South Africa: King IV And IP

Last Updated: 8 December 2016
Article by Rowen Forster

Judge Mervyn King's name is synonymous with corporate governance in South Africa. 1 November 2016 saw the delivery of the fourth version of the famous King report on corporate governance, King IV. So, just what does this latest report mean for IP?

Well, there's apparently no mention of the term "intellectual property" in the report at all, so one might be inclined to answer that it means nothing. But that's certainly not the case, because there's plenty in the report to suggest that IP does, and will in the future, play an important role in corporate governance.

There's long been recognition of the huge shift in emphasis from physical assets to intangibles, and King IV talks of the growing importance of technology and information and, specifically, of information in isolation of technology being regarded as a corporate asset that needs governance structures for effective protection and enhancement. There's also lots of talk of the report being principle-based and outcomes-based, and there's a great deal of emphasis on ethical governance. This all suggests that company directors will be required to take a long-term and big-picture view of their IP assets, and the impacts that these assets might have on others.

IP is a complex and ever-expanding area of the law and it's very likely that corporate South Africa will, over the coming years, be focusing far more on internal policies, systems and manuals for the effective management of IP. These policies, systems and manuals will need to deal with a range of rights, matters and issues. For example, they will need to deal with:

Innovation: The IP rights that deal with innovation, where novelty and quick action are often all-important. Rights such as:

  • patents for invention, with all the difficult issues around software and business method patents
  • utility models for minor inventions
  • layout designs of integrated circuits
  • plant varieties

Brands: The IP rights that deal with brands, often the most valuable rights that companies have. These would include:

  • trade marks
  • trading names or styles
  • passing off, the common law action based on reputation and consumer confusion, an action that falls under the wider category of unlawful competition, which is an area of the law that considers vague and elastic concepts like the morals of the marketplace
  • advertising law – there are clear overlaps between trade mark law and advertising law, and many trade mark disputes end up before the Advertising Standards Authority

Registered designs: The IP right that deals with product design: shape, appearance and the like.

Copyright: The IP right that deals with the wide range of creative works such as writing, art and music, as well as more commercial works like sound recordings, films, computer programmes and broadcasts.

Information: The more nebulous IP rights that are unregistered and rely on common law. These rights are likely to be critically important with the new emphasis on information. These include:

  • know-how
  • trade secrets
  • confidential information

Community rights and issues: Those IP rights that have a wider impact, such as:

  • traditional knowledge
  • geographical indications
  • inventions that result from publicly funded research

Big-picture: Issues that touch on big-picture things like ethics and public relations. Issues such as avoiding allegations of corporate bullying, or avoiding a situation like the one that occurred at Vodacom recently, where an employee sued the company for compensation for the Please Call Me service that he claimed he had devised for the company.

Risk avoidance: Issues dealing with risk avoidance. Pre-use or pre-filing searching would fall into this category.

Audits: Audits of IP rights. Audits are critically important because without knowledge, proper asset management simply isn't possible.

Agreements: IP agreements with third parties, such as licence agreements, franchises, joint ventures and the like.

Training: Staff training, with a view to making staff more aware of IP.

IP developments: Keeping up with developments in IP, such as traditional knowledge, remuneration for recording artists, and changes to patent law in areas like the examination of pharmaceutical patents.

Some of these measures may, on the face of it, appear burdensome. But an increased awareness of and focus on IP will benefit corporate South Africa in the long run.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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