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Legal entanglements: Navigating the web of law in business

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Published Date: April 17, 2024

Leon Trotsky is supposed to have said “you may not be interested in war, but war is interested in you.”. This may or may not be true in war, but it is certainly true in law.

When a person goes into business, they immediately find themselves entangled in law. This is most obvious in the form of contracts, where any agreement (even the maligned handshake agreement) can create binding rights and obligations in terms of our common law. But there are also matters of legislation to consider. There are numerous pieces of legislation that need to be complied with when making or selling a product, many of which overlap or operate concurrently.

To get an idea of the scale of the thing, pick a flower from your garden and contemplate its aroma. If you decide, for whatever reason, that the smell would be just as nice bottled and sold as perfume, then you need to consider the requirements of the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972. Here your floral perfume would be considered a ‘cosmetic’ in terms of the Act and you would need to follow the labelling requirements set out in the associated Regulations. If, for whatever reason, you decide to use your floral scent to make a soap, then you would need to keep an eye out for “any words indicating or suggesting special excellence or superiority” on your packaging. In terms of Regulation 27(b), such language “shall not appear on or on the label of any soap which contains less than 62 per cent of fatty acids of which not more than one-quarter may be replaced by resin acids, or more than 0,1 per cent of free caustic alkali, calculated as sodium hydroxide (NaOH)”. Failing to adhere to the Act and its associated Regulations is an offence and can result in a fine and/or imprisonment (which gets harsher for repeat offenders).

If, instead, you realise that your flower has beneficial effects on health, then you will find yourself navigating the Medicines and Related Substances Act 101 of 1965. There is frankly enough material here to form a series of articles all by itself, but at the very least will involve consideration of whether the mixture you come up with should be considered a medicine, complementary medicine or health supplement, which changes the registration and labelling requirements.

Alternatively, if your flower is in some way useful as an agricultural remedy or stock remedy, then you must register it in terms of the Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act 36 of 1947 before you can sell it for this purpose. In return, this Act provides something like a registered right in relation to stock remedies, as no one can sell an identical formulation without permission from the registration holder.

Of course, where your floral innovation is new, innovative and useful in trade and industry, then you can consider a patent for it. You can also consider using a registered design to protect the shape of the bottle it comes in, and a trade mark to protect the branding that accompanies it. Alternatively, you might decide that the process for manufacture of your perfume or cosmetic would be better protected through maintaining this information as a trade secret, which is protectable through our common law. This intellectual property brings with it its own requirements for registration and maintenance, which again forms the subject of multiple other articles.

If the plant whose flowers you are picking can be considered an indigenous biological resource (IBR), then you will have to look into applying for a permit in terms of the National Environmental Management: Biodiversity Act 10 of 2004. This Act, like those we’ve already looked at, carries penalties for non-compliance. It also obliges the applicant to include consideration of material transfer and benefit sharing with stakeholders. These include both persons and communities providing access to the IBR, as well as any indigenous community which may have in some way contributed to its discovery and/or use.

Finally, if you feel that you might be able to for example improve the scent or aesthetics of your plant by breeding a new and distinct variety, you also may want to consider plant breeders’ rights registration for the new variety.

Finally, if, having survived your brush with numerous forms of legislation, you still wish to develop your flower into a patentable invention, new plant variety, registered design or pharmaceutical product, then there is some good news in the form of the R&D tax incentive available for such activities. Again, this subject forms the basis for an article all on its own.

These examples are by no means exhaustive, but gesture to the scope and scale of the law and regulations which come into play whenever a business idea meets the real world. Hold a flower in your hand, and you find yourself within a web of legislation and regulations, each spinning out intangibly from your choices, and the requirements that those choices place on you. Perfume, soap, medicine, stock remedy, invention, plant variety or IBR. You may not be interested in law, but law is interested in you.

Thomas Schmidt
Senior Associate | Patent Attorney

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