Mr Leon Louw, Executive Director, Free Market Foundation

Distinguished guests

Ladies and Gentlemen

Good morning. It’s a pleasure to have the opportunity to say a few words about IP.

There was something of a public outcry when the publicly funded IP bill became law last year.

There was also an outcry about IP amendment bill, the DTI bill, with a lawyer calling it “an abomination” and a judge calling it “flawed”. The outcry was around traditional and indigenous knowledge. The criticism was that indigenous knowledge is difficult to define and that communal ownership is problematic as well.

That was not our bill, but the issue of indigenous knowledge is a key theme in the DST that we are promoting and protecting.

In fact, only the other day I was in Limpopo where I attended the IKS Expo 2009.

It became clear to me that where particular communities are ‘resource rich but economically poor’, concerted research and development interventions grounded in an indigenous knowledge should commence as a matter of priority.

For example, the DST encourages research into the establishment of a viable bio-economy.

Our Farmer to Pharma programme is aimed at promoting and coordinating the commercial use of South Africa’s plant resources and related indigenous or traditional knowledge. Three market areas have been identified to advance this objective: first the cosmeceutical, second, the food or nutraceutical and, third, the African traditional medicines industry.

Holders and practitioners of IK are custodians of a rich knowledge system that has the potential to form a productive and profitable connection with mainstream science.

The future protection of indigenous knowledge is problematic.

There is no bright line dividing the many legal from the practical problems relating to the protection of traditional intellectual property rights.

Yet our objective is nothing less than an internationally binding instrument for the protection of indigenous knowledge, traditional expression of culture and genetic resources – even though Judge Harms thinks no material benefit will flow to indigenous communities.

This brings me to the DST’s IP Act - to do with publicly funded research and its regulations. They were also subjected to swingeing attack. We have revised those regulations and MacLean Sibanda has already presented those details to you in an earlier session.

Let me say this though. It makes sense that South Africa should expect some material benefit from public funds invested in universities.

Last week I found myself signing a copyright form from a large UK firm specializing in academic journals. They wanted me to sign a copyright form that would allow them to publish a speech I had given. However, I don’t own the speech in my individual capacity and if any royalties were due they would certainly not go into my pocket. I said no, no, no. Speeches are in the public domain and free to all. They still wanted me to sign a copyright form. Under duress I did and it looked like this:

“The copyright in the Article belongs to my employer (is a ‘work made for hire’) and I am granting licence to publish as an authorized representative of my employer (government of SA)

Name and job title of assignee if different from the Author named above (cabinet minister).

In other words I was signing a form to say that I had no ownership in the speech. Very odd.

Yet this is what our academics do day in and day out – signing forms taking ownership in the products of research. We provide public funds for them to undertake research. They have to publish or they won’t get promoted. So they publish in scholarly journals belonging to international academic journal consortia who then sell those articles back to South African libraries at a king’s ransom.

So that is the one issue. Publicly funded research. There is a broader issue to do with protecting IP through the three oldest legal forms: copyright, trademarks, patents. There are many who argue that these forms provide an incentive for innovation. If your intellectual property is appropriately protected, you are more likely to invest your time and resources in developing a new idea that you can exploit for your own private benefit – of course benefiting one and all at the same time.

There are others who say that these forms of protection – copyright, trademarks, patents - positively inhibit innovation. They lock up ideas. They prevent creativity. They say IP treats knowledge as a private good whereas the whole point of publicly funded universities is to open old knowledge if not new knowledge to all. That was the original idea of the university after all.

Copyright opens the door for monopolies created around the creation of knowledge, and restricts user access especially for consumers in developing countries who cannot afford to pay. This is wasteful from an economic and social welfare point of view.

Instead of allocating resources to enforcing copyright protection and (uselessly) fighting piracy, efforts should be directed to revisiting copyright law and devising new business models that bring knowledge producers and consumers closer together within a more balanced IP regime.

What we have at the moment is three models of knowledge protection or non-protection. First, there is the patronage model (foundation grants, universities). Then there is the open-source model (Linux, blogs). Third there is the profit/incentive model of copyright.

http://www.economist.com/debate/days/view/310#pro_statement_anchor

It is the open-source model that has provided the greatest challenge to traditional models of IP protection. The buzz word now is cloud computing.

The idea is that computing will increasingly be delivered as a service, over the internet, from vast warehouses of shared machines. Documents, e-mails and other data will be stored online, or “in the cloud”, making them accessible from any PC or mobile device. Many things work this way already, from e-mail and photo albums to calendars and shared documents.

This represents a big shift in the attitude to knowledge, innovation and collaboration. If you store more and more things online, and access more and more software through an ordinary web browser, it suddenly matters much less what sort of computer you have, and what kind of software it is running.

Google has been a cloud company since its birth in 1998. It is best known for its search service, but now offers all sorts of other products and services.

It took Google a while to come up with a way of making money out of cloud computing, but it found one in advertising, its main source of revenue. Google is free to users, but charges advertisers to promote their products in novels ways. There are many people who will not pay for software at all – it has become regarded as a common or public good.

Google’s reliance on advertising explains its open approach to intellectual property – its approach to digitizing the world’s storehouse of knowledge in books.

It’s difficult, for a whole variety of reasons, to encourage government to be innovative in the provision of public services, but in the same way as we are beginning to think climate-smart, we also beginning to put into practice a technology-smart approach to IT. It’s government policy to go open source. It has been government policy since 2007. Yet it will probably take this recession, and the savings that each government department is now making, to make government go open source across the board.

In closing, I don’t think that innovation requires an open or a proprietory approach to IP. There will be a combination of approaches and models in use. Yet the odds are on open source. I don’t think internet piracy is going to be stamped out. Look at the revenue collapse in the music market - US$40 billion in 1999 to US$28 billion today. Look at all the print newspapers and even a few online ones that are going bankrupt at the moment. Where the trend is towards open and shared platforms, even Microsoft will have to change its business model if it wants to compete with Google.

I thank you