South Africa: Landmark Pharmaceutical Judgment

Dm Kisch Inc. a South African law firm was recently successful in obtaining a landmark copyright judgment in the Pretoria High Court in favour of pharmaceutical giant Beecham Group p.l.c. of the U.K. and its South African counterpart SmithKline Beecham Pharmaceuticals (Pty) Ltd (the Applicant) against Biotech Laboratories (Pty) Ltd (the Respondent). The judgment is expected to have far-reaching implications regarding the use of package inserts of registered medicines, particularly generic pharmaceutical products.

In endeavoring to gain successful registration of its generic equivalent of the Applicant's famous and widely used antibiotic, Augmentin, the Respondent copied the Applicant's Augmentin package insert to the extent of exactly duplicating the Applicant's clinical data and test results as well as efficacy claims regarding the excretion and absorption rates. Furthermore, the Respondent copied the shape of the Augmentin tablet which is protected by a trade mark registration in South Africa and numerous other jurisdictions.

The Applicants launched an urgent application for an interdict on the basis of copyright infringement in the Augmentin package insert, trade mark infringement in respect of the tablet shape trade mark registration, passing-off and the general deficit of unlawful competition.

The matter of the trade mark infringement was reserved to be dealt with at a later stage and argument proceeded in respect of copyright infringement of the package insert. Shortly before argument commenced, Counsel for the Respondent conceded that it had copied certain of the Applicant's clinical absorption and excretion data, and acceded to the Applicant's claim that the Respondent delete such data from the package insert. The issue remaining to be argued and adjudicated upon was the copyright infringement of the package insert as a whole.

In order to prove that copyright subsisted in the work it was necessary to prove that the work fell within a recognized category of a work defined in the provisions of the Copyright Act.

In this case, the Applicants had to prove that the package insert qualified as a literary work as defined in the Act; that it was an original compilation; that it had been reduced to a material form; and that it had been made by authors who, at the time of the making of the compilation, were qualified persons. In other words, that the authors were South African citizens or domiciled in South Africa or in a designated country (being the United Kingdom in this case) and were in the employ of the Applicants at the relevant time.

In order to show originality the Applicants had to establish that the authors had employed some degree of original skill and labor in creating the package insert compilation.

The respondent opposed the application for an interdict on the following bases:

1. No copyright was proved to exist in the hands of the Applicants as the authors of the entire compilation could not all be identified and the package insert was not an original work;
2. Alternatively, that any copyright which may have been found to subsist in the compilation, in fact vested in the State, through its organ the Medicines Control Council (MCC), as it was made under the control and direction of the MCC;
3. Alternatively, that no copyright subsisted in the work at all as the package insert fell within the definition of an official or administrative text, in which copyright cannot subsist.

Mr Justice Swart found that copyright did indeed subsist in the compilation in that the work displayed the requisite original skill and labor in its execution and that the main author was in fact the author of the compilation in its totality. Although the MCC had played a significant role in the approval of the final package insert, both quantitatively and qualitatively, this had not constituted the making of the package insert compilation. The learned Judge considered various definitions of what constituted "direction and control" and concluded that, although the MCC had set certain parameters within which the Applicant for the registration of a medicine must set forth the details of his own medicine, the Respondent sought to stretch their argument too far by contending that the MCC's directions as to content were peremptory and that therefore the State directed the initial making of the package insert.

The Court further found that there existed no authority in support of the case advanced by the Respondent and that the direction and control of the MCC was to be seen in a broad sense, not in the narrower sense of the making of the literary work as a whole, as was envisaged by the Copyright Act. Furthermore, the Judge was unable to find any authority in British case law for the contention that copyright vested in the Crown in circumstances such as in the present case.

Mr Justice Swart concluded that the application for registration of a medicine as well as the compilation of the package insert was not undertaken by the State and that the MCC's intervention did not make it the maker of the package insert.

The Judge concluded that to find that the State was the maker of the package insert would lead to absurd results, negating the very philosophy behind copyright law and it could lead to a situation where the copyright of the State is made dependent on policy considerations, which may not be applied consistently and which may change for better or for worse.

The Court further addressed the issue of the Medicines Control Council's statement that it was not concerned with the "whims of copyright" by finding that the MCC clearly countenances the copying by generic companies of the originator's clinical data. This data should never have been allowed to appear in the Respondent's package insert.

As to the Respondent's third and final argument that no copyright subsisted whatsoever in the package insert, the Judge found that there was no merit in this contention as the package insert was not an administrative or official text as envisaged by the Copyright Act.

The Court found that the Applicants had established copyright subsistence in the package insert as a literary work. As breach of copyright in the package insert by the Respondent had not been disputed, the Applicant was granted a final interdict in the matter.