Research and Development Aspects
The South African Government introduced the Intellectual Property from Publicly Financed Research and Development Act (IPR-PFRD Act) which aims to regulate ownership (amongst other things) of IP emanating from publicly financed research and development. Its default position is that any IP which emanates from publicly financed R&D shall be owned by a recipient of public funds. A recipient includes an institution. In order for IP to be excluded from the IPR-PFRD Act, research and development of such IP should be funded using a full cost model. The IPR-PFRD Act further allows for joint-ownership of IP, subject to certain requirements being met. The IPR-PFRD Act further establishes National Intellectual Property Management Office (NIPMO) which is tasked with ensuring compliance with the Act and provides for a manner in which IP-related transactions should be dealt. Non-compliance with the IPR-PFRD Act renders any transaction void ab initio. The over-arching principle at play is that where State funds have been used to generate IP, the State and the South African public should receive some benefit from that IP. Therefore, it is crucial that parties (the institution and private sector) which engage in an R&D project, should be clear of their respective positions.
The South African Government introduced Section 11D of the Income Tax Act (No. 58 of 1962) in order to encourage and incentivise private sector investment towards the research and development of scientific or technological activities. The Act assists in ensuring that research and development (R&D) activities are conducted within South Africa. Conducting R&D in SA will ultimately result in a positive economic growth in South Africa. In terms of Section 11D, a taxpayer is in entitled to a 100% deduction for costs incurred for an eligible R&D activity. In order to qualify for an additional 50% deduction, the taxpayer should obtain prior approval of conducting such R&D activity from the Department of Science and Technology (DST).