The Constitutional Property Clause and. Immaterial Property Interests

The Constitutional Property Clause and Immaterial Property Interests

Mikhalien Kellerman

Dissertation presented in partial fulfilment of the requirements for the degree of Doctor of Laws at Stellenbosch University

Promoter: Prof AJ van der Walt

March 2011

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Declaration By submitting this dissertation electronically, I declare that the entirety of the work contained therein is my own, original work, that I am the authorship owner thereof (unless to the extent explicitly otherwise stated) and that I have not previously in its entirety or in part submitted it for obtaining any qualification. Signature:................................. Date:.......................................

Copyright © 2011 Stellenbosch University All rights reserved

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Summary The question that this dissertation addresses is which immaterial property interests may be recognised and protected under the constitutional property clause and if so, under which circumstances. The question originated in the First Certification case,1 where the court held that the constitutional property clause is wide enough to include property interests that require protection according to international norms. The traditional immaterial property interests or intellectual property rights (patents, copyright, designs and trademarks) are protected as property in private law on a sui generis basis. Since it is generally accepted that the property concept in constitutional law includes at least property rights protected in private law, it is relatively unproblematic to include intellectual property rights under the constitutional property clause. In Laugh It Off v SAB International,2 the Constitutional Court explicitly balanced the right to a trademark with the right to freedom of expression, which is accepted as authority that at least trademarks may be recognised and protected as constitutional property. The other intellectual property rights may most likely be recognised and protected by analogy. Foreign law as well as international law also indicates that intellectual property should be recognised and protected as constitutional property. However, there are other, unconventional immaterial property interests that are not protected as property in private law. Some are protected in private law, but not as property; others originate in public law; and yet others are not protected yet at all. In terms of the Constitution, South African courts may consider foreign law, but must consider international law. This dissertation determines when these interests may be protected as constitutional property by reference to foreign cases from German, American, Australian and Irish law; regional international law, namely European Union cases; and international law. The conclusion is that unconventional immaterial property interests may generally be protected if they are vested and acquired in terms of normal law, have patrimonial value and serve the general purpose of constitutional property protection. Property theories are also useful to determine when immaterial property interests deserve constitutional protection, although other theories may be more useful for some of the unconventional interests. The German scaling approach and the balancing of competing interests is a useful approach for South African courts to help determine the appropriate level of protection for specific immaterial property interests without excluding some at the outset. 1

Ex parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC). 2 2006 (1) SA 144 (CC).

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Opsomming Die vraag waarmee hierdie verhandeling handel is of belange in immateriële goedere erken en beskerm kan word in terme van die grondwetlike eiendomsklousule en indien wel, onder watter omstandighede. Die vraag het sy ontstaan in die First Certification saak,3 waar die Grondwetlike Hof beslis het dat die eiendomsklousule se omvang wyd genoeg is om belange in eiendom in te sluit wat volgens internasionale norme beskerming verg. Sekere regte in immateriële goedere word op ’n sui generis basis in die privaatreg beskerm, naamlik die regte in tradisionele immaterieelgoederereg kategorieë of intellektuele eiendom (patente, kopiereg, ontwerpe en handelsmerke). Dit is

algemene beginsel van grondwetlike eiendomsreg dat

die konsep van eiendom minstens belange insluit wat as eiendom in die privaatreg beskerm word. In Laugh It Off v SAB International4 het die Grondwetlike Hof

handelsmerkreg

opgeweeg teen die reg op vryheid van uitdrukking en hierdeur implisiet erken dat minstens handelsmerke en dalk ook ander intellektuele eindemsregte deur die eiendomsklousule erken en beskerm kan word. Buitelandse reg sowel as internasionale reg dui aan dat intellektuele eiendom grondwetlike beskerming behoort te ontvang. Buiten hierdie belange is daar ook immaterieelgoederereg belange wat nie onder eiendomsreg beskerm word in die privaatreg nie. Sommige van hierdie belange word wel in die privaatreg beskerm, maar dan onder ander areas van die reg as eiendom; ander het hul oorsprong in die publiekreg; en die res word tans glad nie beskerm nie. Die Grondwet bepaal dat howe buitelandse reg in ag kan neem en dat hulle internasionale reg moet oorweeg. Die verhandeling se vraag word beantwoord met verwysing na sake uit die Duitse, Amerikaanse, Australiese en Ierse grondwetlike reg; streeks-internasionale reg van die Europese Unie; en internasionale reg. Die onkonvensionele immaterieelgoederereg belange kan oor die algemeen beskerm word as eiendom indien daar gevestigde reg is, die reg in terme van gewone reg verkry is en die belang die algemene oogmerke van die grondwetlike klousule bevorder. Die teorieë oor die beskerming van eiendom is van nut om te bepaal watter belange beskerm kan word, alhoewel sekere onkonvensionele belange beter geregverdig kan word deur ander tipes teorieë. Die Duitse metode om belange op te weeg kan van besonderse nut wees vir Suid Afrikaanse howe om te bepaal watter vlak van beskerming spesifieke belange in immaterieelgoedere behoort te geniet.

3

Ex parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC). 4 2006 (1) SA 144 (CC).

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Acknowledgements

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Contents Declaration................................................................................................................................. i Summary ...................................................................................................................................ii Opsomming............................................................................................................................. iii Acknowledgements ................................................................................................................. iv Contents .................................................................................................................................... v Chapter 1: Introduction .......................................................................................................... 1 1 1 The Research Question, Methodology and Hypothesis ................................................. 1 1 2 Motivation ...................................................................................................................... 7 Chapter 2: Traditional Immaterial Property Interests ...................................................... 14 2 1 Introduction: Traditional and Unconventional Immaterial Property Interests ............. 14 2 2 Defining Traditional Immaterial Property Interests ..................................................... 19 2 3 Patents .......................................................................................................................... 24 2 4 Copyright ..................................................................................................................... 28 2 5 Registered Designs....................................................................................................... 35 2 6 Trademarks .................................................................................................................. 37 2 7 Conclusion ................................................................................................................... 43 Chapter 3: Unconventional Immaterial Property Interests............................................... 49 3 1 Introduction .................................................................................................................. 49 3 2 Commercial Information .............................................................................................. 54 3 3 Confidential Information ............................................................................................. 57 3 4 Trade Secrets ................................................................................................................ 60 3 5 Digital Copyright ......................................................................................................... 66 3 6 Biotechnological Products ........................................................................................... 69 3 7 Traditional Knowledge ................................................................................................ 79 3 8 Commercial Property ................................................................................................... 93 3 9 Participatory Claims..................................................................................................... 97 3 10 Non-proprietary Rights ................................................................................................ 99 3 11 Conclusion ................................................................................................................. 100

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Chapter 4: The Value of Immaterial Property ................................................................. 109 4 1 Introduction ................................................................................................................ 109 4 2 Labour Theory (Natural-Law Theory) ....................................................................... 115 421

Development in Roman Law and Roman-Dutch Law for Application to Intellectual Property ......................................................................................... 115

422

Locke................................................................................................................ 117

423

The Revised Theory ......................................................................................... 118

424

The Application of the Labour Theory to Immaterial Property....................... 120

425

Excludability .................................................................................................... 128

426

Conclusions ...................................................................................................... 130

4 3 Reward Theory........................................................................................................... 132 431

The Reward Theory ......................................................................................... 132

432

Views Regarding the Applicability of the Reward Theory to Immaterial Property ............................................................................................................ 133

433

Conclusions ...................................................................................................... 135

4 4 Incentive Theory ........................................................................................................ 136 441

The Incentive Theory ....................................................................................... 136

442

Opinions on the Applicability of the Incentive Theory to Immaterial Property ............................................................................................................ 137

443

Conclusions ...................................................................................................... 138

4 5 Spiritual Theories ....................................................................................................... 140 4 6 Economic Theory ....................................................................................................... 143 4 7 Theory of Natural Monopoly ..................................................................................... 146 4 8 The Commons ............................................................................................................ 149 481

Introduction ...................................................................................................... 149

482

The Tangible Commons ................................................................................... 150

483

Utilitarianism and Distributive Justice............................................................. 152

484

Non-excludability ............................................................................................ 154

485

The Second Enclosure and the Public Domain ................................................ 154

486

The Public Domain or Intangible Commons ................................................... 156

487

The Public Domain in the Context of Copyright ............................................. 158

488

The Public Domain and Traditional Knowledge ............................................. 160

489

The Public Domain in the Context of Patents.................................................. 162

4 9 Conclusion ................................................................................................................. 162

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Chapter 5: Immaterial Property Interests in the Constitution ....................................... 168 5 1 Introduction ................................................................................................................ 168 5 2 Constitutional Immaterial Property Law ................................................................... 171 521

The First Certification Case ............................................................................ 171

522

Arguments for the Protection of Intellectual Property under the Property Clause............................................................................................................... 173

523

Lebowa Mineral Trust Beneficiaries Forum v President of the Republic of South Africa ..................................................................................................... 175

524

Arguments for the Inclusion of a Separate Intellectual Property Clause ......... 177

525

Deprivation and Expropriation ........................................................................ 188

526

The FNB Case .................................................................................................. 190

527

The Laugh It Off Cases .................................................................................... 194

528

Conclusions ...................................................................................................... 202

5 3 Comparative Constitutional Immaterial Property Law .............................................. 204 531

Introduction ...................................................................................................... 204

532

Immaterial Property under the German Basic Law ......................................... 210

533

Immaterial Property under the Constitution of the United States of America ....... .......................................................................................................................... 220

534

Immaterial Property under the Australian Commonwealth Constitution ........ 229

535

Immaterial Property under the Irish Constitution ............................................ 237

5 4 Conclusion ................................................................................................................. 241 Chapter 6: Immaterial Property Interests in International Law .................................... 255 6 1 Introduction ................................................................................................................ 255 6 2 International Human Rights Law in South African Courts ....................................... 256 6 3 Property Rights under International Law ................................................................... 261 6 4 Intellectual Property Rights under International Law ................................................ 265 641

Introduction ...................................................................................................... 265

642

Article 27(2) of the UDHR and Article 15(1)(c) of the ICESCR .................... 267

643

International Human Rights Protection for Intellectual Property .................... 272

644

TRIPS and a Human Rights Framework for Intellectual Property .................. 308

6 5 Conclusion ................................................................................................................. 310 Chapter 7 Conclusion .......................................................................................................... 319 7 1 Introduction ................................................................................................................ 319

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7 2 Immaterial Property Interests Protected as Property in Private Law ......................... 323 721

Introduction ...................................................................................................... 323

722

Patents .............................................................................................................. 324

723

Copyright ......................................................................................................... 329

724

Designs ............................................................................................................. 331

725

Trademarks ...................................................................................................... 332

7 3 Unconventional Immaterial Property Interests Protected under Other Areas of Private Law ................................................................................................................ 335 731

Introduction ...................................................................................................... 335

732

Commercial Information .................................................................................. 336

733

Confidential Information ................................................................................. 338

734

Trade Secrets .................................................................................................... 340

735

Digital Copyright ............................................................................................. 341

736

Biotechnological Products ............................................................................... 342

737

Commercial Property ....................................................................................... 344

738

Non-Proprietary Rights .................................................................................... 347

7 4 Unconventional Immaterial Property Interests not Protected in Private Law ........... 348 741

Introduction ...................................................................................................... 348

742

Traditional Knowledge .................................................................................... 349

743

Participatory Claims......................................................................................... 352

7 5 General Guidelines from Property Theories, Foreign Law and International Law ... 354 751

Property Theories ............................................................................................. 354

752

Foreign Law ..................................................................................................... 357

753

International Law ............................................................................................. 359

7 6 Characteristics of Immaterial Property Interests that may be Protected as Constitutional Property .............................................................................................. 363 Abbreviations ....................................................................................................................... 366 Bibliography ......................................................................................................................... 369 Table of Cases....................................................................................................................... 380 Table of Legislation.............................................................................................................. 387 Table of International Law ................................................................................................. 389

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Chapter 1: Introduction 11

The Research Question, Methodology and Hypothesis

In an important recent case, South African Breweries (SAB) had a registered trademark for the words ‘Carling Black Label’ and for a representation of the label of its product. The respondent, Laugh It Off Promotions CC (Laugh It Off), sold T-shirts with the slogan ‘Black Labour, White Guilt.’ They replaced the laudatory part ‘America's lusty, lively beer’ and ‘Brewed in South Africa’ with ‘Africa's lusty, lively exploitation since 1652’ and ‘No regard given worldwide’.5 SAB argued that this negative connotation with their product caused damage to their property and business reputation. Laugh It Off, on the other hand, argued that they are allowed to parody a trademark in terms of the right to freedom of expression. In South African law, this is the first and to date only example of a conflict between an intellectual property right (in this case a trademark) and another fundamental right (freedom of expression).6 However, as will be demonstrated in this dissertation, there are many other traditional immaterial property interests and other unconventional immaterial property 5

South African Breweries International (Finance) BV t/a Sabmark International v Laugh It Off Promotions CC [2003] 2 All SA 454 (C), Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International 2005 (2) SA 46 (SCA) and Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 6 This has to be qualified with reference to a conflict which arose between patent rights and the right to healthcare following the introduction of section 15C of the Medicines and Related Substances Act 101 of 1965. The Pharmaceutical Manufacturers’ Association of South Africa and Others brought a case in the Transvaal High Court against the President of the Republic of South Africa, but this was later settled out of court. See Pharmaceutical Manufacturers’ Association and Others v The President of the Republic of South Africa and Others (Treatment Action Campaign as amicus curiae) case no 4183/98 [1998] (T); case settled out of court, heads of argument available at http://www.cptech.org/ip/health/sa/pharmasuit.html (accessed 9 February 2011). Although the heads of argument set out the interaction between the economic implications of patents and healthcare on the one hand; and access to affordable medicine and the right to health on the other, the court did not pronounce on these issues and as such this particular example is of limited value for purposes of finding general guidelines that may be of value to South African courts which have to consider the interaction between fundamental rights and immaterial property interests. Section 15C of the Medicines and Related Substances Act 101 of 1965 which was inserted by section 10 of the Amendment Act 90 of 1997 states as follows: ‘Measures to ensure supply of more affordable medicines. - The Minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public, and in particular may (a) notwithstanding anything to the contrary contained in the Patents Act, 1978 (Act No. 57 of 1978), determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent; (b) prescribe the conditions on which any medicine which is identical in composition, meets the same quality standard and is intended to have the same proprietary name as that of another medicine already registered in the Republic, but which is imported by a person other than the person who is the holder of the registration certificate of the medicine already registered and which originates from any site of manufacture of the original manufacturer as approved by the council in the prescribed manner, may be imported; (c) prescribe the registration procedure for, as well as the use of, the medicine referred to in paragraph (b).’ Also see page 71, 289-292 and 380-382 of this thesis.

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interests that may require constitutional property protection in instances where the property interest comes into conflict with the right of a third party and where the state regulates property. The focus of this thesis is to consider whether and if so when, certain immaterial property interests are (or should be) recognised as property for purposes of section 25. Naturally, once these interests are recognised and protected as property they will inevitably in some instances come into conflict with other constitutional rights, making it necessary for the courts to balance the conflicting rights. However, this balancing exercise is conceptually distinct from the question whether the interests should be protected as property. To confuse the two issues (for example by considering the conflicts and balancing as a prerequisite for recognition) would confuse or collapse the two stages of constitutional analysis as adopted by the Constitutional Court.7 The research question of this dissertation, simply stated, is whether immaterial property interests may be recognised and protected as property for purposes of the constitutional property clause and if so, under which circumstances. The reason for this problem is that there is no definition of the property concept in the constitutional property clause and that South African courts have not yet given clarity as to which immaterial property interests may be recognised and protected or what the extent of such protection could be. In the First Certification case,8 where the Constitutional Court was required to certify whether the Constitution complies with the 34 Constitutional Principles,9 the Court held that there is no universally accepted norm that requires protection of intellectual property under a separate constitutional right. The Constitutional Court decided that section 25 (the constitutional property clause) complies with international human rights standards. The Court found that the property concept is wide enough to include rights and interests that require protection according to international human rights standards. Therefore, certain immaterial property interests may still be included under the property clause although it has not been clarified by case law yet which specific interests may be included. Based on this argument, the hypothesis for this dissertation is that the mere fact that immaterial property interests are not explicitly mentioned in the Constitution of the Republic of South Africa 1996 does not mean that these interests are not protected. Immaterial property interests may still enjoy protection, but it 7

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 58-60. See Van der Walt AJ Constitutional Property Law (2005) 53-54. Also see page 71, 289-292 and 380-382 of this thesis. 8 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 9 Constitution of the Republic of South Africa 200 of 1993.

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remains to be determined which specific immaterial property interests may be recognised and protected and under which requirements. It is necessary to find the approach that would be in line with international human rights standards. The object of this study is to determine whether there is a basis for the inclusion of immaterial property interests under the constitutional property clause and under which specific circumstances a particular interest may be recognised and protected, at least in principle. The nature of traditional as well as unconventional immaterial property interests is analysed and discussed in order to determine which of these interests may be recognised and protected as constitutional property. The immaterial property interests include traditional immaterial property interests or the so-called intellectual property rights, namely patents, copyright, designs and trademarks.10 However, the unconventional immaterial property interests in commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, participatory claims and non-proprietary rights are also considered. It is necessary to distinguish between the traditional immaterial property interests or intellectual property interests on the one hand; and unconventional immaterial property interests which also include categories of property interests that cannot be characterised as intellectual property, such as non-proprietary rights, on the other. Both of these categories are included under the overarching category of immaterial property. However, it was necessary to categorise the two different kinds of immaterial property separately, since the one group of immaterial property interests consists of intellectual property rights that are recognised and protected as property in private law; and the other group of those immaterial property interests that are either not protected as property in private law yet or consist of certain interests that are not yet protected adequately as property in private law. Although some of the unconventional immaterial property interests may enjoy some protection in private law, some even under existing intellectual property statutes, there are still some aspects that do not enjoy adequate protection and in this sense that they are not generally protected at all or not sufficiently, they may be described as unconventional. The intellectual property rights may be described as traditional in the sense that they are generally protected as property in private law, albeit on a sui generis basis. The use of the term traditional is also informed by and 10

It would also be possible to divide the categories into two broad categories, namely copyright and related rights (notably performers’ rights) and industrial

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refers to private-law property tradition, as opposed to constitutional property innovation which also includes unconventional property interests. It is necessary to include all of the immaterial property categories referred to under the overarching umbrella of interests. The reference to interests has the purpose of providing an overarching category for all the property interests referred to. However, only the interests that are also protected as property in private law are referred to as property rights. The other interests are only described as immaterial property interests, since they are not protected as property in private law and therefore cannot be described as immaterial property rights. They may however be protected as rights in other areas of private law or public law, for example contractual rights. The reason why reference is made to property interests at all, is because the constitutional property concept is wider than the private property concept and property interests that share certain characteristics with private property rights may also be protected as constitutional property. The traditional immaterial property categories are less problematic to recognise and protect under the constitutional property clause. The reason for this is that intellectual property rights are afforded property rule-type protection by legislation and private law honours this position, therefore intellectual property rights are recognised as sui generis categories of property in private law. In constitutional property law it is generally accepted that at least interests recognised and protected as property in private law would also be recognised and protected as property in constitutional law, although the constitutional property concept is wider than in private law and interests other than property rights in private law may be recognised and protected as constitutional property as well. For the unconventional categories of immaterial property, the reasons why they could be protected as property in constitutional law differ from the reasons why intellectual property may be included under the constitutional property concept. Some of the unconventional immaterial property interests are protected in private law under an area of law other than property; or in public law. There is usually no constitutional clause other than the property clause that could possibly provide protection to these interests and because these interests share certain characteristics with property and intellectual property, they may be recognised and protected under the constitutional property clause. Other immaterial property interests receive no protection in any area of law and therefore in

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addition to the question whether they may be recognised and protected as property in constitutional law, it also needs to be determined whether these interests require some form of private law protection. These interests are most notably the interests in traditional knowledge. Yet other interests already receive adequate protection under other areas of constitutional law. Participatory claims already receive explicit protection under socioeconomic rights and constitutional property protection is therefore unnecessary although possible in principle. Since there are not many constitutional cases in South African law that deal with the constitutional aspects of immaterial property interests, it is necessary to seek some guidance from foreign law and international law. A comparative law methodology is followed, accordingly the constitutions and case law from different jurisdictions are analysed and discussed. An analysis of literature is conducted in order to find the most suitable approach for South Africa. The focus of this comparative study falls specifically on constitutions, cases and international law instruments that may provide South African courts with specific guidance regarding the recognition and protection of immaterial property interests as constitutional property. This is done by means of an examination and comparison of case law and constitutions regarding immaterial property law and constitutional property law in the respective legal systems. Section 39(1) (c) states that a court, tribunal or forum may consider foreign law when interpreting the constitution. This necessitates a comparative study of the South African, German, American, Australian and Irish legal systems regarding their respective approaches to the inclusion of immaterial property interests as fundamental rights. The reason why these foreign legal systems were chosen above others is because there are specific court cases that recognise and protect some immaterial property interests as property and give reasons why particular interests may be included under the property concept and yet others excluded. These general guidelines may be of particular value to South African courts in deciding cases where a particular immaterial property interest comes into conflict with another right or is regulated, cancelled, amended or expropriated. The German Federal Constitutional Court has explicitly accepted the intellectual property rights in patents, copyright and trademarks as property for purposes of Article 14 of the Basic Law of the Federal Republic of Germany 1949. Furthermore, the German cases give

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particularly useful recommendations pertaining to some of the unconventional immaterial property interests, most notably state-granted licenses permits and quotas; and participatory claims. American constitutional law protects patents and copyright separately from other property interest under the Intellectual Property Clause11 and most notably the so-called ‘new property’ interests have received attention. Australian constitutional law has provided valuable guidelines pertaining to the treatment of confidential information in constitutional law and some other unconventional immaterial property interests. Irish constitutional law gives guidelines pertaining to the treatment of state regulations of property and most notably, copyright has been recognised and protected as constitutional property and this is accepted as authority that other intangible rights may be included under the constitutional property concept as well. Furthermore, Irish constitutional law accepts that certain commercial property interests and participatory claims may be recognised and protected as property. Human rights instruments under international law are also analysed and discussed in order to find the most suitable approach for South African courts in dealing with the constitutional protection of immaterial property interests. According to section 39(1) (b) of the Constitution, a court or tribunal is obligated to consider international law when interpreting the Bill of Rights. This is stronger than section 39(1) (c), which merely states that courts may consider foreign law. The Universal Declaration of Human Rights (UDHR)12 protects both the right to property and the right to intellectual property. However, only the right to intellectual property was subsequently made a binding international human right in the International Covenant on Economic, Social and Cultural Rights (ICESCR).13 The right to property was not included in the ICESCR or the International Covenant on Civil and Political Rights (ICCPR).14 Therefore the focus of the international law section falls on the protection of intellectual property rights, since there are no binding instruments that protect the right to property generally. There are developments in international law scholarship to create a human rights framework for intellectual property which would provide specific guidelines to national courts regarding the level of protection that intellectual property rights should receive. Only European Union law, which forms part of regional international law, gives some guidance with regard to the 11

Article I Section 8 Clause 8 of the Constitution of the United States of America 1787. United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 13 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 14 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). 12

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treatment of property as a fundamental right; and hence the treatment of immaterial property rights that do not fall under one of the intellectual property categories. However, the status of European law is the same as foreign law and it can hence merely serve as persuasive authority in South African courts. The question why immaterial property interests should be protected at all is also important in determining whether immaterial property interests should enjoy constitutional property protection. The classical theories as well as more recent theories are analysed and discussed to determine which may be utilised to justify the private law protection of immaterial property interests. The labour theory, reward theory, incentive theory, spiritual theories, economic theory, theory of natural monopoly and considerations of the public domain are considered. These theories may serve to justify the protection of immaterial property interests in private law, but they do not provide equally strong justification for the protection of all the interests. The traditional immaterial property interests may more readily be justified in terms of these theories than unconventional immaterial property interests. For some of the unconventional immaterial property interests there may be other theories that provide more insights, but this is outside of the scope of this dissertation. For example, the protection of traditional knowledge may be better justified by theories of distributive justice and socioeconomic rights such as participatory claims may be supported by yet other theories. The property theories considered also only serve to justify the private law protection of immaterial property and there are other theories for the justification of constitutional property protection.15 It should be possible to include at least some immaterial property interests under the constitutional property clause, but the question remains which interests should be included and on what grounds and this question is addressed in the following chapters. 12

Motivation

Chapter 2 (Traditional Immaterial Property Interests) discusses the traditional immaterial property interests that are generally accepted as property in private law. These interests are patents, copyright, designs and trademarks; in other words the immaterial property interests that may also be categorised as intellectual property rights. Consequently the terms traditional 15

See Alexander GS The Global Debate over Constitutional Property (2006) in general.

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immaterial property and intellectual property rights may be used interchangeably. Dean defines intellectual property as follows: ‘The term “intellectual property” encompasses the right to control the use of the fruits of intellectual endeavour, that is, the products of the mind. Intellectual property takes the form of inventions which are protected as patents, designs of articles which are registered as designs, literary, artistic and other works which are protected by copyright and product brands which are protected by registration as trademarks or under the common law remedy of passing off … Intellectual property is a form of incorporeal property and by its intangible nature has little in common with corporeal property.’16

Alberts states that ‘[t]he nature of intellectual property is best understood through a comparison with other, tangible forms of property’.17 Unlike tangible property, intellectual property is not destroyed if the physical property is destroyed. He gives the example of a patent for binoculars. The patent (which is the property) is not destroyed if the pair of binoculars is destroyed. ‘Most intellectual property rights are created by statute. If the requirements of the legislation are met, protection for a limited period of time is granted.’18 This entails the private law property rule-type protection of property. Since these traditional immaterial property interests or intellectual property rights are granted property rule-type protection in terms of the intellectual property legislation (Copyright Act 98 of 1978, Patents Act 57 of 1978, Designs Act 195 of 1993 and Trade Marks Act 194 of 1993) and private law honours this position, the intellectual property categories are viewed as sui generis categories of property in private law. Constitutional property law generally accepts that at least property interests recognised as property in private law would also be recognised and protected as property in constitutional law. Once the requirements in terms of legislation are met and the particular intellectual property right receives private law protection, then it would also be protected as property in constitutional law, at least in principle. There also exist other new immaterial property interests that are not generally accepted as property in private law. These interests are discussed in Chapter 3 (Unconventional Immaterial Property Interests). These unconventional interests are commercial information, confidential information, trade secrets, digital copyright, biotechnological products, 16

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 105. 17 Alberts W ‘What is intellectual property’ (2007) Nov De Rebus 45-46 at 45. 18 Alberts W ‘What is intellectual property’ (2007) Nov De Rebus 45-46 at 45.

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traditional knowledge, commercial property, participatory claims and non-proprietary rights.19 The reasons why these interests may be recognised and protected under the constitutional property clause differ from the reason why property interests protected as property in private law may be recognised. The unconventional immaterial property rights share certain characteristics with property and intellectual property and hence it is desirable to include them under the constitutional property concept. The characteristics are that the interest must have economic value and must have vested in terms of normal law. Furthermore, there is also no other constitutional clause other than the property clause that could possibly provide protection to these interests. Some of these interests are protected in private law under areas other than property law or in public law. Others receive no protection in private law and in these cases an additional question must be asked, namely whether private law protection is necessary and whether the protection should entail property rule-type protection. In these cases, the potential constitutional property protection of these interests may be used to argue that the legislature should also provide private law protection for these interests. Notably, traditional knowledge receives no private law protection and this is particularly problematic since third parties are appropriating the knowledge and subsequently using it to derive intellectual property products. Although the South African legislature is in the process of creating legislation to provide property protection to these interests in private law, there are many concerns that the current Traditional Knowledge Bill20 would not provide adequate protection. Since it is inevitable that the question why immaterial property interests should be protected at all would arise at some point, Chapter 4 (The Value of Immaterial Property) discusses the reasons why immaterial property interests should be protected as property, both in private law and constitutional law. The labour theory, reward theory, incentive theory, economic theory, theory of natural monopoly and considerations of the commons are discussed. The classical property theories may justify the intellectual property categories with some success even though certain criticisms are levelled against the application of these theories to intellectual property. However, it is more difficult to justify some of the unconventional immaterial property interests in terms of the classical property theories. For the categories of immaterial 19

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 7. Domain names, plant breeders’ rights, geographical indications and virtual property may be added to this list. 20 Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

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property interests that are already protected, but not as property in private law, it is not really useful to consider justification in terms of property theories. In other cases there may be other theories for justification of the immaterial property interests. Considerations of the commons are of particular importance to ensure that intellectual property rights and other immaterial property interests are not expanded to the detriment of the commons or public domain. Chapter 5 (Immaterial Property Interests in the Constitution) discusses the South African constitutional property clause and cases and materials that could give some clarity as to which immaterial property interests may be recognised and protected as constitutional property. The difference between private law and constitutional law protection must be distinguished carefully since the two have widely differing purposes. Unlike the property rule-type protection of private law that protects against infringements by third parties, constitutional protection ensures that the state does not interfere with property unduly. The constitutional property clause provides strict requirements that the state must meet in order for a deprivation or expropriation of property to be constitutionally valid. The constitutional property clause may also provide protection where the property right comes into conflict with other constitutional or private rights of other persons, at least in principle. If another right is regarded as more valuable than the particular property right, the other fundamental right may still outweigh the property right and consequently be protected more stringently than the property right. In the First Certification case,21 the Constitutional Court responded to an objection that the constitutional property clause fails to recognise the right to intellectual property. In the objection it was proposed that the intellectual property right advocated is a ‘universally accepted fundamental right, freedom and civil liberty’. The Court held that ‘[a]lthough it is true that many international conventions recognise a right to intellectual property, it is much more rarely recognised in regional conventions protecting human rights and in the constitutions of acknowledged democracies’. The Court apparently interpreted this tendency to mean that it is not a universally accepted norm to include a specific right to intellectual property in a separate constitutional clause. The Court concluded that the term ‘property’ is wide enough to include rights and interests that need to be protected according to international human rights standards. 21

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75.

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Dean22 examines the decision of the Court in the First Certification case and argues that there are general reasons for the recognition of intellectual property in the Constitution, but also that intellectual property rights are universally accepted as fundamental rights. He argued that the constitutional property clause does not provide adequate protection to intellectual property since it is created by legislation. These arguments are addressed in Chapter 5 (Immaterial Property Interests in the Constitution). In the case of Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae)23 a trade mark right was balanced against and trumped by the constitutionally protected right to freedom of expression. This is the first case in South Africa to deal with the constitutional protection of an intellectual property right, albeit implicitly. Smith24 examines this judgment and concludes that ‘a South African trade mark must be seen as property that the owner may seek to protect like other property … The issue is whether or not the prejudice to the trade mark outweighs the freedom of expression’.25 Dean26 also argues that the Constitutional Court departed from the point that intellectual property rights and the right to freedom of expression have equal status, despite the fact that intellectual property rights are not explicitly mentioned in the Bill of Rights. This interaction between immaterial property interests and other constitutionally guaranteed rights must also be discussed. It is generally accepted that this case implicitly recognises trademarks as constitutional property. The implications of this case for other categories of intellectual property are also discussed in this chapter. Section 39(1) (c) of the Constitution27 states that a court, tribunal or forum may consider foreign law, consequently a thorough comparative analysis is needed that examines the inclusion or exclusion of immaterial property interests as constitutional property in other legal systems. The constitutional protection of immaterial property interests as property in Germany, The United States of America, Australia and Ireland is examined in order to find the best approach for South Africa. These jurisdictions were specifically selected because 22

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105 at 106, 110. 23 2006 (1) SA 144 (CC). 24 Smith A ‘Trade-mark dilution – You can’t laugh it off’ (2004) 12(4) JBL 196-200. 25 Smith A ‘Trade-mark dilution – You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 199. 26 Dean OH ‘Trade-mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 27 Constitution of the Republic of South Africa 1996.

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there were cases decided about the constitutional property protection of immaterial property interests and some guidelines may be distilled from these cases. In German constitutional law certain ‘incorporeal interests are recognized as objects of property for purposes of the property clause: copyright, trademarks, workers’ rights, contractual claims, and certain participatory ‘new property’ or so-called public-law participation rights’.28 It is necessary to establish which of these traditional and new immaterial property interests should be included as property under the constitutional property concept in South African law. Chapter 6 (Immaterial Property Interests in International Law) discusses the protection that international law instruments provide to immaterial property interests. According to section 39(1) (b) of the Constitution, attention must be given to international law in interpreting the Bill of Rights. Dugard states that ‘[s]ection 35(1) [now section 39(1) (b)] strengthens the role of international law in the interpretive process as it obliges courts to apply international law where it is “applicable”’.29 He also states that basically every right in the Bill of Rights has a counterpart in an international human rights convention and he mentions the example of the right to property, concluding that it is hence unlikely that situations would arise where public international law will not be applicable under section 39(1) (b). In interpreting the constitutional property clause to determine which immaterial property interests may be included, South African courts therefore have to refer to international conventions. Property is not protected in any binding international law instrument. Therefore European Union law is the only international law that can give any guidance to South African courts regarding the constitutional protection of immaterial property interests that are not categories of intellectual property. However, European Union law is regional international law to which South Africa cannot be a member and therefore this law can only have persuasive authority as is the case with foreign law. International law protects intellectual property by way of exception in the ICESCR30 and this convention and comments on the convention provide guidelines pertaining to the protection of intellectual property and methods to determine whether a particular state is providing adequate protection to intellectual property rights. This could be of use to South African courts when deciding if protection for a specific intellectual 28

Van der Walt AJ Constitutional Property Law (2005) 83-84. Dugard J ‘The role of international law in the interpreting of the Bill of Rights’ (1994) 10 SAJHR 208-215 at 212. 30 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 29

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property right is justified in a particular instance and how strong the constitutional protection should be. Chapter 7 (Conclusion) analyses all the different guidelines found in property theories, South African constitutional law, foreign constitutional law and international law in order to formulate a number of concrete suggestions that may guide South African courts in their task to determine which immaterial property interests may be recognised and protected under the constitutional property clause. This chapter has the purpose of determining exactly which specific interests may be included under the constitutional property concept and on what grounds such an inclusion would be justified.

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Chapter 2: Traditional Immaterial Property Interests 21

Introduction: Traditional and Unconventional Immaterial Property Interests

The aim of this chapter is, first of all, to distinguish between traditional and unconventional immaterial property interests, secondly to define traditional immaterial property interests broadly and thirdly to discuss specific interests. Chapter 3 (Unconventional Immaterial Property Interests) discusses unconventional immaterial property interests. The traditional immaterial property interests are defined as patents, copyright, registered designs and trademarks, which are also the conventional categories of intellectual property. Consequently, the terms traditional immaterial property interests and intellectual property rights are used interchangeably. This chapter is not meant to constitute a full or authoritative review of intellectual property, but is merely meant to make the point that intellectual property rights already enjoy full recognition and protection in private law on a sui generis basis and that this basis alone justifies constitutional property protection. Such sui generis protection is generally afforded on the basis of legislation. The reason for this enquiry is to establish whether there are immaterial property interests that might enjoy constitutional protection under the property clause.1 The question originates from the First Certification case2 where the Constitutional Court responded to an objection that the constitutional property clause3 failed to recognise the right to intellectual property. The objection advocated the view that the right to intellectual property was a ‘universally accepted fundamental right, freedom and civil liberty’.4 The court held that ‘[a]lthough it is true that many international conventions recognise a right to intellectual property, it is much more rarely recognised in regional conventions protecting human rights and in the constitutions of acknowledged democracies’.5 The court interpreted this tendency to mean that the inclusion of a specific right to intellectual property in a separate constitutional clause is not a universally accepted norm. This does not mean that the right to intellectual property is not protected at all; it merely means that the constitutional principles that governed the 1

Sec 25 of the Constitution of the Republic of South Africa 1996. Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 3 Sec 25 of the Constitution of the Republic of South Africa 1996. 4 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 5 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 2

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writing of the 1996 Constitution did not require a separate right pertaining to intellectual property. Therefore it becomes apparent that intellectual property rights may be protected under the property clause6 even though there is no explicit right pertaining to intellectual property. Van der Walt7 states that the decision of the court in the First Certification case8 was correct in stating that it is unnecessary to include a separate right to intellectual property in the Bill of Rights.9 The first reason he furnishes is that there is no universally recognised norm that dictates the formulation of a constitutional property clause. This is particularly the case where the description of property is concerned. The second reason, which becomes apparent from comparative case law, is that the mere fact that a particular class of property is not mentioned explicitly does not automatically exclude that class of property from the protection of a property clause.10 In other words, intellectual property or traditional immaterial property interests may still be recognised and protected as property under the constitutional property clause even though it is not mentioned explicitly. Similarly, unconventional immaterial property interests could also be recognised and protected as constitutional property. In the First Certification case11 the court also held that there is no separate fundamental right for mineral rights. However, this is not authority for the suggestion that the category of mineral rights is not constitutional property. It merely means that, based on universally recognised practice, it is not the norm to protect mineral rights in a separate constitutional clause.12 In Lebowa Mineral Trust Beneficiaries Forum v President of the Republic of South Africa13 the court held that mineral rights are not protected by the constitutional property clause, because mineral rights are not mentioned explicitly in the Bill of Rights. This is

6

Sec 25 of the Constitution of the Republic of South Africa 1996. Van der Walt AJ Constitutional Property Law (2005) 86. 8 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 9 See Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N South African Constitutional Law – The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17. Roux agrees that intellectual property rights may still enjoy constitutional protection. See further Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-15. Also compare Dean OH ‘The case for the recognition of intellectual property in the Bill of Rights’ (1997) 60 THRHR 105-119 at 105. 10 Van der Walt AJ Constitutional Property Law (2005) 86. The aspect of comparative constitutional property law receives more attention in Chap 5 (Immaterial Property Interests in the Constitution). 11 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 74. 12 Van der Walt AJ Constitutional Property Law (2005) 86. 13 2002 (1) BCLR 23 (T). 7

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patently wrong. Van der Walt14 states that when a specific kind of property is not mentioned explicitly, it may be inferred that a property clause protects any class of property that is not specifically excluded. This is the case as long as the category of interests is recognised as property by the law. This is particularly so when the interests are recognised as property in private law.15 As far as immaterial property interests are concerned, there has not been specific case law yet that clarifies which interests may be included under the property clause. Therefore it still needs to be determined which specific immaterial property interests could be included for the purposes of constitutional protection. In order to assist in determining this issue, immaterial property interests may be divided into two broad categories. Firstly, there are the traditional forms of immaterial property interests that are generally accepted as property in private law; and secondly there are the new, unconventional forms of intellectual property interests that are not yet generally recognised as property in private law or that may be recognised in other areas of private law. This chapter outlines the position of the so-called traditional immaterial property interests or intellectual property rights (namely patents, copyright, registered designs and trademarks);16 while Chapter 3 deals with the unconventional immaterial property interests (for example trade secrets, traditional knowledge and biotechnological products). Traditional immaterial property interests or intellectual property rights are created by way of legislation. The legislation provides for property-based protection of the rights and for this reason intellectual property rights are accepted as property in private law albeit on a sui generis basis. Immaterial property interests may furthermore be categorised with regard to their recognition as property in private law and in public law. The first category consists of the traditional immaterial property interests that are generally recognised as property in private law as well as in constitutional law. This is the case despite the fact that most of these interests are sui

14

Van der Walt AJ Constitutional Property Law (2005) 87. Van der Walt AJ Constitutional Property Law (2005) 87. 16 Intellectual property rights may also be more broadly classified into two categories, namely copyright and related rights (notably performers’ rights) on the one hand; and industrial property (patents, trade marks and industrial designs) on the other. However, for purposes of determining the constitutional protection of intellectual property, it was necessary to deal with each category separately. The reason for this is that when it comes to the chapters on theory, foreign law and international law, each intellectual property category has to be considered separately in light of the examples and guidelines that may be distilled from these areas of law. 15

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generis forms of property.17 For example, the immaterial property interests in trademarks are governed by the Trade Marks Act 194 of 1993, similar to the way all the other traditional immaterial property interests are created and governed by separate acts of parliament. Some examples of interests of this nature that are already accepted as constitutional property in foreign law would be intellectual property such as patents, copyright and trademarks. To date these traditional immaterial property interests have not been explicitly recognised by the court as constitutional property, although it should be possible to include it, as is argued in Chapter 5 (Immaterial Property Interests in the Constitution). The second category encompasses immaterial property interests that are not recognised as property in private law, but that may be recognised in constitutional property law. Van der Walt states that in German constitutional law, certain traditional as well as new incorporeal interests are acknowledged as objects of property for purposes of the property clause even though they are not recognised as property in private law. These interests are trademarks, copyright, workers’ rights, contractual claims, and certain participatory ‘new property’ (also referred to as public-law participation rights).18 Commercial property such as debts, claims and goodwill of a business are other examples of immaterial property interests that may be recognised as property for constitutional purposes, but not necessarily as property in private law.19 Thirdly, there are immaterial property interests that are not yet clearly recognised as property in constitutional law (either in South African or foreign law) and probably not in private law either. Some of these unconventional interests include commercial information, 17

Although there are many examples of how such sui generis categories of property function, it is not the purpose of this chapter to discuss them exhaustively. This chapter departs from the position that intellectual property rights are property rights in private law and thereafter the focus falls on the more controversial question of constitutional property protection. However, an example of the functioning of intellectual property as property in private law may be found in the case of Frank & Hirsch (Pty) Ltd v A Roopanand Brothers (Pty) Ltd 1993 (4) SA 279 (A) (reversing the decision of Frank & Hirsch (Pty) Ltd v A Roopanand Brothers (Pty) Ltd 1991 (3) SA 240 (D)). In this decision, Corbett CJ stated that ‘[t]he assignment of the South African copyright in respect of the get-up of the tapes in issue vested in appellant exclusively all the rights comprehended by the South African copyright and divested TDK Electronics thereof’. This demonstrates how the assignment of copyright transfers ownership in the context of parallel imports. A further example may be the hypothecation and attachment of intellectual property. See sec 60 of the Patents Act 57 of 1978, sec 41 of the Trade Marks Act 194 of 1993 and sec 30 of the Designs Act 195 of 1993, which regulate such hypothecation and attachment for each of the relevant categories of intellectual property. 18 Van der Walt AJ Constitutional Property Law (2005) 83-84. See Chap 5 (Immaterial Property Interests in the Constitution) for a more detailed discussion. 19 This statement should be qualified, since certain of these interests enjoy strong protection under private law, albeit not necessarily in terms of property law, but by other areas of private law. For example, in German private law debts and claims are protected under private law, but not under property law, since the German Civil Code (Bürgerliches Gezetsbuch – BGB § 903) restricts property to corporeal objects for purposes of private law. Debts and claims are protected under the law of contract in private law. See Van der Walt AJ Constitutional Property Law (2005) 96. Also see Van der Walt AJ Constitutional Property Clauses (1999) 131.

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trade secrets, government secrets, confidential information and digital copyright.20 The socalled ‘new property’ or participatory rights might also fall into this category. 21 A controversial area where immaterial property interests could enjoy constitutional recognition is cultural appropriation and other instances where immaterial property rights are based on or derived from existing knowledge without acknowledgement. This falls in the category of immaterial property rights that are hitherto not recognised in either private law or constitutional law. There is still some uncertainty whether these interests should be protected as property rights or rather as cultural rights or perhaps even as a combination of the two. Ghosh states that ‘[m]uch of the debate over traditional knowledge has focused on the consistency of using intellectual property, a tool of progress, to protect ancient and established knowledge. Proponents of using intellectual property to protect traditional knowledge fashion the law as a tool to promote the development and dissemination of knowledge systems that would otherwise be appropriated by powerful corporate interests’.22

The arguments for and against this use of intellectual property both rely on conceptions of distributive justice, as Ghosh23 argues. It is necessary to establish which of these traditional and new immaterial property interests should be included as property under the constitutional property clause. As a point of departure, the focus of this chapter falls on traditional immaterial property interests, while unconventional immaterial property interests are discussed in Chapter 3 (Unconventional Immaterial Property Interests). A broad definition of traditional immaterial property interests is first examined, before the more specific interests in patents, copyright, registered designs and trademarks are discussed. It is necessary to determine, broadly as well as more specifically, which particular interests exist for each category. Furthermore, the exact scope 20

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 7. The aforementioned interests and other unconventional immaterial property interests are discussed in Chap 3 (Unconventional Immaterial Property Interests). Some of these interests are protected as rights in a form other than property rights, for example secs 24 (environment), 26 (housing), 27 (health care, food, water and social security), 28 (rights of children), 29 (education), 30 (language and culture) and 31 (cultural, religious and linguistic communities) of the South African Constitution protect socio-economic rights. Interests such as welfare rights may fall under this category. See Van der Walt AJ Constitutional Property Law (2005) 105. Traditional knowledge could also possibly be protected under sec 31 (cultural, religious and linguistic communities), although this would not provide for monetary remuneration as property protection would. 22 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 888. 23 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 889. 21

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and meaning; and non-constitutional recognition and protection of these interests have to be determined before it can be decided whether the interests may be included under the constitutional property concept. Unavoidably, the question why immaterial property interests should be protected at all; and if so under which particular circumstances; also needs to be addressed. This is briefly done in this chapter, but Chapter 4 (The Value of Immaterial Property) discusses and analysis this question in more detail. It is also necessary to distinguish between private law and constitutional law protection of property, since the two areas have widely differing purposes. Private law protection has the purpose of providing strong property-rule type protection for private rights against competing private parties. In constitutional law recognition and protection is to get protection for private interests against the state and against competing constitutional rights of other private parties. This is discussed in more detail in Chapter 5 (Immaterial Property Interests in the Constitution). 22

Defining Traditional Immaterial Property Interests

Traditional immaterial property interests are generally recognised and protected as property in private law, although it is usually contrasted with tangible property. Dean defines intellectual property as follows: ‘The term “intellectual property” encompasses the right to control the use of the fruits of intellectual endeavour, that is, the products of the mind. Intellectual property takes the form of inventions which are protected as patents, designs of articles which are registered as designs, literary, artistic and other works which are protected by copyright and product brands which are protected by registration as trademarks or under the common law remedy of passing off … Intellectual property is a form of incorporeal property and by its intangible nature has little in common with corporeal property.’24

Alberts25 proposes that the nature of intellectual property can best be understood by comparing it to tangible property. He takes the example of things, such as a watch or a soccer ball, to clarify the difference between intellectual property and tangible property. With

24

Dean OH ‘The case for the recognition of intellectual property in the Bill of Rights’ (1997) 60 THRHR 105119 at 105. 25 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45.

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tangible property an owner has rights to the object itself, at least in the civil-law tradition.26 This has the result that if the object is destroyed, the owner’s rights will be infringed. This is not the position with intellectual property. Unlike tangible property, intellectual property is not destroyed if the physical property is destroyed. Alberts explains the position with reference to a patent for a pair of night vision binoculars. If the binoculars are destroyed, the intellectual property rights granted in terms of the patent would not be infringed. This is so because the patent rights protect the invention and not the physical binoculars. Intellectual property law regulates the creation and use of immaterial property and the enforcement of ensuing rights. He also explains that most intellectual property rights are created by statute and property-rule type protection is granted for a limited period of time, provided the requirements of the legislation are met.27 Therefore, as far as recognition in private law is concerned, intellectual property is still seen as sui generis. May and Sell28 also define intellectual property by comparing it to tangible property. Tangible property is a scarce resource that people need to compete for. According to May and Sell, intellectual property takes knowledge or information that is not formally scarce and constructs a scarce resource from that. The use of knowledge and information by different persons is not necessarily rivalrous, unlike the use of material things. Coincident usage therefore infrequently detracts from social utility where information is concerned. Where a material resource is concerned, two prospective users must compete for the resource. Markets and the setting of a price might mediate the competition. However, in the case of knowledge

26

Even though it is now accepted that a right to property is in relation to the owner and third persons and not only between the owner and the object of the right, such a right would be infringed if the physical object of the right is destroyed. This would not be the case where an intellectual property owner is concerned, since the object of the right is not the physical object created in terms of the intellectual property right, but rather the right to create and distribute these objects. 27 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. Also see Wilson J ‘Could there be a right to own intellectual property?’ (2009) 28 L & Phil 393-427 at 394, where he argues that ‘[i]ntellectual property is philosophically interesting as it typically involves claims of private ownership of types, rather than (as in more familiar cases of ownership) tangible particulars. If I own a bag of rice, or a table, then my property right extends over only that particular bag of rice, or that particular table, but if I own the patent to a particular way of constructing a motor, then (whilst the patent lasts) I have a right which extends over all token motors of the type claimed in my patent. Similarly, copyright gives the novelist rights over that novel considered as a type, and it is in virtue of these legal rights that there are certain things that it would be illegal for you to do with your token copy of the novel (such as running off copies of it to give to all to your friends)’. 28 May C & Sell SK Intellectual Property Rights – A Critical History (2006) 5. Also see Bainbridge DI Intellectual Property (1992) 10 and Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. Bainbridge and Alberts agree with May and Sell that intellectual property may be compared to tangible property in order to understand it.

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or information, two different users may use the same knowledge without competing or the one detracting from the other’s use.29 According to Philips,30 the question of what intellectual property is has two answers, the one colloquial and the other legal. He states that the colloquial depiction of intellectual property is that it basically consists of all the things that stem from activities of the human brain. He mentions examples such as ideas, inventions, poems, designs, microcomputers and Mickey Mouse.31 Philips explains that the legal account of intellectual property differs from the colloquial in that the focus falls upon the rights that are connected to the produce of the mind, rather than the product itself. He states that things such as a piece of land or a motor car are not called ‘property’ in legal terms because it is a physical thing. It is property because owners may enforce a right connected to it over some or all other persons. Phillips applies the meaning of the Latin word for property, namely proprius (one’s own) to the concept of intellectual property, proposing that the concept of intellectual property means ‘the legal rights which may be asserted in respect of the product of human intellect’.32 He gives the example of a record company’s right to stop anyone from making a ‘pirate’ copy of a sound recording.33 It becomes clear from this conception of intellectual property that the focus should be on the bundle of rights which is connected to the property, similar to the case of physical property. The bundle of rights approach entails that property is not defined with regard to the object, but the entitlements to use it.34 This approach is suitable for tangible property as well as immaterial property. This approach is followed in American law and most of English law and may be contrasted with the object-related approach followed in civil law. The bundle of rights granted by intellectual property generally consists of negative rights that allow holders of the intellectual property to prohibit third parties from infringing their exclusive rights. This is the property protection granted by private law.

29

May C & Sell SK Intellectual Property Rights – A Critical History (2006) 5. Philips J Introduction to Intellectual Property (1986) 3-4. 31 Philips J Introduction to Intellectual Property (1986) 3. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 9-14 for a broad overview of intellectual property. 32 Philips J Introduction to Intellectual Property (1986) 3-4. 33 Philips J Introduction to Intellectual Property (1986) 3-4. 34 See Hohfeld W ‘Some fundamental legal conceptions as applied in judicial reasoning’ (1913) 23 Yale LJ 1659 and Hohfeld W ‘Fundamental legal conceptions as applied in judicial reasoning’ (1916) 26 Yale LJ 710-770. 30

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Cornish35 also defines intellectual property by reference to the rights connected to property. He states that intellectual property protects applications of ideas and information, but adds the requirement that the products must be of commercial value in order to warrant protection. He further states that all types of intellectual property are connected by one shared characteristic, namely that the rights granted by intellectual property law are effectively negative. The holder of the right may prohibit others from doing certain things. Cornish36 mentions examples such as rights to stop pirates, counterfeiters, imitators and in certain instances even third parties who have reached the same idea independently, from exploiting intellectual property without a licence obtained from the owner of the right. Furthermore, there are some positive rights granted by intellectual property law, for example the right to register a trademark or to be granted a patent, but these rights are fundamentally subsidiary. These rights to control the actions of others granted to intellectual property owners are often not understood properly. Cornish37 states that the owner of a right does not need the intellectual property right in order to exploit a market for its goods or services. For example; one does not need a patent in order to exploit one’s own invention. However, if the qualified exclusive right to do so is desired, then a patent needs to be registered. Conversely, the right does not enable the owner to ignore the rights of other persons or to ignore public liabilities. Bainbridge38 also defines intellectual property by reference to other, tangible forms of property. He states that ‘intellectual property rights are a form of property which can be dealt with just as with any other property and which can be assigned, mortgaged and licensed. Intellectual property is property in a legal sense: it is something which can be owned and dealt with’.39

He also discusses the jurisprudential character of intellectual property, stating that it gives rise to rights and duties. Intellectual property creates property rights, which grant the owner the right to do certain things pertaining to the subject matter. He explains by way of example that if the right is a copyright and the subject matter is a piece of music, the owner of the right has the exclusive right to make copies of the sheet music, to make an arrangement of the music and to control the performance of the music. In addition to the right to do things with 35

Cornish WR Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (4th ed 1999) 6. Cornish WR Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (4th ed 1999) 6. 37 Cornish WR Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (4th ed 1999) 6. 38 Bainbridge DI Intellectual Property (1992) 10. Also see May C & Sell SK Intellectual Property Rights – A Critical History (2006) 5 and Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. May, Sell and Alberts also compare intellectual property to tangible property for a better understanding. 39 Bainbridge DI Intellectual Property (1992) 10. 36

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the sheet music, the owner also has the negative right to prevent others from doing such things in relation to the music. This right may come into existence automatically upon the creation of the intellectual property to which the right pertains, for example copyright that originates automatically when the work is recorded. Bainbridge40 explains that recording in this context pertains to the putting of ideas into some tangible form. In other cases the right comes into existence once the creation has been registered, such as with patents, trademarks and registered designs. It becomes apparent from Bainbridge’s analysis that intellectual property is concerned with rights. Applying Hohfeld’s41 theory that every right has a correlative duty, Bainbridge states that in the context of intellectual property, the right to do certain things could be to make copies of a copyrighted work or to manufacture articles according to a patent or a design. The correlative duty to the right is a duty owed by all others not to infringe the right. However, he cautions that certain provisos must be added in this general plan. The law strives to reach a balance between conflicting interests in the area of intellectual property, in order to reach a justifiable compromise. Consequently, the duty not to infringe is not overly strict since there are many exceptions.42 Intellectual property rights are furthermore limited by their duration. Most intellectual property rights are granted only for a limited period of time, therefore Bainbridge submits that they may be compared to a lease. He proposes that ‘as a rule of thumb, it can be said that the duration of a right is inversely proportional to its power’. 43 Conventionally, the objects of the assorted intellectual property rights include patents, copyright, registered designs and trademarks.44 These are the traditional forms of intellectual property that are generally recognised and protected as property in private law and that should as a consequence be recognised and protected in constitutional property law as well. The core focus in the definition of intellectual property as described by the authors seems to fall on the rights conferred by intellectual property law. These rights would be the objects of

40

Bainbridge DI Intellectual Property (1992) 11. Published in two articles: Hohfeld W ‘Some fundamental legal conceptions as applied in judicial reasoning’ (1913) 23 Yale LJ 16-59 and Hohfeld W ‘Fundamental legal conceptions as applied in judicial reasoning’ (1916) 26 Yale LJ 710-770. 42 Bainbridge DI Intellectual Property (1992) 12. 43 Bainbridge DI Intellectual Property (1992) 12. This could imply that intellectual property rights are strong rights and therefore have to be limited in duration. 44 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. 41

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the protection afforded by the constitutional property clause. It is necessary to examine these rights in detail to determine which kind of rights may be afforded constitutional protection. In view of these general considerations it becomes necessary to take a look at specific categories of traditional immaterial property or intellectual property in order to determine what the similarities and differences are and to establish the characteristics of the respective categories of property. This is necessary in order to verify which other categories of immaterial property interests may be protected. The examination of these specific intellectual property categories has a threefold purpose. The first is to give a brief introduction to the history of each category. Secondly, it is necessary to determine the specific rights granted in terms of each category of intellectual property in order to see which aspects require constitutional protection. Finally, the purpose is to show that the rights granted are not absolute and to determine in which specific cases there would be exemptions from the infringement of intellectual property rights. The question of why these rights should be protected is addressed in Chapter 4 (The Value of Immaterial Property). Chapter 6 (Immaterial Property Interests in International Law) deals with the international law aspects relating to immaterial property, but it is necessary to keep in mind that there are international treaties relating to intellectual property and other forms of immaterial property which globalise these interests Section 4.8 of Chapter 4 (The Value of Immaterial Property) also explicitly deals with the expansions of intellectual property currently taking place on a global scale. 23

Patents

In the first instance, a short explanation of the origins of patents is required. This is not meant to be a full overview of the history of patents, but merely serves as an indication that patent rights should not necessarily automatically be protected as constitutional property in its current form, but that it possibly needs to be reconsidered. Thereafter the requirements for the existence of a patent under South African private law are discussed. Finally the content and limitations on the extent of patent rights are analysed. Patents are traditionally associated with creativity and invention. Shiva45 states that patents may be granted to the inventor, who then holds an exclusive right to manufacture, distribute and sell the product which is the subject of the patent. Historically, patents have been put to

45

Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 11.

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three diverse uses. The first is what Shiva46 calls ‘patents for conquests’;47 the second is ‘patents for inventions’;48 and the last ‘patents for imports’.49 However, these different functions have not been separated precisely in law. The problem with patent laws is that the old legal tools dating from colonial times have merely been adjusted slightly from time to time in order to cover new areas. As a consequence, when new intellectual property interests came into existence, no new patent laws were created specifically for these interests. New immaterial property interests were forced uncomfortably into existing patent law categories, bringing about only minor changes. The changes have never been fundamental enough to cater for different socioeconomic circumstances or time periods in history.50 Shiva51 argues that the original use of patents was not to encourage inventiveness, as is commonly assumed. Historically, patents referred to ‘letters patent’, which is a literal translation of the Latin literae patentes. These ‘letters patent’ or open letters were official documents in terms of which sovereign rulers conferred certain rights, privileges or titles. These letters were used to enable colonisation and to establish key monopolies.52 Consequently it becomes clear that patents have throughout history been closely associated with colonisation. Patents are often viewed by western powers as a natural right,53 similar to property acquired by conquest during the period of colonialism. The first patent law that was passed with the purpose of stimulating invention was in March 1474, when the Venetian Senate passed the first general patent law. This law covered ‘new and ingenious’ devices that had not previously been manufactured in the Venetian domain. A distinction was not made 46

Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 11. Patents for conquest referred to open letters that were official documents conferring privileges, rights, ranks or titles. These were used for colonisation and the establishing of monopolies. The reason why it is interesting to note the previous use of patents for colonisation, is that patents have also been used rather recently to ‘steal’ traditional knowledge from traditional peoples. Similar arguments to that of colonising land have been used to justify this ‘theft’ in that the knowledge of the traditional peoples was not seen as either valuable or creative. Their knowledge was used by foreign companies (which may be analogised to colonisers) to derive patents and other forms of intellectual property, but no acknowledgement or monetary remuneration was offered to the original holders of the traditional knowledge. See sec 3.7 for an elaboration on traditional knowledge and the issues surrounding its unauthorised use and current developments towards protection. See p 114 fn 197 for a specific reference to the way the Patents Act was amended to counter this mischief. 48 Patents for inventions were granted for new and innovative devices as an incentive. 49 Patents for imports were granted to persons who introduced new devices that had already been invented in other countries. Persons were still rewarded for making the devices available, even if they did not invent it. 50 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 11. Also see Dean OH ‘Hello, is anyone out there?’ (2007) Jul Without Prejudice 7-8, where he states that South African copyright law is outdated. 51 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 11-15. 52 See Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 3-1 where he confirms that these literae patentes or ‘open letters’ were historically used by the English sovereigns to confer special rights and privileges. The right to a monopoly for inventions was also conferred by means of these ‘open letters’. 53 The natural rights theory is discussed in Chap 4 (The Value of Intellectual Property). 47

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between invented and imported patents. Accordingly a patent could be conferred upon a device which had already been manufactured elsewhere, but was ‘new’ to the country. 54 Furthermore, patents were previously used to facilitate the transfer of existing technologies from countries that were technologically more advanced. These inventions were ‘borrowed’ for a certain time and a patent rewarded and protected the person who introduced the invention. Nowadays such a transfer of technology would be seen as ‘piracy’ and patents are used to prevent it.55 At the moment, knowledge is fast becoming more important than land and other tangible assets as the wealth of nations. Patents as property are central to the global economy. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)56 of the World Trade Organization (WTO) was subsequently introduced in order to implement patent laws on a global scale.57 Although this may create the risk that developed countries would not have ready access to new knowledge, there are specific articles in TRIPS which aim to counter this tendency. Article 7 of TRIPS specifically states that ‘the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations’. Article 66(2) specifies that ‘developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base’. This indicates that positive measures are being taken to include less developed countries in the transfer of technology, but simultaneously also indicates that there is a risk that countries may attempt to stifle the transfer of technology for financial gain, otherwise such provisions would not have been necessary. The Patents Act 57 of 1978 governs the registration of patents in South Africa.58 Alberts59 states that the main requirement for the registration of a patent is that it must be for a new 54

Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 11-13. Also see Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 2-2 for more specific information about the history of patents in South Africa. 55 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 14-15. 56 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 57 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 18-20. 58 See Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 15-30 for a basic overview of patents.

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invention involving an inventive step. Such an invention must have the ability to be used or applied in trade, industry or agriculture. He states that a patent grants, among others, the exclusive right to make, use or import products embodying the invention. The term of a patent is twenty years from the date of application.60 A patent granted in South Africa is valid throughout the whole of South Africa for this limited period.61 Once the term has expired, the invention falls within the public domain or intellectual property commons and the public is free to make use of the invention.62 In the case of patents for medicines, this implies that generic substitutes for the medicines may be placed on the market. The original medicine is no longer protected by the patent and the technology falls within the intellectual property commons.63 The term of a patent limits the extent of the right granted, as such patent rights are not absolute. There are also certain situations where inventions are excluded from patentability and these also serve to limit rights. Burrell64 states that a patent is prima facie valid. Therefore a person who wants to rely on the invalidity of a patent carries the burden of proof. The court may revoke a patent if it is proven to be invalid. Section 25(1) of the Patents Act 57 of 1978 describes which inventions are patentable. A patent may be granted for a new invention that involves an inventive step and is capable of being used in trade, industry or agriculture. Section 25(2) of the Patents Act 57 of 1978 names specific exclusions from the concept of an invention for purposes of patents. These are a discovery; a scientific theory; a mathematical method; a literary, dramatic, musical or artistic work or any other aesthetic work; a scheme, rule or method for performing a mental act, playing a game or doing business; a program for a computer; or the presentation of information.65 Section 25(4)66 names further exclusions from patentability, namely

59

Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. See sec 25 of the Patents Act 57 of 1978 and Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-22 – 1-26. 60 Patents Act 57 of 1978 sec 46(1). See Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-3 and Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 27. 61 Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-4. 62 The intellectual property commons or so-called public domain is discussed in more detail in Chap 4 (The Value of Immaterial Property). 63 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. See Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-1. See further Letraset Ltd v Helios Ltd 1972 (3) SA 245 (A) 249 where the court stated that a patent involves a quid pro quo where the quid is the monopoly conferred on the inventor while the quo is the new knowledge that the public may use freely after the patent has expired. 64 Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-3. See Cape Explosives Co Ltd v Cullen and BSA Explosives Co Ltd 1913 TPD 329 at 331-332. 65 Patents Act 57 of 1978 sec 25(2) (a)-(g). See Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 1-24. 66 Patents Act 57 of 1978.

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inventions which promote offensive or immoral behaviour;67 and any variety of animal or plant, or any essentially biological process for the production of animals or plants that is not a microbiological process.68 In some instances, the purpose of these exclusions appear to be that certain information should remain in the public domain and should therefore not be propertised.69 However, other exclusions are aimed at preventing immoral gains or exploitation or to exclude interests not suitable for patent protection, although they could be protected in other forms. The differences between patents and copyright are discussed in the following section on copyright. From this analysis it becomes apparent that patents have not always been utilised for the promotion of creativity, but may be linked to other tools of colonisation. Consequently it cannot be assumed that constitutional property protection should necessarily be granted to all patents in their current form. It also becomes clear that there are certain definable rights linked to patents that could be protected under the constitutional property clause. If an invention complies with the strict requirements as set out in the Patents Act 57 of 1978, a patent is granted which entails the exclusive right to make, use or import products embodying the invention. These rights could possibly be protected by the constitutional property clause. There are also certain ‘built-in’ restrictions placed on patents by virtue of the Patents Act 57 of 1978. Some inventions may not be patented at all due to public considerations. Patents are also only valid for a specified period of time, namely twenty years. After this period of time, the invention falls within the public domain. The constitutional property clause also imposes certain restrictions via the deprivation and expropriation provisions, which could be useful to find a balance between patent protection and the interests in the public domain. Finally it should be noted that patents are accepted as a sui generis form of property in private law and should as such be accepted as constitutional property. 24

Copyright

In the first instance, the purpose of this section is to give a brief overview of the reasons behind the granting of copyright. Secondly the requirements for the subsistence of copyright and the rights granted are discussed. In the third instance the limitations placed on copyright 67

Patents Act 57 of 1978 sec 25(4) (a). Patents Act 57 of 1978 sec 25(4) (b). 69 See Chap 4 (The Value of Immaterial Property) for a more detailed discussion of the public domain or intellectual property commons. 68

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are discussed. Finally, the implications of constitutional inclusion of copyright are discussed briefly; and the differences and similarities between patents and copyright are highlighted. 70 Dean71 gives a broad definition of copyright, namely that copyright is the exclusive right relating to works of intellectual content to do or to authorise others to do certain acts relating to that work. These acts represent the ways in which that work can be used for personal gain. The essential right under the law of copyright is the right to control these different uses of a work. According to Dean, the function and purpose of the law of copyright is to grant this essential right to the full.72 Regarding the philosophy of copyright, he states that copyright law attempts to create a system in terms of which the author of a creative work is awarded a qualified monopoly.73 The reasoning behind this grant is twofold. Firstly, an author is rewarded for the effort, creativity and talent expended in creating the work. Secondly, the qualified monopoly is awarded as an incentive to the author to create further and improved works in future.74 In Biotech Laboratories (Pty) Ltd v Beecham Group PLC & Another,75 the court questioned the soundness of this principle of copyright law. The court (in an obiter dictum) argued that the earliest form of copyright was granted to printing companies and not to authors. The incentive and reward theory consequently does not really convince in the context of copyright.76

70

Chap 5 (Immaterial Property Interests in the Constitution) discusses constitutional property and its implications for intellectual property and unconventional immaterial property forms in more detail. 71 Dean OH Handbook of South African Copyright Law (1987) 1-1. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 73-84 for an overview of copyright. 72 It has to be noted here that the law of copyright also provides for certain limitations on copyright, mostly for the interest in the public domain. See Chap 4 (The Value of Immaterial Property). 73 Performers’ rights are related to copyright and are protected by the Performers’ Protection Act 11 of 1967. In constitutional law, these rights would be protected in a similar way as the rights that relate to copyright and as such it is not necessary or useful to deal with them at great length. Similar to copyright, certain requirements must be met before private law property protection will be granted to a performance, but once they are met protection granted by the Performers’ Act is automatically conferred on such performance. A performance that takes place; is broadcast without a fixation; or is first fixed in any member state of the World Trade Organisation qualifies for such protection. There are also specific negative rights granted to such performances, in other words the owner of the rights may prohibit other persons from doing certain acts with the work as specified in the Performers’ Act. Similar to copyright, once a performance is granted protection, the associated rights may qualify for constitutional property protection, at least in principle. For a concise explanation of performers’ rights see Grealy P, Penfold G, Coppenhagen VL, Mills A & Gardner Z (original text by Grealy P, Batsri G, Penfold G, Cox A, Milo D, Fikelepi U & Coehlo R) ‘Entertainment’ in Joubert WA & Faris JA The Law of South Africa 8 Part 2 (2nd ed 2005) 227-301 at 271-273. 74 Dean OH Handbook of South African Copyright Law (1987) 1-1. These theories are discussed in greater detail in Chap 4 (The Value of Immaterial Property). 75 2002 (4) SA 249 (SCA) 259. 76 Also see Rose M Authors and Owners. The Invention of Copyright (1994) 67-91.

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The Copyright Act 98 of 1978 governs the law of copyright in South Africa. Certain conditions must be met before copyright protection will subsist in a work. There must be an eligible ‘work’77 and a ‘qualified person’.78 Furthermore the work must be original79 and must exist in a material form.80 Propriety of the work is also required. Propriety entails that works that are considered by society to be indecent, improper or lacking in propriety will not be protected by the law.81 Although Dean concedes that ‘it is widely accepted that the law will not protect works which are considered by society to be improper, indecent or lacking in propriety’82 he argues, in my opinion correctly so, that propriety is not a condition for the subsistence of copyright, but a condition for its enforcement. As such copyright would still subsist in a work lacking propriety, but courts may refuse to enforce the right. 83 The Copyright Act 98 of 1978 prescribes no formalities for the acquisition of copyright in a work. Copyright comes into existence automatically, provided a work meets these specified conditions. Regarding the first requirement of an eligible ‘work’ there are four different factors that could cause a ‘work’ to be ineligible. The work must be of a certain category, it must have sufficient substance, it must not be commonplace and considerations of public policy may also be taken into account.84 Section 2(1) of the Copyright Act 98 of 1978 currently protects the following classes or broad categories of works: literary, musical and artistic works, sound recordings, cinematographic films, broadcasts (television and sound), programme-carrying signals, published editions and computer programs.

77

Dean OH Handbook of South African Copyright Law (1987) 1-5 – 1-15. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 73-75. 78 Dean OH Handbook of South African Copyright Law (1987) 1-20. See further Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 75. 79 Dean OH Handbook of South African Copyright Law (1987) 1-15. See Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 75. 80 Dean OH Handbook of South African Copyright Law (1987) 1-18 – 1-19. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 75. 81 See Goeie Hoop Uitgewers (Edms) Bpk v Central News Agency and Another 1953 (2) SA 843 (W) where Price J stated in par H: I have come to the conclusion that the article in question is of such a scandalous character that no copyright exists in it.’ 82 Dean OH Handbook of South African Copyright Law (1987) 1-19. 83 Dean OH Handbook of South African Copyright Law (1987) 1-19. 84 See Waylite Diary CC v First National Bank Ltd 1995 (1) SA 645 (A), Francis Day & Hunter v Twentieth Century Fox Corporation Ltd & Others [1940] AC 112 (PC) and Jacana Education (Pty) Ltd v Frandsen Publishers 624 JOC (T). These cases also demonstrate the interplay between the requirement that there must be an eligible work and the requirement of originality. It should be noted here that the court only considers whether the work is commonplace as one of the factors in determining whether there is an eligible ‘work’, which is the first requirement for the subsistence of copyright. This should not be confused with the requirement for a registered design that it must not be commonplace (sec 14(1) (b)(ii) of the Designs Act 195 of 1993).

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A ‘qualified person’ must be the author of a work in order for copyright to come into existence. Such a person is an individual who is a citizen of, or is domiciled or resident in South Africa or a country to which the Copyright Act’s operation has been extended by way of proclamation. In the case of a juristic person, a ‘qualified person’ would be a body incorporated under South African law or the law of a country to which the Copyright Act has been extended. The most important substantive conditions for the subsistence of copyright in a ‘work’ are originality and existence in material form respectively. Section 2(1) of the Copyright Act 98 of 1978 prescribes the requirement of originality for all ‘works’ in South Africa. The requirement of originality does not necessitate any uniqueness or inventive step, but it requires that the work should be the product of the author’s own work and accomplishments. Therefore it should not be directly copied from other sources. A work may use aspects of an existing work, provided that sufficient own labour has been invested.85 The standard for originality as required by the courts is relatively low. In Marick Wholesalers (Pty) Ltd v Hallmark Hemdon (Pty) Ltd86 the court found that the requirement of own effort merely requires that the creator’s own effort should be more than de minimis.87 In Waylite Diary CC v First National Bank Ltd88 the court decided that the work89 was not a ‘work’ of the right type for purposes of copyright and as a result did not find it necessary to decide the requirement of originality separately. However, in an obiter dictum the court stated that an objective and subjective test should be used in order to determine whether a work was 85

Dean OH Handbook of South African Copyright Law (1987) 1-15 – 1-16. 1999 JOC 707 (T). 87 See Kalamazoo Division (Pty) Ltd v Gay & Others 1978 (2) SA 184 (C), Northern Office Microcomputers (Pty) Ltd & Others v Rosenstein 1981 (4) SA 123 (C), Klep Valves (Pty) Ltd v Saunders Valve Co Ltd 1987 (2) SA 1 (A) and Waylite Diary CC v First National Bank 1995 (1) SA 645 (A) 649H-I, 650D and 653C-D. 88 1995 (1) SA 645 (A). 89 Waylite Diary supplied diaries for the employees of First National Bank for some years. At some point First National Bank awarded the tender to another company who used the format of the diaries. Waylite Diary claimed to have copyright in the format of the diaries. The new company used the identical format that Waylite Diary had been using. ‘The format of the appointment pages in which copyright is claimed, consists of pairs of facing pages, each pair dealing with a particular week, beginning on a Monday. The left-hand page furnishes on the first line the name of the month in English and Afrikaans and also the number of the week. The days of the week are then listed (also in both languages) and dated on the same page, with four horizontal lines of writing space for weekdays and two horizontal lines each for Saturday and Sunday. The right-hand page has a number of lines for the making of notes and at the foot a calendar consisting of the current and the two succeeding months. The colours and typeface used were standard in terms of FNB's corporate identity specifications.’ Waylite Diary CC v First National Bank Ltd 1995 (1) SA 645 (A) 649. The court considered whether this could be a literary or an artistic work, but concluded that it was not a work for the purposes of copyright protection. See Waylite Diary CC v First National Bank Ltd 1995 (1) SA 645 (A) 648-649, 653. 86

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original. The court named factors such as whether the work was a direct copy and whether enough labour and dexterity of the right sort have been applied in the creation of the work. The court determined this by looking at the final product.90 Dean91 argues that this position is incorrect as it is inappropriate to introduce an element of objectivity into the test for originality. The objective test should only be used to determine whether there is in fact a ‘work’ for the purposes of copyright. Thereafter the test for originality should be purely subjective. The second important substantive condition is that a work must exist in a material form, save in the case of broadcasts and programme-carrying signals. Therefore, a work must exist in writing or some other material form.92 Dean states that a maxim in copyright law is that there is no copyright in ideas. Only the material form of the expressed idea can be the subject of copyright.93 In section 1(1) of the Copyright Act 98 of 1987 ‘writing’ is defined as ‘any form of notation, whether by hand or by printing, typewriting or any similar process’. In Northern Office Micro Computers (Pty) Ltd v Rosenstein94 the court held that a work does not come into existence for the purposes of copyright until it is reduced to a material form.95 Once a ‘work’ meets these conditions, it will be protected by copyright for the duration of the author’s life plus 50 years over and above that, unless the work was never published during the author’s lifetime, in which case the work is protected for 50 years from the first act of publishing. This is the general rule for literary, musical and artistic works.96 There are also specific rules for the other categories of works, in which case a work will only be protected for 50 years.97 The author of a copyright protected work has certain moral rights in addition to copyright.98 These moral rights consist of the right of paternity and the right of integrity respectively. The right of paternity allows the author of the work to claim authorship of the 90

Waylite Diary CC v First National Bank 1995 (1) SA 645 (A). Dean OH Handbook of South African Copyright Law (1987) 1-17. 92 Secs 2(2) and 44 of the Copyright Act 98 of 1978. See Klep Valves (Pty) Ltd v Saunders Valve Co Ltd 1987 (2) SA 1 (A) and Fichtel and Sachs Aktiengesellschaft v Laco Parts (Pty) Ltd & Another 174 JOC (T) where the respective courts held that the mere availability of copies may be sufficient to fulfil the publication requirement. 93 Dean OH Handbook of South African Copyright Law (1987) 1-18. Also see Alberts W ‘Copyright in ideas’ (2008) 16(2) JBL 48-50 where he argues that the maxim that there can be no copyright in ideas is qualified in certain instances, such as where there are co-authors of a scientific publication. 94 1981 (4) SA 123 (C) 129. 95 According to the court in Galago Publishers v Erasmus 1989 (1) SA 276 (A) 283, the subject of copyright is the material form of expression of the idea. 96 As set out in secs 3(2) (b)-(f) and 3(3)-(5) of the Copyright Act 98 of 1987. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 77. 97 Sec 3(2) (a) of the Copyright Act 98 of 1987. 98 As set out in sec 20 of the Copyright Act 98 of 1987. 91

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work. The right of integrity enables the author to object to distortions of his work. 99 These rights are essentially personal rights and not economic or property rights. The Copyright Act 98 of 1987 does not provide a term for these moral rights, but Dean100 suggests that it would be for the duration of the author’s life, since the Act does not make provision for moral rights after the death of the author. These moral rights are connected to the author of a work and not to the copyright. Once copyright subsists in a work, the owner of the copyright has certain exclusive rights pertaining to the work. Dean defines copyright as essentially ‘the right to do or authorise others to do, or prevent others from doing, the acts which are designated in respect of each of the different types or categories of works which can be the subjects of copyright, as the monopoly of the copyright owner’.101 Section 6-11B of the Copyright Act 98 of 1987 lists certain acts or dealings with the work, which may be exercised by the copyright owner. There are certain acts listed for each category of works.102 These are the exclusive rights of the copyright owner, for example the right to make copies of the work. These rights could be infringed by means of so-called primary infringement or secondary infringement. Primary infringement occurs when someone does something with the work which falls within the exclusive rights of the copyright owner, provided this takes place without the copyright owner’s permission.103 Indirect or secondary infringement takes place when someone deals in unauthorised copies or permits infringement.104 Since these exclusive rights are not absolute, there are exemptions from the prohibition against infringement. These exemptions serve to

99

Dean OH Handbook of South African Copyright Law (1987) 1-61 – 1-65. Dean OH Handbook of South African Copyright Law (1987) 1-61 – 1-65. 101 Dean OH Handbook of South African Copyright Law (1987) 1-33. 102 For example sec 6 deals with the nature of copyright in literary or musical works, stating that: ‘Copyright in a literary or musical work vests the exclusive right to do or authorize the doing of any of the following acts in the Republic: (a) Reproducing the work in any manner or form; (b) publishing the work if it was hitherto unpublished; (c) performing the work in public; (d) broadcasting the work; (e) causing the work to be transmitted in a diffusion service, unless such service transmits a lawful broadcast, including the work, and is operated by the original broadcaster; (f) making an adaptation of the work; (g) doing, in relation to an adaptation of the work, any of the acts specified in relation to the work in paragraphs (a) to (e) inclusive.’ 103 Dean OH Handbook of South African Copyright Law (1987) 1-37. 104 Dean OH Handbook of South African Copyright Law (1987) 1-44. See further Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 81-83. 100

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limit the copyright owner’s monopoly. The exemptions include105 the fair dealing exemption;106 use for judicial proceedings;107 quotations;108 illustrations for teaching;109 ephemeral copies;110 works delivered in public;111 reproductions in press or broadcast;112 official texts, political speeches and news of the day;113 and reverse engineering of products.114 It appears from this discussion that the historic reasons why copyright should be protected cannot be accepted as is, but may require some re-evaluation.115 However, there are clearly 105

There are still more exemptions which are not discussed for the purposes of this chapter. The exemptions have very technical requirements. The purpose is merely to demonstrate that copyright is not absolute. For a full discussion see Dean OH Handbook of South African Copyright Law (1987) 1-51 – 1-60F. Also see Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 83-84. 106 The concept of ‘fair dealing’ is vague, but this is presumably to allow courts to take all factors into consideration when determining infringement. Dean OH Handbook of South African Copyright Law (1987) 1-51 – 1-52 states that ‘[a]ny fair dealing with a literary, musical or artistic work, or with a broadcast or published edition, does not infringe that copyright when it is – (a) for the purposes of research or private study by, or the personal private use of, the person using the work; (b) for the purposes of criticism or review of that work or of another work; or (c) for the purposes of reporting current events – i) in a newspaper, magazine or similar periodical; or ii) by means of broadcasting or in a cinematographic film’. 107 Dean OH Handbook of South African Copyright Law (1987) 1-53: When a work is reproduced for purposes of the report for judicial proceedings, the copyright in a literary, musical or artistic work; a cinematographic film; sound recording; broadcast; published edition; or computer program, the copyright of the work is not infringed. 108 Dean OH Handbook of South African Copyright Law (1987) 1-54: A summary or quotation taken from a work does not infringe the copyright in a literary or musical work; a cinematographic film; sound recording; broadcast; or computer program. The quotation must, however, be used in line with fair practice and the name of the author must accompany the quotation. 109 Dean OH Handbook of South African Copyright Law (1987) 1-54: A literary, musical or artistic work; a cinematographic film; sound recording; broadcast; published edition; or computer program may be used for the purposes of teaching by way of illustration as long as the extent of use is justified by the purpose and the name of the author accompanies the illustration. 110 Dean OH Handbook of South African Copyright Law (1987) 1-54: Where a copy of a literary, musical or artistic work; a cinematographic film; sound recording; broadcast; published edition; or computer program is made by a broadcaster for a lawful broadcast and the copy is destroyed within six months after its creation, copyright in the work is not infringed. 111 Dean OH Handbook of South African Copyright Law (1987) 1-54A: Where a literary work such as a lecture is delivered in public, its copyright is not infringed when it is broadcast for informatory purposes. 112 Dean OH Handbook of South African Copyright Law (1987) 1-54A: The copyright of a work published in a newspaper or periodical or an article used in a broadcast is not infringed if the topic is of current economic, political or religious nature. 113 Dean OH Handbook of South African Copyright Law (1987) 1-54A: Official texts that are of a legislative, administrative or legal nature; or translations thereof do not acquire copyright. The right to make collections of such speeches still belongs to the author. 114 Dean OH Handbook of South African Copyright Law (1987) 1-54A: Where three-dimensional reproductions of an artistic work has been made available to the public with the consent of the owner, whether inside or outside of South Africa, its copyright is not infringed if someone makes copies or adaptations without the copyright owner’s consent. The authorised productions must have a utilitarian purpose and must be manufactured by an industrial process. See Dean OH Handbook of South African Copyright Law (1987) 1-56 – 1-59 for a full discussion of the requirements. 115 This is done in Chap 4 (The Value of Immaterial Property).

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defined rights that could enjoy protection under the constitutional property clause if the requirements for copyright protection are met. The Copyright Act 98 of 1987 also sets down certain limits on copyright. It is not ideas, but only the embodiment of ideas that are protected by copyright. Ideas should stay in the public domain. Copyrights are furthermore also limited by way of their duration. Copyright is accepted as a sui generis form of property in private law and should as a result be accepted under the wider scope of constitutional property as well. Finally, it is also necessary to highlight the differences and similarities between patents and copyrights. Copyright does not require an inventive step, such as is required for a patent. The subject of copyright does not need to be novel as is required for patents; there must merely be enough own labour invested in the creation of the work. The subject of copyright need not have the ability to be applied in trade, industry or agriculture either, as is the case with a patent. Furthermore, the term116 of copyright is substantially longer than the 20 years granted for a patent, namely the duration of the author’s life plus 50 years. Copyright subsists automatically once the requirements have been met and does not require registration in order to come into existence, as is the case with patents. It appears that the requirements and duration of patents and copyright are quite different. However, in both cases certain specific rights are discernible. It is possible to protect these rights under the constitutional property clause since both patents and copyrights are recognised and protected as sui generis forms of property in private law. There are also similarities between patents and copyright. The qualified monopoly that is granted to copyright authors is limited in time. Once the term has passed, the work falls into the public domain and others may freely use it. This is similar to the position with patents. Both forms of intellectual property are limited and the deprivation and expropriation provisions in the property clause could serve to further limit the property rights if it is in the public interest. 25

Registered Designs

Alberts117 affirms that registered design protection relates to the appearance of an object. In terms of the Designs Act 195 of 1993, aesthetic and functional designs may be registered, 116

According to sec 3(2) (a) of the Copyright Act 98 of 1987 the term of copyright is equal to the lifetime of the author plus 50 years. 117 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46.

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provided they are produced by way of an industrial process. Alberts explains the difference between an aesthetic and a functional design by stating that an aesthetic design is applied to an article, among others, for its form, pattern or decoration. This design should appeal to the eye. Aesthetic designs characteristically include articles such as jewellery. Alberts gives the example of a watch designed by Jenna Clifford as a demonstration of an aesthetic design. An aesthetic design also needs to be novel and innovative in order to be registrable.118 In order to meet this requirement, such a design must not be part of the state of the art directly before the application date for the design or the date on which the design was first released to the public.119 By contrast, a functional design may protect the features that are necessitated by the function that the designed article must perform. Alberts120 gives examples of functional designs such as the sole of a shoe and a brick. He notes that both these examples may also contain purely aesthetic features. A functional design is required to be new and not commonplace. Once these requirements are met and a design is registered, an aesthetic design is protected for a term of 15 years121 and a functional design for a term of 10 years.122 The term of protection for a design is shorter than both the term of copyright and a patent. The registration of a design confers upon the owner the right to prohibit third parties from manufacturing or importing an article making use of the design.123 Similar to patents and copyright, designs also confer specific rights on the owner of the design. Designs are also recognised and protected as a sui generis form of property under private law and should be accepted as constitutional property without any difficulty. Constitutional interpretation would simultaneously make provision for the protection of rights in designs, but also have the potential to limit these rights.

118

See Clipsal Australia (Pty) Ltd v Trust Electrical Wholesalers 2009 (3) SA 292 (SCA) par 13 where the Supreme Court of Appeal dealt with registered designs under the Designs Act 195 of 1993 for the first time. The court confirmed the principle that novelty should be assessed against the background of the prior art relevant to the design. The court stated that a new combination of prior art is permissible and such a design would still be novel. Joffe F ‘Designs registered under the Designs Act’ (2007) 15(2) JBL 24-27 at 27: Clipsal Australia (Pty) Ltd v Trust Electrical Wholesalers 2009 (3) SA 292 (SCA) provides some welcome clarity on aspects of the Designs Act, but simultaneously highlights ‘just what a poorly thought out mongrel the Act is’. 119 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. 120 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. 121 Designs Act 195 of 1993 sec 22(1) (a). 122 Designs Act 195 of 1993 sec 22(1) (b). Also see Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 9-1 and 9-5 where he confirms that the design is protected for the fixed term after which it falls into the public domain, similar to the case of a patent. This principle was fixed in Premier Hangers v Polyoak (Pty) Ltd 1997 (1) SA 416 (A) 424I-426I. 123 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. Also see Burrell TD Burrells South African Patent and Design Law (3rd ed 1999) 9-56 for an explanation of the specific rights conferred by a design.

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26

Trademarks

This section deals with trademarks and has the purpose of setting out a brief history of trademarks; describing the rights associated with a trademark; ascertaining why trademark rights should be protected by the constitutional property clause; setting out the implications of constitutional interpretation, namely protection and limitation of property rights in trademarks; and finally describing the differences and similarities between trademarks and patents on the one hand, and trademarks and copyright on the other. The function of a trademark at common law was to indicate the origin of goods. The term ‘origin’ was used restrictively to refer to the manufacturer of the goods. This narrow function has been progressively widened by subsequent statutes. The 1947 act widened the function of a trademark to include the connection between the goods and the registered proprietor as well as the user of the mark. Since the 1916 act, there was already an ‘origin’ function and there was a ‘distinguishing’ function.124 The basic functions are to show the origin, to guarantee quality, to distinguish products or services and to serve as an advertisement. On the whole, trademarks may also be said to protect the goodwill of a particular business. The Trade Marks Act 194 of 1993 governs the registration of trademarks.125 A trademark may consist of a word, a logo or a shape. According to the Trade Marks Act 194 of 1993, the first requirement is that a trademark must be distinct prior to registration in order to qualify for such registration on the trademarks register. Alberts126 explains that distinctiveness may be acquired in two different ways. A trademark may be inherently distinctive, or it can become distinctive through use. He suggests that ‘Lamborghini’ would be an example of inherent distinctiveness, while ‘Shatterprufe’ which is essentially a description, has become distinctive through use. The registration of a trademark customarily confers upon the property owner the right to prohibit other, unauthorised parties from using a mark that is confusingly similar in relation to the same or similar goods. A wider scope of protection is available for famous marks, for example McDonalds.127 The Trade Marks Act 194 of 1993 defines a ‘mark’ as ‘any sign capable of being represented graphically, including a device, name, signature, word, letter, numeral, shape, configuration, 124

Webster GC & Page NS The South African Law of Trade Marks (3rd ed 1986) 3-10 – 3-10(1). See Von Seidel M Intellectual Property – The John & Kernick Guide (1998) 40. 126 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. 127 Alberts W ‘What is intellectual property?’ (2007) Nov De Rebus 45-46 at 45. 125

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pattern, ornamentation, colour or container for goods or any combination of the aforementioned’.128 Webster and Page129 state that the essence of a mark is its ability to be represented graphically. This implies that the sign should have the ability to be represented visually, which would include representation by means of writing, a diagram, a linear figure or symbolic curve, a photograph, a drawing, painting, engraving, etching, computer created representation or something similar. This is not an exclusive list, hence there may also be other means of representation.130 In Triomed (Pty) Ltd v Beecham Group plc131 the court a quo held that a mark in the form of a tablet was not sufficiently certain to inform the public as to the extent of the monopoly. On appeal, the court in Beecham Group plc v Triomed (Pty) Ltd132 held that there was no intrinsic objection to the registration of a trademark over the shape of a tablet. Whether such a mark would be distinguishing for the purposes of section 9 of the Trade Marks Act 194 of 1993 is a different issue.133 From section 2(1) and 2(2) of the Trade Marks Act 194 of 1993 it appears that there are specific categories of marks. The first category is a ‘device,’ which is defined in section 2(1) (viii)134 as ‘any visual representation or illustration capable of being reproduced upon a surface, whether by printing, embossing or by any other means’. Colour is specifically included as a ‘mark’, as long as the precise shade of the colour is stated. A specific sound may also be the object of a trademark. From the limitations in section 2(2) of the Trade Marks Act 194 of 1993, it appears that no provision has been made for smells to serve as a ‘mark’. Similarly, a specific taste may also not be registered as a ‘mark’. Unlike copyright, which subsists automatically, a trademark needs to be registered before any rights are conferred. The application needs to specify in which of the 45 categories the trademark would fall once granted. Examples of these categories are class 5, which includes medicines and class 42, which includes legal services. Section 37 of the Trade Marks Act 194 of 1993 determines that a trademark is perpetual in principle. It may be renewed every 10 years. The first 10 years commence from the date of application and thereafter a renewal fee must be paid for each term, omission of which may lead to the trademark being scrapped from the register. In this regard, trademarks differ widely from the other categories of intellectual 128

The Trade Marks Act 194 of 1993 in the list of definitions. Webster GC & Page NS The South African Law of Trade Marks (3rd ed 1986) 3-7. 130 Webster GC & Page NS The South African Law of Trade Marks (3rd ed 1986) 3-7. 131 2001 (2) SA 522 (T) 540 E-F. 132 2003 (3) SA 639 (SCA) par 10. 133 Webster GC & Page NS The South African Law of Trade Marks (3rd ed 1986) 3-7 – 3-8. 134 Trade Marks Act 194 of 1993. 129

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property, since trademarks are not limited by way of duration. Trademarks are limited by other means. There are so-called ‘absolute grounds’ on which the Registrar may refuse to register a particular trademark, as expounded in section 10(2) of the Trade Marks Act 194 of 1993. Section 10(2) (a) states that if a mark fails to distinguish, it may not be registered. A mark that is purely descriptive regarding quality, quantity, purpose, geographic origin and so forth, may not be registered.135 Similarly, marks that are purely generic may not be registered.136 However, a generic mark that falls within one of the categories of section 10(2)137 may still acquire distinctiveness through use. There are also certain ‘relative grounds’ for the refusal to register a trademark. The most important of these grounds is where there is a prior registered mark and confusion may be caused138 and where a ‘well-known’ registered mark may be diluted.139 Section 10(14),140 pertaining to confusion, states that a mark may be refused registration if it is similar or identical to a mark which is already registered; where the application is in relation to the same goods or services; and the use would probably lead to confusion or would mislead. This particular limitation on trademarks is mainly to protect the consumer. Once a mark is registered as a trademark, the trademark owner has certain exclusive rights pertaining to the mark. When other persons use the mark without authorisation, infringement occurs. Section 34(1) of the Trade Marks Act 194 of 1993 regulates the three situations when such a trademark would be infringed. This would be the case when there was unauthorised use in the course of trade of an identical or similar mark in relation to identical goods or services, where confusion is likely to occur.141 The second situation differs from the first in that the goods or services need only be similar, not identical. The nature of the confusion required is also an important distinction between the two forms of infringement.142 The third scenario is where a registered well-known mark may be diluted due to its unauthorised use in 135

According to sec 10(2) (b) of the Trade Marks Act 194 of 1993. According to sec 10(2) (c) of the Trade Marks Act 194 of 1993. 137 Trade Marks Act 194 of 1993. 138 Sec 10(14) of the Trade Marks Act 194 of 1993. 139 Sec 10(17) of the Trade Marks Act 194 of 1993. 140 Trade Marks Act 194 of 1993. 141 Sec 34(1) (a) of the Trade Marks Act 194 of 1993. 142 Sec 34(1) (b) of the Trade Marks Act 194 of 1993. See BMW AG v Verimark (Pty) Ltd 2007 (6) SA 263 (SCA). It must be noted that the purpose of this section is merely to show that trade mark rights are protected as property in private law on a sui generis basis provided that certain requirements are met as set forth in the Trade Marks Act; and not to give a full discussion and analysis of all the aspects relating to trade marks. 136

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the course of business.143 There are, however, also certain defences which may be used against trademark infringement.144 As such the holder of a trademark does not have an absolute right in terms of the trademark right. There are eight different defences which may be used in reference to section 34(1).145 These defences are bona fide use of own name; bona fide description; bona fide use to indicate intended purpose; use on genuine goods; bona fide use of utilitarian features; use for which the registration does not extend; concurrent registration; and the case where freedom of expression is perceived as more important than a specific trademark right. The first defence is the bona fide use of one’s own name, the name of the business or that of the business predecessor. However, it must also be fair use.146 The second defence pertains to descriptive use. A bona fide description of the quality, quantity, purpose etcetera would not constitute trademark infringement.147 Thirdly, bona fide, reasonable use in order to demonstrate a product or service’s purpose would be allowed.148 In the fourth place, where a trademark has been used on a product with the consent of the owner in order to import, sell or resell the goods, there would be an allowable defence.149 The fifth defence refers to the bona fide use of useful characteristics of a trademark, for example shape or colour. This prevents the misuse of trademarks as patents or designs.150 Furthermore a trademark may also be used when the specific aspect being used falls outside the scope of the registration.151 The penultimate defence pertains to honest concurrent use, in the case where both parties have the same registered trademark.152 Finally, section 36(1) of the Trade Mark Act 194 of 1993 protects users with pre-existing rights. This is only the case where the use was bona fide and for a period before the date of first use or registration of the mark used. A further category where there may sometimes be exemption from infringement is in the case of freedom of speech or parody. In South African Breweries International (Finance) BV t/a

143

Sec 34(1) (c) of the Trade Marks Act 194 of 1993. Sec 34(2) (a)-(g) of the Trade Marks Act 194 of 1993 sets out specific defences and sec 36 pertains to established rights. 145 Trade Marks Act 194 of 1993. 146 Sec 34(2) (a) of the Trade Marks Act 194 of 1993. 147 Sec 34(2) (b) of the Trade Marks Act 194 of 1993. 148 Sec 34(2) (c) of the Trade Marks Act 194 of 1993. 149 Sec 34(2) (d) of the Trade Marks Act 194 of 1993. 150 Sec 34(2) (e) of the Trade Marks Act 194 of 1993. 151 Sec 34(2) (f) of the Trade Marks Act 194 of 1993. 152 Sec 34(2) (g) of the Trade Marks Act 194 of 1993. 144

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Sabmark International v Laugh It Off Promotions CC153 a constitutional defence was raised for the first time in a trademark dispute. The applicant had a registered trademark for the words ‘Carling Black Label’ and for a representation of the label of its product. The respondent sold T-shirts with the slogan ‘Black Labour, White Guilt’, but other than that the marks were the same as SAB’s. SAB brought an action in terms of section 34(1) (c) of the Trade Marks Act 194 of 1993, which prohibits the use of a well-known mark where use would be detrimental to or take unfair advantage of the distinctive character or repute of a mark. The court found that there was trademark infringement and Laugh It Off subsequently lodged an appeal. On appeal, in Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International154 (hereafter Laugh It Off v SAB International) the court stated that the Trade Marks Act 194 of 1993 should not infringe freedom of expression unduly. The court weighed up freedom of expression against the right to property and freedom of trade. The court concluded that Laugh It Off’s use of SAB’s trademark was not justified in terms of freedom of speech, since there were other means available to Laugh It Off to convey their message than selling T-shirts. The court also said that a parody that is purely insulting is not protected, since it is defamatory. When Laugh It Off lodged an appeal to the Constitutional Court,155 the decision of the Supreme Court of Appeal was reversed. The Court held that freedom of speech and parody are not defences per se, but that they may be considered as factors relevant to determining the unfairness of the prejudice suffered by the trademark holder (in this case SAB). Sachs J balanced the right to freedom of expression and the right to property.156 The Constitutional Court identified factors that might be taken into account to determine whether trademark infringement might be excused. The first is the primary nature of use, for example whether it is commercial or for commentary. On the facts the court excused the limited commercial use, since it was merely to ensure the continued existence of Laugh It Off.157 The second factor is the medium chosen for the expression and the context in which 153

[2003] 2 All SA 454 (C) par 16. 2005 (2) SA 46 (SCA) par 29-34. 155 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 156 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) 231-232. 157 It is interesting to note that Laugh It Off’s shirts are quite expensive, comparable to so-called ‘name brands’. 154

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the trademark was used. The Court stated that the medium used was T-shirts and that the existence of alternative mediums could be excused since it would have been less effective. The third factor identified by the court was the offensiveness of the use. On the facts the court found the offensiveness minimal. The court pertinently stated that whether the court finds the parody funny is not a factor. It should however be an important factor, since it might still influence the court subconsciously.158 From the history of trademarks it becomes apparent that the purpose of trademarks had initially been in the interest of the public, namely to protect consumers by ensuring quality. Provided that trademarks comply with the requirements set out in the Trade Marks Act 194 of 1993, there are specific rights connected to the trademarks that are protected as property in private law. These rights could also be protected under the constitutional property clause similar to patents and copyright, since they are a sui generis form of property in private law. As demonstrated in Laugh It Off v SAB International,159 courts are willing to accept trademarks as constitutional property. This also has the implication that other forms of intellectual property would in all likelihood be accepted as property for constitutional purposes. Trademarks will be protected in terms of the constitutional property clause, at least equal to the protection enjoyed by other forms of property. However, the constitutional property clause also limits property rights and consequently trademark rights will be subject to the limitations of deprivation and expropriation, similar to other tangible and intangible categories of property. By contrast to the other intellectual property categories; namely patents, copyrights and designs; trademarks are not limited by way of their duration. However, trademarks are limited by being deregistered after 10 years if they are not re-registered upon the payment of a fee (provided that they also still comply with the substantial requirements for a trademark, notably that they must remain distinctive and still be in use). The problem with copyrighted works is that the vast majority of works are not economically viable to print for more than about five or ten years unless they are works by, for example, Shakespeare. This causes the works to become inaccessible to the public. Perhaps it would be a better solution to make 158

The full extent of the constitutional implications of this case is discussed in Chap 5 (Immaterial Property Interests in the Constitution). The short discussion of the Laugh It Off cases merely serves to give a full overview of the reasons why a trade mark could possibly not be enforced by a court. See sec 5.2.7 for a full discussion of the constitutional implications of the Laugh It Off cases. 159 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC).

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copyrights subject to renewal periods of ten years as well instead of a fixed term. However, trademarks are also less limited, since they are perpetual as long as someone is interested in renewing and using the trademark. Trademarks are furthermore limited by way of what is allowed to be registered, similar to patents. However, similar to copyright, there are also certain defences against infringement that serve to limit trademark rights even further. It appears that trademarks are more limited in other ways to compensate for the fact that they are perpetual as long as they are renewed every ten years. If you follow the postulation that the strength of an intellectual property right is inversely proportional to the length of its duration,160 then one may conclude that a trademark right would not be protected as strongly as patents, copyright or designs, which have a much shorter duration. 27

Conclusion

It becomes apparent from this discussion that it is useful to compare intellectual property to tangible property in order to describe intellectual property rights. Intellectual property rights are not connected to the tangible objects that are manufactured in terms of these rights and as such the intellectual property rights are not infringed if any of these objects are destroyed. Furthermore, intellectual property differs from tangible property in that it is not a scarce resource, but has to be made scarce artificially through legislation. Most of the rights connected to intellectual property are negative, entailing the right to prohibit persons from doing certain acts with the objects of intellectual property, for example copying and distributing them. Similar to other, tangible categories of property, intellectual property may also be characterised as a bundle of rights. Private law, in terms of legislation, grants certain (mainly negative) rights to the holder of the intellectual property that enable the holder to prevent third parties from utilising the exclusive rights pertaining to the intellectual property. Therefore the bundle of rights approach is particularly apt for intellectual property, since the property literally consists only of a bundle of rights because there is no tangible thing linked to the property concept. It was argued in this chapter that the traditional immaterial property categories or intellectual property categories, namely copyright, patents, designs and trademarks are all sui generis 160

Bainbridge DI Intellectual Property (1992) 12.

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forms of property in private law. This is the case since the legislation creating these intellectual property forms acknowledges and protects it as property and this position is honoured in private law. This already implies that these interests might also be recognised and protected as property in constitutional law. Constitutional law generally employs a wider property concept than private law. The decision in Laugh It Off v SAB International161 strengthens this argument because of the Court’s implicit acceptance that trademarks are constitutional property. This opens up the possibility of including the other intellectual property categories under the constitutional property clause by analogy. It has to be noted that it is ‘expected that the decision to include a certain property interest under the protective umbrella of the property clause will not guarantee actual protection, because a substantive weighing up of private property interests and the public interest could indicate that a particular deprivation or expropriation of property is justified’.162

This explains the decision in Laugh It Off v SAB International163 where the Court implicitly considered trademarks as constitutional property, but ultimately did not afford actual constitutional protection. Therefore, the recognition of these traditional immaterial property interests as property for the purposes of the constitutional property clause would have the implication that these interests could be both protected and limited by the property clause. These interests would have to be considered and weighed up against other fundamental rights and would have to be given serious consideration in instances where these interests and other fundamental rights conflict.164 The private law property rights granted in terms of intellectual property legislation are limited and not absolute; and since no fundamental right is unlimited, certain limitations would also be placed on the protection of these traditional immaterial property interests. The constitutional property clause makes specific provision for expropriation and deprivation of property, which would also be applicable to traditional immaterial property interests or intellectual property rights if they are recognised as a category of property. The two issues of 161

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a/ Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 162 Van der Walt AJ Constitutional Property Law (2005) 106. 163 2006 (1) SA 144 (CC). 164 It has to be noted here that all constitutional rights are not equal. Rights such as the right to life, dignity and political rights are non-derogable, while property rights may be infringed or taken away in certain instances provided for in the constitutional property clause. However, the inclusion of intellectual property as constitutional property would have the effect that it would at least be considered equal to other property or economic rights.

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protection and limitation have to be kept separate although they co-exist closely in the same sphere. These constitutional aspects will be discussed in more detail in Chapter 5 (Immaterial Property Interests in the Constitution). It becomes apparent that these traditional categories of immaterial property, namely patents, copyright, designs and trademarks establish clearly defined rights, so that there should be no problem with the inclusion of these categories of immaterial property as constitutional property. Certain differences as well as common features are discernible in these traditional immaterial property or intellectual property interests. Each of the four intellectual property categories discussed in this chapter is created and governed by statute and as such may be seen as sui generis forms of property in private law. The term of private law protection differs for these intellectual property interests. Patents are protected for a period of 20 years and copyright for the lifetime of the author plus 50 years. An aesthetic registered design is protected for 15 years, while a functional design is protected for 10 years. A trademark, on the other hand, is perpetual in principle. It may be renewed every 10 years provided that it remains distinctive and in use. If it is not renewed by means of the payment of a renewal fee, it may be scrapped from the register. As such it appears that patents, copyright and registered designs are limited by way of their duration, but not trademarks, at least in principle. If one assumes that the duration of an intellectual property right is inversely proportional to its power, then trademarks would not be protected as strongly as the other intellectual property rights, at least where it conflicts with other fundamental rights such as the right to dignity or freedom of expression. This may explain the result of Laugh It Off v SAB International,165 where the court ultimately protected the right to freedom of expression above the property right in the trademark. In German constitutional law, the function of constitutional property protection is to guarantee the property institution and not every conceivable use of the property. For example in the case of copyright, what is protected by constitutional law is the essence of the copyright, namely the author’s right (secured by private law) to have property in the creation.166

165

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a/ Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 166 See Chap 5 (Immaterial Property Interests in the Constitution) for more examples from foreign law where intellectual property rights and other constitutional rights had to be weighed up. See especially German law (discussed in Sec 5.3.2 of Chap 5) and the Schoolbook case (BVerfGE 31, 229 [1971] (Urheberrecht case)) where the right to education and property rights in copyright had to be weighed up. See Kommers DP The

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There are further limitations placed on each of the categories of intellectual property. Similar to tangible property, intellectual property rights are not absolute. The Patents Act 167 names specific inventions that are excluded from patentability, for example a discovery and a scientific theory. Copyright is further limited by way of exemptions from infringement, for example the fair dealing exemption or the provision regulating the reverse engineering of products. When the subject of copyright is used in line with one of these exemptions, the copyright will not be infringed. The Designs Act 195 of 1993 also allows only specific creations to be registered as designs, namely creations pertaining to the appearance of an article. In the case of trademarks, the Trade Marks Act168 provides certain ‘absolute’ and ‘relative’ grounds for the refusal of a trademark, such as the case where a mark does not distinguish or where it is purely generic. Such trademarks may not be registered. The purpose of intellectual property or traditional immaterial property interests is to provide a reward to persons for sharing their intellectual work. Furthermore it creates an incentive for further research. This is the general view, but there are questions regarding the effectiveness of this approach. Intellectual property may in fact stifle research if access to prior work is not readily available due to overly strict intellectual property protection. A balance must also be found between the level of reward or incentive and access to such intellectual works. The theories for the justification of intellectual property and unconventional immaterial property interests are further analysed and discussed in Chapter 4 (The Value of Immaterial Property). The specific purpose of a patent is supposedly reward and incentive, but the history of patents suggests that it was not the case. Similarly, with copyright the idea is to stimulate creativity. However, historically the first copyrights were granted not to authors, but to publishers. The intellectual property category of registered designs is relatively new and had been created to fill a void. These designs relate purely to the appearance of an article and cannot be registered as patents, but are also not suitable for copyright protection. A different type of protection is required, namely protection as registered designs. Trademarks were originally used to indicate the origin of goods. Later it also developed a distinguishing function, which is currently the most important motivation for the protection of trademarks.

Constitutional Jurisprudence of the Federal Republic of Germany (1997) 261-262 and Van der Walt AJ Constitutional Property Clauses (1999) 153. 167 57 of 1978 sec 52(2) (a)-(g). 168 194 of 1993 sec 10(2) and 10(4).

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Before a specific interest becomes intellectual property, it has to comply with certain requirements. These requirements indicate that there may be social or economic justification for the protection of these immaterial property interests. Each category requires at least a certain amount of own effort in order to gain protection. It is sufficient to note here that the specific requirements of each intellectual property form give an indication as to the suitability of each theory for the justification of property protection in private law and perhaps also in constitutional law. These requirements differ for each category. Patents169 are required to be novel, involving an inventive step; and must have the ability to be used or applied in trade, industry or agriculture. Once these requirements are met, a patent may be registered. In order for copyright170 to subsist, there must be an eligible work and a qualified person. The work must be original,171 must exist in a material form and be proper. Copyright, unlike a patent, exists automatically if the requirements are met. There is no need for registration. Registered designs172 must be produced by way of an industrial process and fulfil the requirements for either an aesthetic or a functional design. Similar to a patent, a design also needs to be registered before protection of the intellectual property right is granted. Similarly, a trademark173 must also be registered before it is afforded any protection. Such a trademark is required to be distinctive and must be capable of graphic representation before it may be registered. Furthermore, and perhaps most importantly, the holder of intellectual property (a patent, copyright, registered design or trademark) acquires certain rights pertaining to the object of the right. The owner of a patent has the exclusive right to make, use or import products embodying the invention and to prohibit unauthorised third parties from doing so. The most important right in the case of copyright is control of the different uses of the copyrighted work. Therefore, the owner has the right to do or authorise others to do specific acts relating to the work. The specific acts allowed depend on the category of the work in question. A registered design similarly confers upon the owner the right to prohibit third parties from manufacturing or importing an article that makes use of the design. In the case of a 169

Governed by the Patents Act 57 of 1978. Governed by the Copyright Act 98 of 1978. 171 Originality is not the same as novelty for the purposes of a patent, it merely requires sufficient own effort. 172 Regulated by the Designs Act 195 of 1993. 173 Regulated by the Trade Marks Act 194 of 1993. 170

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trademark, the owner may prohibit third parties from infringing the trademark. Infringement occurs if a similar or identical mark may cause confusion or where the mark would be diluted due to the unauthorised use. A common feature visible in all the rights granted for intellectual property is that the most important rights are negative rights, in other words the rights to prohibit other persons from doing certain acts in relation to a work. A person already has the right to utilise an intellectual creation, whether it is protected as intellectual property or not. The right to prohibit others from utilising it, however, is only acquired once the creation qualifies as intellectual property. It is necessary to note the difference between property protection in private law and constitutional law here again. The purpose of private law protection is to grant these rights to the full, protecting it against infringement by third parties. These rights are also capable of being protected under the constitutional property clause. The purpose of such protection is to guarantee the institution of intellectual property and to protect private interests against the state and against competing constitutional rights of other private parties. However, the constitutional property clause also serves to limit property rights and could therefore also limit intellectual property rights. At this point it becomes necessary to define and discuss the unconventional immaterial property interests, in other words the two categories of interests which may be recognised as property in constitutional law, but not in private law; and interests not yet recognised in either constitutional or private law. These interests are defined in Chapter 3 (Unconventional Immaterial Property Interests). As mentioned, these interests are not generally accepted as property in private law, not even as sui generis forms, therefore its inclusion or exclusion will also have to be examined with reference to the reasons why it should be protected. First, however, it is necessary to define the unconventional immaterial property interests in order to compare it to traditional immaterial property.

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Chapter 3: Unconventional Immaterial Property Interests 31

Introduction

In Chapter 2 (Traditional Immaterial Property Interests), the traditional immaterial property interests or intellectual property rights were discussed. These are respectively patents, copyright, designs and trademarks. Intellectual property rights are all sui generis forms of property in private law, since they have been created by legislation and private law honours this position. These intellectual property rights should readily be accepted as constitutional property as well, since constitutional law traditionally applies a wider property concept than private law. In principle, all forms of property in private law should be accepted as constitutional property as well. In Laugh It Off v SAB International,1 the court implicitly accepted trademarks as constitutional property and the other intellectual property rights should also be included by analogy. The First Certification case2 dealt with the question whether intellectual property rights should be protected under a separate constitutional property clause. The Constitutional Court found that this is not necessary since the property clause is wide enough to include all property interests that should be protected according to international human rights standards. This is understood to mean that intellectual property rights may be protected under the property clause. The fact that no specific categories of property are mentioned means that any otherwise recognised property rights may be protected in principle, particularly since constitutional property law traditionally makes use of a wide property concept. Similarly, there is also scope to include immaterial property interests other than the traditional immaterial property interests or intellectual property rights discussed in Chapter 2 (Traditional Immaterial Property Interests). Chapter 2 (Traditional Immaterial Property Interests) dealt with immaterial property interests created by way of legislation which grants property rule-type protection. The result is that these interests are also protected as property in private law. The question was whether the traditional immaterial property interests or intellectual property rights should also be 1

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 2 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75.

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recognised and protected as property in constitutional law. Since the constitutional concept is wide, it is not restricted to the private law concept of property, but it is acknowledged that property interests accepted as property for private law purposes would most likely also be protected under the constitutional property clause unless it is explicitly excluded. In this chapter, which deals with the unconventional immaterial property interests, the question is different and not quite as straightforward. Some of the unconventional immaterial property interests are protected in private law, albeit not under property but another area of private law such as contractual rights, or in public law, such as socio-economic rights. Others are not protected in private or public law at all. However, all of these interests share certain characteristics such as economic value and scarcity with property and intellectual property and consequently it could be possible to recognise and protect them under the constitutional property clause. The question is whether, and if so in terms of which requirements, it would be possible to recognise and protect these unconventional immaterial property interests under the constitutional property clause. With the possible exception of public participatory rights which may be protected under the constitutional provisions for socio-economic rights, there is no constitutional provision other than the property clause that could provide adequate protection to these interests. There has been no case law yet to clarify which of the unconventional immaterial property interests may be protected as constitutional property, although it is accepted that there is scope in the constitutional property concept to include any or all of these interests if it is found to be necessary. If these unconventional immaterial property interests are recognised as constitutional property, this would provide constitutional protection, but could also place limitations on the rights. The constitutional property clause does not only protect property, but also provides for the deprivation and expropriation of property. The question of why these unconventional immaterial property interests should be protected under the constitutional property clause and under which circumstances, is addressed in Chapter 4 (The Value of Immaterial Property). Aside from the intellectual property rights or traditional immaterial property interests that are accepted as property in private law, there are also unconventional immaterial property

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interests that are not generally accepted as property. Ciro3 argues that it has almost been a foregone conclusion that intellectual creation (traditional immaterial property interests) would be accepted as property. However, in a number of immaterial property areas the possible application of the property label has caused substantial disagreement. Ciro4 proposes that these areas incorporate commercial information, confidential information, trade secrets and digital copyright.5 Biotechnological products, traditional knowledge, commercial property, the so-called ‘new property’ or participatory claim rights and non-proprietary rights are further examples of unconventional immaterial property interests. There are also nonproprietary rights such as contractual claims that are not accepted as property in private law, but which may possibly enjoy constitutional protection because they are recognised and protected under other areas of private law and they arguably involve property-like patrimonial interests. These interests are examined in detail to determine which of its characteristics are similar to property and intellectual property. However, there are more examples of unconventional immaterial property such as domain names,6 plant breeders’ rights,7 geographical indications8 and virtual property.9 There are currently debates about whether domain names should be protected under the existing 3

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21. Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21. 5 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 7. 6 See Hurter E ‘The international domain name classification debate: are domain names ‘virtual property’, intellectual property, property, or not property at all?’ (2009) XLII CILSA 288-308, Alberts W ‘The new domain name dispute resolution structure’ (2007) 15 JBL 66-70 and Greenberg D & Kinstler E ‘The impact of ICANN’s new gTLD programme on trademark owners’ (2009) July Without Prejudice 26-27 for an introduction to the issues surrounding the protection of domain names. 7 See Collier D ‘Access to and control over plant genetic resources for food and agriculture in South and Southern Africa: How many wrongs before a right?’ (2006) 7 Minn J L Sci & Tech 529-564 and Gallo AA & Kesan JP ‘Property rights legislation in agricultural biotechnology: United States and Argentina’ (2006) 7 Minn J L Sci & Tech 565-598 for an overview of the challenges faced by the protection of plant breeders’ rights. 8 See Hughes J (moderator) & Beresford L, Kur A, Plevan K & Scafid S (panellists) ‘Symposium: Panel II: That's a fine Chablis you're not drinking: The proper place for geographical indications in trademark law’ (2007) 17 Fordham Intell Prop Media & Ent LJ 933-692, Kemp DJ & Forsythe LM ‘Trademarks and geographical indications: A case of California Champagne’ (2006) 10 Chap LR 257-978, Gangjee D ‘Geographic 4

indications and trademarks: Quibling siblings: Conflicts between trademarks and geographical indications’ (2007) 82 Chi-Kent LR 1253-1291 and Agdomar M ‘Removing the Greek from Feta and adding Korbel to Champagne: The paradox of geographical indications in international law’ (2008) 18 Fordham Intell Prop Media & Ent LJ 541-608 for an introduction to geographical indications and the debates about how these interests should be protected.

9

See Grimmelman J ‘Virtual worlds as comparative law’ (2004) 49 NYL Sch LR 147-184, Deenihan KE ‘Leave those Orcs alone: Property rights in virtual worlds’ (2008) SSRN 1-51 (Available at SSRN: http://ssrn.com/abstract=1113402 (accessed 7 February 2011)), Fairfield JAT ‘Virtual property’ (2005) 85 Boston ULR 1047-1102, Lastowka FG & Hunter D ‘The laws of the virtual worlds’ (2004) 92 California LR 173 and Horovitz SJ ‘Competing Lockean claims to virtual property’ (2007) 20 Harv JL & Tec 443-458 for an introduction on the issues surrounding the protection of virtual property and the differing opinions as to the form of protection that is suitable and necessary.

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intellectual property category of trademarks or separately. Plant breeders’ rights is another form of problematic biotechnological inventions and there are many aspects that have to be taken into account when considering its protection, both in private law and constitutional law. Geographical indications are sometimes viewed as part of trademarks, but there are also debates around its protection. Virtual property is a particularly troublesome form of immaterial property, since certain interests may be protected as intellectual property, others under the law of contract and for yet others there are debates that the interests should be protected similar to tangible property in private law with the same property rule-type protection. There certainly could exist or emerge other unconventional immaterial property interests and it is impossible to discuss them all at length for purposes of this thesis, but the conclusions drawn for the unconventional interests discussed may certainly also inform the interests that are not discussed and perhaps even interests that have yet to emerge. Certain of these immaterial property interests are not accepted as property in private law, but are or could be accepted as property in constitutional law. Other immaterial property interests are not accepted as property in either private law or constitutional law. However, certain of these interests receive strong protection in private law, but under areas of law other than property. For example, contractual rights such as debts and claim rights do enjoy strong protection in private law, only not as property rights but under the law of contract. A common characteristic of all of the unconventional immaterial interests is that they are similar to property interests in that they have patrimonial value. Commercial information is not protected as property under private law and also not under any other area of private law. However, there may be scope to include it under the property clause, at least in the instances where the resource is viewed as excludable. The rights of a holder of confidential information are not protected as property in private law, but under the law of obligations. However, they could possibly be included as constitutional property. Trade secrets are a species of the genus confidential information and specific requirements for its existence have crystallised from case law. It has also been proposed that trade secrets should be categorised as a sui generis form of property in private law, similar to the intellectual property categories. Consequently trade secrets could most likely also be protected as constitutional property.

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Digital copyright is more problematic, since it is currently protected as property under copyright, but not adequately. Therefore the law of contract is also being used to protect the rights of owners of digital copyright works. However, this does not necessarily mean that it would not be protected under the constitutional property clause, since a wide property definition is traditionally employed in constitutional law. Biotechnological products are also particularly troublesome, since some of these products may be protected under patents, but others not. There are also other constitutional rights that could challenge the constitutional protection of these biotechnological products if they were to be afforded protection. Rights such as the right to healthcare, bodily integrity and privacy are particularly important in this area.10 Traditional knowledge is currently in the process of being integrated into the existing intellectual property categories under South African private law, but there is still some uncertainty about the viability of this approach. There is already limited protection for traditional knowledge under patents, but all other forms of traditional knowledge are currently unprotected. If the so-called ‘Traditional Knowledge Bill’ of 200711 for the adaptation of existing intellectual property categories is passed, traditional knowledge will be protected as property in South African private law and then in principle also as constitutional property. There is also the possibility of protecting traditional knowledge under cultural rights, although this would not provide for the monetary remuneration sought by the holders of traditional knowledge. Commercial property includes debts and claims; shares; goodwill; and state-granted licenses, permits and quotas. Although these interests may broadly be categorised as commercial property, not all of these interests are treated the same. Some of these immaterial property interests are protected under private law, but not under property in private law. They could still be treated as constitutional property and this is done in many foreign jurisdictions. Participatory claims are also not protected as property under private law; and in South African law at least they would most likely not be protected under constitutional property law either, since there are other constitutional rights that protect socio-economic rights. Finally, non-proprietary claims are not traditionally considered to be property in private law, but 10

See p 1-2, especially fn 6. Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

11

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could possibly be protected under the property clause. The aim of this chapter is to set out the specific rights or interests in each unconventional immaterial property category and to determine whether it could be included under the constitutional property clause. The reasons why each category should be protected will be discussed in more detail under Chapter 4 (The Value of Immaterial Property). 32

Commercial Information

In International News Service v Associated Press12 the United States Supreme Court was faced with the problem of propertising a non-scarce resource.13 INS (the plaintiff) sought to prevent Associated Press (the defendant) from obtaining and using news posted on their bulletin boards. The defendant distributed these news items through their news services. The plaintiff argued that the news items were valuable property, since they had spent money, time and effort to obtain news items from the war. The defendant argued that news was published and as such common property, since it was free to be used by any member from the public. They argued that anyone was free to use the news for any purpose and therefore also for profit. The court held that information that had been gathered about events of public interest could not be owned in the absolute sense. The public was free to use the information and in that sense it was ‘common property’. However, the gatherer of the information had the right to restrain rivals from using the news commercially. Between those two parties the news must be regarded as ‘quasi-property’ and this situation may be regulated by the law of unfair competition. On the other hand, Sports & General Press v ‘Our Dogs’ Publishing Co14 is an English case generally cited for the argument that there can be no ownership in commercial information. The facts of the case originate from the promotion of a dog show on leased land by the Ladies Kennel Club. The exclusive rights to take photographs of the show had been assigned by the Club. A freelance photographer, employed by the defendants, took photos of the show. The plaintiff sought to prevent the defendants from publishing the photos taken by the freelance photographer. The court of first instance as well as the Court of Appeal viewed the case with regard to issues of control connected to the ownership of the land. Since the plaintiffs did not have the power to prevent anyone from taking pictures on the premises, there could also be 12

248 US 215 (1918). Also see Baird DG ‘Common law intellectual property and the legacy of International News Service v Associated Press’ (1983) 50 U Chi LR 411-429 for a full discussion of the case. 13 See Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 7-8. 14 [1916] 2 KB 880.

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no proprietary right to take photographs. The court had not considered whether information about the show in the form of photographs might enjoy limited protection against competitors.15 In Victoria Park Racing v Taylor16 the Australian High Court had to consider the issue of the radio broadcasting of live commentaries of horse races by a commentator standing on an observation platform on a neighbour’s land. The platform had been erected especially for this purpose. The racecourse and the boards displaying information about the races were visible from the platform. The court found that no legal right of the racecourse owners had been infringed by this broadcast. The court decided the case on the principles of nuisance. Therefore any power to control such broadcasts would have to be an incident of ownership of the land in order for there to be an enforceable right. The court also noted that the racecourse owner cannot prevent neighbours from watching the races and that there cannot be property in a spectacle. Ciro17 argues that the plaintiff had actually sought to prevent commercial competitors from using the information for profit and in this regard the claim was similar to the United States case of International News Service v Associated Press.18 The argument that information may be regarded as ‘quasi-property’ was rejected by the Australian High Court on conceptual grounds. Only the minority of the court saw the matter as one of unfair competition by the defendants. Gray19 states that in Victoria Park Racing v Taylor20 there is no doubt that the defendant exploited a commercial opportunity. They had not done anything to create the opportunity, but made a profit from horseracing enthusiasts who would have paid the plaintiff, had it not been for the defendant’s actions. Gray states that something had certainly been taken from the plaintiff by the defendant. The question that remained to be answered was whether that which had been taken may be termed property. It was on this question that the majority and minority of the court were divided by their contradictory views of what property is. The minority spoke of misappropriation by the defendant of the plaintiff’s profitable enjoyment of the land for commercial use. The majority denied that there had been any misappropriation or

15

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 8. (1937) 58 CLR 479. 17 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 8. 18 248 US 215 (1918). 19 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 266-267. 20 (1937) 58 CLR 479. 16

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deprivation of any vested legal entitlement. Furthermore, Gray21 states that the ‘excludability’ of a resource is a determinant of whether it may be termed property. The majority of the court in Victoria Park Racing v Taylor22 decided the case on the basis of whether the resource was excludable or not although they did not say so explicitly.23 According to Gray,24 a resource may be non-excludable on physical, legal and moral grounds. A resource is physically non-excludable if it is impossible or not reasonably practical to exclude strangers from a particular resource in the form that it exists.25 A legally nonexcludable resource26 entails that a resource does not enjoy legal protection, either by means such as the adoption of a contract27 or by the utilisation of intellectual property28 protection. Where such available legal protection was not implemented, a resource may be deemed legally non-excludable. Gray states that Sports & General Press v ‘Our Dogs’ Publishing Co29 would be an example where the legal protection of a contract may have been used to prohibit persons to take photos on the premises. Since the plaintiff had not done so, the resource (the assignment of the right to take photos) was deemed legally non-excludable by the court. The final ground for non-excludability is where resources are morally non-excludable.30 This ground connects closely to the normative considerations that govern the commons. Where resources are so integral to social vitality, such resources should be left in the commons and to do otherwise would be contra bonos mores.31 Gray argues that in this ground for nonexcludability ‘the law of property most closely approaches the law of human rights’. 32 In this category, the social and economic concerns frequently relate to ‘freedoms of speech, belief, association, assembly and movement’.33 It becomes clear from this analysis that there are many considerations that need to be weighed up before a conclusion may be reached about 21

Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 266-268. (1937) 58 CLR 479. 23 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-269. 24 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 269. 25 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 269-273. 26 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 273-274. 27 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 274-276. 28 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 276. 29 [1916] 2 KB 880. 30 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 280-283. 31 In Chap 4 (The Value of Immaterial Property), the commons is discussed in more detail with a particular focus on the intellectual property commons or so-called public domain. 32 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 281. 33 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 283. 22

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whether commercial information may be regarded as property. It appears from this analysis that commercial information could only be regarded as property if it is possible to exclude persons from obtaining that information, either by contract or by utilising a statute. Commercial information is not included under any private law property category. However, there could be scope for commercial information to be protected under the constitutional property clause under certain conditions. If the use of such information may be excluded from the general public, in line with one of the categories of ‘excludability’ as identified by Gray,34 then it should be possible to include such an immaterial property interest under the scope of the constitutional property concept. It is not possible to protect commercial information under the intellectual property category of copyright, since there may be no copyright in ideas. The only possibility would most likely be to gain excludability through contractual protection. Commercial information arguably involves property-like patrimonial interests and may be protected under private law albeit in the area of the law of contract and not property. Consequently it is possible that commercial information may be recognised and protected as property under the South African constitutional property clause. 33

Confidential Information

The question of whether confidential information may be treated as property usually originates from the situation where a fiduciary obtains a profit from the information they hold in the position as a fiduciary. The central question is usually whether the person is entitled to keep the fruits gained from their wrongdoing.35 In Boardman v Phillips36 a solicitor obtained commercially sensitive information and used it to purchase shares of a private company. A profit was made from the purchase of these shares. The court held that the profit made was to be held on account to the beneficiary and the solicitor was only entitled to payment for his work and skill. SEC v Materia37 is an ‘insider trading’ case where the court acknowledged that secret information may be worth a fortune in the world of high finance, but worthless once revealed. Materia worked for Bowne of New York City, Inc; a financial printer. He worked as a 34

Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 11. See Stuckey JE ‘The equitable action for breach of confidence: Is information ever property?’ (1980-1982) 9 Sydney LR 402-433 in general, where she argues that confidential information is never property. 36 [1967] 2 AC 46. 37 745 F2d 197 (1984). 35

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copyholder and had to read documents to a proof reader who checked its accuracy. The documents were about a forthcoming tender offer and even though the names of the companies were erased, Materia was able to work out the target. He used publicly available information on the company in order to determine the target company. Materia invested in the target company and made considerable profit selling the shares after the offer had been made public. The central question in this case is to determine when a person may profit from important non-public information. The court answered this question with reference to misappropriation of non-public information. According to the court, Materia breached a fiduciary duty by trading on the confidential information for his own gain. 38 This misappropriation violated the United States’ Securities Exchange Act.39 Boyle40 names certain criticisms of the current trend of prohibiting insider trading, for example that insider trading is consistent with other norms in society; that insider trading injures no one; that insider trading is not possible in an efficient market; and that if corporations believed it to be harmful, they would regulate insider trading themselves.41 Boyle42 states that there certainly is something counter-intuitive about the prohibition of insider trading. In South Africa, the Securities Services Act 36 of 2004 has repealed the Insider Trading Act 135 of 1998. The Securities Services Act 36 of 2004 governs, among others, the civil and criminal liability for insider trading which had previously been governed by the Insider Trading Act 135 of 1998. Jooste43 describes the working of Chapter III of the Securities Services Act 36 of 2004 as imposing ‘liability on “insiders” who, knowing they have “insider information” relating to particular securities, deal in such securities (for their or someone else’s account), disclose the “insider information” to others, encourage others to deal in such securities or discourage others from dealing in such securities’. The aim of such legislation is to curb insider trading and also to provide compensation for the victims of insider trading. In other words, confidential information receives protection in private law, but under the law of

38

SEC v Materia 745 F2d 197 (1984) 203. 1934 sec 10(b) and Rule 10(b)-5. 40 Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 83. 41 See Hetherington JAC ‘Insider trading and the logic of the law’ (1967) 1967 Wis LR 720-737 at 720 and Dooley M ‘Enforcement of insider trading restrictions’ (1980) 66 Va LR 1-84 at 37-44. 42 Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 83. 43 Jooste R ‘A critique of the insider trading provisions of the 2004 Securities Services Act’ (2006) 123 SALJ 437-460 at 437. 39

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obligations and not under the law of property. Jooste44 notes some flaws in the new Securities Services Act 36 of 2004. For the purposes of this chapter, the most important flaw is that the Securities Services Act 36 of 2004 provides no remedy to the creators of such inside information.45 Such a remedy to corporate or institutional creators of information was also absent from the Insider Trading Act 135 of 1998. According to Osode46 there are important reasons why such an omission may not be excused. In the first instance, inside information generally takes the form of intangible property which is developed with the purpose of making a profit. Its use by both insiders and non-insiders may be described as something analogous to theft. The second reason pertains to the law and economics theory of insider trading based on property rights. The theory holds that corporate private sector investment would be discouraged if such information were not protected by some statutory right of recovery. Finally, Osode47 notes that even though it is difficult to show the actual loss sustained in insider trading cases, corporate entities suffer most from such insider trading incidents. In Australia, the Corporation Act of 200148 makes provision for a corporation that had been the victim of insider trading to recover their losses, calculated as the difference between the price for which the securities had been sold and the price at which it could have been sold had it not been for the insider trading. Therefore the question of information as property has two sides in the context of insider trading. In the first instance the question is whether the person trading on such inside information may have property in such profits made. The second question pertains to the protection of the company that owns the inside or confidential information and whether such protection should take the form of property protection. In the case of a person making profits from the use of confidential information, the interest in the information would not be protected since it is prohibited as insider trading. Therefore such an interest in confidential information would not be protected as a category of property 44

Jooste R ‘A critique of the insider trading provisions of the 2004 Securities Services Act’ (2006) 123 SALJ 437-460 at 438-460. 45 Jooste R ‘A critique of the insider trading provisions of the 2004 Securities Services Act’ (2006) 123 SALJ 437-460 at 458-459. 46 Osode PC ‘The new South African Insider Trading Act: Sound law reform or legislative overkill?’ (2000) 4 J African L 239-263 at 254-255. 47 Osode PC ‘The new South African Insider Trading Act: Sound law reform or legislative overkill?’ (2000) 4 J African L 239-263 at 254-255. 48 Sec 1043L(2), sec 1043L(5) and sec 1043L(6).

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in private law, much less in constitutional law. Whether the interests of the owner of the confidential information should and could be protected as property is another matter. The interests are protected under private law, albeit not under property law, but under the law of obligations. However, there are arguments that the current statute governing confidential information and insider trading, namely the Securities Services Act 36 of 2004, does not provide adequate protection of such interests, although this question falls outside of the scope of this dissertation. Perhaps it would be prudent for the South African legislature to address this deficit in future legislation. The misappropriation of these interests by third parties may usually be excluded by way of legislation prohibiting insider trading and as such any unauthorised use of the information usually takes place after the information was ‘stolen’. It should be possible to protect these interests under the constitutional property clause since they are viewed as being excludable and meant to be kept confidential.49 Confidential information arguably involves property-like patrimonial interests that could be protected under the property clause. It could be argued that the state may have a constitutional duty to provide property rule-type protection or some other form of protection for these patrimonial interests in commercial information, potentially by way of legislation. 34

Trade Secrets

According to Domanski, ‘trade secrets, know-how and other intangibles covering technical and commercial information are substantial economic assets’.50 He examines the legal protection of trade secrets in South Africa and states that the protection of trade secrets falls almost entirely under common law, although statutory law may also play a role. He emphasises that a trade secret is a species of the genus confidential information.51 Neethling describes a trade secret as ‘trade, business or industrial information belonging to a person (usually an entrepreneur), which has a particular economic value and is not generally available to and therefore known by others’.52 He states that a trade secret represents a valuable economic interest that deserves legal protection. He argues that the view of a trade secret as intellectual property currently enjoys considerable support, since it is an

49

Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. Domanski A ‘Trade secrets through the cases: A study of the basis and scope of protection’ (1993) 56 THRHR 229-242 at 229. 51 Domanski A ‘Trade secrets through the cases: A study of the basis and scope of protection’ (1993) 56 THRHR 229-242 at 231. 52 Neethling J Van Heerden-Neethling Unlawful Competition (2nd ed 2008) 213. 50

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‘incorporeal product of the human mind embodied in a tangible agent’.53 According to Neethling,54 a trade secret serves as the object of an independent immaterial property right. In Harcris Heat Treatment (Pty) Ltd v Iscor55 the court stated that the confidential information at issue was the intellectual property that belonged to the plaintiff. As a consequence, the owner of the trade secret had the right to exploit it. This may be used as authority that trade secrets are immaterial property. On this authority alone it may be argued that the interest in trade secrets is a sui generis form of property in private law and should consequently also be included as constitutional property. According to Neethling56 there are three requirements that must be satisfied before information may qualify as a trade secret.57 In the first place the information must be capable of application in trade or industry.58 Secondly the information needs to be secret or confidential.59 Therefore the information must be available only to a restricted number of people and this must be objectively determined. Thirdly, objectively viewed, the information must be of economic (business) value to the owner of the information.60 Neethling61 argues that the nature of the business information that may be the subject of a trade secret is irrelevant. As long as the requirements are met, any type of information may qualify as a trade secret. The courts have generally accepted two broad types of trade secrets, namely technical information and business and marketing information. Types of information that the courts have accepted as trade secrets are a technical process;62 computer software;63 the 53

Neethling J Van Heerden-Neethling Unlawful Competition (2nd ed 2008) 213. Also see Lemley MA ‘The surprising virtues of treating trade secrets as IP rights’ (2008) 61 Stan LR 311-353 where he argues that trade secrets should be regarded as a form of intellectual property, although not as a form of traditional property. It should be noted that intellectual property is accepted as property in private law under South African law and that this should be distinguished from the position in the United States of America. 54 Neethling J Van Heerden-Neethling Unlawful Competition (2nd ed 2008) 213-314. 55 1983 (1) SA 548 (T) 555. 56 Neethling J Van Heerden-Neethling Unlawful Competition (2nd ed 2008) 214-216. 57 Also see Neethling J ‘Requirements for the protection of confidential trade information or trade secrets’ (2003) 120 SALJ 472-477. 58 See for example Townsend Productions (Pty) Ltd v Leech 2001 (4) SA 33 (C) 53-54, Motion Transfer & Precision Roll Grinding CC v Carsten [1998] 4 All SA 168 (N) 175 and Alum-Phos (Pty) Ltd v Spatz [1997] 1 All SA 616 (W) 623. 59 See for example Townsend Productions (Pty) Ltd v Leech 2001 (4) SA 33 (C) 53-54, Motion Transfer & Precision Roll Grinding CC v Carsten [1998] 4 All SA 168 (N) 175 and Alum-Phos (Pty) Ltd v Spatz [1997] 1 All SA 616 (W) 623. 60 See for example Townsend Productions (Pty) Ltd v Leech 2001 (4) SA 33 (C) 53-54, Motion Transfer & Precision Roll Grinding CC v Carsten [1998] 4 All SA 168 (N) 175 and Alum-Phos (Pty) Ltd v Spatz [1997] 1 All SA 616 (W) 623. 61 Neethling J Van Heerden-Neethling Unlawful Competition (2nd ed 2008) 217. 62 Harcris Heat Treatment (Pty) Ltd v Iscor 1983 (1) SA 548 (T), Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 322 and Meter Systems Holdings Ltd v Venter 1993 (1) SA 409 (W) 429-430. 63 Northern Office Micro Computers (Pty) Ltd v Rosenstein 1981 (4) SA 123 (C).

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know-how of an undertaking;64 an unpublished trademark;65 customer lists;66 customer connections;67 business conversations;68 credit records;69 price lists;70 and tender prices.71 Knobel72 argues that trade secrets are the objects of independent subjective rights. The doctrine of subjective rights states that people are the holders of subjective rights. The holder of such a subjective right has a right to something. This right is enforceable against other people.73 As such there is a relationship between the holder of the right and the legal object. There is also a relationship between the holder of the right and other people. There are four categories of subjective rights, classified according to the legal objects to which they are relevant. These are real rights pertaining to things; personality rights pertaining to good name, privacy etcetera; personal rights pertaining to performances based on contract or delict; and intellectual (immaterial) property rights pertaining to intangible products of the human mind outside the creator’s personality.74 A new category, personal immaterial property rights pertaining to intangible products of the human mind connected to the personality of the creator, has been proposed. In order to qualify for protection as a subjective right, an interest must be of value and must also be susceptible to human control.75 As examples of the diverse range of trade secrets the courts have protected, Knobel76 mentions information relating to or contained in: a manufacturing process, a furnace for the heat treatment of metals, computer software, an unpublished trademark, credit records and

64

Harcris Heat Treatment (Pty) Ltd v Iscor 1983 (1) SA 548 (T) 551, Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) 189-192, 194-195 and Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 324, 326. 65 Meter System Holdings Ltd v Venter 1993 (1) SA 409 (W) 429. 66 Van Castricum v Theunissen 1993 (2) SA 726 (T) 735 and Meter System Holdings Ltd v Venter 1993 (1) SA 409 (W) 428. 67 Knox D’Acry Ltd v Jamieson 1992 (3) SA 520 (W) (confirmed on appeal in Knox D’Acry Ltd v Jamieson 1996 (4) SA 348 (A)). 68 Sage Holdings Ltd v Financial Mail (Pty) Ltd 1991 (2) SA 117 (W). 69 Dun and Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cape) (Pty) Ltd 1968 (1) SA 209 (C). 70 Premier Medical and Industrial Equipment (Pty) Ltd v Winkler 1971 (3) SA 866 (W) 870. 71 Sibex Constructions (SA) (Pty) Ltd v Injectaseal CC 1988 (2) SA 54 (T) 64 and Meter System Holdings Ltd v Venter 1993 (1) SA 409 (W) 430. 72 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 575. 73 Van Heerden HJO & Neethling J Unlawful Competition (1995) 80. Also see Neethling J Van HeerdenNeethling Unlawful Competition (2nd ed 2008) 89-91. 74 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 575. 75 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 576. 76 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 583.

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customer lists.77 The elements of a trade secret that may be protected by law has been distilled from case law.78 These elements are: information;79 commercial or industrial applicability;80 secrecy;81 the owner’s will to maintain secrecy;82 economic value;83 and concreteness or potential concreteness.84 According to the first element, a trade secret must consist of information. The term ‘trade secret’ is frequently used as a species of the wider concept of ‘confidential information’. In the second place, a trade secret must be capable of industrial or commercial application. This requirement is often described as being selfevident.85 The third requirement, secrecy, is often examined in case law. South African courts have followed English precedents that interpret confidential information as information not in the public domain.86 ‘It must not be something that is public property or public knowledge’, as courts and authors often state.87 The concept of secrecy as used by the courts is relative and not absolute. Secrecy is acknowledged in a case where the information can be produced by someone who obtains the secret by taking the same labour, time and effort as the owner of the secret information.88 Secrecy is not necessarily destroyed if some competitors of the trade

77

See Harcris Heat Treatment (Pty) Ltd v Iscor 1983 (1) SA 548 (T), Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 322, Meter Systems Holdings Ltd v Venter 1993 (1) SA 409 (W) 429-430, Northern Office Micro Computers (Pty) Ltd v Rosenstein 1981 (4) SA 123 (C), Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) 189-192, 194-195, Van Castricum v Theunissen 1993 (2) SA 726 (T) 735, Knox D’Acry Ltd v Jamieson 1992 (3) SA 520 (W) (Confirmed on appeal in Knox D’Acry Ltd v Jamieson 1996 (4) SA 348 (A).). Also see Sage Holdings Ltd v Financial Mail (Pty) Ltd 1991 (2) SA 117 (W), Dun and Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cape) (Pty) Ltd 1968 (1) SA 209 (C), Premier Medical and Industrial Equipment (Pty) Ltd v Winkler 1971 (3) SA 866 (W) 870 and Sibex Constructions (SA) (Pty) Ltd v Injectaseal CC 1988 (2) SA 54 (T) 64. 78 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 583-589. 79 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 584. Also see Domanski A ‘Trade secrets through the cases: A study of the basis and scope of protection’ (1993) 56 THRHR 229-242 at 232. 80 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 584. 81 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 584-585. 82 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 586-587. 83 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 587-588. 84 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 588. 85 Van Heerden HJO and Neethling J Unlawful Competition (1995) 225. Also see Neethling J Van HeerdenNeethling Unlawful Competition (2nd ed 2008) 215. 86 See Schultz v Butt 1986 (3) SA 667 (A) 680 and Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) 194. 87 This phrase originates from the English case of Saltman Engineering Co Ltd v Campbell Engineering Ltd [1948] 65 RPC 203 215. See also Bainbridge DI Intellectual Property (1992) 287 and Cornish WR Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (4th ed 1999) 307. 88 See Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 323-326, Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) 191-192, Harchris Heat Treatment v Iscor 1983 (1) SA 548 (T) 550-551 and Van Castricum v Theunissen 1993 (2) SA 726 (T) 734-735.

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secret owner also have the information.89 Knobel also states that secrecy will be maintained if the information is not readily available to everyone.90 From the way that courts inquire into secrecy, it appears that secrecy must be objectively determined.91 In the fourth place, the owner of confidential information must have the will to maintain secrecy of the information. Only then will a trade secret qualify for legal protection. In most cases this requirement focuses on the steps taken by the owner to safeguard secrecy. Therefore the inquiry is whether such steps were taken or not.92 This links with the idea that an owner must take all available steps to ensure excludability of a property interest and if these were taken, property protection should be afforded.93 Some cases focus on the subjective will of an owner to preserve secrecy.94 In practice, a defendant or respondent may allege absence of a will to maintain secrecy of the information, consequently the requirement of secrecy may be employed negatively.95 The fifth requirement for the protection of a trade secret is economic value.96 It must be objectively determined whether the trade secret is of economic value.97 Sometimes the value to the owner is used and sometimes the value to the competitor, but this does not make a big practical difference. Economic value is not a determinant of secrecy, but a separate element of a trade secret protected by law, as Knobel98 argues. In the final instance, a trade secret must also be concrete or potentially concrete, since a trade secret can be protected by law only if it can exist separate from the personality of its owner.99 There is no requirement in case law that a trade secret should be reduced to a material form in order to qualify for protection; and as a result mere potential concreteness is sufficient.

89

Sibex Engineering Services (Pty) Ltd v Van Wyk 1991 (2) SA 482 (T) 502. Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 585. 91 See Schultz v Butt 1986 3 SA 667 (A) 680. In Van Castricum v Theunissen 1993 (2) SA 726 (T) 732 the court expressly stated that the test employed is objective. 92 See for example Cerebos Food Corporation Ltd v Diverse Foods SA (Pty) Ltd 1984 (4) SA 149 (T) 154. 93 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. 94 See for example Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 325. 95 See for example Northern Office Micro Computers (Pty) Ltd v Rosenstein 1981 (4) SA 123 (C) 126. 96 See Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 325 and Kemp, Sacs & Nell Real Estate (Edms) Bpk v Soll 1986 (1) SA 673 (O) 692. 97 See Coolair Ventilator Co (SA) (Pty) Ltd v Liebenberg 1967 (1) SA 686 (W) 689 and Van Castricum v Theunissen 1993 (2) SA 726 (T) 732. 98 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 588. 99 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 588. 90

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Knobel100 concludes that a trade secret may be protected in South African law. He defines a trade secret broadly as ‘secret information which is capable of commercial or industrial application, which the owner has the will to keep secret, which has economic value, and which can lead an existence separate from its owner’.101 Furthermore, Knobel102 asks whether trade secrets may be the objects of subjective rights. He concludes that they may, since they are of economic value and enjoy the quality of scarceness. Secondly, trade secrets possess the qualities of independence, distinctness and definiteness to be capable of use, enjoyment and disposal. Knobel states that if subjective rights to trade secrets are recognised, these subjective rights may be classified as intellectual property.103 He argues that a trade secret is ‘an intangible product of the human mind and endeavour which can be expressed in an outwardly perceptible form’ and as such complies with the concept of intellectual property.104 Intellectual property may be defined as ‘the intangible products of human skills, or the inventions of the human mind, situated outside the personality of the author and which are protected by the legal order’.105 Knobel argues that there seems to be no reason why a trade secret should not be recognised as a non-statutory intellectual property right. He adds that the law of trade secrets is often discussed in treatises on intellectual property law. In the alternative, he explores the possibility of including trade secrets under the right to goodwill, thereby negating the need for a separate right to trade secrets. In a majority of cases, the infringement of a trade secret will also infringe goodwill, but the converse is not necessarily always true. It is quite possible that a trade secret may be infringed without the goodwill of a business being affected. Knobel gives the example of an inventor who intends to sell his secret to an entrepreneur instead of using it himself. If a third person obtains access to the secret without permission, there is no unlawful competition or infringement of goodwill. In such a case it would be more satisfactory to base wrongfulness on the infringement of a subjective right of which the trade secret is the object.106 100

Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 589. Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 589. 102 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 589. 103 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 590. 104 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 590. 105 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 590. Also see Domanski A ‘The nature of the right infringed in cases of unlawful competition in South African law’ (1993) 5 SA Merc LJ 127-143 at 128. 106 Knobel JC ‘Trade secrets and the doctrine of subjective rights’ (2001) 64 THRHR 572-595 at 591-592. 101

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From case law as well as the opinions of the authors discussed, it seems that there should be no problem to include trade secrets as property for the purposes of private law protection, since they may be treated as the objects of subjective rights. Certain specific requirements have to be fulfilled before information may be termed a trade secret. Once these requirements are met, it should be possible to extend private law property protection to trade secrets. It may even be argued that trade secrets should be viewed as a sub-category of intellectual property, similar to patents or works of copyright. In the United Kingdom and the United States of America, for example, trade secrets are treated as intellectual property and discussed in the same works dealing with other intellectual property forms.107 As is argued in Chapter 2 (Traditional Immaterial Property Interests), property interests recognised in private law may also be included under the constitutional property clause. Consequently it should not be problematic to recognise and protect trade secrets under the scope of the constitutional property concept.108 35

Digital Copyright

Digital technologies pose challenges to the regulation of intellectual property, more specifically copyright.109 Tensions between the enforcement of private property rights and the free and unrestrained distribution of information on the internet are caused by anticircumvention devices used by copyright owners.110 Pistorius describes the internet as ‘a major global data pipeline through which large amounts of “locked” intellectual property and

107

See Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 348-354. Also see Bainbridge DI Intellectual Property (1992) and Cornish WR Intellectual property: Patents, Copyright, Trademarks and Allied Rights (4th ed 1999) in general. 108 Specific reasons for the protection of different immaterial property interests are discussed in Chap 4 (The Value of Immaterial Property). 109 Although copyright naturally applies in the digital environment, there are certain aspects of the digital environment that cause the enforcement of copyright to be problematic and this needs to be explored and improved if it is found to be necessary. The referral to immaterial property interests pertains to the aspects of copyright works that do not enjoy adequate protection where copyright remedies are applied in the digital environment. This is also the reason why it is necessary to refer to property interests that are not protected as property in private law separately from the property rights that are already protected in private law. These interests may possibly still enjoy constitutional property protection and in light of this the legislator may be obliged to make the necessary changes to existing legislation in order to provide the required property protection in private law. 110 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 12. Also see Moloney LJ ‘The internet: Demise of intellectual property law?’ 1997 TSAR 566-570 where she highlights some of the challenges that the internet poses to existing intellectual property categories and stresses the importance of protecting intellectual creations in the area of the internet.

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proprietary information are moved’.111 She notes that earlier technologies such as taping and photocopying allowed individual consumers to copy works mechanically. This was done in limited quantities; the copies required investment and time; and the copies were of poor quality relative to copies distributed via the internet. Such copies made by taping or photocopying also required the person making the copies to be in the same physical place as the work being copied. This may be contrasted with the internet, where any number of copies can be made in almost no time. The quality of each copy also stays the same where copies are distributed via the internet. Accordingly the internet has transformed the industry of copying.112 Pistorius113 states that digital technology combined with the internet create opportunities and also pose threats to intellectual property interests of both the public and private intellectual property right holders. Private holders have the opportunities created by a global market as well as a broader scope of exposure for authors. However, alongside these opportunities there also exist the dangers that works may be distributed all over the web and that the works may be adapted without authorisation. The public, on the other hand, has the advantage of basically unlimited access to works from authors around the globe. Yet this same situation also leads to intellectual property holders protecting their works more stringently by means of legal and technological devices. This in turn allows the holders of the rights to determine when and how the works may be accessed and by whom. The other danger posed to public users is legislation. When confronted with new technologies, legislators often propose legislation that is too narrow and technology-specific.114 Holders of intellectual property rights progressively protect their property by means of technological systems such as ‘anti-copy devices, access control, electronic envelopes, proprietary viewer software, encryption, passwords, watermarking, fingerprinting (user 111

Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 1. Also see Ryan M ‘Cyberspace as public space: A public trust paradigm for copyright in a digital world’ (2000) 79 Or LR 647-720 in general and specifically at 647 where she describes the increased privatisation of information in cyberspace and argues that ‘such information is inherently public property and, as such, its management through copyright policy is subject to the same public trust principles that have operated as a check on the privatization of other types of public resources’. 112 Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 1. 113 Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 1-2. 114 Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 12 PER 1-27 at 1-2.

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authentication), metering and monitoring of usage and remuneration systems’.115 The World Intellectual Property Organisation (WIPO) Copyright Treaty116 enforces this approach of protection by means of technological systems. The WIPO Copyright Treaty (the Treaty) makes provision for the protection of technological protection devices used on copyrighted works. Parties to the Treaty are required to provide sufficient legal protection and remedies to prevent persons from circumventing these technological protection systems. The Treaty maintains the balance between private copyright and rights of the public to access the works.117 In South African copyright law the Treaty has yet to be implemented. The Copyright Act 98 of 1978 has not yet been amended to implement the measures required to regulate digital copyright. However, South African law has adopted certain aspects of the Treaty. The provisions against circumvention were employed in South Africa’s efforts to fight cyber crime. The anti-circumvention provisions were used in section 81 of the Electronic Communications and Transactions Act (ECTA) 25 of 2002, which makes it an offence to access, intercept or interfere with data without the relevant permission.118 The main problem with the implementation of these technological protection devices is that the Copyright Act 98 of 1987 was designed to protect works in tangible form. When the works are viewed online, every time someone accesses the work, this act constitutes copying the work. The trends currently employed in copyright law are also disturbing the balance between the rights of copyright holders and the rights of the public. Often, works protected by copyright are governed by licenses, which may frequently override the copyright exemptions.119 This has led to the gradual encroachment of copyright into the area of the public domain.120 In some cases, once a work’s copyright expires and it should rightly fall

115

Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 2. 116 World Intellectual Property Organisation Copyright Treaty (March 6, 2002) (http://www.wipo.int/treaties/en/ip/wct/trtdocs_wo033.html (accessed 4 February 2010)). 117 Article 11 of the World Intellectual Property Organisation Copyright Treaty (March 6, 2002) (http://www.wipo.int/treaties/en/ip/wct/trtdocs_wo033.html (accessed 4 February 2010)). See Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 2-3. 118 Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 7. 119 Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 9. 120 The concept of the public domain is examined in detail under Chap 4 (The Value of Immaterial Property). The ‘public domain’ refers to the pool of intellectual property works that are not protected by intellectual property law, but are freely accessible to the public. This includes works of which the intellectual property law protection has expired as well as works that never qualified for such protection.

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into the public domain, it is still inaccessible due to the technological protection measures put in place.121 The private law protection in terms of copyright as well as constitutional protection of digital copyright works need to be determined with reference to the separate interests of the private intellectual property holders and the public.122 It also becomes apparent that the law of copyright needs some form of revision in order to address the problems created by new technology. The inclusion of these immaterial property interests under the constitutional property concept may be one way in which the copyright holders’ rights may be both protected and limited. This would enable the legislature and courts to maintain the balance between these rights and the public domain, since the constitutional property clause not only protects property interests, but provides for limitations in the form of expropriation and regulation.123 36

Biotechnological Products

Nwabueze124 states that Biotechnological advances pose challenges to property law, since property law concepts were formulated before modern biotechnological applications existed. Certain biotechnology companies have developed products that make use of body parts or other biological materials. These companies argue that they have property rights in these products and patents should be granted for the protection of rights in life forms.125 The use of the concept of property in this context is controversial. In certain legal systems and cultures people might find the application of property law to the human body offensive. He states that there are religious, spiritual, economic and technological arguments that influence this debate about the application of the property label. He adds that traditional knowledge also poses

121

Pistorius T ‘Developing countries and copyright in the information age – The functional equivalent implementation of the WCT’ (2006) 2 PER 1-27 at 10. 122 The necessity of the public domain is discussed in Chap 4 (The Value of Immaterial Property). 123 The implications of expropriation and regulation for immaterial property are discussed in Chap 5 (Immaterial Property Interests in the Constitution). 124 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 1. 125 Although the patent system provides protection to certain interests in biotechnological products, there are yet others that do not receive property protection in private law. It is the purpose of this section to determine whether these property interests could still enjoy constitutional property protection and if so, whether the legislator should change existing patent laws to provide protection for these interests; and not to create a new category of intellectual property. There are also many other non-property interests relating to rights to bodily integrity, privacy and healthcare that also need to be considered before these property interests in biotechnological products that are not protected as property in private law can be considered for property protection either in constitutional law or private law.

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challenges to property law. He notes that ‘modernity as well as antiquity has challenged property’.126 This may be an example of the moral non-excludability that Gray127 mentions. Grey128 examines the historical background to the law of cadavers; from the first important case in English law, R v Lynn,129 where the defendant was charged with taking away a dead body from the ground with the purpose of dissecting it; through to cases on the commerce in human organs.130 The question arising in the context of the commerce in human organs is whether cadaver parts should be subject to sale, either after death by the relatives of the deceased or ‘in advance’ during the lifetime of the person. Two reasons forwarded for the state’s refusal to allow the sale of body parts are that it is unsavoury and that there are rational policy arguments against it.131 Similar arguments may be made against the granting of property rights in biotechnological products based on body parts (cells), since they may be viewed as morally non-excludable. Regarding the nature of property, Nwabueze132 states that property is variable and that this allows much freedom to characterize some new forms of intangibles as property. Property protection may be conferred as it becomes necessary according to the specific conditions and time. This flexible nature of property makes it a valuable tool for analysing some of the legal, political and socio-economic challenges that a society may face. Nwabueze also shows that property is not static, but dynamic. That which may qualify as property at one stage may later no longer be termed property. The content of property rights are strongly influenced by the specific period of time. Property rights may also differ from one society to the next.133 He gives the example of the era of slavery in order to illustrate this point. At that point in time, slaves could not own property. They themselves were objects of property. These days the ownership of human beings is unacceptable and the constitutions and laws of most countries 126

Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 1. Also see Pottage A ‘The inscription of life in law: Genes, patents and biopolitics’ (1998) 61 MLR 740-765. 127 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. 128 Grey TC The Legal Enforcement of Morality (1983) 105-153. 129 100 Eng Rep 394 (1788). 130 For further reading on the early history of the law of cadavers, see Grey TC The Legal Enforcement of Morality (1983) 105-118, State v Bradbury 9 A 2d 657 (1939) (Maine Supreme Court) and Yome v Gorman 242 NY 395 (New York Court of Appeals 1926). 131 Grey TC The Legal Enforcement of Morality (1983) 141. 132 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 13. 133 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 13.

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reflect this position. Similarly, in previous times, land had been the most important form of property and the property system had been modelled to cater for the protection of rights in land. These and other policy considerations may certainly be used in order to determine which property interests may enjoy constitutional protection. However, the concept of property in South African private law has not historically been as flexible.134 It is proposed that the concept of property in private law may also be in need of some revision to bring it in line with the Constitution. Today information is fast becoming a more important form of wealth. Innovations of technological and social origin usually lead to new forms of property and also bring changes to the existing property model.135 At this stage the private property model utilised in South Africa has not been adapted to accommodate these new forms of informational property. A broad-scale revision of intellectual property legislation could be necessary, either by creating new categories of intellectual property or by adapting existing forms. In the area of constitutional property law, the wider property concept has the result that there may be scope to include biotechnological products. Vandevelde136 states that the meaning of the term ‘property’ has changed radically during the history of the United States. His essay focuses on two elements of Blackstone’s theory of property, namely the physicalist conception and the absolutist conception; and the incremental move away from these ideas. For the purposes of this chapter, focus falls on the movement away from the physicalist conception. In Blackstone’s era, the courts purported to be protecting the possession of things. Where there was no physical thing, one was fictionalised. In the nineteenth century, courts encountered situations where it was more important to protect intangible wealth than tangible things. Subsequently, property was termed to be the right to value instead of the right to a physical thing.137 Gradually, courts recognised business goodwill as a separate property right, unconnected to the premises or 134

Traditionally a closed number of categories of property were defined and adding new forms of property proved problematic. See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 23-24 and Van der Merwe Sakereg (2nd ed 1989) 11. However, in constitutional property law this is not the case, since a much wider definition of the property concept is used here. In this context, Nwabueze’s comments also ring true for South African law. 135 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 14-15. 136 Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 325. 137 Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 333.

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tangible property of a business. Eventually trademarks;138 trade secrets;139 as well as oil and gas140 were recognised as property in both the United Kingdom141 and the United States of America.142 More recently, similar challenges have been posed to the property concept. Nwabueze143 explores the challenges to property posed by DNA banks and commercial interests in genetic information. He states that it may be controversial to establish a DNA bank when this is being done by a commercial company in a developing country. In such a case there is the danger that commercial exploitation may take place. Furthermore, he argues that privacy may be an issue. He explores the idea of granting the persons whose DNA is being used a limited property right, simply in order to protect their privacy. Using this framework, it should also be possible for these persons to claim a part of the profit deriving from the DNA use and to control access to the DNA.144 Nwabueze argues that there are advantages to protecting DNA

138

Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 341-348. 139 Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 348-354. 140 Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 354-357. 141 Regarding trademarks see Singleton v Boulton 3 Doug 293, 99 Eng Rep 661 (1783); Millington v Fox 3 My & Cr 338, 40 Eng Rep 956 (1838) citing Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 341-342. Regarding trade secrets see Newberry v Janes 2 Mer 445, 35 Eng Rep 1011 (1817); Smith v Dickenson 3 Bos & Pul 630, 127 Eng Rep 339 (1804); Williams v Williams 3 Mer 157, 36 Eng Rep 61 (1817); Yovatt v Winyard 1 Jac & W 393, 37 Eng Rep 425 (1820); Bryson v Whitehead 1 Sim & St 74, 57 Eng Rep 29 (1822); Green v Folgham 1 Sim & St 398, 57 Eng Rep 159 (1823); Cholmondeley v Clinton 19 Ves 261, 34 Eng Rep 515 (1815); Evitt v Price 1 Jac & W 394, 57 Eng Rep 659 (1827); Morison v Moat 9 Hare 241, 68 Eng Rep 492 (1851) citing Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 348-353. 142 Regarding trademarks see Thompson v Winchester 36 Mass (19 Pick) 214 (1837); Bell v Locks 8 Paige Ch 75 (NY 1840); Taylor v Carpenter 11 Paige Ch 292 (NY 1844); Coats v Nelson Holbrook & Co 2 Sand Ch 586 (NY 1845); Trade-Mark Cases 100 US 82 (1879); Kidd v Johnson 100 US 617 (1879); American Waltham Watch Co v US Watch Co 173 Mass 85, 53 NE 141 (1899); Sartor v Schader 125 Iowa 696, 101 NW 511 (1904); Cohen v Nagle 190 Mass 4, 76 NE 276 (1906); Star Milling Co v Metcalf 240 US 403 (1916); Pease v Scott County Milling Co 5 F2d 524 (ED Mo 1925) and France Milling Co Inc v Washburn-Crosby Co Inc 7 F2d 340 (2d Cir 1925) citing Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 342-348. Regarding trade secrets see Vickery v Welch 36 Mass (19 Pick) 523 (1837); Peabody v Norfolk 98 Mass 452 (1868); EI DuPont DeNemours Powder Co v Masland 244 US 100 (1917) citing Vandevelde KJ ‘The new property of the nineteenth century: The development of the modern concept of property’ (1980) 29 Buffalo LR 325-367 at 351-354. 143 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 147-149. 144 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 147-149.

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samples by means of the property regime. This would strengthen the protection already afforded by other means.145 In the United States case of Moore v The Regents of the University of California146 a cell line was patented, but the facts leading to the case created controversy. Moore underwent treatment for leukaemia at the University of California Medical Centre. The doctors realised that components of his blood had the potential to be used in commercial products. They did not inform him of their commercial interest and did many tests on his genetic material. Eventually, Moore’s spleen was removed for (arguably)147 medical reasons and sections thereof were used for further research. The University of California patented a cell line derived from Moore’s T-lymphocytes. Boyle148 argues that the two problematic aspects of this case are both concerned with information. On the one hand Moore was not informed of the commercial interest in his genetic material. The doctors after all had a duty to inform him of such interests. The case is furthermore also concerned with the ownership and control of genetic information. The genetic information contained within T-lymphocytes (white blood cells) is coded with ‘programs’ for the production of lymphokines, which are proteins that regulate the immune system. By isolating these ‘programs’, the lymphokine may be reproduced by recombinant DNA processes.149 The question before the court in the Moore150 case had been whether Moore owned the genetic information in his cells, or even the cells from which the information had been derived. The court held that he did not have ownership of either. The court gave a variety of reasons for this decision. First, Moore had abandoned the cells when he gave his consent to have it removed. This is not compatible with the fact that Moore had not been given sufficient information to give informed consent to the removal.151 The second reason furnished by the court was that cells 145

Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 170. Also see Pottage A ‘The inscription of life in law: Genes, patents and biopolitics’ (1998) 61 MLR 740-765. 146 51 Cal 3d 12; 271 Cal Rptr 146; 793 P 2d 479 1991. 147 See Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 22 on this point. 148 Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 22. 149 Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 22. 150 Moore v The Regents of the University of California 51 Cal 3d 12, 271 Cal Rptr 146, 793 P 2d 479 1991. 151 Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 23.

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are not property since they are highly regulated. Boyle152 states that all forms of property are subject to regulation and that the court’s statement is accordingly meaningless. The court finally also stated that it might hinder research if a property right in Moore’s genetic material were to be given to him. The court argued that there is a relatively free and efficient exchange of scientific materials which would be hampered by property rights in each and every cell. Boyle153 points out the contradiction in the court’s argument, since the court awarded a property right in the cell line to the doctors who isolated the cell line. The court stated that this is a necessary incentive to promote research.154 It becomes apparent that different considerations are at play when deciding on whether a property right is appropriate. Another consideration, according to Nwabueze,155 is the characteristics of genes. These need to be examined in order to apply the property framework. It is necessary to distinguish between the human tissue samples and the genetic information derived from such samples. The tissue samples are tangible and physical and Nwabueze argues that as such, it may be easier to classify such samples as property. The genetic information, on the other hand, is intangible and may hence more easily be seen as mere data. There are two separate arguments why this genetic information should be protected as property, even though it is intangible. The first is that the genes may be analogised to tangible property and as such should be protected. The second argument is that even if these genes are not physical, they are still valuable pieces of information and should consequently be protected nevertheless. According to the first argument, it would be anomalous to protect the external manifestation of the body, but not its fundamental blocks. If genes can be characterized as body parts, it would enjoy property protection and legal mechanisms such as the law of delict, privacy and the law pertaining to the protection of dead bodies would become applicable. Persons would have to give their consent before their genes or DNA may be used for research. There are, however, certain objections to propertising genes. For example, the Australian Law Reform Commission voiced concerns about the inalienability of genes. However, Nwabueze proposes that the solution to this problem is to merely confer a limited property right by excluding

152

Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 23. Boyle J Shamans, Software, & Spleens – Law and the Construction of the Information Society (1996) 24. 154 The aspect of property rights as an incentive is discussed in detail in Chap 4 (The Value of Immaterial Property). 155 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 171-175. 153

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some of the incidents of property, for example the right to sell the property. 156 If one follows the court in the Moore157 case and the statement that cells are not property because they are highly regulated, this approach would not solve the problem. The second argument entails recognising genes as informational property. Nwabueze acknowledges that the issue whether there may be property in information is an extremely controversial one. It is even more so in the case of genetics. He proposes that genetic data should be protected as what he terms ‘family property’. Since genetic data runs in a family, it would be sensible to award private property rights to a family, thereby taking it out of the commons. This is so because issues of privacy and confidentiality may affect not only the individual from who the sample was taken, but the whole family. The final part of this argument entails the legal recognition of information as property. The most important question in this context is whether genetic information may be protected separately from the physical samples. This would entail protecting genetic information as confidential information. The example of companies may also be used in this context. Many companies own commercially valuable information together with physical assets. Since the courts routinely grant protection to physical assets, it would be illogical not to protect valuable information. Similarly, biotechnological companies are also dependent on confidential information consisting of genetic information. Such information usually enjoys the protection of patent law. It has not been established whether genetic information could be protected outside of the intellectual property regime. Courts, however, have not been consistent in treating information as property.158 Whether or not information or other forms of intangible interests may be characterised as property seems to depend on the justifications put forward for conferring property rights on a certain interest. According to Nwabueze,159 property rights should be granted for cells and for information derived from cells, an example being patents for cell lines. According to Nwabueze, the only question left to answer is whether such

156

Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 171-175. 157 Moore v The Regents of the University of California 51 Cal 3d 12; 271 Cal Rptr 146; 793 P 2d 479 1991. 158 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 175-188. 159 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 175-188.

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property rights should be awarded to the person from whom the cells were taken or to the person who developed the cell line. The problems created by biotechnological products are no less real in South Africa. Therapeutic embryonic stem cell research160 is one of the controversial areas of biotechnology that is being utilised progressively more in South Africa. This line of research raises various legal and ethical issues. The research is promising and knowledge could be used in curing or reversing disease processes that are currently irreversible.161 The most important issue for purposes of this chapter is the question of intellectual and other property rights in human cell lines and the techniques used to produce it. According to Dhai et al162 there is no global consensus on the position of therapeutic embryonic stem cell research in legal systems. Aside from the ethical concerns regarding cloning, there is concern that the patenting of the techniques used to produce human cell lines may obstruct access to healthcare. Furthermore there are questions as to the suitability of the human body as the subject of property rights and also whether the human genome is actually the common heritage of mankind, in other words, it must stay in the commons. Dhai et al163 suggest that legislation may be created to prevent such patents. Cloning for stem cell research is allowed under restricted circumstances in most countries.164 In South Africa cloning has been prohibited by section 39A of the Human Tissue Act 65 of

160

According to Dhai A, Moodley J, McQuoid-Mason DJ & Rodeck C ‘Ethical and legal controversies in cloning for biomedical research – A South African perspective’ (2004) 94 SAMJ 906-909 at 906, ‘[s]tem cells are tissue precursor cells that have the ability to self-renew and differentiate into more specific adult cells required in the body’. Embryos are cloned in order to take stem cells for research and this causes the controversy. Also see Moore TJ ‘Stem cell Q and A – An introduction to stem cells and their role in scientific and medical research’ (2007) 21 Medical Technology SA 3-6 at 3-4. See further Thomas SM ‘Genomics and intellectual property rights’ (1999) 4 DDT 134-138 at 134-136 for a specific explanation of genomics and the patenting of genes. 161 Dhai A, Moodley J, McQuoid-Mason DJ & Rodeck C ‘Ethical and legal controversies in cloning for biomedical research – A South African perspective’ (2004) 94 SAMJ 906-909 at 906. 162 Dhai A, Moodley J, McQuoid-Mason DJ & Rodeck C ‘Ethical and legal controversies in cloning for biomedical research – A South African perspective’ (2004) 94 SAMJ 906-909 at 906. 163 Dhai A, Moodley J, McQuoid-Mason DJ & Rodeck C ‘Ethical and legal controversies in cloning for biomedical research – A South African perspective’ (2004) 94 SAMJ 906-909 at 908. 164 Dhai A, Moodley J, McQuoid-Mason DJ & Rodeck C ‘Ethical and legal controversies in cloning for biomedical research – A South African perspective’ (2004) 94 SAMJ 906-909. In Germany, Austria, Ireland, Denmark and France research on embryos requiring its destruction is prohibited. In Britain, research on embryos is only permitted until the 14th day of development. In the United States of America federal funding for human embryo research is banned. In Australia the legislation varies between the states.

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1983165 since 1984. This Act has subsequently been replaced by the National Health Act 61 of 2003 and section 57 now prohibits cloning, but allows for certain exceptions.166 These exceptions that need to be permitted by the Minister of Health are therapeutic cloning utilising adult or umbilical cord stem cells and research on zygotes that are not older than 14 days. This is similar to the position in Britain. The National Health Act 61 of 2003 also contains certain provisions regulating any payments received for tissue, blood, blood products or gametes.167 Payments may only be made to certain entities and is restricted to ‘an 165

Sec 39A of the Human Tissue Act 65 of 1983 reads as follows: ‘Notwithstanding anything to the contrary contained in this Act or any other law, no provision of this Act shall be so construed as to permit genetic manipulation outside the human body of gametes or zygotes.’ 166 Sec 57 of the National Health Act 61 of 2003 pertaining to the prohibition of reproductive cloning of human beings states that: ‘(1) A person may not(a) manipulate any genetic material, including genetic material of human gametes, zygotes or embryos; or (b) engage in any activity, including nuclear transfer or embryo splitting, for the purpose of the reproductive cloning of a human being. (2) The Minister may, under such conditions as may be prescribed, permit therapeutic cloning utilising adult or umbilical cord stem cells. (3) … (4) The Minister may permit research on stem cells and zygotes which are not more than 14 days old on a written application and if(a) the applicant undertakes to document the research for record purposes; and (b) prior consent is obtained from the donor of such stem cells or zygotes. (5) … (6) For the purpose of this section(a) “reproductive cloning of a human being” means the manipulation of genetic material in order to achieve the reproduction of a human being and includes nuclear transfer or embryo splitting for such purpose; and (b) “therapeutic cloning” means the manipulation of genetic material from either adult, zygotic or embryonic cells in order to alter, for therapeutic purposes, the function of cells or tissues.’ 167 Section 60 of the National Health Act 61 of 2003 regulates the aspect of payment in connection with the importation, acquisition or supply of tissue, blood, blood products or gametes: ‘(1) No person, except(a) a hospital or an institution contemplated in section 58 (1) (a), a person or an institution contemplated in section 63 and an authorised institution or, in the case of tissue or gametes imported or exported in the manner provided for in the regulations, the importer or exporter concerned, may receive payment in respect of the acquisition, supply, importation or export of any tissue or gamete for or to another person for any of the purposes contemplated in section 56 or 64; (b) a person or an institution contemplated in section 63 or an authorised institution, may receive any payment in respect of the importation, export or acquisition for the supply to another person of blood or a blood product. (2) The amount of payment contemplated in subsection (1) may not exceed an amount which is reasonably required to cover the costs involved in the importation, export, acquisition or supply of the tissue, gamete, blood or blood product in question. (3) This section does not prevent a health care provider registered with a statutory health professional council from receiving remuneration for any professional service rendered by him or her. (4) It is an offence for a person(a) who has donated tissue, a gamete, blood or a blood product to receive any form of financial or other reward for such donation, except for the reimbursement of reasonable costs incurred by him or her to provide such donation; and (b) to sell or trade in tissue, gametes, blood or blood products, except as provided for in this chapter.

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amount which is reasonably required to cover the costs involved in the importation, export, acquisition or supply of the tissue, gamete, blood or blood product in question’.168 The person who supplies the tissue, gamete, blood or blood product is also prohibited from receiving payment for such product and any such payment would constitute an offence.169 The question of biotechnological products derived from human cells is complex. The current position is that most forms of human cloning is prohibited in South Africa, so any interests in such products or the information embodied therein would not be protected as property under private law and also not under constitutional property law, save for the few exceptions. Only the biotechnological products that would qualify for a patent would be protected in private law and subsequently also in constitutional law. The Patent Act specifically excludes any form of cloning to be the subject of a patent.170 If all biotechnological products were to be included under the constitutional property clause, there would be many other fundamental rights rivalling such a right. For example the right to human dignity,171 the right to privacy172 and possibly other rights would be affected by the development of such products. These issues could even arise in cases where the biotechnological product does fall into one of the exceptions and is hence protected, for example cloning for therapeutic purposes. Only the biotechnological products that would qualify for a patent would be protected in private law and consequently also in constitutional law. Perhaps it would be useful for legislation pertaining to patents to be updated to make specific provision for these biotechnological products or in the alternative for entirely new and separate legislation to be created specifically for these products. Furthermore it is also not permitted to sell any products such as tissue, gametes, blood or blood products;173 therefore these products would not be protected as property either in private law or constitutional law. In summary, there are certain biotechnological products that could be recognised and protected under constitutional property law, but only those that are not prohibited by way of legislation or viewed as morally non-excludable. (5) Any person convicted of an offence in terms of subsection (4) is liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and such imprisonment.’ 168 National Health Act 61 of 2003 sec 60(2). 169 National Health Act 61 of 2003 sec 60(4)-(5). 170 Patents Act 57 of 1978 sec 25(4) (b). See Chap 2 (Traditional Immaterial Property Interests) for a more detailed discussion of the requirements for a patent and exclusions from patentability. 171 Constitution of the Republic of South Africa 1996 sec 10. 172 Constitution of the Republic of South Africa 1996 sec 14. 173 Section 60 of the National Health Act 61 of 2003.

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37

Traditional Knowledge

In this section, three important questions emerge. Firstly, the question of what may be regarded as traditional knowledge. Second, what role intellectual property should play in the traditional knowledge debate and lastly, how this pertains to South Africa. Nwabueze174 explains that traditional knowledge forms part of the cultural heritage of a people. He states that this knowledge is important because traditional medicine is the main source of health care in traditional communities and many developing countries. Some products of traditional knowledge, such as traditional art, traditional music and traditional medicine, also have commercial value. Nwabueze gives the example of indigenous images which have been appropriated to be used in the marketing of different kinds of goods. These include T-shirts, automobiles and souvenirs. Pharmaceutical companies have also used traditional medicine knowledge to discover plants with medicinal properties and to patent drugs. There are furthermore some uses of the traditional knowledge by outsiders that debase the spirituality and culture of the holders of that traditional knowledge.175 Visser176 gives a wide definition of traditional knowledge that includes ‘traditional and tradition-based literary, artistic and scientific works; performances; inventions; scientific discoveries; designs, marks, names, and symbols; undisclosed information; and all other innovations and creations resulting from intellectual activity in the industrial, scientific, literary or artistic fields. So categories of traditional knowledge include agricultural knowledge; scientific knowledge; technical knowledge; ecological knowledge; medical knowledge, including knowledge relating to medicines and remedies; knowledge relating to biodiversity; traditional cultural expressions in the form of music, dance, song, handicrafts, designs, stories, artworks and elements of language (such as names, geographical indications, and symbols), and movable cultural properties’.

177

From this definition it becomes clear that traditional knowledge may be relevant to practically all categories of intellectual property and other immaterial property categories. There are instances where patents, copyright, registered designs, trademarks and even confidential information may be used respectively, either to protect or exploit traditional

174

Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 2. 175 Nwabueze RN Biotechnology and the Challenge of Property – Property Rights in Dead Bodies, Body Parts, and Genetic Information (2007) 2. 176 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687. 177 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 656.

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knowledge. In his essay on the control of Native American intellectual property rights, Nason178 states that intellectual property is by its very nature a kind of cultural property. Nason179 explains that the esoteric knowledge that has received attention by outside scholars and the associated concerns of Native Americans with sharing that knowledge is of particular importance. He uses the concept of esoteric knowledge to refer to traditional, valued knowledge that is designated for the use of the specially initiated or trained. He states that this knowledge is mostly owned or held in trust and treated as private or secret by an individual, by a group within the community (such as a clan or society) or by the community as a whole. In some cases this knowledge may be sacred and yet in others it may be patrimonial in nature. This traditional knowledge is typically regarded as property within tribal legal systems and ‘therefore constitutes a key form of traditionally defined intellectual property’.180 It appears from this that the concern over the control of esoteric knowledge stems from two distinct situations. The first is where knowledge is sacred or secret and traditional people fear that it may be misused, thereby tarnishing their culture.181 The second scenario is where esoteric knowledge may be used for commercial gain, such as relying on the traditional knowledge to register patents derived from plants. Nason argues that the focus of current efforts by Native Americans and other indigenous peoples in the world to control their esoteric knowledge and other forms of important intellectual property has been on the management of research; creative and associated cultural heritage; and knowledge connected to animals and plants.182

178

Nason JD ‘Native American intellectual property rights: Issues in the control of esoteric knowledge’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 237-254 at 237. 179 Nason JD ‘Native American intellectual property rights: Issues in the control of esoteric knowledge’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 237-254. 180 Nason JD ‘Native American intellectual property rights: Issues in the control of esoteric knowledge’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 237-254 at 242-243. 181 See Coombe RJ ‘Tenth Anniversary Symposium: New direction: Critical cultural legal studies’ (1998-1999) 10 Yale JL & Human 463-486 at 468 where she describes some everyday intellectual property objects that she notes as she walks down a street. She notes a particularly apt example which illustrates the problems posed by the misuse of traditional culture: ‘A cheerful Disney film titled The Indian in the Closet is advertised through marketing tie-ins promoted by McDonalds(R) - children are promised their own free "Indian" with every Happy MealTM. Both in the Magic Kingdom(R) and under The Golden Arches(R), native peoples are mere toys to fire fantasy. Attempts by First Nations peoples to “come out of the closet” and protest their stereotyping in commercial culture provide poignant reminders of the political stakes in contemporary struggles over commodified representations.’ 182 Nason JD ‘Native American intellectual property rights: Issues in the control of esoteric knowledge’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 237-254 at 246.

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Visser183 explains the problem of biopiracy (the appropriation of scientific and technical traditional knowledge) as follows: ‘In the context of biodiversity and genetic resources, nature smiles on developing countries.’184 He states that estimates have been made that developing countries hold about 90 percent of the world’s genetic resources. However, developed countries account for more than 90 percent of the world’s research and development activity. He states that ideally, both of the interest groups should benefit from these facts. This, however, has not been the case. Visser explains that customarily, genetic resources were held to be part of the ‘common heritage of mankind’. This approach empowered users in developed countries to freely exploit genetic resources. The countries or communities that held and provided the resources generally received no return of economic benefit. The communities that lived near the genetic resources and biological resources usually did not participate in the advanced research that resulted in the inventions that were protected by intellectual property. Also there was no legal obligation on companies to share profits. As a result countries hosting biological resources generally did not benefit economically from the biological diversity.185 Shiva defines the problem of biopiracy as follows: ‘Biopiracy refers to the use of intellectual property systems in order to legitimize exclusive ownership and control over biological resources and biological products and processes that have been used over centuries in non-industrialized cultures. Patent claims over biodiversity and indigenous knowledge that are based on the innovation, creativity and genius of the people of the Third World are acts of “biopiracy”.’

186

A patent is given for an invention and accordingly a patent that was based on an act of biopiracy does not acknowledge the innovation which forms part of the traditional knowledge. Biopiracy occurs because western patent systems do not sufficiently protect traditional knowledge. Shiva187 argues that similar to terra nullius, there is an equivalent in the knowledge context, which she calls ‘Bio-Nullius’. In this she means the way that biodiversity knowledge is treated as not being owned or created by the person or group who

183

Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439 at 429. 184 Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439 at 429. 185 Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439 at 429. 186 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 49. 187 Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 49.

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held it previously. Consequently it may be claimed through ‘invention’.188 This links to the traditional concept that traditional knowledge falls within the public domain and as such is open to appropriation. Roht-Arriaza189 more specifically discusses the appropriation of scientific and technical traditional knowledge. She states that traditional knowledge has been freely appropriated because it has not been acknowledged as being either scientific or valuable to the culture holding the knowledge: ‘The appropriation of the scientific and technical knowledge of traditional and resource-based peoples, of the products of that knowledge, and even the genetic characteristics of the people themselves has become both notorious and contested.’190

Roht-Arriaza cites a range of examples where Western corporations appropriated traditional knowledge in order to patent medicines originating from plants. She names Quinine, which is used in the treatment of malaria. This substance is made from the bark of the Peruvian cinchona tree. The bark has been used as a cure for fevers by Andean indigenous groups, who supposedly learned of the bark’s abilities while observing feverish jaguars eating it. Unique to Madagascar is the rosy periwinkle, a plant that has been found to contain properties important in the treatment of leukaemia as well as other cancers. Bristol-Meyers Squibb developed the drugs vincristine and vinblastine from the periwinkle. The company receives $100 million in sales annually and Madagascar receives virtually nothing.191 These are only two examples of corporations that committed biopiracy, in other words scientific and technical traditional knowledge was appropriated without giving acknowledgement or financial reward. Shiva points out that ninety-four percent of top-selling drugs that were derived from plants contain at least one ingredient that has seen prior therapeutic use in traditional medicine. Also with pesticides, companies have begun to realise that chemical pesticides do more harm and also increase pests. Therefore they are turning to biological pesticides. Neem and pongamia 188

Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 49. Roht-Arriaza N ‘Of seeds and Shamans: The appropriation of the scientific and technical knowledge of indigenous and local communities’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 255-287. 190 Roht-Arriaza N ‘Of seeds and Shamans: The appropriation of the scientific and technical knowledge of indigenous and local communities’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 255-287 at 255. 191 Roht-Arriaza N ‘Of seeds and Shamans: The appropriation of the scientific and technical knowledge of indigenous and local communities’ in Ziff B & Rao PV (eds) Borrowed Power - Essays on Cultural Appropriation (1997) 255-287 at 256.

189

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are such plant-based pesticides which were derived making use of traditional knowledge.192 Neem was mentioned in Indian texts that were written more that 2000 years ago. It was used as an air purifier and as a cure for many human and animal ailments, because it has insectand pest repellent qualities. Neem-based insect repellents have been proven to be very efficient, even where insects were resistant to other pesticides. Since neem has been used on a commercial scale, this has had three primary negative effects for the Indian community. Firstly, the price of neem seed has risen to the extent that it is no longer available to local people. Secondly, seed that was previously available to farmers are now being bought by the company as a result of its economic power. Finally, underprivileged people no longer have access to the resource that was important to their survival and they do not have ready access to modern medical treatments. At no stage was the traditional medicinal knowledge of the Indian community acknowledged.193 A South African example of controversy around traditional knowledge would be the Hoodia plant which has long been used by the San communities as an appetite suppressant during times of hunger.194 Various pharmaceutical companies have done research on the plant and have acquired patents over certain isolates that have medicinal value. The South African Council for Scientific and Industrial Research (CSIR) filed a patent relating to the appetitesuppressing qualities of the plant in 1997. Reportedly, they concluded a benefit-sharing agreement with the San people, who have subsequently already received benefits. However, the matter is further complicated by the South African National Environmental Management: Biodiversity Act 10 of 2004 (the Biodiversity Act).195 According to the definitions of the Biodiversity Act (section 1), ‘“biological diversity” or “biodiversity” means the variability among living organisms from all sources including, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part and also includes diversity within species, between species, and of ecosystems; “bioprospecting”, in relation to indigenous biological resources, means

192

Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 50-53. Shiva V Protect or Plunder? Understanding Intellectual Property Rights (2001) 57-61. 194 Joffe F ‘The hoo-ha about Hoodia’ (2007) Dec Without Prejudice 6-7. See Vermaak I & Viljoen A ‘Indigenous South African medicinal plants: Part 9: Hoodia gordonii: Medicinal plants’ (2008) 75 SAPJ 37 for a specific botanical description of the plant, its traditional uses and scientific research on the plant and its properties. 195 Joffe F ‘The hoo-ha about Hoodia’ (2007) Dec Without Prejudice 6-7. 193

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any research on, or development or application of, indigenous biological resources for commercial or industrial exploitation’.196

For any bioprospecting done in South Africa, a permit has to be obtained from the state and such a permit would only be granted once the company wishing to perform such bioprospecting has reached a benefit-sharing agreement with the holders of the traditional knowledge. Such an agreement must be based on full disclosure of information about the intended use of the biological resource to which the traditional knowledge pertains. Amendments to the Patents Act 57 of 1978 have been drafted to incorporate the requirements of the Biodiversity Act, in the Patents Amendment Act 20 of 2005 which came into force in 2007. These amendments require a patent application to include information about any traditional knowledge; or indigenous biological or genetic resource that was used to derive a patent or base it on.197 As Joffe198 notes, there are many problems with the implementation of the Biodiversity Act relating to traditional knowledge. It is difficult to establish to whom remuneration should be paid, since there is not only one holder of the traditional knowledge. Furthermore, patents based on traditional knowledge do not use the traditional knowledge as is, but large amounts of scientific research is necessary before a specific patent may be derived. Another problem is the fact that South Africa does not have the means to exploit biological resources and traditional knowledge for the use of patents. Joffe199 argues that more attention should be spent on developing South Africa’s ability to create patents and less on the traditional knowledge debate. However, this approach does not create an immediate solution to the problem of how to provide protection for traditional knowledge.

196

This includes: ‘(a) the systematic search, collection or gathering of such resources or making extractions from such resources for purposes of such research, development or application; (b) the utilisation for purposes of such research or development of any information regarding any traditional uses of indigenous biological resources by indigenous communities; or (c) research on, or the application, development or modification of, any such traditional uses, for commercial or industrial exploitation’. 197 Section 30(3A) and 30(3B) of the Patents Act incorporate these provisions. 198 Joffe F ‘The hoo-ha about Hoodia’ (2007) Dec Without Prejudice 6-7 at 7. 199 Joffe F ‘The hoo-ha about Hoodia’ (2007) Dec Without Prejudice 6-7 at 7.

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The next question that this section attempts to address is the role of intellectual property mechanisms in the protection of traditional knowledge. Ghosh200 states that the debate over traditional knowledge has largely focused on the compatibility of protecting ancient and established knowledge by means of intellectual property, which is in reality a tool of progress. Defenders of this use of intellectual property to protect traditional knowledge use the law in order to encourage the progress and dissemination of traditional knowledge systems that would otherwise be appropriated by powerful corporations. Critics of this use of intellectual property argue that the expansion of intellectual property to accommodate the protection of traditional knowledge would lead to other expansions of intellectual property law, for example extending the terms for copyright and patents or expanding the derivative work right.201 As put forward by Ghosh,202 these arguments for and against the use of intellectual property to protect traditional knowledge both contain conceptions of distributive justice. He reasons that traditional knowledge will be used, whether it is protected as intellectual property or not; the only remaining question is by whom and how it will be used.203 According to Ghosh,204 there are three basic positions in the traditional knowledge debate. He refers to these as the public domain position; the appropriation position; and the moral rights position. Supporters of the public domain position are in favour of keeping traditional knowledge in the public domain, so that it may be used by all entities in a global commons. The second group, namely those following the appropriation position, argue that entities making commercial or practical use of the traditional knowledge should receive exclusive ownership rights thereupon. When this position is followed, multinational companies situated in the developed world would most often own traditional knowledge. The last group, those persons who follow the moral rights position, would protect the interests of the holders of traditional knowledge. This would be done either by giving traditional knowledge holders full ownership to the exclusion of entities seeking to appropriate or exploit the knowledge or by 200

Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890. 201 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 888. It is necessary to keep the debate about the protection of traditional knowledge separate from the debate about the extensions of intellectual property. 202 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 889. 203 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 889. 204 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510.

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giving the traditional knowledge holders a share in any business exploitation made by multinational corporations.205 Ghosh breaks down these positions into two questions that determine into which category an opinion falls. The first question is ‘should knowledge be commodified?’ and the second is ‘who should decide the uses of traditional knowledge?’ As argued by Ghosh,206 persons advocating the public domain position think that traditional knowledge should not be commodified, since they are wary of legal ownership created to control and regulate its use. They support traditional social structures that govern the preservation and control of traditional knowledge, even though this hampers the distribution of socially valuable uses of such knowledge. Followers of the appropriation position, on the other hand, support the commodification of traditional knowledge, particularly by entities that can make the greatest use of the knowledge by spreading it to as wide a market as achievable. Supporters of the moral rights position follow the same approach to commodification as the public domain position, except that members of the traditional structure could decide to market the knowledge. Ghosh proposes that this debate about traditional knowledge needs to be rethought ‘in terms of the federated, participatory structure by World Trade Organization (WTO) and the Agreement on Trade-Related Aspects of Intellectual Property Rights207 (TRIPS)’.208 He explains that members of the TRIPS agreement209 should be seen as self-regulating sovereigns who function within the boundaries of the TRIPS agreement. The TRIPS agreement may be seen as a constitution for the member states, in terms of which member states must respect specified intellectual property rights of its citizens. Under the principle of national treatment, these rights would be extended to the citizens of other member states. Member states are allowed to place limitations on these rights. These limitations must, however, comply with the ‘substantive and procedural standards of Article 31 (which applies to compulsory licenses) and the substantive standards of Article 30 (which applies to all other limitations of rights)’.210 205

Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510 at 499-500. 206 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510 at 500. 207 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 208 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510 at 501. 209 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 210 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510 at 501.

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Ghosh211 further describes this governance structure as federated and participatory, since member states have room to shape the structure of rights and powers within the general outline of TRIPS.212 Intellectual property rights may consequently be defined in a myriad of different ways within the general provisions of the agreement. The TRIPS agreement is therefore not a restrictive document that prescribes standardisation. The agreement provides a ‘playing field’ within which the law may be fashioned to meet policy goals such as political, economic, social and other goals. He infers that it is not necessary that an identical, standardised set of cultural icons and economic norms be created. The other option is diversity, which has a place for an expansive public domain and uses of cultural property which are not for business. The option followed will depend on the way member states use the freedoms granted by TRIPS to work within its parameters.213 This agreement recognises and provides the mechanism in terms of which the interests in both developing and developed countries may be protected. Ghosh214 refers to what he termed ‘strategic intellectual property rights’ to indicate that intellectual property, unlike natural resources, may be created by the state, in order to subsidise its constituencies and engage more efficiently in the international marketplace. He argues that the traditional knowledge debate is an illustration of ‘strategic intellectual property rights’. He uses the example of a pharmaceutical product based on traditional knowledge. Where the knowledge was used without permission or compensation, a part of the profit deriving from the patent (the return) should go to the source of the traditional knowledge. If traditional knowledge is protected as intellectual property, then the intellectual property is a strategic tool to extract the return of the patent. Finally Ghosh proposes that a combination of ‘strategic intellectual property rights’ and the freedom accorded by the TRIPS agreement215 may be used in order to ensure that different members of the global market receive returns from that market.216

211

Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510. World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 213 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp L 497-510 at 501-512. 214 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp Law 497-510. 215 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 216 Ghosh S ‘Reflections on the traditional knowledge debate’ (2003) 11 Cardozo J Int’l & Comp Law 497-510 at 504-505.

212

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The last question relevant to this section pertains to traditional knowledge and intellectual property in South Africa. Visser217 discusses a number of solutions to the problem of the appropriation of traditional knowledge. Certain intellectual property mechanisms from patents, trademarks, designs, copyright and the public domain may be employed as is or in a slightly varied form in order to protect traditional knowledge. The first form of protection relates to patents. Where traditional knowledge was exploited in order to locate a plant with properties leading to a patent, the traditional community is faced with a multitude of problems. Visser218 explains that firstly, developing countries derive no financial benefit if the knowledge is simply appropriated by multinational companies. Secondly, the holders of the traditional knowledge are barred from registering a patent derived from their knowledge, since a patent was registered already. The holders of the knowledge may well find themselves unable to use that knowledge, since a patent confers a monopoly on its holder. Even though such a patent may be open to revocation, legal process is often too expensive to be an option to the traditional community. In some legal systems it is also required that a claim for revocation be backed by written evidence of prior art. These problems may be solved by three complementary approaches, as suggested by Visser.219 In the first instance, a requirement that applicants for a patent must prove that they obtained consent from the traditional communities could be added into the patent law system. A second approach may be to document and publish traditional knowledge as searchable prior art, as a result any patent based thereupon would not be novel and as such revocable even if it is obtained. Thirdly, a requirement of morality may be used in order to protect traditional knowledge. Visser220 is of the opinion that any exploitation which occurs after the piracy of traditional knowledge would as such be tainted by immorality and the resulting intellectual property right should as a consequence be unenforceable. Visser’s article221 was written before the Biodiversity Act222 came into force. This Act now provides specific guidance where traditional knowledge and biodiversity are concerned and this has 217

Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 660. 218 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 661. 219 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 662-666. 220 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 665. 221 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687. 222 South African National Environmental Management: Biodiversity Act 10 of 2004.

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subsequently been implemented in patent law. This may be viewed as a positive step towards protecting traditional knowledge under private property law, at least as far as patents based on traditional knowledge are concerned. Visser223 explores trademark law mechanisms in the second form of traditional knowledge protection. New Zealand, South Africa and the United States have similar sections in their respective trademark laws that prohibit the registration of distinctive signs as trademarks if it may offend a section of the community or falsely suggest a connection between the sign and a community. Finally, Visser224 discusses the possibilities for the protection of traditional cultural expressions such as paintings; music; stories; designs in woven textiles; secret or sacred traditional cultural expression; and words from the indigenous communities which have been registered as trademarks by outsiders. He explores the value of copyright for the protection of these cultural expressions. This approach has certain advantages, the strongest being that copyright is protected on the basis of the principle of national treatment. However, the disadvantage is that traditional cultural expressions do not fit easily into the copyright concept. Firstly, traditional cultural expressions are often not fixed, but are the result of a slow creative process exercised by a specific community by successive replication. By contrast, in order for works to be protected by copyright, some degree of individual originality is required. Secondly, copyright focuses on the author. By contrast, with traditional cultural expressions, the notion of an author as required in copyright is usually absent.225 The next problem is the fixed term of copyright, which is generally determined by reference to a particular author. The fact that there is no one readily identifiable author of traditional cultural expression causes problems when applying the copyright concept. Furthermore, traditional cultural expressions are not fixed, but continue to evolve. Consequently, the idea of a fixed term of protection does not provide for traditional cultural expressions.226

223

Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 666. 224 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 667-668. 225 See Zemer L ‘“We-intention” and the limits of copyright’ (2006) 24 Cardozo Arts & Ent LJ 99-120, where the limits of copyright is discussed, specifically regarding the way that the requirement of a specific author for the subsistence of copyright does not make provision for collective culture. 226 Visser C ‘Some thoughts on making intellectual property work for traditional knowledge’ (2002) 14 SA Merc LJ 656-687 at 669-670.

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Visser227 specifically examines the protection afforded to biodiversity in this context. He points out that it is vital to make a distinction between traditional ecological knowledge and genetic resources. He explains that ‘traditional knowledge is the product of human invention and creation, whereas genetic resources are, in a certain sense, given by nature. Yet many of the instances of the appropriation and exploitation of traditional knowledge involve the use of both genetic resources and traditional ecological knowledge about the properties of such resources’.

228

Further, he states that the economic significance of the traditional knowledge is considerable. According to one estimate, the ability to locate plants with medicinal uses increases four hundred fold with the use of these knowledge systems.229 Visser further discusses three levels of sui generis protection afforded to biodiversity and genetic resources, and the interaction with patent law. The discussion covers protection on an international, regional and national level. On an international level, there are the Convention on Biological Diversity230 (CBD) and TRIPS.231 ‘The CBD has three main objectives: the conservation of biological diversity, the sustainable use of its components, and the equitable sharing of benefits arising from the use of these genetic resources (article 1).’232 The South African Intellectual Property Laws Amendment Bill of 2007 or so-called Traditional Knowledge Bill was published recently. The Traditional Knowledge Bill would amend existing intellectual property categories to include traditional knowledge if it were to come into operation. The Traditional Knowledge Bill233 has the aim of including traditional knowledge under the existing statutes governing the law of performers, copyright, trademarks, geographical indications and designs, similar to the way traditional knowledge has been included under the Patents Act 57 of 1978. This Traditional Knowledge Bill amends the definitions in these acts so as to explicitly include traditional knowledge as a form of a performance, copyrighted work, trademark, geographical indication or design in each of the acts. Furthermore, the Traditional Knowledge Bill provides for the creation of a National 227

Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439. 228 Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439 at 431. 229 Shiva V Biopiracy: The Plunder of Knowledge and Nature (1997). 230 Accessible at http://www.biodiv.org/convention/convention.shtml (last visited 23 June 2010). 231 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 232 Visser C ‘Biodiversity, bioprospecting, and biopiracy: A prior informed consent requirement for patents’ (2006) 18 SA Merc LJ 429-439 at 432. 233 Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

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Council for Traditional Intellectual Property, which will play an advisory role. A national database for traditional intellectual property will also be created in terms of the Traditional Knowledge Bill, with the purpose of making traditional works searchable. Furthermore a National Trust Fund would be created for the payment of royalties. Any commercial use of traditional works on the national database would be subject to the payment of royalties and these funds would be applied for the benefit of indigenous communities. However, the Traditional Knowledge Bill234 has been widely criticised by South African intellectual property experts such as Dean235 and Judge Harms236 of the Supreme Court of Appeal. Even though Dean237 agrees that traditional knowledge should be protected, he argues that protection should be afforded through new sui generis legislation which has the objective of protecting traditional knowledge. The core of such legislation would be to prevent anyone from using any traditional knowledge without the payment of royalties to the indigenous community who holds the traditional knowledge. He holds that the system of intellectual property is not suited to the needs of traditional knowledge, since traditional knowledge has been in existence for a long time and it is hard to determine who the creator is.238 Apart from these problems there are also technical errors, inconsistencies and anomalies in the Traditional Knowledge Bill.239 For example, the amendment to the Copyright Act 98 of 1987 would have the result that only traditional works created on or after the date of commencement of the Traditional Knowledge Bill or within a period of fifty years before its commencement would be protected. This has the result that most traditional knowledge works would remain unprotected, since they were created long before that. Judge Harms240 also takes issue with the Traditional Knowledge Bill241 on the fact that the descendants of the original creators of the traditional knowledge could not be considered the authors. He also notes that the fact that such knowledge was created long ago and that 234

Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa). 235 Dean OH ‘Where angels fear to tread’ (2009) Feb Without Prejudice 18-19 and Dean OH ‘Red card’ (2009) Sep Without Prejudice 17-20. 236 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191. 237 Dean OH ‘Red card’ (2009) Sep Without Prejudice 17-20 at 20. 238 Dean OH ‘Red card’ (2009) Sep Without Prejudice 17-20 at 17. 239 Dean OH ‘Red card’ (2009) Sep Without Prejudice 17-20 at 20. 240 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 184. 241 Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

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copyright is usually only the length of the author’s life plus fifty or seventy years is problematic.242 Copyright is also territorial and would not be enforceable in other countries unless specific international agreements are concluded.243 Furthermore, it is only the original work that would be eligible for copyright and it would be nearly impossible to determine which version would be the original version of traditional knowledge.244 Judge Harms245 also notes many anomalies in the Patents Amendment Act 20 of 2005. For example, if a person wishes to patent an invention making use of knowledge about the Hoodia plant, an agreement with the indigenous community is necessary, although this would not be required for an invention patented worldwide. The same problem would be present in the amendment to the Trade Marks Act 194 of 1993, since trademarks would only be protected in the country where it was registered.246 However, despite the problems that still need to be addressed before the Bill could become legislation, this Traditional Knowledge Bill247 indicates that South Africa is moving towards protecting traditional knowledge as property. It would also be useful to include traditional knowledge under the constitutional property clause. Although the South African Bill of Rights also provides for the protection of cultural rights, this would possibly deal only with the moral aspects of traditional knowledge and not give local communities access to monetary benefits from intellectual property products derived from traditional knowledge. This may only be achieved through property-based protection. As a developing country, South Africa needs to protect its natural and cultural resources against exploitation by foreign corporations. As explained, there are many possibilities for the facilitation of this protection. The Biodiversity Act 10 of 2004 and the Patents Amendment Act 20 of 2005 already give protection to certain forms of traditional knowledge and

242

Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 175-176. 243 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 176. 244 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 176. 245 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 186. 246 Harms LTC ‘A few negative trends in the field of intellectual property rights’ (2009) 72 THRHR 175-191 at 190. 247 Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

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biological and genetic resources. The Traditional Knowledge Bill of 2007248 has the purpose to make provision for the protection of traditional knowledge within the other existing categories of intellectual property, namely copyright, trademarks and geographical indications. Therefore South African law already protects certain forms of traditional knowledge under the existing intellectual property categories and consequently also as property under private law. The process to include all aspects of traditional knowledge under existing intellectual property categories is already in motion. As a result traditional knowledge should readily be accepted as property under the constitutional property clause. 38

Commercial Property

The private law-recognised categories of intellectual property (patents, copyright, trademarks and designs) discussed in Chapter 2 (Traditional Immaterial Property Interests) constitute one kind of commercial property. This is the least controversial form of commercial property. ‘Since these rights are creatures of statute and established in accordance with a special statutory regime, the requirement is usually that the right should be established and vested according to the applicable statutory prescriptions before it will be recognized and protected under the constitutional property clause.’249 The general rule is that an intellectual property right will be recognised and protected under the property clause provided that these requirements were met.250 Intellectual property rights are not explicitly mentioned in the Constitution under a separate right, ‘since they are generally understood to be included in the usual generic reference to property’.251 However, there are also more controversial categories of commercial interests. Some of these interests receive private law protection via legislation or common law, but not as property; and there is no other heading other than the property clause under which they could possibly obtain constitutional protection. Furthermore, these commercial interests share the kind of characteristics with property and intellectual property that renders constitutional protection necessary for the same reasons. These commercial interests are debts and claims; shares;

248

Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa). 249 Van der Walt AJ Constitutional Property Law (2005) 95. Also see Van der Walt AJ ‘Police-power regulation of intangible property and the constitutional property clause: A comparative analysis of case law’ in Jackson P & Wilde DC (eds) Property Law: Current Issues and Debates (1999) 208-280 at 256. 250 Van der Walt AJ Constitutional Property Law (2005) 95. 251 Van der Walt AJ Constitutional Property Law (2005) 96.

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goodwill; and state-granted licenses, permits and quotas.252 Although they all fall under the broader category of commercial property interests, these interests are not all treated similarly in constitutional law. In most jurisdictions, debts and claims that sound in money are generally recognised as constitutional property.253 Two different kinds of debt need to be distinguished, namely private debts and similar claims; and debts against the state. Private debts are generally protected as property in constitutional law, while debts against the state are more controversial. In the area of private debts, the question is most often whether regulatory action that cancelled these kinds of debts should be regarded as deprivation or rather as expropriation where compensation should be payable. The question regarding state debts has more to do with the definition of expropriation than that of property and pertains to situations where debts against the state were cancelled by state action, without compensation.254 It is generally accepted that state debts are recognised and protected as constitutional property. In Australian constitutional law, the principle was developed that the state acquires property compulsorily if it derives any kind of benefit and not merely when the property is taken from the owner as such. In other words, even if that which the state gains is not identical to what the property owner loses, there would still be a compulsory acquisition, provided that the state debt was in fact recognised as constitutional property.255 Van der Walt256 submits that it is not meaningful to compensate the property owner for the cancellation of the debt. The only remedy would be for the state action to be declared unconstitutional and invalid; thereafter the debt would once again become payable. Shares in companies form a special category of contract-based personal rights protected in private law. Even in jurisdictions where shares are not accepted as property in private law, 252

Van der Walt AJ Constitutional Property Law (2005) 94-101. Van der Walt AJ Constitutional Property Law (2005) 96. See BVerfGE 42, 263 [1976] (Contergan case) and BVerfGE 83, 201 [1991] (Vorkaufsrecht case) (Germany); Phillips v Washington Legal Foundation 524 US 156 (1999) and Webb’s Fabulous Pharmacies v Beckwith 449 US 155 (1980) (US); and Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 and Mutual Pools & Staff Pty Limited v The Commonwealth of Australia (1994) 179 CLR 155 (Australia). Also see Van der Walt AJ ‘Police-power regulation of intangible property and the constitutional property clause: A comparative analysis of case law’ in Jackson P & Wilde DC (eds) Property Law: Current Issues and Debates (1999) 208-280 at 216-228. 254 See Van der Walt AJ Constitutional Property Law (2005) 96-98. Also see Peverill v Health Insurance Commission (1991) 104 ALR 449 (FC) 454 (Australia) and Hewlett v Minister of Finance and Another 1982 (1) SA 490 (ZSC) (Zimbabwe). 255 See Van der Walt AJ Constitutional Property Law (2005) 97-98. 256 See Van der Walt AJ Constitutional Property Law (2005) 98. 253

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they are generally regarded as constitutional property.257 In Cooper v Boyes NO and Another258 the court recognised that shares are incorporeal moveable property over which an usufruct may be established. This has made the recognition of shares as constitutional property considerably easier in South Africa. Business goodwill is sometimes regarded as constitutional property, but such recognition has been controversial in foreign constitutional law.259 The purpose of recognising goodwill as constitutional property is to demonstrate the value that the state acquires when taking over a business by means of regulatory action and that compensation is necessary. 260 This distinguishes between the two scenarios where the state merely closes a business down for regulatory purposes; and where the state takes over a business and acquires value, trading on the goodwill of the business. More controversial forms of commercial property interests are state-granted and controlled licences, permits and quotas.261 Intellectual property rights, debts, shares and goodwill are uncontroversial in the sense that they are generally recognised and protected as property in constitutional law even though they are not all protected as property in private law. Only intellectual property rights and possibly shares are protected as sui generis forms of property rights in private law. Debts are protected as personal rights under the law of contract in private law. Licenses, permits and quotas differ from the other categories of commercial property in that they are usually state-created and hence subject to state powers of cancellation, amendment and regulation. These interests are not protected in private law, not under property law and not under any other area of private law either. Often, they are not regarded as constitutional property. Due to their origin in administrative awards, there is resistance to recognising and protecting licenses, permits and quotas as property. However, in foreign law some of these interests have enjoyed limited constitutional protection. The reason why constitutional property

257

See BVerfGE 50, 290 [1979] (Mitbestemmung case) (Germany) and Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 (Australia). 258 1994 (4) SA 521 (C). 259 Van der Walt AJ Constitutional Property Law (2005) 98. 260 Van der Walt AJ Constitutional Property Law (2005) 99. 261 Van der Walt AJ Constitutional Property Law (2005) 100. Also see Van der Walt AJ ‘Police-power regulation of intangible property and the constitutional property clause: A comparative analysis of case law’ in Jackson P & Wilde DC (eds) Property Law: Current Issues and Debates (1999) 208-280 at 248-253.

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protection is sought for these interests is because they may acquire commercial value, especially when they can be sold and transferred. Such licenses, permits and quotas will usually only be regarded as property if they have commercial value and have vested and been acquired in line with the relevant requirements as set by statute or regulation. It becomes apparent that licenses, permits and quotas may be protected as constitutional property if they display certain characteristics that may be analogised to property, namely that they have acquired value and have vested according to the relevant statutory or regulatory requirements. There is no other constitutional right that could provide protection for these interests; therefore application of the property clause may be suitable if the interests conform to these strict requirements. Even though licenses, permits and quotas may be recognised and protected as property for constitutional purposes, they are still subject to administrative regulation, amendment and cancellation.262 The two main requirements that determine which commercial property interests may be recognised and protected as constitutional property appear to be that they must be vested and acquired in terms of statutory or regulatory requirements and they must have intrinsic or acquired value. Intellectual property rights are vested and acquired once the statutory requirements for the particular kind of intellectual property have been met. In the case of patents, this means that requirements must be met and the patent must be registered. In the case of copyright, no registration is necessary and conforming to the requirements is sufficient to gain private law property protection and hence also constitutional property protection. Intellectual property rights already have value and do not need to acquire value before gaining constitutional property protection as is the case with licenses, permits and quotas. For shares and business goodwill, there are also certain statutory or regulatory requirements that have to be met before the right is vested and acquired. Shares and goodwill also need to acquire value before they would be protected as constitutional property. The same is true for licenses, permits and quotas. In all of the cases, there is no other constitutional property clause that could possibly provide constitutional protection for these interests.

262

Van der Walt AJ Constitutional Property Law (2005) 100-101.

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39

Participatory Claims

The so-called ‘new property’ refers to participatory claims against state welfare and social benefits.263 Van der Walt264 states that welfare payments and subsidies are not generally considered property, but in certain instances pension interests and similar interests may be regarded as property. Constitutional practice varies in this regard. These interests are generally not accepted as property in private law, but may be recognised and protected in constitutional law if they display certain characteristics that cause them to be treated as analogous to property. These characteristics are that they have vested and been acquired in terms of statutory or regulatory requirements and have acquired value. However, this category of unconventional immaterial property interests differs from the previous ones regarding constitutional protection, since the South African Constitution includes express provisions for the protection of welfare benefits or socio-economic rights. German courts have formulated three requirements for the inclusion of a public-law participatory right as constitutional property. The public-law entitlement must accrue to the beneficiary exclusively, as the case would be with a right in private law; the entitlement must be based on the beneficiary’s own or personal efforts; and the entitlement should have the purpose to ensure the beneficiary’s own survival. The mere fact that a beneficiary has contributed to receive the entitlement does not automatically mean that the interest will be included under constitutional property.265 These requirements serve to strike a balance between the public interest and the individual’s interests. Once a public-law participation right is recognised as property, it is protected the same as all other constitutional property. The normal principles applying to constitutional property is applicable, namely that only concrete rights are protected and not wealth in general; and secondly that only vested and acquired rights are recognised.266 Reich’s argument267 that certain intangible interests should be recognised as constitutional property influenced the United Sates law regarding the recognition of social and welfare

263

Van der Walt AJ Constitutional Property Law (2005) 101. Van der Walt AJ Constitutional Property Law (2005) 101. 265 Van der Walt AJ Constitutional Property Law (2005) 101. See BVerfGE 69, 272 [1985] (Eigenleistung case). Compare Kleyn DG ‘The constitutional protection of property: A comparison between the German and the South African approach’ (1996) 11 SA Public Law 402-445 at 421. 266 Van der Walt AJ Constitutional Property Law (2005) 102. 267 Reich CA ‘The new property’ (1964) 73 Yale LJ 733-787 at 733. 264

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rights. Reich268 argued that the traditional forms of property are steadily being replaced by valuables dispensed by government and furthermore that these forms of government largess are influencing the workings of the Bill of Rights. He names a number of forms of what he terms ‘government largess’ such as jobs; occupational licenses; franchises; contracts; subsidies; use of public resources; and public services.269 He argues that these participatory rights should be included as constitutional property. Courts have accepted this argument as far as it concerns the due process clause of the property guarantee, but not for purposes of the takings clause.270 The question of ‘new property’ has only been posed to South African courts twice in constitutional property law. In Transkei Public Servants Association v Government of the Republic of South Africa and Others271 the Transkei High Court observed in passing that the meaning of the 1993 Constitution was probably wide enough to include a state housing subsidy. This note can only serve as persuasive authority. In the second case272 the question was posed to the Constitutional Court. The Court held that certain conditions of service relating to payment were in line with section 28 of the 1993 Constitution. However, the Court did not ask directly whether the payments in question were actually property for constitutional purposes. Van der Walt273 notes that it is dangerous and complicated to treat socio-economic interests as property, since legitimate reform may be frustrated if courts protect these interests too easily and rigidly against regulation and amendment. He also states that the ‘new property’ question has not been raised in any of the important cases deciding on social and economic rights. The reason for this is that the Bill of Rights explicitly protects socio-economic rights in a number of separate provisions.274 Van der Walt hence proposes that in future it is unlikely that socio-economic rights would be protected or adjudicated in terms of the property clause. 268

Reich CA ‘The new property’ (1964) 73 Yale LJ 733-787 at 733. Reich CA ‘The new property’ (1964) 73 Yale LJ 733-787 at 734-737. 270 Van der Walt AJ Constitutional Property Law (2005) 103. See Goldberg v Kelly 397 US 254 (1970). 271 1995 (9) BCLR 1235 (Tk) 1246-1247. 272 Ex parte Speaker of the KwaZulu-Natal Provincial Legislature: In re KwaZulu-Natal Amakhosi and Iziphakanyiswa Amendment Bill of 1995; Ex parte Speaker of the KwaZulu-Natal Provincial Legislature: In re Payment of Salaries, Allowances and other Privileges to the Ingonyama Bill of 1995 1996 (4) SA 653 (CC) paras 41-44. 273 Van der Walt AJ Constitutional Property Law (2005) 105. 274 Sec 24 (environment), sec 26 (housing), sec 27 (health care, food, water and social security), sec 28 (children’s rights), sec 29 (education), sec 30 (language and culture) and sec 31 (cultural, religious and linguistic communities) of the Bill of Rights. 269

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He also notes that the term ‘new property’ should be avoided in South Africa, since it encompasses two distinct categories, namely commercial property and welfare rights. Since commercial property such as licences, permits and quotas may be protected as property in terms of the South African Constitution, but not welfare rights, it is advisable to keep these categories separate.275 Welfare rights are not included under private property law and also not under constitutional property law, while commercial property may be included under the constitutional property concept under certain strict requirements as mentioned. 3 10

Non-proprietary Rights

In both German and South African private law, the property concept is closely linked to ownership, which is usually contrasted with other, lesser interests such as a lease or a bond. As a result, the narrow private law (ownership-based) concept of property excludes important, commercially valuable property interests such as leases. However, legislation or private law rules correct this shortcoming by strengthening the protection of these nonproprietary rights for purposes of private law.276 In the area of constitutional law, a wider property concept is employed, including non-proprietary rights and interests, even in RomanGermanic systems such as South African and German law. Van der Walt277 argues that the concept of property in private law restricts the property clause unduly. If the property clause encompasses incorporeal rights and interests, it would be illogical to restrict property rights to a specific kind of property interest, namely ownership.278 The German Federal Constitutional Court279 recently confirmed that article 14 GG (the property clause) of the Basic Law of the Federal Republic of Germany 1949 protects the possessory right of a lessee of immovable property. This case illustrates the fact that the property concept is interpreted widely in constitutional law, providing protection for property rights other than ownership, even where such protection is afforded against the property owner. This decision means that the rights of different persons regarding the same object may qualify as property in constitutional law. This conclusion may be justified in constitutional law as long as ‘property’ is not restricted to ownership.280 German courts answer the question whether a particular interest will be included under the constitutional property concept or not 275

Van der Walt AJ Constitutional Property Law (2005) 105-106. Van der Walt AJ Constitutional Property Law (2005) 88. 277 Van der Walt AJ Constitutional Property Law (2005) 88-89. 278 Van der Walt AJ Constitutional Property Law (2005) 88-89. 279 BVerfGE 89, 1 [1993] (Besitzrecht des Mieters case). 280 Van der Walt AJ Constitutional Property Law (2005) 89. 276

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by reference to ‘the question whether in- or exclusion will serve the creation of a sphere of personal freedom which will allow the individual person to take responsibility for the development and management of her own affairs in the social context’.281 In terms of this guideline, sensitive and socially important non-proprietary rights have received constitutional property protection.282 Whether a particular non-proprietary right may be included under the constitutional property concept often depends ‘on issues regarding the separate or independent existence of the right and its vesting in or acquisition by the property holder according to normal law’.283 This corresponds with the requirements for commercial property to qualify as constitutional property. In instances where a specific non-proprietary interest is ‘generally accepted or recognised as an independent right in private or commercial law, or when it is socioeconomically or constitutionally justified to recognise and protect the right or interest as such although it is not necessarily recognised in private law, and provided that the claimant acquired the right according to the legal rules that control the existence of the right’, 284 the right may enjoy constitutional property protection. 3 11

Conclusion

From this analysis it becomes apparent that different interests of diverse stakeholders need to be considered in determining the scope of immaterial property and the protection afforded these rights. What also becomes apparent is that immaterial property interests do not fall into a neat category of property that is free of policy and considerations of justice. The aspects of traditional knowledge appropriation and enclosure of the commons need to be considered thoroughly before granting constitutional protection to immaterial property and more specifically intellectual property as the law stands. There are many factors that need to be weighed up in reaching the decision whether immaterial property interests should be protected and to what extent. The questions of whose interests should be protected and what aspects of immaterial property should be protected also arise. This chapter dealt with the unconventional immaterial property interests. The question was which of the unconventional immaterial property interests may be protected under the 281

Van der Walt AJ Constitutional Property Law (2005) 90. Van der Walt AJ Constitutional Property Law (2005) 94. 283 Van der Walt AJ Constitutional Property Law (2005) 94. 284 Van der Walt AJ Constitutional Property Law (2005) 94. 282

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constitutional property clause. Certain of these unconventional immaterial property interests are protected in private law but not under property law, while others are not yet protected in private law at all. The interests share certain characteristics such as economic value and scarcity with property and intellectual property and hence it should be possible to recognise and protect at least some of them under the constitutional property clause, as indicated by the analysis in this chapter. The overarching question was under which circumstances and in terms of which requirements it would be possible to recognise and protect these unconventional immaterial property interests under the constitutional property clause, similar to the way tangible property and intellectual property are protected. With the exception of public participatory rights which may be protected under the constitutional provisions for socio-economic rights, there is generally no constitutional provision except for the constitutional property clause that could possibly provide adequate protection for these interests. Traditional knowledge could possibly be protected under the provision for cultural rights, although this would not provide protection for any form of remuneration. Commercial information does not fall into any property category in private law. However, commercial information could be protected under the constitutional property clause if certain strict requirements are met. The issue whether commercial information may be regarded as property may be determined with reference to the concept of excludability, in other words whether other persons may be prevented from obtaining or utilising the information. Where the creator of the information took no steps to prevent other persons from using the information, the information is said to be non-excludable and as such is unsuitable to be the object of property rights. Where steps were taken to prevent access to the information, the owner may be protected by the law of unlawful competition in the event of competitors using the information for commercial purposes. Therefore, the inclusion of commercial information as constitutional property may be suitable under certain circumstances, namely where such information may be deemed excludable and the gatherer of the information took certain steps to exclude persons from using the information. If no such steps were taken or if the information is deemed to be morally non-excludable, then constitutional inclusion of the interest would most likely also be unsuitable.

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It is not possible to gain excludability for commercial information by utilising statutory provisions for the intellectual property category of copyright, since there may be no copyright in ideas. Contractual protection constitutes the only possibility in terms of which excludability may be created for interests in commercial information. Although commercial information may only be protected under the law of contract in private law and not the law of property, these interests arguably involve property-like patrimonial interests. Consequently it is suitable for commercial information to be recognised and protected as property under the South African constitutional property clause. As long as these commercially valuable interests are vested and acquired in terms of the requirements for contractual protection, there should be no reason why South African courts would refuse to recognise and protect commercial information as constitutional property. Confidential information is often linked to insider trading and the question whether it should be allowed or not. In South Africa insider trading is prohibited, therefore a person would not be allowed to keep profits made by way of insider trading. Such profits are prohibited and therefore not protected in private law as property or under any other area of the law. These interests should consequently also not be protected in constitutional property law. However, there is the possibility that the ‘owners’ of confidential information could have property rights in such information. South African law does not currently provide for the protection of confidential information as property in private law. Limited protection is available in terms of the legislation prohibiting insider trading under the law of obligations. However, only once this information is recognised as property may the companies be adequately protected in situations where the information is used by unauthorised persons. However, even though confidential information is not yet protected as property in private law, there is certainly scope for constitutional protection when the information is excludable. This may even strengthen the argument that legislation should be enacted to protect the owner’s property-like interest in confidential information. The information would probably be deemed excludable if certain measures were taken to keep the information confidential. Similar to the other forms of unconventional immaterial property, there is no constitutional clause other than the property clause that may provide protection to confidential information. Also similarly, confidential information is commercially valuable.

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A trade secret is a species of the genus confidential information. Trade secrets may more readily be protected as constitutional property since specific requirements for a trade secret have crystallised from case law. The information must be capable of application in trade or industry; must be secret or confidential; and must also be of economic value to the owner. Only once these requirements are met, does the information qualify as a trade secret. The holder of a trade secret then has the right to prevent other persons from using the information. Trade secrets are not governed by statute as is the case with copyright, patents and other intellectual property; but by common law. However, they could still possibly be viewed as a sui generis form of intellectual property. Trade secrets are legally excludable and as such should qualify as property in private law. Yet in the unlikely event that this is not the case, immaterial property interests in trade secrets could still be included as constitutional property. This would be the case if certain strict requirements are met. The trade secret must be vested and acquired in terms of the requirements for a trade secret. One of the requirements is that the trade secret must be held secret, in other words it must be excludable. Another important requirement is that it must be of economic value. These are characteristics shared by all intellectual property categories and also other categories of property and it is for this reason that constitutional property protection would be suitable for the protection of the immaterial property interests in trade secrets. Digital copyright merely embodies one troublesome aspect of copyright protection. This dilemma arrived along with the World Wide Web. This new technology has enabled copyright piracy on a scale that the current law of copyright is unable to address sufficiently. This is in reality not an entirely new form of immaterial property, but digital copyright needs some form of legislation to regulate digital copying more effectively than what traditional copyright is currently able to do. Copyright legislation was designed with the protection of tangible copies of a work in mind and not unlimited digital online copying. At the moment, authors are reverting to ‘anti-copy’ devices in order to protect their works. These devices prevent expansion of the intellectual commons by blocking access in cases where materials should be available for utilisation in line with the ‘fair use’ exception. This constitutes additional contract-based protection that authors use in order to maintain legal excludability of the copyrighted works. Since copyright is an existing form of intellectual property, digital copyright already forms part of property under private law and therefore constitutional protection of this right as a form of property is possible.

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As with all copyright works, traditional and digital, a balance needs to be maintained between protection of the owner’s property interest and the public’s interest in access to the work. Constitutional protection of these interests could be particularly useful to create a balance between the interests of digital copyright owners and interests in the public domain. In this case the owners already have legal excludability in the form of contracts to their disposal. However, specific legislation dealing with this aspect would be useful since the current copyright legislation was not designed with digital copyright in mind and the contractual protection may interfere with copyright exclusions such as fair use. Biotechnological products are created with the assistance of new technologies. The creations are generally protected under the intellectual property category of patents, but the patent system is not fully equipped to deal with these new technologies and as such needs updating. In the alternative, a new set of legislation may be created in order to govern biotechnological products and to prevent the stagnation of the intellectual property commons. There are many other interests other than property interests at stake in these cases where biotechnological products are derived from human body parts such as cells. Therefore it would be particularly useful to include the biotechnological products (that are not prohibited by way of legislation) under the constitutional property clause. This would allow for a balance to be created between property interests and other interests such as the commons, privacy and the right to bodily integrity. In some instances the other interests may be deemed so important that a particular biotechnological interest would be deemed morally non-excludable. Traditional knowledge is another form of intellectual creation that poses challenges to the current intellectual property system. No private law protection is currently available for the protection of immaterial property interests in traditional knowledge, neither under property law nor under any other area of law. Companies use the knowledge of indigenous peoples in order to develop patents. Traditional designs and other cultural products are also appropriated and used in works of copyright and trademarks. In doing so the knowledge is treated as part of the intellectual property commons and the creative effort of traditional communities is disregarded. Companies that exploit these products often give no benefit, financial or otherwise, to the traditional communities that developed the traditional knowledge. As such the intellectual property system is currently being used to exploit traditional communities. Some reform is required in order to protect traditional knowledge as property or by other means.

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In South Africa, some reform is already in motion since the Biodiversity Act 10 of 2004 and the Patents Amendment Act 20 of 2005 have been implemented to give property-based protection to traditional knowledge used in the creation of patents. The Traditional Knowledge Bill285 has the purpose to include traditional knowledge under other existing categories of intellectual property. Even though there are still many challenges posed to the Bill in its current form, the process of including traditional knowledge under all existing intellectual property categories is already in motion. In South Africa there is also the possibility to protect traditional knowledge as constitutional property despite the difficulties of fitting traditional knowledge into the conventional intellectual property categories, since constitutional law traditionally employs a wider property concept than private law. It appears that commercial property may or may not enjoy constitutional protection depending which specific category is at issue. Intellectual property or traditional immaterial property is the least controversial form of commercial property. As discussed in Chapter 2 (Traditional Immaterial Property Interests) and this chapter, intellectual property rights should be recognised and protected under the constitutional property clause since they are recognised and protected as property in private law. The constitutional property concept should include at least interests that are accepted as property in private law, although the concept is not limited to these interests. More controversial commercial interests are debts and claims; shares; goodwill; and state-granted licenses, permits and quotas. Debts and claims that are based in contractual rights are recognised and protected as constitutional property in most jurisdictions. Shares are also recognised and protected as constitutional property, even in jurisdictions where they are not recognised as property in private law, but only as contractual rights. In South African law, shares have been accepted as property in private law, which simplifies the question somewhat. Business goodwill is not readily recognised and protected as constitutional property. However, in foreign jurisdictions where this has been done, the purpose was to distinguish between the regulation of businesses and cases where the state benefitted from closing down a business. The goodwill serves as the visible aspect of the benefit gained by the state.

285

Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa).

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Licenses, permits and quotas are usually state-created and hence subject to state powers of cancellation, amendment and regulation. They originate in administrative awards; therefore there is resistance to recognising and protecting licenses, permits and quotas as property. However, these interests may be protected as constitutional property in cases where they share certain characteristics with property, namely that they have acquired value and have vested according to the relevant statutory or regulatory requirements. This is also true for all the other forms of commercial property. There is no other constitutional clause that could provide protection for any of the commercial property interests other than the property clause. These interests are not specifically excluded from the property clause and there appears to be no specific reason why they should be excluded. Therefore, the South African Constitutional Court may in future grant constitutional property protection to theses interests. Participatory claims could in theory enjoy constitutional property protection as long as the rights have vested and been acquired and the interests have acquired value. German law also sets the additional requirement that some form of own contribution should be evident. In South African law it is unlikely that these interests would be protected under the property clause, since the constitutional socio-economic rights provisions explicitly provide protection for participatory claims or welfare rights. In this way, participatory claims differ from all the other traditional and unconventional immaterial property interests in that the property clause is not the only option for constitutional protection. There are furthermore certain property rights other than ownership that may be protected. Such a right would be recognised and protected under the constitutional property clause provided that the non-proprietary interest is ‘generally accepted or recognised as an independent right in private or commercial law, or when it is socio-economically or constitutionally justified to recognise and protect the right or interest as such although it is not necessarily recognised in private law’.286 A further requirement is that the claimant must have acquired the right in terms of the legal rules that control the existence of the right. Certain of these interests are already protected as property in private law, but the protection is not adequate. Digital copyright and biotechnological products fall into this category. There have also been arguments to include trade secrets as a sui generis category of intellectual 286

Van der Walt AJ Constitutional Property Law (2005) 94.

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property. Some of these immaterial property interests are not traditionally included as property in private law, but are protected under other areas of private law, notably the law of contract and obligations. These interests are commercial information, confidential information and commercial property and non-proprietary rights. Others are not protected under any area of private law, notably traditional knowledge and participatory claims. Here there is an extra question, namely whether the interests should be protected at all, whether in private or constitutional law. Participatory claims are different from all the other traditional and unconventional immaterial property interests in that they are explicitly provided for in the constitutional clauses pertaining to socio-economic rights. For all the other traditional and unconventional immaterial property interests there is no constitutional clause other than the property clause that could possibly provide protection against state interferences and interferences by the rights of other persons. All of the interests discussed in this chapter share certain characteristics with property under certain circumstances and for this reason it would be suitable to recognise and protect them as property for constitutional purposes. If these characteristics are visible in a particular immaterial property interest, then it should be possible to grant constitutional property protection, at least in principle. Firstly, an immaterial property interest may never be recognised as property if it is morally non-excludable. This would be the case if it is very important for a specific interest to remain in the public domain. An example would be gene sequences. An interest must be at least physically or legally excludable in order to be recognised as property in either private or constitutional law. None of the immaterial property interests are physically excludable. They can only become legally excludable by the utilisation of particular legal mechanisms. Intellectual property rights or the traditional immaterial property interest may become legally excludable if the owner utilises the applicable intellectual property legislation. Some of the other interests may become legally excludable by utilising mechanisms from the law of contract. If the available mechanism were not utilised, no property protection would be available, either via private law or constitutional law. An interest must have accumulated value in order to be protected as property in constitutional law. The right must have vested and been acquired in terms of the applicable legislation or rules. For example if an interest is protected by the law of contract, the rules must have been

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complied with and the right to claim something must have vested in the person claiming constitutional property protection. In addition to the guidance provided by the characteristics shared with property, immaterial property interests may be termed property or not according to which theories for their justification are being used. These justifications will be discussed in detail under Chapter 4 (The Value of Intellectual Property).

Chapter 4: The Value of Immaterial Property 41

Introduction

The question that this dissertation deals with is whether immaterial property interests may be included under the property concept for purposes of the constitutional property clause. It is unavoidable that the question whether protection for these interests may be justified at all; and if so under which particular circumstances; also arises. As such, this chapter aims to analyse and discuss the reasons why traditional immaterial property interests 1 as well as unconventional immaterial property interests2 should be protected, both in private law and in constitutional law. The classical property theories and some newer theories appear to justify protection of traditional immaterial property interests or intellectual property rights, but it is more problematic to extend this line of argument to some of the unconventional forms of immaterial property interests. Furthermore, in some instances there may be other theories that could be more relevant for the justification of unconventional immaterial property interests. For example, the protection of traditional knowledge may be better justified by theories of distributive justice than by conventional property theories. The protection of unconventional categories of immaterial property that are not protected as property in private law but under other areas of private law or in public law, cannot be justified by property theories and it is also unnecessary to do so, since the only question is whether these interests may be recognised and protected under the constitutional property clause and this is not determined by reference to property or other theories. Rather, these interests could be protected under the property clause because they share certain characteristics with intellectual property and tangible property; and there is no other constitutional clause that could provide protection to these interests. The first unconventional immaterial property category that is not considered is commercial property, namely debts and claims; shares; goodwill; and state-granted licenses, permits and quotas. These interests already receive protection in private law, under areas other than property law. Therefore it is both unnecessary and impractical to consider these interests in terms of the property theories.

1

Chapter 2 (Traditional Immaterial Property Interests) defines these interests as patents, copyright, designs and trademarks. 2 Chapter 3 (Unconventional Immaterial Property Interests) defines these interests as commercial information, confidential information, trade secrets, digital copyrights, biotechnological products, traditional knowledge, commercial property, participatory claims and non-proprietary rights.

There may be other theories for the justification of protection for these interests, but for the purposes of the research question, it is only important to determine whether these interests may be recognised and protected under the constitutional property clause and this is discussed in Chapter 5 (Immaterial Property Interests in the Constitution). The reason why it is desirable to recognise these interests as property for constitutional purposes is because they share certain characteristics with property and intellectual property and there is no other constitutional clause that could provide the necessary protection. The second category of interests that needs no consideration under property theories entails participatory claims that are recognised and protected under separate constitutional property clauses specifically aimed at socio-economic rights. Therefore it is unlikely that these interests would be adjudicated in terms of the property clause. Finally, this chapter has the purpose of discussing and analysing the impact of immaterial property interests on the public domain and other public and private rights that may be affected by immaterial property rights. Drahos3 notes that intellectual property rights are relations between individuals, as is the case with other property rights. Intellectual property law, however, pertains to rights in abstract objects. A lot is at stake where the concept of property is extended to include abstract objects. Therefore Drahos4 argues that it is necessary to ask whether the legal recognition and protection of intellectual property may be explained and justified by utilising general property theories or whether a distinctive theory of intellectual property needs to be developed.5 Drahos6 suggests that intellectual property should be approached in terms of property rights instead of treating it in terms of the language of privileges. Hettinger notes that ‘[i]ntellectual property is an increasingly significant and widespread form of ownership’.7 He states that the manufacture of physical goods is increasingly being replaced by the production and use of information in what is termed the arrival of the ‘post-industrial society’. As a result, the laws and rules protecting intellectual property are increasingly strained.8 Hettinger9 and Drahos10 agree that the institutions of intellectual property need to be scrutinised carefully. However, 3

Drahos P A Philosophy of Intellectual Property (1996) 1. Drahos P A Philosophy of Intellectual Property (1996) 1. 5 Also see Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 288: ‘Does the law of intellectual property reflect general theories of property?’ Hughes states that in answering that question, one should keep in mind what the theory of intellectual property should be and reflect from that image what the law should be. 6 Drahos P A Philosophy of Intellectual Property (1996) 2. 7 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 31. 8 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 31-32. 9 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 32. 10 Drahos P A Philosophy of Intellectual Property (1996) 1. 4

Hughes11 does not agree that every aspect of the intellectual property system should be tested for theoretical validity. Instead, he attempts to prove that existing intellectual property law is supported in varying degrees by the existing theories, but that the same theories may also be used to argue that the current law has certain shortcomings. According to Hettinger,12 one is faced by two major problems when attempting to justify the recognition and protection of intellectual property, namely the nonexclusive character of intellectual property and the restriction of the free flow of information. Hettinger explains the nonexclusive characteristic of intellectual property subject matter as follows: ‘These objects are nonexclusive: they can be at many places at once and are not consumed by their use. The marginal cost of providing an intellectual object to an additional user is zero, and though there are communications costs, modern technologies can easily make an intellectual property object unlimitedly available at very low cost.’13

This nonexclusive character of intellectual property would possibly constitute an example of what Gray14 would refer to as a physically non-excludable resource. However, it may still be legally excludable since there is legislation that enables the creator of the intellectual property to protect the creation. If such protection granted by legislation is not utilised, then the intellectual creation would also be legally non-excludable and no property protection would be afforded. Hettinger15 notes that the sharing of intellectual property objects does not prevent or impair the personal use of its creator, but it does prevent the creator from exclusively selling these intellectual objects to other persons. The primary question which a justification of intellectual property needs to address, according to Hettinger, is ‘[w]hy should one person have the exclusive right to possess and use something which all people could possess and use concurrently?’16 He states that the exclusive use of a physical object may be justified where such exclusion is necessary for the person’s own use, but no such justification is available in the context of intellectual property. This nonexclusive feature should be contemplated while discussing the justifications for intellectual property.

11

Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 289. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 34-35. 13 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 34. 14 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276. 15 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 34-35. 16 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 35. 12

The other problem with justifying intellectual property is created by the fundamental value that society places on freedom of expression and thought. Where private property is granted, one person’s freedom is improved to the detriment of all other persons’ freedom.17 Hettinger18 states that these restrictions on the free flow of information (in the form of intellectual property rights) stifle not only individual growth, but more importantly impede the general advancement of new technologies and knowledge. When these negative consequences of intellectual property are taken into account, it becomes harder to justify intellectual property. On the other hand, most immaterial property rights are created by statute and as a result they may need additional protection from state interference, as becomes apparent from the analysis in Chapter 2 (Traditional Immaterial Property Interests). According to Dean, intellectual property would no longer exist if these statutes were to be repealed. Parliament would be able to terminate the existence of intellectual property if the statutes creating intellectual property were not entrenched in the Constitution.19 It is important to note the difference between protection in private law and constitutional law and also the different purposes served by private law protection and constitutional law protection. The purpose of property protection in private law is to get strong property-rule type protection for private rights against competing private parties.20 On the other hand, recognition and protection in constitutional property law has the purpose of acquiring bill of rights type protection for private interests against the state and against competing constitutional rights of other private parties. This is discussed at greater length in Chapter 5 (Immaterial Property Interests in the Constitution). However, there are also many other forms of property that are created by statute such as sectional title rights,21 consequently intellectual property is not unique or special in that regard. The constitutional property clause may provide adequate protection to intellectual property rights, similar to any other category of property. The South African constitutional

17

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 35. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 36. 19 Dean OH ‘The case for the recognition of intellectual property in the Bill of Rights’ (1997) 60 THRHR 105119 at 113. 20 See Calabresi G & Melamed AD ‘Property rules, liability rules, and inalienability: One view of the cathedral’ (1972) 85 Harvard LR 1089-1128. 21 See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 49 for a discussion of real rights created in terms of legislation. 18

property clause does not only protect property, but provides for expropriation and deprivation by the state, although there are strict requirements that need to be met for such an action to be constitutionally justifiable. This is useful when the interests of an intellectual property owner and other interests such as public interests in the public domain or conflicting private rights such as human dignity, education or freedom of expression need to be weighed up during constitutional interpretation.22 Hughes states that the biggest difference between rights conferred by intellectual property and the rights conferred by other forms of property lies in the fact that ‘intellectual property always had a self-defined expiration, a built-in sunset’.23 He argues that this sunset of intellectual property ‘enhances the social neutrality of intellectual property rights’.24 He concludes that intellectual property laws in fact fit better under the justificatory theories because of this feature. Hughes25 refers to Proudhon’s26 proclamation that ‘all Property is theft’ and states that this slogan is incoherent on a literal reading since ‘the idea of theft presupposes that someone else holds legitimate title’.27 He adds that if Proudhon meant to exempt certain property from this accusation, then one is faced with the original dilemma of justifying such an exemption. According to Hughes, property may be justified on either labour or personality theories, but he argues that a combination should be used. He argues that: ‘[p]roperly elaborated, the labor and personality theories together exhaust the set of morally acceptable justifications of intellectual property. In short, intellectual property is either labor or personality, or it is theft’.28

Both the labour and personality theory for the justification of intellectual property have received much criticism. These theories and their criticisms, as well as other alternative and supplementary theories are discussed in this chapter.

22

See Chapter 5 (Immaterial Property Interests in the Constitution) for a discussion of constitutional property and expropriation. 23 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 296. 24 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 296. 25 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 289. 26 Proudhon PJ What is Property? An Inquiry into the Principles of Right and of Government (1840, trans Tucker BR 1970) 11-12. 27 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 289-290. 28 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 290.

Ciro states that propertising intellectual creations has been justified on labour, economic and spiritual theories: ‘The philosopher John Locke argued that a labourer has a natural property right to an item that is created with his/her labour.’29 However, he argues that there is no natural right to intellectual property. The second argument is an economic argument that the author of a work needs to be compensated in the form of a property interest in order to provide an incentive to create the work in the first place. This may be split into the reward theory and the incentive theory, respectively. Thirdly, Ciro mentions the personality theory as derived from the works of Kant and Hegel, in terms of which ‘an author’s personality, spirit and will cannot be free unless the author owns his/her work’.30 Radin’s31 development of the personality theory also needs consideration here. Ciro32 argues that justifications used for tangible property cannot be used to support the protection of intellectual property. Tangible creations are physically scarce, while intellectual property makes use of information which is a plentiful commodity.33 Intellectual property is made scarce through artificial constraints imposed by a legal framework, restricting public access to the intellectual work. For these reasons, he argues that an explanation for intellectual property rights should instead be founded on the creation and protection of investor value. This, according to Ciro, explains, but does not justify, the enforcement of intellectual property rights in their current form. This argument is one form of economic theory. Another, fairly new theory for the justification of intellectual property is Ghosh’s34 theory of natural monopoly. This theory analyses intellectual property rights from a perspective of natural monopoly, applying criticisms of natural monopoly to the intellectual property system. Finally, one needs to consider the public domain (also known as the commons of intellectual property) in order to conclude a comprehensive discussion of the justifications for intellectual property.

29

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 2. Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 2. 31 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015. 32 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 2. 33 See Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 34-35, where he agrees that there are concerns about applying general property theory to intellectual property. Also see Dean OH ‘The case for the recognition of intellectual property in the Bill of Rights’ (1997) 60 THRHR 105-119 where this notion is questioned and Drahos P A Philosophy of Intellectual Property (1996) 1. However, compare Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 296 where he concludes that intellectual property actually fits in better with the property theories because it has a built-in expiration or fixed term of property protection. 34 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1128. 30

The purpose of this chapter is to discuss each theory that may justify the legal recognition and protection of immaterial property interests, as well as criticisms levied against it. Furthermore, suggestions are made as to the particular suitability of applying each theory to the traditional35 and unconventional36 forms of immaterial property interests that have been discussed in Chapter 2 (Traditional Immaterial Property Interests) and 3 (Unconventional Immaterial Property Interests). Finally, the impact that each category of immaterial property interests has on the public domain are considered. 42 421

Labour Theory (Natural-Law Theory) Development in Roman Law and Roman-Dutch Law for Application to Intellectual Property

Mostert37 argues that the natural-law theory is one of the most important theories that support the recognition of intellectual property rights. The theory is derived from the principle that one owns that which one creates by one’s own effort and labour: ‘The principle rests on the conviction that a person is entitled to the fruits of his own intellectual effort and that equity demands that he is entitled to reap where he has sown.’38 Mostert uses Roman law as a starting point to discuss the development of the natural-law theory for the recognition of intellectual property. He argues that the Roman jurists’ treatment of certain natural modes of acquisition of ownership, namely specificatio,39 scriptura, pictura and occupatio40 show signs of the first emergence of a natural-law theory for the justification of intellectual property. These, according to Mostert, are all forms of accessio, which encompassed all instances where a thing belonging to one person was mixed with or united to a thing that belonged to another person, creating one inseparable thing through this act. Although this

35

Traditional immaterial property interests have been defined as patents, copyrights, registered designs and trademarks, respectively. See Chapter 2 (Traditional Immaterial Property Interests). 36 Unconventional immaterial property interests have been defined as commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, participatory claims and non-proprietary rights, respectively. See Chapter 3 (Unconventional Immaterial Property Interests). 37 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property. A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 480. 38 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property. A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 480. 39 Specificatio takes place when one person’s thing is worked up into another thing by another person who is not the owner of the original thing. See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 156. 40 Occupatio entailed taking occupation of a thing belonging to no one (res nullius) in order to aquire ownership. This pertains to a corporeal movable or immovable thing in the sphere of private law (res in commercio) which is not owned by anyone. This has to be done with the intention of becoming owner of the thing. See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 137.

does not detract from Mostert’s argument, it has to be noted that specificatio, scriptura, pictura and occupatio are not traditionally regarded as forms of accessio. Accessio refers to the joinder of two or more separate things in such a way that it forms one entity afterwards. Mostert41 describes these, traditionally independent, forms of original acquisition (or loss) of ownership as examples of accessio to indicate that one owner loses ownership of a thing because another person has ‘occupied’ it by adding his own work and value to it in such a way that the original loses its independence and hence ceases to exist as a thing.42 In some instances, the Roman jurists acknowledged that the labour of one person may have increased the value of the resultant thing to a point where the added value is higher than the original, thereby entitling him to ownership of the new product.43 Mostert44 states that the rules for specificatio were used in cases where a new thing was created with the materials of another and the acquisition of ownership had to be determined. It had to be determined whether the new thing belonged to the maker by virtue of his labour in its creation (as the Proculians argued) or whether it belonged to the original owner of the materials (as the Sabinians held). Justinian invoked a media sententia, deciding that the new thing belonged to the maker only if it could not be restored to its former state. In the case of accessio, two or more things belonging to different owners are mixed in such a way that they become one thing and the one thing accedes to the other that is principal. The thing of more value is usually deemed to be the principal thing. This should be distinguished from specificatio, where only one thing is changed into another thing by someone who is not the owner of the original thing. 41

Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 481-485. 42 See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 141-156. 43 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 481-485. 44 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 481-483. See Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 156-159. Also see Henckert HG Saakvorming as Wyse van Eiendomsverkryging (1988); Sohm R The Institutes: A Textbook of the History and System of Roman Private Law (1889 trans Ledlie JC 3rd ed 1907) 324; Grotius H Inleidinge tot de Hollandsche Rechtsgeleerdheid met aantekeninge van SJ Fockema Andraea (15381645 Van Appeldoorn LJ 4th ed 1939) 2 8 2; Van der Keessel DG Praelectiones Iuris Hodierni ad Hugonis Grotii Introductionem ad Iurisprudentiam Hollandicam (1738-1816 Van Warmelo P, Coertze LI & Gonin HL eds 1961-1975) 2 8 2; Van Leeuwen S Censura Forensis (1625-1682 De Haas G 1741) 1 2 5 1-1 2 5 2; Voet J Commentarius ad Pandectas Comitum (1707 Gane P trans The Selective Voet 1955) 41 1 21; Aldine Timber Co v Hlatwayo 1932 TPD 337 at 341; S v Riekert 1977 (3) SA 181 (T) at 182E-G citing Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 156-159.

Scriptura was the legal concept utilised to determine ownership in instances where someone had written on the parchment or paper of another person. The rules were that the owner of the paper became the owner of the finished product. Mostert argues that the natural-law principle was probably disregarded in the case of scriptura due to the relative value of writing.45 According to Mostert, the case of pictura is seen as the first tentative step towards the recognition of intellectual property.46 The rules for pictura dictated that if a painter painted a picture on another person’s tablet, the picture and the tablet became the property of the painter. Some implicit recognition is as such given to the principle essential to the natural-law principle in the case of pictura. This act of creating the painting by the application of intellectual effort cannot merely be recognised by placing a monetary value on the final product. During the seventeenth-century and later, Roman-Dutch law authors placed more emphasis on the importance of writing and therefore also on the intellectual labour expended to create the work. During this time, the natural-law principle basically became the determining factor for specificatio, scriptura, pictura and occupatio.47 This express recognition of the naturallaw principle, together with the eighteenth century philosophical influences, laid the foundation for the modern recognition of property and intellectual property.48 422

Locke

The natural-law principle as foundation of the recognition of intellectual property played an even more prominent role in the writings of seventeenth century and later legal scholars. John Locke49 justified property on the basis that every person has a property in his own person and also his own labour and works created with his labour. The basic idea of Locke’s proposition is that by ‘mixing’ one’s labour with land or other tangible property, one acquires a ‘natural 45

Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 483. 46 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 484-485. 47 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 486-490 and 492. 48 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 493. 49 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27.

right’ to the property.50 This principle that a person should have property in that which he has created by his own intellectual effort and exertion played a large role in the recognition of intellectual property rights.51 Mostert argues that the doctrine of ‘intellectual property’ is based on the ‘principle that the creator of a work of intellect has an absolute and exclusive right to it, just as property as a tangible thing would grant unfettered dominion to the owner of it’.52 The doctrine of ‘intellectual property’ in this form contributed a great deal towards the recognition of patents and copyright.53 However, there are differing opinions regarding the success of the application of the labour theory to intellectual property. 423

The Revised Theory

Munzer states that ‘desert based on labor should play a significant, though by no means the only, role in justifying rights of private property’.54 Munzer55 distinguishes between the initial and the revised theory based on labour and desert. For purposes of the initial labour theory he defines labour as ‘the exertion of effort in order to make or physically appropriate something’ and desert as ‘worthiness of some recompense because of some personal feature or action’.56 He also views the conclusion of the labour-desert argument as the initial labour theory. He outlines the labour-desert theory as follows: ‘If the background conditions57 exist, then the laborer may use his body to gain control over some thing. If, further, there exist the features of the laboring situation58 and the physical and

50

See Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 3. Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 494-495. 52 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 495. See Munzer SR A Theory of Property (1990) 254-291 where it is argued that the property rights justified by the labour-desert theory should be qualified and restricted in certain instances where it affects the rights of other persons. 53 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 496. 54 Munzer SR A Theory of Property (1990) 254. 55 Munzer SR A Theory of Property (1990) 254-291. 56 Munzer SR A Theory of Property (1990) 256-257. 57 Munzer SR A Theory of Property (1990) 258: The background conditions assume that there is no society or government, the thing that the labourer hopes to acquire is not owned, there is a sufficient amount of these things with sufficient quality and the labourer has the liberty to use his body for the work required. 58 Munzer SR A Theory of Property (1990) 258: These features are that the labourer has no moral duty to work, the purpose of working is to acquire enduring control over a thing, the labourer works alone and not for someone, the work done involves physical contact with the thing, the work does not reflect how the labourer sees himself in relation to others and all workers work equally intense and effective. 51

psychological effects described,59 then the laborer is responsible for a product that he does not misuse and over which his enduring control has no adverse impact on others. If, finally, the evaluative and normative features are as specified,60 then recognizing his enduring control is the most fitting benefit for his labor and does not infringe the rights of others. Such recognition is the acknowledgement of property rights.’61

According to Munzer, the initial labour theory claims that the labourer deserves property rights in the product created if all the assumptions are true. The labourer would deserve ‘moral property rights in the product in virtue of his labor’.62 Munzer63 notes some problems posed by this approach and suggests the revised labour theory,64 because the initial labour theory is based on unrealistic assumptions. He argues that the revised labour theory is the significant point that remains once the assumptions are made more realistic. In the first instance, the labourer’s property rights need to be qualified by broader duties arising from the rights of non-labourers. Such rights would encompass the right to the necessities of life. The assumption that there is no waste is also unrealistic and it is necessary to allow a power of transfer.65 In the context of intellectual property and current constitutional thinking, significant examples of these rights of non-labourers could be the right to freedom of speech, education or other political and socio-economic rights. The second problematic area relates to acquisition. The assumption that property is justified when there are similar things in sufficient quantity and quality left for other people and that they lose nothing by the labourer’s acquisition is not satisfactory. Munzer suggests relying on the principles of utility and efficiency; and justice and equality to constrain the acquisition process. Therefore, limits should not only come from the labour theory itself, but also from outside via an understanding of social complexities.66 The problem of scarcity precludes the assumption that the acquisition of a thing changes nothing for other persons. The assumption 59

Munzer SR A Theory of Property (1990) 258: The physical and psychological effects refers to the fact that the labourer produces a product and not a service, the product is not wasted and others are not adversely affected by the creation or gathering of the product. 60 Munzer SR A Theory of Property (1990) 258: These features are that the product is good in a general sense, that no one besides the labourer benefits from the product, property rights would not be transferable and would be exclusive, the rights would last indefinitely, the rights would be the most appropriate benefit for the labourer’s work and would not infringe any other persons’ rights. 61 Munzer SR A Theory of Property (1990) 259. 62 Munzer SR A Theory of Property (1990) 259. 63 Munzer SR A Theory of Property (1990) 261-266. 64 See Munzer SR A Theory of Property (1990) 266-291 for a detailed discussion of this revised labour theory. 65 Munzer SR A Theory of Property (1990) 267-269. 66 Munzer SR A Theory of Property (1990) 269-274.

that labour-generated property rights are exclusive and last indefinitely is also unwarranted, since the situation of other persons is changed by the acquisition. According to the alterations made for the revised labour theory, the property rights acquired may be restricted. 67 In the case of intellectual property, rights are exclusive, but for a limited duration. Furthermore, the rights are not absolute and may be limited when other rights such as socio-economic rights are deemed to be more important than the property rights. Intellectual products are not scarce, in the sense that more can be created. The last problems relate to transfer, general scarcity and work as a social activity.68 Scarcity is not really the problem when it comes to intellectual property, since intellectual property is about creation and it does not ‘use up’ resources in the way that the creation of physical property does. However, information resources may still be taken from the public domain in order to create these intellectual property products and once taken from the public domain and propertised, these resources are no longer available for other persons to use in future intellectual creations; and in this sense scarcity could be perceived as a problem. The revised labour-desert theory holds that labour may still serve as a prima facie justification for property rights, but rights qualified by the restrictions discussed. 424

The Application of the Labour Theory to Immaterial Property

According to Drahos,69 there are many interpretations of Locke’s philosophies about property. He states that labour has a relatively small role in the so-called ‘labour theories of property’. According to Drahos,70 ‘[t]he true value of Locke’s writing on property is that it shows us that the coherence or truth of an argument that relies on natural rights to justify intellectual property rights primarily depends on a concept of community and an accompanying metaphysical scheme. Appeals to labour in labour theories of property are essentially exhortations to keep certain metaphysical assumptions and a concept of community in place’.71

Drahos72 states that the problem that Locke attempted to address by means of his philosophy was that the earth belonged to ‘Mankind in common’, so how could individuals have property in any things? Since natural law proclaimed the existence of a commons, it was problematic 67

Munzer SR A Theory of Property (1990) 274-276. Munzer SR A Theory of Property (1990) 276-281. 69 Drahos P A Philosophy of Intellectual Property (1996) 41. 70 Drahos P A Philosophy of Intellectual Property (1996) 41. 71 Drahos P A Philosophy of Intellectual Property (1996) 41. 72 Drahos P A Philosophy of Intellectual Property (1996) 42. 68

for the same natural law to also explain private ownership. The solution to the problem, according to Locke, was that ‘every Man has a ‘Property’ in his own ‘Person’. Where a person mixes his own labour with something which had previously been in the commons, the thing becomes his property’.73 Locke placed two provisos on the justification of a property right based on labour. The first one is that ‘enough and as good [must be] left in the commons for others’.74 This is often interpreted to mean that ‘[a]s long as one does not worsen another’s position by appropriating an object, no objection can be raised to owning that with which one mixes one’s labor’.75 Hettinger76 argues that patent law does not honour this proviso, since the original inventor is granted the exclusive right to manufacture, utilise and sell the creation. He further points out that independent inventors who come up with the same invention suffer a great loss, since they are not even permitted to use their own invention. Hughes states that the ‘enough and as good as’ condition is usually understood as descriptive of the common. However, he notes that it is ‘also conceptually descriptive of human beings’.77 By this he means that there is a natural ceiling on how much each person can appropriate through labour because of the limited capacities of humans. Locke’s78 second proviso to the labour theory pertains to the prevention of spoilage. According to Locke, one must not take more than one is able to use. Hettinger79 argues that intellectual property will never be able to meet this proviso entirely, since intellectual property is nonexclusive. He states that the benefit of the products would determine how wasteful it is for the owner of intellectual property to prohibit other persons’ use of the creation. Here it is necessary to qualify that the intellectual property rights granted by statutes does not have the purpose of granting exclusive use rights, but rather the exclusive right to prohibit third persons from doing certain acts with the work. For example, the copyright of a 73

Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. See Drahos P A Philosophy of Intellectual Property (1996) 43. Also see Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 297, where he states that Locke’s discussion begins with the description of ‘a state of nature in which goods are held in common through a grant from God … The individual must convert these goods into private property by exerting labor upon them. This labor adds value to the goods, if in no other way than by allowing them to be enjoyed by a human being’. 74 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 75 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 44. Also see Drahos P A Philosophy of Intellectual Property (1996) 42-43. 76 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 44. 77 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 297-298. 78 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 79 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 44-45.

book does not give the exclusive right to read the book. Anyone who is willing to buy the book or prepared to pay a fee to read an electronic copy is allowed to read it. It is only when third persons wish to copy and distribute the book that copyright becomes relevant. Copyright grants the holder the negative right of preventing third persons from copying and distributing the book and taking away the remuneration to which the copyright holder is entitled. In the context of copyright, it is not exclusive personal use and enjoyment of the product that is protected, but rather the right to exploit the product and this kind of use is reserved exclusively for the copyright owner; and these property rights may be justified by the labour theory without contravening the two provisos. This argument is relevant for patents, designs and trademarks as well. Drahos80 asks why labour should serve as the justification for ownership and not, for instance, intention or possession. According to Drahos,81 Locke’s82 answer to this question takes on a utilitarian form. Locke suggests that just reward for the industrious is appropriate since an individual’s labour has general social benefits. Hughes83 refers to Epstein’s84 idea that if possession is good enough to establish ownership in one’s self, it should also be good enough to possess external things. Epstein argues that the labour theory is used to assist the possession theory, but that the possession of self is the basis for title according to the labour theory. Hughes85 does not agree with Epstein’s86 analysis. Hughes87 notes that Locke88 never refers to possession of one’s body as the basis for property in one’s body. Locke simply asserts that one has property in one’s body. Hughes also sees Epstein’s argument as inaccurate, since ‘Locke’s overall scheme for property can be viewed as an alloy of the labor and tacit consent theories’.89 Locke90 implies that the common stock of mankind is increased by granting property to people who created things by their own labour.

80

Drahos P A Philosophy of Intellectual Property (1996) 43. Drahos P A Philosophy of Intellectual Property (1996) 43-44. 82 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 83 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 298. 84 Epstein R ‘Possession as the root of title’ (1979) 13 Ga LJ 1221-1243 at 1227. 85 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 298. 86 Epstein R ‘Possession as the root of title’ (1979) 13 Ga LJ 1221-1243 at 1227. 87 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 298. 88 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 89 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 298. 90 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 81

According to Hughes91 there is an obvious problem with this justification. He states that the common stock is not increased as long as the new wealth stays the property of the labourer. Yet if anyone could appropriate the new wealth, there would be no motivation for the labourer to create new wealth that might increase the common stock. One solution, as mentioned by Hughes,92 would be to rely on donations made by the labourer to the commons. However, he hastens to add that a better solution would be the one advocated by Locke himself,93 namely to introduce the money economy which would make the new wealth potentially part of the commons. Locke assumes three things when introducing the money economy: that the individual is able to appropriate more than can be used; that the individual will have the motivation to do so; and that (with the exception of waste) nothing is wrong with this. Locke finally employs tacit consent as a justification for this money economy.94 Hughes95 comes to the conclusion that Locke’s general system for property may be seen as a combination of labour and tacit consent theories. He notes, however, that it is the labour theory that is considered to be unique to Locke. Hughes utilises three propositions while justifying property in intellectual creations under Locke’s labour theory. These are: ‘first, that the production of ideas requires a person’s labor; second, that these ideas are appropriated from a “common” which is not significantly devalued by the idea’s removal; and third, that ideas can be made property without breaching the non-waste condition’.96

He notes that many people accept these propositions implicitly. However, he finds it necessary to test the power of such a justification. First, he looks at the idea that labour is needed for the production of ideas. He discusses the ‘avoidance’ view of labour, the ‘valueadded’ labour theory and the interaction between labour and the idea/expression dichotomy. 97 The ‘avoidance’ view looks at the normative proposition that labour should be rewarded with property, due to its unpleasantness. Hughes98 compares this to the instrumental argument that the reward of property should be given to motivate people to perform labour. Hughes also notes that the creation of ideas is not so pleasant an activity that people would choose it 91

Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 299. Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 299. 93 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 94 See Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 299. 95 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 300. 96 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 300. 97 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 302-314. 98 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 302-305. 92

above recreation, consequently the motivation provided by property rights is also necessary in the production of intellectual products. The so-called ‘value-added’ labour theory is discussed by Hughes99 as another interpretation of Locke’s labour justification. This corresponds with the ‘just desert’ justification of property, since it holds that a labourer deserves a reward where something which is of value to others is produced. It is this creation of social value which deserves reward rather than the labour itself. The idea/expression dichotomy pertains to the balancing of the need to reward creators with the need to have free access to ideas.100 Drahos101 also notes that Locke’s work on property may be interpreted in different ways. Drahos identifies two well-known interpretations, namely those of Tully102 and Macpherson.103 According to Tully’s104 interpretation, Locke’s105 philosophy justifies the commons and not the right to private property. However, on Macpherson’s106 interpretation, Locke provides the foundation for the justification of private property. Drahos107 notes that Locke’s108 text encourages interpretations that are in conflict. It is also shown by Drahos that there are two factors that may determine how much weight could be attributed to labour in a theory for the justification of intellectual property. These are ‘a conception of community; and the relation of that community to the intellectual commons.’109 Hughes110 takes a different approach to the interpretation of Locke’s111 theory on property. He agrees that the theory is subject to different interpretations, but he separates these into an instrumental and a normative interpretation. On an instrumental interpretation, the argument would be that society rewards labour with property since rewards must be provided in order to get labour. A normative interpretation would say that a reward should be given for labour.

99

Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 305-310. Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 310-314. 101 Drahos P A Philosophy of Intellectual Property (1996) 44. 102 Tully J A Discourse on Property: John Locke and His Adversaries (1980) 174-176. 103 Macpherson CB The Political Theory of Possessive Individualism (1962) 221. 104 Tully J A Discourse on Property: John Locke and His Adversaries (1980) 174-176. 105 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 106 Macpherson CB The Political Theory of Possessive Individualism (1962) 221. 107 Drahos P A Philosophy of Intellectual Property (1996) 44. 108 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 109 Drahos P A Philosophy of Intellectual Property (1996) 44. See Sec 4.8 on The Commons for a further discussion of the notion of the intellectual property commons. 110 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 296-297. 111 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 100

According to Hughes’112 argument, either of these interpretations may be used to justify intellectual property. He also argues that it may be applied to intellectual property without a number of the problems that tangible property would face in such an application. As Drahos113 notes, Locke114 had physical rather than intellectual property in mind when he was writing on property. Nonetheless, his theories about property are widely relied on for the justification of intellectual property. Drahos115 argues that too much emphasis is placed on the labour and mixing metaphor. He states that with physical property the mixing of labour allows persons to appropriate part of the commons for own use. On the other hand, where intellectual property is concerned, this same act of labour may prevent an intellectual property commons from emerging.116 In the 1769 English case of Millar v Taylor,117 the court decided that literary property in a published work was recognised by common law. Justification for the recognition and protection of such literary property was found in the natural-law principle that a person should reap the rewards of his own ingenuity and labour. Mostert118 states that the notion that an author’s right is founded in natural law forms a strong undercurrent in this decision. By this he means that an author’s right is not artificially granted by way of legislation. The legislation is merely supplementary to the natural law right of the author. However, from the history of copyright invention it also becomes apparent that copyright was first lobbied for by booksellers and that authors did not originally benefit from it.119 According to Mostert, modern-day intellectual property still echoes the concept that a person is entitled to that which he has created by his own exertion of intellectual effort.120 Mostert further acknowledges that the natural-law theory is not the only theory used in modern-day law to

112

Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 296-297. Drahos P A Philosophy of Intellectual Property (1996) 47. 114 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 27. 115 Drahos P A Philosophy of Intellectual Property (1996) 48. 116 See Sec 4.8 (The Commons) of this chapter for further discussion of the intellectual property commons. 117 (1976) 4 Burr 2303, 98 ER 201. 118 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 496-497. 119 See Rose M Authors and Owners. The Invention of Copyright (1993) in general. 120 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 497. 113

justify intellectual property, but that the reward and incentive theories also had an influence.121 Mostert states that ‘the natural law theory, which is justified on the interest of the individual to enjoy the fruits of his own labour, is still of particular prominence in the protection of modern-day intellectual property and especially new forms of intellectual property’.122 Hettinger agrees that ‘[p]erhaps the most powerful institution supporting property rights is that people are entitled to the fruits of their labor’.123 He explains the labour theory by stating that the products of a person’s own intelligence, effort and perseverance should belong to that person and to no one else. If the person had not created the object, it would not be there and for that reason the person owns it. This formulation of the labour theory has certain problems. Hettinger124 notes that where labour is mixed with something, it may not necessarily be gained. Nozick125 gives the example of mixing one’s tomato juice with the ocean and asks whether the tomato juice would be lost or the ocean gained. According to Hettinger,126 a more important problem relates to the question whether a labourer would be entitled to the total value of the resulting product or only to the value that his labour has added to the resulting product. He argues that these two values need to be kept separate. According to Locke,127 99 percent of an object’s value is created by human labour. Hettinger128 questions this division of value, stating that 99 percent of an apple’s value is not created by picking it, although some human labour is needed before it has value. The question for intellectual property (patents, copyright and trade secrets)129 asks what part of the value of inventions, writings and business information may be attributed to the intellectual labourer. It is clear that without such labour, the creations would not exist, but it 121

Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 499. 122 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 500. 123 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 36. 124 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 37. 125 Nozick R Anarchy, State, and Utopia (1974) 175. 126 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 37. 127 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V par 40. 128 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 37. 129 In the United States of America a trade secret is accepted as a form of intellectual property. In South Africa there has been no clear court case yet as to the position of trade secrets, but there are strong indications that it would be accepted as intellectual property. See Chap 3 (Unconventional Immaterial Property Interests) and Chap 2 (Traditional Immaterial Property Interests).

does not necessarily follow that the whole value of the creation may be attributed to the labourer.130 Hettinger131 describes intellectual products as ‘fundamentally social products’, since creators rely strongly on information that already exists in order to create something new. Firstly he argues that if a labourer should be entitled to the market value of the intellectual product he created, this value should be distributed among all the contributors. There is no logical reason why the last contributor should be entitled to the full value. Accordingly Hettinger is not convinced that the market value could be of assistance in determining the value of a creator’s contribution. Furthermore, he states that the market value is greatly dependent upon different social factors. As a consequence the argument that property rights should be conferred because of own labour would fail.132 He reaches the conclusion that it is a myth that a labourer has a natural right to receive the market value of the creation. Furthermore, Hettinger133 states that another, more plausible interpretation to the natural right theory would be that a moral right to the fruits of one’s labour could refer to the right to use personally and possess one’s own creation. This right would be protected as long as the use does not harm others. Hettinger stresses that the natural right of a creator to utilise his own creation is distinct from the right (protected by intellectual property) to sell copies of the work and to prevent others from making copies of the work. He states that ‘[t]he “right” to receive what the market will bear is a socially created privilege, and not a natural right at all’.134 According to Nozick,135 the state is an invention, but not individual rights. As such, the main purpose of the state is to protect property rights and should not interfere with them.136 Drahos137 cautions that this sort of theoretical approach may lead to the conclusion that intellectual property rights should be held in perpetuity. Therefore, in any instances where the 130

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 37. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 38. 132 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 36-37. 133 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 39-40. 134 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 39-40. 135 Nozick R Anarchy, State, and Utopia (1974) 174-178. 136 Here it has to be noted that property rights are not the only rights that the state is required to protect. The state also has the obligation to protect socio-economic rights, political rights and other fundamental rights that are as important as or more important than property rights. This entails a balancing of rights. This aspect and other constitutional aspects receive more attention in Chap 5 (Immaterial Property Interests in the Constitution). 137 Drahos P A Philosophy of Intellectual Property (1996) 53. 131

duration of intellectual property is limited by way of statute or where compulsory licenses are introduced, this would constitute ‘theft’ of the intellectual property.138 This would be a radical implication. Drahos139 also notes that one has to keep in mind that the historical tradition of natural property rights does not establish the sanctity of property rights. Property rights remain a phenomenon that is subject to regulation. The government has the power to regulate property, but must do so in line with the purposes of natural law, as Locke140 states. Drahos141 comes to the conclusion that the writings of Locke cannot serve as a basis for justifying strong intellectual property rights, since the labour mixing metaphor generates too many uncertainties and problems once it is stripped of its metaphysical context. However, it should be possible to justify intellectual property rights that may be balanced with interests of the public in the intellectual property commons or public domain; and also other fundamental rights. 425

Excludability

For some of the unconventional immaterial property interests, the labour theory does not provide an entirely satisfactory justification. In these cases the notion of excludability may be of more value to determine whether the particular interest may be described as property. According to Gray, the question whether a particular interests may be termed property hinges on whether the interest may be deemed ‘excludable’.142 ‘The notion of excludability … imports a hidden structure of rules which critically define the legal phenomenon of private property.’143 There are three bases on which a resource may be deemed non-excludable, namely physical, legal and moral. Non-excludable resources lie outside the field of private property, remaining in the commons. Physical non-excludability is described as the situation where ‘it is not possible or reasonably practicable to exclude strangers from access to the benefits of a particular resource in its existing form’.144 An example of such a situation would

138

These situations are foreseen in the constitutional property clause. Statutes such as the ones envisioned by Drahos would be allowed in South African law as long as the state complies with the provisions for deprivation and expropriation as set out in the property clause. 139 Drahos P A Philosophy of Intellectual Property (1996) 53. 140 Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chapter VIII par 120. 141 Drahos P A Philosophy of Intellectual Property (1996) 54. 142 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276. 143 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 269. 144 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 269.

be the case of Victoria Park Racing v Taylor,145 where it was not realistic to exclude persons from the spectacle on the property, for purely physical reasons. ‘Ultimately the risk of non-excludable benefit must rest with the plaintiff, and if the plaintiff fails, by such physical means as are at his disposal, to prevent unconsented visual intrusion into his land, the particular resource at stake – the “spectacle” – must be deemed nonexcludable. No one can claim “property” in a resource in relation to which it is physically unrealistic to control, consistently over prolonged periods, the access of strangers.’146

Legal non-excludability is the second form of non-excludable resources that Gray mentions. This refers to situations where legal protection is available for resources, but the owner of the resource failed to use such available means, for example contractual protection or the adoption of a particular regime of intellectual property.147 The third form of non-excludability refers to morally non-excludable resources. ‘The notion of moral non-excludability derives from the fact that there are certain resources which are simply perceived to be so central or intrinsic to constructive human coexistence that it would be severely anti-social that these resources should be removed from the commons. To propertise resources of such social vitality is contra bonos mores: the resources in question are non-excludable because it is widely recognised that undesirable or intolerable consequences would flow from allowing any one person or group of persons to control access to the benefits which they confer. Following such an appropriation, there would not, in Locke’s well known phrase, be “enough and as good left in the common for others” … It is in the definition of moral non-excludables that the law of property most closely approaches the law of human rights.’148

The exclusion of certain resources from the property concept on moral grounds recognises that there are certain human rights that are superior to any ‘property’ claims. Certain freedoms of speech, belief, association, assembly and movement are frequently viewed as values higher than the property concept: ‘Here emerges again the important point that property rights are merely prima facie rights which may be abridged or overridden by other moral concerns.’149

145

(1937) 58 CLR 479. See Chap 3 (Unconventional Immaterial Property Interests) for a brief discussion of the case. 146 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 270. 147 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 273. 148 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 280-281. 149 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 282-283.

426

Conclusions

The question of which immaterial property interests’ protection may be justified on a natural rights or labour theory greatly depends upon the interpretation that one uses. The protection of traditional immaterial property interests, namely patents, copyright, registered designs and trademarks may more easily be justified by utilising the labour theory. Since every form of intellectual creation has some element of labour connected to it, the labour theory still remains one of the strong justifications for intellectual property. However, it may be necessary to employ the personality theory together with the labour theory. In the alternative, the labour theory may be interpreted in such a way that it already incorporates the aspect of personality. Property rights justified in terms of the labour theory are not unlimited. From the construction of the labour theory it becomes apparent that property rights were never meant to be unlimited and unfettered, but meant to consider other rights and interests. Gray’s150 analysis of excludability indicates that this is a particularly important consideration for immaterial property interests and the question whether they may qualify as property. In the case of traditional immaterial property interests or intellectual property (patents, copyright, designs and trademarks) each category is created by legislation. As long as the creator of the intellectual work invokes the protection afforded by this legislation, the work will be legally excludable and as such enjoy property protection, subject to limitations. Some aspects will also not be protected as property, but remain in the public domain or commons if it is deemed to be morally non-excludable. Examples of this would be materials that are excluded from patentability. The protection of unconventional immaterial property interests, namely commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, participatory claims and nonproprietary rights are more problematic to justify in terms of the labour theory. It is apparent that some labour was expended in creating commercial information and therefore the labour theory may be used to justify property in the resource. However, this is subject to the principles of excludability. In some instances it may be physically impossible to exclude persons from accessing commercial information or there could be no legal way to exclude persons. Furthermore, it is possible that legal exclusion was possible, but not invoked by the creator of the information. 150

Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276.

Confidential information also involves an element of labour and as such the labour theory is suitable to justify protection of this interest. However, there is currently no legal recourse for creators who wish to protect these property interests from third persons, with the exception of protection for trade secrets which is a species of commercial information. Trade secrets may be protected as a legally excludable resource as long as the requirements for the protection a trade secret have been met. Digital copyright is merely a problematic aspect of copyright and should consequently be treated no different than ordinary forms of copyright. The problematic aspect of digital copyright is that copyright protection is not viewed as adequate in the online world and therefore recourse is taken to the law of contract for additional protection. Therefore the resource would still be viewed as legally excludable, since the nonexcludability problem created for copyright online is solved by contractual protection. The creation of biotechnological products also involves labour and may be justified by the labour theory. However, this may be an instance where the concept of moral nonexcludability could be particularly useful. Although some biotechnological products are legally excludable since they are protected under patent law, some forms of biotechnological products are not patentable; and this may be attributed to the fact that they are morally nonexcludable by reason of the fact that the information should remain in the commons or for reasons pertaining to the rights of other people such as privacy and bodily integrity. Traditional knowledge is a particularly troublesome form of unconventional immaterial property, since only the last person who contributed to the intellectual creation is rewarded. For example, where a pharmaceutical company patents a medicine utilising traditional knowledge to find a particularly valuable medicinal plant, only the company is rewarded with a patent. Generally, the traditional community who held the knowledge is not rewarded. Although there is a movement to include traditional knowledge under the existing forms of intellectual property in order to reward the holders of traditional knowledge, the property theories provide weak justification for the protection of traditional knowledge. It is submitted that justification could possibly rather be found in theories of distributive justice or human rights. However, the focus of this chapter falls only on property theories and their merits and shortcomings.

The protection of commercial information hinges on whether the resource may be viewed as excludable rather than whether any labour has been expended to create the particular resource. The labour theory is not really useful to justify property rights in commercial property interests. Participatory claims could possibly be justified by the labour theory; since some form of own contribution is required before a participatory claim would be recognised as property. Non-proprietary rights are not really justified by the labour theory either, since the labour theory has ownership as its object, while non-proprietary rights concern rights other than ownership. As long as some labour was involved in the creation of the intellectual resource, property in such a creation may be justified by using the labour theory. However, the labour theory is not particularly helpful in determining who should be rewarded and how much the reward should be for the labour expended. 43 431

Reward Theory The Reward Theory

According to Mostert,151 the reward theory is similar to the natural-law theory. The reward theory entails that an individual should be rewarded for his own labour and effort, but it also takes into account the benefit to society in general that flows from the individual’s effort. The reward theory is hence based on the principle that an individual should be rewarded for his creative efforts that benefit society.152 The creative individual is awarded an exclusive intellectual property right as a reward for his creative endeavours (for example a patent, copyright, trademark or design). In the case of intellectual property rights, the resources are legally excludable because legislation creates the opportunity for the creators of intellectual products to invoke protection for these products. This is qualified by moral non-excludability, but this is largely provided for in the legislation. For example, there is no copyright in ideas since this should stay in the public domain for future utilisation. At least some unconventional immaterial property interests are not legally excludable, so more attention needs to be spent determining whether these interests are physically or legally excludable and also whether there are concerns causing it to be morally non-excludable.153

151

Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 500. 152 Also see Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366. 153 See Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276 where he develops the three forms of non-excludability; namely physical, legal and moral non-excludability.

432

Views Regarding the Applicability of the Reward Theory to Immaterial Property

Hettinger154 endorses the idea that society rewards inventors and writers in the form of a legal right to exclude other persons from certain forms of use of the work. This is received in return for making the works publicly available. He states that in such instances where intellectual property brings about the disclosure of works that would otherwise have remained secret, intellectual property (specifically patents, designs and copyright) will enhance the free flow of information instead of restricting it. However, he notes that this is not the case with trade secrets. Instead of promoting the dissemination of information, the requirements for a trade secret promote secrecy. One of the main requirements for holding a trade secret is that the information must not be widely known. It becomes clear on Hettinger’s interpretation that the reward theory may be used to justify patents, designs and copyright, but is not an appropriate justification for the protection of trade secrets. Hettinger155 describes another variation of the reward theory, namely the desert theory. This theory fundamentally suggests that a labourer deserves to benefit from his labour. Although a convincing argument, the problem with this theory is that it does not indicate what the labourer would be entitled to. Hettinger notes that a property right is not the only possible reward. There is also the possibility of ‘fees, awards, acknowledgement, gratitude, praise, security, power, status and publicly financed support’.156 A property right may not be the most fitting reward in instances where the value of the right is disproportionate to the effort the labourer spent. According to Hettinger157 it would be incorrect to say that one deserves the amount proportional to the value that the labour produces. Often the value of the creation is affected by outside factors and one does not deserve to be rewarded if one is merely lucky. Rawls158 argues that even the capability to expend effort is a factor outside of a person’s control. Consequently he considers it a morally impermissible criterion to determine distribution. Hettinger159 states that the proportionality requirement may also be violated by the granting of a property right. For example, the copyright in a computer program might

154

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 36. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 41. 156 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 41. 157 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 42. 158 Raws J A Theory of Justice (1971) 104. 159 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 43. 155

earn the owner much more than the initial expenditure of creating it. Hettinger160 argues that copyright as well as a trade secret confer more benefits than what is fair according to the initial cost of creation. Munzer161 discusses the labour and desert theories in combination, under what he calls the ‘labor-desert’ theory. He discusses the initial theory, which concludes that ‘a prima facie justification exists for a set of private-property rights in a version of the state of nature’ whereas the revised theory concludes that ‘a prima facie justification exists for a somewhat different set of private-property rights in a modern society’.162 Munzer163 argues that desert still plays a role in the revised labour-desert theory, even though it is supplemented and occasionally trumped by the roles of utility and efficiency; and justice and equality. With the revised theory, property rights are not product tied and as far as wages are concerned, there exist no precise correlations for desert claims. Munzer states that ‘although commensurateness is a problem, comparative assessments of desert claims based on labor are feasible. The tasks are to identify relevant features of a worker’s performance and to arrive at a fitting recompense.’164 The revised theory places some weight on ‘the relative importance of effort, ability, persistence, industriousness, luck, time spent, achievement, the difficulty, unpleasantness, or danger of the work, and the working conditions’.165 The revised theory also emphasises the social nature of work, taking into account factors such as ‘the responsibility, leadership, or motivating capacity displayed by one worker in relation to others’.166 By use of these factors, the case of one worker or type of job may be compared to other workers or jobs and by doing so attempt to ‘arrive at some relative fitting recompense for each. This procedure does not generate absolute values, disclose the “inherent worth” of labor, or yield a “just price” for labor’.167

160

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 43. Munzer SR A Theory of Property (1990) 254-291. 162 Munzer SR A Theory of Property (1990) 255. 163 Munzer SR A Theory of Property (1990) 289-291. 164 Munzer SR A Theory of Property (1990) 290. 165 Munzer SR A Theory of Property (1990) 290. 166 Munzer SR A Theory of Property (1990) 290. 167 Munzer SR A Theory of Property (1990) 290. 161

433

Conclusions

In summary, in the case where the granting of an intellectual property right promotes dissemination of information, the reward theory may be used. The protection of patents, copyright and registered designs may be justified on the reward theory. In the case of trademarks, it does not seem as if any benefit is created for society in general except perhaps the relatively minor benefit of not confusing the trademarked product with other possibly inferior products. Therefore the reward theory may not be the best theory to justify protection of trademarks. In other words, with the exception of trademarks, it is possible to justify the traditional immaterial property interests on the basis of the reward theory. However, the theory may only serve to justify a reward, but does not give any indication as to what the reward should be and as such it does not necessarily have to take the form of a property right. The protection of all the unconventional immaterial property interests is not clearly justified by the reward theory. Commercial information encompasses some form of benefit for the persons who are willing to pay for the information, so the reward theory is somewhat successful for the justification of commercial information protection. However, the excludability issue is also of particular importance for this category of unconventional immaterial property interests. In the case of trade secrets and confidential information, the information is not made known; accordingly the reward theory has no applicability. Digital copyright may be protected under copyright and its protection may be justified by the reward theory on the same grounds. This should be the case even though digital copyright is protected by contract in addition to the copyright protection afforded by copyright law. Biotechnological products that are not liable to remain in the public domain on conceptual grounds may be protected under patent law and as such these rights may also be justified by the reward theory. In the case of traditional knowledge, the traditional community receives no reward for making their information known. For example, the person who registers the patent based on traditional knowledge receives the full reward. Munzer and Raustiala168 state that one cannot ‘rule out desert based claims to TK [traditional knowledge] by an indigenous people on conceptual grounds. But if a labor-desert principle is pressed into service for TK, its justificatory force is distinctly limited. Perhaps the originators, or the group of originators, of 168

Munzer SR & Raustiala K ‘The uneasy case for intellectual property rights in traditional knowledge’ (2009) 27 Cardozo Arts & Ent LJ 37-97 at 59-60.

the TK deserve rights in it, but they are long dead. It is hard to see why their remote descendants should deserve an IP [intellectual property] right in TK that they did not originate.’169

Accordingly, the reward theory is not a strong justification for the protection of traditional knowledge, but may play a role albeit not the most important role. 44

Incentive Theory

441

The Incentive Theory

Mostert170 states that the incentive theory takes the importance of society’s interest in intellectual works one step further. The incentive theory is based on the premise that ‘if an individual’s intellectual creation is protected by law, this will serve as an incentive for other creative individuals to produce intellectual works from which society will benefit.’171 Hettinger argues that this utilitarian argument based on incentives is the strongest and most widely utilised justification for patents, copyrights and trade secrets. He explains the incentive theory as follows: ‘According to this argument, promoting the creation of valuable intellectual works requires that intellectual labourers be granted property rights in those works. Without the copyright, patent, and trade secret property protections, adequate incentives for the creation of a socially optimal output of intellectual products would not exist.’172

The United States Constitution has specifically taken up the incentive theory in the context of patents and copyright and the so-called Intellectual Property Clause173 provides that intellectual property rights are granted ‘to promote the progress of science and the useful arts’,174 which is incentive-based.

169

Munzer SR & Raustiala K ‘The uneasy case for intellectual property rights in traditional knowledge’ (2009) 27 Cardozo Arts & Ent LJ 37-97 at 59. 170 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 500. 171 Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property - A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 500. 172 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 47. 173 The Constitution of the United States of America Article I Section 8 Clause 8. 174 The Constitution of the United States of America Article I Section 8 Clause 8.

442

Opinions on the Applicability of the Incentive Theory to Immaterial Property

This incentive-based theory focuses on the users of immaterial property and particularly intellectual property; and uses the grant of property rights to creators merely as a tool to ensure further production of intellectual creations. Hettinger175 notes that this approach is not without paradox. An intellectual property right is granted in order to ensure future intellectual products, yet the right restricts the use and availability of current intellectual creations. Hettinger176 suggests that it might be more rational to provide a different yet equally powerful incentive that does not restrict the use and availability of intellectual creations. One of the possible alternatives that he suggests is government support for intellectual creation and its public ownership. According to Hettinger,177 the crucial question in this context is to what extent intellectual property increases or restricts the availability of intellectual creation, and which is greater. He asks whether the goal could be better attained by shortening the term of patents and copyright and possibly eliminating the category of trade secrets in its entirety. The incentive provided by a patent is increasingly being used as a tool for monopoly, as Hettinger178 argues. Trade secrets may similarly act as a suppressor of competition. He concludes that it has not been proven conclusively that the incentive theory justifies the institution of intellectual property. Ghosh notes that ‘[t]he language of incentives pervades intellectual property law’.179 In some instances courts as well as commentators see the intellectual property grant as a reward for making one’s creative works public. Yet others describe it as a quid pro quo and as such an exclusive right is awarded in exchange for making new works available to the public. According to Ghosh, even natural rights theories found the rights granted in need of legal protection in order to encourage creative activities. However, Ghosh180 states that there are big problems in justifying intellectual property by means of incentive talk. The obvious problem that creation occurs even without the incentive of an intellectual property grant is seen as uninteresting by Ghosh. According to him, the more problematic aspect is that the 175

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 48. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 48-49. 177 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 49. 178 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 50. 179 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1130. 180 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1131. Also see Ghosh S ‘The intellectual property incentive: Not so natural as to warrant strong exclusivity’ (2006) 3 SCRIPT-ed 97-108 at 97-98. 176

incentive theory predicts little about the structure of intellectual property, only that it should be as strong as possible in order to create the maximum incentive. There are some limits on rights in order to protect cumulative invention, but Ghosh states that these were introduced as an afterthought and as exceptions to the rule that intellectual property rights should be as strong as possible. Another error in the incentive story, as Ghosh181 notes, lies in the premise that intellectual property protection is necessary to correct market failures which arise from the high fixed costs of creating and the low marginal cost of distributing the creation. Ghosh argues that the error is made when justifying intellectual property rights in terms of the prevention of free riding. Similarly, when intellectual property is limited in order to give the owner enough of an incentive to create the work, this mistake is made. In both of these scenarios, the costs incurred in creating the work are used to determine intellectual property rights. The problem lies in the fact that the cost structure gives little details of how intellectual property systems should be structured and how policies should be implemented. This approach overemphasises the concern of cost and neglects the role of allocation and utilisation.182 Instead of this approach, Ghosh suggests a ‘re-regulation’ of intellectual property.183 443

Conclusions

The incentive theory points out the difficulties one faces in attempting to find a balance between a sufficient amount of incentive and relatively free access to information. Where traditional immaterial property, namely patents, copyrights and registered designs are concerned, it is fairly plain that an incentive may be necessary for the creation of such useful intellectual works. However, it is uncertain whether the granting of intellectual property rights does fulfil an incentive function or whether the informational products would have been created regardless. With trademarks, again, there is no visible value for society. The creation of trademarks does not seem to need any incentive via intellectual property rights, since the incentive behind trademarks is probably to sell products or services.

181

Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1131. 182 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1132. 183 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1128. See Sec 4.7 (The Theory of Natural Monopoly) of this chapter for an explanation.

Similar to the reward theory, the incentive theory is more problematic to apply to the unconventional immaterial property interests than the traditional immaterial property interests. Regarding the category of commercial information, there may be some function of incentive, since people would be less inclined to compile information if their work may be freely appropriated. Here excludability184 is once again of importance. If there is legal protection available to the creator of the information and it is not utilised, then the resource is non-excludable. In the case of confidential information and trade secrets, there is no benefit to the community since no information is made public. It would not be useful to incentivise the production of products that has no utility for the benefit of society at large. The crux as to whether this theory is useful to justify a particular immaterial property interest hinges on its use to society and whether information is being made public or not. Digital copyright and biotechnological products may once again be treated as categories of intellectual property, under copyright and patents respectively. These products are valuable to society and some form of incentive is necessary to ensure their continued production. Once again biotechnological products would only be included under this category if they are not excluded from protection in terms of the exclusions in patent law or in light of public interests such as the public domain or a private interest such as the right to privacy, freedom of expression or bodily integrity. The same concern as with the reward theory is relevant in the case of traditional knowledge. Munzer and Raustiala note that ‘indigenous people did not need incentives in the form of modern IP rights to develop TK. From time immemorial groups of all kinds developed specialized knowledge and folklore. So the primary point of legal protection of TK now for indigenous peoples is to keep others from purloining their handiwork, which by definition is of long-standing.’185

They suggest that indigenous groups seek to control their cultural products and consequently their identity and that this may be achieved by granting the following protections to indigenous groups: ‘a claim right to its TK; a power to create rules that bind others in regard to the copying or reverse-engineering of its TK; a claim-right to receive just compensation for granting access to its TK; a power to seek and a claim-right to have a wide range of remedies for others’ 184

Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. Munzer SR & Raustiala K ‘The uneasy case for intellectual property rights in traditional knowledge’ (2009) 27 Cardozo Arts & Ent LJ 37-97 at 73.

185

failure to pay compensation or obtain informed consent; and lastly powers to modify otherwise applicable laws of patent and copyright’.186

The incentive theory is even less applicable for the justification of traditional knowledge protection than the reward theory. 45

Spiritual Theories

A personality theory has been derived from the writings of Kant187 and Hegel,188 namely that an author’s personality, spirit and will cannot be free unless the author is also the owner of the work created. According to the theory, once a property right is granted, the author’s will is unrestricted because he/she fully controls their spirit and personality. As a result a property right in a creation must be granted before a creator can be fully in control of their spirit and personality.189 According to Drahos, the purpose of Hegel’s190 writings is ‘to reveal the role and effects that community play in the evolution of individual freedom’.191 Drahos examines ‘Hegel’s192 explanation of the role of property in those systems that he identifies as being active in the development of the individual will and the state.’193 Drahos194 asks whether Hegel’s analysis of property as a phenomenon of system offers any insights into the phenomenon of intellectual property. According to Drahos’195 interpretation of Hegel’s writings on property, intellectual property may have negative effects on community. Drahos196 notes that Hegel’s arguments concerning property are not widely followed in legal philosophy. One interpretation of Hegel’s writings suggest that a distinctive personality theory of property may be derived, which may be contrasted with Locke’s labour theory of property. Drahos197 argues that it would be possible to make the link between property rights and personality in the case of copyright, which encompasses literary, artistic and dramatic works. In such instances the link between personality and ownership of the creative work looks strong. Drahos cautions against the strategy of using Hegel’s personality theory to 186

Munzer SR & Raustiala K ‘The uneasy case for intellectual property rights in traditional knowledge’ (2009) 27 Cardozo Arts & Ent LJ 37-97 at 73. 187 Kant I Critique of Practical Reason and Other Works on the Theory of Ethics (1788, trans Abbott TK 1898). 188 Hegel GWF Philosophy of Right (1821 trans Knox TM 1952) par 41-71. 189 See Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 4. 190 Hegel GWF Philosophy of Right (1821 trans Knox TM 1952) par 10. 191 Drahos P A Philosophy of Intellectual Property (1996) 73. 192 Hegel GWF Philosophy of Right (1821 trans Knox TM 1952) par 10. 193 Drahos P A Philosophy of Intellectual Property (1996) 73. 194 Drahos P A Philosophy of Intellectual Property (1996) 73. 195 Drahos P A Philosophy of Intellectual Property (1996) 74. 196 Drahos P A Philosophy of Intellectual Property (1996) 74. 197 Drahos P A Philosophy of Intellectual Property (1996) 74-75.

justify (at least) those intellectual property rights that involve the personality creatively. He offers two distinct reasons why such an approach would not be workable. In the first instance, he questions whether the property theories of Locke and Hegel should be contrasted by reference to labour and personality. On Drahos’198 interpretation, Locke199 sees property as serving the personality, while Hegel views property as the ‘embodiment of personality’.200 The second reason Drahos201 offers, is that an aspect of Hegel’s writings that is often overlooked is that Hegel saw a contradiction in individual property ownership. Hettinger202 argues that ‘[p]rivate property can be justified as a means to sovereignty’. By this he means that in order to achieve individual autonomy, a person must have dominion over certain objects. However, copyrights and patents are not important or necessary to achieve these goals. Here a creator’s right to use his invention must once again be distinguished from the right to prevent others from using the invention. If a person were prevented from using his own invention, this would certainly threaten his sovereignty, but the right to exclude others would not affect such sovereignty. According to Hughes,203 the most powerful alternative to a labour theory for the justification of intellectual property would be a personality justification. Such a justification holds that ‘property provides a unique or especially suitable mechanism for self-actualization, for personal expression, and for dignity and recognition as an individual person’. Radin204 describes the ‘personhood perspective’ by saying a person has to have control over certain resources in the external environment in order to be a person. This control, she argues, needs to be fulfilled by property rights. Whether an intellectual property interest may be justified by the personality theory or not, depends on how central an interest is to the fulfilment of one’s personhood. The personhood perspective that Radin205 describes starts from the premise that certain items of property are closer to personhood, for example a wedding ring or a house. A wedding ring at a jeweller’s shop would be replaceable, while the ring would not be replaceable if it were lost by a person who wears the wedding ring. Radin206 distinguishes 198

Drahos P A Philosophy of Intellectual Property (1996) 75. Locke J Second Treatise of Government (1690 Gough GW (ed) 1976) Chap V. 200 Hegel GWF Philosophy of Right (1821 trans Knox TM 1952) par 51. 201 Drahos P A Philosophy of Intellectual Property (1996) 75. 202 Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 45. 203 Hughes J ‘The philosophy of intellectual property’ (1988) 77 Geo LJ 287-366 at 330. 204 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015. 205 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 959-960. 206 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 960. 199

between the two scenarios by referring to the one as fungible property and the other as personal property. She claims that there would be a stronger moral claim for the protection of property for personhood than fungible property.207 The basic premise is that some forms of property are more worthy of protection than others and should consequently enjoy more stringent legal protection. Radin208 creates the picture of a continuum with personal property on the one end and fungible property at the other end. Property closer to the ‘fungible’ end could more easily be overridden than property at the personal side which has a stronger entitlement, even though such a split between the two forms of property would not work in all situations. Radin209 uses the example of a home since this is closely connected with liberty, privacy and freedom of association. Furthermore she identifies the area of ‘takings’210 as a difficult area yet one where the personality theory could be applied successfully. Courts are more likely to award compensation for property that has a personal aspect than for the taking of property that constitutes merely monetary loss. Finally, Radin211 explores the interaction between fungible property and interests other than property interests such as freedom of expression, concluding that such interests could override an interest in fungible property more easily than if the property interest were personal. If both interests have a personal aspect, then it is more difficult to weigh up the interests. Therefore, in the constitutional context, one would have to examine the specific type of property to determine whether it has an element of personality. If not, then another constitutional right such as the right to education or freedom of expression would more easily outweigh the property interest. If it does have a personal aspect, such as is perhaps the case with copyright, then a court would have to weigh up the two more equal rights to determine which one should ultimately be protected more stringently than the other. The protection of intellectual property categories, namely patents, copyright, designs and trademarks, may be justified by the spiritual theories insofar as they serve to secure a sphere of personal liberty. These theories are viewed as one of the strongest justifications for the protection of intellectual property. Copyright appears to be the only category which is closely 207

Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 978. Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 986-987. 209 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 991-1002. 210 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 1002-1008. 211 Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015 at 1008-1013. 208

linked to the personality, as envisioned by Radin’s personality theory. Once again, these theories are not that easy to apply to the unconventional immaterial property interests. Digital copyright and biotechnological products may be justified by the spiritual theories, similar to the categories of copyright and patents. The protection of commercial information, confidential information and trade secrets cannot be justified by the spiritual theories since they are not instrumental in achieving individual autonomy. There is no need to consider commercial property, participatory claims or non-proprietary rights in terms of the spiritual theories. Traditional knowledge protection could possibly be justified by the personality theory since the knowledge is so closely connected to the cultural and spiritual life of the holders of the traditional knowledge. This theory could at least be a point of departure for developing a theory on why traditional knowledge should enjoy any form of property protection. 46

Economic Theory

Another justification for awarding property rights in intellectual creation is a theory founded on economic grounds. Drahos212 states that intellectual property rights are very closely related to markets. Intellectual property rights are the mechanisms by which markets in information are created. He also notes that economic theory is an important resource in justifying intellectual property, but has a very wide scope and is diverse in approaches. In the case of intellectual property, a market failure arises due to the high initial cost of creation and marginal distribution costs of intellectual products. The basic economic theory for intellectual property entails that an economic incentive to create is provided in order to overcome market failure. Ciro213 states that the argument is self-fulfilling. In order to provide the incentive to create, the author of a work must be compensated by awarding him a property right. Ciro criticises this theory, arguing that there is no proof that only property rights can provide this incentive. He states that intellectual works are created even in the absence of property rights and that the creators are often not the owners of the property rights. Furthermore, even if an incentive is provided, it is uncertain how much compensation is required in order to ensure an incentive. In the United States, there have been attempts to extend the copyright term to life of the

212 213

Drahos P A Philosophy of Intellectual Property (1996) 6. Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 4.

author plus 120 years in an attempt to cover the expiration of copyright on the Disney collection.214 In respect of resource allocation, property laws are applied most comfortably in the context of tangible property because of its physical scarcity. Ciro215 states that the interaction between law and economics is embodied in the system of private property. Property laws are essentially used for the allocation of scarce resources among competing needs. The economic argument would be that suppliers would refrain from producing and supplying to the market if there were no specific property protection, even with potentially high prices and profits. The argument is based on the free rider principle that opportunists should not be allowed to reap where they have not sown. According to this argument, there would be no incentive to invest skill and resources to create if the free rider was allowed carte blanche. Ciro216 makes the argument in support of free riders, namely that they provide much needed competition, in lieu of which the marketplace would be firmly in the grip of a monopolist. According to Ciro, this is also the reason why the state imposes limitations on the duration of intellectual property monopolies and allows limited public access to the works. Ciro217 points out that unlike tangible property, intellectual property is not inherently scarce, so the market failure justification cannot be utilised to support intellectual property arguments. In the case of intellectual creation, their scarcity is created by way of legislation protecting intellectual creation as property. Market value of intellectual creations is not only dependent upon market demand, but also artificial scarcity imposed by property legislation. The reason why economists view the property system as the only viable option for the protection of intellectual property involves a market instrumental justification, according to Ciro.218 This justification holds that it is costly to produce intellectual creations and if property is not granted in return, some of the creations may not be produced. This argument is a self-fulfilling prophecy. As Ciro states:

214

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 4. Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 5-7. 216 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 5. Compare Boyle J ‘Symposium: Taking stock: The law and economics of intellectual property rights: Cruel, mean, or lavish? Economic analysis, price discrimination and digital intellectual property’ (2000) 53 Vand LR 2007-2039. 217 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 5. 218 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 5. 215

‘Intellectual property laws produce an artificial restriction that creates the scarcity problem and are then used to allocate scarce resources through a complex web of private property rights controlled by intellectual property owners.’219

Boyle explains the basic economic theory as applied to intellectual property as follows: ‘Information is a public good, non-excludable and non-rival. It is hard to stop one unit from satisfying an infinite number of users at zero or close to zero marginal cost. Under such conditions, producers of information and information goods will have inadequate incentives, leading to under-production. If I could create a useful digital restaurant guide at great expense but can sell only one copy before my whole market disappears, then I will hardly make the effort in the first place. The solution to this public goods problem is intellectual property. By creating a limited monopoly called an intellectual property right, we can give producers an adequate incentive to create.’220

He states that this argument has been used to expand the reach of intellectual property. Especially in the area of the internet it is argued that the goods become even less rivalrous and less excludable and for this reason intellectual property protection should be stronger. However, he hastens to add that the argument is not as straightforward as it looks, either at a theoretical or an empirical level, since an intellectual property right entails a monopoly. In economic terms, monopolies are usually seen as imposing losses. This might lead to the expectancy that the benefits of encouraging innovation would be at least offset by costs of the monopoly: ‘It seems to suggest that the idea of a perfect market in information is internally contradictory even in theory.’221 As Ciro222 also notes, a similarly convincing market based argument may be made against granting property rights in intellectual creation. By granting intellectual property rights, monopoly rights are in actual fact being awarded and this may be seen as anti-competitive. Ciro argues that it is market value rather than market failure that may be used to explain the creation and protection of intellectual property. This is reflected in the way multinational corporations seek extensions for the duration of copyright on their intellectual property. This 219

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 6. Boyle J ‘Symposium: Taking stock: The law and economics of intellectual property rights: Cruel, mean, or lavish? Economic analysis, price discrimination and digital intellectual property’ (2000) 53 Vand LR 2007-2039 at 2012. 221 Boyle J ‘Symposium: Taking stock: The law and economics of intellectual property rights: Cruel, mean, or lavish? Economic analysis, price discrimination and digital intellectual property’ (2000) 53 Vand LR 2007-2039 at 2012-2013. 222 Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 6. 220

is motivated purely by financial reasons. Monopolists are merely eager to maintain exclusive control over their streams of revenue.223 It becomes apparent that different versions of an economic theory may be utilised. The most basic version of the economic theory is that a person would not be motivated to expend their revenue and time if there were not some reward in the form of a property right. This theory still leaves open the question of how much the reward should be. Since basically all forms of immaterial property are created by means of some form of financial investment, this theory may be applied to the traditional as well as some of the unconventional immaterial property interests. The intellectual property categories of patents, copyright, designs and trademarks have high initial costs, but afterwards the products may be produced and distributed at very low cost. Without some form of protection, creators and investors would not be willing to spend money and effort on creating new intellectual products. Consequently the economic theory does convince in the area of intellectual property, although it is not established that a property right is necessarily the only way to provide compensation or incentive. The protection of digital copyright and biotechnological products may be justified by the economic theory, similar to copyright and patents. Commercial information, confidential information and trade secret protection may also be justified by the economic theory. There is no need to justify commercial property, participatory claims or non-proprietary rights in terms of the economic theory. Traditional knowledge may be justified in terms of the economic theory for purposes of property protection in private law. Traditional knowledge protection is economically valuable and is a physically non-excludable resource. Its use is non-rivalrous and this is similar to the existing categories of intellectual property. This is most likely the reason why the South African legislature has opted to protect traditional knowledge as intellectual property in terms of the Traditional Knowledge Bill of 2007.224 47

Theory of Natural Monopoly

Ghosh225 developed a theory of natural monopoly226 as an alternative metaphor for intellectual property. According to Ghosh, the foundation for intellectual property has always 223

Ciro T ‘The scarcity of intellectual property’ (2005) 1 JILT 1-21 at 6. Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa). 225 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1128. 224

been property. Intellectual property theory often justifies the exclusive rights granted by reference to the high fixed costs of production and the small marginal distribution cost of the subject matter of patents, copyright and trademarks. Ghosh states that this cost structure also justifies natural monopolies and their regulation. As such, he argues, the natural monopoly metaphor may also be used to ‘map the domain of regulation onto several doctrinal elements of patent, copyright, and trademark law.227 However, the deregulation of traditional natural monopolies leads to the strengthening of private rights, which is not the case with intellectual property. When criticisms of natural monopoly are applied to intellectual property, the exclusivity of patents, copyrights and trademarks are challenged, which allows the development of intellectual property law to be more oriented towards the public interest. Ghosh argues that the purpose of a deregulation of intellectual property would be freedom from the stranglehold of rights owners on users, which hampers creative processes. The process entails a ‘re-regulation’ in terms of which the regulation structures are transformed rather than extinguished. According to Ghosh,228 there are compelling reasons for scepticism of the treatment of intellectual property as a form of natural monopoly. However, there are useful lessons that may be learnt from the criticisms of natural monopoly. These lessons may successfully be applied in the ‘re-regulation’ of intellectual property. Ghosh229 identifies three types of criticisms of natural monopoly. The first questions assumptions about information and cost. The second criticism explores the idea that decreased government regulation would be possible if there were potential competition. In the third instance, that the politics and economics of regulation should take into account the political reform and recognition of

226

Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1138-1139: ‘A natural monopoly arises when the average costs of producing a product or service declines as more of the product or service is supplied to the market. Because of declining average costs, it is more efficient from the perspective of lowering the average cost of production to have one firm service the market rather than duplicate expenditures. Average costs are falling either because there are huge fixed costs to production or because the costs of producing an additional unit of the product or service are negligible.’ See Berg SV & Tschirhart J Natural Monopoly Regulation: Principles and Practice (1988) 12-24 and Spulber DF Regulation and Markets (1989) 513-514. 227 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1128. 228 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1150. 229 Ghosh S ‘Decoding and recoding natural monopoly, deregulation, and intellectual property’ (2008) 2008 U Ill LR 1125-1183 at 1154. Also see Ghosh S ‘The intellectual property incentive: Not so natural as to warrant strong exclusivity’ (2006) 3 SCRIPT-ed 97-108 at 101.

consumer interests. Ghosh230 argues that the incentive theory justification for intellectual property is based on the same justifications for a natural monopoly. As such, the same scrutiny that is applied to natural monopoly should also be applied to intellectual property. Ghosh231 states that the processes of creating and inventing are costly and time-consuming. There are high fixed costs involved in the processes of inventing, yet once a new work is made public it is relatively costless to copy the work. For example, once the preliminary work and safety testing for a medicine has been done, it is relatively inexpensive to manufacture the actual medicine for the commercial market. This situation of high fixed costs and low distribution costs is frequently utilised for the justification of intellectual property exclusivity. This justification is similar to that of a natural monopoly. This combination of high fixed costs and low distribution costs would drive the market down to zero, or so it is argued. As a consequence, artificial scarcity needs to be created by way of exclusivity in order to avoid competition that leads to destruction of the market. Ghosh notes that ‘[n]atural monopoly-like justifications for intellectual property are most prevalent in the controversial areas of database protection, computer software, and biotechnology’.232 When applying the criticisms of natural monopoly to intellectual property, the first problem is determining the right amount of incentive to ensure continued production of creations. The tendency is to make rights as strong as possible. Ghosh233 proposes ‘re-regulation’ of intellectual property as a solution to this problem. This implies that intellectual property should be seen as a system of regulation instead of a system of property. Regulation and property are not opposites, but by acknowledging intellectual property as a regulatory system, an understanding of intellectual property law as public law may be developed. The deregulation of intellectual property rights does not merely imply the expansion of private rights, but the loosening of exclusionary rights. Such a deregulation of intellectual property rights requires that the idea of strong property rights shifts more towards a regime that recognises limits on exclusion.

230

Ghosh S ‘Decoding and recoding Ill LR 1125-1183 at 1157. 231 Ghosh S ‘Decoding and recoding Ill LR 1125-1183 at 1157-1158. 232 Ghosh S ‘Decoding and recoding Ill LR 1125-1183 at 1159. 233 Ghosh S ‘Decoding and recoding Ill LR 1125-1183 at 1160-1166.

natural monopoly, deregulation, and intellectual property’ (2008) 2008 U natural monopoly, deregulation, and intellectual property’ (2008) 2008 U natural monopoly, deregulation, and intellectual property’ (2008) 2008 U natural monopoly, deregulation, and intellectual property’ (2008) 2008 U

This theory is not so much a theory for the justification of immaterial property rights, but a proposal for how intellectual property products and other creative products may be regulated in order to make provision for other rights and interests as well, for example the public domain or intellectual property commons and private interests such as the right to freedom of expression, the right to education or the right to bodily integrity. This theory was specifically developed with the intellectual property categories of patents, copyright, designs, trademarks and trade secrets234 in mind. However, as Ghosh notes, it is also particularly relevant for digital copyright and biotechnological products. It should also be possible to apply the theory to commercial information and confidential information. The theory of natural monopoly currently has no applicability to the category of traditional knowledge. However, once traditional knowledge receives protection under the existing categories of intellectual property or even as a sui generis form of intellectual property, it may be possible to apply the theory of natural monopoly to traditional knowledge as well. 48 481

The Commons Introduction

Macmillan235 states that an important part of intellectual property scholarship involves discussion about the interaction of intellectual property with the public domain. This important debate has been driven by concerns about the imperialistic tendencies of intellectual property that is extending to include new types of intellectual activity as well as extending existing intellectual property rights.236 In this section three important questions need to be addressed. Firstly, where did the notion of a commons originate and why is it necessary to apply the concept to intellectual property? Secondly, what exactly is the commons (or the public domain, as it is more often termed when referring to intellectual property)? Finally, how should the intellectual property commons develop further? In her analysis of the relationship between intellectual property and the public domain, Macmillan237 states that the concept of the public domain in intellectual space depends 234

In American law, trade secrets are regarded as a category of intellectual property. Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117. 236 Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117 at 98-99. 237 Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117 at 99. 235

profoundly on Roman law concepts that govern physical space. These concepts acknowledged different non-exclusive, but not necessarily public, uses of property. These concepts were first explored by Rose.238 The concepts of res communes and res publicae have been used most often in the debate about intellectual property and the public domain. Res communes refer to things which are by their nature incapable of being owned, whilst res publicae refer to things which are open to the public due to the working of a law. Macmillan infers that these concepts have translated to the concepts of the commons and the public domain in the current debate about intellectual property. However, these two concepts are often confused or used interchangeably, which has not helped to simplify the interaction between intellectual property and the intellectual public space.239 Macmillan240 argues that it is not the purpose of intellectual property to exclude the whole of the intellectual property commons. Intellectual property excludes certain parts of the intellectual space from being exclusively owned. However, it is not always clear whether these parts are excluded because they are incapable of being owned by virtue of their legal nature241 or whether they should be kept in the public domain as a matter of policy.242 For example, certain innovations are not patentable since they are excluded by statute. Examples would be discoveries and scientific theories. Copyright does not protect ideas, but this distinction between unprotected ideas and protected expressions is vague and not applied consistently in courts.243 This interaction between property and the commons has been discussed by various persons from different academic fields. 482

The Tangible Commons

In his 1968 article on the commons, Hardin244 (a natural scientist) explains that the population growth problem is leading to the commons being destroyed. His article refers to the tangible commons of land, water and other natural resources. He proposes that there is no 238

See Rose CM ‘Romans, roads and romantic creators: Traditions of public property in the information age’ (2003) 66 L & CP 89-110 at 89. 239 Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117 at 99-100. 240 Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117 at 100-101. 241 This relates to what Gray would refer to as legal non-excludability: Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. 242 Gray terms this moral non-excludability: Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307. 243 Macmillan F ‘Altering the contours of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 98-117 at 100-101. 244 Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248.

technical solution to the population problem, but that the solution lies in a fundamental extension in morality.245 Regarding the commons, he explains that the commons is being over-used and destroyed. Due to the population growth, the commons will no longer be able to accommodate the needs of all entities. The commons is being eroded by persons taking from the commons, for example herdsmen grazing cattle on a common pasture. The commons is also being destroyed by people putting things into it, for example pollution into a river.246 Hardin then proceeds to propose different ways in which the population growth may be regulated in order to spare the commons. However, he does not make use of the usual private property arguments in order to facilitate the conservation of the commons, but instead refers to wealth maximization and morality.247 Ghosh248 suggests that this solution of morality is ‘perhaps not inapposite to an appeal to property rights, which is a particular type of “social arrangement”’.249 He states that this morality approach may be the answer to the question of how the notions of distributive justice should influence the way intellectual property law manages the intellectual property commons. However, Ghosh notes that one must distinguish intellectual property from tangible property, which is the subject of Hardin’s250 article. During use of the tangible property commons, actions such as grazing and polluting can lead to the commons being overused. In the case of intellectual property, on the other hand, use of the commons entails creative and innovative processes that in fact expand the commons instead of overusing it. This assumes that the resource remains in the commons after it is used in the creation of an intellectual property work and is not propertised and consequently removed from the commons. Ghosh further defines ‘distributive justice’ simply as the way in which resources should be allocated among individuals in society, since he finds Hardin’s251 notion of distributive justice (or morality, as Hardin term it) strained. Ghosh questions the reasons why the metaphor of the commons is so important in intellectual property debates when the rationale of intellectual property differs so radically from the concept of the ‘tragedy of the commons’ (as borrowed from Hardin). Ghosh subsequently proposes that a revision of the 245

Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248 at 1243. Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248 at 1244-1245. 247 Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248 at 1245-1248. 248 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890. 249 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 857. 250 Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248. 251 Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248. 246

notion of the commons is necessary in order to afford room for the rationale behind intellectual property.252 Rose describes the ‘tragedy of the commons’ as follows: ‘When things are left open to the public, they are thought to be wasted by overuse or underuse. No one wishes to invest in something that may be taken from him tomorrow, and no one knows whom to approach to make exchanges. All resort to snatching up what is available for “capture” today, leaving behind a wasteland. From this perspective, “public property” is an oxymoron: things left open to the public are not property at all, but rather its antithesis.’253

Rose254 notes that the modern doctrines do not explain why and under which circumstances property rights may appear to vest in the public at large or what she calls the ‘unorganised public’. Instead, she turns to the older doctrines of ‘public trust’, ‘prescription’ and ‘custom’ in order to find some insights into the nature of ‘inherently public property’. She notes that ‘service to commerce was a central factor in defining as “public” such roads and waterways. Used in commerce, some property had qualities akin to infinite “returns to scale”. Consequently, here the commons was not tragic, but comedic, in the classical sense of a story with a happy outcome.’255 This is the case not only because it may infinitely expand health, but also because it could socialise the members of an otherwise atomised society.256 483

Utilitarianism and Distributive Justice

In what he terms ‘the fable of the commons’, Ghosh257 explains that if a person using the commons of land sees a new piece of land, that person as well as all the other users of the commons want to arrive at the land first. When they arrive, however, they still find the same tensions of overuse with which to struggle. By contrast, intellectual property is about the voyage and ultimately about exploring new areas in order to increase the existing commons. 252

Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 858-861. 253 Rose CM ‘The comedy of the commons: Custom, commerce, and inherently public property’ (1986) 53 U Chi LR 711-781 at 712. 254 Rose CM ‘The comedy of the commons: Custom, commerce, and inherently public property’ (1986) 53 U Chi LR 711-781 at 722. 255 Rose CM ‘The comedy of the commons: Custom, commerce, and inherently public property’ (1986) 53 U Chi LR 711-781 at 723. 256 See Rose CM ‘The comedy of the commons: Custom, commerce, and inherently public property’ (1986) 53 U Chi LR 711-781 at 723-749 for a full discussion of the older doctrines of ‘public trust’, ‘prescription’ and ‘custom’. 257 Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 861.

Yet there are also similarities between the intellectual property commons and the traditional commons, in the fact that both emphasise the dilemma of resource management. 258 Also, intellectual property is similar to real property (tangible property) due to the reality that both these forms create an arrangement of rights that determine which uses of a resource are allowed and which are not.259 Ghosh260 further discusses how the commons might be governed through goals of distributive justice. He states that his ‘fable of the commons’ could make use of technical, legal and social arrangements in order to regulate the creative and inventive processes. There are two possible normative principles that could guide the process of creating a regulatory system, namely ‘utilitarianism’ and ‘distributive justice’. These correspond to Hardin’s261 notions of ‘welfare maximization’ and ‘morality’. Ghosh argues that these two notions must be used together, as alone they do not suffice. However, he is of the opinion that Hardin’s jump to morality was somewhat simplistic. He suggests that merely defining property rights appropriately and enforcing them accordingly can possibly solve the problem of resource allocation.262 ‘Distributive justice’ as a normative guide should be applied instead of wealth maximization when defining these property rights. The problems standing in the way of the application of wealth maximization are the problem of progress and the problem of markets respectively, as Ghosh argues. By applying wealth maximization, it can only be determined that the commons should grow in line with progress, but not how that growth should take place. The basic problem of who should benefit from the progress is not answered by wealth maximization. By merely allocating the resource to the highest bidder, notions of justice are not taken into account. Somewhere, ‘distributive justice’ also needs to feature in designing a system to regulate the intellectual commons. Ghosh proposes that intellectual property should be

258

Ghosh S ‘The fable of the commons: Exclusivity and the construction (2007) 40 UC Davis LR 855-890 at 861. 259 Ghosh S ‘The fable of the commons: Exclusivity and the construction (2007) 40 UC Davis LR 855-890 at 863. 260 Ghosh S ‘The fable of the commons: Exclusivity and the construction (2007) 40 UC Davis LR 855-890. 261 Hardin G ‘The tragedy of the commons’ (1968) 162 Science 1243-1248. 262 Ghosh S ‘The fable of the commons: Exclusivity and the construction (2007) 40 UC Davis LR 855-890 at 864-866.

of intellectual property markets’ of intellectual property markets’ of intellectual property markets’ of intellectual property markets’

considered in terms of three distributional concerns, namely distribution among creators; distribution among creators and users; and intergenerational distribution.263 484

Non-excludability

Gray’s264 explanation of ‘excludability’ sets out three grounds on which a resource may be deemed non-excludable, namely physical, legal and moral. Physical non-excludability entails that it is impossible or impractical for an owner of a particular resource to exclude third persons from the resource and for this reason the resource may not be termed property. Legal non-excludability envisions the instance where there was some form of legal protection available to the owner of a resource, but that he failed to utilise it and for this reason the courts will not protect the resource as property. The third form of non-excludability, which is the most important for this section of the chapter, relates to moral non-excludability. This refers to the situation where it is so important for a particular resource to remain in the commons, that it would be contra bonos mores to remove it from the commons by propertising it. The reason why these resources are non-excludable is because ‘undesirable or intolerable consequences would flow from allowing any one person or group of persons to control access to the benefits which they confer’.265 Where legislation is changed to include resources which were previously in the commons, this threatens the existence and quality of the commons. 485

The Second Enclosure and the Public Domain

In his article on the second enclosure movement and the public domain, Boyle266 describes the enclosure of common land, where the argument had been that private property would be better conserved by the owner than a commons would by the users sharing a resource. 267 He states that this is relevant to intellectual property, since there is a second enclosure movement taking place at the moment. He calls this ‘the enclosure of the intangible commons of the mind’.268 Things that were formerly regarded as being either common property or 263

Ghosh S ‘The fable of the commons: Exclusivity and the construction of intellectual property markets’ (2007) 40 UC Davis LR 855-890 at 866-870. 264 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276. 265 Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 280-281. 266 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008). 267 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 33-36. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008). 268 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 36-37. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008).

uncommodifiable, are being added to the property regime. This is done by granting new rights or extending existing rights. He takes the example of the human genome to illustrate this tendency. He states that supporters of the enclosure movement would reason that there should be patents granted to cover human genes. Only with the guarantee of property rights would there be investment in the production of drugs and gene therapies. In other words: private property saves lives. People opposing the enclosure movement, by contrast, would argue that the human genome is part of the ‘common heritage of mankind’ and that it should not and cannot be owned. Also, by the state handing monopolies to only a few entities, innovation may be slowed down.269 The most interesting example of inconsistent application of the ‘common heritage of mankind’ concept is in Moore v Regents of University of California,270 a California Supreme Court case where it was decided that Moore did not have a property interest in the cells derived from his spleen. The court found that the process in terms of which researchers share cell lines would be slowed down if private property rights were to be given to ‘sources’. However, the doctors who invented the billion-dollar cell line from Moore’s spleen were granted a patent. This was justified by the court on the strength that property rights in the latter case are a necessary incentive to encourage research.271 Boyle adds that the human genome is not the only area being enclosed. The expansion of intellectual property rights has included business method patents and trademark antidilution rulings in the American courts. The former limits imposed on intellectual property by the public domain are steadily being eroded. The point of departure regarding intellectual property has always been that intellectual property rights are the exception and not the norm. The point of departure should still be that ideas and facts should not be propertised, but should remain in the public domain.272 This concept has recently been questioned extensively. Patents are being stretched to cover ideas that were formerly not patentable. There have also been attempts to grant property rights over mere compilations of facts, which Boyle argues is more troubling. One of the 269

Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 37. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008). 270 51 Cal 3d 12; 271 Cal Rptr 146; 793 P 2d 479 1991. 271 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 37-38. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008). 272 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 38-39. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008).

goals of intellectual property has always been to protect the commons to ensure access to materials. More recently the goal of intellectual property seems to be that there should be as much private property as possible. The assumption appears to be that any commons is wasteful or uneconomical. The ultimate question posed by Boyle is: ‘How much of the intangible commons must we enclose?’273 486

The Public Domain or Intangible Commons

MacQueen and Waelde274 define the importance of the concept of the ‘public domain’ in the cultural and scientific context as ‘a body of knowledge and information to which there is general access for use for purposes such as education (formal and informal) and the further development of knowledge, understanding, creativity and inventiveness’.275 It is important to have a well-stocked public domain in order for innovation to continue in the cultural as well as scientific areas. This is at least as important as the incentive created by intellectual property’s reward of exclusivity and financial reward. Both of these methods have the same goal, namely to encourage and enable ongoing innovation. Therefore it is at least as important to define the public domain and determine what is required in order to guarantee its continued existence as it is to promote the growth and enforcement of intellectual property rights.276 MacQueen and Waelde277 depart from the point where the public domain is perceived by lawyers as being the opposite of property. However, they caution that this has the potential to be a serious over-simplification. They warn that ‘free use’ does not automatically mean ‘use for free’.278 ‘Free is often better understood as in free speech (or indeed, freedom) rather than as in free beer.’279 Boyle280 explores this concept of ‘free.’ He asks whether ‘free’ means: 273

Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 39-40. Also see Boyle J The Public Domain: Enclosing the Commons of the Mind (2008). 274 MacQueen H & Waelde C ‘Introduction: The many faces of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) xi-xviii. 275 MacQueen H & Waelde C ‘Introduction: The many faces of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) xi-xviii at xi. 276 MacQueen H & Waelde C ‘Introduction: The many faces of the public domain’ in Waelde C & MacQueen H Intellectual Property – The Many Faces of the Public Domain (2007) xi-xviii at xii. 277 MacQueen H & Waelde C (eds) ‘Introduction: The many faces of the public domain’ in Waelde C & MacQueen H Intellectual Property – The Many Faces of the Public Domain (2007). 278 MacQueen H & Waelde C ‘Introduction: The many faces of the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) xi-xviii at xiii-xiv. 279 As put by Richard Stalman – see the GNU website at http:/www.gnu.org/philosophy/free-sw.html (last visited 21 July 2010). 280 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 62.

‘Free trade in expression and innovation as opposed to monopoly? Free access to expression and innovation, as opposed to access for pay? Or free to innovation and expression, in the sense of not being subject to the right of another person to pick and choose who is given access, even if all have to pay some flat fee? Or is it common ownership and control that we seek, including the communal right to forbid certain kinds of uses of the shared resources?’281

What the public domain means depends on ‘why we care about the public domain, on what vision of freedom or creativity we think the public domain stands for, and what danger it protects against’.282 The answer is that there is not only one public domain, but different versions thereof. The ‘commons’ has frequently been used to refer to origins of creation that are outside of the intellectual property regime.283 Cahir284 explores the question whether the public domain is a right or a liberty. He maintains that if the public domain can be described as a right, this will strengthen its position substantially. If the public at large have vested rights in the public domain, this strengthens the arguments brought against limiting the public domain by means of private contracts.285 According to the structure of rights as set out by Hohfeld,286 every right has a corresponding duty. A privilege, on the other hand, imposes no correlative duty and as such there is no right. If this analysis is applied to the public domain, there has to be a corresponding duty on some person in order for there to be a right to the public domain. This would lead to the conclusion that individuals have merely a privilege to use objects in the public domain. When examining the statutory exemptions from intellectual property infringement, it appears that these are also privileges and not rights.287

281

Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 62. 282 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 62. 283 Boyle J ‘The second enclosure movement and the construction of the public domain’ (2003) 66 L & CP 3374 at 62. See Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276 on excludability and specifically moral non-excludability. 284 Cahir J ‘The public domain: Right or liberty?’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 35-52. 285 Cahir J ‘The public domain: Right or liberty?’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 35-52 at 35. 286 Published in two articles: Hohfeld W ‘Some fundamental legal conceptions as applied in judicial reasoning’ (1913) 23 Yale LJ 16-59 and Hohfeld W ‘Fundamental legal conceptions as applied in judicial reasoning’ (1916) 26 Yale LJ 710-770. 287 Cahir J ‘The public domain: Right or liberty?’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 35-52 at 39-40.

487

The Public Domain in the Context of Copyright

In an article examining the public interest in the public domain, Davies288 defines the public domain specifically in the context of copyright to include all literary and artistic works of which the term of protection has expired and as such are no longer protected by copyright or other rights. At the end of such a term of protection, the work may be freely used, since it falls in the public domain. Once a work falls within the public domain, permission is no longer required in order to use the work and no remuneration needs to be paid. The work is also no longer protected by the Universal Copyright Convention,289 which acknowledges the public domain. A work would also fall in the public domain if it did not qualify for copyright protection in the first place, such as if the work lacked originality or did not comply with one of the other requirements for the subsistence of copyright.290 Davies further examines the option of a paying public domain, which entails royalties being collected after the expiry of a work’s copyright term. These royalties would then be used for the benefit of living authors or for other cultural purposes. These royalty payments are generally perceived as a form of tax.291 Deazley292 states that in understanding the public domain specifically of copyright, one needs to distinguish clearly between the two connected concepts of ‘access to’ and ‘use of’ a work. He points out that copyright confers a bundle of rights upon the owner of the work. The owner is then able to prevent other parties from using the work without permission from the owner of the copyright. The public domain in the context of copyright accordingly allows use of a work without the necessity of permission. The second consideration is that once a work is published, it enters a public space (which Deazley calls the ‘intellectual commons’). This aspect refers to the work being accessible to the public. In other words, the author is no longer the only person with control over access to the work as was the case before the work was published. According to Deazley’s description, the intellectual commons hence consists of two separate types of works, namely those which are protected by copyright and those 288

Davies G ‘The public interest in the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 86-97. 289 United Nations Universal Copyright Convention of 6 September 1952 (http://portal.unesco.org/culture/en/ev.phpURL_ID=1814&URL_DO=DO_TOPIC&URL_SECTION=201.html (accessed 9 June 2010)). South Africa is not a party to this convention. 290 Davies G ‘The public interest in the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 86-97 at 86. 291 Davies G ‘The public interest in the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 86-97 at 91-92. 292 Deazley R ‘Copyright’s public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 21-34.

falling in the public domain. These works would not fall into the intellectual commons until they are disclosed by being made available to the public through publishing.293 However, Deazley294 cautions that these first distinctions are too simplistic. It is also necessary for the public domain to include the aspects of copyrighted works where permission is not required in order to use the work. This would be the case with the ideas within a copyrighted work. Such ideas are not protected by copyright and may as a result be used without prior consent of the copyright owner. Also, the use exceptions, as set out in the Copyright Act, would fall in this category.295 In South Africa, there are certain statutory fair use exceptions set out in the Copyright Act 98 of 1987, where prior permission is not required to use the work. Dean296 states that these exemptions are instances where it is considered to be in the public interest that the owner of the copyright should not have a monopoly where the performance of certain acts in relation to the copyrighted work is concerned. These exemptions are based on the assumption that a copyright infringement has transpired and that this infringement is then excused by virtue of the exemption.297 The first exemption in the Copyright Act 98 of 1978 is the Fair Dealing exemption, as set out in section 12(1): ‘Any fair dealing with a literary, musical or artistic work, or with a broadcast or published edition, does not infringe that copyright when it is – (a) for the purposes of research or private study by, or the personal private use of, the person using the work; (b) for the purposes of criticism or review of that work or of another work; or (c) for the purposes of reporting current events – i)

in a newspaper, magazine or similar periodical; or ii)

by means of broadcasting or in a cinematographic film.’298

Section 12(1) (b) and (c) also apply to cinematographic films, sound recordings and computer programs. Where a work deals fairly in terms of paragraphs 12(1) (b) and (c) (i), it must be

293

Deazley R ‘Copyright’s public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 21-34 at 22-24. 294 Deazley R ‘Copyright’s public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 21-34. 295 Deazley R ‘Copyright’s public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 21-34 at 24-25. 296 Dean OH Handbook of South African Copyright Law (1987) 1-51. 297 Dean OH Handbook of South African Copyright Law (1987) 1-51. 298 Copyright Act 98 of 1978 sec 12(1).

accompanied by an appropriate acknowledgement.299 Specifically, the source of the work as well as the name of the author (if it appears on the work) must be mentioned. ‘Fair dealing’ is a rather vague concept, possibly in order to enable the court to take all circumstances into consideration when deciding whether an infringement may be excused.300 There are a further number of exemptions which will not be discussed at length for the purposes of this section.301 The purpose is merely to give a number of examples from South African copyright law where certain aspects of copyright works would fall in the public domain. Further exemptions include quotations,302 illustrations for teaching,303 ephemeral copies304 and reverse engineering of products.305 There are furthermore certain criticisms of a public domain for copyright, as Deazley306 notes. The two main problems with the public domain is that firstly, it is not accurately defined and may vary according to who uses the public domain. Secondly, it is also possible that a misappropriation of traditional knowledge may be justified in terms of the public domain. 488

The Public Domain and Traditional Knowledge

This link between traditional knowledge and the public domain is further explored by Gibson.307 She states that historically, the appropriation of traditional knowledge by colonisers has been justified by the doctrine of discovery. The traditional knowledge was regarded as ‘natural’ or part of the global heritage of humanity and as a consequence it was there for all’s benefit. This formed an important aspect of the imperialist process, in terms of which colonised peoples’ culture and knowledge were dominated by the ‘superior’ knowledge of the coloniser. Gibson also argues that in the current debate relating to the

299

Copyright Act 98 of 1978 sec 15(4), 16, 17, 18 and 19B. Dean OH Handbook of South African Copyright Law (1987) 1-51 – 1-52. 301 See further Dean OH Handbook of South African Copyright Law (1987) 1-51 – 1-60F on the exemptions to copyright infringement. 302 Copyright Act 98 of 1978 sec 12(3). 303 Copyright Act 98 of 1978 sec 12(4). 304 Copyright Act 98 of 1978 sec 12(5). 305 Copyright Act 98 of 1978 sec 15(3). 306 Deazley R ‘Copyright’s public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 21-34 at 31-33. 307 Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188. 300

expansion of intellectual property rights, traditional knowledge is still treated as part of a common heritage instead of creative knowledge of the indigenous communities.308 More recently, on an international level, there have been calls in favour of the protection of traditional knowledge as property and also as an integral part of the unity and dignity of indigenous communities.309 Gibson310 states that the position of traditional knowledge within the public domain as defined by modern intellectual property law is a very important aspect of the debate about the expansion of intellectual property rights. Currently, this construction of traditional knowledge as part of the public domain still enables the appropriation of traditional knowledge. This leads to arguments that access to traditional knowledge cannot be denied, because it is legally or morally impossible. The public domain is used by groups with commercial interests to argue in favour of access to the resources. Absurdly, these commercially interested groups sometimes argue that traditional communities are attempting to expand intellectual property rights by seeking to protect their traditional knowledge.311 Therefore it appears that the two separate debates about the expansion of intellectual property rights and the protection of traditional knowledge sometimes get confused. The way in which traditional knowledge is construed as part of the international public domain does not account for cultural and political identity linked to the traditional knowledge. This does not keep in mind the creative process that leads to the knowledge, which is treated as a mere product to be extracted by companies with commercial interests.312 The assimilation of traditional knowledge into the public domain also raises questions pertaining to the ‘public’ character of the public domain. The public domain operates on a global scale and accordingly the ‘public’ is portrayed as a ‘global public’. This ‘global public’ also includes the traditional communities, albeit without their consent. This means

308

Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188 at 174. 309 See Chap 3 (Unconventional Immaterial Property Interests) on traditional knowledge and the current position in South African law. 310 Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188. 311 Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188 at 175-178. 312 Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188 at 178.

that the colonised and the coloniser are in the same territory competing for the traditional knowledge as a product.313 489

The Public Domain in the Context of Patents

Furthermore, the public domain specifically in the context of patents deserves some discussion. Wallace and Mayer314 argue that by granting ‘patents on life’, access to new biological discoveries and their applications are being restricted, which in turn limits the acquisition of new knowledge. The patent system does not merely restrict access, but controls that which constitutes scientific knowledge itself. The ‘public domain’ of knowledge about human, animal and plant biology is changing shape entirely. Preference is being given to knowledge which may be patented and that which is communal is neglected, which may lead to damaging effects particularly in developing countries.315 Without the protection of intellectual property, companies will be unwilling to invest in developing a product for fear that other companies will copy the product.316 Wallace and Mayer conclude that even though patents are mainly used in order to prevent the imitation of inventions and to secure markets, patenting has increasingly been driven by other motivations. These include ‘blocking competitors; increasing the company’s reputation and value; exchanging value with partners, licensees and investors; and controlling internal performance and motivations.’317 Patent holders may prevent other companies from using the particular, patented knowledge. Subsequently these competitors are also barred from using the knowledge to make improvements on a particular product and selling it in competition with the holder of that patent. 49

Conclusion

The question that this chapter addressed is why and under which circumstances immaterial property rights should and could be recognised and protected under the constitutional 313

Gibson J ‘Audiences in tradition: Traditional knowledge and the public domain’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 174-188 at185-187. 314 Wallace H & Mayer S ‘Scientific research agendas: Controlled and shaped by the scope of patentability’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 189-199. 315 Wallace H & Mayer S ‘Scientific research agendas: Controlled and shaped by the scope of patentability’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 189-199 at 189. 316 Wallace H & Mayer S ‘Scientific research agendas: Controlled and shaped by the scope of patentability’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 189-199 at 191. 317 Wallace H & Mayer S ‘Scientific research agendas: Controlled and shaped by the scope of patentability’ in Waelde C & MacQueen H (eds) Intellectual Property – The Many Faces of the Public Domain (2007) 189-199 at 197.

property clause. For some of the categories of immaterial property interests there was also the additional question whether the particular category should be recognised and protected as property in private law. As becomes apparent from the analysis above, property theories that are already problematic in the context of tangible property are even more difficult to apply to intellectual property and other forms of immaterial property interests. As Hettinger318 notes, the nonexclusive nature of intellectual property as well as the restrictions that intellectual property places on the free flow of information create problems in justifying the institution of intellectual property. Social utility is an important consideration when attempting to justify the protection of intellectual property. Hettinger319 comes to the conclusion that the protection of the right to copyright is easier to justify than the right to patents or trade secrets. The reason for this is that patents restrict the use of an idea, while copyright prohibits only the copying of the expression of the idea and does not restrict use of the idea itself. Trade secrets are also more problematic, since they do not require disclosure to the public, so no benefit to the public becomes evident. Some of the unconventional immaterial property interests may be included under intellectual property categories and their protection justified accordingly, while others’ protection is not justified adequately by property theories and may need other theories for justification. It is both unpractical and unnecessary to consider the justification of the protection of unconventional categories of immaterial property that are not protected as property in private law, but under other areas of private law or in public law in terms of property theories. Commercial property, namely debts and claims; shares; goodwill; and state-granted licenses, permits and quotas already receive protection in private law under areas other than property law or in public law. The reason why it is unnecessary to consider the justification of the protection of these interests in terms of property theories is that it only needs to be determined whether these interests may be recognised and protected under the constitutional property clause; and this is not determined by reference to property or other theories. The reason why these interests could be protected under the property clause is rather due to the fact that they share certain characteristics with intellectual property and property; and furthermore there is no other constitutional clause that could possibly provide protection to these interests.

318 319

Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 51. Hettinger EC ‘Justifying intellectual property’ (1989) 18 Phil & Pub Affairs 31-52 at 51-52.

The justification of the protection of participatory claims also needs no consideration in terms of the property theories, because they are recognised and protected under separate constitutional property clauses specifically aimed at socio-economic rights. It is hence unlikely that these interests would be adjudicated in terms of the property clause although it is possible in principle. The labour theory is still a strong theory for the justification of the protection of intellectual property interests. However, it becomes clear that it does not justify unlimited rights, but that the rights are subject to both the private and public interests. From Gray’s formulation of excludability, it may be inferred that immaterial property interests are physically nonexcludable, but may be legally excludable in the instances where statutes afford protection and such protection is invoked by the holder of the resource. Furthermore there are also certain morally non-excludable resources that should stay in the public domain. The protection of intellectual property (patents, copyright, registered designs and trademarks) may be justified by the labour theory. The unconventional immaterial property interests’ protection is more problematic to justify in terms of the labour theory and the principles of excludability may be of more use to determine whether a particular interest may enjoy property rule-type protection in private law. The protection of some unconventional immaterial property interests may also be justified by this theory, namely confidential information, trade secrets, digital copyright and some biotechnological products. Confidential information currently receives no private law protection and it is only the category of trade secrets that is currently protected in private law. Digital copyright is merely a form of copyright that possibly requires additional protection and its protection may be justified by the labour theory. Digital copyright is a legally excludable resource since it receives both copyright and contractual protection in private law. Similarly, protection of biotechnological products may be justified by the labour theory. However, certain biotechnological products may be morally non-excludable and as such would not receive any protection in private law or constitutional law. The protection of traditional knowledge is not justified by the labour theory, but may be better justified by other theories not usually utilised for the justification of property, such as theories of distributive justice or human rights. In terms of the labour theory, only the last person who laboured on a work is rewarded, therefore the traditional community that held the

knowledge is not rewarded, but only the entity that derived the intellectual property product from the knowledge. The protection of commercial information is not justified by the labour theory, but rather depends on the excludability of the particular informational resource. Whether own effort was contributed is one of the factors in determining whether a participatory claim may be protected as property, at least in constitutional law, therefore the labour theory may have some influence in the justification of this category of unconventional immaterial property interests. The protection of non-proprietary rights may not be justified by the labour theory, since the labour theory envisions ownership as the property right awarded. The reward and incentive theory are both based on the same idea that the disclosure of useful information should be rewarded by a property right. If the information is not disclosed, as is the case with trade secrets and confidential information, these theories are not useful. With the exception of trademarks, it is possible to justify the traditional immaterial property interests on the basis of the reward theory. In other words, the protection of patents, copyright and registered designs may be justified by the reward theory. Trademarks do not appear to confer any particular benefit on society except for prohibiting the confusion of the products or services sold under the trademark with other similar products or services, which is possibly not the kind of benefit envisioned by the reward theory. The protection of the unconventional immaterial property interests is not clearly justified by the reward theory in all cases. The reward theory may be used for the justification of the protection of commercial information since some benefit to society is involved, although the issue of excludability is most likely of more importance. In the case of trade secrets and confidential information, the information is not made known; accordingly the reward theory has no applicability. Digital copyright may be protected under copyright and may be justified by the reward theory on the same grounds and some biotechnological products may be protected under patent law and as such these rights may also be justified by the reward theory. The reward theory is not a strong justification for the protection of traditional knowledge. Similar to the labour theory, it is only the last person working on the property product who receives a reward in terms of this theory; and as such the traditional community who holds the traditional knowledge is not rewarded. The incentive theory is relevant for traditional immaterial property, namely patents, copyright and registered designs. With trademarks there is no visible value for society. Similar to the

reward theory, the incentive theory is more problematic to apply to the unconventional immaterial property interests than the traditional immaterial property interests. The theory may be useful for commercial information. In the case of confidential information and trade secrets, there is no benefit to the community since no information is made public. Digital copyright and biotechnological products may fall under the categories of intellectual property and their protection may consequently be justified in terms of the incentive theory. For traditional knowledge, the incentive theory is even less applicable for the justification of its protection than the reward theory, since traditional knowledge was created without any need for an incentive. The spiritual theories may serve to justify the protection of the categories of traditional immaterial property interests, namely patents, copyright, designs and trademarks, but only insofar as they serve to secure a sphere of personal liberty. The personality theory as envisioned by Radin320 is only useful in the context of intellectual creations that are closely related to the personality, therefore perhaps only copyright. Similar to the other theories, it is also more problematic to apply the spiritual theories to the unconventional categories of immaterial property interests. The protection of digital copyright and biotechnological products may be justified by the spiritual theories insofar as they serve to secure a sphere of personal liberty and do not fall into the category of morally non-excludable resources. The protection of commercial information, confidential information and trade secrets is not justified by the spiritual theories. However, traditional knowledge protection could possibly be justified by the personality theory since the knowledge is so closely connected to the cultural and spiritual life of the holders of the traditional knowledge. These theories could also serve as a point of departure in developing a theory specifically for the justification of the protection of traditional knowledge. The economic and natural monopoly theories may apply to the traditional as well as some of the unconventional forms of immaterial property. The economic theory is commonly utilised as a justification for the protection of intellectual property rights (patents, copyright, designs and trademarks), since they have high initial costs and low distribution costs and some form of protection is necessary in order to ensure continued investment in the creation of intellectual products. The protection of digital copyright, biotechnological products that are 320

Radin MJ ‘Property and personhood’(1982) 34 Stan LR 957-1015.

not morally non-excludable, commercial information, confidential information and trade secrets may also be justified by the economic theory for the same reasons. Traditional knowledge is economically valuable and its use is non-rivalrous. However, it is currently physically non-excludable. The Traditional Knowledge Bill321 has the purpose of remedying this situation by including traditional knowledge under the existing categories of intellectual property. Once this Bill becomes legislation, traditional knowledge would also constitute a legally excludable resource, similar to intellectual property. The theory of natural monopoly is a criticism of the intellectual property system rather than a justification for the protection of intellectual property. It was devised with the traditional categories of intellectual property in mind, namely patents, copyright, designs, trademarks and trade secrets.322 However, it may also be applied to the categories of digital copyright and biotechnological products; and possibly commercial information and confidential information. The public domain is relevant for all categories of immaterial property, since the enclosure of the commons by the extension of intellectual property rights is such a great concern at this time. However, from all the theories discussed it becomes evident that the public interest always has an influence where property rights are concerned. Chapter 5 (Immaterial Property Interests under the Constitution) discusses the interpretation of the constitutional property clause and whether immaterial property interests may be protected under the property concept, but also the way in which it relates to public interest and the restrictions placed on constitutional property.

321

Intellectual Property Laws Amendment Bill of 2007 published on 29 March 2010 GG 33055 and 5 May 2008 GG 31026 (South Africa). 322 Trade secrets are viewed as a category of intellectual property in American law, which was the system used as the basis for the development of the theory of natural monopoly.

Chapter

5:

Immaterial

Property

Interests

in

the

Constitution 51

Introduction

Section 25 of the Constitution of the Republic of South Africa of 1996 protects property, but also provides for the deprivation and expropriation of property under specified circumstances and requirements. This chapter will focus mainly on the constitutional property concept and more specifically the question of whether, and if so which, specific immaterial property interests may be included as property under the property clause. The inclusion of immaterial property interests as constitutional property will have two implications, namely protection and limitation. These two aspects are closely linked, but also separate and need to be treated as such. The property clause (section 25 of the Constitution) provides for the protection of property against state interference. Immaterial property interests would also be protected by this guarantee if it is included under the constitutional property concept. However, the clause also provides for the limitation of property rights in terms of the deprivation and expropriation provisions. The state is permitted to interfere with property rights in terms of the provisions for deprivation and expropriation. As long as the state adheres to these strict requirements, the interference is constitutionally justifiable. The reach of immaterial property interests may also be limited by public interests such as the public domain and private interests such as the right to freedom of expression. It is crucial to note that recognition and protection of traditional and unconventional immaterial property interests in private law is different from their recognition and protection in constitutional law and the aims of the two forms of protection also differ. In private law the purpose is to get strong property-rule type protection for private rights against competing private parties.1 In constitutional law recognition and protection is to get bill of rights type protection for private interests against the state. This is achieved in terms of the provisions for regulation and expropriation. Furthermore, constitutional recognition and protection provides bill of rights-type protection against competing constitutional and other rights of other private parties. This is done be weighing up the competing rights. In South Africa the purpose of 1

Calabresi G & Melamed AD ‘Property rules, liability rules, and inalienability: One view of the cathedral’ (1972) 85 Harvard LR 1089-1128.

constitutional recognition and protection is perhaps also to enforce constitutional development of common law remedies to strengthen either claims or defences in terms of common law in private conflicts. Section 39 of the Constitution provides for the development of common law.2 The focus of this chapter does not fall on the private law recognition of traditional immaterial property interests or intellectual property rights, since these rights already enjoy strong property protection in private law. Similarly, some of the unconventional immaterial property interests already enjoy protection in private law albeit not under property law, for example commercial rights. Yet other unconventional immaterial property interests enjoy protection under public law, such as licenses. Some unconventional immaterial property interests are even protected under constitutional law under a constitutional right other than property, for example public participatory rights are protected under socio-economic rights in South African law. This is not the position in the United States or Germany, hence the necessity to protect these kinds of rights as constitutional property. However, in some cases the question is whether the unconventional immaterial property rights such as traditional knowledge should enjoy private law or statutory protection. This is discussed in more detail in Chapter 3 (Unconventional Immaterial Property Interests). In all cases, the important question is whether these rights could enjoy constitutional protection in addition to their private law or statutory protection, because the private law or statutory protection does not extend to the purposes of constitutional threats and conflicts as mentioned before; or whether they might enjoy constitutional protection even though they do not enjoy private law protection, which might strengthen their effort to obtain private law or statutory protection; or whether they might pursue constitutional protection as property because they enjoy private law protection as non-property, but in constitutional conflicts they are unprotected and they share some characteristics with typical property interests. These shared characteristics are the following: Property interests have inherent or accrued economic value for the holder of the interest. Labour and resources were invested in the creation of the interest and the interest must have vested. In each case where constitutional property protection is suitable, there is also no other constitutional clause that could possibly provide protection to the specific category of immaterial property interests. 2

Van der Walt AJ Constitutional Property Law (2005) 10-57.

The First Certification case3 may be used as a point of first reference in this enquiry, followed by an overview of the constitutional protection of immaterial property interests in South African law, foreign law and international law. In this case, the Constitutional Court was required to decide on the validity of the Constitution. There was an objection that the Constitution did not provide for the protection of intellectual property or mineral rights. However, the Court decided that the property clause was wide enough to include property interests that needed to be protected according to international standards. This has been interpreted to mean that intellectual property and possibly also other immaterial property interests that need to be protected would be included under the constitutional property clause. According to section 39(1) (b) of the Constitution, a court, tribunal or forum must consider international law when interpreting the Bill of Rights. Dugard states that ‘[s]ection 35(1) [now section 39(1) (b)] strengthens the role of international law in the interpretive process as it obliges courts to apply international law where it is “applicable”’.4 He adds that basically every right in the Bill of Rights has a counterpart in an international human rights convention and mentions the example of the right to property, concluding that it is consequently ‘difficult to imagine situations where public international law will not be applicable under s[ection] 35(1)’.5 Chapter 6 (Immaterial Property Interests in International Law) deals extensively with the human rights protection afforded to intellectual property rights (traditional immaterial property interests) and unconventional immaterial property interests in international law; as well as the implications for South Africa. Section 39(1) (c) also states that a court, tribunal or forum may consider foreign law. In this chapter, the constitutional protection of immaterial property interests as property in Germany, The United States of America, Australia and Ireland is examined in order to find the best approach for South Africa.6 Patents,7 copyright8 and trademarks,9 for example, are included 3

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 4 Dugard J ‘The role of international law in the interpreting of the Bill of Rights’ (1994) 10 SAJHR 208-215 at 212. 5 Dugard J ‘The role of international law in the interpreting of the Bill of Rights’ (1994) 10 SAJHR 208-215 at 212. 6 The Council of Europe and the First Protocol of the European Convention on Human Rights and Fundamental Freedoms 1950 are discussed in Chap 6 (The Protection of Immaterial Property Interests under International Law). 7 BVerfGE 36, 281 [1974].

under the general property clause in the German Basic Law10 and this approach could provide some guidance to South African courts. These and other examples from foreign law may be used to interpret the South African constitutional property clause. It is argued that this may be a useful aid in the context of immaterial property, since there are no South African cases yet clarifying which immaterial property interests may be protected under the South African property clause. This chapter discusses South African Constitutional law and comparative law, while international law is dealt with in Chapter 6 (Immaterial Property Interests in International Law). 52

Constitutional Immaterial Property Law

521

The First Certification Case

In the First Certification case11 the Constitutional Court responded to an objection that the constitutional property clause failed to recognise the right to intellectual property. In the objection it was proposed that the intellectual property right advocated was a ‘universally accepted fundamental right, freedom and civil liberty’. The Court held that ‘[a]lthough it is true that many international conventions recognise a right to intellectual property, it is much more rarely recognised in regional conventions protecting human rights and in the constitutions of acknowledged democracies’.12

The Court apparently interpreted this tendency to mean that it was not a universally accepted norm to include a specific right to intellectual property in a separate constitutional clause. The Court cited article 27(2) of the Universal Declaration of Human Rights (UDHR)13 and article 15(1) (c) of the International Covenant on Economic, Social and Cultural Rights (ICESCR)14 as examples of international conventions recognising the right to intellectual 8

BVerfGE 31, 229 [1971] (Urheberrecht case). BVerfGE 51, 193 [1979] (Warenzeichen case). 10 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. 11 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. The Constitutional Court was required to decide whether the Constitution conformed to the Constitutional Principles set out in the Interim Constitution. In this paragraph of the decision, the Court had to decide whether the property clause was adequate in this respect. It had been argued that the Constitution did not protect intellectual property. 12 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 13 United Nations Universal Declaration of Human Rights (1948) 216 A [III] (http://daccessdds.un.org/doc/RESOLUTION/GEN/NR0/043/88/IMG/NR004388.pdf?OpenElement (accessed 16 September 2009)). Article 27(20) of the UDHR reads as follows: ‘Everyone has the right to the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author.’ 14 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 9

property. The Court stated that there is no express provision for intellectual property in the Austrian Basic Law of 1867; the Belgian Constitution 1831; Constitution of the Republic of Botswana 1966; the Canadian Charter of Rights and Freedoms 1982;15 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949; the Constitution of India 1949; the Constitution of Japan 1946 or the Constitution of the United States of America 1787.16 The Court then proceeded to acknowledge that there are certain constitutions, particularly in Eastern Europe, which do contain express provisions for the protection of intellectual property. The Court mentioned article 51 of the Belarus Constitution;17 article 54(3) of the Bulgarian Constitution;18 article 39 of the Estonian Constitution19 and article 47 of the Macedonian Constitution20 as examples of these express provisions. The Court concluded that the express provisions are ‘probably due to the particular history of those countries and cannot be characterised as a trend which is universally accepted’.21 The Court concluded that the term ‘property’ is wide enough, when used in a generic property clause, to include rights and interests that need to be protected according to international human rights standards.

(http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). Article 15(1) (c) of the ICESCR protects everyone’s right ‘to benefit from the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author’. 15 The Canadian Charter of Rights and Freedoms 1982 does not include a general property clause either and as such does not guarantee any form of property as a fundamental right. See Van der Walt AJ Constitutional Property Clauses (1999) 87. 16 The USA has a so-called intellectual property clause which deals specifically with copyright and patents. See sec 5.3.3 of this chapter. 17 Belarus Constitution 1994: Art 51(2) states that ‘[f]reedom of artistic, scientific, and technical creativity and teaching shall be guaranteed’ while art 51(3) states that ‘[i]ntellectual property shall be protected by law’. 18 Bulgarian Constitution 1991: Art 54(2) guarantees that ‘[a]rtistic, scientific, and technological creativity shall be recognized and guaranteed by the law’ and art 54(3) provides that ‘[t]he state shall protect all inventors’ rights, copyrights, and related rights’. 19 Article 39 (the Right to Intellectual Property) of the Estonian Constitution 1992 guarantees intellectual property as follows: ‘Authors shall have the inalienable right to their work. The state shall protect intellectual property rights.’ 20 The Macedonian Constitution 1991 art 47 provides for the protection of intellectual property as follows: ‘Article 47 (1) The freedom of scholarly, artistic and other forms of creative work is guaranteed. (2) Rights deriving from scholarly, artistic or other intellectual creative work are guaranteed. (3) The Republic stimulates, assists and protects the development of scholarship, the arts and culture. (4) The Republic stimulates and assists scientific and technological development. (5) The Republic stimulates and assists scientific and technological development.’ 21 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75.

522

Arguments for the Protection of Intellectual Property under the Property Clause

According to Roux and Davis,22 the Constitutional Court’s23 discussion about the failure of an explicit mention of intellectual property rights in section 25 or another clause of the final Constitution complicates the position of intellectual property rights. Roux and Davis24 state that it may appear as though the court dismissed the objection raised against the failure to include intellectual property rights on the grounds that it is not a ‘universally accepted’ norm to protect intellectual property and that section 25 does not include intellectual property. They argue that there is in fact nothing that prevents the term ‘property’ to be so understood as to include intellectual property rights. Roux and Davis argue that ‘given the importance of intellectual property rights in modern times, it would be wrong for a court to dismiss their claim to constitutional recognition’.25 As a result, they submit that the Constitutional Court’s decision should not be interpreted restrictively. According to their argument, the correct construction of the court’s decision would rather be that the failure to expressly mention intellectual property rights in section 25 of the final Constitution does not violate the Second Constitutional Principle in Schedule 4 to the interim Constitution of the Republic of South Africa 200 of 1993, which holds that all universally accepted fundamental human rights should be protected in the final Constitution. Since intellectual property rights do not need to be protected in a separate constitutional clause and could still be protected under the constitutional property clause, the Court’s decision did not violate the Second Principle. Roux and Davis26 note that on such a reading of the First Certification case27 there is still the opportunity to recognise intellectual property rights as constitutional property in future cases.28

22

Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17. 23 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa 1996 1996 (4) SA 744 (CC) par 75. 24 Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17. 25 Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17. 26 Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17. 27 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 28 Also see Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-15. Roux agrees that the decision of the Constitutional Court leaves scope to include intellectual property as constitutional property.

Alexander29 agrees that the First Certification case30 supports a broad interpretation of constitutional property. The Constitutional Court rejected the objection that the Constitution was deficient due to the fact that it did not recognise mineral rights and intellectual property rights explicitly. According to Alexander,31 this opens up the possibility for these rights (mineral rights and intellectual property rights) to be classified as property in constitutional law. He states that the Court’s duty in the First Certification case32 was merely to ensure that the Constitution complied with ‘universally recognised’ norms. Alexander33 argues that since mineral rights and intellectual property rights are not universally recognised rights, there is no need to explicitly specify them.34 He also notes that although it is uncommon for constitutional property clauses to specify which particular kinds of property rights are included, mineral rights and intellectual property are generally understood to be included in the general category of ‘property’ under constitutional property clauses. According to Van der Walt,35 the objection that the draft of the constitutional property clause failed to explicitly recognise intellectual property and mineral rights was rejected on the ground that there exists ‘no universally recognised formulation of the constitutional guarantee of property’.36 He states that the court’s decision on this matter seems to be correct. In the First Certification case,37 the Constitutional Court’s duty was to certify that the proposed constitutional provisions conform to ‘established and universally recognized norms’.38 As Van der Walt notes, there ‘is no universally recognized norm for the formulation of a constitutional property clause, particularly not as far as the description of property is 29

Alexander GS The Global Debate over Constitutional Property (2006) 163. Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 31 Alexander GS The Global Debate Over Constitutional Property (2006) 163. 32 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 33 Alexander GS The Global Debate Over Constitutional Property (2006) 163. Compare Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17 and Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-15. Roux and Davis argue that it is merely not a ‘universally accepted’ norm to protect intellectual property rights in a separate constitutional clause, while Alexander states that intellectual property is not a universally recognised right although it may still be protected under the constitutional property clause. 34 Compare Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105-119 at 106, 110. Dean argues that there are general and specific reasons why intellectual property should be regarded as a ‘universally accepted’ fundamental right. 35 Van der Walt AJ Constitutional Property Law (2005) 85-87. 36 Van der Walt AJ Constitutional Property Law (2005) 85. 37 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 38 Van der Walt AJ Constitutional Property Law (2005) 86. 30

concerned’.39 However, this does not mean that a specific class of property such as intellectual property is excluded simply because it is not explicitly mentioned. It is unusual to specify all the types of property that are generally accepted as ‘property’ for purposes of a constitutional property clause. Van der Walt40 illustrates this point by referral to movable corporeal property which is not specified as property in section 25 of the 1996 Constitution either, yet the Constitutional Court and everyone else accepts that it is property for purposes of the clause. It becomes apparent that the failure to specify a certain category of property in a property clause does not constitute a fatal flaw on the part of the clause, nor does it mean that a certain category of property is not included in the clause simply because it is not mentioned. All of the above authors seem to agree, albeit for different reasons, that the constitutional property clause has scope to recognise and protect at least some immaterial property interests. 523

Lebowa Mineral Trust Beneficiaries Forum v President of the Republic of South Africa

The issue regarding intellectual property as well as mineral rights is not only, or perhaps not at all, whether these rights should be protected in a separate constitutional clause. Rather the issue is whether these rights should have been mentioned explicitly in the property clause and whether failure to do so means that these interests are not included under the property clause. The meaning of the Constitutional Court’s decision in the First Certification case41 on the matter of the failure to specifically mention mineral rights in the property clause is not entirely clear and has on occasion been misinterpreted. In Lebowa Mineral Trust Beneficiaries Forum v President of the Republic of South Africa,42 the Transvaal High Court decided that mineral rights were not ‘property’ within the meaning of section 25. The reason given by the High Court was that the First Certification case43 decided that the right to mineral rights is not a universally accepted fundamental right. The court held that the drafters of the Constitution would have protected mineral rights explicitly as is the case in other jurisdictions if they had intended for mineral rights to be protected. It is generally viewed that

39

Van der Walt AJ Constitutional Property Law (2005) 86. Van der Walt AJ Constitutional Property Law (2005) 86. 41 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 74. 42 2002 (1) BCLR 23(T) at 29G-H. 43 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 74. 40

the court’s decision on this point is incorrect.44 Van der Walt states that even though the Constitutional Court stated in the First Certification case45 that mineral rights are not a separate set of fundamental human rights and as such need not be specified in the Bill of Rights, this statement has to be read in the context of the judgment, bearing in mind the constitutional function of the court in that case. He argues that this statement is not authority for the broad proposition that mineral rights are not included as ‘property’ under the property clause. According to Van der Walt, this decision could have a profound effect on other immaterial property interests such as ‘shares, intellectual property rights, debts and other monetary claims, commercial licenses, permits and quotas and other use or exploitation rights’.46 In the First Certification case,47 the Constitutional Court stated that it was very rare for a property clause to mention mineral rights explicitly and as such there is no universally recognised practice or need to protect mineral rights as a separate fundamental human right. Van der Walt48 states that this cannot be interpreted to mean that mineral rights are not included under the property concept for purposes of the property clause. He argues that the general formulation of the property clause and the lack of specific references to the categories of property should lead to the opposite conclusion. In other words, where no specific reference is made to any categories of property, the conclusion drawn should rather be that all categories of property would be included under the property clause, provided that it is not specifically excluded.49 According to Van der Walt,50 any such category of property should probably be included as long as the law recognises it as property. He states that where a property interest is recognised in private law, such as is the case with mineral rights, such a category should readily be included as property for purposes of the property clause. Van der 44

See Van der Walt AJ Constitutional Property Law (2005) 87 and Van der Walt (AJ) ‘Resisting orthodoxy – again: Thoughts on the development of post-apartheid South African law’ (2002) 17 SA Public Law 258-279, especially at 260-265, where Van der Walt discusses the Lebowa Mineral Trust case and more detailed reasons why the court came to the incorrect conclusion regarding the constitutional protection of mineral rights as property. 45 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 74. 46 Van der Walt AJ ‘Resisting orthodoxy – again: Thoughts on the development of post-apartheid South African law’ (2002) 17 SA Public Law 258-279 at 261 fn 11. 47 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 74. 48 Van der Walt AJ Constitutional Property Law (2005) 86-87. Also see Van der Walt AJ Constitutional Property Clauses (1999) 324. 49 Also see Alexander GS The Global Debate Over Constitutional Property (2006) 163. Alexander agrees with the idea that a wider scope of constitutional property should be accepted where no categories are specified. 50 Van der Walt AJ Constitutional Property Law (2005) 87.

Walt suggests that the High Court’s incorrect conclusion may have been reached by relying on the ‘old-fashioned privatist orthodoxy about the restricted scope of property law in Roman-Dutch law’.51 He notes that this still does not adequately explain the court’s decision, since mineral rights are regarded as property in South African private law.52 524

Arguments for the Inclusion of a Separate Intellectual Property Clause

Dean53 examines the decision of the Constitutional Court in the First Certification case and argues that there are general reasons54 for the recognition of intellectual property in the Constitution, but also that the right to intellectual property is universally accepted as a fundamental right. He argues that the reason for protecting intellectual property rights is to provide an incentive to creators to create works that will be beneficial to the public interest. He also states that intellectual property rights are protected under the United Nations Bill of Rights,55 which was adopted by 48 votes with only 3 abstentions. The International Covenant on Economic, Social and Cultural Rights (ICESCR)56 has 133 parties including Canada, Germany, India, Italy, Japan, Kenya, Namibia, the Netherlands, Philippines, Uganda, Zambia and Zimbabwe. South Africa had signed but not yet ratified the Covenant at the time of the Court’s decision and still has not signed it to date. Dean57 states that none of the aforementioned countries provided for the protection of intellectual property rights in their constitutions, which was used by the Constitutional Assembly to demonstrate that intellectual property rights are not universally accepted fundamental rights. These countries have, however, bound themselves to implement the Covenant’s provisions and as a result also to grant protection to intellectual property rights as fundamental rights.58

51

Van der Walt AJ Constitutional Property Law (2005) 87 and Van der Walt AJ ‘Resisting orthodoxy – again: Thoughts on the development of post-apartheid South African law’ (2002) 17 SA Public Law 258-279. 52 Van der Walt AJ Constitutional Property Law (2005) 87. See Van der Merwe CG Sakereg (2nd ed 1989) 559 and Badenhorst PJ, Pienaar JM & Mostert H Silberberg and Schoeman’s The Law of Property (5th ed 2006) 667 where the authors agree that mineral rights are accepted as property in South African private law. 53 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110. 54 These and other reasons why immaterial property should be protected are analysed and discussed in Chap 4 (The Value of Immaterial Property). 55 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 56 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 57 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110. 58 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110.

In the First Certification case,59 Dean appeared on behalf of the Association of Marketers in order to argue for a separate constitutional right to intellectual property. Their submission was that the right to hold intellectual property is a universally accepted fundamental right and that the Second Constitutional Principle of the interim Constitution set the prerequisite that the Constitution should make provision for all universally accepted rights. Therefore they argued that the Constitution was defective since there was no provision for a right to intellectual property and as such the Constitutional Court should not have certified the Constitution. On Dean’s60 interpretation, the Constitutional Court stated that the right to hold intellectual property is not a universally accepted fundamental right and as a result the Constitution is not defective even though the right to intellectual property is not protected in a separate constitutional clause. Dean61 argues that this result is unsatisfactory and that this view is ‘widely held in intellectual property circles’.62 However, it is now generally accepted that the Constitutional Court’s decision in the First Certification case63 does not prevent intellectual property from enjoying constitutional protection under the general constitutional property clause.64 Dean65 argues that there are general arguments that support the broad proposition that intellectual property should be recognised in the Bill of Rights. These arguments are useful whether the proposition is that intellectual property should be recognised in a separate constitutional clause as Dean argues; or that intellectual property should be included under the general property clause, which is the more widely accepted line of reasoning. Dean’s arguments are based on the incentive theory for promoting creative work, the international 59

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 60 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 61 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 62 It is unclear whether this perhaps refers to practitioners, since there does not appear to be any other scholarship on the subject. 63 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 64 See Van der Walt AJ Constitutional Property Law (2005) 86, Alexander GS The Global Debate Over Constitutional Property (2006) 163, Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17 and Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 4615. Also see Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19, where he concedes that intellectual property may still be recognised and protected despite the lack of an explicit constitutional clause pertaining to intellectual property and despite the fact that intellectual property is not explicitly mentioned in the property clause. 65 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106.

law recognition of intellectual property and comparative law examples supporting the constitutional protection of intellectual property. The first argument, according to Dean,66 relates to the supposed reason why the state grants protection to intellectual property, which is to provide an incentive. This is done by rewarding inventors, designers and authors for sharing their creations that may benefit the public. The idea behind this approach is that the state enters into an agreement with creators that they receive a temporary monopoly to exploit their creation. Once this term expires, the creation falls into the public domain where it is open for all to use. Dean67 argues that this approach has proven to be successful in the past century and has to a great extent promoted the expansion of the development of creative works.68 The second argument noted by Dean69 is that the intellectual property system is universally recognised and as such is internationally regulated by international treaties. In particular, he notes the Paris Convention on Intellectual Property of 1883,70 the Berne Convention on Copyright of 188671 and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) of 1994.72 South Africa is a signatory to these treaties. According to Dean,73 this means that South Africa is internationally bound to provide protection for intellectual property that is in line with ‘internationally accepted norms and standards’ and also to provide intellectual property protection to other signatory states. Protection for intellectual property, Dean argues, is a non-negotiable requirement for foreign investment and the inflow of technology from countries that invest. Dean74 argues that this may be achieved by 66

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 67 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 68 See Chap 4 (The Value of Immaterial Property) for a full discussion of the theoretical justifications for the protection of intellectual property, namely the labour theory, reward theory, incentive theory, spiritual theories, economic theory, theory of natural monopoly and arguments based on the intellectual property commons or the so-called public domain. 69 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 70 World Intellectual Property Organisation Paris Convention for the Protection of Industrial Property (March 10, 1883) (http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html (accessed 17 September 2009)). 71 World Intellectual Property Organisation Berne Convention for the Protection of Literary and Artistic Works (September 9, 1886) (http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (accessed 17 September 2009)). 72 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 73 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106. 74 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106.

protecting the right to hold intellectual property in the Bill of Rights. He argues that by entrenching this right, the incentive created by the intellectual property system would be strengthened considerably. Dean75 refers to the Constitution of the United States of America as an example to support his final argument that foreign law also points in the direction that intellectual property ought to be constitutionally protected. He states that the United States of America is the most successful industrial country and accordingly their model for intellectual property should be followed. Dean76 acknowledged that the Constitutional Assembly did not disagree with the arguments why intellectual property should be constitutionally protected, but they reasoned that intellectual property interests could be adequately protected under the general property clause. He states that this reasoning was based on the idea that intellectual property is a form of property and that general protection afforded to property would also adequately cover intellectual property. Dean77 does not agree with this line of reasoning. He states that once the debate about the Bill of Rights moved from the Constitutional Assembly to the Constitutional Court, the persons advocating separate protection for intellectual property focused on the Second Principle78 of the 34 Constitutional Principles set out in Schedule 4 of the interim Constitution of the Republic of South Africa 200 of 1993. The persons advocating the separate protection of intellectual property attempted to establish that intellectual property is an independent, universally accepted fundamental human right that should be entrenched in a justiciable provision in the Constitution. They attempted to prove three statements in applying the Second Constitutional Principle to intellectual property. In the first instance, they argued that intellectual property rights are fundamental rights or freedoms. Secondly, they attempted to establish that intellectual property rights are universally accepted as fundamental rights. Finally, they stated that there are no provisions in the Bill of Rights79 that

75

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 107. 76 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 107. 77 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 107. 78 Principle II of the 34 Constitutional Principles: ‘Everyone shall enjoy all universally accepted fundamental rights, freedoms and civil liberties, which shall be provided for and protected by entrenched and justiciable provisions in the Constitution, which shall be drafted after having given due consideration to inter alia the fundamental rights contained in Chapter 3 of this Constitution.’ 79 In the Constitution of the Republic of South Africa 1996.

are entrenched or justiciable provisions protecting intellectual property rights; and more specifically that the property clause does not adequately protect intellectual property rights. 80 Regarding the first argument, that the right to hold intellectual property is an independent fundamental right or freedom, Dean81 states that this argument was founded on two bases. These were the natural law principle and the United Nations Bill of Rights82 respectively. According to Dean,83 the natural law principle has played a great role in the process for the recognition of intellectual property rights.84 The second argument, which is more important for the purposes of this chapter, pertains to intellectual property rights under the United Nations Bill of Rights.85 Dean argues that these covenants are international treaties that convert the provisions in the Universal Declaration of Human Rights (UDHR)86 into enforceable international obligations. This does not necessarily mean that intellectual property rights must be protected in a separate constitutional clause. On the contrary, signatory states are allowed a wide margin of freedom in implementing protection for fundamental rights. Protecting intellectual property could entail that the state provides private law protection for intellectual property rights and that the right is guaranteed by the property clause of the particular state’s Constitution. In this way, a state could still comply with international law. Dean’s87 article on constitutional intellectual property protection discusses the independent intellectual property clause that the Association of Marketers proposed for the Bill of Rights

80

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 107. 81 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 107-108. 82 This United Nations Bill of Rights comprises the Universal Declaration of Human Rights of 1948; the International Covenant on Civil and Political Rights of 1966; and the International Covenant on Economic, Social and Cultural Rights of 1996. 83 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 108. 84 See Mostert F ‘The development of the natural-law principle as one of the principles underlying the recognition of intellectual property: A historical survey from Roman law to modern-day law’ (1987) 104 SALJ 480-501 at 480. Also see Chap 4 (The Value of Immaterial Property) sec 4.2 on the labour theory (the naturallaw theory) for a full explanation of this principle. 85 This comprises the Universal Declaration of Human Rights of 1948; the International Covenant on Civil and Political Rights of 1966; and the International Covenant on Economic, Social and Cultural Rights of 1966. 86 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 87

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114-115.

during the proceedings of the First Certification case.88 This proposed clause reads as follows: ‘Everyone has the right to the protection of the moral and material interest resulting from any industrial, scientific, literary or artistic production of which they are creators, or brand equity from which they are the proprietors.’

As Dean89 notes, this proposed clause is based on the content of article 27(1) of the Universal Declaration of Human Rights.90 He also points out that this proposed clause adds the word ‘industrial’ and lists ‘brand equity’ as a further sub-category of intellectual property. This issue is now moot, since the Constitutional Court91 decided that there is no entitlement to a separate right for the protection of intellectual property and all forms of property may be adequately protected by the constitutional property clause. According to Dean,92 South Africa has a very good track record in the field of intellectual property and there is no reason that he can find why the universally accepted fundamental right to hold intellectual property should be omitted from the South African Bill of Rights. He states that such an enshrinement of intellectual property rights would in fact give formal recognition to ‘one of the few fundamental rights which South Africa has honoured in the past and should continue to honour in the future, particularly in a truly democratic dispensation’.93 Dean states that one could argue that intellectual property rights may conflict with certain other fundamental rights, such as the right to freedom of expression. He states that intellectual property rights are monopolistic by their very nature, since they grant exclusive rights and that such exclusivity must necessarily impact the rights of others to some extent. Furthermore, where two conflicting rights have to be considered in the application of section 36 of the Constitution, Dean94 submits that the right that is not entrenched within the Constitution may be considered subservient to the other right. He argues that such a situation 88

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 89 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114. 90 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 91 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 92 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114-115. 93 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 115. 94 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 115.

could be avoided if intellectual property rights were to be given explicit constitutional protection. It has to be noted here that even where both rights are entrenched in the Constitution, one of the rights could still be considered subservient to the other right since not all constitutional rights enjoy equal protection. Some rights such as the right to life, political rights and socio-economic rights are non-derogable, while other rights such as the right to property may be infringed in certain instances. In discussing the view of the Constitutional Assembly and the Constitutional Court in the First Certification case95 that intellectual property rights are protected by the constitutional property clause, Dean96 mentions that the Association of Marketers argued that the property clause does not grant adequate protection to intellectual property rights. The Constitutional Court did not enquire into the question of whether intellectual property is a separate or independent category of property. Dean97 states that intellectual property rights are clearly distinguished from property rights in a human rights context. According to him, intellectual property rights are not considered to be a sub-category of property rights. In order to demonstrate this submission, Dean98 refers to article 17 and 27(2) of the UDHR.99 Article 17 of the UDHR deals with property rights and is classified under the political and civil rights; while article 27(2) deals with intellectual property rights and falls under the section for economic, social and cultural rights. Dean100 also states that property rights are entrenched in the International Covenant on Civil and Political Rights,101 but intellectual property rights, on the other hand are protected in the International Covenant on Economic, Social and Cultural Rights.102 Furthermore, Van der

95

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 96 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112. 97 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112. 98 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112. 99 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 100 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112. 101 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). See Chap 6 (Immaterial Property Interests in International Law), especially sec 6.1 and sec 6.3. 102 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)).

Walt103 views Dean’s approach as a logical error, since it cannot be concluded that the rights are inherently different merely because they are protected under separate international law instruments; there may be strategic or institutional reasons for that in international law. Van der Walt104 also notes that if Dean’s argument were to be accepted, this would have the result that other property rights created and protected by special national legislation would also require separate provisions. This would include mineral rights, sectional title and registered real security rights governed by legislation. The source of origin and protection cannot determine that the right is so unique that it requires separate protection. Constitutional law merely requires that private law, including legislation, recognises the right and affords protection once the right is vested in terms of normal law; and then constitutional protection is available to the particular property interest. Dean’s analysis would specifically exclude all land rights created by land reform legislation105 from section 25, because those rights are also only created by the legislation, which is the object of Dean’s concerns.106 Dean107 explains that the constitutional property clause (article 25 of the Constitution) is based on the premise that property is pre-existing and it is merely its ownership that is to be regulated. Van der Walt108 states that this conclusion that the Constitution only protects preexisting property is false, since the property clause clearly includes rights that cannot be described as pre-constitutional or pre-existing, for example servitudes yet to be created; cars yet to be designed and built; licences yet to be granted; and companies yet to be set up. According to Dean,109 the focus of the property clause falls on the title of the property and not the creation of the property. By contrast, the law of intellectual property principally caters for the creation of property and the regulation of ownership is less important. The question of

Dean’s statement is incorrect, since the right to property was not made binding in any covenant. Although there were extended discussions about a possible formulation of the right to property for the purposes of an international covenant, no agreement could be reached between state parties to the UDHR and subsequently the right to property was excluded. The right to intellectual property in the ICESCR is viewed as an exception. International law is discussed in more detail in Chap 6 (Immaterial Property Interests under International Law). 103 See Van der Walt AJ Constitutional Property Clauses (1999) 352-353. 104 See Van der Walt AJ Constitutional Property Clauses (1999) 352-353 and Van der Walt AJ Constitutional Property Law (2005) 95. 105 For example, see the Restitution of Land Rights Act 22 of 1994. 106 See Van der Walt AJ Constitutional Property Clauses (1999) 328-329 and Van der Walt AJ Constitutional Property Law (2005) 284-398 in general. 107 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112-113. 108 See Van der Walt AJ Constitutional Property Clauses (1999) 323-324, 349-353 and Van der Walt AJ Constitutional Property Law (2005) 85-86, 95. 109 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 112-113.

ownership only becomes relevant once the property actually comes into existence. Dean explains the position as follows: ‘The fundamental right concerning [intellectual property] is the right of the individual to have the fruits of his intellectual effort clothed in a form which can become the subject of property rights. Put differently, the fundamental right which relates to [intellectual property] is the right to have the fruits of the individual’s intellectual activity created into a thing (albeit an incorporeal thing) over which he can thereafter exert powers of ownership.’110

From this remark it appears that the purpose of constitutional protection according to Dean should be recognition in order to establish and justify the rights; and that is not the purpose of the constitutional provision. Constitutional property clearly only grants actual protection to specific rights already recognised and vested according to private law or statute. Dean111 notes that the content of the ownership of intellectual property depends on the law that creates it. In fact, the object of an intellectual property right is created and determined by law. He notes that all forms of intellectual property are created by statute, subject to the common-law remedy of passing off. If the right to hold intellectual property is not entrenched in the Constitution, the state would have the power to end the very existence of intellectual property if they chose to do so. In order to demonstrate this position, Dean contrasts intellectual property with land, which is a form of corporeal property. He states that land does not exist because of any particular statute and as such parliament can go no further than to regulate its ownership. Dean112 draws the conclusion that completely different considerations are applicable in the case of the entrenchment of the constitutional rights to property and intellectual property respectively.113 This incorrect conclusion is not drawn from the best example, since section 25(4) (b) states explicitly that property is not limited to land. Therefore this example logically applies only to one kind of the property categories included under section 25. One has to note that there are many other forms of property included under section 25 that are not pre-existing such as land. At least some of the property interests included under the property clause are also created by legislation. Some examples would be real security rights and shares. With this in mind, the conclusion drawn by Dean does not 110

Dean OH 119 at 113. 111 Dean OH 119 at 113. 112 Dean OH 119 at 113. 113 Dean OH 119 at 113.

‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105-

seem accurate, since the constitutional property clause is wide enough to include different forms of property for constitutional protection. The mere fact that a specific type of property is created by legislation does not mean that it needs a different kind of protection than that which the property clause can afford. Dean adopts a different approach here in stating that the state would have the ability to abolish the institution of intellectual property if it were not entrenched as a constitutional right. The crux of Dean’s argument is that he wants to insulate statutorily created rights against state regulation or abolition, and that cannot be done by constitutional protection. This may be compared to the position regarding for example licences and the so-called new property, where the same problem exists. In German law, the solution to this problem in the context of new property or social-security rights is that if the statute creates a right in such a way that it vests in someone and if the beneficiary acquires it on the basis of some own effort or investment (Eigensleistung requirement), the fact that the right is created by statute does not render it completely at the arbitrary disposition of the legislature. A contribution-based pension would fall in this category. However, if the right is a purely statutory grant, constitutional recognition as property will not protect it against statutory abolition without recourse. Dean114 stresses the importance of the fact that intellectual property consists of both moral and material interests.115 He concedes that intellectual property rights may be seen as analogous to property law to the extent that it creates economic rights or so-called material interests. However, the moral rights that may be compared to personality rights are also created by intellectual property law. Dean116 mentions the provision for moral rights in section 20 of the Copyright Act 98 of 1978 by way of example. This provision gives an author the right to claim authorship of a work even in the case where copyright has been transferred. The author may also object to a ‘distortion, mutilation or other modification of the work’117 where this may influence the author’s reputation negatively.

114

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 113. 115 This is stated in article 27(2) of the United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 116 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 113. 117 Sec 20 of the Copyright Act 98 of 1978.

Dean118 argues that section 25 of the Constitution does not cater for these moral rights, which are recognised explicitly in the Universal Declaration of Human Rights. This is not entirely true, since it would be harder for the state to justify the deprivation or expropriation of a property right that is closer to the personality of the owner.119 He also argues that the issues of expropriation and restoration of dispossessed property that section 25 deals with has no relevance for intellectual property. He claims that if these aspects were to be applied to intellectual property it would ‘abrogate the very underlying principles and theory of [intellectual property] … In practical terms, section 25 has no bearing whatsoever on [intellectual property] as a fundamental right or in the regulation of its content or ownership.’120

This conclusion is once again drawn from selective examples. While it is correct that the restoration of dispossessed property would not be relevant for intellectual property, the same may also be said of licences, personal servitudes, the right to lateral support and many other forms of property that are included and protected under the constitutional property concept. And although it is unlikely that expropriation would be relevant to intellectual property, the same is true for about 90 percent of all property. The main constitutional issue that affects about all forms of property is deprivation in terms of section 25(1), especially in instances where the state wishes to regulate property; and intellectual property is absolutely included in this issue. Dean121 proposes what he describes as a straightforward test in order to determine whether the constitutional property clause entrenches intellectual property rights adequately. He submits that one should ask whether the clause would prohibit parliament from passing a

118

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 113. 119 See Chap 4 (The Value of Immaterial Property) and specifically sec 4.5 dealing with spiritual theories and the personality theory in particular. 120 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 113. Compare Van der Walt AJ Constitutional Property Law (2005) 82; Alexander GS The Global Debate Over Constitutional Property (2006) 163; Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17 and Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-15. All of these authors agree that there is scope in the constitutional property clause to include intellectual property as constitutional property and that it would constitute adequate protection. 121 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114.

statute that prevents further intellectual property rights from being created. Dean122 is of the opinion that the answer to that question is decidedly in the negative. It is respectfully submitted that the answer to that question is not quite as straightforward.123 The same argument holds for licences (for example in taxi’s), shares in certain kinds of companies, servitudes with regard to water and many other property interests. Parliament would only be prohibited from passing a statute that prevented new intellectual creations from receiving property protection if this constitutes an unjustifiable arbitrary deprivation or an expropriation without just compensation. 525

Deprivation and Expropriation

Dean’s ‘straightforward’ question needs to be answered by reference to expropriation and deprivation, since no form of property receives absolute protection from state interference. Section 25 of the Constitution reads as follows: ‘(1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. (2) Property may be expropriated only in terms of law of general application – (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by court. (3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including – (a) the current use of the property; (b) the history of the acquisition and use of the property’ (c) the market value of the property; (d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and [my emphasis] (e) the purpose of the expropriation. (4) For the purposes of this section – (a) the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources; and (b) property is not limited to land [my emphasis] 122

Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114. 123 See sec 5.3.2 of this chapter for specific examples from German constitutional law that deal with intellectual property.

(5) […] (6) […] (7) A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress. (8) […] (9) […]’124

Of particular relevance to Dean’s125 argument that section 25 would not prevent parliament from passing a statute that would bring an end to the further creation of intellectual property rights, are the sections pertaining to deprivation126 and expropriation127 respectively. A situation as envisioned by Dean128 could possibly either fall into the category of deprivation; expropriation; or arbitrary deprivation, in which case it would be unconstitutional. It has to be noted that section 25(4) (b) expressly states that property is not limited to land. Van der Walt reasons that this section may be used to make the argument ‘that movable corporeal property as well as intangibles such as commercial interests and intellectual property [are] included under the protection in section 25 as a matter of course.’129 As a result, if intellectual property is included under section 25, as is submitted, then any Act passed by the legislature that takes away any property or a specific category of property would either be a valid and constitutionally legitimate deprivation or expropriation or it would be unconstitutional and as such the Constitutional Court could strike down the particular Act for being invalid. For example, a legislative amendment may take away the right to remuneration for a work of copyright for specific uses such as educational purposes.130 It becomes clear that the constitutional property clause does not necessarily leave intellectual property and other immaterial property interests without constitutional protection. However, this does not mean that constitutional protection is unlimited. Since intellectual property rights are created by statute, they could also potentially be extinguished by an act of parliament or by administrative action in terms of legislation. 124

For the sake of brevity and clarity I have omitted sections that pertain only to land and highlighted sections that may be of particular relevance to intellectual property and the broader category of immaterial property. 125 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114. 126 Sec 25(1) of the Constitution of the Republic of South Africa 1996. 127 Sec 25(2) - 25(4) of the Constitution of the Republic of South Africa 1996. 128 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 114. 129 Van der Walt AJ Constitutional Property Law (2005) 15. 130 See BVerfGE 31, 229 [1971] (Urheberrecht case) (the Schoolbook case).

The purpose of the section pertaining to deprivation is twofold.131 In the first instance it verifies that the property clause does not give absolute protection to property by confirming ‘the constitutional police power principle’ that allows for state interferences with property interests, provided that the interference complies with the requirements in section 25(1). Secondly, this section ensures that such regulations by the state comply with constitutional requirements. This section requires that a balance be struck between the protection of individual rights and the promotion of social responsibilities. Expropriation as set out in section 25(2) and 25(3), by contrast, does not pertain to regulations that merely interfere with certain property interests, but to instances where the property is taken by the state and compensation is required. These sections set out the requirements that the state needs to satisfy in order for such an expropriation to be valid and they also provide guidelines to determine what compensation would be just and equitable.132 526

The FNB Case

In First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance133 (hereafter referred to as the FNB case), the Constitutional Court set down certain steps that need to be followed where a court needs to consider the validity of limitations on property rights. These steps were based on the court’s distinction between deprivation and expropriation. The court defined deprivation as the wider category that includes the narrower category of expropriation, so that something that is a deprivation may also be an expropriation in certain instances. The court’s argument was that the requirements for deprivation are also applicable in the instance of an expropriation. Accordingly, for an expropriation to be valid the requirements in section 25(1) pertaining to deprivation as well as section 25(2) requirements for expropriation need to be satisfied, otherwise such an expropriation would be unconstitutional. In the FNB case,134 the Constitutional Court set out the methodology to be followed in a constitutional property dispute. The first step is to determine whether there was a deprivation 131

See Van der Walt AJ Constitutional Property Law (2005) 13. See Van der Walt AJ Constitutional Property Law (2005) 14. 133 2002 (4) SA 768 (CC). 134 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 58-60. 132

that infringes property in conflict with section 25(1) and therefore arbitrarily. This first step is referred to as the arbitrariness test. The questions whether the applicant qualifies as a beneficiary; whether the interest affected is in fact property for purposes of section 25; and whether the property interest was actually infringed upon appear to be ‘sucked into’ the arbitrariness test.135 In the FNB case, the Court set out the arbitrariness test as follows: ‘[D]eprivation of property is “arbitrary” as meant by s[ection] 25 when the “law” referred to in s[ection] 25(1) does not provide sufficient reason for the particular deprivation in question or is procedurally unfair.’136

Roux137 argues that the Court’s test for arbitrariness would be the focus of basically any property clause enquiry since the test would apply to all deprivations, including expropriations. Once it has been determined in the first step that there had in fact been an arbitrary deprivation, the second step would be to determine if such a deprivation may still be justified under section 36(1). If it cannot be justified, then the enquiry ends at this step since the limitation is unconstitutional. If the deprivation is in line with section 25(1) and therefore not arbitrary, then the enquiry proceeds to the question whether the deprivation is also an expropriation. If the deprivation is in conflict with section 25(1) but may be justified under section 36(1), then it must furthermore be determined whether the deprivation is also an expropriation, which is the third step in the enquiry. If the deprivation was indeed also an expropriation, then it must meet the requirements as set out in section 25(2) and 25(3). 138 If it

135

See Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-2 – 46-5, 46-21 – 46-25 for a full argument on this aspect of the ‘arbitrariness vortex’, as he termed it. Also see Van der Walt AJ Constitutional Property Law (2005) 54. 136 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 100. 137 Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-23 – 46-25. 138 Sec 25(2) and (3) of the Constitution provide as follows: ‘(2) Property may be expropriated only in terms of law of general application – (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by court. (3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including – (a) the current use of the property; (b) the history of the acquisition and use of the property’ (c) the market value of the property; (d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and (e) the purpose of the expropriation.’

does conform to section 25(2) and 25(3) requirements, then the expropriation is constitutional and that is the end of the enquiry. However, if the deprivation did amount to an expropriation but the requirements in section 25(2) and 25(3) were not met, then it could still be justified under section 36(1). If it may be justified, then the expropriation is constitutional; but if it is also not justifiable under section 36(1) then the expropriation is unconstitutional. Van der Walt139 notes that this procedure is not as effective as it appears. He points out two important reasons why it is not likely that an enquiry into constitutional validity would advance through all the stages as set out by the court. The first reason pertains to the likelihood that non-compliance with the requirements for a valid expropriation would already become apparent during the test for arbitrariness as set out in section 25(1). Where an expropriation does not make provision for compensation, it would already fail the nonarbitrariness test even before it has reached the stage where the deprivation is considered as an expropriation. As such it is unlikely that the analysis would ever reach the expropriation stage. The second reason why the enquiry is unlikely to reach all the stages is because logically a deprivation cannot be justified under section 36(1) if it has failed the nonarbitrariness test. As submitted by Van der Walt,140 it would be only in the most unusual cases that section 36(1) would play any role in a constitutional property dispute. If these reasons are valid, as they appear to be, then it is very likely that in most constitutional property disputes the enquiry would never proceed beyond the non-arbitrariness test. The enquiry would get stuck in the ‘arbitrariness vortex’, as Roux141 termed this particular complication with the approach as set out by the Court in the FNB case.142 In the FNB case,143 the Constitutional Court did not find it necessary to decide whether the property was property for purposes of the constitutional property clause, since the property in question was movable corporeal property. As the court stated: ‘Here it is sufficient to hold that ownership of a corporeal movable must - as must ownership of land - lie at the heart of our constitutional concept of property, both as regards the nature of

139

Van der Walt AJ Constitutional Property Law (2005) 54-55. Van der Walt AJ Constitutional Property Law (2005) 55. 141 Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-2 – 46-5, 46-21 – 46-25. 142 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 58-60. 143 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 51. 140

the right involved as well as the object of the right and must therefore, in principle, enjoy the protection of s[ection] 25.’144

The court also found it ‘practically impossible to furnish - and judicially unwise to attempt - a comprehensive definition of property for purposes of s[ection] 25’.145 The court specifically stated that they were ‘not concerned at all with incorporeal property’.146 Roux,147 however, states that there was nothing in the judgment to suggest that the court would not grant constitutional property protection to incorporeal property if it were faced with such a case. Since many forms of incorporeal property interests are not accepted as property in private law and also not yet explicitly as constitutional property, it becomes clear that the property question may still be very relevant in the context of immaterial property interests.148 Accordingly it would not always be possible to merely brush over the property question and continue to the non-arbitrariness test. Depending on the kind of property, the court may very well have to go into the issue whether the allegedly infringed interest is indeed property for purposes of section 25. Since intellectual property rights and some unconventional immaterial property interests are often held by a company or other juristic person, it should be noted here that in principle a juristic person would be entitled to the protection of section 25 of the 1996 Constitution. Van der Walt149 notes this by reference to section 8(4) of the 1996 Constitution which entitles juristic persons to the protection of the rights as protected by the Bill of Rights ‘to the extent required by the nature of that juristic person’. In the FNB case,150 the Constitutional Court confirmed the principle that not only natural persons, but also juristic persons may be the beneficiaries of section 25 protection.151 It becomes apparent that the constitutional property 144

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 51. 145 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 51. 146 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 100. 147 Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-10. 148 See Chaps 2 (Traditional Immaterial Property Interests) and 3 (Unconventional Immaterial Property Interests) for a discussion of the different immaterial property interests. 149 Van der Walt AJ Constitutional Property Law (2005) 49. Also see Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-9, where he states that a company or other juristic person should enjoy constitutional protection over their property even where their headquarters are situated somewhere other than South Africa. 150 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC). 151 See First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45 for the reasons

clause may indeed offer protection to intellectual property just like any other form of property. Similarly, the constitutional property clause could also restrict intellectual property just like any other form of property. 527

The Laugh It Off Cases

The position at this stage is that intellectual property rights are not entrenched in a separate constitutional clause. The best solution is hence to protect intellectual property rights and other immaterial property interests under the general constitutional property clause, which provides adequate protection. The situation in terms of which intellectual property rights and a fundamental right come into conflict as foreseen by Dean152 did in fact culminate in a court case where the right to freedom of expression had to be weighed up against the right of a trademark owner. In South African Breweries International (Finance) BV t/a Sabmark International v Laugh It Off Promotions CC153 the court had to weigh up the constitutionally protected right to freedom of expression and the property right of a trademark owner. The applicant, South African Breweries (SAB), had a registered trademark for the words ‘Carling Black Label’ and for a representation of the label of its product. The respondent, Laugh It Off Promotions CC (Laugh It Off), sold T-shirts with the slogan ‘Black Labour, White Guilt.’ The laudatory part ‘America's lusty, lively beer’ and ‘Brewed in South Africa’ were replaced by ‘Africa's lusty, lively exploitation since 1652’ and ‘No regard given worldwide’. The marks used by Laugh It Off appeared the same as SAB’s registered trademarks. SAB brought an action in terms of section 34(1) (c) of the Trade Marks Act 194 of 1993, which prohibits the use of a well-known mark where use would be detrimental to or take unfair advantage of the distinctive character or repute of a mark. The court found in favour of SAB and Laugh It Off subsequently lodged an appeal against the court’s finding of trademark infringement. As Smith154 notes, Laugh It Off had been given leave to appeal directly to the Supreme Court of Appeal due to the novelty of the issues.

why the Court decided to grant constitutional property protection to juristic persons. In brief, the two reasons were that only when protection was extended to juristic persons as well could the rights of natural persons be fully realised; and that if juristic persons were not protected, disruptions would occur and the fabric of the democratic state would be undermined. See Van der Walt AJ Constitutional Property Law (2005) 49. 152 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 115. 153 [2003] 2 All SA 454 (C) par 16. See Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 196-197 for an extensive discussion of the case. See further Alberts W ‘A case of Black Label: More than just free speech’ (2003) July De Rebus 32-35 at 32-33 for commentary on the ruling of the court. 154 Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 197.

When the case went on appeal,155 the Supreme Court of Appeal stated that the Trade Marks Act 194 of 1993 should not infringe freedom of expression unduly. The court dismissed the appeal after weighing up the right to freedom of expression against the right to property and freedom of trade. The court’s decision was based on their finding that Laugh It Off’s use of SAB’s trademark could not be justified in terms of freedom of expression, because there were means other than the sale of T-shirts available for Laugh It Off to convey their message. According to Smith, the court’s judgment is ‘notable for its extensive use of [foreign] case law’.156 After this decision, Laugh It Off appealed to the Constitutional Court,157 where the Supreme Court of Appeal’s decision was ultimately reversed. The Constitutional Court held that the right to freedom of speech and to use material in a parody were merely factors to be considered in determining whether the prejudice suffered by the holder of a right (in this case SAB, the holder of a trademark) and were not defences per se. Of specific importance to this chapter is the fact that Sachs J balanced the right to freedom of expression and the right to property.158 The Constitutional Court argued as follows regarding the balancing of the right to freedom of expression and the property right of the trademark owner: ‘The question to be asked is whether, looking at the facts as a whole, and analysing them in their specific context, an independent observer who is sensitive to both the free speech values of the Constitution and the property protection objectives of trademark law, [my emphasis] would say that the harm done by the parody to the property interests of the trademark owner outweighs the free speech interests involved … It seems to me that what is in issue is not the limitation of a right, but the balancing of competing rights … it would appear once all the relevant facts are established, it should not make any difference in principle whether the case is seen as a property rights limitation on free speech, or a free speech limitation on property rights. At the end of the day this will be an area where nuanced and proportionate balancing in

155

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International 2005 (2) SA 46 (SCA) par 29-34. See Neethling J & Potgieter JM ‘Disparagement of a business, its product or its services: Freedom of expression of consumers and the public’ (2005) 26 Obiter 389-397 at 395-396 for a brief discussion of the case. Also see Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 197-199 for a full discussion of the technical aspects of the case and Ginsburg P ‘Intellectual property law’ 2005 ASSAL 572-583 at 573 for a very concise account of the facts and issues of the case. 156 Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 197. 157 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 158 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 82-83.

a context - specific and fact - sensitive character will be decisive, and not formal classification based on bright lines.’159

After these court decisions, different opinions were voiced as to the impact of the first two decisions as well as the final decision of the Constitutional Court on the status of trademarks and the broader category of intellectual property under the Constitution. Pistorius160 discussed the implications of South African Breweries International (Finance) BV t/a Sabmark International v Laugh It Off Promotions CC161 after the case had gone on appeal to the Supreme Court of Appeal, but before the Constitutional Court decision. She states that ‘[t]he constitutional right of freedom of expression is not absolute but is limited by laws of general application such as intellectual property laws’.162 This statement is derived from section 36(1) of the Constitution and interpreted to mean that a person’s right to freedom of expression may be limited in certain instances where it is in conflict with someone else’s right to a trademark. As the court stated per Harms J in Laugh It Off v SAB International: ‘Concern is expressed from time to time about the pervasiveness of trademarks, the fact that trademark owners tend to be voracious and that trademark protection is not always kept within its legitimate bounds … On the other hand, and in spite of some judicial resistance in certain quarters, trademarks are property, albeit intangible or incorporeal. The fact that property is intangible does not make it of a lower order. Our law has always recognised incorporeals as a class of things in spite of theoretical objections thereto … But then again, intellectual property rights have no special status. The Constitution does not accord them special protection and they are not immune to constitutional challenge [my emphasis]. Even if constitutional, their enforcement must be constitutionally justifiable. The problem, as will appear later, is that the question of how far guarantees of freedom of the media and expression affect intellectual property rights, is, except for the USA, somewhat virgin territory.’163

From the court’s statements there are a few aspects that are of importance for this chapter. In the first instance, the court explicitly affirms that intangible property is property in private 159

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 82-83. 160 Pistorius T ‘Trade-mark tarnishment: Should we laugh it off all the way to Telcomsucks and Hellcom?’ (2004) 16 SA Merc LJ 727-740 at 729. 161 [2003] 2 All SA 454 (C) par 16. 162 Pistorius T ‘Trade-mark tarnishment: Should we laugh it off all the way to Telcomsucks and Hellcom?’ (2004) 16 SA Merc LJ 727-740 at 729. 163 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a/ Sabmark International 2005 (2) SA 46 (SCA) paras 8, 10-11. For a short discussion of the court’s remarks, see Pistorius T ‘Trade-mark tarnishment: Should we laugh it off all the way to Telcomsucks and Hellcom?’ (2004) 16 SA Merc LJ 727-740 at 731.

law, which substantiates the argument that at least certain immaterial property interests should be accepted as constitutional property. Smith164 points out the statement of Harms J that ‘no one would suggest that painting graffiti on private property is not an abuse of free speech’165 and notes that Harms J does not think that it should be any different for trademarks. Furthermore, the court states that intellectual property has no special status and consequently rejects the idea that intellectual property rights should enjoy separate constitutional protection. The court also confirms that intellectual property rights, exactly like other property rights, are not absolute. Finally, the court weighs up intellectual property and freedom of expression, which implicitly gives acknowledgement to intellectual property even though the court does not expressly refer to the constitutional property clause. The reason for this omission must be that the issue of constitutional property protection was not placed before the court for consideration. On the topics that become apparent from the judgment, Smith’s166 conclusion is that a South African trademark should be seen as property and the owner of such property may protect it like any other form of property. He states that a trademark may not be freely taken and distorted for commercial gain. Whether a certain use of a trademark is allowed depends on whether or not the prejudice to the owner of the trademark weighs more than the right to freedom of expression. There are certain instances where a trademark may be used for a parody where the use of the trademark is not strictly for commercial gain. Smith submits that such an instance may occur where the parody is ‘based on truth, public interest, and fair comment for comic effect, or to ridicule, criticize, or comment on the trademark or its proprietor’.167 Smith’s article was also written before the Constitutional Court’s judgment on the case; hence the position is slightly different pertaining to the aspect of commercial gain. The comments that a trademark may be protected in terms of the Constitution like any other form of property is still relevant even after the Constitutional Court overturned the Supreme Court of Appeal’s decision.

164

Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 198-199. Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International 2005 (2) SA 46 (SCA) par 31. 166 Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 199-200. 167 Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 200. 165

After the Constitutional Court gave judgment in Laugh It Off v SAB International,168 there were also a few comments written on the decision. Alberts169 begins his discussion by referring to the process followed by the Constitutional Court. The Constitutional Court criticised the two-step approach that the Supreme Court of Appeal had followed in dealing with the relationship between the Trade Marks Act 194 of 1993 and the 1996 Constitution. The process followed by the Supreme Court of Appeal had been to first determine whether there was an infringement on the trademark and thereafter considering whether such an infringement could be constitutionally justified. According to the Constitutional Court, this approach is flawed and the correct approach would be to base a finding of likely detriment on whether the expression is protected under section 16(1) of the Constitution, the right to freedom of expression clause. If the expression is found to be protected, then the alleged detriment must be ‘mediated against the competing claim for free expression’.170 According to the Constitutional Court, the Supreme Court of Appeal’s approach did not allow that court to take into account the alleged infringer’s claim to the right to freedom of expression.171 The Constitutional Court also noted that statutes should be construed consistent with the Constitution, consequently section 34(1) (c) of the Trade Marks Act 194 of 1993 had to be interpreted bearing in mind the right to freedom of expression protected under section 16 of the Constitution. Alberts argues that this procedure proposed by the Constitutional Court seems somewhat circular, but concedes that it is most likely less so if one takes into account that ‘an expression will usually qualify for constitutional protection’.172 He derives this conclusion from the court’s statement that an expression would be protected unless it is excluded by section 16(2), which deals with propaganda for war; incitement of violence; and hate speech inciting harm.173 Alberts notes that the threshold for protection of an expression is 168

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 169 Alberts W ‘The future of trade mark dilution in South Africa: Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International and the Freedom of Expression Institute [2005] 3 BCLR 743 (CC)’ (2006) 1 TSAR 212-223 at 213. 170 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 43-44. 171 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a/ Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 44. 172 Alberts W ‘The future of trade mark dilution in South Africa: Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International and the Freedom of Expression Institute [2005] 3 BCLR 743 (CC)’ 2006 TSAR 212-223 at 213. 173 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 47.

accordingly not high and no specific qualities are required. He argues that constitutional protection may feature twice in the process of reaching a decision; the first being merely to include an expression under the protection of the right to freedom of expression and the second the actual weighing up of the competing rights in order to determine which one will dominate. Furthermore, he also notes that the Constitutional Court’s approach seems to be that in cases where the right to freedom of expression is found to prevail, no ‘detriment’ in the legal sense exists.174 Ginsburg,175 who is also cited as council for SAB in the court a quo, wrote the intellectual property law update for the Annual Survey of South African Law. In his update, he discusses the decisions of Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International in the Supreme Court of Appeal176 as well as the Constitutional Court.177 He notes quite correctly that there are still valuable dicta in the Supreme Court of Appeal’s judgment that remain intact even though the Constitutional Court overruled the outcome of the case.178 Ginsburg notes that ‘the judgment of Harms J reflects substantial legal research’.179 As he notes, the research covers comparative law from American, European and Canadian cases, text books and academic writing. He also refers to the weighing up of the right to freedom of expression and the trademark owner’s right to property and freedom of trade, occupation or profession. However, Ginsburg does not say anything about the implications of the decision for the constitutional protection of trademarks and other forms of intellectual property. Dean, on the other hand, notes the importance of the ‘broad issue of the inter-relationship between intellectual property rights and the fundamental right of freedom of [expression]

174

For a specific discussion of the legal concept of ‘detriment’ in the context of sec 34(1) (c) of the Trade Marks Act 193 of 1994 and comparative case law on the subject, see Alberts W ‘The future of trade mark dilution in South Africa: Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International and the Freedom of Expression Institute [2005] 3 BCLR 743 (CC)’ (2006) 1 TSAR 212-223 at 214-218. 175 Ginsburg P ‘Intellectual property law’ 2005 ASSAL 572-583 at 573-575. 176 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International 2005 (2) SA 46 (SCA). 177 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 178 See the discussion of Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 199-200, where he highlights some of the dicta of the Supreme Court of Appeal. 179 Ginsburg P ‘Intellectual property law’ 2005 ASSAL 572-583 at 573. Also see Smith A ‘Trade-mark dilution: You can’t laugh it off’ (2004) 12(4) JBL 196-200 at 197 where he makes a similar comment about the extent of the comparative law used in the Supreme Court of Appeal’s judgment.

enshrined in the constitution’.180 He argues that the owners of trademarks and other intellectual property rights may ‘find some comfort’ in the judgment on this level even though the factual outcome of the case was that the right to freedom of expression trumped the trademark right. Dean181 refers back to the First Certification case,182 where concerns were raised about the fact that intellectual property rights were not entrenched in a separate constitutional clause. This, it was felt, might lead to intellectual property rights being considered subservient to other entrenched rights if a conflict would arise between the rights. Dean183 stresses the importance of the fact that both the judgment of the court per Moseneke J as well as the individual judgment of Sachs J departed from the point that the right to freedom of expression and the right to intellectual property have equal status despite the fact that the right to freedom of expression is entrenched while the right to intellectual property is not explicitly mentioned in the Bill of Rights.184 Dean185 furthermore notes the importance of the views of Moseneke J that freedom of expression is not limitless, unqualified or a right ranking above all others. In specific circumstances, law of general application may limit the right to freedom of expression.186 Dean187 also notes the importance of the judgment of Sachs J, where it was stated that the issue is not the limitation of a right, but the balancing of competing interests and that it should make no difference whether the case is seen as a ‘property rights limitation on free speech or a free speech limitation on property rights.’188 Dean189 correctly states that there is no suggestion in these judgments that freedom of expression should be seen as generally superior to the right to intellectual property. In his opinion, the court equated the right to intellectual property and the right to freedom of expression, which is a universally accepted fundamental right entrenched in the 1996 Constitution. He also welcomes ‘this belated recognition by the Constitutional Court of the status of intellectual property rights’ and sees it 180

Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 18. Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 182 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 183 Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 184 The constitutional property concept has always been wide and no explicit definition of property is given in the constitutional property clause, but all property rights may be included under the clause. 185 Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 186 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 47. 187 Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 188 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC) par 81, 83. 189 Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 181

as the first step in rectifying the situation that the Constitutional Court had created by refusing to accept the right to hold intellectual property as a fundamental human right. As Dean puts it, ‘Cinderella has been welcomed at the ball!’190 He sees in this judgment the ‘unequivocal recognition of the right to hold intellectual property as a fundamental right having equal status to the specified fundamental rights in the Bill of Rights’.191 This is not really a new recognition of intellectual property, since the position has always been that intellectual property may be included under the property clause even though Dean would not accept this as adequate.192 However, it must be asked why there was no reference made to the constitutional property clause, since the court did go so far as to say that the holder of a trademark has a property right. In the First Certification case,193 the Constitutional Court made it clear that the constitutional property clause may include an array of interests and that intellectual property is not specifically excluded. Therefore it strikes one as strange that section 25 was never mentioned in Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International.194 The first reason is that the parties simply did not bring the issue before the court. This may pertain to the fact that the Constitution is still relatively new and that private law specialists are wary of implementing the rights traditionally perceived as ‘public law’ rights in a primarily private law case. The second reason may pertain to the fact that courts are wary of constitutional property cases since they are perceived as being difficult and technical. As a result courts shy away from using the constitutional property clause where a solution may be found by any other means.195 This is rather unfortunate, since the court passed up a grand opportunity to give more clarity on the meaning of ‘property’ in the constitutional context and more specifically on whether intellectual property, and perhaps the overarching category of immaterial property, may be included under the property clause. Even though the court did offer some form of protection for intellectual property, they did not say under which specific authority that is. However, the court surely did not create a new 190

Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 21. 192 See Dean OH ‘The case for the recognition of intellectual property in the Bill of Rights’ (1997) 60 THRHR 105-119. 193 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 194 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 195 These two reasons were derived from some of Professor AJ van der Walt’s ideas that were mentioned in the course of seminars on constitutional property law during 2008 and 2009. 191

category of fundamental rights, so the protection afforded (at least in principle) must have been under the property clause. 528

Conclusions

Van der Walt196 states that it is reasonably clear that at least some incorporeal interests will be included as property in the general property clause. Incorporeal interests that are accepted as property in private law should in principle be protected under the constitutional property clause.197 According to Van der Walt,198 foreign examples indicate that constitutional property should include ‘intellectual property (patents, copyright and trademarks), certain “rights in rights” (mineral rights, leases, security interests, other commercial property based on contract) and other commercial property interests (shares and licences)’.199 Chapters 2 (Traditional Immaterial Property Interests) and 3 (Unconventional Immaterial Property Interests) of this dissertation examine the nature of immaterial property interests and their inclusion under the property clause in more detail. Van der Walt200 suggests a general rule, namely that the inclusion of these incorporeal interests should depend on the questions whether the interest can exist independently and whether the rights have vested or been acquired by the claimant according to normal law, common law or statute depending on the particular right. However, it becomes apparent that there is still no consensus on the interpretation of the Constitutional Court’s decision201 on intellectual property and its protection in a separate constitutional clause. Although most authors agree that the constitutional property clause has scope to include intellectual property rights, there are still authors arguing that intellectual property should be protected under a separate constitutional property clause since intellectual property interests need a different kind of protection than other property interests. Van der Walt202 views this as a logical error since the property clause does not specify any particular category of property rights or interests explicitly. As a result it would be impossible to predict 196

Van der Walt AJ Constitutional Property Law (2005) 87. See for example Cooper v Boyes NO and Another 1994 (4) SA 521 (C) where it was decided that shares are incorporeal movable property over which an usufruct may be established. 198 Van der Walt AJ Constitutional Property Law (2005) 87. 199 Van der Walt AJ Constitutional Property Law (2005) 87. 200 Van der Walt AJ Constitutional Property Law (2005) 87-88. 201 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 202 Van der Walt AJ Constitutional Property Clauses (1999) 352-353 and Van der Walt AJ Constitutional Property Law (2005) 95.

197

which specific kind of protection any category of property could require. Therefore it is also not possible to determine abstractly that the category of intellectual property would necessarily require a different kind of protection than other categories of property. The argument for the separate constitutional protection of intellectual property rights perhaps confuses the differing purposes of private law and constitutional protection respectively. The different kind of protection sought in terms of this argument appears to be additional private law protection rather than protection against state interference or competing constitutional rights; and this is not the purpose of constitutional protection. Even if one does accept Dean’s argument for separate protection of intellectual property, which seems unlikely, the position at the moment is that intellectual property does not enjoy separate constitutional protection and consequently the best approach would be to include it under the constitutional property clause. The current position is that the constitutional property clause is wide enough to protect rights and interests that should be protected according to international human rights standards. This is interpreted to mean that intellectual property rights or traditional immaterial property interests as well as at least certain unconventional immaterial property interests may be included under the constitutional property clause. There are no court cases yet to clarify which immaterial property interests may be included, but it may be assumed that at least property interests that are accepted as property in private law would also be accepted as property for constitutional purposes. Therefore, at the very least, intellectual property rights would be included, although unconventional immaterial property interests may also be included if international human rights standards require this. The acceptance of immaterial property interests as constitutional property rights would afford protection to these interests against arbitrary state interferences as well as the rights of third parties, at least in principle. However, the property clause also has a limitation function, provided in the deprivation and expropriation subsections. It becomes clear from this discussion that at least certain immaterial property interests may be protected under the constitutional property clause, since its wide scope allows for the protection of all property interests deserving of protection. The FNB case203 provided guidance regarding the procedure that should be followed in a constitutional property case. 203

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC).

Although the case did not deal with immaterial property interests, it did not exclude the possibility of constitutional protection for immaterial property interests. It has also been shown that the protection pertaining to expropriations and deprivations would apply to and benefit intellectual property rights as well as the broader category of immaterial property interests. Intellectual property could not simply be abolished by an act of parliament, since such an action would have to be constitutionally justifiable under the property clause. In the case of Laugh It Off v SAB International204 the Constitutional Court gave implicit protection to trademarks by balancing the entrenched right to freedom of expression with the right of a trademark owner. However, since there are still no court cases giving clarity on which specific immaterial property interests would be included under the constitutional property clause, some guidance may be found in examples from foreign case law. 53

Comparative Constitutional Immaterial Property Law

531 Venter

Introduction 205

warns that ‘[t]o venture into the field of comparative law is to expose oneself to the

hazards of philosophy’.206 The risks stem from the fact that legal philosophers tend to use incomprehensible terminology in their process of analysis, categorisation and critique. However, he also cautions that the relevant philosophy cannot be ignored. Comparative lawyers need to make clear what their preferences are on the burning issues lest they be ‘interpreted’ involuntarily into one of the categories.207 Regarding comparison in the field of constitutional law, Venter states that most comparative law historically took place in the context of private law.208 Although he acknowledges that some work has been done in the field of constitutional comparison, he denies that a systematised and comprehensive field has been developed. Venter notes certain difficulties faces by all constitutional comparative scholars. These ‘include the variation of meaning and content of legal concepts and expressions, differences 204

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 205 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 15. 206 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 15. 207 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 15. 208 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 19-20. Also see Alexander GS The Global Debate over Constitutional Property (2006) 17, where he agrees that comparative law previously took place mainly in the area of private law.

in institutions and procedures; and the fact that primary sources are not always readily accessible and methods of interpretation are not constant’.209 It is furthermore rare to find neat, systematic classifications of concepts in public law. The effects of external variables such as socio-economic and political culture and history; and historical differences are more extensive in the field of public law. Finally, he also notes that ‘public law tends to be tinted in stronger national tones than private law is’.210 Venter211 also states that no comprehensive, universally valid formulation of the purposes of constitutional comparison may be found, since the purposes of each comparison may vary. The purpose of this comparison is to analyse and discuss the property definitions of constitutional jurisdictions with a particular focus on the jurisdictions that have given specific consideration to the issue of immaterial property interests and its inclusion under the constitutional property concept, in order to find a suitable approach for South African law. According to Alexander,212 the field of comparative constitutional law is currently flourishing in America, although it was rarely used merely ten years ago. He notes that although interpretation is most important, the text of a constitutional property clause is still relevant. There are certain features that all property clauses have in common even though they are not identical. All property clauses make provision for the state to ‘expropriate’ or ‘take’ property under specified, restricted circumstances. The two restrictions are generally that the expropriations may only be permitted for a ‘public purpose’ or ‘public use’; and that an expropriation must be compensated to some degree.213 A point of difference is the inclusion of a social-obligation provision, which is absent in the American Constitution, but present in the German Basic Law214 and even more pronounced in the South African Constitution. Although Alexander215 denies that it is possible to speak of something such as ‘the comparative method’, he concedes to using interpretation as a main methodological approach.

209

Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 19-20. 210 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 20. 211 Venter F Constitutional Comparison – Japan, Germany, Canada & South Africa as Constitutional States (2000) 36. 212 Alexander GS The Global Debate over Constitutional Property (2006) 1. 213 Alexander GS The Global Debate over Constitutional Property (2006) 6-7. 214 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. 215 Alexander GS The Global Debate over Constitutional Property (2006) 17.

Van der Walt216 notes that the question whether incorporeal property interests may be included under constitutional property is specific to legal systems based on Roman-Germanic private law tradition. In Anglo-American jurisdictions, the property concept has always been wider and the distinction between public and private law less strict than in the case of Roman-Germanic jurisdictions. According to section 39(1) (c) of the Constitution, a court, tribunal or forum may consider foreign law when interpreting the Bill of Rights. According to Van der Walt,217 the use of foreign law in the interpretation and application of the property clause is a complex and controversial issue. While the interim Constitution was still being drafted, South African lawyers almost automatically used comparative law for the interpretation of the Bill of Rights. This was especially the case with private law property lawyers, who mostly had little or no experience with constitutional law. At this stage, South African lawyers did not have adequate knowledge of comparative constitutional property sources and as such the comparative analysis was not systematic or organised. Van der Walt218 notes that both lawyers and the courts have since then improved their knowledge of constitutional comparison. He also states that since the volume of literature on the subject has increased, the use of comparative materials has been refined. It is now understood that comparison should be done in order to bring new solutions or clarity in specific areas or points of law or interpretation.219 In the specific instance of this chapter, the comparative analysis of constitutional property sources should give clarity on the interpretation of the concept of ‘constitutional property’, specifically regarding the inclusion or exclusion of certain immaterial property interests. Attention is given to jurisdictions that provide case law pertaining to the treatment of immaterial property interests under the respective constitutions. Van der Walt220 argues that the phraseology and structure of a specific property clause is not that important in the interpretation of a property clause221 and even the differences between common-law and civil-law traditions are not all that meaningful, especially if one judges from a private law background.

216

Van der Walt AJ Constitutional Property Law (2005) 82. Van der Walt AJ Constitutional Property Law (2005) 19. 218 Van der Walt AJ Constitutional Property Law (2005) 19. 219 Also see Alexander GS The Global Debate over Constitutional Property (2006) 17, where he agrees that interpretation is the most important method in comparative constitutional law. 220 Van der Walt AJ Constitutional Property Law (2005) 20-21. 221 Also see Alexander GS The Global Debate over Constitutional Property (2006) 17 where he agrees on this point. 217

However, Van der Walt222 does caution that one must keep in mind the different social and political contexts which inform the role that property is expected to play in a society and which informs the formulation and interpretation of its constitution.223 According to Van der Walt, the purpose of a comparative approach is to learn from the interpretational problems that foreign cases have already uncovered and also to study and ‘analyse different approaches, arguments, tendencies and trends in the solution of those problems’, while keeping in mind the specific localised needs of South Africa. Furthermore, Van der Walt224 argues that one should not be too suspicious or sceptical about considering foreign law, since a court is not committed to follow foreign law just because it is considered. It could prove to be a useful tool in avoiding the mistakes that have already been made in other jurisdictions. He states that the fear of making the same mistakes should not prevent courts from considering foreign law, but should have the opposite effect since such consideration of foreign law would assist rather than hinder the court in avoiding the same mistakes. Consequently, the court does not necessarily have to follow the specific foreign law that is considered, but could choose not to follow its approach precisely because it has proven to be faulty. In his comparative article on Commonwealth constitutions, Allen225 formulates two important questions to be asked when one studies a particular constitutional property clause and the meaning of ‘property’. First, it should be asked whether property has ‘a meaning in constitutional law which differs from its meaning in other branches of the law’ and if it does (as Allen argues), one must ask: ‘[W]hat criteria do the courts employ when deciding whether something is constitutionally protected property?’226 As far as the constitutional property decisions of Commonwealth jurisdictions are concerned, Allen states that courts have been reluctant to draw on the available literature on the theory of property. He notes that ‘[i]nstead of engaging in a moral, political, or economic analysis of property, they rely on the

222

Van der Walt AJ Constitutional Property Law (2005) 20-21. See Alexander GS The Global Debate over Constitutional Property (2006) 17 where he agrees that the society’s background legal and political traditions and culture are important considerations in the interpretive process. He also identifies ‘the legal institutional context within which constitutions and the courts interpreting them operate’ as an important factor for interpretation. 224 Van der Walt AJ Constitutional Property Law (2005) 22. 225 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 524. 226 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 524. 223

conception of property as a bundle of rights over a tangible or intangible thing’.227 He states that the ‘bundle of rights’ concept is applied similarly throughout the Commonwealth, even though the content of such rights may vary in the different jurisdictions. Allen identifies rights in the ‘bundle’ to include ‘the right to exclude others from the thing owned, the right to use or receive income from it, and the right to transfer it to others’.228 He also gathers from the majority of Commonwealth cases that an individual has property in a specific thing once he or she ‘has a sufficient quantity of these rights in a thing’.229 He states that it varies from case to case how many of these rights are considered necessary to constitute a ‘sufficient’ amount, but he doubts whether only one would ever be sufficient. He also notes that some rights appear to carry more weight, although the case law does not explain why that would be the case. As mentioned, the focus of this comparative study will fall on jurisdictions that have specific case law that provide clarity on the inclusion of immaterial property interests under the concept of constitutional property. Van der Walt230 states that different forms of intangible property are widely accepted as property for purposes of constitutional property protection. Under the German law and also to a lesser extent in Australian law, intellectual property interests (patents, copyright and trademarks) have been accepted as property for constitutional purposes. The decisions accepting these interests as well as other academic works are considered in the sections on German and Australian law later in this chapter. Certain commercial interests also enjoy constitutional protection under jurisdictions such as Germany, Australia, Ireland and the United States of America and as such these decisions warrant some consideration. Money debts, permits, licenses and quotas are mostly treated on the same basic principles, namely that the interest would generally qualify and be protected as property if the interest or right has vested in the claimant in such a way that the legislation creating or assigning the benefit may no longer simply abolish the benefit.231 Germany, 227

Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 429. 228 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 429. 229 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 430. 230 Van der Walt AJ Constitutional Property Clauses (1999) 22. 231 The German court’s approach provides an answer to Dean’s argument (Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105-119) that intellectual property requires separate constitutional protection against state interferences and abolition. The answer to the question lies in whether the statute or the private law principles result in a positive answer in the case at hand, if not, the matter cannot be solved by constitutional protection. In other words, the property interest created in terms of

Australia and the United States of America have judicial decisions pertaining to these problematic forms of intangible property.232 Under German jurisdiction, the so-called ‘new property’ or ‘public-law property’ 233 enjoys a certain measure of constitutional protection. In the United States of America similar attempts have been made to gain protection for the ‘new property’ rights, but with little success. In the United States of America, these rights have received protection under the Due Process Clause,234 but not yet under the Takings Clause235 that usually serves to protect property. The Due Process Clause has often protected interests other than property. Van der Walt 236 argues that the due-process protection granted under United States law can hardly be seen as protection of property in the usual sense and for this reason it is still uncertain whether the ‘new property’ is really treated as a form of constitutional property. He also refers to what he calls a ‘third wave’ of property interests, namely body rights, cultural property and religious property. Although these interests have not enjoyed constitutional attention, there has been a fair amount of literature on the subject, especially in the United States.237 There is also ample literature on the interaction between the right to freedom of expression and intellectual property in the United States.238 It has to be noted that the United States has a specific constitutional clause that protects and promotes intellectual property interests separately from other forms of property.239 It is most likely this kind of protection and promotion that Dean240 had in mind when he contended that intellectual property is not adequately protected under the Constitution of the

legislation would only qualify and be protected as property if the interest or right has vested in the claimant in such a manner that the legislation which creates or assigns the benefit may no longer simply abolish the benefit without constitutional scrutiny. 232 Van der Walt AJ Constitutional Property Clauses (1999) 22-23. 233 See Chap 3 (Unconventional Property Interests) sec 3.9 for a discussion of the ‘new property’. 234 Constitution of the United States of America 1787 Fourteenth Amendment 1868. 235 Constitution of the United States of America 1787 Fifth Amendment 1791 Section 1. 236 Van der Walt AJ Constitutional Property Clauses (1999) 23, 441-444. 237 See the discussion in Chap 3 (Unconventional Immaterial Property Interests). 238 See for example Lange DL & Powell HJ No Law: Intellectual Property in the Image of an Absolute First Amendment (2009); Jaroff AF ‘Big Boi, Barbie, Dr Seuss, and the king: Expanding the constitutional protections for the satirical use of famous trademarks’ (2008) 57 American ULR 641-681. 239 Article I Section 8 Clause 8 of the Constitution of the United States of America 1787 assigns the express power to Congress ‘[t]o promote the progress of science and the useful arts, by securing for limited times, to authors and inventors, the exclusive right to their writings and discoveries’. 240 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110.

Republic of South Africa 1996, even though the Constitutional Court241 made it clear that the constitutional property clause may protect an array of interests and does not only protect interests pertaining to land. The following discussion on foreign case law may provide some guidance in the interpretation of the constitutional property clause, specifically with reference to the property concept and the question of which immaterial property interests should be included under the constitutional property concept. It is not necessary that South African courts should follow these examples, but there is much to be learnt from the approaches and mistakes of other constitutional jurisdictions. 532

Immaterial Property under the German Basic Law

Property (Eigentum) is restricted to tangible, corporeal things in the German Civil Code.242 Van der Walt243 states that although the same term (Eigentum) is used in Article 14244 (the property clause) of the Basic Law,245 the Federal Constitutional Court decided in the Warenzeichen case246 that the scope of property for the purposes of this guarantee should not merely be determined from the private law concept of corporeal things, but from the property clause itself, keeping in mind the meaning and context of the guarantee in the larger plan of the constitution. Alexander247 adds that the Federal Constitutional Court places little weight on the text of the constitution itself. The Federal Constitutional Court relies on the ‘fundamental purpose’ of property as a constitutional right rather than a direct textual interpretation. Rather it is the values of the constitution that determine what may be included under the scope of constitutional property. All private law property interests are accepted as

241

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 242 Bürgerliches Gezetzbuch – BGB § 903. 243 Van der Walt AJ Constitutional Property Clauses (1999) 151. Also see Alexander GS The Global Debate over Constitutional Property (2006) 124, where he agrees that the constitutional conception of property is not dependent upon the private law concept. 244 The official translation of Article 14 of the Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949 reads as follows: ‘Article 14 (1) Property and the right to inheritance shall be guaranteed. Their substance and limits shall be determined by law. (2) Property entails obligations. Its use should also serve the public interest. (3) Expropriation shall only be permissible in the public interest. It may only be ordered by or pursuant to a law which determines the nature and extent of compensation. Compensation shall reflect a fair balance between the public interest and the interests of those affected. In case of disputes regarding the amount of compensation recourse may be had to the ordinary courts.’ 245 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. 246 BVerfGE 51, 193 [1979] (Warenzeichen case) 218. 247 Alexander GS The Global Debate over Constitutional Property (2006) 124.

property for constitutional purposes, although constitutional property is not limited to these interests; it merely serves as a point of departure.248 Fundamental rights do not only apply to natural persons, but also to domestic juristic persons, as far as the nature of the right permits.249 Van der Walt notes250 that a number of German decisions deal with patrimonial interests and their inclusion or exclusion under the guarantee. These decisions were based on the question whether or not a sphere of personal liberty may be secured for the individual to achieve independence in the patrimonial field, by affording protection to the specific interest through Article 14. As Van der Walt states: ‘The question is whether the interest in question can be said to belong to an individual who can take private initiative and responsibility in using it for her own benefit, while participating in the development and functioning of the broader legal community.’251

In a similar vein, Kommers252 states that the subjective character of the property right is specifically accentuated in German constitutional law. According to him, ‘[p]roperty is associated with liberty and personhood; it provides space for the exercise of autonomy and self-realization’.253 He also stresses the ‘social obligation of property’, which he derives from Article 14(2) and its reference to property’s function to serve the welfare of the public. He also states that there is a social obligation in ownership. Kommers argues that the legislature is granted a wide berth to regulate property in the public interest. However, such regulation ‘may not infringe on the essence of ownership’.254 If the power of eminent domain255 were used in such a way as to interfere with the property rights that are based in personhood, then the public interest would be seen as subject to that right. Alexander256 also refers to the ‘social obligation’ of ownership under German constitutional property law. He argues that the way in which property is treated by the constitution, textually as well as through the courts’ interpretation, ‘is functionally dynamic and socially

248

Alexander GS The Global Debate over Constitutional Property (2006) 124-125. Article 19.3 of the Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. See Van der Walt AJ Constitutional Property Clauses (1999) 126. 250 Van der Walt AJ Constitutional Property Clauses (1999) 151. 251 Van der Walt AJ Constitutional Property Clauses (1999) 151. 252 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 252. 253 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 253. 254 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 253. 255 This refers to the power vested in the German legislature in terms of which property may be regulated. 256 Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 748. 249

based’.257 What he means by ‘functionally dynamic’ is that courts take into consideration social and economic changes that have an effect on the purpose that a particular resource serves at a particular time. According to him, the ‘social obligation’ of ownership means that ‘private property rights are always subordinate to the public interest’.258 It is submitted that Alexander formulates this approach too rigidly, since the German courts usually balance the private property interest and the public interest in order to find a constitutionally justifiable result in a given dispute in order to comply with the relevant constitutional property clause. Neither of these interests should automatically prevail over the other. According to Van der Walt, the social limitations entail that an equitable balance should be ‘established (by the legislature) and maintained (by the administration and the judiciary) between individual property interests and the social or public interest in the use of the property’.259 The Federal Constitutional Court has described the scope of constitutional property in a number of landmark cases. The content of property for the purposes of Article 14 is not determined by reference to private law, but by the public law purpose and nature of the property clause.260 However, Van der Walt261 notes that the private law concept of property was used as a point of departure in the development of the constitutional property concept. As a result, all traditional private-law property interests were automatically accepted as constitutional property under Article 14. In addition to private-law rights pertaining to corporeal things, private-law rights with regard to immaterial and incorporeal property are included under the guarantee. These include shares, patent rights,262 trademark rights,263 copyright,264 and the rights of performing artists, contractual money claims,265 debts266 and so 257

Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 748. 258 Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 750. 259 Van der Walt AJ Constitutional Property Clauses (1999) 133. In the Besitzrecht des Mieters case (BVerfGE 89, 1 [1993]), the Federal Constitutional Court had to decide whether a lessee had a property interest in the rental property that is separate from the owner’s interest and how far such an interest would be protected against the owner. The Federal Constitutional Court weighed up the different interests, eventually deciding in favour of the owner, although it controversially added that the lessee also held a form of private property. 260 Compare Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 254 where he argues that although the Constitutional Court has tended to approach the definition of constitutional property by looking at the whole Constitution, the reality is that the judges have ‘relied more heavily on the historic development of the concept of property in the Civil Code than on any systematic or teleological approach to constitutional interpretation’. 261 Van der Walt AJ Constitutional Property Clauses (1999) 152. Also see Alexander GS The Global Debate over Constitutional Property (2006) 124-125. 262 BVerfGE 36, 281 [1974] (patent rights). 263 BVerfGE 51, 193 [1979] (Warenzeichen case) (trademarks). 264 BVerfGE 31, 229 [1971] (Urheberrecht case) (copyright). 265 BVerfGE 42, 263 [1976] (Contergan case) (contractual money claims).

forth. For the purposes of this chapter, the focus will fall on intellectual property rights and unconventional immaterial property interests as defined in Chapter 2 (Traditional Immaterial Property Interests)267 and 3 (Unconventional Immaterial Property Interests)268 respectively. Kommers269 states that in 1971, there were five controversial cases which decided that artistic and other intellectual creations are accepted as constitutional property for the purposes of Article 14. However, he states that the nature and extent of the right to intellectual property has to be determined by the legislature in the public interest. The courts have struck down regulations that deny authors and composers fees for the reproduction and distribution of their works. On the other hand, the courts have upheld statutory provisions that made provision for the use of protected material without permission from the creator in specific educational and cultural contexts. Kommers argues that the court treats the right to intellectual property in close proximity with the rights of personality and artistic freedom, more so than in the cases dealing with other forms of property. He notes that the courts also focus on the social character of intellectual property. He states that the so-called Schoolbook case,270 the leading opinion in this context, is important not only for the clarity it gives about intellectual property, but also because it brings enlightenment on the standards and principles that inform the Constitutional Court’s construction of Article 14’s content and limits.271 In short, the facts of the Schoolbook case272 are as follows: The German parliament amended the Federal Copyright Act in 1965 as to permit the publishing of a collection of ‘literary and musical works of small extent, single artistic work, or single photographs’ that had already been published before. The collection was meant to assemble ‘the works of a considerable number of authors’ with the intention, ‘by its nature, exclusively for religious, school, or instructional use’.273 This purpose had to be clearly stated on the title page of such a collected 266

BVerfGE 68, 193 [1984] (debts). Traditional immaterial property interests have been defined as patents, copyrights, registered designs and trademarks, respectively. 268 Unconventional immaterial property interests have been defined as commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, participatory claims and non-proprietary rights, respectively. 269 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 261. For this section I rely heavily on Kommers’ translation and interpretation of the German cases pertaining to intellectual property under the constitution as well as Van der Walt AJ Constitutional Property Clauses (1999) 151-157. 270 BVerfGE 31, 229 [1971] (Urheberrecht case). 271 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 261-262. 272 BVerfGE 31, 229 [1971] (Urheberrecht case). See Van der Walt AJ Constitutional Property Clauses (1999) 152-153. 273 Section 46 Urheberrechtsgesetz BGBl I [1965]: 1273 (Federal Copyright Act 1965). 267

work. Authors also had to be notified of this use of their work by registered mail before reproduction and distribution of the collection could begin. Quite a few musicians felt that the amendment violated their property rights under Article 14 and therefore filed constitutional complaints. According to the First Senate’s judgment, the constitutional complaints were justified. The Federal Copyright Act 1965 distinguishes between the moral rights of authors and their utilisation rights since copyright protects both of these aspects. The German Federal Constitutional Court274 also stated that a constitutional evaluation must focus solely on the economic aspect of copyright, namely the economic utilisation of an intellectual creation. The question was whether the limitation imposed by the statute on these economic rights of the author is constitutionally justifiable, a question which the court deemed to be within the ambit of Article 14. The Court further stated that the link between personal-artistic creation and its economic utilisation as well as the special nature of the property rights should be considered in the constitutional assessment. Section 46, the amendment to the Federal Copyright Act, was found to be incompatible with Article 14(1), the property guarantee. The Court held that even though the constitution enables the legislature to define the content of property according to social and economic demands, the constitution also restricts the legislature’s freedom in this regard. The legislature must ensure the preservation of the core of a right and ensure that it conforms to all constitutional provisions in determining the content of a specific right such as a property right. Similar to tangible property rights, the economic rights of authors may as a result also be shaped by the legal order. The first function of Article 14(1) is to guarantee the legal institutions of property. In the case of copyright the essence of the right protected by the constitution is the author’s right, secured by private law, to have property in his or her creation, including the right to freely dispose thereof. However, not every conceivable use of the property is constitutionally protected. The property guarantee ensures that a basic set of rules are in place to characterise the right as ‘private property’. It is the responsibility of the legislature to lay down appropriate standards to allow for the utilisation of a specific category of property in line with Article 14(1) and taking into account the nature and social importance of the right. Section 15 of the Federal Copyright Act allows an author to dispose of his or her work by means of 274

BVerfGE 31, 229 [1971] (Urheberrecht case).

contract, but this right is not unlimited and the section contains certain exclusions. According to the court,275 it must also be kept in mind that the legislature is obligated to secure the public good when it circumscribes individual rights. A fair balance must be established between the interests of the public and individual rights. Therefore, whether a provision is constitutionally valid also depends in part on whether it may be justified in terms of the public interest.276 According to the Federal Constitutional Court277 it would not be in the public interest to allow an author to bar the use of his or her work in an educational collection; consequently the contested provision is justifiable. However, as far as the contested provision does not provide for the compensation of authors whose works are used in such a collection, the provision is unconstitutional, since the authors have the right to set certain conditions for the use of their work. Such a provision would impair the economic value of a copyrighted work substantially and not be in line with the property guarantee. There would have to be a very compelling public interest for such a provision to be valid and on the facts of the case there was none. What was decisive, according to the Court, was that no other intellectual property owners were required to donate their creative works free of charge. Kommers278 also refers to other constitutional property cases dealing with intellectual property and specifically copyright in order to demonstrate that the Court does not blindly protect a complainant’s intellectual property right, but weighs up all interests before coming to a decision. In the Broadcasting Lending case279 the Federal Constitutional Court had to decide on the constitutionality of a statutory provision that allowed schools to lend out the single works of authors on a non-profit base, after the authors had received equitable remuneration for the original use. According to the court, the provision was not incompatible with the constitutional property clause and was accordingly sustained. In a companion case, the School Broadcast case,280 the court ruled that an author does not have to be paid for every broadcast of his work. According to Kommers,281 the factor that made this limitation on the

275

BVerfGE 31, 229 [1971] (Urheberrecht case). See Van der Walt AJ Constitutional Property Clauses (1999) 133. 277 BVerfGE 31, 229 [1971] (Urheberrecht case). 278 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 265-266. Also see Van der Walt AJ Constitutional Property Clauses (1999) 151-157. 279 BVerfGE 31, 248 [1971]. 280 BVerfGE 31, 270 [1971]. 281 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 266. 276

author’s right to reproduce a work permissible was that the work would possibly have to be broadcast more than once in order to reach all of the school audiences that were intended. The Tape Recording I case282 dealt with a section of the Federal Copyright Act that granted authors a claim against manufacturers of tape recorders that had the ability to reproduce copyrighted works for personal use. The Federal Constitutional Court sustained this particular section because it balanced the interests of the manufacturers; the producers of tape recordings; retailers; and the persons who would ultimately buy these products. The final case in this series of five 1971 copyright cases is the Phonograph Record case.283 In this case the Federal Constitutional Court had to decide whether a change in the Federal Copyright Act should be sustained. The copyright of a recording was changed from the original provision for 50 years to the new provision for only 25 years. The court upheld this provision, noting that public interests may warrant the redefinition of the rights of owners as long as the principles of certainty and proportionality in the law are taken into proper consideration. Seven years later, another constitutional property case dealt with intellectual property, namely the Church Music case.284 The Federal Constitutional Court once again had to balance the interests in the individual and social dimensions of intellectual property. A section of the 1965 Copyright Act that provided for the reproduction of a musical score without permission of the copyright holder and without payment of royalties if it were played at a non-profit public event; in church; or in connection with a religious event was challenged by several composers of church music. The Court referred to the ‘social character of intellectual property’, meaning that the public interest was also relevant in constitutional intellectual property cases. It was decided that these kinds of performances at a statesponsored public event may take place without authorisation of the copyright holder, due to the compelling public interest in such an event. The Court confirmed the principle that the public or non-profit character of an event is not always adequate justification to deny royalties or some form of compensation. The Court focused on the part of the provision pertaining to performance in a church and upheld it although, according to Kommers,285 with some reluctance. Kommers also notes that ‘the right to remuneration can be overridden only

282

BVerfGE 31, 255 [1971]. BVerfGE 31, 275 [1971]. 284 BVerfGE 49, 415 [1978]. 285 Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 266. 283

when the public interest prevails in a given situation’286 and that this requires a balancing act. He also notes that there is some suggestion in this case that ‘the justices are prepared independently to determine, apart from legislative policy, what kind of intellectual property is deserving of protection under Article 14’.287 The Court is apparently also prepared to protect potential property rights. Even though a wide interpretation of ‘property’ is accepted for the purpose of Article 14, Van der Walt288 notes that this wide concept does not mean that any right or interest that is of patrimonial value would be recognised as property. There are two general principles that restrict the constitutional guarantee provided by Article 14. In the first instance, only concrete rights are protected and not merely the general patrimony, wealth or estate of a person. Secondly, only rights vested or acquired in terms of private law, including the applicable legislation, are protected and not mere expectations. This second general statement does not apply absolutely to business property, since it often consists of the possibility to make profits, which may be affected by unlawful state actions pertaining to licenses and permissions. The property guarantee also covers the so-called social-security rights or ‘new property’289 insofar as these rights serve the purpose of Article 14, ‘namely that it protects the sphere of liberty of the individual in constituting and organizing her own life in the patrimonial sphere’.290 This concept is important for every immaterial property interest that is not explicitly protected by the constitution in any other clause and therefore the question arises whether protection may be afforded in terms of the property clause. In this context, the requirements derived from this concept is useful for the South African Constitutional Court in determining which immaterial property interests, especially some of the unconventional ones, may be recognised and protected under the constitutional property clause. This concept may be divided into two separate requirements. Firstly, the right must be used to secure the person’s existence in society and secondly the right must have vested or been acquired by the person in question. In order for such a right to be regarded as vested, it should be sufficiently separated from the control of the state and acquired by the person to the extent that the right 286

Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 266. Kommers DP The Constitutional Jurisprudence of the Federal Republic of Germany (1997) 266 fn 63. 288 Van der Walt AJ Constitutional Property Clauses (1999) 153. 289 See Reich C ‘The new property’ (1964) 73 Yale LR 733-787, where he first developed the concept of social participatory rights as constitutional property. 290 Van der Walt AJ Constitutional Property Clauses (1999) 156. Also see Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 765. 287

may be regarded as belonging to the person. A further requirement usually set by the courts is that the person must have invested adequate own effort or expenditure to acquire the right.291 Social-security provisions stemming from the state’s duty of social maintenance are not included under constitutional property. Van der Walt292 states that the social-security rights that are included under Article 14 are mostly created by ‘statutory, public-law social-security insurance schemes’ that are based on substantial own contributions and serve to ensure the person’s existence. Claims for state payments, such as repayment of overcharged taxes are also included under Article 14.293 According to Alexander,294 German courts grant constitutional protection to private property only to the extent that such an interest embodies some other substantive value of the constitution. Alexander argues that the decisions regarding welfare benefits illustrate the relationship between the two constitutional values that he calls ‘individual self-realization’ and ‘civic capacity’ very well. The courts have consistently linked these substantive values with constitutionally protected property. By way of example he refers to a 1985 case295 that dealt with the constitutionality of an amendment reducing the health-care benefits received in terms of a federal statute. The Federal Constitutional Court decided that the amendment did not violate Article 14 rights. According to the claimants, the legislature deprived them of a property interest vital to their personal liberty. The Court had to decide whether such benefits qualified as property under the constitutional property clause. The Court set out the conditions that the interest must be vested and that sufficient own contribution must have taken place. This requirement is referred to as the ‘Eigenleistung’ requirement or the requirement of own effort or own input, investment or contribution. Van der Walt296 states that the German law conception of ‘new property’ and its conception in the United States of America should be distinguished. He questions whether the category of public-law property in German law may be compared to the ‘new property’ as envisioned 291

This approach provides a solution to Dean’s concern that property interests created in terms of legislation would not receive adequate constitutional protection. See Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105-119 at 112. 292 Van der Walt AJ Constitutional Property Clauses (1999) 157. 293 Van der Walt AJ Constitutional Property Clauses (1999) 157. 294 Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 765. 295 BVerfGE 69, 272 [1985] (Eigenleistung case; Personal Contribution case). 296 Van der Walt AJ Constitutional Property Clauses (1999) 157. Also see Alexander GS ‘Property as a fundamental constitutional right? The German example’ (2003) 88 Cornell LR 733-778 at 766. He agrees that the concept of ‘new property’ differs in German and American constitutional law.

by Reich297 and applied in the United States of America, since German law applies the strict requirements of vesting and own contribution. This kind of property as defined in German law possibly does not have the government largesse aspect anymore and as such it possibly does not constitute recognition of ‘new property’, since the narrow definition of these kinds of interests brings it very close to the traditional property interests. However, Van der Walt298 also notes that in so far as public-law participation interests are recognised and protected as property in German law, they enjoy substantive protection and not mere due-process protection. In other words, welfare benefits are also included under Article 14 of the Basic Law,299 but only if some form of own contribution is evident. It appears from this analysis that German constitutional law has accepted a wide meaning of the property concept for constitutional purposes. Although the German courts departed from the point that all private law property interests enjoy constitutional protection, the property concept is not restricted to property interests in private law. Instead, the constitutional property concept is formulated by reference to the social function of constitutional property. A specific interest may be afforded constitutional property protection if this secures a sphere of personal liberty for the individual to achieve independence in the patrimonial field. Property’s function to serve the welfare of the public is also very important and it is central to balance the public interest and private rights. Artistic and other intellectual creations are accepted as constitutional property for the purposes of Article 14. However, the public interest is an important consideration when the legislature determines the nature and extent of the right to intellectual property. The right to intellectual property is considered in close proximity with the rights of personality and artistic freedom, even more so than in the cases dealing with other forms of property. Courts also focus on the social character of intellectual property. Patents, copyright and trademarks have explicitly been accepted as constitutional property in Constitutional Court cases, in line with the purpose of the constitutional property clause. Shares, the rights of performing artists, contractual money claims and debts are also accepted as property for constitutional purposes. These interests are recognised and protected in 297

Reich C ‘The new property’ (1964) 73 Yale LR 733-787. Van der Walt AJ Constitutional Property Clauses (1999) 157. 299 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. 298

private law. However, there is no specific article in the Basic Law300 that provides constitutional protection for these interests. These interests also share certain characteristics with property and for this reason the Federal Constitutional Court is willing to treat them as property in constitutional law. In German law, these interests serve the same purpose as property, namely to secure a sphere of personal liberty for the individual. These interests also only acquire protection if they are vested and acquired in terms of normal law. This approach could be particularly useful for South African courts to determine under which circumstances immaterial property interests may be recognised and protected as constitutional property. The ‘social obligation’ of ownership is very important in the court’s evaluation of whether a specific property interest should enjoy constitutional protection or not and, if it is protected, what that protection should entail. It is submitted that such an approach could be useful in the South African context in order to determine which immaterial property interests should enjoy constitutional protection under section 25 of the Constitution. It also has to be noted that in South Africa, unlike Germany, intellectual property is accepted as a sui generis form of property in private law. This strengthens the argument that intellectual property should be included as property for purposes of the South African constitutional property clause. However, especially for the unconventional immaterial property interests that are not protected as property in private law, the approach that the Federal Constitutional Court developed in the context of welfare benefits could be of particular relevance in determining under which circumstances these interests could be recognised and protected as constitutional property. 533

Immaterial Property under the Constitution of the United States of America

According to Van der Walt,301 the property concept for the purposes of the Fifth302 and Fourteenth303 Amendments is interpreted widely in American case law. He notes that this is

300 301

Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949.

Van der Walt AJ Constitutional Property Clauses (1999) 441. The Fifth Amendment 1791 of the Constitution of the United States of America 1787 provides as follows: ‘No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury…nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for private use without just compensation.’ 303 The Fourteenth Amendment 1868 of the Constitution of the United States of America 1787 provides as follows: 302

usually the case in jurisdictions where a constitution guarantees property, but even more so for American law. He states that the American property concept has always been wider than in Roman-Germanic law, since American law is based on English common law, which defines property exceptionally widely. Since the property definition was never problematic in English systems, it does not enjoy as much attention in case law as in continental systems. Van der Walt304 states that constitutional case law does not yet reflect debates about extending the scope of the property concept, although there are interesting discussions in literature on the topic.305 The American Constitution has a clause pertaining specifically to intellectual property, a feature which is quite unique. Article I Section 8 Clause 8 of the Constitution of the United States of America 1787 consigns to Congress the express powers ‘[t]o promote the progress of science and the useful arts, by securing for limited times, to authors and inventors, the exclusive right to their writings and discoveries’. According to Lange and Powell,306 this clause was usually referred to as the ‘Copyright Clause’ or the ‘Patent Clause’, depending on the subject matter on hand. They state that it is now generally known as the ‘Intellectual Property Clause’ despite the fact that only copyrights and patents originate under the power vested by this clause. This clause has been described as a grant of power as well as a limitation. This clause is generally used by American courts as authority that patents and copyright are not protected under the Takings Clause.307 However, in his article on the history of the constitutional protection of patents, Mossoff308 states that the issue of constitutional protection of patents is not novel and uncertain, but that there are nineteenth century judicial opinions that explicitly granted constitutional protection ‘No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.’ 304 Van der Walt AJ Constitutional Property Clauses (1999) 441. 305 Examples of these would possibly be commercial information, confidential information, biotechnological products and traditional knowledge respectively as discussed in Chap 3 (Unconventional Immaterial Property Interests). See Radin MJ Contested Commodities: The Trouble with Trade in Sex, Children, Body Parts, and Other Things (1996) and Boyle J Shamans, Software and Spleens – Law and the Construction of the Information Society (1996). 306 Lange DL & Powell HJ No Law: Intellectual Property in the Image of an Absolute First Amendment (2009) 34-35. 307 Constitution of the United States of America 1787 Fifth Amendment 1791 Section 1. See Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 690-691. 308 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 689.

to patents in terms of the Takings Clause.309 He states that this case law has been neglected by recent court decisions as well as scholars and that this position needs to be rectified. He states that patents are property, but ‘[t]he question that haunts scholars and courts today is whether patents also are constitutional private property, falling within the ambit of protections afforded to “private property” under the Takings Clause’.310 These scholars and courts have been unanimous in their view that there exists no nineteenth century case law holding that patents are secured under the Takings Clause311 and Mossoff312 argues that this is wrong. He states that the reason for such oversight may pertain to the rejection of the natural rights conception of property by the legal realists at the turn of the twentieth century. This conception of property secured the exclusive rights to acquire, use and dispose of property and was the leading property theory during the eighteenth and nineteenth centuries. The Legal Realists replaced this definition with the theory that property secures mainly the right to exclude and this is the theory relied on in American legal theory today. Mossoff313 argues that this radical transformation affected the way that courts and scholars defined categories of property ‘such as the intangible property in a patent, which is now defined as securing only the right to exclude’.314 He argues that this had an impact on the way ‘modern courts and scholars have understood how patent rights were defined and secured in the nineteenth century, when property rights were more broadly conceived as securing exclusive use rights’.315 Mossoff316 deems this issue important, since patents are increasingly being regulated and as such the constitutional security of these rights is becoming more prominent in American public policy debates. By way of example, he mentions that after 11 September 2001, the

309

Constitution of the United States of America 1787 Fourteenth Amendment 1868 Article [XIV], Section 1. Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 689. 311 Constitution of the United States of America 1787 Fourteenth Amendment 1868 Article [XIV], Section 1: ‘No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.’ 312 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 690-691. 313 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 691. 314 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 691. 315 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 691. 316 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 692. 310

federal government wanted to suspend Bayer’s patent on Cipro so that vast amounts of the antibiotic for the treatment of anthrax could be obtained. Since patents are property, questions are being raised about the constitutionality of such limitations. Mossoff317 states that some courts accept patents as constitutional property, while others do not. He also notes that the issue is complicated by a federal statute318 that mandates the government to pay ‘reasonable and entire compensation’ where an invention protected by a patent is used by the government. According to Mossoff, this statutory requirement has been recognised by courts as an execution of the power of eminent domain of the federal government. He argues that this ‘tacitly acknowledges that patents are property rights accorded constitutional protection under the Takings Clause’.319 In 2002, in the case of Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co320 the Supreme Court decided that patent rights are ‘the legitimate expectations of inventors in their property’.321 By this statement, the court applied one of the current standards employed by the courts to protect tangible property rights under the Takings Clause.322 However, confusion on the issue remains, as illustrated by the 2006 case of Zoltek Corp v United States,323 where the Federal Circuit court gave a split decision. The court stated that ‘patent rights are a creature of federal law’ and refused to apply the Takings Clause to patent law.324 The reason given for this decision was that the owners of patent rights had only the rights provided by Congress and that the federal law, § 1498325 unveiled that these rights were not secured under the Constitution before the law came into force. This was explained by the court as follows: ‘Had Congress intended to clarify the dimensions of the patent rights as property interests under the Fifth Amendment, there would have been no need for the new and limited sovereign immunity waiver.’326

317

Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 693-694. 318 United States Code Title 28 § 1498. 319 Constitution of the United States of America 1787 Fourteenth Amendment 1868 Article [XIV], Section 1. 320 535 US 722 (2002). 321 Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co 535 US 722 (2002) at 723. 322 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 694. 323 442 F3d 1345 (Fed Cir 2006). 324 Zoltek Corp v United States 442 F3d 1345 (Fed Cir 2006) at 1352. 325 United States Code Title 28 § 1498. 326 Zoltek Corp v United States 442 F3d 1345 (Fed Cir 2006) at 1352.

The dissenting opinion of the minority of the court argued that patents should be included under the Takings Clause, but still held that a court has not yet addressed this question, ignoring the nineteenth century jurisprudence that did address the question extensively.327 According to Mossoff,328 the ‘limited scholarship on patent takings’ agree that the majority opinion of Zoltek Corp v United States329 applied the correct historical background. Mossoff330 notes that there are scholars who argue that patents should be included under the Takings Clause, but they argue that it has to be done by extending the 1984 Supreme Court decision of Ruckelshaus v Monsanto Co331 to patents. This case decided that trade secrets are private property that may be secured under the Takings Clause. The logic behind such an extension is that both trade secrets and patents are forms of intellectual property, hence both must be protected by the Takings Clause if the one is protected. More broadly, intellectual property scholarship has criticised the expansive protections for copyrights, patents and other forms of intellectual property. They also criticise the ‘property rhetoric’ used in what they call the ‘propertising’ of intellectual property where the traditional limited monopoly language is replaced by the language of property rights.332 Mossoff333 notes that ‘if patents were traditionally defined as limited monopoly privileges, then nineteenth-century courts would not have extended constitutional protection to them as property rights on par with common law rights in land or chattels’.334 Mossoff335 sets out the history of patent protection under constitutional law by referring to certain nineteenth century cases that accepted patents as private property for purposes of the 327

See Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 696. 328 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 696. 329 442 F3d 1345 (Fed Cir 2006). 330 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 698. 331 467 US 986 (1984). 332 For example, see Lemley MA ‘Property, intellectual property, and free riding’ (2005) 83 Texas LR 10311076 at 1033; Carrier MA ‘Cabining intellectual property through a property paradigm’ (2004) 54 Duke LJ 1146 at 1; Lemley MA ‘Romantic authorship and the rhetoric of property’ (1997) 75 Texas LR 873-906 at 902; Samuelson P ‘Information as property: Do Ruckelshaus and Carpenter signal a changing direction in intellectual property law?’ (1989) 38 Cath ULR 365-400 at 398. 333 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 698-700. 334 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 700. 335 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 700-711.

Takings Clause. He states that the 1843 Supreme Court case of McClurg v Kingsland336 laid the foundation for the application of the Takings Clause to property rights in patents. The case found that an Act repealing certain patents could not impair the rights in existing patents. The court also ‘directly linked patents with traditional property rights as a matter of legal and constitutional doctrine’.337 In the 1876 case of Cammeyer v Newton,338 the Supreme Court stated that ‘private property, the Constitution provides, shall not be taken for public use without just compensation’339 and applied it to patents. Thereafter, in the case of McKeever v United States,340 the court directly answered the question whether patents are included as property for purposes of the Takings Clause in the affirmative. In this case, the United States War Department had used two of McKeever’s patents without his permission. The Government claimed sovereign immunity, claiming that patents did not apply against the Government since patents were special legal privileges granted by the Government. The court341 did not accept the Government’s argument and stated that patents fell within the scope of private property for purposes of protection in terms of the Takings Clause. The court noted that in American law, patents secured inventions and that this is specifically authorised in terms of the Copyright and Patent Clause.342 The court specifically distinguished this from the English law position where patents are viewed as a ‘grant’ issuing from a ‘royal favour’. The Copyright and Patent Clause and the language it employed were analysed to show the distinction between the personal privilege granted in terms of a patent in English law and the American property right for inventions. The words ‘right’ and ‘exclusive’ and the absence of the term ‘patent’ and any express reservation in favour of the Government in the Copyright and Patent Clause were used to demonstrate the difference. The fact that Congress, and not the Executive, was empowered by the Constitution to protect the rights of inventors was further employed to distinguish between these privileges in English law and the American property rights.343 The court further referred to the natural right to property in order to strengthen the argument that American patent rights were property rights and not mere privileges granted to inventors by the Government. However, the court did not refer to the 336

42 US (1 How) 202 (1843). Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 703. 338 94 US 225 (1876). 339 Cammeyer v Newton 94 US 225 (1876). 340 14 Ct Cl 396 (1878). 341 McKeever v United States 14 Ct Cl 396 (1878) at 420. 342 Article I Section 8 Clause 8 of the Constitution of the United States of America 1787. 343 McKeever v United States 14 Ct Cl 396 (1878) at 421. 337

difference between patents secured under the federal statute and tangible property rights secured at common law.344 In the case of Campbell v James,345 this distinction between patents and tangible property rights was specifically invoked by United States postal officials defending their unauthorised use of a patented device for the postmarking of stamps. The officials claimed immunity on the basis that patent rights were created by federal statute. The court noted that all property is either expressly or implicitly upheld by law and that patents were the same as any other form of property.346 These nineteenth century cases make it clear that historically the issue of patent protection under the Takings Clause is neither novel nor uncertain; patents were protected under the Takings Clause. Somehow this history has been forgotten or lost and modern scholars and courts treat the issue as novel and controversial.347 Ghosh348 argues that intellectual property (copyright, patents, trademarks, trade secrets and unfair competition in American law) should be recognised and protected as property for purposes of the Takings Clause, since this would constitute the best way of protecting intellectual property against state infringements. He states that ‘analyzing intellectual property infringement under the Takings Clause requires a three-part inquiry. First, there must be a governmental use. This part is fairly easy to satisfy by some use of the intellectual property by the state or an agent of the state … There also must be a use of a protected intellectual property right. It is necessary to look to the relevant positive law to determine whether the owner has a protected interest that was used by the government. This inquiry hinges upon which rights are granted by the relevant intellectual property statute. Therefore, a case-by-case analysis of the intellectual property is appropriate here. Finally, there must be a reduction in the licensing value of the intellectual property.’349

344

Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 707. 345 4 F Cas 1168 (CCSDNY 1879) (No 2, 361). This decision was ultimately reversed by James v Campbell 104 US 356 (1981) on the ground that the patent was not valid. However, the Supreme Court (James v Campbell 104 US 356 (1981) at 358) still agreed with the court of first instance that the Government may not appropriate or use a patent without just compensation any more than if the property in question were land. 346 Campbell v James 4 F Cas 1168 (CCSDNY 1879) (No 2, 361) at 1172. 347 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 711. 348 Ghosh S ‘Toward a regulatory takings doctrine for intellectual property: The path left open after College Savings v. Florida Prepaid’ (2000) 37 San Diego LR 637-709. 349 Ghosh S ‘Toward a regulatory takings doctrine for intellectual property: The path left open after College Savings v. Florida Prepaid’ (2000) 37 San Diego LR 637-709 at 687-688.

Ghosh applies this three-part enquiry to each category of intellectual property separately. He regards patents as the easiest case for a taking and also refers to the case of James v Campbell350 as authority that patents are protected under the Takings Clause just like any other form of property. He states that ‘[c]opyright is also considered protected property under case law and under the Copyright Act. The difficulty raised by state use of copyrighted work is posed by the fair use doctrine’.351 He explains this by referral to the example of a state university making multiple classroom copies of a copyrighted work. The question whether such use would be a taking or not hinges on whether the use may be regarded as fair use or not. He submits that a takings claim would be treated as a statutory claim in the context of copyrights. Unlike patents and copyrights, trademarks allow the owner exclusively to use the mark to distinguish a particular good or service marketed in a particular geographic region. A trademark right is narrower than the rights of patents or copyright, but is perpetual in principle. ‘Because of these differences, the key problem raised for characterizing trademark infringement as a taking is one of defining the protected property interest that is infringed upon by state use.’352 Ghosh353 also agrees with Mossoff354 that the theft of trade secrets is the easiest case to characterise as a taking due to the Court’s decision in Ruckelshaus v Monsanto Co.355 The case of Ruckelshaus v Monsanto Co356 accepted trade secrets as constitutional property for the purpose of protection under the Takings Clause and there have been attempts by scholars to extend this protection to other forms of intellectual property by analogy. Apart from judicial opinion on the treatment of intellectual property there are also cases that deal with the interaction between intellectual property and freedom of expression in American constitutional law.357

350

104 US 356 (1981). Ghosh S ‘Toward a regulatory takings doctrine for intellectual property: The path left open after College Savings v. Florida Prepaid’ (2000) 37 San Diego LR 637-709 at 691. 352 Ghosh S ‘Toward a regulatory takings doctrine for intellectual property: The path left open after College Savings v. Florida Prepaid’(2000) 37 San Diego LR 637-709 at 693-694. 353 Ghosh S ‘Toward a regulatory takings doctrine for intellectual property: The path left open after College Savings v. Florida Prepaid’ (2000) 37 San Diego LR 637-709 at 698. 354 Mossoff A ‘Patents as constitutional private property: The historical protection of patents under the takings clause’ (2007) 87 Boston ULR 689-724 at 698. 355 467 US 986 (1984). 356 467 US 986 (1984). 357 For example see Jaroff AF ‘Big Boi, Barbie, Dr Seuss, and the King: Expanding the constitutional protections for the satirical use of famous trademarks’ (2008) 57 American ULR 641-681 and Lange DL & Powell HJ No Law: Intellectual Property in the Image of an Absolute First Amendment (2009). 351

Welfare benefits were in principle recognised as constitutional property by the Supreme Court in Goldberg v Kelly.358 This case recognised the ‘new property’ first argued for by Reich.359 The principle that social security benefits had to be treated as property for purposes of the ‘due process’ guarantee once such a right was vested, was established in this case. Black J noted in his dissenting opinion that the majority’s approach implies that an individual is deprived of his own property if the government does not pay a charitable instalment as promised. According to Van der Walt ‘[t]his statement suggests a view in terms of which the due process requirement and the property concept are closely related, so that both affirmation and denial of the applicability of the due process in the context of welfare rights or social rights involve a concomitant affirmation or denial of the property status of these rights in the constitutional property context’.360

However, Van der Walt361 also notes that such an interpretation does not fit if one keeps in mind that the ‘new property’ has never been accepted as constitutional property for purposes of the Takings Clause,362 but only for the Due Process Clause.363 He argues that this may mean that the ‘new property’ is not really accepted for constitutional property purposes, but only for the purposes of due process protection. Van der Walt suggests that it may be argued that the ‘new property’ is not accepted as property at all if it becomes clear that it would never be protected as property for purposes of the Takings Clause. In that case it may be that these welfare rights are merely important interests once they are vested and as such they deserve due process protection.364 According to Van der Walt this issue is still unclear, since the courts insist that the due process clause is applicable to these rights as property rights. It becomes apparent that there are many different aspects of American constitutional property that are interesting and potentially useful to South African courts. American courts employ a wide definition of the property concept in the constitutional context. There has been a movement to include ‘new property’ under property for constitutional purposes, although these property interests have never been protected under the Takings Clause, only under the 358

397 US 254 (1970). Reich C ‘The new property’ (1964) 73 Yale LJ 733-787. 360 Van der Walt AJ Constitutional Property Clauses (1999) 442-443. 361 Van der Walt AJ Constitutional Property Clauses (1999) 443. 362 The Fourteenth Amendment 1868 of the Constitution of the United States of America 1787. 363 The Fifth Amendment 1791 of the Constitution of the United States of America 1787. 364 In South African law due process protection is described as administrative justice. 359

Due Process Clause. Therefore it is still uncertain whether the ‘new property’ is truly accepted as a form of constitutional property. The subject of patents is uncertain, but the latest court cases have held that patents are not protected under the Takings Clause.365 Although there are certain nineteenth century court cases366 that have decided otherwise, these decisions have not yet been reflected in recent case law and it remains to be seen whether it will be mentioned in future. The argument appears to be that patents and copyright are adequately protected by the ‘Intellectual Property Clause’ and therefore it does not require additional protection from the Takings Clause. In South Africa, intellectual property is not protected in a separate clause, since the South African Constitutional Court367 decided that the property clause provides adequate protection and there is no need for a separate clause pertaining to intellectual property. Although this aspect of American law is therefore not helpful to South African courts, it is still important to note that intellectual property is not unprotected in American constitutional law, it is merely protected separately. As a result, it nonetheless strengthens the argument that intellectual property should be protected under the South African constitutional property clause. Trade secrets are explicitly accepted as property under the American Takings clause. 534

Immaterial Property under the Australian Commonwealth Constitution

In Australia, constitutional property law is regulated by section 51(xxxi) of the Commonwealth Constitution 1990, which provides that: ‘[t]he Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to: … The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has the power to make laws …’

As Van der Walt368 notes, this constitution does not contain a ‘classic bill of rights’ and as a consequence section 51(xxxi), the property clause, is not a typical property guarantee. Nonetheless, courts treat and recognise this provision as a property guarantee and as such, it has generated important case law pertaining to the constitutional protection of property and 365

Festo Corp v Shoketsu Kinzoku Kogyo Kabushiki Co 535 US 722 (2002); Zoltek Corp v United States 442 F3d 1345 (Fed Cir 2006). 366 McClurg v Kingsland 42 US (1 How) 202 (1843), Cammeyer v Newton 94 US 225 (1876) and McKeever v United States 14 Ct Cl 396 (1878). 367 Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 368 Van der Walt AJ Constitutional Property Clauses (1999) 39.

specifically immaterial property interests, which is discussed in this section. Section 51(xxxi) has the purpose of providing as well as restricting the power to acquire property.369 Furthermore, Van der Walt370 notes that the view of the Australian courts is that the property concept should be interpreted widely for section 51(xxxi) purposes, especially since it enjoys the status of ‘a constitutional guarantee of just terms’.371 This position was established in the early decision of Minister of the State for the Army v Dalziel,372 where the majority of the court found that the formal distinction between ownership and possession should not keep a court from granting constitutional protection. Starke J stated that ‘[p]roperty, it has been said, is nomen generalissimum and extends to every species of valuable rights and interest including real and personal property, incorporeal hereditaments such as rents and services, rights of way, rights of profit or use in land of another, and choses in action’ [my emphasis].373

From this it becomes apparent that Australian constitutional law recognises and protects nonproprietary rights as constitutional property. McTiernan J also confirmed that constitutional property refers to any tangible or intangible thing that is protected as property under the law.374 Therefore, where certain strands of the ‘bundle of rights’ of property are acquired, protection in terms of section 51(xxxi) should be as strict as in the case of the acquisition of the full ‘bundle of rights’.375 This position was demonstrated in the case of Bank of New South Wales v The Commonwealth376 or the so-called ‘Bank Nationalisation’ case, where the court found that the compulsory acquisition of company shares constituted acquisition of the company. In this case, the Commonwealth was permitted to acquire shares in a private bank and also to 369

Van der Walt AJ Constitutional Property Clauses (1999) 41. See Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 where the court confirmed this position. Also see Clunies-Ross v The Commonwealth of Australia and Others (1984) 155 CLR 193 at 193. 370 Van der Walt AJ Constitutional Property Clauses (1999) 39. 371 Also see Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 743 where they state that the courts have ‘taken a wide view of the concept of “property”’. 372 (1944) 68 CLR 261. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 743-744 for a discussion of the case. 373 Minister of the State for the Army v Dalziel (1944) 68 CLR 261at 290. See Van der Walt AJ Constitutional Property Clauses (1999) 62. 374 Minister of the State for the Army v Dalziel (1944) 68 CLR 261at 295. 375 See Van der Walt AJ Constitutional Property Clauses (1999) 60 and Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 527-528 on the meaning of ‘property’. 376 (1948) 76 CLR 1. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 744-745 for a discussion of this case.

acquire assets or the business of a private bank in terms of a statutory provision.377 The provision stipulated that compensation be paid to the owners of the private banks. The Act, however, also allowed the Commonwealth to appoint its own directors to the Board of a private bank in the place of those elected by the shareholders. The court held that this provision constituted an ‘acquisition of property’. This case accordingly seems to be authority at least for the proposition that shares are accepted as constitutional property under section 51(xxxi) of the Australian Commonwealth Constitution. However, while the property concept enjoys a wide interpretation, it is not unlimited. The case of Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health378 dealt with the question whether confidential information should enjoy constitutional protection under section 51(xxxi). Gummow J noted that knowledge per se is not proprietary in character379 and that the protection of information is not based on a proprietary right in Australian law. The court relied on a dictum of Lord Wilberforce in National Provincial Bank Ltd v Ainsworth380 in order to define property rights as follows: ‘[B]efore a right or interest can be admitted into the category of property, it must be definable, identifiable by third parties, have some degree of permanence or stability, and be capable in its nature of assumption by third parties.’381

Gummow J accepted that ‘one should lean towards a wider rather than a narrower concept of property, and look beyond legal forms to the substance of the matter’382 for purposes of the constitutional property guarantee. As a result of this view, he found that there was a proprietary right in the information in this case.

377

Banking Act 1947, now consolidated in the Banking Act 1959. (1990) 95 ALR 87 (FC). See Van der Walt AJ Constitutional Property Clauses (1999) 61. Also see Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531-532, 540. 379 Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health (1990) 95 ALR 87 (FC) at 135. See Van der Walt AJ Constitutional Property Clauses (1999) 61. 380 [1965] AC 1175. Van der Walt AJ Constitutional Property Clauses (1999) 61. 381 National Provincial Bank Ltd v Ainsworth [1965] AC 1175. 382 Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health (1990) 95 ALR 87 (FC) at 136. See Van der Walt AJ Constitutional Property Clauses (1999) 61. 378

As Allen383 notes, the court distinguished confidential information, which is protected as property, from mere knowledge, which is not protected per se. The difference between the two is that equity rules allow the holder of confidential information to withhold others from using it, while knowledge may be freely used.384 Allen argues that the case is important for two reasons, the first being that ‘it supports the idea that control over a resource may establish that one has property in it’.385 However, Van der Walt386 notes that if this rule were applied to basically every regulation, as is possible, it could have disastrous effects, since every regulation would then automatically be classified as an acquisition and the only question left would be to determine whether the specific regulatory taking is material enough to warrant compensation. The second reason pertains to the court’s statement that confidential information was not accepted as property for constitutional purposes simply because it was property in some other sense. Allen387 argues that the true reason for such protection could be found in equity’s protection of confidential information. This protection is derived from an ‘obligation of conscience rather than a pre-existing proprietary right’.388 However, as he notes, the court did not specify any reason why an ‘obligation of conscience’ should be a reason why a specific interest should be protected as property under the Constitution. Allen389 also notes that in the case of The Commonwealth of Australia and Another v The State of Tasmania and Others390 it was decided per Deane J that the acquisition of the right to exclude others from the property was sufficient to constitute property for constitutional purposes. Deane J still held the view that there should be some economic benefit or right of enjoyment accruing to the State before there can be an issue of the taking of property. Contrary to the opinion of Deane J, the majority of the court held that there was no

383

Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531. 384 This is in line with Gray’s approach of excludability: Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276. See Chap 4 (The Value of Immaterial Property) for a discussion of excludability and its usefulness in determining when a resource may be deemed property. 385 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531. 386 Van der Walt AJ Constitutional Property Clauses (1999) 61-62. 387 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531. 388 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531. 389 Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 532. 390 (1983) 158 CLR 1.

proprietary interest that had been acquired. Van der Walt391 notes that an important distinction should be made between the Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health392 case and the case of The Commonwealth of Australia and Another v The State of Tasmania and Others.393 He notes that neither the courts nor Allen refers to this distinction, namely that in the second case, the plaintiff had been one of the Australian states. Unlike other constitutional property clauses, section 51(xxxi) protects both private persons and states from acquisitions by the Commonwealth, a feature that renders the Australian provision unique.394 Van der Walt395 states that since the property concept is interpreted widely for section 51(xxxi) purposes, it is accepted that tangible as well as intangible property are included under the guarantee. In early cases such as Minister of State for the Army v Dalziel396 and Bank of New South Wales v The Commonwealth,397 courts were willing to use ‘conceptual severance’398 as a strategy. This meant that the courts identified a right or group of rights from the bundle of rights which it considered particularly valuable and then deemed the acquisition of those rights to be the acquisition of a distinct property right. The problem with such an approach is that it creates a situation where almost any state interference could be identified as an acquisition as meant in section 51(xxxi). Van der Walt399 states that although later court cases still pay lip service to the idea that the property concept should be interpreted widely, the effect of their decisions has been to reduce the scope of constitutional property rather drastically. Courts have been moving towards a more workable definition of ‘property’ than the vague concept that it has to be interpreted widely.

391

Van der Walt AJ Constitutional Property Clauses (1999) 62. (1990) 95 ALR 87 (FC). Also see Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531-532, 540. 393 (1983) 158 CLR 1. 394 Compare this position to German constitutional property case law, which holds that the property guarantee extends only to private persons. See sec 5.3.2 of this chapter. See Van der Walt AJ Constitutional Property Clauses (1999) 121-163 on this subject. 395 Van der Walt AJ Constitutional Property Clauses (1999) 62. 396 (1944) 68 CLR 261. 397 (1948) 76 CLR 1. 398 See Radin MJ ‘The liberal conception of property: Crosscurrents in the jurisprudence of takings’ (1988) 88 Col LR 1667-1696 at 1674ff, where she first coined the phrase ‘conceptual severance’. 399 Van der Walt AJ Constitutional Property Clauses (1999) 63. 392

Since the Australian High Court in principle holds that debts, money payments and claim rights are choses in action400 and accordingly property, there is still some confusion in this area.401 Blackshield, Williams and Fitzgerald402 refer to a few of these more recent cases that were decided in 1994. They argue that these cases strongly reaffirmed the notion that some forms of acquisition do not fall within the scope of section 51(xxxi). Mutual Pools & Staff Pty Ltd v The Commonwealth of Australia403 was concerned with the extinguishment of a contractual claim for a tax refund through legislation. The High Court held that section 51(xxxi) had not been infringed. The case of Health Insurance Commission v Peverill404 pertained to a claim for medical care benefits and according to Blackshield et al405 serves as another example of what the High Court deems not to be an ‘acquisition of property’ for section 51(xxxi) purposes. In this case, the Health Insurance (Pathology Services) Amendment Act 1991 (Cth) reduced the amount of benefits that a pathologist could claim. The majority of the court held that such a retrospective reduction was not an ‘acquisition of property’ for section 51(xxxi) purposes. Brennan J held that the right conferred by the Statute was not ‘property’ for section 51(xxxi) purposes. Contrary to the previous two cases, in Georgiadis v Australian and Overseas Telecommunications Corporation,406 the court held that there was an acquisition of property and that the legislation was invalid insofar as it did not provide for ‘just terms’. The court had to decide on the issue of a common-law claim for damages relating to back injuries. The claim had been extinguished by the Commonwealth Employees’ Rehabilitation and Compensation Act 1988 (Cht). The court concurred that a vested cause of action under a general law constitutes a form of property for section 51(xxxi) purposes. It was also held that there was an ‘acquisition of property’, since the Commonwealth received a direct financial benefit by being released from the claim for damages. Another case decided in 1994,

400

‘A chose in action is a comprehensive term used to describe a property right or the right to possession of something that can only be obtained or enforced through legal action. It is used in contradistinction to chose in possession, which refers to cases where title to money or property is in one person but possession is held by another.’ (http://law.jrank.org/pages/5211/Chose-in-Action.html (accessed 17 September 2009)). 401 Van der Walt AJ Constitutional Property Clauses (1999) 63-64. 402 Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 748. 403 (1994) 179 CLR 155. 404 (1994) 179 CLR 226. 405 Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 752. 406 (1994) 179 CLR 297.

Nintendo Co Ltd v Centronics Systems Pty Ltd,407 concerned the practical effects of the Circuit Layouts Act 1989 (Cht). The importation of television games from Taiwan and sale thereof by Centronics, an action that had previously been allowed, now constituted an infringement of Nintendeo’s intellectual property rights in terms of the Circuit Layouts Act. Centronics argued that this legislation’s impact amounted to the ‘acquisition of property’ and that they were therefore entitled to ‘just terms’. The court did not accept their argument. The court stated that the legislature received the power to make such legislation from section 51(xviii) of the Australian Commonwealth Constitution which pertains to ‘[c]opyrights, patents of inventions and designs, and trademarks’. This power authorises the making of laws that create, confer and enforce intellectual property rights. As the court stated: ‘It is of the nature of such laws that they confer such rights on authors, inventors and designers, other originators and assignees and that they conversely limit and detract from the proprietary rights which would otherwise be enjoyed by the owners of affected property. Inevitably, such laws may, at their commencement, impact upon existing proprietary rights. To the extent that such laws involve an acquisition of property from those adversely affected by the intellectual property rights that they create and confer, the grant of legislative power contained in s[ection] 51(xviii) manifests a contrary intention which precludes the operation of s[ection] 51(xxxi).’408

Blackshield, Williams and Fitzgerald409 state that there is some uncertainty whether this decision410 and the decisions mentioned earlier411 ‘represent a cutting back of the scope of s[ection] 51(xxxi)’.412 They state that if this is the case, it would support the hypothesis that the court is moving towards a more extensive protection for civil and political rights and consequently shifting its priorities away from economic rights. However, Van der Walt413

407

(1994) 181 CLR 134. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 755-756 for a discussion of the case. 408 Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134. 409 Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 756. 410 Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134. 411 Mutual Pools & Staff Pty Ltd v The Commonwealth of Australia (1994) 179 CLR 155; Health Insurance Commission v Peverill (1994) 179 CLR 226; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297. 412 Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 756. 413 Van der Walt AJ Constitutional Property Clauses (1999) 41-48.

notes that these cases have to be viewed in light of the function of section 51(xxxi), namely to regulate federal powers. In these cases,414 ‘the High Court of Australia provided a more comprehensive and systematical explanation of the exclusions from section 51(xxxi). In these decisions it was reiterated that section 51(xxxi) does not apply to all acquisitions of property. A number of exclusions are recognized, and consequently any finding that a specific law or action of the Commonwealth effects an acquisition of property has to be followed by a second inquiry into the question whether the acquisition was an acquisition of property for purposes of section 51(xxxi).’415

Mutual Pools & Staff Pty Ltd v The Commonwealth of Australia416 explains that section 51(xxxi) does not apply in cases where the state exercises its regulatory or police power.417 However, where just compensation was required in terms of section 51(xxxi) but not afforded, the section will be applicable. As demonstrated in this section, the property concept is interpreted widely for purposes of section 51(xxxi). The Australian courts have indicated that some commercial interests and certain immaterial property interests will be treated as property, although a state regulation that governs the conflicting claims of private parties to those interests will not necessarily be seen as an expropriation simply because one party loses its interest. Non-proprietary rights are recognised as constitutional property in Australian law.418 Shares were also recognised and protected under section 51(xxxi) in Bank of New South Wales v The Commonwealth.419 Confidential information may be treated as property for purposes of section 51(xxxi), but only under specified circumstances, namely if the knowledge is definable, identifiable by third parties, has some degree of permanence or stability and is capable in its nature of assumption by third parties.420 This particular approach could be useful to South African courts in deciding when a particular immaterial property interest that is not protected as 414

Mutual Pools & Staff Pty Ltd v The Commonwealth of Australia (1994) 179 CLR 155; Health Insurance Commission v Peverill (1994) 179 CLR 226; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297. 415 Van der Walt AJ Constitutional Property Clauses (1999) 43-44. 416 (1994) 179 CLR 155. 417 Van der Walt AJ Constitutional Property Clauses (1999) 47. 418 Minister of the State for the Army v Dalziel (1944) 68 CLR 261at 290. 419 (1948) 76 CLR 1. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 744-745 for a discussion of this case. 420 Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health (1990) 95 ALR 87 (FC). See Van der Walt AJ Constitutional Property Clauses (1999) 61. Also see Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531-532, 540.

property in private law may be recognised and protected as property in constitutional law. This promotes the idea that control over a resource may establish that one has property in the resource;421 although this rule should not be interpreted too widely otherwise the legislature would be rendered incapable of regulating.422 Debts, money payments and claim rights are choses in action under Australian law and as such are protected in terms of section 51(xxxi), although not every regulation is viewed by the courts as an infringement of property rights.423 The courts are more likely to decide that there was an infringement of property if the right was vested and if the state received some benefit from extinguishing such right. Section 51(xviii) of the Australian Constitution specifically authorises the legislature to make laws that create, confer and enforce rights in intellectual property (patents, copyright and designs). Therefore, this section both provides for the protection and regulation of intellectual property rights. The approach of Australian courts could be useful for South African courts in determining when immaterial property interests could be protected as constitutional property, particularly if the interest on hand is confidential information or commercial information. The Australian courts accept that commercial information, confidential information and some commercial property interests (shares, debts and claims), participatory claims and nonproprietary rights may be protected in terms of section 51(xxxi), although they are all subject to regulation. 535

Immaterial Property under the Irish Constitution

According to Van der Walt,424 the Irish constitutional property clause in article 40.3.2 and 43 of the 1937 Constitution425 has to be studied with care, particularly when doing a comparative 421

Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531. 422 Van der Walt AJ Constitutional Property Clauses (1999) 61-62. 423 See Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155, Health Insurance Commission v Peverill (1994) 179 CLR 226 and Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297. 424 Van der Walt AJ Constitutional Property Clauses (1999) 230. Also see Van der Walt AJ ‘The protection of private property under the Irish Constitution: A comparative and theoretical perspective’ in Carolan E & Doyle O (eds) The Irish Constitution: Governance and Values (2008) 398-411 and O’Donnel D ‘Property rights in the Irish Constitution: Rights for rich people, or a pillar of free society?’ in Carolan E & Doyle O (eds) The Irish Constitution: Governance and Values (2008) 412-430. 425 ‘40.3.2 The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.’ [my emphasis] 43.1.1 The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods. 43.1.2 The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.

study. This is the case because its interpretation and application by courts create confusion. A general feature of the Irish property clause that Van der Walt notes as interesting is ‘the almost complete lack of concern about the meaning or scope of the term “property”’. 426 He argues that this may be because in Anglo law the approach is to simply assume that a wide range of rights pertaining to tangible as well as intangible assets are included under the property concept.427 Similarly, regarding the scope of the property concept in Irish constitutional law, Hogan and Whyte428 state as follows: ‘Most obviously of all, the constitutional guarantee applies to land and to rights arising from land ownership. It also applies to moveable property and money. Intangible rights are also protected – Article 43.1.2 itself refers to a “general right to transfer, bequeath and inherit property” – while the guarantee has been invoked in relation to intangible rights created by legislation and by contract.’ [footnotes omitted]429

The Irish courts have not discussed the meaning of the property concept at length, but there are certain cases that are relevant to this dissertation. According to Hogan and Whyte,430 intangible property rights are protected under the Constitution. They cite Phonographic Performance (Ireland) Ltd v Cody431 as proof of this statement. In this case it was decided that ‘[t]he right of the creator of a literary, dramatic, musical or artistic work not to have his or her creation stolen or plagiarised is a right of private property within the meaning of Article 40.3.2 and Article 43.1 of the Constitution, as is the similar right of a person who has applied his or her technical skills and/or capital in the sound recording of a musical work’.432 This case explicitly accepts copyright as a constitutionally protected property right, but the case is also viewed as general authority for the proposition that intangible rights are constitutional property. Apart from copyright (and by analogy the other intellectual property rights), certain commercial property interests and participatory claims have also been explicitly accepted as 43.2.1 The State recognises, however, that the exercise of the rights mentioned in the foregoing provision of this Article ought, in civil society, to be regulated by the principles of social justice. 43.2.2 The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.’ 426 Van der Walt AJ Constitutional Property Clauses (1999) 231. 427 Van der Walt AJ Constitutional Property Clauses (1999) 231, 241. 428 Hogan G & Whyte G JM Kelly: The Irish Constitution (4th ed 2003) 1971-1972. 429 Hogan G & Whyte G JM Kelly: The Irish Constitution (4th ed 2003) 1971-1972. 430 Hogan G & Whyte G JM Kelly: The Irish Constitution (4th ed 2003) 1971. 431 [1998] 2 ILRM 241, [1994] 2 ILRM 241. 432 Phonographic Performance (Ireland) Ltd v Cody [1998] 2 ILRM 241 at 511, [1994] 2 ILRM 241 at 247.

constitutional property in Irish law. State (Pheasantry Ltd) v Donnelly433 dealt with the forfeiture of a liquor licence. The court held that since the license was a privilege granted by statute and subject to change by statute, such forfeiture could not be regarded as an attack upon property rights.434 Van der Walt435 argues that it may be questioned whether this decision actually means that interests in a licence that had been created by statute cannot be regarded as property for constitutional purposes. Another interpretation would be that some licenses are created by statute and are subject to change; therefore such a change would not be regarded as an unfair attack on property. This interpretation is relevant to Dean’s436 argument that intellectual property rights require separate constitutional protection because they are created by statute. Dean’s argument attempts to isolate intellectual property against regulation, which cannot be done in constitutional law, as demonstrated once again by the Irish case of State (Pheasantry Ltd) v Donnelly.437 On this interpretation, namely that statutory regulations to property created in terms of statute do not constitute an unfair attack on property rights, there may still be instances where administrative and statutory limitations on a licence could constitute an unfair attack on the property interest. This last interpretation seems especially appropriate in cases where such a licence has already acquired some financial value. This is similar to the approach followed by the German Federal Constitutional Court, namely that once an interest created by legislation vests in private hands separate from the state grant, it may become a right that is not so easily taken away simply because it was created by statute. Hogan and Whyte,438 by contrast, state that economic interests created by state regulation enjoy little or no constitutional protection. By this they mean that interests would not enjoy constitutional protection if they are purely granted by the state, with no own effort or investment on the part of the recipient visible and no acquisition in terms of private law. In Maher v Minister for Agriculture, Food and Rural

433

[1982] ILRM 512. Also see Hempenstall v Minister for the Environment [1994] 2 IR 20, where it was held that although taxi licenses are property, regulations which effectively reduced their value did not constitute an unjust attack on private property. 434 Also see Hand v Dublin Corporation [1991] 1 IR 409, where the court reached a similar conclusion to that of the court in State (Pheasantry Ltd) v Donnelly [1982] ILRM 512. 435 Van der Walt AJ Constitutional Property Clauses (1999) 231, 241. 436 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 113. 437 [1982] ILRM 512. Also see Hempenstall v Minister for the Environment [1994] 2 IR 20, where it was held that although taxi licenses are property, regulations which effectively reduced their value did not constitute an unjust attack on private property. 438 Hogan G & Whyte G JM Kelly: The Irish Constitution (4th ed 2003) 1972.

Development,439 the court did not decide the question whether a statutory license is constitutional property, accordingly there is still uncertainty in this area. However, the court decided that quotas for the production of goods (granted in terms of a statute) were not property for constitutional purposes. The relationship between shareholding in a company and the constitutional property guarantee was considered in the case of Kerry Co-Operative Creameries Ltd v An Bord Bainne.440 The rules of the defendant organisation had been changed and the plaintiffs alleged that these changes amounted to an expropriation of their property. The changes allowed the defendant company to repay a member who had been expelled only the amount that such a member had paid for their shares and consequently the plaintiffs alleged to have been deprived of the accumulated value of the shares. The allocation of bonus shares had also been changed and the plaintiffs made a similar argument as to their deprivation. The constitutional claim based on property rights was hence grounded in their belief that they were entitled to their share in the net value of the board’s underlying assets. The judge rejected this argument, stating that shareholders do not have a right to any specific portion of the assets of the company and that this is also the case with the rights of a shareholder in a registered society. The judge ultimately held that no property right was infringed where the value of a shareholding was reduced. The result is that as long as a shareholder’s participation rights are not affected, no property right is infringed. However, two earlier Supreme Court cases441 held the contrary view that shareholders did have property rights that were protected against unconstitutional legislative attacks. Hogan and Whyte442 note that the latest case is most likely not the final word, since these authorities are contradictory. The right to carry on business and earn a livelihood was accepted as property for constitutional purposes in the case of Re Article 26 and the Employment Equity Bill 1996.443 The right to a statutory pension was also held to be constitutional property in the case of Lovett v Minister for Education,444 therefore participatory claims are accepted as 439

[2001] 2 IR 139, [2001] 2 IRLM 481. [1990] ILRM 664. 441 Private Motorists Provident Society v Attorney General [1983] IR 339, [1984] ILRM 88; Pine Valley Developments Ltd v Minister for the Environment [1987] IR 23, [1987] ILRM 748. 442 Hogan G & Whyte G JM Kelly: The Irish Constitution (4th ed 2003) 1976. 443 [1997] 2 IR 321. Also see Scally v Minister for the Environment [1996] 1 IR 367, an earlier case actually decided in 1988, that also decided that the right to carry on a business and earn a livelihood is considered a constitutional property right. 444 [1997] 1 ILRM 89. 440

constitutional property. Finally, it should be noted that persons whose property rights enjoy protection are not limited to natural persons. Similar to the position under South African constitutional law, corporate bodies are also entitled to protection for their property. 445 In summary, Irish constitutional law applies a broad property concept. A wide interpretation of the property clause is therefore followed, which is a tendency that would also be workable in South African constitutional property law. Copyright is explicitly accepted as constitutional property in case law and this is accepted as authority for the broad proposition that immaterial property interests are accepted as constitutional property. This includes, but is not restricted to the other intellectual property rights; namely patents, designs and trademarks). The Irish Supreme Court has dealt with some of the unconventional immaterial property interests explicitly, namely certain commercial property interests (shares and stategranted licenses, permits and quotas) and participatory claims. In certain cases, the Supreme Court was prepared to grant property protection to shares.446 However, in a later case, Kerry Co-Operative Creameries Ltd v An Bord Bainne,447 the court was not prepared to grant property protection to the value embodies by shares. However, the reason for this may simply have been that there was a legitimate state regulation that reduced the value of the shares (which are created in terms of legislation) and that shares are not protected against such a regulation. Shares are created by administrative grant and are therefore always more open to regulatory limitation than other forms of property, even when they have vested. State granted licences and quotas are accepted as constitutional property provided that they have already vested and accrued value, which is similar to the German approach in this regard. The right to a statutory pension is accepted as constitutional property in Irish law, which may be viewed as persuasive authority that participatory claims should be accepted as constitutional property. 54

Conclusion

The difference between property protection in private law and constitutional law is important for purposes of this chapter. The purpose of private law protection is to get strong property

445

See Iarnród Éireann v Ireland [1996] 3 IR 321, [1995] 2 ILRM 161. Private Motorists Provident Society v Attorney General [1983] IR 339, [1984] ILRM 88; Pine Valley Developments Ltd v Minister for the Environment [1987] IR 23, [1987] ILRM 748. 447 [1990] ILRM 664.

446

rule-type protection for private rights against competing private parties,448 while constitutional law recognition and protection has the purpose of conferring bill of rights-type protection for private interests against the state and also where the property rights come into conflict with competing rights of other private parties. Competing rights are weighed up in order to find a constitutionally justified outcome. The immaterial property interests discussed in this dissertation were divided into three groups, namely interests that are already protected as property in private law; interests that are protected in private law or public law, but not as property; and interests that currently receive no protection. The traditional immaterial property interests or intellectual property rights (patents, copyright, designs and trademarks) and some of the other unconventional immaterial property interests already enjoy property rule-type protection in private law. The intellectual property rights are accepted as sui generis property rights in private law since the intellectual property legislation confers property ruletype protection to intellectual property rights and private law honours this position. The focus of this chapter was to determine whether these property rights may also enjoy constitutional protection. It is generally accepted in constitutional law that property interests that are recognised and protected as property in private law would also be recognised and protected in as property in constitutional law. As a result, the constitutional recognition and protection of intellectual property rights (patents, copyright, designs and trademarks) is less problematic than unconventional immaterial property interests and their inclusion under the constitutional property concept should be a matter of course. The recognition and protection of the unconventional immaterial property interests is a more problematic area and the reasons why they should be protected in terms of the property clause are different. With the exception of public participatory rights or participatory claims, which enjoy constitutional protection under socio-economic rights, none of the other immaterial property interests enjoy the possibility of receiving constitutional protection under any clause other than the property clause. Some of the immaterial property interests are recognised and protected in private law under areas other than property law or in public law. They already receive adequate protection albeit not under the area of property law; and as such the only question is whether they may be recognised and protected under the property clause since there is no other constitutional clause that could provide them with the necessary protection. These interests share certain characteristics with intellectual property and tangible property 448

Calabresi G & Melamed AD ‘Property rules, liability rules, and inalienability: One view of the cathedral’ (1972) 85 Harvard LR 1089-1128.

and this is the reason why it is desirable to recognise and protect these immaterial property interests under the constitutional property clause. In South African law, the problem pertaining to the constitutional protection of immaterial property and the narrower category of intellectual property first became apparent in the First Certification case.449 In this case the Constitutional Court had to decide whether the South African Constitution provided adequate protection for intellectual property. The court held that it was not a universally accepted norm to include a specific right to intellectual property in a separate constitutional clause, but that the scope of the property clause is wide enough to protect property interests that need to be protected according to international standards. Most authors writing on constitutional property law agree that this does not mean that intellectual property is not protected, but that intellectual property may be included under the property clause.450 However, Dean451 argued that the right to intellectual property should have been entrenched in a separate constitutional clause, since intellectual property is fundamentally different from other categories of property; and the property clause does not provide adequate protection. The reason furnished was that intellectual property is created by statute and as such the state would be able to abolish the institution of intellectual property if it were not entrenched in the Constitution. The crux of this argument was apparently that intellectual property rights should be insulated from statutory regulation; and this cannot be done in terms of constitutional law. German law as well as Australian law clearly illustrates the position that no or limited constitutional protection is available to property interests in instances where the legislature regulates a particular category of property and the regulation does not exceed the legitimate state power to do so. Furthermore, the origin of a particular category of property cannot determine that it is so unique as to render it in need of separate constitutional protection. Also, it is not possible to determine that the property clause would leave owners of intellectual property without recourse, since it is impossible to determine which specific kind 449

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75. 450 See Van der Walt AJ Constitutional Property Law (2005) 86; Alexander GS The Global Debate Over Constitutional Property (2006) 163; Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17; and Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-15; Dean OH ‘Trade mark dilution laughed off’ (2005) Oct De Rebus 18-22 at 19. 451 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110.

of protection is necessary for a distinct property right until a particular state action or right of a third party infringes the right and the court has to adjudicate the matter. Since the Constitutional Court held that the constitutional property clause is wide enough to protect all the property interests that require protection, it is accepted that the scope of the property clause is wide enough to include interests such as intellectual property rights, certain other immaterial property interests and mineral rights.452 It is generally accepted that most property clauses in constitutional jurisdictions do not specify the interests that are protected and that this tendency means that unless a property interest is specifically excluded, it would be protected in terms of a general property clause. The remaining question, which this chapter addresses by reference to examples from foreign law,453 relates to the specific immaterial property interests that may be included as property under the constitutional property clause. A second, separate but equally important aspect is the aspect of limitations imposed by the property clause. As mentioned, the property clause does not insulate property rights against all interferences. The property clause also provides specifically for the deprivation and expropriation of property and the state is allowed to interfere with property insofar as the strict requirements of deprivation and expropriation are adhered to. Furthermore, there are certain instances where the rights of third parties may be viewed as more important than property rights; and their protection may be stronger than that of the property right after a careful balancing of the rights in question has been done by the courts. This is particularly the case where the competing rights embody non-derogable fundamental rights.454 The German Federal Constitutional Court utilises a scaling approach in terms of which property rights are balanced with conflicting rights and the public interest by reference to the question whether an individual’s particular property right may ‘serve the fundamental constitutional purpose of securing a sphere of personal liberty for the individual to take responsibility for her own affairs in the patrimonial field’ and protecting or limiting the right accordingly.455 452

See Roux T & Davis D ‘Property’ in Cheadle H, Davis D & Haysom N (eds) South African Constitutional Law: The Bill of Rights (2nd ed 2008) 20-1 – 20-28 at 20-17; Roux T ‘Property’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 46-1 – 46-37 at 46-15; Alexander GS The Global Debate Over Constitutional Property (2006) 163; Van der Walt AJ Constitutional Property Law (2005) 86. Compare Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105-119 at 106, 110. 453 Sec 39(1) (c) of the Constitution of the Republic of South Africa 1996 states that courts may consider foreign law in interpreting the Constitution. 454 See Chap 6 (immaterial Property Interests in International Law), especially sec 6.4 which identifies specific guidelines from international law instruments that may guide courts in deciding which rights should be protected more stringently where the right to intellectual property conflicts with other rights. 455 Van der Walt AJ Constitutional Property Clauses (1999) 151.

In general, where intellectual property rights are concerned, their independent existence and vesting are determined by the statute that creates them and once these requirements are met in terms of the statute, the intellectual property rights should be recognised and protected by the constitutional property clause against administrative cancellation and amendment. The question is different for unconventional immaterial property interests. A general rule that may be used to determine whether specific unconventional immaterial property interests should be recognised and protected originated in German constitutional law and asks whether the interest can exist independently and whether it has already vested. Once the interest does exist independently and is regarded as having vested in or being acquired by a particular person in terms of normal law (in terms of the requirements of the particular statute in the case of intellectual property), then such an interest should be recognised and protected as constitutional property.456 However, this does not insulate the interests against regulation; and in some cases against sharper regulation than in others. However, for some of the unconventional immaterial property interests, notably participatory claims, the problem is different. The question is also whether participatory claims may be protected against administrative cancellation or amendment and they are created by statute, but they do not necessarily vest or are not acquired as rights due to their nature as pure grants. Therefore no constitutional property protection is available unless own investment or effort is apparent. This links to the property theories discussed in Chapter 4 (The Justification of Immaterial Property), notably the labour theory in terms of which own labour is rewarded with a property right. It has been argued by Dean457 that intellectual property would not be adequately protected by the constitutional property clause because it does not exist and vest in the holder in the same way as traditional property rights. Since intellectual property rights are created by statute, they could also potentially be extinguished by an act of parliament or by administrative action in terms of legislation. However, there are many other forms of property that are also created by legislation and for which the same concerns would also be relevant. The moral rights that cling to certain forms of intellectual property such as copyright have also been mentioned as part of the reason why intellectual property may need additional protection to that afforded to 456

Van der Walt AJ Constitutional Property Law (2005) 87-88. Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 106, 110.

457

other forms of property, or a different form of protection. Dean also argues that the property clause would not prevent the legislature from passing a statute abolishing intellectual property. This indicates that Dean wishes for the constitutional protection of intellectual property to insulate intellectual property against state regulations, which cannot be done in constitutional law. Intellectual property may only be protected against arbitrary state interferences, but in instances where the expropriation or deprivation is legitimate, no additional protection is available or necessary, since property is not absolute. However, it has been shown that intellectual property would be adequately protected by the constitutional property clause, just like any other form of property. The constitutional property clause provides protection against arbitrary deprivations of property, since the deprivation and expropriation provisions provide strict requirements that the state needs to adhere to. The German Federal Constitutional Court cases discussed also demonstrate how Article 14 could apply to the regulation of copyright458 and this indicates that the South African constitutional property clause can also provide protection to intellectual property rights by applying the same principles. Intellectual property held by a juristic person would also be protected by the South African constitutional property clause, since juristic persons may also be the beneficiaries of constitutional protection provided for their property rights.459 This is especially relevant to immaterial property, since many intellectual property rights and unconventional immaterial property rights are held by juristic persons. Although the FNB Court460 pertinently stated that the case was not concerned with incorporeal property, there was no suggestion that incorporeal property would not be protected if such a case were to come before the court. In fact, the Court stated as follows: ‘It is trite that a company is a legal entity altogether separate and distinct from its members, that its continued existence is independent of the continued existence of its members, and that its assets are its exclusive property … No matter how complex the holding structure of a company or groups of companies may be, ultimately - in the vast majority of cases - the 458

See sec 5.3.2 of this chapter, BVerfGE 31, 229 (Urheberrecht case) [1971] (Schoolbook case), BVerfGE 31, 248 [1971] (Broadcasting Lending case), BVerfGE 31, 270 [1971] (School Broadcast case), BVerfGE 31, 255 [1971] (Tape Recording I case), BVerfGE 31, 275 [1971] (Phonograph Record case) and BVerfGE 49, 415 [1978] (Church Music case). 459 See First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45. 460 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 100.

holders of shares are natural persons. More important, for present purposes, is the universal phenomenon that natural persons are increasingly forming companies and purchasing shares in companies for a wide variety of legitimate purposes, including earning a livelihood, making investments and for structuring a pension scheme [my emphasis]’.461

In the first instance, it is relevant that the Court referred to the assets of a company as its exclusive property, since in many instances intellectual property rights and other immaterial property interests such as trade secrets; confidential information; and commercial property (shares; debts and claims; and state-granted licenses, permits and quotas) form part of the assets of a company. This indicates that the Court would be willing to recognise and protect intellectual property and at least some of the unconventional immaterial property interests. It is also significant that the court mentions the earning of a livelihood as an important consideration in deciding that the recognition and protection of a particular property interest is suitable. This relates to the German approach that a property interest would be protected more strongly if it serves to secure a sphere of personal liberty in the patrimonial area for an individual.462 The Constitutional Court has been required to consider the interaction between the right to freedom of expression and the right of a trademark owner.463 From this case it has become apparent that the court equates the right to freedom of expression and a trademark owner’s right, requiring a balancing of these rights. This implicitly gives constitutional recognition to trademarks and by implication also to other intellectual property categories. However, the Court did not specify from which section of the Constitution such protection is derived and no reference was made to the property clause, although it could only have been the property clause unless the Court created a new category of rights, which is unlikely. There have also been no court cases that expressly dealt with the question of whether unconventional immaterial property interests may be protected under the constitutional property clause. In this regard, foreign law may be of particular use to South African courts.

461

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 43. 462 See sec 5.3.2 of this chapter. 463 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC).

The second issue pertains to the limitations imposed by the property clause and the effects it could have on immaterial property interests if they were included under the property clause. The sections in the property clause pertaining to deprivation and expropriation would limit intellectual property by allowing constitutional interferences by government and the legislature, similar to any other form of property. The FNB case464 established guidelines for the procedure to be followed in testing the constitutional legitimacy of deprivations or expropriation of property and this would also be the procedure to follow where the property interest on hand is an incorporeal property interest. Property rights may also be limited by other rights that are valued as fundamental human rights or more important rights. This was demonstrated in the case of Laugh It Off v SAB International.465 Although the Constitutional Court was prepared to recognise and protect trademarks as constitutional property, on the facts of the case freedom of expression constituted a more important right than the economic rights of a trademark and therefore the right to freedom of expression received stronger protection than the property right in trademarks. Since section 39(1) (c) of the South African Constitution states that a court may consider foreign law, it has proven valuable to analyse and discuss specific cases from foreign jurisdictions that have shed some light on the question of which immaterial property interests could be included under the property concept for constitutional purposes. This is true even though foreign law can only serve as persuasive authority to South African courts. Since South Africa is a Roman-Germanic jurisdiction, the property concept has always been narrower in private law. As a result the property concept has proven to be more problematic in the constitutional context than has been the case in Anglo-American jurisdictions, which have always employed a wider property concept. In German constitutional property law, the point of departure is the private law conception of property which is restricted to tangible, corporeal things. However, the constitutional property concept is not restricted to corporeal property. Although interests recognised and protected as property in private law would be included under the constitutional property concept, the concept is not limited to these interests, but may include other interests as well. The purpose and nature of the property clause itself and the context of the Constitution 464

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC). 465 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC).

generate the meaning of ‘property’. A specific interest would usually be protected if it secures a sphere of personal liberty for the individual to achieve independence in the patrimonial field. This links to the property theories discussed in Chapter 4 (The Justification of Immaterial Property Interests). The labour theory rewards own effort with a property right, while the reward theory and incentive theory are based on the idea that the creation of property benefits society at large and that this should be rewarded and incentivised. The personality theory also postulates that property should be protected more stringently the more personal the particular property is. In terms of the economic theory, economic value is also considered to be an important aspect of property in deciding whether a particular property interest may be considered property. It is submitted that this links to the purposive approach to the interpretation of the property concept and that this may be viewed as a guideline to courts in deciding firstly which immaterial property interests may be recognised and protected as constitutional property and secondly how strongly a particular property interests should be protected when it comes into conflict with other rights. Although intellectual property rights are not recognised and protected as property in German private law, they are recognised and protected as constitutional property. Copyright, 466 patent rights467 and trademark rights468 have explicitly been accepted as constitutional property in German constitutional property law in line with the wider constitutional property concept.469 The German Federal Constitutional Court considers the right to intellectual property in close proximity with the rights of personality and artistic freedom, more so than rights to other forms of property. The social character of intellectual property is also important. A constitutional evaluation focuses solely on the economic aspect of copyright, namely the economic utilisation of an intellectual creation and such economic rights may be shaped by the legal order. The purpose of Article 14 in the context of copyright is to ensure that the core of the right is protected.470 The public interests may serve to limit the constitutional property right relating to copyright, although there must be a very pressing public interest in order to limit a copyright owner’s right to remuneration for the copyrighted work. In such

466

BVerfGE 31, 229 (Urheberrecht case) [1971] (Schoolbook case), BVerfGE 31, 248 [1971] (Broadcasting Lending case), BVerfGE 31, 270 [1971] (School Broadcast case), BVerfGE 31, 255 [1971] (Tape Recording I case), BVerfGE 31, 275 [1971] (Phonograph Record case) and BVerfGE 49, 415 [1978] (Church Music case). 467 BVerfGE 36, 281 [1974] (patent rights). 468 BVerfGE 51, 193 [1979] (Warenzeichen case) (trademarks). 469 See Van der Walt AJ Constitutional Property Clauses (1999) 152-153. 470 This corresponds with the core minimum approach as developed in international law. See Chap 6 (Immaterial Property Interests in International Law) sec 6.4.

constitutional cases relating to the protection of copyright works, the Federal Constitutional Court of Germany attempts to balance the individual rights of the property owner and the public interest, in much the same way as applies to cases regarding traditional property interests in corporeal property. Unconventional immaterial property interests such as shares, contractual money claims 471 and debts472 are protected under the German property clause, Article 14 of the Basic Law.473 However, only rights or interests that are concrete and vested or acquired may be protected and not just any right of patrimonial value. They must also serve the purpose of Article 14, namely ‘to secure, for the holder of the property, an area of personal liberty in the patrimonial sphere, to enable her to take responsibility for the free development and organization of her own life within the larger social and legal context’.474 Welfare rights are protected if the rights are vested and their owner has invested enough own effort so that it can be said to be his or her property. These welfare rights that enjoy protection in German law are not the same as the ‘new property’475 in American constitutional law since they do not have the government largesse aspect anymore and as such their protection possibly does not constitute the recognition of ‘new property’. The narrow definition of these kinds of interests brings them much closer to the traditional property interests than what was originally envisioned in terms of ‘new property’. In American constitutional law welfare rights have only ever been afforded due-process protection in terms of the Due Process Clause and not property protection in terms of the Takings Clause. Similar to the South African property clause and basically every other constitutional property clause, the German property clause also provides for the limitation of property rights in certain instances where there is a compelling ‘public purpose’ or ‘public interest’. In cases where the public interest was very great, the right to remuneration for certain uses of a work could be taken away and in some cases the public interest was found not to be compelling enough. A legislative provision is deemed constitutional if the public interest is compelling enough to justify such interference by government. In summary, German courts seem to grant constitutional protection to property interests if it also serves a constitutional purpose and 471

BVerfGE 42, 263 [1976] (Contergan case) (contractual money claims). BVerfGE 68, 193 [1984] (debts). 473 Basic Law of the Federal Republic of Germany (Grundgezetz für die Bundesrepublik Deutschland) 1949. 474 See Van der Walt AJ Constitutional Property Clauses (1999) 124. 475 See Reich CA ‘The new property’ (1964) 73 Yale LJ 733-787 at 733-737. 472

where an interest is not protected as property in private law, it is necessary to determine whether the interest is vested and the person contributed enough own effort to establish the right. However, the protection is not unlimited and interferences with property rights are permitted if the public purpose is compelling enough. This seems to be a sound approach that South African courts could consider in deciding which immaterial property interests may be accepted as constitutional property. The American Constitution has an Intellectual Property Clause that grants Congress the power to create laws to promote and protect copyright and patent rights. Probably due to the existence of this clause, copyright and patents are not protected by the Due Process Clause. Patents have been held to be protected under the Takings Clause in nineteenth century cases based on their origin in the Copyright and Patent Clause, but more recent cases have denied patents constitutional protection on the grounds that patent rights are granted by the Government. Trade secrets are protected under the American Takings Clause. American constitutional law does protect intellectual property, just not under the Takings Clause, but under the Intellectual Property Clause. Since the South African Constitution does not have an intellectual property clause, protection can only be afforded through the property clause. No specific conclusion can be derived from the American courts’ treatment of public participatory rights or ‘new property’, since these rights are currently only afforded due process protection (which would constitute administrative justice in South Africa) and are not accepted as property for purposes of the Takings Clause yet. The protection has accordingly been thin and it may even be argued that ‘new property’ is not recognised for constitutional property purposes at all, but only for due process purposes. Similar to other jurisdictions that guarantee property, the American Takings Clause employs a wide property concept. The American constitutional property concept has not enjoyed too much attention, since a wider concept of property than Roman-Germanic law has always been applied, even in private law. The American property clause is similar to the German and South African clauses, since it does not only protect property, but may also restrict property as long as the requirements for a taking are met. Section 51(xxxi) of the Australian Constitution regulates federal and state relations in state regulation of property. It is not a traditional property clause, but it is accepted that this section may provide protection to property. The constitutional property concept is also interpreted

widely in Australian constitutional law, similar to German and American law. The case of Nintendo Co Ltd v Centronics Systems Pty Ltd476 concerned intellectual property. The court referred to section 51(xviii) of the Australian Commonwealth Constitution which pertains to ‘[c]opyrights, patents of inventions and designs, and trademarks’ and authorises the legislature to make laws that create, confer and enforce intellectual property rights. The court stated that the regulation of the intellectual property in the case did not amount to a taking of property that is protected by section 51(xxxi). The case of Minister of the State for the Army v Dalziel477 found that the formal distinction between ownership and possession should not keep a court from granting constitutional protection, which may be viewed as authority that non-proprietary rights may also be protected under section 51(xxxi) since the legislature is explicitly permitted to regulate such property. This case also confirmed that both tangible and intangible property interests may be protected. Australian courts followed the ‘conceptual severance’ approach in terms of which the taking of a single right from the ‘bundle of rights’ is considered to be a taking of the whole property. Shares constitute constitutional property under the Australian property clause.478 Confidential information is also considered to be constitutional property.479 The case of Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health,480which afforded constitutional protection to confidential information provided an important distinction between confidential information which may be protected and mere knowledge which may not. The difference lies in whether the knowledge is accessible and hence unprotected or whether equity rules allow the holder of confidential information to withhold others from using it. This is directly based on excludability, in other words the knowledge may be protected if it is legally excludable. 481 A general guideline set by the courts is that a right must be definable and identifiable by third 476

(1994) 181 CLR 134. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 755-756 for a discussion of the case. 477 (1944) 68 CLR 261. See Blackshield T, Williams G & Fitzgerald BF Australian Constitutional Law and Theory Commentary and Materials (1996) 743-744 for a discussion of the case. 478 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1. 479 Smith-Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health (1990) 95 ALR 87 (FC). 480 (1990) 95 ALR 87 (FC). See Van der Walt AJ Constitutional Property Clauses (1999) 61. Also see Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 at 531-532, 540. 481 See Gray K ‘Property in thin air’ (1991) 50 Cambridge LJ 252-307 at 268-276. Also see Chap 4 (The Value of Immaterial Property) for a discussion of excludability and its usefulness in determining when a resource may be deemed property.

parties; it must have some degree of permanence or stability; and be capable in its nature of assumption by third parties. There is also the idea that there is property in a resource if a person can exercise control over it. Later cases no longer strictly adhere to the ‘conceptual severance’ strategy and this has resulted in a narrowing of the scope of property for constitutional purposes. Although the courts hold in principle that debts, money payments and claim rights are choses in action and subsequently property, there have been some contradictory cases lately. As explained in Mutual Pools & Staff Pty Ltd v Commonwealth,482 section 51(xxxi) does not apply in cases where the state exercises its regulatory or police power.483 This is similar to all the other constitutional property clauses discussed in this chapter. Irish constitutional law is not particularly concerned with the property concept and simply assumes that tangible and intangible rights are protected. Land and rights arising from land ownership, moveable property, money and intangible rights are protected. Copyright was specifically held to be protected in the case of Phonographic Performance (Ireland) Ltd v Cody484 and the case is also seen as authority for the general proposition that intellectual property and other forms of incorporeal property are protected under the constitutional property clause. State (Pheasantry Ltd) v Donnelly485 dealt with the forfeiture of a liquor licence. The court held that such forfeiture could not be regarded as an attack upon property rights since the license was a privilege granted by statute and subject to change by statute.486 This may be interpreted to mean that licenses are not protected, but a more likely interpretation would be that such licenses are only protected where they have already acquired some financial value. An interest purely granted by the state would only be protected in constitutional law if there is some own effort or investment on the part of the recipient visible and acquisition in terms of private law. In Maher v Minister for Agriculture, Food and Rural Development,487 the court decided that quotas granted in terms of a statute are not property for constitutional purposes. Irish constitutional law protects shares as property, but only insofar as own investment is visible. The right to a statutory pension was 482

(1994) 179 CLR 155. Van der Walt AJ Constitutional Property Clauses (1999) 47. 484 [1998] 2 ILRM 241, [1994] 2 ILRM 241. 485 [1982] ILRM 512. Also see Hempenstall v Minister for the Environment [1994] 2 IR 20, where it was held that although taxi licenses are property, regulations which effectively reduced their value were not considered an unjust attack on private property. 486 Also see Hand v Dublin Corporation [1991] 1 IR 409, where the court reached a similar conclusion to that of the court in State (Pheasantry Ltd) v Donnelly [1982] ILRM 512. 487 [2001] 2 IR 139, [2001] 2 IRLM 481. 483

recognised and protected as constitutional property in Irish law;488 hence participatory claims are accepted as constitutional property. In Irish law, corporate bodies are also entitled to property protection, which is similar to the position under South African constitutional law.489 All of the foreign jurisdictions considered include at least some categories of immaterial property under their definition of ‘property’ for constitutional purposes. Generally these jurisdictions seem to employ a wide property concept. The majority of the jurisdictions accept that a juristic person may also be a beneficiary of the property right, which is important for intellectual property. Intellectual property interests (patents, designs, copyright and trademarks) are protected under German, American, Australian and Irish law. It must be noted that American and Australian law protect intellectual property under separate clauses.490 From a comparative perspective it should be relatively easy to include the traditional immaterial property interests (intellectual property interests, namely patents, designs, copyright and trademarks) under the South African property clause. 491 Most jurisdictions also accept trade secrets as constitutional property. The other unconventional immaterial property interests492 are more problematic and not all of these interests are referred to in the foreign case law mentioned in this chapter. Confidential information is accepted as property under the Australian constitutional property clause. Participatory claims are accepted to some extent in both German and American law. Trade secrets are accepted as property for purposes of the American Takings Clause. The cases from the foreign jurisdictions considered in this chapter give some indication as to which immaterial property interests may be included under the constitutional property concept and this may be useful to South African court in future decisions on whether a specific immaterial property interest should enjoy constitutional protection under section 25 of the South African Constitution.

488

Lovett v Minister for Education [1997] 1 ILRM 89. See First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45. 490 Article I Section 8 Clause 8 of the Constitution of the United States of America 1787 and sec 51(xviii) of the Australian Constitution 1900 respectively. 491 Traditional immaterial property interests have been defined as patents, copyright, registered designs and trademarks, respectively in Chap 3 (Unconventional Immaterial Property Interests). 492 Unconventional immaterial property interests have been defined as commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, participatory claims and non-proprietary rights, respectively.

489

Chapter 6: Immaterial Property Interests in International Law 61

Introduction

The aim of this chapter is firstly to give a brief outline of the history of international law and human rights in South Africa and the current status of international law; secondly to identify and discuss international human rights law pertaining to property; and in the last instance to outline the international human rights law relevant to intellectual property rights. The overarching goal of this chapter is to identify specific international human rights instruments that may be useful in the interpretation of the constitutional property clause and more specifically to determine whether immaterial property interests may be included under the property clause in view of the international instruments. Section 39(1) (c) of the Constitution compels South African courts to consider international law in the interpretation of the Bill of Rights. As a point of first reference, this chapter outlines the previous position of international law in South African courts and the more important role that international law is now required to fulfil, especially in the area of human rights law. Where the Bill of Rights is at issue, courts are required to consult applicable international law instruments, even if South Africa is not a party to the agreement. The question of this dissertation, namely whether immaterial property interests may be protected under the constitutional property clause, is clearly an issue pertaining to the Bill of Rights. Therefore, all applicable international law instruments need to be identified and discussed, since courts would be obligated to consider it in answering the question whether immaterial property interests may be included under the constitutional property concept. As far as international law is concerned, the right to property and the right to intellectual property are protected in separate human rights instruments. Since some of the unconventional immaterial property rights cannot be considered as categories of intellectual property, it is necessary to broadly discuss the international law instruments pertaining to property and intellectual property, respectively. Both the right to property and intellectual

property are protected under the Universal Declaration of Human Rights (UDHR).1 However, only the right to intellectual property was entrenched in the International Covenant on Economic, Social and Cultural Rights (ICESCR).2 The right to property was not made binding in any of the further covenants. Therefore it is necessary to find some guidance for the construction of the right to property in the European Convention on Human Rights (ECHR).3 It is also necessary to discuss the emerging human rights framework developing for intellectual property rights in international law. Finally, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)4 and its influence on the development of intellectual property rights needs to be discussed briefly. South African courts are obliged to consider all of the above-mentioned international law instruments in deciding whether intellectual property rights and other immaterial property interests may be protected under the constitutional property clause. 62

International Human Rights Law in South African Courts

As stated by Dugard,5 international law has in the past played an insignificant role in the South African courts’ furtherance of human rights. South Africa became a party to the United Nations Charter in 1945. Articles 55 and 56 of this charter obliged member states to promote universal respect for and the observance of fundamental human rights for all persons, without discrimination. However, these provisions were not incorporated into South African law. Once the National Party had come into power there was very little scope for human rights and the government subsequently also abstained from voting on the General Assembly’s Universal Declaration of Human Rights (UDHR)6 in 1948. This government subsequently refused to become party to any human rights treaty. Dugard7 states that as a result, treaties such as the International Covenant on Civil and Political Rights,8 the International

1

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 2 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 3 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)). 4 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 5 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 208. 6 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 7 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 208. 8 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)).

Convention on the Elimination of all Forms of Racial Discrimination,9 the International Covenant on the Elimination of Discrimination against Women10 and the Convention against Torture11 were not incorporated into South African law.12 The South African courts were not powerless and could still summon international human rights law in other ways, yet they hardly ever did so. As long as customary international law did not conflict with legislation, courts were free to apply it since it has always formed part of South African common law. Even though apartheid legislation violated many rights recognised under the UDHR13 and there was therefore little scope for the application of customary international law, the courts did not invoke customary rules in the instances where this could have been done.14 Dugard15 refers to S v Petane16 and S v Rudman17 as examples where South African courts stated that the UDHR18 did not form part of customary international law. The court made no attempt to observe legal authority other than that of South Africa in coming to this conclusion. Dugard19 notes that even though South Africa had signed and ratified the Charter of the United Nations, human rights clauses in the charter could not be directly invoked by South African courts, since the Charter had not been incorporated into municipal law by statute.20

9

United Nations International Convention on the Elimination of all Forms of Racial Discrimination (Dec 21, 1965) 660 UNTS 195 (1969) (http://www2.ohchr.org/english/law/cerd.htm (accessed 25 November 2009)). 10 United Nations International Covenant on the Elimination of Discrimination against Women (Dec 18, 1979) 1249 UNTS 13 (Sept 3, 1981) (http://www.un.org/womenwatch/daw/cedaw/cedaw.htm (accessed 25 November 2009)). 11 United Nations Convention against Torture and Other Cruel, Inhumane and Degrading Treatment or Punishment (Dec 10, 1984) 1468 UNTS 85 (http://www.hrweb.org/legal/cat.html) accessed 25 November 2009)). 12 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 208. 13 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 14 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 208209. 15 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 209. 16 1988 (3) SA 51 (C) 58G-J. 17 1989 (3) SA 368 (E) 376A-B. The court stated that ‘[h]owever laudable the ideals which have inspired the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights and the European and American conventions they do not form part of customary international law’. 18 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 19 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 209. 20 See Pan American World Airways Incorporated v SA Fire and Accident Insurance Co Ltd 1965 (3) SA 150 (A) at 161B–D, where the court stated that ‘it is common cause, and trite law I think, that in this country the conclusion of a treaty, convention or agreement by the South African Government with any other Government is an executive and not a legislative act. As a general rule, the provisions of an international instrument so concluded, are not embodied in our municipal law except by legislative process’. Also see Dugard J International Law: A South African Perspective (3rd ed 2005) 51-52.

However, where a statute was ambiguous, courts could interpret it in accordance with the presumption that the legislature did not intend to violate international law.21 Where human rights conventions and declarations were not binding on South Africa as a custom or a treaty, such conventions could still be invoked by courts as ‘a guide to judicial policy in the formulation of a rule of law’.22 However, courts mostly failed to utilise these limited opportunities to apply international human rights norms.23 Dugard24 ascribes this to a number of factors. He mentions ‘an unfamiliarity with international law, a lack of awareness of the importance attached to international human rights norms in other jurisdictions and an antipathy to the international human rights movement, which had succeeded in isolating South Africa from the international community’.25 He reasons that the negative attitude of the courts towards international human rights norms also discouraged counsel from raising international human rights arguments in South African courts. In terms of the 1993 Constitution, international law was meant to play a larger role in the ‘new’ South African legal order and particularly in the area of human rights law. In accordance with section 231(4), ‘[t]he rules of customary international law binding on the Republic, shall, unless inconsistent with this Constitution or an Act of Parliament, form part of the law of the Republic’.26 Dugard27 states that this is nothing new; it merely confirms the common law position. Nonetheless, the inclusion of this provision in the Constitution grants a more elevated status to customary international law. The role of treaties under the Constitution is not as certain as customary international law, but such treaties would be negotiated by the executive and would be binding as soon as it is ratified by Parliament. Section 35(1) of the 1993 Constitution made it clear that international law had to play an important role in the interpretation of the Bill of Rights. Section 35(1) stated that ‘[i]n interpreting the provisions of this Chapter a court of law shall promote the values which underlie an open and democratic society based on freedom and equality and shall, where

21

Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 209; Devenish GE Interpretation of Statutes (1992) 212-215; Hahlo HR & Kahn E The South African Legal System and its Background (1968) 114; S v Penrose 1966 (1) SA 5 (N) 11E-F. 22 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 209. 23 See S v Adams; S v Werner 1981 (1) SA 187 (A). Also see S v Werner 1980 (2) SA 313 (W); S v Khanyile 1988 (3) SA 795 (N) as examples of the courts’ reluctance. 24 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 210. 25 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 210. 26 Constitution of the Republic of South Africa 200 of 1993 section 231(4). 27 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 210.

applicable, have regard to public international law applicable to the protection of the rights entrenched in this Chapter, and may have regard to comparable foreign case law’.28

Section 39(1) (b) of the 1996 Constitution contains a similar provision, which states that ‘[w]hen interpreting the Bill of Rights, a court, tribunal or forum … must consider international law’.29 Section 233 of the 1996 Constitution furthermore provides as follows: ‘When interpreting any legislation, every court must prefer any reasonable interpretation of the legislation that is consistent with international law over any alternative interpretation that is inconsistent with international law.’

This provision gives constitutional form to the common law presumption that legislation should be interpreted in line with international law. Dugard30 argues that the Constitution shows a clear intention to ensure that South African law complies with international law, particularly in the area of human rights. Dugard31 explains that international human rights conventions clearly inspired the Bill of Rights. The Bill of Rights also draws substantially on the language and structure of these conventions. For these reasons, Dugard argues that South African courts would have been obliged to make use of international human rights law in the interpretation of the Bill of Rights even if the Bill of Rights made no explicit reference to the courts’ use of international law. In the opinion of Dugard,32 South African courts are obliged to give regard to all the sources of international law as recognised in the Statute of the International Court of Justice33 article 38(1), namely: ‘(a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; (b) international custom, as evidence of a general practice accepted as law; (c) the general principles of law recognised by civilised nations; (d) judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law’.34

28

Constitution of the Republic of South Africa 200 of 1993 section 35(1). Constitution of the Republic of South Africa 1996 section 39(1) (c). See Dugard J International Law: A South African Perspective (3rd ed 2005) 65. 30 Dugard J International Law: A South African Perspective (3rd ed 2005) 64-65. 31 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 211. 32 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 212. 33 United Nations Statute of the International Court of Justice (June 26, 1945) Stat 1005 TS 993 (http://www.icjcij.org/documents/index.php?p1=4&p2=2&p3=0 (accessed 25 November 2009)). 34 United Nations Statute of the International Court of Justice (June 26, 1945) Stat 1005 TS 993 art 31(8) (http://www.icj-cij.org/documents/index.php?p1=4&p2=2&p3=0 (accessed 25 November 2009)). 29

Dugard35 states that since 1994, the Constitutional Court and the other courts have been willing to utilise international human rights law. Assistance has been provided by decisions of the European Commission and the Court of Human Rights, but views of the United Nations Human Rights Committee and United Nations reports on human rights matters have also occasionally been considered by South African courts. Courts are obliged to consider treaties to which South Africa is not a party in cases where the interpretation of the Bill of Rights is in issue. Where the Bill of Rights is not in issue, no such rule exists regarding treaties to which South Africa is not a party.36 On authority of Dugard,37 the main advantage of this approach is that courts are no longer required to conduct an enquiry as to whether the particular principle in a human rights convention is backed by sufficient practice (usus) and opinio juris that it may be viewed as a customary rule that is binding on South Africa. The new approach created by section 39(1) (b) of the Constitution allows courts to simply utilise the language of multilateral human rights conventions and decisions related to its interpretation. Section 39(1) (b) does not mandate courts to apply international human rights norms, but merely requires that they ‘consider’ it.38 The question whether intellectual property and the broader category of immaterial property may be included under the South African constitutional property clause is clearly an issue that pertains to the interpretation of the Bill of Rights. Consequently, courts may automatically refer to international human rights instruments, including treaties to which South Africa is not a party. The following sections will outline the international human rights instruments that have particular relevance to immaterial property rights and the sub-category of intellectual property rights. The rationale is to determine how these instruments may assist South African courts in interpreting the constitutional property clause and more specifically to determine which intellectual property interests and other immaterial property interests may be included under the property concept for constitutional purposes. Since intellectual property interests and other property interests are considered separately in international human rights instruments, the two categories are discussed separately.

35

Dugard J International Law: A South African Perspective (3rd ed 2005) 66. Dugard J International Law: A South African Perspective (3rd ed 2005) 66. 37 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 213. 38 Dugard J ‘The role of the international law in interpreting the bill of rights’ (1994) 10 SAJHR 208-215 at 214. South African courts may therefore have regard to international law principles, but decide not to apply it if it is unsuitable for South Africa. The crux is that these international law instruments and principles must be considered when a court interprets the Constitution or any other legislation. 36

63

Property Rights under International Law

In international law, property rights are protected under article 17 of the Universal Declaration of Human Rights (UDHR).39 This article states that: ‘(1) Everyone has the right to own property alone as well as in association with others. (2) No one 40

shall arbitrarily be deprived of his property.’

However, the right to property is not mentioned in the International Covenant on Economic, Social and Cultural Rights (ICESCR)41 or in the International Covenant on Civil and Political Rights (ICCPR),42 which are the treaties that convert the human rights in the UDHR43 into legally binding commitments.44 Yu attributes this omission to ‘cold-war politics and concerns raised by Socialist countries’.45 Article 1 of Protocol Number 1 to the European Convention on Human Rights (ECHR)46 guarantees the right to property as follows: ‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The proceeding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’47

The concept of ‘possessions’ has an autonomous meaning that is not linked to the formal classification in national law. The concept of ‘possessions’ is interpreted broadly in case law, since it is not restricted to the right of ownership, but include ‘a whole range of pecuniary 39

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 40 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 41 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 42 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). 43 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 44 Grgi A, Mataga Z, Longar M & Vilfan A The Right to Property under the European Convention on Human Rights: A Guide to the Implementation of the European Convention on Human Rights and its Protocols. Human Rghts Handbooks No 10 (2007) 5. 45 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 733. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1086-1088. 46 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1(http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)). 47 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)).

rights such as rights arising from shares, intellectual property such as patents, arbitration award, established entitlement to a pension, entitlement to a rent, and even rights arising from running of a business’.48 In the French version of the text of Protocol 1, Article 1, the word ‘biens’ is used and this word relates to all patrimonial rights. This is used as authority for the broad interpretation of the concept of ‘possessions’.49 The protection of Article 1 only applies if it is possible to lay a claim to a certain property and it does not guarantee the right to acquire property. For example, a mere expectancy to inherit would not be protected.50 Van der Walt51 states that Article 1 is read as if the property guarantee simply refers to property in general and in particular to the ownership of property. He also agrees with the interpretation that Article 1 only protects property that is already in existence, in other words if an applicant is able to prove a valid claim.52 This is similar to the German approach which requires that a particular property interest must have been acquired before it may be protected as constitutional property. This approach could be of particular use to South African courts in determining which of the unconventional immaterial property rights could be recognised and protected by the property clause, particularly the interests that are not protected as property in private law. Allen states that ‘[w]here an applicant claims that a Convention right has been breached, the court must first determine whether the right is applicable to the facts or, as it is often put, whether the right is engaged’.53 Under Article 1, ‘a generous view of applicability does not 48

Grgi A, Mataga Z, Longar M & Vilfan A The right to property under the European Convention on Human Rights: A guide to the implementation of the European Convention on Human Rights and its protocols. Human rights handbooks No 10 (2007) 7. See for example Marckx v Belgium [1979] ECHR Series A vol 31; Handyside v United Kingdom [1976] ECHR Series A vol 24; Pine Valley Developments Limited and Others v Ireland [1991] 14 EHRR 319; Tre Traktörer AB v Sweden [1989] ECHR Series A vol 159; Stran Greek Refineries and Stratis Andreadis v Greece [1995] ECHR Series A vol 31B citing Van der Walt AJ Constitutional Property Law (2005) 116-118, where he discusses these cases. 49 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)); Grgi A, Mataga Z, Longar M & Vilfan A The right to property under the European Convention on Human Rights: A guide to the implementation of the European Convention on Human Rights and its protocols. Human rights handbooks No 10 (2007) 7. 50 Grgi A, Mataga Z, Longar M & Vilfan A The right to property under the European Convention on Human Rights: A guide to the implementation of the European Convention on Human Rights and its protocols. Human rights handbooks No 10 (2007) 7. See Marckx v Belgium Series A no 31 (1979) 2 EHRR; Handyside v United Kingdom [1976] ECHR Series A vol 24. Also see Van der Walt AJ Constitutional Property Law (2005) 116117. Especially see Allen T Property and the Human Rights Act 1998 (2005) 39-46. 51 Van der Walt AJ Constitutional Property Law (2005) 116. 52 See Pine Valley Developments Limited and Others v Ireland (1991) 14 EHRR 319; Van der Walt AJ Constitutional Property Law (2005) 116-117 for a discussion of this case. 53 Allen T Property and the Human Rights Act 1998 (2005) 39.

necessarily extend the State’s obligations or enhance the protection of property, except in the limited sense that it extends the circumstances in which the State can be called upon to justify its actions’.54 Allen55 notes that Article 1 was not formulated particularly precisely, since the words ‘possessions’ and ‘property’ are used interchangeably and Article 1 also refers initially to the ‘enjoyment of possessions’ and later to the ‘use of property’. Apart from the discrepancies in the French and English texts, Allen also notes that the use of the term ‘possessions’ is not general in common law and that the term ‘property’ is more often used in most common law constitutions. Despite this, Allen56 states that ‘possessions’ is clearly the general term Article 1 employs to refer to all categories of proprietary interests, including the rights to acquire and dispose of property. The Court has accepted that if national law classifies a property interest as property, then it would also constitute a possession for the purposes of Article 1. The Court’s approach was initially more restrictive regarding applicability and it was held that the concept of possessions applies only to existing possessions.57 In Inze v Austria,58 the formal approach, in terms of which vested rights which are included under Article 1 are distinguished from the mere hope of acquiring a property interest, was confirmed. This is also similar to the German requirement that an interest should be vested before it would enjoy constitutional property protection and this could also be of use to South African courts regarding the question whether unconventional immaterial property interest may be protected as constitutional property. However, the Article 1 meaning of ‘possessions’ is not limited to interests accepted as property under national law. In Gasus Dosier-und Fördertechnik GmbH v Netherlands,59 the Court held that the concept of ‘possessions’ does not include only limited to the ownership of physical goods, but has an autonomous meaning which may include other rights and interests that may constitute ‘property’ and consequently also ‘possessions’ for purposes of Article 1.

54

Allen T Property and the Human Rights Act 1998 (2005) 39. Allen T Property and the Human Rights Act 1998 (2005) 40. 56 Allen T Property and the Human Rights Act 1998 (2005) 40-42. Also see Allen T ‘Commonwealth constitutions and the right not to be deprived of property’ (1993) 42 Int & Comp LQ 523-552 where he argues that ‘property’ has an autonomous meaning in constitutional law. 57 See Marckx v Belgium Series A no 31 (1979) 2 EHRR at 330. 58 Series A No 126 (1988) 10 EHRR 394. 59 Series A No 306-B (1995) 20 EHRR [53]. 55

Allen60 notes two broad questions raised by the autonomous meaning doctrine. The first question asks what would count as ‘possessions’ for purposes of Article 1, while the second question relates to the function of the doctrine in relation to Article 1. Regarding the first question, Allen suggests that the autonomous meaning doctrine would not allow the Court to find vested rights where there is no personal or proprietary right in national law. Instead, the Court would be permitted to classify a bundle of rights classified as a non-proprietary interest in national law as a ‘possession’ for Article 1 purposes. He also suggests that the function of the doctrine may be to prevent states from relabeling rights in order to avoid being called to justify their actions. Furthermore, the laws of other states are also considered in construing the meaning of ‘possessions’ in order to secure common standards. The autonomous meaning’s purpose is also to take into account the fact that the Court often construes Article 1 as a general protection for wealth and also construes its meaning within the Convention and Protocols as a whole. Furthermore, it reflects the Court’s perception of its capacity to ensure that states conform to Convention standards.61 Van der Walt62 agrees that the property concept (the concept of ‘possessions’) in Article 1 has always been interpreted more widely than in the national legal systems, including both real rights and creditors’ rights. Both movable and immovable categories of property are included under Article 1.63 For purposes of this wider property concept under Article 1, the economic interests in a restaurant (including a liquor licence)64 as well as a final, binding arbitration award65 constitute property. Van der Walt66 states that this is in line with the general view that a vested or accrued money debt is protected as property. Allen67 notes that a share in a company is also accepted as a ‘possession’ for Article 1 purposes. A contractual

60

Allen T Property and the Human Rights Act 1998 (2005) 43-45. Allen T Property and the Human Rights Act 1998 (2005) 42-45. 62 Van der Walt AJ Constitutional Property Law (2005) 117. 63 See Wiggins v The United Kingdom [1978] 13 DR 40, where it was stated unequivocally that Article 1 protects both movable and immovable property. Also see Van der Walt AJ Constitutional Property Law (2005) 117 . 64 See Tre Traktörer AB v Sweden [1989] ECHR Series A vol 159. See Allen T Property and the Human Rights Act 1998 (2005) 75-78. 65 See Stran Greek Refineries and Stratis Andreadis v Greece [1995] ECHR Series A vol 31B at 86. 66 Van der Walt AJ Constitutional Property Law (2005) 117. See Allen T Property and the Human Rights Act 1998 (2005) 46-57 for a more detailed discussion of the reasons why a debt is protected as a ‘possession’ in terms of Article 1. 67 Allen T Property and the Human Rights Act 1998 (2005) 46. See Lithgow v The United Kingdom Series A No 102 (1986) 8 EHRR 329. 61

right over property is also accepted as a ‘possession’.68 Compulsory contributions to a state pension may under certain circumstances establish a right to the payment of pension benefits, which is accepted as property for the purposes of Article 1. The test used to determine whether such a payment constitutes property, ‘is whether there is a direct relationship between the contributions and the expectation of receiving pension benefits’.69 From the next section of this chapter it will become clear that intellectual property rights are protected in separate conventions under international law. However, other immaterial property interests that do not fall under the category of intellectual property may be protected under Article 1 of Protocol 1 of the ECHR.70 These cases of the European Human Rights Court could assist South African courts in determining which immaterial property interests could be included under the constitutional property clause. However, these cases can merely serve as persuasive authority on par with foreign law, since they are part of regional international law of the European Union. The ECHR is a regional (European) instrument to which South Africa can never accede. Article 14 of the African (Banjul) Charter on Human and Peoples’ Rights71 is a regional international instrument to which South Africa (a member of the African Union) is party. However, since the cases decided in terms of this Charter presently have no binding force they are currently of limited use, but they may prove to be of value to South African courts in future. 64 641

Intellectual Property Rights under International Law Introduction

Dean72 states that the Universal Declaration of Human Rights (UDHR)73 of 1948 and International Covenant on Economic, Social and Cultural Rights (ICESCR)74 of 1966 may be

68

Allen T Property and the Human Rights Act 1998 (2005) 46. See Gasus Dosier-Und Fördertechnik GmbH v The Netherlands Series A No 306-B (1995) 20 EHRR [53] and Wilson v Secretary of State for Trade and Industry [2004] 1 AC 816. 69 Van der Walt AJ Constitutional Property Law (2005) 118. See X v United Kingdom [1970] YB 13 892 and X v The Netherlands [1971] YB 14 224. See Allen T Property and the Human Rights Act 1998 (2005) 71-75. 70 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)). 71 African Union African (Banjul) Charter on Human and Peoples’ Rights (June 27, 1981) OAU Doc CAB/LEG/67/3 rev 5, 21 ILM 58 (1982) (http://www.africaunion.org/official_documents/Treaties_%20Conventions_%20Protocols/Banjul%20Charter.pdf (accessed 28 July 2010)). Article 14 provides as follows: ‘The right to property shall be guaranteed. It may only be encroached upon in the interest of public need or in the general interest of the community and in accordance with the provisions of appropriate laws.’ 72 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 108-109.

used to prove that the protection of the right to hold intellectual property rights is internationally accepted. He identifies article 27(2) of the UDHR75 as a starting point to prove the international acceptance of intellectual property rights as a fundamental human right. This article states that ‘[e]veryone has the right to the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author’. 76 Dean77 states that the purpose of this declaration is to set a universal standard for all nations, in order for all nations to observe and realise these fundamental rights. Dean78 observes that article 15 of the ICESCR79 is ‘clearly derived from the UDHR’,80 since article 15(c)81 states that everyone has the right ‘to benefit from the protection of the moral and material interest resulting from any scientific, literary or artistic production of which he is the author’.82 This Covenant creates binding obligations for state parties, unlike the UDHR,83 which is non-binding. Although at least certain aspects of intellectual property are clearly protected as a fundamental human right under international law, it is still necessary to determine how intellectual property law and human rights law should interact, since it is an area that is still unclear. The implications of protecting certain intellectual property aspects under human rights law still need to be thoroughly analysed and a human rights framework for intellectual property has to be developed. Although some groundwork has already been done for the creation of such a framework, there are still many unanswered questions. The groundwork for such a framework as well as the remaining questions will be discussed in the

73

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 74 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 75 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 76 Article 27(2) of the United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 77 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 109. 78 Dean OH ‘The case for the recognition of intellectual property in the bill of rights’ (1997) 60 THRHR 105119 at 109. 79 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 80 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 81 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 82 Article 15 (c) of the United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 83 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)).

next section. Such a framework would also provide South African courts with much needed guidance regarding the interaction between intellectual property rights and human rights. 642

Article 27(2) of the UDHR and Article 15(1)(c) of the ICESCR

Article 27(2) of the Universal Declaration of Human Rights (UDHR)84 and article 15(1) (c) of the International Covenant on Economic, Social and Cultural Rights (ICESCR)85 are the two provisions generally identified as the ‘internationally recognized basis of the right to the protection of interests in intellectual creations’.86 Yu87 stresses the importance of the drafting history of article 27(2) of the UDHR88 and article 15(1) (c) of the ICESCR,89 since important lessons may be learnt that may be useful in the development of a human rights framework for intellectual property. It becomes apparent that controversy surrounded the protection of moral and material interests in intellectual creations. Since a textual analysis often leaves unanswered questions, it is important to turn to the drafting history for guidance. By analysing the drafting history, the intentions and challenges that faced the drafters become apparent. It is also important to remember that the right to the protection of moral and material interests was not automatically included and that the United States of America opposed this right during the drafting of the UDHR90 as well as the ICESCR.91 The drafting history also gives insight into the conflict that could possibly exist between human rights and intellectual property rights and could also give an idea as to the challenges that may be encountered during the development of a human rights framework for intellectual property. 92

84

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) article 27(2) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 85 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 86 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1044. See Coombe RJ ‘Intellectual property, human rights and sovereignty: New dilemmas in international law posed by the recognition of indigenous knowledge and the conservation of biodiversity’ (1998-1999) 6 Ind J Global LS 59-115 at 59, where she also states that ‘[t]he Universal Declaration of Human Rights (UDHR) is the most general embodiment of today’s international human rights norms’. 87 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1044. 88 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) article 27(2) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 89 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 90 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) article 27(2) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 91 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1)(c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 92 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1050.

The UDHR93 was adopted in 1948 and ‘created against the backdrop of aggression and atrocities committed during World War II’.94 This motivated the framers of the Declaration to protect specific human rights and this background was often discussed, although the Declaration does not mention the discussion explicitly. The drafting of the declaration went through seven stages and initially there was strong opposition to the protection of rights in intellectual creations. During the drafting of the UDHR,95 the United States of America was not a member of the Berne Convention,96 since this convention offered higher standards of protection for economic and cultural intellectual property rights than what the United States of America was willing to afford. Eventually article 27(2) was adopted, although it remains unclear why it was ultimately agreed to. It may be because states wanted protection for moral rights or it could have been to internationalise copyright law.97 Another view is that this step was seen as a way to promote freedom of expression.98 Whatever the motivation may be, article 27(2) of the UDHR99 now protects the moral and material interests in intellectual creations explicitly.100 When the drafting of the ICESCR101 began, there was uncertainty as to whether this document should take the form of a covenant or a declaration. At first, a declaration which included only civil and political rights was drafted. Thereafter, the Commission of Human Rights included economic, social and political rights upon instruction of the United Nations Economic and Social Council. A year later, these provisions were split into the International 93

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 94 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1050. Also see Coombe RJ ‘Intellectual property, human rights and sovereignty: New dilemmas in international law posed by the recognition of indigenous knowledge and the conservation of biodiversity’ (1998-1999) 6 Ind J Global LS 59115 at 60-62. 95 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 96 World Intellectual Property Organisation Berne Convention for the Protection of Literary and Artistic Works (September 9, 1886) (http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (accessed 17 September 2009)). 97 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1058. 98 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1050-1058 for a more comprehensive discussion of the drafting history of article 27(2) of the UDHR. 99 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 100 See Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 275-278, where he examines the origins of the UDHR and more specifically article 27(2). 101 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)).

Covenant on Civil and Political Rights (ICCPR)102 and the ICESCR.103 Even though the language of the ICESCR104 is closely related to that of the UDHR,105 it was far from certain that article 15(1) (c) would be included automatically. Initially only the French delegate argued in favour of the protection of rights in intellectual creations and the clause was subsequently omitted from the draft, since the other delegates were not enthusiastic about such a provision. Various arguments for and against the protection of moral and material interests in intellectual property were brought to the discussion and similarly a range of versions of the article was introduced and rejected.106 It was only after the Universal Copyright Convention107 had entered into effect and the United States of America had joined the international intellectual property law ‘family’, that the article protecting the moral and material interests of intellectual property was reintroduced successfully. This Convention allowed the United States of America to provide lower international intellectual property protection without members of the Berne Convention108 having to lower their standards of intellectual property protection. Most of the countries that had initially opposed the provision eventually supported it, with the remaining opposition being from the Eastern bloc countries. The reason for remaining opposition was that countries felt unable to assume the obligation to progressively realise the rights of authors. In the end the provision was adopted with thirty-nine votes to nine, with twenty-four abstentions.109

102

United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). 103 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 104 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 105 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 106 See Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 278-281 for a recounting of the history of the ICESCR’s drafting. 107 United Nations Universal Copyright Convention (Sept 6, 1952) (http://portal.unesco.org/culture/en/ev.phpURL_ID=1814&URL_DO=DO_TOPIC&URL_SECTION=201.html) accessed 30 November 2009). 108 World Intellectual Property Organisation Berne Convention for the Protection of Literary and Artistic Works (September 9, 1886) (http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (accessed 17 September 2009)). 109 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1059-1069 for a fuller discussion of the drafting history of article 15(1)(c).

Yu110 argues that important lessons may be learnt from these drafting histories. In the first instance, ‘the right to the protection of interests in intellectual property has always been controversial’.111 Some delegates found that this right should not be protected as a human right, while others reasoned that the right to own property or the right to remuneration for work already adequately covers the protection of intellectual property interests. As a result, considerable debate was necessary before article 27(2) of the UDHR112 and article 15(1) (c) of the ICESCR113 were included. The second important aspect is that the realpolitik of international negotiations is present even for the protection of fundamental rights. Human rights are not universal and unchanging, but may vary under specific economic, social or political circumstances. In the case of article 15(1) (c) of the ICESCR,114 the right was eventually included due to the successful conclusion of the Universal Copyright Convention, which was a political issue.115 A third important lesson is that the instruments do not demarcate the scope of the right to the protection of interests in intellectual property; neither do they endorse any particular method of protection. Furthermore, no common purpose has been agreed upon, since states voted for specific provisions based on different considerations. A fourth aspect pertains to the fact that most of the discussion preceding the adoption of the intellectual property provisions was spent on whether rights in intellectual property creations should be included under an instrument dealing with fundamental human rights. Subsequently, the important question of a suitable balance between public and private rights pertaining to intellectual property did not receive adequate attention at the drafting stage. The final important aspect to consider is that the relationship between human rights and intellectual property rights was already explored during the drafting of the UDHR 116 and the ICESCR.117 Delegates raised important questions that are currently still valid, such as 110

Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1070-1075. 111 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1070. 112 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 113 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 114 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 115 United Nations Universal Copyright Convention (Sept, 6 1952) (http://portal.unesco.org/culture/en/ev.phpURL_ID=1814&URL_DO=DO_TOPIC&URL_SECTION=201.html) accessed 30 November 2009). 116 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 117 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)).

questions regarding the human rights basis for intellectual property rights; and the economic, social and cultural implications for intellectual property rights. Only recently have these questions begun to be addressed by the human rights forum, which is ‘partly in response to challenges created by the digital revolution and the implementation of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS)118 and partly because of an increasing focus on the rights of indigenous peoples’.119 Similarly to Yu’s120 analysis, Torremans121 also notes four important aspects that become apparent from a review of the drafting histories of the UDHR122 and the ICESCR.123 He agrees with Yu that the inclusion of copyright in the international human rights instruments is controversial. The second observation is that the rights of authors and creators should be understood as a precondition for the existence of cultural freedom and participation in; as well as access to scientific progress. The fact that these rights may also stand alone should be seen as a secondary point. In the third instance, Torremans124 remarks that the rights of authors and creators should facilitate other rights such as the right to cultural participation and access to the products of scientific progress. The fourth observation is that international human rights instruments do not specify how intellectual property rights should be dealt with, but instead leaves this to the legislature to determine. All of the issues mentioned by these authors are also relevant in the South African context, since courts are required to deliberate the interaction between intellectual property rights and human rights; and the legislature has to give effect to a balanced approach between private and public rights in the area of intellectual property law.

118

World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994 (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 119 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1075. Also see Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 47-61. 120 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1070-1075. 121 Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 280. 122 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 123 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 124 Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 280.

643

International Human Rights Protection for Intellectual Property

In his article on intellectual property and human rights, Yu125 names two approaches used by policymakers, international bureaucrats, scholars, intergovernmental organisations and nongovernmental organisations in their examination of the interaction between human rights and intellectual property. These approaches are the ‘conflict approach’, which views the two sets of rights as being fundamentally in conflict; and on the other hand the ‘coexistence approach’, which holds that the two sets of rights are in essence compatible.126 In the opinion of Helfer, these two approaches are based on ‘radically different normative foundations and they offer divergent prescriptions for how to structure the rights and obligations of nation states and private parties’.127 The conflict approach holds that strong intellectual property rights undermine human rights and are therefore incompatible with states’ human rights obligations, especially where economic, social and cultural rights are relevant. Proponents of this approach prescribe the normative primacy of human rights over intellectual property law in instances where rights protected in treaties may be in conflict.128 The coexistence approach, on the other hand, views both intellectual property law and human rights law as being concerned with determining the correct balance between private monopoly rights which serve as an incentive; and access of the consuming public to creative works. In accordance with this approach, intellectual property law and human rights law are essentially compatible, although there is often disagreement over where the balance should be found between incentives and access.129 Torremans130 agrees that there is a need to balance public and private interests in the context of intellectual property rights.

125

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 709. 126 Helfer first identified these approaches. See Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 47-61. 127 Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 4761 at 48. 128 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 709. Helfer first identified these approaches. See Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 47-61. 129 Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 4761 at 48-49. Also see Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 272-274, where he explains the conflict approach and coexistence approach by specifically applying them to copyright law. 130 Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 281-282.

Helfer131 submits that the debate between proponents of the two approaches is unlikely to end soon. He notes four consequences that such continued tension between the two frameworks could have for the international legal system. The first consequence is that there would be a raised incentive to develop soft law human rights norms. In order to apply the human rights primacy over intellectual property protection rules, it is essential to know which human rights are being undermined and this is not always possible to determine from treaty texts alone. Proponents of the conflict approach would pressure human rights bodies to develop interpretations that would give clarity over the ambiguous human rights in order for these rights to compete with the rules of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),132 which are more clearly defined. This could also speed up the process by which the jurisprudence of economic, cultural and social rights evolves in this currently underdeveloped area of human rights law. A second consequence relates to intellectual property product consumers, who would be treated as the holders of internationally guaranteed rights. Where TRIPS133 is concerned, the only holders of rights are the owners of the intellectual property products and people who consume the products are merely users. These users are granted a status equal to owners in terms of a human rights approach to intellectual property. A third paradigm shift caused by this conflict between the two approaches relates to the ‘maximum standards’ of intellectual property protection which may be used in a human rights approach to intellectual property. ‘Minimum standards’ of protection are used in treaties such as the Berne Convention,134 the Paris Convention135 and TRIPS136 that do not prevent states parties from enacting more stringent intellectual property protection measures. Whether such a ‘maximum standard’ of intellectual property protection would actually emerge would depend on how human rights norms are received by forums such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO) that are 131

Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 4761 at 57-61. 132 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 133 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 134 World Intellectual Property Organisation Berne Convention for the Protection of Literary and Artistic Works (September 9, 1886) (http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (accessed 17 September 2009)). 135 World Intellectual Property Organisation Paris Convention for the Protection of Industrial Property (March 10, 1883) (http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html (accessed 17 September 2009)). 136 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)).

established as intellectual property lawmakers. This is also the final consequence of the tension between the conflict approach and the coexistence approach. Helfer137 states that it is much more uncertain how and if human rights would be integrated into the WTO. Yu138 mentions Resolution 2000/7 of the United Nations Sub-Commission on the Promotion and Protection of Human Rights as an example of the conflict approach being followed. The Sub-Commission stated that the implementation of TRIPS139 actually or potentially conflicted with the realisation of economic, social and cultural rights since it prevented the transfer of technology to developing countries, affected the enjoyment of the right to food and reduced communities’ control over their genetic and natural resources.140 The Sub-Commission reminded states that human rights should enjoy primacy over economic policies and agreements. By contrast, the coexistence approach was utilised by the WTO, which noted that international trade agreements have built-in flexibilities that allow states to balance human rights protection and intellectual property protection.141 Yu states that while both of these approaches have merits as well as disadvantages, neither addresses ‘the fact that some attributes of intellectual property rights are protected in international or regional human rights instruments while other attributes do not have any human rights basis at all’.142 He argues that the most important task is to distinguish the human rights attributes of intellectual property from the aspects of intellectual property protection that have no human rights attributes. Yu also suggests that it may be useful to distinguish between the so-called ‘intellectual property rights’ and the human rights aspects 137

Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop R 4761 at 60. 138 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1076-1077. 139 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 140 United Nations Economic and Social Council [ECOSOC] Sub-Commission on Promotion & Protection of Human Rights, Intellectual Property Rights and Human Rights Resolution 2000/7 (Aug 17, 2000) UN Doc E/CN4/Sub2/RES/2000/7 (http://www.unhchr.ch/Huridocda/Huridoca.nsf/0/c462b62cf8a07b13c12569700046704e?Opendocument (accessed 25 November 2009)). 141 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1077. See World Trade Organization Protection of Intellectual Property Under the TRIPS Agreement P 9 E/C12/2000/18 (Nov 27, 2002) (http://www.unhchr.ch/tbs/doc.nsf/0/292864197888d603c12569ba00543291?Opendocument (accessed 30 November 2009)). 142 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 710-711. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1077-1078.

of intellectual property by referring to these as ‘the right to the protection of interests in intellectual creations’ in the context of human rights.143 The conflict and coexistence approaches encourage focusing on specific situations and problems, which hinders a more general discussion of the rights involved and the interaction between human rights and intellectual property rights. Since the Universal Declaration of Human Rights (UDHR)144 and the International Covenant on Economic, Social and Cultural Rights (ICESCR)145 now expressly include the protection of interests in intellectual creations, Yu sees it as misleading to enquire whether human rights and intellectual property rights coexist or conflict. Due to the overlap of human rights attributes, these rights coexist and conflict with one another at the same time.146 In Yu’s147 opinion, it is more important to resolve the tension between the human rights aspects of intellectual property and the non-human rights aspects in the development of a human rights framework for intellectual property. There are two different sets of conflicts, namely internal conflicts that exist only within the human rights regime; and external conflicts that exist at the intersection between human rights and intellectual property. When addressing the external conflicts, it becomes important to distinguish between the human rights and non-human rights aspects of intellectual property. These non-human rights aspects of intellectual property refer to intellectual property rights, which include patents, copyright, trademarks, trade secrets and other existing as well as newly created rights.148 Once the different aspects have been separated, it should be possible to resolve the conflicts with the use of human rights primacy. This approach entails protecting human rights attributes above

143

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 711. Helfer refers to these human rights aspects of intellectual property as authors’ rights in his article on human rights and intellectual property: Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020. Throughout this dissertation I have similarly referred to this aspect as ‘the right to hold intellectual property rights’. 144 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 145 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 146 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1077-1078. 147 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 711. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1078. 148 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1079.

rights that have no human rights basis.149 Yu explains the principle of human rights primacy as follows: ‘Once the human rights attributes of intellectual property rights have been identified, the principle of human rights primacy will require that the protection of these attributes take precedence over the protection offered under the current intellectual property system, including the protection of the non-human-rights attributes of intellectual property rights and those forms of intellectual property rights that have no human rights basis.’150

The remaining question is whether the built-in flexibilities of the intellectual property system would allow states to balance their human rights obligations with the non-human rights attributes of intellectual property and whether adequate protection is afforded to the human rights attributes of intellectual property.151 However, this approach does not resolve all conflicts, especially in cases where the human right in question is not precisely defined.152 Therefore Yu153 cautions that the principle of human rights primacy should not be abused to bring existing intellectual property rights into disrepute. He acknowledges that the expansion of intellectual property rights is a distressing trend and that affording intellectual property rights the status of a human right may promote the argument for further extensions of intellectual property rights. However, he advises that the balance would not be corrected by restricting intellectual property rights unjustly in terms of other human rights. The reason for this is that the non-human rights attributes of intellectual property would be deemed subordinate to human rights in terms of the principle of human rights primacy, but the many important interests protected by those attributes need to be examined with care before coming to any conclusions about restricting the non-human rights attributes of intellectual property.

149

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 710-711. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1092. 150 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1092. 151 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1093-1094. 152 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 710-711. 153 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 712.

As Yu154 explains, the principle of human rights primacy is not useful in the case of internal conflicts, since the conflicting rights both have a human rights basis. For example, this would be the case where the right to freedom of expression comes into conflict with the right to the protection of interests in intellectual creations.155 In such a case, other approaches such as the just remuneration approach; the core minimum approach; and the progressive realisation approach may prove to be more useful. The just remuneration approach postulates that authors and inventors hold a right to remuneration rather than a right to exclusive control; and individuals wishing to use the intellectual work would obtain a human rights-based compulsory license instead of a free license.156 The core minimum approach refers to the minimum essential levels of protection that a state has to provide in order to comply with human rights obligations. This approach entails a balance between the obligations of a state and the constraints imposed by a scarcity of economic and natural resources. 157 The progressive realisation approach refers to the fact that certain human rights are empowerment rights that enable individuals to benefit from other important rights.158 It is important to note that the German Federal Constitutional Court has utilised the just remuneration approach.159 In accordance with the Court’s implementation of the just remuneration approach, the legislature is allowed to remove the exclusivity of copyright under certain circumstances where there is a compelling reason as long as authors receive

154

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 712. 155 Also see Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 287-289, where he explores the relationship between the human rights aspects of copyright and other human rights. He states that the aim of balancing the different rights should be to respect both rights. He submits that the human rights protection for copyright should be more stringent in cases where the input level of creativity was higher. 156 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1095-1105 for a full discussion of the just remuneration approach. 157 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1106-1113 for a full discussion of the core minimum approach. 158 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1113-1123 for a full discussion of the progressive realisation approach. 159 See Chap 5 (Immaterial Property Interests in the Constitution) sec 5.3.2 for a discussion of the German constitutional property cases pertaining to intellectual property. The German Constitutional Court also developed a balancing test, outside of intellectual property law, that reflects a distinction between human and economic interests and between conflicting rights. See Van der Walt AJ Constitutional Property Clauses (1999) 158-163.

adequate remuneration for the exempted use.160 Although the just remuneration approach provides a good solution in instances where there is conflict between two human rights, there are also some disadvantages. In instances where the remuneration level is too high, access to intellectual property materials may still be hindered. Therefore states need to facilitate human rights-based compulsory licenses as well as legislation that prevents that prices be set too high if human rights are to be protected adequately.161 Another problem with the just remuneration approach is that the focus falls on material interests, ignoring the moral interests in intellectual property creations, which are also important interests. Furthermore, it is also ineffective in addressing problems related to the protection of traditional knowledge and intellectual creations stemming from such knowledge.162 The core minimum approach was specifically created for the ICESCR163 for determining whether a state has fulfilled its obligations relating to economic, social and cultural rights as far as its resources allow. In agreement with this approach, states would still be compliant with the ICESCR164 if they modified or removed protection in terms of international treaties such as TRIPS165 that are in excess of the protection of moral and material interests in intellectual property required by the ICESCR.166 Excess protection may also be removed if this is compelled by the competing demands of other human rights.167 This approach provides authors with a minimum level of protection even where other human rights demand a state’s resources. However, there are also limitations to this approach. In the first instance, it is difficult to determine how much protection would satisfy the core minimum requirement. This approach does not provide guidance as to how rights could be progressively realised as resources become available either, since it only focuses on one right at a time, nor does it 160

See BVerfGE 31, 248 [1971] (Broadcast Lending case); BVerfGE 31, 270 [1971] (School Broadcast case); BVerfGE 31, 255 [1971] (Tape Recording I case); BVerfGE 31, 275 [1971] (Phonograph Record case); BVerfGE 49, 415 [1978] (Church Music case). 161 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1100-1101. 162 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1102-1104. See Chapter 3 (Unconventional Immaterial Property Interests) sec 3.7 for a discussion of traditional knowledge. 163 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 164 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 165 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 166 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 167 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1106.

dictate the maximum protection for intellectual property creations, which becomes important when the intellectual property system interferes with other human rights. Finally, it does not attempt to explore the relationship between different provisions in human rights instruments. This is problematic, since it is possible that the core minimum rights could be perceived as the ceiling for protection instead of the lowest level of protection permissible.168 In Government of the Republic of South Africa v Grootboom (Grootboom),169 the use of the minimum core rights approach was argued in a South African constitutional case. This case concerned extremely poor persons who felt compelled to move onto vacant, but privately owned land that was meant for formal low-cost housing. The people were evicted and their possessions destroyed. The Constitutional Court had to interpret 26 (the right to adequate housing) and section 28(1) (c). It was argued before the court that guidance for the interpretation of these rights should be found in the ICESCR170 and the General Comments from the United Nations Committee, General Comment 3171 and 4172 in particular. General Comment 3 states that ‘a minimum core obligation to ensure the satisfaction of, at the very least, minimum essential levels of each of the rights is incumbent upon every State party. Thus, for example, a State party in which any significant number of individuals is deprived of essential foodstuffs, of essential primary health care, of basic shelter and housing, or of the most basic forms of education is, prima facie, failing to discharge its obligations under the Covenant … Article 2(1) obligates each State party to take the necessary steps “to the maximum of its available resources”. In order for a State party to be able to attribute its failure to meet at least its minimum core obligations to a lack of available resources it must demonstrate that every effort has been made to use all resources that are at its disposition in an effort to satisfy, as a matter of priority, those minimum obligations’.173 168

Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1107-1113. 169 2001 (1) SA 46 (CC). See Bilchitz D Poverty and Fundamental Rights – The Justification and Enforcement of Socio-Economic Rights (2007) 139-141 for a brief discussion of the case. 170 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 171 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No 3: The Nature of States Parties Obligations Art 2(1) (Dec 14, 1990) (http://www.unhchr.ch/tbs/doc.nsf/0/94bdbaf59b43a424c12563ed0052b664?Opendocument (accessed 10 April 2010)). 172 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No 4: The Right to Housing Art 11(1) (Dec 13, 1991) (http://www.unhchr.ch/tbs/doc.nsf/0/469f4d91a9378221c12563ed0053547e?Opendocument (accessed 10 April 2010)). 173 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No 3: The Nature of States Parties Obligations Art 2(1) (Dec 14, 1990) par 10

The Grootboom Court174 did not reject the minimum core approach suggested by the United Nations Committee outright, but levelled several criticisms against the approach, ultimately finding it unnecessary to decide on the issue whether it would be ‘appropriate for a court to determine in the first instance the minimum core of a right’.175 The Court decided that the real question is whether the steps that the state has taken to realise the fundamental right may be seen as reasonable. Therefore it appears that the South African Constitutional Court does not endorse the application of the core minimum rights approach in socio-economic rights cases.176 The third approach for dealing with two conflicting human rights is the progressive realisation approach, which was designed with the UDHR177 and ICESCR178 as its basis. In terms of this approach, the focus falls on realising rights systematically as resources become available. The purpose of such an approach is to ‘enable individuals to progressively realize their economic, social and cultural rights by resolving the conflicts between human rights and the non-human-rights aspects of intellectual property protection’.179 The question that this approach leaves unanswered is how resources should be allocated, since international treaties do not give any guidance in this regard. The most visible limitation of this approach is that it is not always possible to balance the demands of competing human rights. The South African (http://www.unhchr.ch/tbs/doc.nsf/0/94bdbaf59b43a424c12563ed0052b664?Opendocument (accessed 10 April 2010)). See Bilchitz D ‘Giving Socio-economic rights teeth: The minimum core and its importance’ (2001) 119 SALJ 484-501, Bilchitz D ‘Towards a reasonable approach to the minimum core: Laying the foundations for future socio-economic rights jurisprudence’ (2003) 19 SAJHR 1-26 and Bilchitz D Poverty and Fundamental Rights – The Justification and Enforcement of Socio-Economic Rights (2007) 139-149 for a discussion of the minimum core rights approach. Also see Liebenberg S ‘The interpretation of socio-economic rights’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 33-1 – 33-66 at 33-10 – 33-16 for a discussion of the positive and negative aspects of adopting the core minimum rights approach. 174 Government of the Republic of South Africa v Grootboom 2001 (1) SA 46 (CC). 175 Government of the Republic of South Africa v Grootboom 2001 (1) SA 46 (CC) par 33. See Bilchitz D Poverty and Fundamental Rights – The Justification and Enforcement of Socio-Economic Rights (2007) 140141. See Liebenberg S ‘The interpretation of socio-economic rights’ in Woolman S, Roux T & Bishop M (eds) Constitutional Law of South Africa (2nd ed 2003) 33-1 – 33-66. Also see Liebenberg S Socio-Economic Rights Adjudication Under a Transformative Constitution (2010) 148-151. 176 Also see Soobramoney v Minister of Health, KwaZulu-Natal 1998 (1) SA 765 (CC) and Minister of Health v Treatment Action Campaign 2002 (5) SA 721 (CC), where the Court claimed that adopting a core minimum rights approach would force the state to do the impossible. Also see Bilchitz D ‘Towards a reasonable approach to the minimum core: Laying the foundations for future socio-economic rights jurisprudence’ (2003) 19 SAJHR 1-26 where he argues that this statement of the court is without substance. 177 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 178 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 179 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1114-1115.

Constitutional Court explicitly uses the method of balancing competing rights with some success, especially with reference to socio-economic rights. For example, in the case of Laugh It Off v SAB International,180 the court used the balancing approach in order to weigh up the right to freedom of expression and intellectual property rights in a trademark. It depends on the nature of the conflict between human rights in determining which of these three approaches would be best utilised in a specific situation and sometimes it would even be best to use a combination, since the approaches complement one another. The first important question that should be addressed when attempting to establish a human rights framework for intellectual property is whether intellectual property rights are human rights. Yu181 states that there are questions about why intellectual property rights should be equated with fundamental human rights such as the right to life. There is also concern that the inclusion of intellectual property as a fundamental human right would undermine the importance of human rights. Nonetheless, the right to the protection of interests in intellectual creations has been explicitly recognised as a fundamental human right in international law by the UDHR182 and the ICESCR.183 In terms of article 27(2) of the UDHR,184 ‘[e]veryone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he [or she] is the author’.185 Article 15(1) (c) of the ICESCR186 mandates all parties to the Covenant to ‘recognize the right of everyone … [t]o benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he [or she] is the author’.187

180

Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). 181 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 713. 182 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 183 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 184 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 185 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 186 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 187 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3(1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)).

Another important question, on authority of Yu,188 is whether all forms of intellectual property are human rights. He argues that this is not the case and that the protection of corporate trademarks is unlikely to be considered a human right under international law. Similarly, trade secrets owned by corporations do not have a human rights basis, since the employees of the corporation created the trade secrets. ‘[W]orks-made-for-hire, employee inventions, neighboring rights, database protection, data exclusivity protection, and other rights that protect the economic investment of institutional authors and inventors’189 are other examples of intellectual property rights that Yu considers to be outside of the scope of human rights. He derives this conclusion from General Comment Number 17,190 which is considered to be the authoritative interpretation of article 15(1) (c) of the ICESCR.191 In this comment, the Committee declared that ‘[h]uman rights are fundamental, inalienable and universal entitlements belonging to individuals and, under certain circumstances, groups of individuals and communities. Human rights are fundamental as they are inherent to the human person as such, whereas intellectual property rights are first and foremost means by which States seek to provide incentives for inventiveness and creativity, encourage the dissemination of creative and innovative productions, as well as the development of cultural identities, and preserve the integrity of scientific, literary and artistic productions for the benefit of society as a whole’.192

However, it bears mentioning that this argument is also applicable to property in general, but property is recognised and protected as a constitutional right nevertheless, without equating it with other human rights in the strict sense. This approach allows some immaterial property interests to be described as human rights and yet others as economic or constitutional rights. Therefore the immaterial property interest on hand may be weighed up against the conflicting 188

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 726. 189 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 727. 190 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant) (Jan 12, 2006) 4 UN Doc E/C12/GC/17 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 191 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 192 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant) 4 UN Doc E/C12/GC/17 (Jan 12 2006). (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)).

right (for example freedom of expression or the right to education) without excluding it from constitutional protection at the outset. Grosheide193 suggests that human rights may be divided into two categories in order to solve this problem. The first category would encompass fundamental human rights, for example the prohibition of slavery. These kinds of rights are beyond state interference and open to international enforcement. The second category consists of non-fundamental human rights which may also be described as economic rights, for example the right to property. These rights would be open to state interference. Grosheide suggests that the problem of diluting fundamental human rights may be solved by placing intellectual property in the second category. It must be noted that in principle all constitutional rights may be limited and weighed up against one another, although it is true that the economic rights may be regulated more readily while certain fundamental human rights are practically non-derogable. In a similar vein, Yu194 also states that corporations cannot bring claims of violation of their right to the protection of interests in intellectual creations despite the fact that corporate intellectual property rights are growing, since these rights would not qualify as a human right. This opinion differs from the position in certain national human rights systems, where it is generally accepted that legal persons may also rely on human rights protection for their rights and specifically property rights.195 The ICESCR196 was drafted with individuals and communities in mind, not corporations. Yu also observes that human rights are inalienable. He argues that although individuals may have transferred rights to corporations in terms of assignment or work-for-hire arrangements, the human rights-based interest of such individuals are not transferable. Yu197 mentions two arguments that corporate rights holders might bring to prove that their rights should enjoy human rights protection, although he finds these arguments weak. The first argument pertains to the fact that the intellectual property interests of these corporations were derived from the human rights-based interests of the creative individuals and that damage to the corporate interests would also risk the individual 193

Grosheide FW ‘Intellectual property and human rights – A delicate relationship’ (2009) Guest Lecture, Faculty of Law, Stellenbosch University (21 October 2009) (text on file with the author) 194 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 728. 195 See the discussion on this aspect in Chap 5 (Immaterial Property Interests in the Constitution). In South African constitutional law it is accepted that legal persons may also invoke human rights protection for their rights insofar as it is applicable. 196 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 197 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 728-729.

interests by reducing the individual’s opportunities and the remuneration they receive. The second argument holds that corporate rights holders’ rights should be strongly protected because they are seeking protection on behalf of the individual shareholders of the human rights-based property interests in their investments. Yu198 submits that even if these arguments were to be accepted, it is unlikely that a human rights violation would result from the decrease in opportunities and remuneration. Although corporate actors may have the standing to bring human rights claims, they may not claim that their ‘human’ rights were violated. This distinction is important to ensure that corporate intellectual property rights are not propelled upwards through an association with human rights. In South African constitutional law it is accepted that juristic persons’ rights may also be protected by the Constitution as far as it is applicable. The Constitutional Court confirmed the principle that not only natural persons, but also juristic persons may be the beneficiaries of section 25 protection in the FNB case.199 According to Article 19.3 of the Basic Law for the Republic of Germany 1949, fundamental rights do not apply only to natural persons, but to domestic juristic persons as well, as far as the nature of the right permits.200 In Irish law, corporate bodies are also entitled to constitutional protection for their property.201 Therefore Yu’s argument that juristic persons are excluded from constitutional protection does not really convince, unless what he means is that the rights of juristic persons may be protected, although they should be viewed as economic constitutional rights rather than fundamental human rights. It would be correct to say that a juristic person’s economic rights may have been violated and where that right and another constitutional right conflicts, it will bear some weight in the weighing up process. The German Federal Constitutional Court uses a scaling approach in terms of which constitutional rights are protected stronger if they are more closely connected to the human individual, but weaker if the interest is purely economic. In other words, human or personal rights such as the rights to liberty and dignity would be protected more strongly than economic interests such as property rights.202 In German law, the property clause 198

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 729-730. 199 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45. 200 See Van der Walt AJ Constitutional Property Clauses (1999) 126. 201 See Iarnród Éireann v Ireland [1996] 3 IR 321, [1995] 2 ILRM 161. 202 See Van der Walt AJ Constitutional Property Clauses (1999) 124-125.

(Article 14) ‘is a fundamental (human) right which is meant to secure, for the holder of the property, an area of personal liberty in the patrimonial sphere, to enable her to take responsibility for the free development and organization of her own life within the larger social and legal context’.203 As a result, ‘the property guarantee is primarily a guarantee for the protection of personal liberty and not for the protection of property as such. The guarantee of personal liberty in the patrimonial sphere is therefore said to form the foundation for the secondary guarantee of rights, which entails that all valuable patrimonial rights and interests (vermögenswerte Positionen) are recognized and protected in terms of (inter alia) the property guarantee’.204

For example, my right to the house in which I live is protected stronger than my right to the house that I rent out for profit. Mostert explains the theory of Güterabwägung or ‘abstract ranking’ of rights and values as follows: ‘According to this hierarchy [of fundamental rights], individual freedom would, for instance, rank higher than property rights and other rights which protect objects, because individual freedom is inextricably connected to the person. Furthermore, the importance of a right depends, inter alia, on its relevance to the community, which in turn links with the importance of individual freedom. This theory basically foresees that the more fundamental a right is for the maintenance of values in a democratic state, the higher its position in this pyramid of fundamental rights will be. Freedom of expression or occupational freedom would, for instance, rank higher than property rights.’205

Alexander views the German scaling approach as an illustration of ‘another aspect of the Federal Constitutional Court’s implementation of the social-obligation norm’.206 The question whether intellectual creations already receive adequate protection under the right to private property is another important question in the context of international intellectual property protection.207 Although the modern-day tendency is to consider 203

See Van der Walt AJ Constitutional Property Clauses (1999) 124. Van der Walt AJ Constitutional Property Clauses (1999) 124-125. See BVerfGE 24, 367 [1968] (Deichordnung case) 400. Also see Alexander GS The Global Debate over Constitutional Property (2006) 139 and Mostert H The Constitutional Protection and Regulation of Property and its Influence on the Reform of Private Law and Landownership in South Africa and Germany (2000) 292-296. 205 Mostert H The Constitutional Protection and Regulation of Property and its Influence on the Reform of Private Law and Landownership in South Africa and Germany (2000) 293-294. 206 Alexander GS The Global Debate over Constitutional Property (2006) 139. 207 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 731. 204

intellectual property as private property, international human rights instruments do not reject or endorse this tendency to protect intellectual property interests in terms of property rights. As an alternative, the human rights instruments simply distinguish between moral and material interests, the two separate interests covered by the right to the protection of interests in intellectual creations. A moral interest ‘safeguards the personal link between authors and their creations and between peoples, communities, or other groups and their collective cultural heritage’ and is generally considered to fall outside the scope of private property. A material interest, on the other hand, ‘enable[s] authors to enjoy an adequate standard of living’.208 Moral interests traditionally offered in continental Europe include the right of attribution,209 the right of integrity,210 the right of disclosure211 and the right of withdrawal.212 As per the CESCR, the intention in granting moral rights was to ‘proclaim the intrinsically personal character of every creation of the human mind and the ensuing durable link between creators and their creations … “moral interests” in article 15, paragraph 1 (c), include the right of authors to be recognized as the creators of their scientific, literary and artistic productions and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, such productions, which would be prejudicial to their honour and reputation’.213

208

United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant) 4 UN Doc E/C12/GC/17 (Jan 12 2006) (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 209 The right of attribution refers to the right to claim authorship of the protected work. In South African copyright law, this right exists in the form of a paternity right. See Chap 2 sec 2.4 for a discussion of this aspect. 210 The right of integrity grants the ‘right to prevent the distortion, mutilation, or other modification of the work in a manner prejudicial to the author’s honor or reputation’: Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1081 fn 166. In South African copyright law, a similar right of integrity is granted to the author of a copyrighted work. See Chap 2 (Traditional Immaterial Property Interests) and sec 2.4 in particular. 211 The right of disclosure allows the author to ‘determine when the work is ready for public dissemination and in what form the work will be disseminated’. Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 10291149 at 1081 fn 166. This right does not exist in South African copyright law. See Chap 2 (Traditional Immaterial Property Interests) and sec 2.4 in particular. 212 In terms of the right to withdrawal, an author may choose to withdraw a work from public dissemination: Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1081 fn 166. In South African copyright law, no such right exists. See Chap 2 (Traditional Immaterial Property Interests) and sec 2.4 in particular. 213 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material

In the opinion of Yu,214 a strong case can be made that these two rights identified by the CESCR constitute the minimum levels of protection for the moral interests in intellectual creations that states are required to afford authors. Yu215 states that on its face value, the phrase ‘material interests’ appears to encompass all the forms of economic interests that the right to private property normally protects. However, upon closer inspection the phrase appears to cover a narrower type of economic interest than those usually protected under the right to private property, especially considering the drafting history of the phrase. The right to material interests does not cover all forms of economic interests that are protected in the existing intellectual property system. This right rather protects the limited interests of authors to acquire just remuneration for their intellectual labour. Yu216 also notes that the right to private property is not protected under either the ICCPR217 or the ICESCR218 and he attributes this to cold-war politics and concerns raised by Socialist countries. It is uncertain whether countries would agree to a right to private property now. Yu interprets this tendency to mean that the delegates agreed upon a special exception for property rights in intellectual creations. He argues that the right to hold intellectual property should be considered a right separate from property rights.219 Although article 17 of the UDHR220 protects the right to own property, it is the right to own property ‘alone as well as in association with others’ and not private property that is Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant) 4 UN Doc E/C12/GC/17 (Jan 12 2006) par 12, 13 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 214 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1083. 215 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 731-732. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1084. 216 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 733. Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1083-1092, where the concept of material interests and its background is discussed in full. 217 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). 218 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 219 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 733. 220 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 220 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)).

protected. This leads to the inference that there is also a compelling textual basis for the creation of a rich public domain. This conception of the public domain as unrestricted access to protected materials contrasts with the idea that the public domain consists merely of materials that are not protected by a property right for some or other reason.221 Yu argues that article 17 of the UDHR222 is ambiguous on the subject of whether property rights form the basis for the protection of material interests in intellectual creations, since article 17 has the dual purpose of protecting property and promoting the public domain. The drafting history appears to suggest that article 17 should not form the basis, since countries are free to decide whether they want to promote strong intellectual property rights or a rich public domain. As suggested by Yu, the international human right to ‘the protection of interests in intellectual creations … covers only the protection of sufficient intellectual property-based interests: it does not include the protection of additional interests that are generally not required to meet the essential needs of decent living or to maintain human dignity’.223

There is no requirement that the term of protection of material interests should span over the entire lifetime of a creator. It would also be perfectly acceptable to grant a creator an adequate standard of living by means of one-time payments, or by granting the creator an exclusive right for a limited period of time only to exploit his or her creative work. 224 As claimed by Yu,225 the question that one has to ask in determining whether the obligation of material interests protection is fulfilled by states is not whether protection is offered by the property rights system or by international intellectual property agreements, but rather whether the system currently in place does in fact provide adequate protection for material interests in

221

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 734. 222 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 223

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 735. 224 United Nations Economic and Social Council Comment on Economic, Social & Cultural Rights [CESCR], General Comment No. 17: The Right of Everyone to Benefit from the Protection of the Moral and Material Interests Resulting from Any Scientific, Literary or Artistic Production of Which He Is the Author (Article 15, Paragraph 1(c), of the Covenant) 4 UN Doc E/C12/GC/17 (Jan 12 2006) (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). Also see Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1088-1092. 225 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1089.

intellectual creations. This suggests that the South African constitutional right to property may be utilised in order to protect the human rights aspects of intellectual property. The next question relating to a human rights framework for intellectual property is whether such a framework will strengthen existing intellectual property protection. This is a particularly important question and a great concern among scholars opposing the expansion of intellectual property rights. Yu supposes that ‘an emphasis on the human rights attributes of intellectual property rights is likely to strengthen intellectual property rights, especially in civil law countries where judges are more likely to uphold rights that are considered human rights’.226 He notes concerns that this would aggravate the imbalance between intellectual property rights and the public domain and that it would ultimately have undesired results for proponents of the public domain who wish to use the human rights framework to promote the public domain and set limits for the protection of intellectual property rights. However, he also points out that international human rights instruments give human rights recognition only to certain attributes of intellectual property rights. The other, non-human rights attributes are not protected.227 There is still the danger that all intellectual property rights may be elevated to the status of human rights in rhetoric even if it is not the case in practice. However, Yu228 cautions that the correct approach would not be to deny that intellectual property does have certain human rights attributes, but to establish which attributes do have human rights qualities and which ones do not. Once again, the German scaling approach may be useful where constitutional balancing is required in case of conflicting constitutional rights. In terms of this approach, even recognised property (including immaterial property) interests in the same object could deserve different levels of protection according to whether the interest is fundamental or merely economic (what Yu calls rights with human rights attributes and rights without such attributes). For example, the rights to moral interests and material interests in copyright could be distinguished in this way. The moral interests are more closely connected to the personality of the author of a copyrighted work and it is not possible to cede such a right to someone else; therefore this particular right could be

226

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 738-740. 227 See Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1126-1127. 228 Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149 at 1128.

protected relatively stronger than the material interest in a work of copyright which is merely an economic interest. Another question that is of particular importance is whether a human rights framework for intellectual property would promote the interests of indigenous peoples and traditional communities.229 Yu230 argues that indigenous groups and traditional communities were not kept in mind when the UDHR231 and the ICESCR232 were drafted. The existing intellectual property regime similarly does not provide for traditional communities.233 However, it is still possible to interpret article 27 of the UDHR234 and article 15(1) (c) of the ICESCR235 broadly in order to include the rights of traditional communities and indigenous groups, although the drafters may not have foreseen this extension.236 Yu notes that there is ample scope for the exploration of collective rights in international human rights instruments. Helfer237 agrees with Yu238 that a human rights framework needs to be developed for intellectual property. Helfer states that ‘[t]he international intellectual property system is on the brink of a deepening crisis’.239 This crisis is caused by different parties (such as Government officials, private parties and civil society groups) taking conflicting views on a range of issues in international venues that are also on the increase. Issues include patented medicines, biodiversity, traditional knowledge, digital content and the harmonisation of procedural rules.240 Another problem in creating a human rights framework for intellectual property is that the textual provisions for international human rights law give only a faint 229

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 740. 230 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 740. 231 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 232 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 233 See Chap 3 (Unconventional Immaterial Property Interests). 234 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 235 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 236 See Chap 3 (Unconventional Immaterial Property Interests) sec 3.7 for a discussion of traditional knowledge. 237 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020. 238 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753. 239 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 973. 240 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 973.

outline as to how human rights-compliant mechanisms should be developed to promote creativity and innovation. These provisions also invite the use of human rights rhetoric both for and against the revision of protection standards for intellectual property, both in national law and treaties. Helfer cautions that using such human rights rhetoric without greater normative clarity could lead to the situation where every claim would enjoy human rights protection and therefore effectively none would enjoy such protection.241 Furthermore, Helfer242 states that questions remain regarding the relationship between the intellectual property clauses in the UDHR243 and the ICESCR244 as well as the interaction of these two clauses with other economic, social, civil and political rights. It also remains to be answered how international human rights rules pertaining to intellectual property would interface with international trade agreements such as TRIPS.245 Helfer argues that these questions and issues underscore the need for a comprehensive and coherent human rights framework to be developed. In developing such a framework, it is important to define the different characteristics of the rights that are protected by each human rights system. It must be determined whether ‘standards of conduct are legally binding or only aspirational’246 and whether only governments or also private parties are bound by these standards. Rules should be adopted in order to resolve inconsistencies among international and national laws and policies where these overlap.247 A human rights framework for intellectual property must also distinguish between a situation where international and national laws have the same goal yet different mechanisms to reach it; and a situation where there is an actual conflict of goals or values that cannot readily be reconciled. The framework must finally also incorporate an institutional dimension that takes into account ‘the diverse international and domestic

241

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 975-176. 242 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 976-177. 243 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 244 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 245 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights of 15 April 1994. (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 246 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 977. 247 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 977.

lawmaking and adjudicatory bodies in which states and non-state actors generate new rules, norms, and enforcement strategies’.248 Helfer249 states that it becomes apparent from the drafting history of the UDHR250 that the protection of authors’ and inventors’ rights was deliberately included, even though the precise intention of the drafters may be somewhat unclear. He states that these rights are supported in the ICESCR251 in nearly identical language. This international convention, adopted twenty years after the UDHR,252 ‘makes the UDHR’s253 economic and social guarantees binding as a matter of treaty law’.254 Helfer255 finds it strange that the protection of the rights of authors and inventors are not reflected in the international property system. ‘Human rights’ are mentioned neither in multilateral treaties such as the Paris,256 Berne257 or Rome258 Conventions, nor in the TRIPS259 agreement. Helfer proposes that the phrases ‘rights’, ‘private rights’ and ‘exclusive rights’ used in treaties to describe authors’ rights may suggest that the objectives of the international human rights regime and the international intellectual property regime are similar. However, he cautions that these mere textual and linguistic parallels are superficial.260 In intellectual property treaties, the reference to rights serves merely to indicate that these treaties fall within the scope of private rather than public 248

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 977. 249 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 978-979. 250 United Nations Universal Declaration of Human Rights (1948) 216 UNTS 3 (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 251 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 252 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 253 United Nations Universal Declaration of Human Rights (1948) 216 UNTS 3 (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 254 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 979. 255 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 979. 256 World Intellectual Property Organisation Paris Convention for the Protection of Industrial Property (March 10, 1883) (http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html (accessed 17 September 2009)). 257 World Intellectual Property Organisation Berne Convention for the Protection of Literary and Artistic Works (September 9, 1886) (http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html (accessed 17 September 2009)). 258 World Intellectual Property Organization International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (26 Oct, 1961) 496 UNTS 43 (http://www.wipo.int/treaties/en/ip/rome/trtdocs_wo024.html (accessed 29 July 2010)). 259 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 260 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 979.

international law. Use of such rights language also assists in bolstering ‘claims of intellectual property owners in foreign legal systems unfamiliar with or sceptical of the entitlements the treaties create for non-nationals’.261 Helfer states that ‘[a]lthough the references to rights in intellectual property law and human rights law have distinct theoretical and philosophical roots, the recent expansion of the two fields has blurred these distinctions in new and unexamined ways. International relations scholars have noted the tendency of international legal regimes to expand their scope over time, creating dense “policy spaces” in which formerly unrelated sets of principles, norms, and rules increasingly overlap in incoherent and inconsistent ways. Such regime expansions are especially pronounced in international intellectual property law and international human rights law’.262

As Helfer points out,263 there were two events that caused intellectual property issues to be considered by human rights norm-creating bodies. Firstly, the neglected cultural rights of indigenous people were highlighted; and secondly, intellectual property was linked to trade via TRIPS264 and also by bilateral and regional so-called ‘TRIPS-plus’ treaties.265 From these events it became apparent that intellectual property law has serious normative deficiencies from the viewpoint of human rights law. These events furthermore led to new standardsetting initiatives, which amplified the challenges between intellectual property law and human rights law. Of particular importance is the issue of indigenous peoples and traditional knowledge. 266 The main problem stems from the fact that traditional knowledge was previously treated as part of the public domain ‘either because it did not meet established subject matter criteria for protection, or because the indigenous communities who created it did not endorse private 261

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 980. 262 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 980. 263 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 982. 264 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 265 ‘TRIPS-plus’ treaties refer to treaties that contain more stringent intellectual property protection rules than those in TRIPS, require developing countries to implement TRIPS earlier than the date specified in TRIPS or require developing countries to conform to other multilateral intellectual property agreements’ requirements. See Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 982 fn 28. Also see Helfer LR ‘Human rights and intellectual property: Conflict or coexistence?’ (2003) 5 Minn Intell Prop Rev 47-61 at 51-57. 266 See Chap 3 (Unconventional Immaterial Property Interests) sec 3.7, where the issue of traditional knowledge is discussed at length.

ownership rules’.267 Third parties were then able to exploit this knowledge, privatising it through patents, copyright and plant breeders’ rights. Its benefits were rarely shared with the indigenous communities who initially held the traditional knowledge. United Nations (UN) human rights bodies commissioned the creation of the Draft Declaration on the Rights of Indigenous Peoples268 and Principles and Guidelines for the Protection of the Heritage of Indigenous People269 in order to close this loophole in intellectual property law in terms of which traditional knowledge is exploited. These documents identify intellectual property as one of the problems facing traditional knowledge and note only a small possibility that intellectual property could be a part of the solution. On the one hand, the documents encourage states to utilise existing intellectual property protection mechanisms to include traditional knowledge; but on the other hand caution states not to grant exclusive intellectual property rights over traditional knowledge that do not provide for the indigenous peoples to share in ownership, control, use and benefits.270 As Helfer states,271 human rights and intellectual property rights also intersect where TRIPS272 and ‘TRIPS-plus’ treaties are concerned. Relatively high minimum protection standards were adopted by TRIPS273 for all World Trade Organization (WTO) members. Members include many developing and undeveloped countries which previously had little interest in protecting intellectual property rights. What sets TRIPS274 apart from previous 267

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 982-983. 268 United Nations Economic and Social Council [ECOSOC] Sub-Commission on Prevention of Discrimination & Protection of Minorities Draft Declaration on the Rights of Indigenous Peoples (1994) UN Doc E/CN4/Sub2/1994/2/Add1. 269 United Nations Economic and Social Council [ECOSOC] Sub-Commission on Prevention of Discrimination & Protection of Minorities Draft Principles and Guidelines for the Protection of the Heritage of Indigenous People, Final Report of the Social Rapporteur UN Doc E/CN4/Sub2/1995/26, Annex 1 (June 21, 1994) (initial text draft of Principles and Guidelines); United Nations Economic and Social Council [ESOSOC] SubCommission on Prevention of Discrimination & Protection of Minorities Report of the Seminar on the Draft Principles and Guidelines for the Protection of the Heritage of Indigenous People (2000) UN Doc E/CN4/Sub2/2000/26 (revised text of draft Principles and Guidelines). The Sub-Commission later adopted the Revised Draft Principles and Guidelines and transmitted them to the Commission for its approval. United Nations Economic and Social Council [ECOSOC] Sub-Commission on the Promotion and Protection of Human Rights Decision 2000/107 (2000) UN Doc E/CN4/Sub2/DEC/107/2000/107. 270 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 983-984. 271 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 984. 272 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 273 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 274 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)).

intellectual property agreements is that it ‘has teeth’.275 Treaty bargains may be enforced through the WTO’s dispute settlement system, which makes use of mandatory adjudication backed by the threat of trade sanctions. In 2000, the UN human rights Sub-Commission on the Protection and Promotion of Human Rights (the Sub-Commission) first turned its attention to TRIPS,276 adopting Resolution 2000/7 on ‘Intellectual Property and Human Rights’.277 In accordance with this resolution, intellectual property protection was flawed since there were conflicts between the implementation of TRIPS 278 and the realisation of economic, social and cultural rights. Five areas of conflict were identified, namely ‘(1) the transfer of technology in developing countries; (2) the consequences for the right to food of plant breeders’ rights and patents for genetically modified organisms; (3) biopiracy; (4) the protection of the culture of indigenous communities; and (5) the impact on the right to health of legal restrictions on access to patented pharmaceuticals’.279

The Sub-Commission proposed that national governments, civil society groups and intergovernmental organisations should give human rights primacy over economic policies and agreements in order to resolve the conflicts mentioned. However, this assertion was nonbinding and as such had no legal force. Furthermore, the Sub-Commission did not scrutinise the relevant, binding international agreements or customary international law rules in order to determine which particular human rights TRIPS280 violates.281 Helfer282 observes that such studies have not provided for a detailed human rights framework for intellectual property, nor do they indicate how such a framework should interface with existing intellectual property protection mechanisms in international or national law. He does not find this omission 275

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 984. 276 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 277 United Nations Economic and Social Council [ECOSOC] Sub-Commission on Promotion & Protection of Human Rights, Intellectual Property Rights and Human Rights Resolution 2000/7 (Aug 17, 2000) UN Doc E/CN4/Sub2/RES/2000/7 http://www.unhchr.ch/Huridocda/Huridoca.nsf/0/c462b62cf8a07b13c12569700046704e?Opendocument (accessed 25 November 2009)). Also see Weissbrodt D & Schoff K ‘A human rights approach to intellectual property protection: The genesis and application of sub-commission resolution 2000/7’ (2003) 5 Minn Intell Prop R 1-46. 278 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 279 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 985. 280 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 281 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 986. 282 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 987.

surprising either, since the area of economic, social and cultural rights is least developed of all the human rights categories. This is also the area where human rights and intellectual property rights overlap most often. Economic, social and cultural rights have only received continued jurisprudential attention since the last decade. The United Nations Committee on Economic, Social, and Cultural Rights (the CESCR) interpreted these rights in more detail. Functions of the CESCR include guiding member nations as to the meaning of the ICESCR283 treaty. The CESCR issues general comments that interpret specific treaty articles or human rights issues. These comments provide a standard that the CESCR may use when reviewing states’ compliance with the Covenant. Such interpretations are applicable to governments, but also to individuals and other private parties whose actions are significant to social, economic and cultural rights. Governments are required to regulate such private parties in order to comply with their treaty obligations. The first interpretive comment on intellectual property was the Statement on Human Rights and Intellectual Property,284 which analysed the ICESCR’s285 intellectual property provisions on a preliminary basis and set out an agenda for the CESCR to draft comments on each specific intellectual property clause of the ICESCR.286 The first of these general comments287 pertained to article 15(1) (c) of the ICESCR.288

283

United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 284 United Nations Economic and Social Council [ECOSOC] Commission on Economic, Social & Cultural Rights Substantive Issues Arising in the Implementation of the International Covenant on Economic, Social and Cultural Rights (Dec 14, 2001) UN Doc E/C12/2001/15 (http://www.unhchr.ch/tbs/doc.nsf/0/40d009901358b0e2c1256915005090be?Opendocument (accessed 2 December 2009)). 285 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 286 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 287 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 288 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). Article 15(1)(c) grants ‘the right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author’.

In Helfer’s289 opinion, these two comments, read together, form the basis for the development of a human rights framework for intellectual property. The CESCR developed a ‘violations approach’ for the interpretation of the covenant in which the so-called ‘core obligations’ or minimum essential levels for immediate implementation by states are distinguished from other obligations which only need to be progressively realised and implemented once resources become available. These core obligations consist of the particular undertakings to respect, protect and fulfil the relevant rights.290 The obligation to respect entails that states ‘refrain from interfering directly or indirectly with the enjoyment of the right to benefit from the protection of the moral and material interests of the author’.291 States are required to take measures preventing third parties from interfering with authors’ moral and material interests in terms of the obligation to protect. The obligation to fulfil mandates states to implement ‘legislative, administrative, budgetary, judicial, promotional and other measures towards the full realization of article 15, paragraph 1(c)’.292 Helfer293 notes that these obligations seem very similar to intellectual property law, although they are framed in human rights language. The three core obligations effectively prevent states from interfering in the moral and material interests of creators; mandate states to protect the works of creators; require states to provide for effective remedies in cases where the rights of creators are infringed by unauthorised use; and make provision for the participation of creators in decisions that affect their moral and material interests.294 Helfer295 also states that the three core obligations overlap with certain provisions in intellectual 289

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 989-990. 290 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) UN Doc E/C12/GC/17 (Jan 12, 2006) (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 291 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 990. 292 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 990. 293 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 990. 294 See United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17par 30, 31, 34 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 295 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 991.

property treaties. He mentions the most obvious example, namely the reproduction rights clause and moral rights clause respectively in the Berne Convention. This may be an indication that states are allowed to partly fulfil the obligations imposed by article 15(1) (c) of the ICESCR296 by ratifying international intellectual property agreements and furthermore by enacting national intellectual property laws for the protection and enforcement of copyright, patents and other rights. However, Helfer297 cautions that many issues remain unresolved regarding the ‘core obligations’ approach followed by the CESCR, despite the commonalities between the human rights and intellectual property regimes. The approach leaves open the question about the meaning of ‘moral and material interests’ and also does not specify what the difference is between a human rights framework for creators’ rights and legal rules from intellectual property treaties and national legislation. Helfer298 analyses the CESCR’s Comment299 regarding the difference between the moral and material interests of authors protected under article 15(1) (c) of the ICESCR300 and the provisions in international treaties and national legislation protecting intellectual property. The CESCR generally distinguished article 15(1) (c) of the ICESCR from intellectual property protection as follows: ‘The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author is a human right, which derives from the inherent dignity and worth of all persons. This fact distinguishes article 15, paragraph 1(c), and other human rights from most legal entitlements recognized in intellectual property systems. Human rights are fundamental, inalienable and universal entitlements belonging to individuals and, under certain circumstances, groups of individuals and communities. Human rights are fundamental as they are inherent to the human person as such, whereas intellectual property rights are first and foremost means by which States seek to provide incentives for inventiveness and creativity, encourage the dissemination 296

United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 297 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 992. 298 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 993. 299 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17par 30, 31, 34 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 300 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)).

of creative and innovative productions, as well as the development of cultural identities, and preserve the integrity of scientific, literary and artistic productions for the benefit of society as a whole.’301

From this comparison, it becomes apparent that the superficial similarities between the human rights protection of creators’ rights and intellectual property protection are less important than the differences in scope. The CESCR identified several other important features that distinguish the human rights protection of creators’ rights from intellectual property rights. ‘In contrast to human rights, intellectual property rights are generally of a temporary nature, and can be revoked, licensed or assigned to someone else. While under most intellectual property systems, intellectual property rights, often with the exception of moral rights, may be allocated, limited in time and scope, traded, amended and even forfeited, human rights are timeless expressions of fundamental entitlements of the human person.’302

The CESCR also distinguished the human rights protection of moral and material interests in intellectual creations from intellectual property protection on the grounds that the human rights protection ‘safeguards the personal link between authors and their creations and between peoples, communities, or other groups and their collective cultural heritage’303 and the basic material interest guaranteeing their adequate standard of living; whilst intellectual property generally protects the investments and interests of corporations and other juristic persons. The CESCR specifically cautioned against equating the human rights protection of article 15(1) (c) of the ECESCR304 with intellectual property protection.305

301

United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 1 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 302 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 2 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 303 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 2 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 304 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)).

Helfer306 states that this approach differs greatly from Anglo American copyright laws, which have always made provision for juristic persons to be the holders of intellectual property rights.307 He also notes that the protection granted in terms of article 15(1) (c) has ‘a distinctive human rights flavor’.308 An example would be the ‘national treatment’ of foreign authors and owners of intellectual property rights, which is one of the most important principles in intellectual property treaties. Some unexpected consequences stem from these distinctive features associated with a human rights approach. Helfer309 argues that if these rights are accepted as fundamental rights, governments would only be allowed to regulate the moral and material rights of authors under very narrow circumstances. Such regulation would only be allowed to protect other human rights or to attain social objectives. Helfer states that the CESCR has in fact developed a stringent test to determine whether restrictions that a state imposes on social and economic rights are legally acceptable and that this standard is reaffirmed in the Comment.310 The CESCR specifically stated that the right protecting the moral and material interests of an author ‘is subject to limitations and must be balanced with the other rights recognized in the Covenant’. However, such limitations must 305

United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 3 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 306 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 993. 307 In South Africa, the position in intellectual property law is similarly that juristic persons may hold intellectual property rights. See First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45. Also see Chap 5 (Immaterial Property Interests in the Constitution) for further discussion. See Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753 at 728729, where he also notes that corporations and other legal persons would not be able to claim that their human rights were violated. 308 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 993. 309 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 994. 310 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 28 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)): ‘The obligation to respect requires States parties to refrain from interfering directly or indirectly with the enjoyment of the right to benefit from the protection of the moral and material interests of the author.’

‘be determined by law in a manner compatible with the nature of these rights, must pursue a legitimate aim, and must be strictly necessary for the promotion of the general welfare in a democratic society … Limitations must therefore be proportionate, meaning that the least restrictive measures must be adopted when several types of limitations may be imposed. Limitations must be compatible with the very nature of the rights protected in article 15, paragraph 1(c)’.311

Under certain circumstances, compensatory measures may also be required for the imposition of limitations, for example ‘adequate compensation for the use of scientific, literary or artistic productions in the public interest’.312 In South African law, expropriation and deprivation of property is also only allowed under strict requirements set out in the Constitution.313 Therefore it seems that the protection of the moral and material interests in intellectual property could be facilitated by the South African constitutional property clause in line with the guiding principles from international human rights law. Helfer314 states that this multipart test proposed by the CESCR would be seen as ideal by an intellectual property owner, since it constrains states more than the test for assessing whether states’ limitations on intellectual property is compatible with treaties. However, he cautions that governments would find it extremely difficult to balance authors’ rights and the public’s interest in access to knowledge if limitations imposed on authors’ rights were scrutinised too strictly and upheld only rarely. It is necessary to understand the purpose of a human rights framework for authors’ rights. The CESCR suggests a twofold purpose, comprising of the function to protect the ‘personal link between authors and their creations’ and to protect ‘basic material interests which are necessary to enable authors to enjoy an adequate standard of living.’315 This approach indicates that there are certain ‘irreducible core rights – a zone of 311

United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 22-23 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 312 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 24 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 313 See Chap 5 (Immaterial Property Interests in the Constitution) sec 5.2.5 for a discussion of the requirements. 314 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 994-995. 315 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and

personal autonomy in which authors can achieve their creative potential, control their productive output, and lead independent, intellectual lives, all of which are essential prerequisites for any free society’.316 Any protection above the protection of these core rights as envisioned by article 15(1) (c) of the ICESCR317 would not be subject to the stringent test devised by the CESCR. It is evident that this particular approach is very close to the principle that the German Federal Court applies in balancing property rights with conflicting rights and the public interest, namely by asking whether an individual’s particular right may ‘serve the fundamental constitutional purpose of securing a sphere of personal liberty for the individual to take responsibility for her own affairs in the patrimonial field’ and protecting or limiting the right accordingly.318 Helfer319 states that this approach entails that a country is obligated to guarantee the two core rights of authors and creators. Any protection above and beyond these core rights would have to be balanced with other rights and the public interest in access to knowledge in authors’ work would have to be taken into consideration.320 These additional rights may be shaped by member states to fit in with a country’s particular economic, social and cultural conditions. As Helfer321 observes, a human rights framework for intellectual property at the same time grants more protection as well as less protection than intellectual property rights law. More stringent protection is granted to the core rights than intellectual property law would provide, but other rights which do not fall within these core rights receive less protection under human rights law than under the intellectual property regime, since party states are not obligated to recognise and protect any rights outside of the core rights. If a party state does decide to protect such other rights, these rights would be subject to other economic, social and cultural

material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 2 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 316 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 996. 317 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 318 Van der Walt AJ Constitutional Property Clauses (1999) 151. 319 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 996. 320 The core rights will also have to be balanced with other fundamental rights, but it would be harder to justify a limitation of these rights. 321 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 997.

rights as well as the interest of the public in access to knowledge.322 The German Federal Constitutional Court would also afford such rights less protection in terms of the scaling approach by reason that these additional protections would most likely pertain to commercial interests which is viewed as being further removed from the core principle of human flourishing in terms of which Article 14 determines whether constitutional protection is suitable given the nature of a particular property interest. The comment of the CESCR does not give details about how states should proceed to create an intellectual property protection system that would also comply with the human rights framework. The comment does, however, provide three specific recommendations as well as an interpretive principle.323 In this paragraph, it is stated unequivocally that the right to the protection of moral and material rights of authors should be read together with other rights protected in the ICESCR.324 State parties should find a balance between authors’ rights protected under article 15(1) (c) and the other rights from the Covenant in order to promote and protect all the various rights. Undue consideration should not be given to private interests of the author, in doing so neglecting the public interest in access to information. Helfer325 states that the interpretive principle that states have to consider all rights in the Convention serves as a reminder that states should reconcile all commitments stemming from treaties, although it also has the function of instructing states on how to reconcile intellectual property with human rights. Helfer326 draws two conclusions from the CESCR’s reference to ‘core obligations’. The first is that such a reference indirectly recognises that states may find it difficult to resolve intellectual property rights protected under the Convention and responsibilities that do not fall within these core obligations. States are allowed some freedom to decide how to resolve 322

See Chap 4 (The Value of Immaterial Property), particularly the section discussing the public domain or intellectual property commons (sec 4.8). 323 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 35 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 324 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 325 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 997. 326 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 997-998.

human rights, intellectual property rights and other policy objectives. The second conclusion that may be drawn from the CESCR’s reference to ‘core obligations’ is that the Committee has appropriated the power to determine which rights would be considered ‘core’, since the concept of ‘core obligations’ does not originate with the ECESCR,327 but is a creation of the Committee. The CESCR328 specifies that states should ensure that the protection given to intellectual property does not impede the ‘ability to comply with their core obligations in relation to the rights to food, health and education, as well as to take part in cultural life and to enjoy the benefits of scientific progress and its applications, or any other right enshrined in the Covenant’.329 States should ensure that the protection afforded to intellectual property does not result in unfairly high prices for essential medicines; plant seeds; or educational materials, since this would undermine the rights to health; food; and education, which are also fundamental rights. States should protect the respective rights to life, health, privacy and other rights relating to dignity from abuses related to scientific and technical progress. This could be done by refusing to grant a patent on an invention if its commercialisation would violate any of these rights. A particular issue for consideration is the patenting of the human body and its parts;330 and whether the granting of such patents would render a state incompliant with the Covenant. The CESCR also suggests that states should do a human rights impact assessment before adopting legislation protecting the moral and material interests of authors and also after such legislation has been in force for some time.

327

United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 328 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 35 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 329 United Nations Committee on Economic, Social, and Cultural Rights Comment on Economic, Social & Cultural Rights, General Comment No 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author (article 15, paragraph 1(c) of the Covenant) (Jan 12, 2006) UN Doc E/C12/GC/17 par 35 (http://www.unhchr.ch/tbs/doc.nsf/898586b1dc7b4043c1256a450044f331/03902145edbbe797c125711500584e a8/$FILE/G0640060.pdf (accessed 18 November 2009)). 330 See Chap 3 (Unconventional Immaterial Property Interests) sec 3.6, which discusses this aspect in more detail.

Helfer considers the aforementioned three aspects of the Comment to be important ‘specific prescriptions for member states’.331 In sum, these recommendations to states are to prevent unreasonably high prices for access to essential intellectual property products; to prevent intellectual property rights that violate other essential rights; and to do a human rights impact assessment before and after implementing intellectual property legislation. In the opinion of Helfer,332 it is still unsure what implications these recommendations would have for member states, since the comments of the CESCR are only advisory and could possibly be seen as nothing more than goals to aspire towards. Regardless, these recommendations could still induce important political and legal changes, most likely over the course of years. When states report on their progress and difficulties with implementation, the CESCR is able to question officials about rules for patent eligibility and license fees. Helfer333 also submits that countries that wish to implement more human-rights- friendly national intellectual property legislation could use these recommendations as a template. The World Trade Organization (WTO) dispute settlement panels could also use these recommendations in order to interpret TRIPS334 in a manner that is compatible with human rights. After the CESCR’s recommendation, new non-binding norms as well as international treaties were created in an attempt to expand the CESCR’s influence in the area of human rights and intellectual property law. For example, a new international agreement, the Convention on the Protection and Promotion of the Diversity of Cultural Expressions (Cultural Diversity Convention)335 was adopted by United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2005. The Cultural Diversity Convention is built upon the Universal Declaration on Cultural Diversity336 and is a response ‘to the belief shared by many governments that the increasingly fluid movement of cultural goods and services across national borders is endangering cultural diversity and domestic

331

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 997-998. 332 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 999. 333 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1000. 334 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 335 United Nations Educational, Scientific and Cultural Organization Convention on the Protection and Promotion of the Diversity of Cultural Expression (Oct 20, 2005) (http://portal.unesco.org/en/ev.phpURL_ID=31038&URL_DO=DO_TOPIC&URL_SECTION=201.html (accessed 23 November 2009)). 336 United Nations Educational, Scientific and Cultural Organization Universal Declaration on Cultural Diversity (2002) (http://unesdoc.unesco.org/images/0012/001271/127161e.pdf (accessed 2 December 2009)).

cultural industries. The Cultural Diversity Convention is seen as a way to fight the danger to cultural diversity and to preserve distinctive national cultures’.337

Helfer338 states that the development of a human rights framework for intellectual property is still in the early stages and he proposes three different hypothetical scenarios for such a human rights framework. The first uses human rights to expand intellectual property; the second uses human rights to impose external limits on intellectual property; and the third proposes that human rights ends be achieved through intellectual property means. The first scenario entails expanding intellectual property rights at the expense of other human rights and consumers. This possibility is the reason why some commentators are sceptical of or even against analysing intellectual property rights in terms of a human rights framework. In such a scenario, industries that rely on intellectual property rights for their economic survival would use the authors’ rights339 and property rights protected in human rights treaties to argue for the expansion of intellectual property protection.340 Since the authors’ rights clauses in the UDHR341 and ICESCR342 ‘share a close affinity with the natural rights tradition of droit d’auteur prominent in civil law jurisdictions’, this particular version of the human rights framework’s future is already becoming visible in the opinion of Helfer.343 He views the trend of European Constitutional courts relying on fundamental rights guarantees to justify intellectual property protection as proof of this assessment. He argues that it would not take much for these courts to begin utilising international human rights law to expand intellectual property protection even further. However, if domestic courts keep in mind the core purpose of property protection while using some variation of the scaling approach to determine which particular rights in a specified category of intellectual property 337

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1001-1002. 338 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1014-1020. 339 Protected in terms of article 15(1) (c) of the United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 340 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1015. See Chon M ‘Intellectual property and the development divide’ (2006) 27 Cardozo LR 2821-2912 at 2853; Raustiala K ‘Density and conflict in international intellectual property law’ (2007) 40 UC Davis LR 1021-1038 at 1031-1032. 341 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) article 27(2) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 342 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) article 15(1) (c) (http://www2.ohchr.org/english/law/cescr.htm (accessed 16 September 2009)). 343 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1015.

deserves protection and which ones do not, this encroachment on the public domain may be prevented. Since South African courts already use a balancing approach in order to determine which constitutional rights should take precedence, the unfortunate outcome predicted by Helfer may be avoided in its entirety. Intellectual property rights may be protected by the South African constitutional property clause in some instances where it is found to be necessary; and trumped in other instances where another more pressing right takes precedence. The second scenario created by Helfer344 pertains to the use of human rights law to impose limits on intellectual property. Intellectual property user groups would most likely draw on other human rights in order to bring counterarguments to intellectual property rights owners who use the authors’ rights provisions to argue for further intellectual property rights protection. An example would be the limitation of intellectual property rights by protection of the freedom of expression. National courts in Europe particularly have limited copyright by means of freedom of expression, justifying a use that is not covered in the intellectual property laws.345 These kinds of cases reach beyond the exceptions and limitations of intellectual property, imposing external limits or maximum standards of protection upon holders of the rights. In Laugh It Off v SAB International,346 the South African Constitutional Court limited trademark rights in terms of the right to freedom of expression in a similar way, also justifying a use outside of those provided for in the Trade Marks Act 194 of 1993. The right to freedom of expression ultimately limited the right of a trademark owner after the two rights were weighed up. Helfer347 proposes that intellectual property user groups might increase the chances that courts would follow this second approach by extending this approach to other international lawmaking venues. On the authority of this idea, judges would be more likely to impose external limits on intellectual property rights if there were more treaties that provided specific 344

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1017. 345 See Geiger C ‘Fundamental rights, a safeguard for the coherence of intellectual property law?’ (2004) 35 IIC 268-280 at 277. 346 Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC). See Chap 2 (Traditional Immaterial Property Interests) and Chap 5 (Immaterial Property Interests in the Constitution) for a discussion of the case and trademarks in general. 347 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1017-1018.

instructions as to how these limits should be applied. However, Helfer cautions that such a strategy also has risks, since the international law system does not have the centralised enforcement mechanisms of national laws. If there were an excess of conflicting rules, the international law system’s coherence would be diminished even further. As a result judges would be less likely to refer to international law, since there would be uncertainty about how to interpret national legislation in line with the rules from international law. The third possible scenario for a human rights framework for intellectual property rights as formulated by Helfer348 would achieve human rights ends through intellectual property means. The first two scenarios both take the existing intellectual property system as is, merely adding human rights protection to the existing system. This third scenario differs from both of the previous ones. The minimum outcomes for health, education, poverty and other human rights that states are required to protect and promote are specified first and thereafter mechanisms are identified that could possibly assist in achieving the goals set. Intellectual property laws should be protected insofar as it helps to achieve these goals, but where it hinders the process, such rules should be modified or restricted. In this scenario, the importance of intellectual property is secondary and the focus falls on providing minimum levels of human well-being by using intellectual property laws or other mechanisms. Helfer349 claims that it is not possible yet to determine which of these three scenarios would emerge as dominant, but it is certain that the two fields of intellectual property law and human rights law are becoming more and more intertwined, since the rules of international human rights law are becoming increasingly relevant to intellectual property law. 644

TRIPS and a Human Rights Framework for Intellectual Property

Blakeney350 states that the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)351 was created in response to growing concern about the counterfeiting of

348

Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1018-1020. 349 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020 at 1020. 350 Blakeney M Trade Related Aspects of Intellectual Property Rights: A Concise Guide to the TRIPS Agreement (1996) 1-9 discusses the history of the drafting of TRIPS. 351 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)).

trademarked products. The TRIPS352 agreement was an Annexe to the WTO agreement establishing the WTO. The preamble of TRIPS353 begins by stating the members’ desire ‘to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade’.354

Helfer355 states that TRIPS,356 unlike prior international intellectual property agreements under the World Intellectual Property Organization (WIPO), has teeth and may be enforced by mandatory adjudication backed up by the threat of retaliatory sanctions. Proponents of the TRIPS357 agreement argue that relatively high standards of protection for intellectual property rights serve as an incentive for the creation of future intellectual property works. Furthermore, they also argue that developing countries gain freer access by means of benefits and concessions received from WTO agreements. Yu358 submits that since the establishment of the TRIPS359 agreement in 1994, many less developed countries have found the international intellectual property system unsatisfactory. The reason for this is the perception that the system does not consider local conditions, needs and interests of less developed countries; and also that the TRIPS360 agreement hampers access to information, knowledge and essential medicines. Helfer361 similarly remarks that developing countries are questioning the claims of the proponents of TRIPS362 and he

352

World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 353 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 354 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 355 Helfer LR ‘Regime shifting: The TRIPS agreement and new dynamics of international intellectual property lawmaking’ (2004) 29 Yale J Int’l L 1-83 at 2. 356 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 357 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 358 Yu PK ‘Symposium: The first ten years of the TRIPS agreement: TRIPS and its discontents’ (2006) 10 Marq Intell Prop LR 369-410 at 370. 359 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 360 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 361 Helfer LR ‘Regime shifting: The TRIPS agreement and new dynamics of international intellectual property lawmaking’ (2004) 29 Yale J Int’l L 1-83 at 3. 362 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)).

specifically observes that this is taking place at the stage where phase-in rules of TRIPS363 have expired and developing countries are unable to comply with TRIPS.364 The focus has fallen on the provisions of TRIPS365 that affect public health, human rights, biodiversity and plant genetic resources.366 Therefore it becomes apparent that the TRIPS367 agreement is another area of international intellectual property law where human rights law and intellectual property law interface and conflict. In this area it is also necessary to use the human rights supremacy principle in order to balance the rights in question. Furthermore, the just remuneration approach, core minimum rights approach and the progressive realisation approach could be useful in resolving conflicting rights.

65

Conclusion

In the pre-constitutional dispensation, international law did not play such a pronounced role. However, the South African Constitution assigns a much more pronounced role to international law in the new constitutional dispensation. In terms of the Constitution, South African courts are compelled to take note of international law, especially in cases where the Bill of Rights is at issue. Therefore this chapter indicates the most important international law sources that may aid South African courts in deciding which immaterial property interests may be accepted as constitutional property. The position of property law as an international fundamental human right is of particular importance, since not all of the unconventional immaterial property interests may be described as intellectual property rights. Although the right to property is entrenched in the UDHR,368 it was not made binding in any subsequent international law instruments. However, some guidance for the construction of the property concept may be found in the European Union law, where Protocol 1 of the

363

World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 364 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 365 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 366 Helfer LR ‘Regime shifting: The TRIPS agreement and new dynamics of international intellectual property lawmaking’ (2004) 29 Yale J Int’l L 1-83 at 4. 367 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)). 368 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)).

ECHR369 protects property. Contrary to the right to property, intellectual property which is also entrenched in the UDHR370 was converted into a binding right in the ICESCR.371 This is viewed as an exception to the general exclusion of property as a constitutional right in binding international law instruments. The last sections note the interaction between intellectual property rights and the need to develop a human rights framework for intellectual property. This is necessary to ensure that intellectual property rights play a role in promoting human rights instead of restricting other fundamental human rights unduly. The 1996 South African Constitution compels courts, tribunals and forums to take international law into consideration. Courts must also interpret legislation in line with international law where an alternative interpretation would be incompatible with international law norms. In terms of the Constitution, international law is meant to play a larger role, especially where the interpretation of the Bill of Rights is concerned. Courts are obligated to take international law into account when interpreting the Bill of Rights, even if South Africa is not a party to the particular international convention or treaty in question. Therefore South African courts have to consider the UDHR372 and the ICESCR373 in interpreting the Bill of Rights, even though the ICESCR374 has been signed but not ratified. More specifically, courts have to consider article 27(2) of the UDHR375 and article 15(1) (c) of the ICESCR376 in considering whether a specific intellectual property right may be protected as a human right under the property clause and in finding the correct approach to balance conflicting rights. Intellectual property and property are dealt with separately under international human rights law. Since there are immaterial property rights that do not fall under the category of intellectual property law, it has proven necessary to deal with both property rights and 369

Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)). 370 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 371 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 372 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 373 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 374 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 375 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 376 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)).

intellectual property rights under international law. Property rights are protected under article 17 of the UDHR,377 but it protects the right to own property alone as well as in association with others instead of the right to private property. Neither the ICESCR378 nor the ICCPR379 mentions the right to property as a fundamental human right and these are the treaties that create binding obligations from the rights in the UDHR.380 However, the ECHR381 does guarantee the right to property and the wide interpretation of the property concept allows for the inclusion of certain immaterial property interests as fundamental human rights. These interests include rights arising from shares, intellectual property such as patents, arbitration awards, established entitlements to pensions, entitlements to rent, and even rights arising from running of a business such as licenses. The ECHR is part of regional international law and for this reason its status is similar to foreign law, in other words European Union cases serve merely as persuasive authority for the South African courts. South Africa is not a member of the European Union and is unable to accede to the ECHR. A wide property concept is utilised for Article 1 purposes and both material and immaterial property interests are accepted as constitutional property, including property interests that are not considered to be property at national law. Article 1 is often construed as a general protection for wealth. Movable and immovable property is recognised and protected by Article 1.382 The economic interests in a restaurant (including a liquor licence)383 as well as a final, binding arbitration award384 constitute property, which is in line with the general view that a

377

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 378 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 379 United Nations International Covenant on Civil and Political Rights (Dec 16, 1966) 999 UNTS 171 (1976), entered into force Mar 23, 1976 (http://www2.ohchr.org/english/law/ccpr.htm (accessed 17 September 2009)). This covenant has been signed and ratified by South Africa. 380 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 381 Council of Europe The European Convention on Human Rights (Nov 4, 1950) 213 UNTS 221 Protocol 1 (signed Paris 20 March 1952) Article 1 (http://www.hri.org/docs/ECHR50.html (accessed 24 November 2009)). 382 See Wiggins v The United Kingdom [1978] 13 DR 40, where it was stated unequivocally that Article 1 protects both movable and immovable property. Also see Van der Walt AJ Constitutional Property Law (2005) 117 . 383 See Tre Traktörer AB v Sweden [1989] ECHR Series A vol 159. See Allen T Property and the Human Rights Act 1998 (2005) 75-78. 384 See Stran Greek Refineries and Stratis Andreadis v Greece [1995] ECHR Series A vol 31B at 86.

vested or accrued money debt is protected as property.385 A share in a company386 as well as a contractual right over property387 is accepted as a property for Article 1 purposes. Under certain circumstances, compulsory contributions to a state pension may establish a right to the payment of pension benefits and this is accepted as property for the purposes of Article 1. In order to determine if such a payment constitutes property, it has to be established ‘whether there is a direct relationship between the contributions and the expectation of receiving pension benefits’.388 In other words, the case law of the European Union may serve as persuasive authority to South African courts that some commercial property interests (shares; debts and claims; and certain state-granted licenses) may be recognised and protected as constitutional property. Furthermore, participatory claims may be recognised as constitutional property, but only if there was some form of own contribution, which is similar to the German approach in this regard. Certain intellectual property attributes are protected as fundamental human rights under article 27(2) of the UDHR389 and article 15(1) (c) of the ICESCR.390 The ICESCR391 creates binding obligations for state parties and therefore states have to afford a certain level of protection to specific intellectual property attributes. These are the moral and material interests in intellectual property creations. The drafting histories of the UDHR392 and the ICESCR393 make it clear that the inclusion of intellectual property interests under a human rights instrument was always controversial and much deliberation went into the final decision to include such rights. It also becomes clear that states have a wide berth to provide protection for these rights since the international instruments do not prescribe or endorse any 385

Van der Walt AJ Constitutional Property Law (2005) 117. See Allen T Property and the Human Rights Act 1998 (2005) 46-57 for a more detailed discussion of the reasons why a debt is protected as a ‘possession’ in terms of Article 1. 386 Allen T Property and the Human Rights Act 1998 (2005) 46. See Lithgow v The United Kingdom Series A No 102 (1986) 8 EHRR 329. 387 Allen T Property and the Human Rights Act 1998 (2005) 46. See Gasus Dosier-Und Fördertechnik GmbH v The Netherlands Series A No 306-B (1995) 20 EHRR [53] and Wilson v Secretary of State for Trade and Industry [2004] 1 AC 816. 388 Van der Walt AJ Constitutional Property Law (2005) 118. See X v United Kingdom [1970] YB 13 892 and X v The Netherlands [1971] YB 14 224. See Allen T Property and the Human Rights Act 1998 (2005) 71-75. 389 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 390 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 391 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 392 United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 393 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)).

particular method. In the South African Bill of Rights there is no separate right protecting the human rights attributes of intellectual property. It is therefore submitted that it would be suitable to afford protection to these rights in terms of the property clause, since the international human rights instruments allow for the protection of intellectual property interests in terms of property rights, even though this approach is not specifically endorsed. During the drafting of the UDHR394 and the ICESCR,395 little attention was given to the balance between private and public interests in intellectual property rights and currently this is a very important issue.396 It is important to develop a human rights framework for intellectual property in international law as this area is still largely unexplored. Such a framework would also be useful in guiding South African courts in the balancing of intellectual property rights and other human rights where they come into conflict. Torremans,397 Helfer398 and Yu399 have developed strategies for such a framework in varying degrees of specificity. All three of these authors began to explore the interface between human rights and intellectual property by suggesting the use of the conflict approach and the coexistence approach in the creation of a human rights framework. In terms of the conflict approach, intellectual property undermines human rights; while the coexistence approach postulates that human rights and intellectual property rights are in essence compatible and it is merely necessary to find a balance between the public and private rights in intellectual property, in other words between access to information and an incentive for the creation of more intellectual works; and also between other human rights and intellectual property rights. South African courts appear to have adopted the coexistence approach in dealing with intellectual property rights and human rights.400 In building a human

394

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)). 395 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 396 The issue of the public domain is discussed in Chapter 4 (The Value of Immaterial Property). 397 Torremans PLC ‘Symposium: The international intellectual property regime complex: Is copyright a human right?’ (2007) 2007 Mich St LR 271-291 at 281-282. 398 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020. 399 Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753; Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149. 400 See Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC), where the court balanced the rights of a trademark owner and the right to freedom of expression.

rights framework for intellectual property, Yu401 found that it is more important to determine which intellectual property attributes have a human rights basis and which do not than to choose between the conflict and coexistence approaches. After determining this, it would be possible to use the human rights supremacy principle to give protection to other human rights above the attributes of intellectual property rights that have no human rights basis. For the intellectual property rights attributes that do have a human rights basis, the human rights supremacy principle would not be useful, since both of the conflicting rights in question are human rights. In such a case, three other approaches may be used either separately or in conjunction with one another. These are the just remuneration approach, the core minimum rights approach and the progressive realisation approach. Not all intellectual property rights should be protected under human rights law. Corporate trademarks, trade secrets owned by corporations, works-made-for-hire, employee inventions, neighboring rights, database protection, data exclusivity protection and other rights that protect the economic investment of institutional authors and inventors should be excluded from human rights protection. Although these rights could still be protected in terms of constitutional law as economic rights, they would not be considered fundamental rights. There are arguments that in international human rights law pertaining to intellectual property, juristic persons should not be allowed to claim that their human rights were violated. This possibly means that the property rights of juristic persons would not be protected as fundamental rights, but rather as economic rights in terms of constitutional law. However, in South African law, the Constitutional Court has explicitly stated that juristic persons may receive human rights protection for their rights as far as it is applicable.402 German law and Irish law also agree that the rights of juristic persons may enjoy constitutional protection. The German scaling approach entails balancing property rights with conflicting rights and the public interest by asking whether an individual’s particular right may ‘serve the fundamental constitutional purpose of securing a sphere of personal liberty for the individual to take responsibility for her own affairs in the patrimonial field’ and protecting or limiting the right

401

Yu PK ‘Ten common questions about intellectual property and human rights’ (2007) 23 Ga St ULR 709-753; Yu PK ‘International rights approaches to intellectual property: Reconceptualizing intellectual property interests in a human rights framework’ (2007) 40 UC Davis LR 1029-1149. 402 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) par 41-45.

accordingly.403 In terms of this approach, some rights that are closer to the concept of human flourishing would be protected more stringently as human rights, while the right that are merely economic rights would be protected less stringently as constitutional rights. This is similar to the approach in terms of which some attributes of intellectual property rights may be protected as a human right, while others that have no human rights attributes would receive no human rights protection. The German scaling approach is actually more efficient, since it does not exclude some intellectual property rights from constitutional protection at the outset, but balances the conflicting rights to determine which one should be protected more strongly. This approach is also relevant to determine which rights may be regulated more easily by the state. Article 15(1) (c) of the ICESCR404 protects the moral and material interests of an author. The moral interest protects the personal link between an author and the intellectual work and encompasses the right of attribution and the right of integrity. The material interest, on the other hand, protects the limited interests of authors to acquire just remuneration for their intellectual labour. Helfer405 created three possible routes that the creation of a human rights framework for intellectual property could possibly follow. The first uses human rights to expand intellectual property; the second uses human rights to impose external limits on intellectual property; and the third proposes that human rights ends be achieved through intellectual property means. South African courts may utilise the approach in terms of which human rights ends may be achieved through intellectual property means, since this appears to be the best solution. This coincides with the German approach, in terms of which property interests are only protected as constitutional property if they serve the fundamental purpose of Article 14, namely securing an area of personal liberty in the patrimonial sphere for the holder of the property interest. In other words, where a particular property interest serves to further other human rights, the German Federal Constitutional Court would be more likely to protect a particular property interests strongly. All of the intellectual property rights (patents, copyright, designs and trademarks) serve to secure a sphere of personal liberty in the patrimonial area. However, it is submitted that 403

Van der Walt AJ Constitutional Property Clauses (1999) 151. United Nations International Covenant on Economic, Social and Cultural Rights (1966) 993 UNTS 3 (1976) (http://www2.ohchr.org/english/law/cescr.htm (accessed 24 November 2009)). 405 Helfer LR ‘International rights approaches to intellectual property: Towards a human rights framework for intellectual property’ (2007) 40 UC Davis LR 971-1020.

404

copyright is closer to the human personality than trademarks and should consequently be protected more stringently. In South African law, these particular rights are unproblematic since they are protected as property in private law and once they have vested and been acquired in terms of the statutes that create them they may receive constitutional property protection. In essence, the international law instruments serve merely as a mechanism to determine whether member states are complying with the requirements for providing protection to particular fundamental rights. Since South African law does provide protection to intellectual property in terms of private law property rules and the constitutional property clause has the scope to recognise and protect intellectual property rights, South Africa complies with the duty to protect intellectual property rights. Trade secrets, digital copyright and biotechnological products may also be treated as part of intellectual property and therefore the same considerations may apply. Traditional knowledge is not currently protected in South African law, but there is a movement towards protecting these interests under the existing categories of intellectual property. Traditional knowledge is very closely connected to the human personality and may consequently receive more stringent constitutional protection. Finally, it is important to note that the TRIPS406 agreement poses further situations where human rights and intellectual property rights conflict and that a method for balancing such conflicting rights is of vital importance. International human rights law indicates that at least certain human rights aspects of intellectual property law must be protected under human rights law. However, it cannot be determined which kind of protection is necessary and whether the particular attribute of an intellectual property interests should be protected more or less stringently until a particular case comes before the courts. However, the just remuneration approach, the core minimum rights approach and the progressive realisation approach may be utilised by South African courts in determining how strongly a particular right should be protected on the facts of the case. South African courts may turn to these international conventions and declarations for

406

World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (April 15, 1994) (http://www.wipo.int/clea/en/text_html.jsp?lang=en&id=4064 (accessed 17 September 2009)).

guidance on the interpretation of the Bill of Rights, especially since the South African Bill of Rights was inspired by the UDHR.407 The Comments by the United Nations Committees are also useful in providing guidance on the interpretation of the conventions and provide useful approaches and guidelines. This analysis shows that there is no reason evident from international human rights law why intellectual property and other unconventional immaterial property interests could not be protected under the constitutional property clause. In fact, the property rights system is one of the acceptable methods for providing protection to the human rights attributes of intellectual property. It also provides guidance for when immaterial property interests would not receive constitutional protection, for example inventions based on body parts. Since the South African Constitution does not have a separate clause protecting intellectual property rights, both intellectual property rights and other immaterial property interests have to be protected under the property clause insofar as international norms dictate. The South African property clause has the scope to allow protection of strong human rights such as housing as well as weaker economic rights such as commercial property. The difference is that the state may more easily regulate weaker economic rights than strong human rights, in other words the human rights are protected more strongly.

407

United Nations Universal Declaration of Human Rights (1948) GA Res 217 A (III), UN Doc A/810 at 71 (1948) (http://www.un.org/en/documents/udhr/ (accessed 24 November 2009)).

Chapter 7 Conclusion 71

Introduction

The central question that this dissertation aims to answer is whether immaterial property interests may be recognised and protected under the South African constitutional property clause and if so, under which specific circumstances. In order to determine the circumstances, a discussion and an analysis of the traditional and unconventional immaterial property interests were undertaken. In the first instance it was necessary to determine the requirements that need to be met for each of the specific immaterial property interests to be protected in private law. It was found to be necessary to separate the interests into different categories according to the different kinds of protection that they receive. There are interests that are protected as property in private law; interests that are protected in private law, but under an area of law other than property; and interests that receive no protection in private law. However, most of these interests share certain characteristics that make them suitable for constitutional property protection. A number of these characteristics may be distilled from property theories; South African and foreign constitutional property law; and international law principles. In the case of most of these interests, there is also no constitutional clause other than the property clause that could possibly provide protection to these interests. There are two reasons why it was necessary to undertake this study. The first relates to the fact that there is no separate constitutional clause that provides protection to immaterial property interests. The second pertains to the fact that the South African constitutional property clause, like most property clauses, does not provide a definition of the property concept; and South African courts have not yet given clarity as to which specific immaterial property interests may be recognised and protected under the constitutional property clause. For this reason it was necessary to do a comparative study with a focus on foreign constitutional jurisdictions where case law provides some clarity and general indications with regard to which immaterial property interests may be included under the property concept. Specific international law human rights instruments were also discussed with this purpose in mind.

In the First Certification case,1 the Constitutional Court needed to ensure that the Constitution complied with the 34 Constitutional Principles contained in Schedule 4 of the interim Constitution of the Republic of South Africa 200 of 1993. One of the objections to the constitutional property clause was that no provision was made for intellectual property. The Court held that the constitutional property clause is wide enough to protect all property interests that require protection in compliance with universal human rights norms. Initially, there were arguments that the constitutional property clause does not provide adequate protection to intellectual property rights. These arguments may have been due to confusion between the purposes of private law and constitutional law protection of property. The constitution guarantees property insofar as it prohibits arbitrary interferences by the state and provides protection in cases where the interests come into conflict with other fundamental rights, but it cannot serve the purpose of providing intellectual property rights or any other property rights with additional private law property rule-type protection against interferences by third parties. It cannot strengthen the property rule-type protection granted to property, since these are functions of private law protection. The argument that intellectual property rights are not adequately protected by the constitutional property clause cannot be successful, since it is not possible to determine which kind of protection is required by a particular category of property until a specific case comes before the South African courts. It is also inaccurate to argue that a particular category of property is so unique merely because it is created in terms of legislation, as to render it in need of a different kind of protection than that which the property clause can provide. Despite these arguments, it is now accepted that any kind of property that is not specifically excluded by the property clause may be recognised and protected and that it is unnecessary to include a separate clause for intellectual property in the Bill of Rights of the Constitution of South Africa 1996. Intellectual property rights (the traditional immaterial property interests) as well as other immaterial property interests may be recognised and protected under the constitutional property clause. Constitutional property clauses generally employ a wide property concept and although it is generally accepted that property interests protected as property in private law would also be recognised under the property clause, a wider range of property interests may be protected in constitutional property law than under the concept of

1

Ex Parte Chairperson of the Constitutional Assembly: In Re Certification of the Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) par 75.

property in private law. A general rule, suggested by Van der Walt,2 is that the questions whether the interest can exist independently and whether the rights have vested or been acquired by the claimant according to normal principles of law, could determine whether these immaterial property interests may be included under the constitutional property concept. It is extremely important to recognise the differences between the kind of protection granted to property in private law and constitutional property protection. In private law, the purpose is providing strong property rule-type protection for private rights against competing private parties. In constitutional law, the purpose of recognition and protection is to acquire protection for private interests against the state and in instances where these interests come into conflict with other constitutional rights of other private parties. Constitutional property law cannot guarantee any kind of property absolutely, since the constitutional property clause explicitly provides specific requirements in terms of which the state is permitted to interfere with property, namely by way of expropriation and deprivation. Similar to other categories of property, intellectual property as well as the unconventional immaterial property interests will most likely mainly be affected by the deprivation provision and not the expropriation provision. This usually becomes relevant in instances where the state finds it necessary to regulate property. If the state does not comply with the requirements in terms of section 25 while regulating property, this would constitute an arbitrary deprivation against which the property owner would be constitutionally protected. Other possibilities where the constitutional property clause may be relevant for intellectual property rights as well as unconventional immaterial property rights would be in instances where these property rights conflict with other fundamental rights. In such cases the two conflicting rights must be balanced, therefore the immaterial property right will not automatically enjoy a higher level of protection in terms of the property clause than the other fundamental rights. As was demonstrated in Laugh It Off v SAB International,3 the Constitutional Court is prepared to grant a higher level of protection to other fundamental rights that are viewed as being more important than the intellectual property rights (a trademark in this case) protected in terms of the property clause. Section 25 requires that a 2

Van der Walt AJ Constitutional Property Law (2005) 87. Laugh it Off Promotions CC v South African Breweries International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) 2006 (1) SA 144 (CC).

3

balance be struck between the protection of individual rights and the promotion of social responsibilities. Immaterial property interests were broadly classified into two groups, namely traditional immaterial property interests and unconventional immaterial property interests. Traditional immaterial property interests were defined to include the traditional categories of intellectual property, namely patents, copyright, registered designs and trademarks. Unconventional immaterial property interests were defined to include commercial information, confidential information, trade secrets, digital copyright, biotechnological products, traditional knowledge, commercial property, the so-called ‘new property’ or participatory claim rights and non-proprietary rights. Apart from this broad classification into traditional and unconventional immaterial property interests, immaterial property interests may also be broadly classified into three groups according to their protection outside of constitutional law. The first group encompasses interests that are recognised and protected as property in private law. The second group consists of immaterial property interests that are protected in private law under an area of law other than property. The last group includes immaterial property interests that receive no protection in private law. The first group consists of immaterial property interests in patents, copyright, designs and trademarks which are also generally classified as categories of intellectual property. These are all sui generis forms of property in private law since legislation affords property rule-type protection to these interests and private law honours this position. In constitutional property law