Z Mkhize: Regional Conference on Intellectual Property
Enforcement

20 November 2007

Theme: "Towards Integrated Regional Intellectual Property enforcement: 2010
and beyond"

Programme Director
Chief Director of Office of Companies and Intellectual Property (Cipro)
Enforcement, Advocate Mandla Mnyatheli
CEO of Cipro
Representative of Mayor's Office
Honoured guests
Ladies and gentlemen

Very recently the World Bank released a positive report on Africa welcome
news indeed viewed against the ingrained Afro-pessimism we have to contend with
almost on a daily basis in the international media.

According to the Bank's Africa Development Indicators for 2007:

* For the first time in 30 years, sub-Saharan Africa economies grew in step
with the rest of the world, notching up 5,4% a year in the past decade.
* More than a third of Africans now live in countries that have grown at more
than four percent a year for ten years.
* Human development outcomes have improved, with an estimated 41% of Africans
living in poverty compared with 47% in 1990.
* Policies in many sub-Saharan countries also improved, with inflation, budget
deficits, exchange rates and foreign debt payments becoming more
manageable.
* Greater integration with the global economy, especially through export trade,
are characteristics common to all African countries that have sustained
growth.

The reality behind these statistics is of course a far cry from the
perceptions of Africa in the so-called developed world, which habitually views
the continent as a basket case, a wild and lawless region where conflict,
crime, and corruption are the norm. But perceptions aside, there are real risks
to the impressive economic growth and social development taking place in this
country and across the African continent. Here I am not talking about the
short-term risks to the global economy posed by the American sub-prime market
collapse, or the oil-fuelled inflationary threat facing the major economies of
the world, including our own.

I am referring instead to inherent risks to development on the African
continent in general and in this country in particular. In South Africa we have
to contend with a long list of inherent risks to socio-economic growth and
development. To mention a few: a chronic shortage of skills and poor
educational outcomes, a consequent low level of productivity, a largely
untransformed economy and slow pace of black economic empowerment, high crime
rates, high rates of social dependency and chronic diseases such as HIV and
AIDS and drug resistant tuberculosis (TB).

But there is another major risk which we seldom talk about. I refer to the
fact that as a country, we still lack a clear national strategy on combating
counterfeit goods infringing on local intellectual property. The same applies
to the southern African region as whole. This poses a major risk to economic
growth and social stability. Already there are clear examples emerging in other
regions of the world, particularly in East Asia, of the risks associated with
pursuing break-neck economic growth at all costs, with scant regard for the
environment let alone the protection of trademarks and intellectual property
rights. The short term rewards are obvious, but the longer term consequences
are far more insidious and damaging.

The bottom line is simply this. We can address, indeed we are addressing all
the other inherent risks to economic growth and development I referred to the
skills shortage, the empowerment issue, crime, chronic diseases etc. Unless we
get serious about protecting intellectual property rights, however and unless
we develop a clear national strategy, underpinned by an appropriate legislative
and regulatory framework, as a country we will not be taken seriously by major
foreign investors in the developed world.

The damage caused to the domestic economy by the import of counterfeit goods
and failure to protect local trademarks and intellectual property rights is
far-reaching and hard to over-estimate. The damage has economic, social, legal
and even diplomatic dimensions. Let me give you a few examples.

For developing countries like South Africa stability is the precondition for
economic growth. Intellectual Property Crime (IPC) creates instability and is a
threat to a long-term prosperity. I am saying this because piracy and
counterfeiting operations provide organised criminal syndicates with a steady
source of income. With this income they are able to support other illicit
activities such as drug trafficking, car hijacking, heists and armed robberies.
This discourages the very conditions that are necessary to encourage economic
growth and investment.

Then there is the economic cost, in terms of revenue and jobs lost. It would
be interesting to know much of the pirated memorabilia and branded clothing was
sold in SA during the recent Rugby World Cup imagine the impact this has on
companies with legitimate registered brands and trademarks. Failure to protect
intellectual property rights discourages investment, loses jobs and has a
direct cost in terms of revenue lost to the fiscus people dealing in pirated
and smuggled goods are certainly not typically tax-payers.

For example the Department of Trade and Industry's (DTI's) data released
earlier in the year showed an "alarming" loss of revenue of R540 million
between April 1 2005, and 31 March 2006 owing to counterfeited goods floating
around in the South African market. The same study also revealed that, between
2003 and 2005, loss of revenue owing to fake goods was approaching R2 billion.
Earlier in the year a statement from the Office of Companies and Intellectual
Property Enforcement (OCIPE), stated that counterfeited electronic goods were
the most common to penetrate the local market, but added that government has
seen the growth of fake goods in various sectors, particularly in medicine. In
both these examples there are clear health and safety implications.

I am under no illusions about the difficulties we face as a country in
combating the scourge of pirated and counterfeit goods. South Africa is
experiencing an unprecedented level of technological development. While this
has major benefits, unfortunately, this has made it easier for intellectual
property pirates and counterfeiters to profit. While we battle to keep up with
constant waves of technological innovations and inventions, we should not lose
sight of the fact that this technological revolution has made illegal copying
and distribution of material easier than ever before. Throughout the world,
proliferation of IP crime in the digital environment presents a host of legal
and technical challenges.

Recently, the Business Day published a report following a research conducted
by a United Kingdom based provider of technology market intelligence,
Industrial Investment Corporation (IDC). This report revealed that more than
80% of software deployed in Africa is counterfeit. IDC research shows that a
10-point drop in South Africa's piracy rate could create 2 400 jobs and pump
$1,7 billion into the economy. The same report released by IDC shows that the
drop in piracy rate could increase the local industry revenue by more than $1,2
billion and boost South African Revenue coffers by an additional $131 million
in tax revenue.

The impact of piracy on the entertainment and music industries is equally
profound. Technical advancements have significantly changed the way in which
entertainers interact with consumers. There has been an increase in the number
of consumers who prefer web and digital downloading. Although digital
downloading is relatively new, there are strong indications that it is set to
change the landscape of the South African music industry. The question that all
of us must ask is: in the face of this transformation how do we ensure that
digital downloading does not become the breeding ground for music piracy?

Ladies and gentlemen, difficult though the task of protecting intellectual
property rights may be, as a country we have no option but to embrace the
challenge. Our citizens are demanding no less. Department of Trade and Industry
(DTI) statistics show that companies in SA are intensifying efforts to register
their trademarks and other intellectual property. Trademark registration had
risen to 31 800 for the financial year ending March 31, compared with about 27
000 trademarks registered for the financial year ending March 2006 and an
average of around 24 000 trademark registrations in previous years. This rising
trend is likely to accelerate even further with the 2010 World Cup
approaching.

We cannot afford to let down these citizens and businesses applying for
trademark protection. Still less can we afford a situation to develop where
even a registered trademark or protected right becomes worthless owing to lack
of enforcement and protection. As I have emphasised, the long term consequences
of such action, or lack of action as the case may be, are simply too
serious.

Globalisation has also meant that people who are part of the second economy
can be affected by the counterfeit in a very significant way. For instance, the
township traditional outfit designers based in the townships and villages have
reported how people who have posed as tourists have taken photos with their
attires only to discover loads and loads of low quality material sold to South
Africa at low prices. In doing this they do not take into account the
intellectual property and the costs of designing the original attire. This
damages their businesses.

There was a widely publicised court case which was taken up by an
non-governmental organisations (NGO) to the Court of Justice in Hague.
Actually, a multinational pharmaceutical company had obtained information about
the herb the Khoi-San people were using to suppress appetite as part of their
culture. This pharmaceutical giant used this information for profit making
purposes. It is important for us to devise ways and means to protect communal
intellectual property what we normally call non registered traditional
knowledge.

Fifa World Cup has come with many restrictions on branding which has many
implications to businesses. Many businesses have not internalised this. We need
to publicise some of these issues given the fact that 25 November is the
beginning of Fifa activities after Germany.

Conclusion

Ladies and gentlemen, I trust with these few remarks I have brought home to
you the importance of the conference beginning tomorrow. The next two days
presents us with the opportunity to map out a multilateral approach towards the
enforcement of Intellectual Property Rights. We are fortunate to have senior
leaders from government, business and tertiary institutions, even from
neighbouring countries, who will be sharing their experiences and insights
during the conference. I sincerely believe there is an urgent need to work with
other governments in the Southern African Development Community (SADC) region
to protect and promote the vitality of our IP industries.

Speedy progress towards the creation of an environment free of IP crime is
vital for sustainable economic growth and social development in this country
and elsewhere on the continent, lest the major advances highlighted by the
World Bank report be reversed in the longer term. Delegates must emerge from
the conference with a clear strategy for ensuring IP enforcement in all its
dimensions. We must demonstrate to the international community that we are
serious about our commitment to protecting businesses, big and small from IP
crime.

I thank you and wish you all a most enjoyable and productive conference.

Issued by: Department of Finance and Economic Development, KwaZulu-Natal
Provincial Government
20 November 2007