In September 2022, the Copyright Amendment Bill was passed by the National Assembly – giving South African artists, creators and entrepreneurs more benefits and rights, including receiving adequate remuneration. This bill is just one of the ways intellectual property rights (IPR) protect the work of creatives and allow entrepreneurs whose products or services are used in society and the economy, to tap into growth opportunities.
This protection is crucial in a business world that is becoming increasingly competitive and where successful innovative ideas tend to attract ‘copycats’ who steal or imitate intellectual property (IP) as their own.
Tumelo Mashabela, founder of niche black female owned law firm, Tshaya Mashabela Attorneys, unpacks more about what IP is, why you shouldn’t ignore protecting it, and how it will help to create growth for SMEs in South Africa.
What is Intellectual Property?
IP is a broad umbrella term for intangible assets (non-physical assets of human creativity with commercial value) owned and legally protected by a company or individual from outside use or implementation without consent.
IP can consist of many types of intangible assets, such as:
Patents – these are property rights for an invention that the government grants in exchange of an exclusive disclosure of the invention on a patent specification. A patent gives the inventor exclusive rights to their idea, which could be a new process, system, or product. For example, in 1980, Steve Jobs filed a patent for the personal computer.
Copyrights – providing authors and creators of original material the exclusive right to use, copy, or duplicate their material.
Trade marks – a symbol, phrase, or logo that is recognisable and represents a product that legally separates it from other products. For example, the Coca-Cola company trademarked the logo and brand name of “Coca-Cola”.
Trade Secrets – a company’s process or practice that is not public information. Companies must actively protect trade secrets, which is why some employers require employees to sign non-disclosure agreements (NDAs).
Franchises – not an IP, but rather a license agreement that uses IP whereby a company, individual, or party, called the franchisee, purchases. This license allows them to use a company’s, known as the franchisor, name, trademark, proprietary knowledge, and processes.
Although no IPR is more important than the other, small businesses must look at their strategic objectives to determine how they can use it to grow their businesses. For example, an organisation like Coca-Cola, which will most likely be producing its product for decades to come, may have decided not to patent its secret formula because the term of a patent is 20 years. After that time, that formula would be public knowledge, and anyone could access that patent document and start producing Coca-Cola drinks. Instead, it realised that a trade secret would best suit the brand’s long-term business objective. It introduced stringent measures internally, to ensure the Coca-Cola formulation remained a secret.
How IPR creates opportunities for SME’s growth in South Africa
IP sets small businesses apart from their competitors and is essential in promoting economic growth through innovation, creative expression, and industrial development, as highlighted by South Africa’s Intellectual Property Policy.
Unlike in the past, when businesses would differentiate themselves from competitors by having more capital or owning a manufacturing plant, the business world now operates in the knowledge economy. In this environment, IP allowed organisations like Apple, whose humble beginnings stem from a garage, to set themselves apart from other PC manufacturers and, later, even mobile device manufacturers.
Those rights are still highly beneficial for South African SMEs because competitors who want to use their solution will need to compensate them either through payment of royalties or a lump-sum.
For example, suppose a small manufacturer with a patent can no longer produce its products due to a lack of funding. However, because of its patent, that manufacturer can conclude a licence agreement with another individual or organisation and let that person or company manufacture its product while getting royalties.
Not only that, but a business can also sell its IP asset and receive a lump sum of money for it. IPR is an often-overlooked business asset, however, IP can assist South African SMEs to realise their business objectives and overcome hurdles to success.
