"Hakuna Matata"? You're missing the point.

"Hakuna Matata"? You're missing the point.

By Isaac   Wednesday, December 05, 2018   1 comment:

Recently, there has been an uproar in Kenya initiated by this article about Disney's trademark for the phrase "Hakuna Matata". A reasoned response (here) clarified that the TM is valid only in the U.S., so no rights in East Africa are involved, and further argued that this is normal business behaviour and normal use of the TM system. Various articles have questioned the legality and morality of the TM (e.g., here), and the BBC ran a story about "unlikely" phrases that are trademarked.

Suffice to say a lot has been said about this. It's this blogger's turn!

Focusing on "hakuna matata" completely misses, excuse the phrase, the elephant in the room. Revenues from the movie (to date, including box office income and DVD sales, as reported here) are roughly 1.2B USD (that's more than 1% of Kenya's GDP). The Lion King musical has grossed substantially more - 8.1B USD to be exact (as reported here). So this single film (and the musical spin-off), a story taking place on the African Savannah, with African animals and African words/phrases, has grossed almost 10B USD for Disney, an American company.

So, while we are focusing so much energy on the TM (which truthfully provides extremely limited rights - only to the sale of T-shirts in America), we are losing sight of the bigger story. Disney's profit from African culture/imagery goes far, far beyond the simple two-word phrase. Could an African animation studio have produced a film like the Lion King? Possibly, although the marketing power of Disney is legendary and surely has much to do with the movie's success. Clearly, though, there was (and still is) a market for such entertainment. Can Africa capitalize on it? Shouldn't, perhaps, we engage more with the American market (and use the American intellectual property systems when doing so)? Millennials are craving anything "new" - experiences, culture, food, art - and Africans certainly can provide such things directly, rather than allowing an American company to reap all the benefits. 

Let's not ignore the larger issue...
(Image licensed under CC0 license)

A few final comments, just for the record:

A search of the USPTO TESS database for trademarks is fascinating. Eighteen results are returned for "hakuna matata", five of which are either pending or granted and alive. This includes Disney's TM but also an intriguing entry by a Chinese company, filed 13 November (just three weeks ago!), for use of the phrase on toys and balloons. The timing of this application, filed just two weeks before the beginning of the uproar mentioned above, is more than a little curious.

A wider search of the database reveals that many common Swahili words are trademarked (often by multiple companies), including "chakula" (food), "nzuri" (good), and "jambo" (hello).

Finally, the Lion King has been the subject of more than TM infringement - plenty has been said (e.g., here and here) about the purported copyright infringement vis-a-vis Kimba The White Lion.

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Can a foreign professional institution successfully maintain an action for passing off of its name and grades in Nigeria?

Can a foreign professional institution successfully maintain an action for passing off of its name and grades in Nigeria?

By Chijioke Ifeoma Okorie   Monday, December 03, 2018   No comments:

Can a foreign professional institution, which is not incorporated as a Nigerian company, successfully maintain an action for passing off of its name and grades in Nigeria?

This is the principal question that the Federal High Court was asked in the case of The Chartered Institute of Arbitrators v. The Chartered Institute of Arbitrators (Nig.) Gte/Ltd and the Corporate Affairs Commission FHC/L/CS/341/09 decided recently on 22^nd October 2018. The Chartered Institute of Arbitrators (CIArb UK) is an arbitration institution incorporated as a charity in the UK. The Chartered Institute of Arbitrators (Nig.) Gte/Ltd (NCIArb) is an arbitration institution registered as a company limited by guarantee in Nigeria.

Background

Chartered Institute of Arbitrators UK

The CIArb UK instituted an action at the Federal High Court against the NCIArb for passing off. CIArb UK claimed that by using the name “Chartered Institute of Arbitrators (Nigeria)”, NCIArb was passing itself off as the Nigerian branch of CIArb UK. It also claimed that by using the logo and membership grades of CIArb UK such as “Associate”, “Member”, “Fellow” and “Chartered Arbitrator”, NCIArb is passing off the logo and membership grades as those of CIArb UK. Prior to trial in the suit, the name of the Corporate Affairs Commission (CAC) was struck out as a party to the suit, whereupon NCIArb filed a preliminary objection challenging inter alia, the locus standi of CIArb UK to institute the suit.  

In its judgment, the Court dismissed the preliminary objection and held that CIArb UK had the requisite locus to institute the action. The Court also granted CIArb UK the declarative reliefs sought as to passing off and granted an order of perpetual injunction restraining NCIArb from using its current name or using the logo and membership grades. NCIArb was also directed to deliver up all books, letterheads, certificates etc. bearing “Chartered Institute of Arbitrators (Nigeria)” to the Deputy Sheriff of the Federal High Court for destruction. See page 22 of the Judgment.

Issues raised for determination

In his judgment, Justice C.M.A Olatoregun adopted the issues raised by the Defendant. Page 12 of the judgment. The key issues were:

Whether or not CIArb UK’s act is void ab initio by virtue of section 54 of the Companies and Allied Matters Act.

In resolving this issue, the Federal High Court considered section 54 of the Companies and Allied Matters Act (CAMA), which stipulates that a foreign company which intends to carry on business in Nigeria must be registered as a Nigerian Company otherwise its actions as such company operating in Nigeria, are void. The Court held that as the reliefs sought related to passing off, section 54 was not relevant to the case of CIArb UK and there was no contravention of section 54 of the CAMA. See page 15 of the Judgment. In the Court’s view, if CIArb UK were to be registered as a Nigerian company, such registration would have been undertaken pursuant to Part C of the CAMA, which deals with incorporated trustees. [NB. Charities may also register as a company limited by guarantee].

Whether or not the Defendant is liable for passing off

The Court identified three components of the common law tort of passing off as follows: (1) that the name, mark or sign in contention has become distinctive of the plaintiff’s goods and is regarded by relevant members of the public as coming from a particular source; (2) that there has been a misrepresentation by the defendant that has caused or could cause the public to think that the goods of the defendant emanate from the plaintiff; and (3) that the plaintiff has suffered or is likely to suffer loss by reason of the defendant’s misrepresentation. See pages 15 and 16 of the Judgment.

The Court held that the CIArb UK established the first component to succeed in its action for passing off as it was an arbitration institution founded in 1915 with branches all over the world and is globally known to offer training and education to arbitrators. See page 16 of the Judgment. On the second component involving misrepresentation, the Court found that NCIArb advertised itself in several Nigerian newspapers using the CIArb’s logo. It invited the public to a seminar on ADR processes and members of the public were misled into attending the event. See pages 17 to 19 of the Judgment. The Court also found that NCIArb had membership grades similar to that of CIArb UK. See pages 19 and 20 of the Judgment.

On the issue of damages or loss from the misrepresentation, the court held that actual damage or deception need not be proved and that it was sufficient that the misrepresentation had the potential to deceive. See page 21 of the Judgment.

Comments  

The Federal High Court correctly identified the elements that must be proved in an action for passing off. However, the Court did not (sufficiently) explain why an action in passing off involving a foreign company (a charitable organisation) operating through a Nigerian branch, had nothing to do with section 54 of the CAMA.

Section 54 provides thus:

(1) “…every foreign company which before or after the commencement of this Act was incorporated outside Nigeria, and having the intention of carrying on business in Nigeria shall take all necessary steps to obtain incorporation as a separate entity in Nigeria for that purpose. But until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notice and other documents as matters preliminary to incorporation under this Act.

(2) Any act of the company in contravention of subsection (1) of this section shall be void.

Accordingly, whenever a foreign company is instituting an action in Nigeria, it is opined that section 54 of the CAMA is relevant as it goes to the question of locus standi – the capacity to validly maintain an action. As a tort, passing off envisages that the owner of the name, logo or getup being passed off must have acquired the reputation around its name, logo or getup in the course of trade or in a business capacity. In other words, an action in passing off may only be maintained by a person (natural or artificial) who is carrying on business with the name, logo or getup being passed off. If an entity is doing business in Nigeria, section 54 of CAMA then becomes crucial to its locus standi to maintain an action.

A crucial part of CIArb UK’s claim was that NCIArb’s use of the name “Chartered Institute of Arbitrators (Nigeria) Ltd/Gte” amounted to the latter passing its institution off as the Nigerian branch of CIArb UK. See page 1 of the Judgment. Expressly stated in the Statement of Claim albeit without reference to the reliefs sought is the fact that CIArb UK had a Nigerian branch operating in Nigeria with its permission and support. In these circumstances, it is opined that the business of the Nigerian branch authorized by CIArb UK and the relationship between these two bodies (the authorized Nigerian branch and CIArb UK) makes section 54 of the CAMA relevant to the suit. By extension, it cannot be said that there was no contravention with section 54 of the CAMA. Nor can the irrelevance of section 54 to passing off actions be stated without some rigorous explanation.

It is also known that common law precepts such as “passing off cannot override clear terms of statute where there is conflict. Hence, It would have been helpful if the learned trial Judge laid down in clear terms why an ordinarily relevant law (i.e. the CAMA) would be inapplicable. For instance, would it be because of Nigeria’s international obligations to recognise well-known brands under certain treaties and agreements such as the TRIPS Agreement as urged in the case of The Procter and Gamble Company v Global Soap and Detergent Industries Ltd and the Registrar of Trade Marks (2013) 2 NWLR (Pt. 1336) 409 CA? Are the treaties domesticated as demanded by Nigerian law to enable their application? If not, on what legal basis may a court, whose duty is to interpret the law rather than make it, sidestep the clear words of a statute? It would have been helpful if the court raised and addressed these questions.

Afroleopa opines that the appropriate question should have been: whether a foreign company, which does business in Nigeria without the requisite incorporation, can validly maintain an action in passing off in Nigeria? Put differently, is non-compliance with section 54 of CAMA a bar to an action in passing off by a foreign company or entity?

The status of CIArb UK and its authorised Nigerian branch shares some similarities with the position of the Institute of Chartered Secretaries and Administrators (ICSA), originally founded in England in 1891. For several years, ICSA’s members in Nigeria operated in associate capacity. The Nigerian Chapter was granted autonomy in 1988 and incorporated under the Companies Act 1968 as the Institute of Chartered Secretaries and Administrators Nigeria (ICSAN). It became chartered in Nigeria by virtue of Decree 19 of 1991 (now Institute of Chartered Secretaries and Administrators of Nigeria Act, Cap I13 Laws of the Federation of Nigeria 2004). In 2014, ICSA and ICSAN signed a Memorandum of Understanding (MoU) to inter alia, clarify the treatment of their respective members and students.

In the case of CIArb UK, the authorized branch comprising of its members in Nigeria was granted Branch status since 1999. See page 9 of the Judgment. It was only after NCIArb (which was incorporated in 1988) had changed its name to the Chartered Institute of Arbitrators (Nigeria) Ltd/Gte that the Nigerian branch of CIArb UK applied to the CAC to be incorporated as a company. Juxtaposed with the history of ICSA and ICSAN summarized above, it appears that CIArb UK may have been negligent in securing the position of its Nigerian branch when it granted it Branch status.

By holding that section 54 was irrelevant to the suit, it appears that unless its decision is overturned on appeal, the court has provided a (temporary) leeway for the CIArb UK to address its seeming inadvertence. However, this leeway may not be sufficient as the present orders merely restrain the NCIArb from using its registered name. The orders do not affect the certificate of incorporation issued by the CAC to NCIArb. In the present circumstances, there may yet be need for the parties to explore other arrangements that addresses the needs and interests of the each party. In AfroLeopa’s experience as a Chartered Mediator, Alternative Dispute Resolution (ADR) mechanisms such as mediation may better serve those needs.

For advantages of ADR mechanisms, see WIPO’s take, here. 

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INVITATION: Commercial Private International Law in India and South Africa – A Shared Future in BRICS

INVITATION: Commercial Private International Law in India and South Africa – A Shared Future in BRICS

By Afro Leo   Saturday, November 10, 2018   No comments:

This is a guest post from Prof Wim Alberts.

The Research Centre for Private International Law in Emerging Countries, Faculty of Law, in cooperation with the Law Library, invites you to a conference on Commercial Private International Law in India and South Africa – A Shared Future in BRICS
 
DATE: Wednesday 21 November 2018
TIME: 09h00 for 09h30 – 20h00
VENUE: Council Chambers, Madibeng, University of Johannesburg, Auckland Park Kingsway Campus

RSVP to Mrs Tertia Jacobs at tertiaj@uj.ac.za on or before 12 November 2018.

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Intellectual Property (IP) and the proposed re-enactment of the Companies and Allied Matters Act in Nigeria

Intellectual Property (IP) and the proposed re-enactment of the Companies and Allied Matters Act in Nigeria

By Chijioke Ifeoma Okorie   Monday, November 05, 2018   No comments:

A few months ago, the Nigerian parliament (the Senate) passed the Bill for an Act to Repeal the Companies and Allied Matters Act 2004 (CAMA) and enact, in its place, the Companies and Allied Matters Act 2018 (the “Bill”). The Bill is now awaiting presidential assent for it to become law. [Afroleopa is happy to provide a copy of the Bill upon request]. This post only addresses some aspects of the Bill that particular affect IP and creative entrepreneurship. 

Some key points of departure from the existing CAMA include:

(1) Provision for the establishment of single member companies and in the case of small companies, provision for single directorship. Small companies are private companies with turnover of N2million or less; net assets of N1million or less; no foreign or government agency membership and whose directors between themselves hold not less than 51% of the company’s share capital. The existing CAMA requires all companies to have at least 2 directors and 2 shareholders.

(2) Exemption of small companies from the requirement to appoint a company secretary. The existing CAMA requires all companies to appoint a company secretary.

(3) Exemption of small companies from the requirement of appointing auditors where it has not carried on business since incorporation or in a particular financial year or where its turnover is not more than N10m and its balance sheet total is not more than N5m.

(4) Requirement of disclosure in the case of individuals who hold shares on behalf of other persons.

(5) Removal of stringent and mandatory timelines for holding Annual General Meetings in the case of small companies.

The Nigerian Senate

(6) Removal of Attorney General’s (AG) Consent for Company Limited by Guarantee and its place, the requirement to publish the application for registration in three national newspapers. The existing CAMA required the consent of the Attorney General for the registration of companies limited by guarantee.

(7) Removal of the requirement for an order of the Federal High court for reduction of share capital in the case of private companies.

Comments

A key aspect of IP management is the establishment of business and ownership structures. Business structures are established in accordance with extant company laws. Therefore, the provisions of the CAMA in the case of Nigeria are crucial to IP management in many respects. By extension, many of the proposed changes to the CAMA as reflected in the Bill will have relevance for the IP community. Some IP perspectives on the Bill:

(a)   Single Member Companies: According to the existing CAMA, each company must have at least 2 shareholders and 2 directors and individuals seeking to do business in a name outside their own legal name may only do so as a business enterprise under Part C of CAMA (Section 573 of CAMA). Consequently, creators, designers, artists, authors and other copyright owners are constrained to either register their entrepreneurial bent through a business enterprise or involve another individual (usually managers, family members, legal advisers) as co-shareholder and co-director. The Bill provides individual creators with the opportunity to establish their own incorporated companies as sole shareholders and sole directors. This means that individual creators would now enjoy the benefits of incorporation whilst retaining the powers to solely pilot their affairs as far as their creativity directs. As sole shareholders and directors, individual creators can now provide both entrepreneurial and artistic direction to their companies without interference from other persons who are not part of their creative activities. In addition, the purport of the sole shareholder and director provision is the ability of individual creators to ‘monetise’ their creative outputs in share capital aiding valuations and succession.

(b)  Lifting the veil of incorporation: The significance of incorporation under company law in Nigeria is that such company is recognised as a legal person separate from its shareholders. Accordingly, any claims arising from the company’s activities would be brought against the company itself and not against its shareholders unless circumstances necessitate the lifting of the veil of incorporation. The courts may, upon application “lift the veil of incorporation” and hold the directors of a company liable where the directors have used the corporate shield of the company to commit an illegality or fraud. The single member company proposed in the Bill will also enjoy separate legal personality from its single member despite having one known shareholder (who may be a director as well). However, it may be easier to lift the veil of incorporation of a single member and director company because there is no other person within such company that may be held responsible as the acting mind of the company. IP owners may find themselves personally liable for the actions of their companies in such instance.

British Council Creative Hub

(c)     Monetary thresholds: The Bill provides several monetary thresholds (for example, turnover of N2million or less; net assets of N1million or less) for companies to qualify as small companies, which may enjoy exemptions, such as non-requirement of appointment of auditors and company secretaries and removal of strict timelines for AGMs. From an IP perspective, this raises several questions: Given the various streams of income from song-writing, endorsements, streaming and licensing, will copyright owners such as composers, music artists, publishers etc. (continue) to qualify as small companies? Will the status of a company change each financial year, depending on its turnover and assets? Given the rate of inflation, will the monetary threshold not become obsolete standards for the size and status of companies?

(d)     Companies limited by guarantee: The Bill proposes a deletion of the requirement under the existing CAMA for companies limited by guarantee to obtain the AG’s consent for registration purposes. The Nigerian Copyright Act requires all aspiring collecting societies to be incorporated as companies limited by guarantee. This meant that aspiring collecting societies have needed to procure the AG’s consent in order to even commence the application process to the Nigerian Copyright Commission for approval to operate as collecting societies. This change now obviates this requirement and may open the door for more application for approval to operate as collecting societies.

(e)     Disclosure of beneficial ownership: The Bill requires holders of beneficial interests in shares to disclose such interests to the company. But, what would be the point of disclosing such interests if the company and other shareholders are not able to take any action with the knowledge of such disclosure? For instance, would the holder of beneficial interest be required to transfer such interests to the actual owner or to the company?

No doubt, the Bill has several provisions that would greatly benefit IP owners, especially creative entrepreneurs. But, in making adjustments to enjoy the benefits of the Bill, IP owners and creative entrepreneurs would also do well to be aware of how best to maximize the benefits.

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Curiosities in Kenya's TK law

Curiosities in Kenya's TK law

By Isaac   Wednesday, October 17, 2018   No comments:

Kenya's Protection of Traditional Knowledge and Cultural Expressions Act was passed in 2016 and commenced on 21 September, 2016. On this (approximately) 2-year anniversary of the Act, let us discuss three oddities of the Act.

1. Section 12 provides for compulsory licensing of tradition knowledge. The very notion that a community could be compelled to grant a license to their traditional knowledge is, to this blogger, a bit revolting, but the text of the provision is even more curious.

"12. Where protected traditional knowledge is not being sufficiently exploited by the owner or rights holder, or where the owner or holder of rights in traditional knowledge refuses to grant licenses for exploitation, the Cabinet Secretary may, with prior informed consent of the owners, grant a compulsory licence for exploitation subject to Article 40(3) (b) of the Constitution." (emphasis added)

What, exactly, does "prior informed consent" mean in the context of a compulsory license? If there is consent of the owners, doesn't that mean it's not a compulsory license? This blogger cannot think of any reasonable and sensible interpretation of this provision.

2. Communities/owners may assign their TK. Section 22(1) of the Act states: "The owners of traditional knowledge or cultural expressions rights shall have the right to assign and conclude licensing agreements."  Now, licensing is one thing, but assignment? What exactly does it mean to assign traditional knowledge?  The Act defines an owner of TK as "local and traditional communities, and recognized individuals or organizations within such communities in whom the custody or protection of traditional knowledge and cultural expressions are entrusted in accordance with the customary law and practices of that community". An assignment would mean that the owner transfers ownership to someone else - but how is that possible in this context? It seems that anybody who could be an owner (i.e., could receive an assignment), would already be an owner under the Act.

3. The Act makes numerous references to the "Cabinet Secretary", which in Section 2 is defined as the "Cabinet Secretary responsible for matters relating to Intellectual Property". Who is this? In Kenya, there is no such Cabinet Secretary, per se, but there are several possibilities: the copyright office, KECOBO, is in the Office of the Attorney General; the Plant Breeders' Rights office, KEPHIS, is in the Ministry of Agriculture; and the patent/trademark office, KIPI, is in the Ministry of Industrialization. Another possibility might be the Cabinet Secretary to the Ministry of Sports and Heritage. The identity of this "CS in charge of IP" is important, for example, because the funding for KECOBO's database of TK, required by the Act, would most likely come from that Cabinet Secretary's ministry.  Also, many decisions described in the Act (such as for compulsory licensing, as described above) must come from this mystery CS.

As with any newly enacted law, the Protection of TK Act has some kinks that require attention. Hopefully these will be addressed in the near future.... 

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