Dina Biagio Jan-Gerhard Oosthuysen September 26 2022 Death, wills and IP legacies in South Africa Spoor & Fisher | Intellectual Property - South Africa Dina Biagio, Jan-Gerhard Oosthuysen Intellectual Property IntroductionRegistered rightsCopyrightKnow-how and trade secretsIn competition with heirUnregistered trademarksCommentIntroductionDeath and taxes are inevitable, but how do intangible assets such as trademarks, copyrights and other forms of intellectual property and their related income streams transfer to heirs in a deceased person's estate?Immovable tangible assets are usually the foremost considerations when drafting a last will and testament; intangible assets, such as intellectual property, are often overlooked. Like immovable property, intellectual property has the ability to continue to generate an income stream after the owner's death and, if managed correctly, some forms of intellectual property, such as trademarks, may appreciate in value over their lifespan.For example, the legacy that JK Rowling, the author of the Harry Potter series, will leave behind will endure long after her death, but what happens to the copyright that has formed the foundation for the more than £800 million that she is estimated to be worth? In South Africa and the United Kingdom, copyright subsists automatically (ie, without the need for registration) in a work resulting from the skill and labour of the author. The copyright in Rowling's literary works will expire 50 years after her death – a comparatively long period for IP rights.The market value and the mechanisms by which intellectual property in all of its forms will transfer to an heir are usually not considered in any detail in a will.Registered rightsIn South Africa, an owner's rights in a patent, design registration or a trademark registration, which entitles them to the exclusive use of an invention, design or trademark, are recorded in registers at the Patent, Designs and Trade Mark Office. The respective statutes governing these forms of IP provide for them to devolve to heirs by operation of law.A patent, design or trademark registration certificate is analogous to a title deed for an item of immovable property. Much like immovable property, the heir must be recorded as the new proprietor in the relevant IP register. The rights will not be enforceable by the new proprietor until this step has been taken.CopyrightDevolution of copyright, although unregistered, is also specified by South African copyright legislation to be assignable by testamentary disposition. Furthermore, it may be "sliced and diced" so as to apply to only some of the acts that the owner of the copyright has the exclusive right to control, or to only a part of the term of the copyright, or to a specific country or other geographical area. In this sense, copyright can be thought of as a bundle of discreet and separable rights to prevent different things, in different areas, for different periods of time.It would therefore be possible, for example, to dispose in a testament, of some rights of copyright in a particular work (eg, an artistic, literary or musical work or a computer program) to one heir for a first territory and to another heir for a second territory.It would also be possible to dispose of the right to license others to perform a work (eg, a musical work) to one heir but the right to reproduce and distribute copies of the work to another heir. Similarly, one heir could inherit the right to use and adapt a work (eg, a computer program) but not to license others to do so (which may be the exclusive right of another heir).Know-how and trade secretsThe devolution of common law rights in know-how (eg, trade secrets) is, at best, uncertain.The nature and transferability of rights in know-how (ie, information that is not generally known or readily ascertainable) are not regulated by statute in South Africa. While an action for unlawful competition would certainly be possible under common law, the requirements, circumstances or conditions that bestow such a right on a plaintiff are not as clear. The following questions remain a grey area:Would a plaintiff have a protectable interest in know-how only if they created the know-how?What of circumstances where they arranged for and paid someone else to create it?Would acquiring knowledge of it legally entitle them to enforce rights in the know-how?When adjudicating the issue of unlawful competition, the South African courts have relied heavily on public perception and the mores of the community regarding what is fair and just. A dilemma that might present itself is what would happen if a plaintiff, purporting to have acquired knowledge of and rights in know-how, in the form of a bequest, institutes legal proceedings for misappropriation of this know-how.In competition with heirIs an heir entitled to institute such proceedings even though it is common cause that it was the deceased's know-how on which a claim would be based?In Schultz v Butt,(1) the court stated the following when considering the unlawfulness of the defendant's actions:In South Africa, the Legislature has not limited the protection of the law in cases of copying to those who enjoy rights of intellectual property under statutes.The fact that in a particular case there is no protection by way of patent, copyright, or registered design, does not license a trader to carry on his business in unfair competition with his rivals. In my view, there is not in the present case any sufficient countervailing public interest to displace one's initial response to Schultz's methods of competition.It would appear that even if there are no registered rights protecting the know-how and no legislation governing the devolution of these rights to an heir, a regard generally for the public interest may still prevent unfair use of the know-how by another person in competition with the heir.Unregistered trademarksIt is generally accepted that common law rights in trademarks (ie, rights in trademarks that are used but not registered) form part of the goodwill of a business and are only transferable as part of the business that used the trademark and established the reputation.Generally, the owner of common law rights in the trademark is entitled to prevent passing off by others. To succeed in a passing off action, the trademark must have an established reputation and the use by another person of the same or a similar mark must be the cause of confusion in the market (ie, where the products or services of a competitor are being associated with the trademark by consumers).If a deceased operated a sole proprietorship in association with an unregistered trademark and an heir took over this business, they may not immediately be entitled to institute a passing off action. It is unclear whether the goodwill of a sole proprietorship (including common law rights in an unregistered trademark) transfers to an heir by testamentary disposition. This is a good reason to register trademarks.(2)CommentWhile most people do not own copyrights as valuable and significant as JK Rowling, it may still be worth considering how IP rights should devolve to heirs and taking steps such as registering unregistered rights or ceding unregistered rights expressly while alive. This ensures that such transfers are as simple and certain as possible.For further information on this topic please contact Dina Biagio or Jan-Gerhard Oosthuysen at Spoor & Fisher by telephone (+27 12 676 1111) or email ([email protected] or [email protected]). The Spoor & Fisher website can be accessed at www.spoor.com.Endnotes(1) 1986 (3) SA 667 (A).(2) For further information, see "Trade mark introduction – A complete guide".