government.
Beecham would then have required the UK government’s licence to submit the
insert to the MCC and upon submission to the latter, copyright would have been
transferred to the South African government.
[22] I prefer to adopt and adapt Ricketson’s16 approach: the production of the
work needs to be the principal object of State direction and control and not
merely an incidental or peripheral consequence of some generalised
governmental licensing or monitoring power; the direction and control should
be directly and specifically expressed with respect to the work in question, and

16 Ricketson The Law of Intellectual Property: Copyright, Designs & Confidential Information par 14.180.

should not be inferred from the fact of some residual or ultimate government
veto.  On the facts of this case, the MCC did not ‘control’ the making of the
work or the intellectual effort involved in its genesis; it controlled its fate to the
extent that it had to determine administratively whether the insert complied with
the regulations.  Its statutory function is to control the sale of medicines and not
to be the controlling mind behind the creation of the insert.  An editor is not an
author and even if ‘the meaning of a word is always another word’,17 control
does not mean cooperation or consultation, at least not in the present context.
[23] I therefore agree with Swart J that the copyright in the insert vests in
Smith-Kline Beecham and the appeal must consequently be dismissed.  It would
not be out of order to say something about the concerns of the MCC.  It joined
the Biotech team by claiming through its deponents that the ‘whims’ of
copyright law should not interfere with its policies.  It insists that the same
medicines should have identical inserts.  That may be a commendable ideal but

17 Harold Bloom The Western Canon 63-64.

it does not entitle it to disregard other parties’ proprietary rights, in this case
based upon statute.  The evidence also establishes that identical inserts are not
necessary and that at least one other competitor was able to produce an insert
acceptable to the MCC that was not a copy of Smith-Kline Beecham’s insert.
This is not a case where the information can be presented in only one format,
for instance, a mathematical formula, the batting list of a cricket team or an
alphabetical list of the members of a society and it was thus unnecessary to
consider whether or not this factor may affect the conferral of copyright.
[24] The appeal is dismissed with costs, including the costs consequent upon the
employment of two counsel.

__________________
L T C HARMS
JUDGE OF APPEAL

AGREE:

NIENABER JA
ZULMAN JA
NAVSA JA
NUGENT JA