Briefing on the Intellectual Property from Publicly Financed Research and Development Act (IPR Act); with Minister

Science, Technology and Innovation

11 March 2025

Chairperson: Ms T Shiviti (ANC)

Meeting Summary

The Committee was briefed by the Department of Science, Technology and Innovation and the National Intellectual Property Management Office (NIPMO) on the Intellectual Property from Publicly Financed Research and Development Act (IPR Act).

Dr Blade Nzimande, the Minister of Science, Technology and Innovation, said when the Department was first formed in 1994, one of its aims was to strengthen the country's innovation capabilities, identifying strategic weaknesses in the innovation system. An example of this could be research which hardly translated to commercialisation and intellectual property (IP). Most of the innovators consisted of the poor and working-class communities. To address the aforementioned weakness, several innovation-enabling legislative, institutional measure were in place. This included the creation of the Technology of the Innovation Agency which was for innovative IPs commercialisation from research products. The Intellectual Property from Publicly Funded Research and Development Act was passed in 2008.

The Committee wondered about an instance where someone acquired (Intellectual Property) IP and a large corporation challenged the originality of the IP. The Committee raised concerns about the theft of IP in the country by international companies. They asked about the beneficiaries of the NIPMO, specifically the small enterprises, and what impact the NIPMO made on local economic development. The Committee was alarmed at the allocations which were at only 3% of the budget to support millions, yet 78% was spent on salaries alone.

Meeting report

Opening comments:

The Chairperson greeted everyone present at the meeting and said that she would switch off her video. She said that she had a pleasant weekend, during which she observed the good work done by the Department. She outlined the agenda for the meeting. She experienced some technical issues. The meeting agenda was subsequently adopted. She heard no absentees with an apology, except from the Deputy Minister, who was currently travelling. She handed over for the next item on the agenda.

Minister's remarks

Dr Blade Nzimande, Minister of Science, Technology and Innovation, greeted everyone and said he would switch off his video due to having poor internet connection, he hoped that all could hear him speaking. He greeted everyone present at the meeting, and mentioned the members of his team. He looked forward to the presentation. He appreciated the support provided by the Committee on the latest Tourism Strategy. When the Department was first formed in 1994; one of its aims was to strengthen the country's innovation capabilities, identifying strategic weakness in the innovation system namely; the innovation 'chasm'. An example of this could be research which hardly translated to commercialisation and intellectual property (IP). Most of the innovators consisted of the poor and working-class communities. To address the aforementioned weakness, several innovation-enabling legislative institutional measures were in place.

This included the creation of the Technology of the Innovation Agency which was for innovative IPs commercialisation from research products. The Intellectual Property from Publicly Funded Research and Development Act was passed in 2008. Said Act sought to ensure that research funded by the public funds was identified, protected and utilised for the benefit of the public. Said Act also established the National Intellectual Property Management Office (NIPMO). Here, he was reminded of the discovery of insulin in 1928. The professor who founded the insulin was paid only $2. He wondered how many billions of Rand were generated from the pharmaceutical companies that used and sold insulin for the purpose of treating diabetes. He wondered whether the University of Toronto was still benefiting from this.

Another problem which the Department sought to address was the Intellectual Property leakage; this referred to unauthorised disclosure of an organisation which was appropriated by other organisations. This leakage occurred through many means: data breaches, poor security practices, and ethical actions of an employee working for the organisation by means of plagiarism. In 2010, South Africa produced the first electric car in the world, called the Optimal Energy Joule, but this was lost due to lack of funding and weak management. Said car won many international awards. He wondered why the researchers fled to the USA, could some of the innovations in the USA be connected to the South African researchers? He rhetorically asked this. The massive data breach led to the compromising of the clients and the employees. He recalled that an American company wanted to patent the Rooibos tea as an American product, as well as a former Vodacom employee who invented the 'please call me' initiative, which led to a conflict. Much of the IP was stolen from developing countries. South Africa was among the top five of the most biodiverse countries, and of the plant species in the country, only 5% were formally studied. The continent was equally biodiverse; many countries invested in the African continent and committed theft of intellectual property. He recalled the President mentioning the public funding for innovation in the State of the Nation (SONA) last month. The Innovation Fund was established in 2021. Its primary objective was to serve as a catalyst for the creation of the sustained growth of the high technology Small Micro and Medium Enterprises (SMMEs), and to focus on generating sustainable pipeline opportunities of viable high technology for the private sector. Compared with traditional financing institutions such as private equity investors and commercial banks.

The Department provided financial support. There was a long-standing debate and discussion on the Bank of South Africa, which was not responding to such initiatives; there was no start-up funding facility, and commercial banks showed no interest in supporting the SMMEs. During the COVID-19 global pandemic, R200 000 000 000 was set aside to assist the SMMEs, and hardly any of that funding reached said enterprises. NIPMO was integral to unlocking innovation in the country, commercialising it, and supporting it as part of contributing to economic growth and development in the country, especially those in the poor and working-class sectors. The task of protecting IP was strenuous and NIPMO may be out of depth in this regard. The Department may need to enhance the NIPMO - he was considering this and invited the Committee to comment on this. Regarding the grass-roots innovation, how much of the country's economy did this take up? The Department required data on this and on the transformation of the economy relating to the country's demographics. He requested details on the demographic beneficiaries. The aforementioned matters suggested the importance of safeguarding the IP of the country, in light of the current geo-political events. NIPMO was thus very crucial. He felt that the background was important to outline.

Ms Gugulethu Zwane, Acting Director-General, led the Committee through the presentation on the NIPMO.

Briefing by the DSTI and National Intellectual Property Management Office (NIPMO) on the Intellectual Property from Publicly Financed Research and Development Act (IPR Act)

The Committee was taken through the presentation. NIPMO was established through the Intellectual Property Rights from Publicly Financed Research and Development Act (IPR Act (Act 51 of 2008)) to ensure that outputs from publicly funded research and development is identified, protected, utilised and commercialised for national benefit.

Members were taken through why the Act was established and what the Act seeks to regulate. The presentation also covered NIMPO’s responsibilities under the IPR Act.

 The presentation addressed the work of NIMPO in more detail.

see attached for full presentation

Discussion

The Chairperson appreciated the presentation and the background provided by the Minister and the Department. She opened the floor for comments.

Ms N Mazzone (DA) appreciated the comprehensive presentation. She said she was very passionate about IP and handled many cases of IP theft during the State Capture. She acknowledged the mitigating national interest and protection. However, she did not see mention of a Risk Assessment Department; where was this? What happened in an instance where someone acquired IP and a large corporation challenged the originality of the IP? In the past, the large corporations had the funds to enter into an IP war with South Africa for long periods of time, and the South African developers could not maintain such costs, which led to the eventual abandonment of the IP. The challenge of IP remained an issue. Would the IP that was protected be on record? Could the Minister, for example, open the file and outline its contents? Could the Committee ensure that all was in order? She was happy to hear about the pebble bed monitor being mentioned, some of the IP for this was missing; did NIPMO have record of this to follow up on the whereabouts of the said monitor? It was important to enforce the anti-corruption fail-proof. What was the possibility of retrieving the missing or stolen IP?

Mr T Mjadu (MK) appreciated the presentation. He had serious concerns to address about the recent report on NIPMO. Said report lacked information about the funding processes in consideration compliances, as well as the neglect of SMMEs. The report highlighted critical issues that need to be addressed urgently and with accountability. NIPMO was established to foster innovations and to steer progress, yet there was no mention of evidence of the list of goals achieved by NIPMO and the 'when and how' of the projects conducted. The absence of measurable outcomes called into question the project's effectiveness. Could the Department explain why there was a lack of information and evidence of the project (NIPMO?) impact? The Committee had to acknowledge any measure of success from the NIPMO. The Department claimed to financially support various institutions, yet the funding distribution was flawed. Allocations were at 3% to support millions (of people?) yet 78% was spent on salaries alone. This was of grave concern. How did the Department justify the budget allocation, especially when claiming to support millions of beneficiaries? There was a lack of transparency and fairness. Could the Minister clarify the funding allocation processes and explain the structure of it?

Regarding the Mixed Compliance results; he was concerned about the reported inconsistent compliance and monitoring. While steps were taken to address this issue, non-compliance remained. The Department needed to focus on the measures in place to rectify this situation and ensure future accountability. Regarding the neglect of the SMMEs; the initiatives appeared to favour the larger corporations in Johannesburg and not those outside of Gauteng Province. Why was this the case? Why could the Department not expand the initiative into other provinces? How could the Department justify the neglect of SMMEs? What measures were taken to empower the SMMEs across the country? Could NIPMO provide evidence of how the initiative had been strengthening the local innovation system? Particularly with the developing areas? How many SMMEs have been supported through NIPMO? What major impact had this made on the local economic development? What percentage of publicly funded IP has been successfully commercialised? And how did this compare with the global average? Could NIPMO provide data on the figures of patents and IPs abandoned due to lack of market potential factors, and what measures were in place to prevent such losses in the future? How many Historically Disadvantaged Institutions (HDIs) have benefited from NIPMOs support? What measures were in place to ensure that such institutions benefited from publicly-funded IP? Could NIPMO provide data on the number of IP-disclosed patterns and commercialised activities?

Dr S Thembekwayo (EFF) mentioned that various departments were in partnership with the Department in relation to the management of IP, emanating from the publicly-financed research development. How did the Department steer the interaction amongst the aforementioned stakeholders in the Intellectual Property Rights (IPR) landscape? How did the re-prioritisation of funds work in relation to the disburse amounts compared with the needs of the institutions in relation to IP? What had the Department done to ensure the country was not further disadvantaged by its existing patenting system? The presentation indicated that the annual call for applications due date was 15 May (2025?), with the mention of 'subject to fund availability'. With the call for applications with the said due date, what happened in a situation where there was no funding available? Had this previously occurred, and if yes, how was the matter handled? This may disappoint the applicants. She echoed the question of the capacity development allocation of 3% and the salaries allocation of 78%. This was of grave concern; it should be the antithesis. Regarding the strategic update; what was the role of the Committee in the IPR Amendment Act? Why was there an amendment?

Mr T Ramongalo (DA) asked about the mention of little return on the South African economy; what was the issue in this regard? How did the Department function with regard to IPs? Did the Department work only with institutions? How could a person learn to protect their IP? Could the person consult with NIPMO? On mismanagement, he heard that about R9 000 000 000 was mismanaged; what was the consequence management in this regard? How would the Department handle issues of accountability in the future?

Mr V Nkosi (ANC) welcomed the presentation and the introduction. He asked where the offices of Technology Transfers were. In which towns and provinces did said offices reside? How could the public access them? Could the Department assist the IP arising from the private-funded research? Here, he brought up the example of the former Vodacom employee who initiated the 'Please call me' project. Could the Department assist such a person with private-funded research? Or was it strictly supporting the public-funded IP? How much funding has been dispersed thus far by the IP fund? And which institutions received the largest share of the funds? Who were the four institutions that accounted for around 70% of the 55 start-up companies formed?

Ms T Mchunu (ANC) appreciated the information provided. She asked for clarity on the IP leakage and demographic profile of the beneficiaries. She requested a thorough discussion on this and suggested forming a committee to address the matters. Regarding the demographics of the beneficiaries, could there be a report on the progress made and the profile of the beneficiaries? The presentation mentioned funding of the institutions; was there a plan to rectify the previously disadvantaged institutions that were now receiving less funding? Could the Committee receive said plan along with the measures taken to rectify the situation? She said the aforementioned institutions could be the universities among the communities who urgently required such a service. Regarding the abandoned IPs; the presentation mentioned that there must be an advertisement of approximately 45 days before the IP is abandoned. Which platforms were used to conduct the advertisement? Were said platforms user-friendly?

Was there no manipulation tactic to deprive a person of their sustainable project, and who may suffer under the potential abandonment of the IP? Was there a way of monitoring that the IP would not return with another individual or company who may have gained access to the IP for their own personal gain, thus depriving the original creator of the potential benefits? Regarding the awareness of NIPMO and its activities, how could advocacy campaigns expose a lot of people to the information and ensure access for all? She recalled in a previous meeting, there was a discussion of protecting Indigenous knowledge through embarking on awareness and advocacy campaigns. She was concerned that the funding may only benefit those who were privileged and exclude those from poor and disadvantaged communities. How could the Department engage those who possessed the indigenous knowledge, individually and without the institutions? Was it the case rather that those individuals could only be assisted through other institutions? To what extent had the Minister invited and involved other Ministers to collaborate? Were other departments, apart from those mentioned in the presentation, also contacted (such as the Department of Sport, Arts and Culture, for instance)?

The Chairperson handed over for responses.

Responses from the Department:

Minister Nzimande said he would distribute the questions amongst his team members for responses, and he would respond later on.

Dr Rakeshnie Ramoutar-Prieschl, Acting Deputy Director-General: Technology Innovation, responded saying the Department had not clearly outlined what the 78% allocation for staff was for. Said allocation was for supporting eligible institutions across the 26 universities as well as science councils, she informed. She could prepare detailed responses to all the questions brought forward to them. She handed over to her colleague.

Ms Jeanne Charsley, Head Chief Director of NIPMO, responded on risk assessment; the NIPMO was part of the Department and NIPMO reported the risks on the Risk Register of the Department. Enforcement was mentioned in the presentation, and this was identified as an issue. NIPMO tried to obtain a mechanism for insurance, but in a failed attempt, the investigation was ongoing.

Regarding the database; the universities and science councils reported bi-annually to NIPMO. Fortunately, every IPR was open for public inspection 18 months after the application process. With the security clearance of the Committee, NIPMO could provide the necessary confidential information.

Regarding the loss of state-funded IP; NIPMO had not been involved in this as NIPMO had no jurisdiction in this regard. The aforementioned legislation was in place to rectify the wrongdoing of the past and to have better IP practices.

Regarding the measurable impact; NIPMO had two projects. The IP Fund; whose beneficiary was an application number, NIPMO would work on making more of an impact.

Regarding the Office of Technology Transfer (OTT) Support Fund; when the IPR was formed, the universities and science councils said they had a legislative mandate to comply with the Act however there was a lack of funding. The first four years of said Fund was to employ personnel to establish the OTTs. Later on, the transition was away from salaries and into Technology Transfer activities, capacity development, operational costs. Capacity development refers to the OTT personnel.

She informed that the main stakeholders of NIPMO were the 37 institutions (tertiary institutions as well as science councils), and funding was allocated to the recipients to assist with establishing OTTs.

Regarding the number of disclosures which were successfully licensed; it was 14% for the 2023/2024 snapshot.

She promised to look at the database and provide details of the abandoned IP to the Committee.

NIPMO had supported all of the previously disadvantaged institutions, about 150 contracts, with the OTT Support Fund.

Regarding support for the existing patents, NIPMO focused mainly on state-funded IP. Other interventions were also made to assist the SMMEs, such as the Inventor Assist programme, where attorneys provided pro bono work for SMMEs. She confirmed that every university and every science council had an OTT; she could provide the full list.

The NIPMO would assist someone who had a query and then direct them to the Inventor Assist Programme or to other funding organisations to assist.

She informed that R263 000 000 had been paid out over 13 years, with the Council for Scientific and Industrial Research (CSIR) receiving the most funding.

Regarding the previously disadvantaged universities which had minimal engagement on the IP Fund; NIPMO had a plan in place. The IP Fund was for those who had IP and had a rebate on the IP. She agreed that the universities should fully utilise the IP Fund.

She currently did not have the statistics on hand about the start-up companies, this information was on the database and she would retrieve it. She said that the demographic from 2018 had changed greatly, thus far eleven institutions had participated in licensing of their technology.

Regarding the demographics of the start-up companies which had been established by universities; NIPMO was under-way with the third IP which would be published. NIPMO would use an impact survey to delve into what the start-up companies look like, thereafter NIPMO would implement the impact survey.

If the IP was abandoned, the IP would be advertised on the innovation-rich portal; and currently NIPMO was collaborating to get said portal to be zero-rated to easily connect people. The applicants still had to approach NIPMO and verify that all had been done to obtain a license and commercialise it, before receiving approval from NIPMO. If the IP was in the public domain and stolen, once it was in the public domain- it was difficult to manage. Failure was to be expected, and lessons could be learnt from the failures.

NIPMO collaborated with the National Indigenous Knowledge Systems Office (NIKSO) on training sessions. It also collaborated with other institutions to create the SMME IP booklet to assist with IP registrations and translations. NIKSO had a system in place for working with the various tribes to ensure cohesion and correct capturing of Indigenous knowledge.

Acting Director-General Zwane responded on the IPR Act; there was a slide on the proposed amendments, with internal discussions currently under way. This would eventually be escalated to Dr Nzimande and presented to the Committee again. It was important to include the rural communities in the knowledge systems.

Regarding the funds, the statistics presented to the Committee were from what NIPMO had spent over the past 13 years. The Chief Directorate would soon expand and with a revised Act to empower NIPMO to act independently.

She reminded all that there was a slide which mentioned the OTTs, she would provide more specific details to the Committee.

She confirmed that there existed an inter-ministerial committee which worked on IP Management.

Minister Nzimande said that his team members had covered most of the questions. He responded by saying that legislation was a process which involved the Committee. Said process commenced with the Department, subsequently it was escalated to Cabinet for discussion, as a draft Bill. Sometimes the draft Bill was published to the public, Cabinet approved the draft Bill and it was then tabled for Parliament. The Committee would engage with the amendments. Ms Charsley was informed of the various loopholes identified.

He agreed that it might be helpful to go through the State Capture report and identify the potential instances of theft of IP. He was of the opinion that one of the reasons why government was engaged in conflict with the Gupta family was because the Gupta family possibly stole IP from South African companies and public institutions. Perhaps he could call for an audit of the said report.

He said that the law enforcement agencies would be involved in instances of wrongdoing. He understood that NIPMO attempted to prevent the theft of IP. He was of the opinion that State Capture committed grand theft of IP, and legal action would be taken surely.

He requested that Mr Mjadu submit his questions in writing so that he could review them more clearly. He warned the Committee not to pose questions implying mischief on the part of NIPMO; he reiterated submitting questions in writing and to avoid making allegations against NIPMO.

Regarding the record of publicly funded IPs, he mentioned an organisation that contained a bank recording all the IPs in the world. One could freely access an IP from said bank. Perhaps South Africa could follow this lead.

He informed that the NIPMO and Department did not support privately funded IPs in any way. He considered that there were other institutions that contained IP for the country. Perhaps the country could adopt a broader perspective, with insight from the State Capture report on how to manage IP theft in the country.

He confirmed that the Department largely worked with SMMEs. The presentation was full of information on how NIPMO was supporting the various SMMEs. He did not agree with the assertion that the Department did not work with or support SMMEs. The Department, along with others, largely supported many SMMEs.

He said that NIPMO was designed to prevent IP theft. Perhaps more work could be done in this regard, with more capacity. He informed that NIPMO was a very small organisation. He would closely look at the 78% of the budget allocated to staff; perhaps this was because the majority of the work required human intervention.

Regarding the demographic profile; once NIPMO had completed work on this, the Committee would be informed through a report.

He had a plan on how to strengthen and further develop HDIs. He suggested mimicking a previous programme focused on developing HDIs. This plan was currently in progress and would be mentioned in the Annual Performance Plan (APP).

Regarding the Indigenous Knowledge Systems (IKS); the Department could present on this in the future too and respond to the questions. The Department wished to explore the already-existing treatments and traditional systems.

The Presidency had already established an inter-ministerial committee on science, technology and innovation, involving several departments. The Department would soon revert to Cabinet on the work done thus far. Through this, the Department could co-ordinate with other Ministers. He already had several meetings with other Ministers, in the area of empowering schools with education on Math and Science. This week he would have more meetings on the common issues and the plan he had in place. He was happy to consider the various comments made, especially those submitted in writing.

Closing comments:

The Chairperson thanked the Department and NIPMO for their responses. She proposed setting timelines for the Department to return with responses as there were still some responses outstanding. She agreed that the Department should evaluate its work on the theft of IP. She requested a full report on all the IP theft cases. The said report should be presented to the Committee as soon as possible. Law enforcement should also be involved in IP theft. She suggested that the Department empower the NIPMO and expand it so that more work could be done, and more support could be given to NIPMO. She reiterated that there be a deadline for all the reports and responses to be presented to the Committee. She would ask the Secretariat to submit the questions in writing to the Minister. She pleaded that responses be provided prior to their upcoming meeting. A lack of responses would lead to repeated questions; this was frustrating for the Committee.

She thanked everyone for their participation, and she looked forward to hearing their responses.

The meeting was adjourned.

Source: https://pmg.org.za/committee-meeting/40345/