Thursday, 18 February 2010

The Budget Speech - some IP implications

Yesterday, RSA's new finance minister Pravin Gordhan delivered his 2010 Budget Speech. With the help of a useful summary of the speech from Moneyweb, Afro Leo considers some of the IP implications below:


  • Exchange control reforms are proposed: the proposed reforms do not appear to impact the continuing effect of this form of protectionism on the international technology transfer market and IP licensing requirements (which include intra group brand licenses) where RSA residents are involved. There is some talk of promoting RSA as a gateway to Africa and for dropping some of the controls to encourage this development.
  • Tax on a pack of cigarettes to increase by R1.24 from R7.70 to R8.94. Beer to increase by 6c a can and wine by 16c a litre. The impact is likely to squeeze profits on these goods. Branding may become even more important to retain customers, and those with smaller ad spends are likely to suffer. Counterfeit goods may increase to meet the addictive demands associated with these products.
  • Congestion, pollution and landfill taxes are considered. The need for alternative solutions is likely to continue spur innovation in this area. Afro Leo thinks that it is going to be even more difficult for any trade mark lawyer to secure rights over the colour "green".
  • Real public spending growth limited to +- 2% per annum, lower than preceding three years. Meanwhile the public sector wage bill almost doubled in five years. Afro Leo hopes that CIPRO is/has been in the front of the queue for funding and wage increases.
  • Economic growth of 2.3% projected for 2010, increasing to 3.6% by 2012. Modest by recent RSA standards but may positively impact on local IP filings which declined (especially trade marks) remarkably in 2009
  • 2010 FIFA World Cup to contribute 0.5% of GDP in 2010. Perhaps the compensation for the vice like control FIFA has over the tournament and all advertising around it. It is worth considering too that "so far, government has spent R33bn preparing for the soccer games."
  • R8.4bn for fighting HIV/Aids with antiretroviral therapy. This spending is likely to spur the ongoing discussion about costs and the economic role of IP in fostering innovation and/or restricting access to ARVs and related infrastructure.

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