Linda Ensor
22 October 2007
Cape Town — Proposed changes to the intellectual property regulatory regime will be in conflict with the existing law relating to the seizure of counterfeit goods, Parliament's finance committee was told on Friday.
The South African Institute of Intellectual Property told the committee that proposed amendments to the Customs and Excise Act contained in the Draft Revenue Laws Amendment Bill were in conflict with the Counterfeit Goods Act.
The institute represents about 140 patent attorneys, patent agents and trade mark practitioners who represent a range of local and international companies.
Institute representative Marilyn Krige said the changes would create practical difficulties which would "hinder the effective prevention of counterfeit goods entering the country instead of improving control" over them.
The proposals would create a different procedure for the detention and seizure of counterfeit goods than that contained in the Counterfeit Goods Act, which Krige said had stood the test of time and met with the approval of the high court.
Huge quantities of counterfeit goods enter the country each year. South African Revenue Service commissioner Pravin Gordhan recently reported to Parliament that last year 1554 seizures of counterfeit goods with a total value of R354m took place and that the number of seizures of counterfeit clothing and DVDs had risen more than 80%.
In 2005-06 there were 846 counterfeit seizures worth R451m. The institute's objections add a new dimension to those previously raised in relation to the proposed tax treatment on royalty payments for intellectual property developed locally and used abroad. Opponents to this change said it would act as a disincentive to SA becoming a hub for research and development.
Krige said the procedure proposed envisaged a detention of suspect goods indefinitely simply on the basis of a statement of intent by the holder of the intellectual property rights that a court ruling would be sought that the goods are counterfeit.
"Such a (court) application could take months or even years before it is heard by a court. The detention therefore in effect becomes a seizure," Krige said.
The statement provided did not have to be made under oath. Under existing law, goods can only be seized by custom officials with a warrant or a court order.
"The effective seizure is conducted without a warrant or any subsequent confirmation of the seizure as is prescribed by the Counterfeit Goods Act which we submit, is contrary to law and the constitution," Krige said.
Meanwhile the nonprofit consortium has objected to a provision in the bill which will require public benefit organisations with an annual payroll of more than R500000 to pay the skills development levy.
South African Breweries (SAB) last week also objected to proposed changes to the taxation of intellectual property .
The proposals could result in the group having to pay large amounts in additional tax, SAB group tax manager Craig Mitchell said .
The intellectual property provisions of the draft bill aim to prevent the leakage of tax that occurs when locally developed intellectual property is taken to offshore tax havens and tax-deductible royalties are paid for its use by the SA-registered company.
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