endcode's intellectual property for innovators

ENDCODE TECH LAW SERIES

The InnovaTors’ GuIde To InTellecTual ProPerTy law

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Published by EndCode September 2014

Contributors: Natalie Reffo, Denise Fouche and Pria Chetty

Website: www.endcode.org

Telephone: +27 011 049 0453

E-mail: [email protected]

Address: Building 3, Park Nicol Offices, 3001 William Nicol Drive, Bryanston, Johannesburg, South Africa

This guide is available for download on our website.

You may share this work as long as you credit EndCode and indicate if changes were made to the work. If you remix, transform, or build upon the material you may not distribute the modified material.

This work is licensed under the Creative Commons Attribution-NoDerivatives 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nd/4.0/

This guide is about intellectual property protection under South African law and how it relates to you as an innovator.

Intellectual property (IP) laws protect the rights of creators and owners of original works. By protecting those rights IP laws inspire new technologies and stimulate economic growth.

As you travel through the process of devising, creating and commercialising your innovation, you will stumble upon weighty legal questions about how to protect your IP, about what rights you and others may have over your IP and how you can apply these to suit your needs.

This guide to IP is an easy-to-follow blue-print as you, the innovator, embark on your journey.

The InnovaTors’ GuIde To InTellecTual ProPerTy law

WE TAKE CARE OF

for all innovators, start-ups, pioneers, entrepreneurs, creators, thinkers

In this Guide:

1. The Different Types of Intellectual Property

2. Copyright

3. Trade Marks

4. Trade Secrets

5. Designs

6. Patents

7. Collaboration Environment

8. Managing Your IP

9. IP Due Diligence

The Innovators’ Guide to Intellectual Property Law

1

There are different types of intellectual property:

For instance, there are those created under statute (an Act of Parliament). These are:

• Copyright (The Copyright Act 98 of 1978)

• Trade Mark (The Trade Marks Act 194 of 1993)

• Patent (The Patents Act 57 of 1978)

• Design (The Designs Act 195 of 1993)

In the case of these types of intellectual property, there are legal rights and obligations emanating from the actual laws that govern the relevant intellectual property.

Trade Secrets are also considered to be intellectual property and may be subject to obligations of confidentiality and non-disclosure usually arising out of contracts.

Each of the above types of intellectual property will be described in more detail below.

THE DIFFERENT TYPES OF IPWAys to protect your rights

1 The Innovators’ Guide to Intellectual Property ENDCODE

We hope this guide assists you to:

Protect your rights to your innovation

Commercialise your innovation

Disseminate your innovation

Prevent violation of your innovation

All legislatory sections mentioned under this heading refer to the Copyright Act 98 of 1978

3.1 For what types of works is copyright used? (Section 2(1))

3.2 Do I need to register my work?Your work is automatically protected by copyright without any formal registration if the following requirements are met:

Originality - this means skill, labour or judgement must be expended by the author (Section 2(1))1;

Material embodiment - the work must be expressed in a physical format (ideas are not protected) (Section 2(2)); and

The author is a ‘qualified person’ (Section 3(1)) - the author must be a citizen/resident of South Africa or a body (juristic person) incorporated under laws of South Africa; or

The work must have been first published or made in the Republic or a World Trade Organisation Country (Section (4)(1).

COPYRIGHTprotectiNg Merit

Category of works Types of works

Literary works Novels, textbooks, treaties, compilations or tables of stored data (including data stored) in a computer program, lyrics

Musical works Music or musical notation (excluding lyrics)

Artistic works Paintings, sculptures, drawings, photographs, works of architecture, works of craftsmanship

Cinematographic films

Films, home movies, documentaries, sound tracks to films

Sound recordings Recording of music, voice or other sounds

Broadcasts A telecommunication transmission service which consists of sounds, images, signals or signs

Programme-carrying signals

A signal which carries a program and is emitted through a satellite

Published editions The first print of a particular typographical arrange-ment of a literary or musical work

Computer programs A set of instructions which, when used with a computer directs it to bring about a certain result

ENDCODE The Innovators’ Guide to Intellectual Property 2

The WTO is an international organisation concerned with trade regulations and rules between countries. It aims to ensure the free-flow of trade between signatory nations. The WTO’s TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement seeks to create internationally approved trade rules with regard to intellectual property rights protection.

South Africa is also a signatory to the Berne Convention for the Protection of Literary and Artistic Works, which provides international copyright protection to authors who are nationals of signatory countries or where the works originated in a signatory country. Thus, all signatory countries benefit from the protection of intellectual property rights of authors within other signatory countries.

THE WTO

1 The Act does not define ‘original’. We gain our understanding of originality from case law which considers whether “a substantial improvement on what preceded the work” has occurred and whether “skill, labour, effort and time were expended” in creating the work. http://www.saiipl.org.za/introip/74-copyright

3.3 How long does protection last?This depends on the type of work we’re talking about. Let’s look at two categories:

Literary, musical, artistic works (Section 3(2)(a)): the lifetime of the author, plus 50 years from the end of the year of his/her death BUT if the work has been published or made available to the public before the death of the author, then 50 years from the year first published or made publicly available.

Films, photographs, computer programs (Section 3(2)(b)): 50 years from the end of the year the work was made BUT if the work has been published or made available to the public, then 50 years from the year first published or made publicly available.

3.4 What rights do I have in my work?Even if you are the author of the work, you don’t necessarily own the copyright.

If you made the work in the course of employment - your employer owns it (Section 21(1)(b)(d))If it is a commissioned work - the person who commissioned it owns it (Section 21(1)(c))An author/owner can agree to exclude these rights in a contract (Section 21(1)(e))Ownership of copyright for works made under the direction or control of the State belongs to the State (Sections 5 and 21(2))

The owner of the copyright has rights over the work, but these depend on the type of category to which the work belongs. Here, we look at literary, musical, artistic works, films and computer programmes (You can find the complete rights for specific categories of work in the following sections of the Copyright Act: Sections 6 to 11B).

The owner of the copyright has the following exclusive rights for literary, musical, artistic works, films and computer programmes:

Reproduce the work in any manner or formPublish the work if it is yet unpublished Perform the work in publicDistribute copies of the workBroadcast the workCause the work to be transmitted in a diffusion service2 Make an adaptation of the workDisplay the work in public

3.5 When can somebody use my work without permission?There are exceptions to the rule that the copyright owner has exclusive rights as described above:

Fair dealing (Section 12(1)(4)): for research, criticism, teaching, reporting on current events of a literary or musical work, only if the source is mentioned.Quotation (Section 12(3)): quotation of a part of a literary or musical work that enjoys copyright protection is allowed, as long as such use is in line with fair practice, does not exceed the purpose of the use and the source and name of the author is mentioned.

COPYRIGHTprotectiNg Merit


Creative Commons assists you in creating licences that let you manage your rights and how your work is shared and used. View the different categories of Creative Commons licenses at http://creativecommons.org/

WHAT DOES IT MEAN IF A WORK IS IN THE PUBLIC DOMAIN?Works in the public domain are those whose intellectual property rights have expired, have been forfeited, or are inapplicable. http://en.wikipedia.org/wiki/Public_domain. These works can be used without restriction and no permission is needed.

Attribution CC BY others can distribute, remix, tweak, and build upon your work, including for commercial purposes, but must credit you for the original. use this license if you wish to disseminate your work as much as possible.

Attribution-ShareAlike CC BY-SA others can remix, tweak, and build upon your work, including for commercial purposes, but must credit you and license their new creations under the same terms. Any derivative work will therefore also allow commercial use.

Attribution-NonCommercial CC BY-NC others can remix, tweak, and build upon your work but only for non-commercial purposes, and new derivative works must acknowledge you and be non-commercial, however, they need not be licensed under the same terms.

Attribution-NoDerivs CC BY-ND others can redistribute, or make use of the work commercially and non-commercially in whole and unaltered, and the work must be credited to you.

Attribution-NonCommercial-ShareAlike CC BY-NC SA others can remix, tweak, and build upon your work for non-commercial purposes only, but must credit you and license their new creations under the identical terms.

Attribution-NonCommercial-NoDerivs CC BY-NC-ND others can download your work and share it but must credit you. the work cannot be changed in any way or used commercially. this is the most restrictive of the creative commons licenses.

The author of a work has the right to claim authorship of the work and to object to the distortion or modification of the work should such modification harm the reputation of the author (Section 20(1))

MORAL RIGHTS

2 Defined as “telecommunication service of transmissions consisting of sounds, images, signs or signals which takes place over wires or other paths.” Note the distinction between the broadcast right and the diffusion right. “Broadcast” involves a form of public transmission transmitted by wireless communication whereas “wire-broadcast” means the form of public transmission transmitted by wire-telecommunication. http://www.wipo.int/edocs/pubdocs/en/copyright/1025/wipo_pub_1025.pdf

CC LICENSES

All legislatory sections mentioned under this heading refer to the Trade Marks Act 194 of 1993

4.1 For what types of works are trade marks used?A “trade mark” means a mark used or proposed to be used by a person in relation to goods or services for the purpose of distinguishing the goods or services in relation to which the mark is used or proposed to be used from the same kind of goods or services connected in the course of trade with any other person (Section 2(1))

A trade mark is something which is used to distinguish one brand or enterprise from another that is used in relation to goods and services. A logo or company name or slogan might be trade marked. (Section 9(1)(2))

4.2 What can I NOT trade mark?a mark which is not capable of distinguishing a marka mark which consists only of a sign that has become customary in the current language or practices of a tradea mark to which you have no claima mark to which you have no intention to use as a trade marka mark which consists only of the shape, configuration, colour or pattern where such elements are necessary to obtain a specific technical resulta mark that was applied for in bad faith

4.3. How do I trade mark my mark? A registered trade mark is protected under the Trade Marks Act 194 of 1993 and has a registration certificate, which has legal status and stands as proof of the ownership of that trade mark. Registering a trade mark thus provides more certainty for the owner. Application for registration of a trade mark needs to be made at the Companies and Intellectual Property Commission (CIPC). Find them at http://www.cipc.co.za.

In order to qualify for registration, the mark needs to have the ‘distinguishing’ characteristic (Section 9(1)). In other words, it needs to be capable of

TRADE MARKSprotectiNg DistiNctioN

A trademark can include

Visual representation of the mark

e.g. the McDonalds ‘M’ logo

In the case of a container, the use of the container

e.g. the Coco-Cola bottle

An audible representation of the mark

e.g. Audible jingles or tunes

The name or representation of a person, with that person’s consent

e.g. Colonel Sanders from KFC


Unregistered trademarks are protected through the laws of unfair competition (common law).

PROTECTION FOR UNREGISTERED MARKS

distinguishing the goods and services which it represents from other enterprise. It must also be capable of being represented graphically.

Trade marks must be registered as falling into a particular class as prescribed by the Registrar.

Remember that it is possible that your mark is rejected at the trade mark office, for example, if it is similar to a currently registered trade mark and could cause confusion for a consumer.

The Registrar may also impose restrictions and limitations on your use of your trade mark (Section 16(2)(b)). For example, a colour limitation may apply so that mark is trade marked only in a certain colour (Section 32).

4.4 How long does its protection last for?Trade marks are registered for a period of 10 years, and can be renewed at the registration office.

Note that non-renewal of your mark can result in it being removed from the register. The Registrar will send notice to the owner of the mark before the renewal date expires.

4.5 What rights do I have over my trade marked mark?You have the monopoly to do the following with regard to the trade mark:

Use the trade mark in relation to goods or services for which they were registered (Section 2)

Prevent others from registering a similar trade mark (Section 10(14))

Prevent others from using the trade mark or a confusingly similar one, in relation to similar or the same goods or services for which you are using it (Section 34)

Licence the use of the mark to others (Section 38)

Transfer the trade mark to someone else (Section 39)

4.6 Do I need a lawyer to register my trade mark?Although you can register the mark yourself through CIPC, this can be time-consuming process. It is best to get legal advice should you have any doubts regarding a trade mark search, or the class in which your mark will be registered.

TRADE MARKSprotectiNg DistiNctioN


“Passing off” occurs when an enter-prise misrepresents that his business or product is that of another enter-prise by using the trade name, trade mark or get-up of that enterprise in order to mislead consumers. Passing off is an offence under the common law of unlawful competition for unreg-istered trade marks and Section 34(1) of the Trade Marks Act 194 of 1993 for registered trade marks.

PASSING OFF

TRADE SECRETSprotectiNg ecoNoMic VALue

A trade secret is information that has application in trade, business or industry that has economic value and is not publicly available. If a company’s trade secret is misused then the economic value of the trade secret is lost and the goodwill of the company is damaged. Use, appropriation and disclosure of a trade secret are illegal.Where copyrighted matter deals in a company trade secret but the copyright belongs to the employee, that employee may not reveal it or copy it as he or she pleases.

The following mechanisms can be put in place to protect trade secrets:

Restraint of TradeA Restraint of Trade Agreement occurs when the seller of a company agrees not to carry on a similar and competitive business with the purchaser of the company, or, where an employee agrees not to start a competing business or enter into the service of a competing business to the employer’s business. Such an agreement seeks to protect the trade secrets of the company. Violation of a Restraint of Trade Agreement may result in the abuse of intellectual property rights.

Non-Disclosure AgreementsWhen an innovator has to disclose intellectual property to another party in the course of business or to get financial or marketing advice, they put themselves at risk in that their ideas may be copied. A Non- Disclosure Agreement creates confidentiality between you and the person with whom you have shared your idea.

Contractual limitations on Solicitation of EmployeesCompanies may enter into agreements, restricting the soliciting of each other’s employees.


REVERSE ENGINEERINGA ground of justification for the infringement of a trade secret. Reverse engineering is the discovery of a trade secret by independent examination of a product that contains the trade secret.

When one enterprise spies on another in order to obtain intellectual property such as customer lists and trade secrets so as to gain a competitive advantage.

INDUSTRIAL ESPIONAGE

All legislatory sections mentioned under this heading refer to the Designs Act 195 of 1993.

The Designs Act protects two dimensional designs and three dimensional designs (shape). The Act considers shape and configuration and not the functionality of the design. If all the visual features of a design serve a functional purpose, that design is according to common law, not registrable.3

6.1 What types of designs are protected?There are two types of designs:

Aesthetic = new and original (Section 1)

“aesthetic design” means any design applied to any article, whether for the pattern or the shape or the configuration or the ornamentation thereof, or for any two or more of those purposes, and by whatever means it is applied, having features which appeal to and are judged solely by the eye, irrespective of the aesthetic quality thereof.

Functional = new and not commonplace (Section 1)

“functional design” means any design applied to any article, whether for the pattern or the shape or the configuration thereof, or for any two or more of those purposes, and by whatever means it is applied, having features which are necessitated by the function which the article to which the design is applied, is to perform, and includes an integrated circuit topography, a mask work and a series of mask works.

6.2 How do I protect my design?Registration at the Register of Designs is required through the Companies and Intellectual Property Commission (CIPC) (Section 7).

6.3 How long does protection last for?Aesthetic designs are protected for 15 years and functional designs are protected for 10 years.

Registered designs must be renewed annually before the end of the third year as from the date of registration.

DESIGNSprotectiNg shApe


3 http://www.zaip.org/designs

PATENTSprotectiNg iNVeNtiVeNess

All legislatory sections mentioned under this heading refer to the Patents Act 57 of 1978.

7.1 For what types of works is a patent used?An invention, formula or recipe that is (Section 25):

newinvolves an inventive step and is capable of use in trade or industry or agriculture

7.2 What is the ‘new’ requirement?An invention is new if it does not form part of the “state of the art” (Section 25(1)) So, what is this “state of the art”?The state of the art is all disclosures previously made available to the public. The invention is compared with all that came before it that is available in the public sphere, and if there is no difference between them it is not ‘new’. Thus the invention has to be different to be new.

7.3 What is the ‘inventive step’ requirement? An invention involves an inventive step if the invention is, simply, not obvious to a person skilled in the art (Section 25(10)).

7.4 How do I patent my work?The inventor will need to make an application for the registration of a patent. However, the patent office is a non-examining office and as such does not scrutinise the patent application for anything other than administrative requirements. This can result in patents for similar inventions being granted to two people simultaneously and this will consequently have to be resolved after the fact rather than at the registration step.

7.5 How long does its protection last for?The protection lasts for 20 years from the date of application (Section 46(1))

7.6 What rights do I have over my patented work?(Section 45) As patentee, you have the right to enjoy all profit and advantage that accrues from the patented invention.

You also have the right to prevent others from: (Section 45(1)) making, using, exercising, disposing of or importing the invention.

You also have the right to licence the patented invention to another person for use.


Project collaboration can make the authorship and the ownership of intellectual property rights more problematic.

Possible complications when collaborating with others:

Ownership amongst collaborators: many people collaborating on the same work may result in confusion with regard to who owns the IP for which parts of the work.

Funders rights: a person funding a project but not directly involved in the creation of the work might stipulate that they are the owner of the intellectual property.

Third party’s rights: incorporation of third party IP into new work would result in confusion as to who would own the intellectual property of that portion of the new work unless done in accordance with the rules of fair dealing or quotation.

Employee’s rights: Employees producing work in the course of their employment do not own the intellectual property; rather the employer owns the IP unless an agreement has been made between them to the contrary.

Independent contractor’s rights: Contrary to the above, independent contractors who work on a project will be the owner of the intellectual property, unless such ownership was assigned to the company through an agreement.

Customers and client’s rights: The intellectual property rights can be unassured between the person who instructs and gives specifications as to the work, and the person who actually manifests the idea into physical form. It will be necessary to create an agreement to settle these issues beforehand.

State’s rights: The Intellectual Property Rights from Publicly Financed Research and Development Act 51 of 2008 provides the state with certain intellectual property rights associated with publicly financed research and development which places limitations on the ownership, rights of exploitation and commercialisation of such works. Also note that copyright in a work that was made under the direction and control of the state, vests in the state and the state has the power, for instance, to obtain any invention or patent by acquisition.

COLLABORATION ENVIRONMENTMANAgiNg MANy Authors/oWNers


© Copyright

Patent

Registered

Trade mark

Service mark

KNOW YOUR SYMBOLS

℠

℗

®™

Dissemination:In certain instances, protecting the use of a copyright might not be your main goal. You may in fact rather wish to spread your work easily to as many people as possible in order for it to reach its full potential. If this is the case, consider the following: The Creative Commons creates licences of use to your specifications for your copyrighted work, letting others know if they may use your work and in what ways. Learn more at www.creativecommons.org.

Unregistered Trade Marks: Marks do not need to be registered at the trade marks office in order to have legal protection. The rules of unlawful competition protect the goodwill of businesses and this includes protecting any well known marks associated with it from abuse.

Understand and clarify ownership: Ownership of intellectual property rights is not always clear-cut as can be seen from the “Collaboration Environment” section. It is important to consider that complications that may occur and that it is best to seek protective measures through licence agreements, non-disclosure agreements and other contracts as appropriate. Please see the list under the “Due Care” section for further information.

LicencesCopyright: Section 22 of the Copyright Act 98 of 1978 allows for exclusive and non-exclusive use licence for copyrighted work.

o “exclusive licence” means a licence authorising a licensee, to the exclusion of all other persons, including the grantor of the licence, to exercise a right which by virtue of this Act would, apart from the licence, be exercisable exclusively by the owner of the copyright (Section 1 of the Copyright Act 98 of 1978).o “non-exclusive licences” are those that grant only some of the exclusive rights of the copyright (Section 22(2)) and may be written, oral or inferred by conduct (Section 22(4) of the Copyright Act 98 of 1978).

Trade Marks: The use of a registered trade mark by a licensee is permitted by Section 38 of the Trade Marks Act 194 of 1993. The Act does not insist on recordal of a trade mark licence, and such recordal is a voluntary process. It is recommended that trade mark licences be recorded as this provides prima facie proof that a valid licence exists.

MANAGING YOUR IPiMportANt coNcepts to reMeMBer


DEFINE YOUR RIGHTS

Definition clauses in all agreements are critical. All important terms must be carefully defined and used consistently. Definitions in agreements should not directly contradict definitions for the same words or phrases in legislation, so as not to cause confusion.

Patents: Section 53 (1) of the Patents Act 57 of 1978 requires the registration of the licence of use. This is a voluntary licence. Section 55 of the Patents Act describes a situation where the patent rights of one invention are dependent upon having a licence for another patent. In such situations where an agreement between the two patent owners cannot be reached, the dependant patent rights owner can approach the commissioner for a licence to use the prior patent. This is a compulsory licence. Where any person believes that the patent rights of an invention are being abused (for example, by non-use) he may approach the commissioner for a licence of use (Section 56 of the Patents Act 57 of

1978). This is a compulsory licence.

Commercial Terms of EngagementManage the use of your protected intellectual property with those who engage with you in commerce via a Commercial Terms of Engagement contract.

Terms of SaleTerms of Sale will usually clearly state that no rights use of intellectual property is licenced out by the selling of any material which may include or be associated with the intellectual property of the seller.

Managing Third Party Intellectual Property Rights in online contentOften, websites incorporate the logos, hyperlinks, images, videos and other sources of IP that belong to companies, organisations, accreditations or customers

it is associated with. In order to utilise such material, it is best to get consent for such use by the IP owner. Such consent should be safely stored in the event that there is a dispute.


What is your existing IP?

Rights in print equal rights in electronic formats.

What current projects are you involved with that create new IP?

Do you have any third party IP, and do you have permission for use?

What existing IP licences do you have and what are the licence conditions?

Are you paying or being paid any existing royalties?

What fees are payable to or by you for IP licences?

Is there compatibility between proposed IP and new or current project objectives?

CONSIDER THE FOLLOWING WHEN ESTABLISHING YOUR IP PORTFOLIO AND STRATEGY

MANAGING YOUR IPiMportANt coNcepts to reMeMBer

This guide is a broad introduction to intellectual property rights. It is always best to do your research and to ask questions should you be unclear regarding these rights or the processes required securing those rights. Should you be concerned about potential infringement of your rights of those of others, speak to staff at the CIPC or consult with an intellectual property lawyer.

REMEMBER

now – go forth and conquer, armed with the knowledge to defend, disperse, and inspire innovation

TECHNOLOGYLEGAL RISK.YOU FOCUS ONTHE FUTURE.

EndCode is a respected advisory firm of African technology law and policy professionals. We advise organisations on tech and innovation legal and policy landscapes on the continent. EndCode Advisory recognises that local, regional and international organisations are in need of expert assistance with navigating tech laws and policies in Africa.

We have specialist skills and experience in the following areas: privacy, digital media, access to information, electronic commerce, mobile commerce, electronic signatures and contracts, electronic records, evidence and discovery, electronic government, online consumer protection, cybersecurity, interception and surveillance, intellectual property management and technology innovation and commercialisation.

Tel: +27 11 049 0453 E-mail: [email protected]

Website: endcode.org Twitter: @endcode_org

WE TAKE CARE OF

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