Exchange Control Barrier to Assignment of IP Offshore Lifted

The recent judgement on 18 March 2011 by the Supreme Court of Appeal in the Oilwell (Pty) Ltd case confirmed that IP is not defined as 'capital' for the purposes of Exchange Control regulations. This has made the acquisition of South African IP by overseas companies attractive as South African Reserve Bank approval of the deal will not need to be sought any longer.

It is important to note that in the university environment in terms of the IP Rights from Publicy Financed R&D Act, if research is conducted at below full cost approval for assignment will still need to be sought from the National IP Management Office (NIPMO).

It is also worth noting that there are other regulations that may continue to control IP licensing activities - something that law firms are currently grappling with.

The move is seen by many as aiding the global expansion of South African companies and it is felt that foreign investors will be keener to invest in South Africa as there will be no exchange control hurdles to be overcome.