RSA Govt has turned down the music - Excon Approval

 Protecting the pot at end

The South African government has reacted to last year's Oilwell decision which had the effective of declaring that IP transfers did not require exchange control approval. In that case an attempt to void a trade mark assignment for lack of exchange control went all the way to the Supreme Court of Appeal - this blog carries the news here together with comment that celebration, for those who advocate a less restrictive environment, ought to have been nervous. And correct that turned out to be.

The government, without any consultative process, has unilaterally amended the exchange control regulations to include "intellectual property" within the definition of "capital" which has the effect of requiring all IP transfers to seek exchange control approval from the government. See Afro-IP report here.

The difficulty is that IP has not been defined and drafted to specifically include both registered and unregistered IP. This widens the scope of the regulations to possibly include amoebic concepts such as reputation, know-how and personality rights. This could mean, for instance, that a local talented footballer would need exchange control to move to join Manchester United because image rights are being "exported". There is also the question of whether IP can in fact be transferred in the sense of being moved from one country to another in the same way that other "capital" envisaged by the regulations ie money, can. The Oilwell judgement considered this at length.

The upshot is that this latest move is unlikely to be the end of the tussle. For those doing deals or creating IP in RSA, if you need to get IP out of the country, this requires the extra step of getting excon approval which, by the way, will be granted if the government is satisfied that value for value has been exchanged ie the price is fair.