Saturday, 10 November 2018

Afro Leo

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

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 on or before 12 November 2018.

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Monday, 5 November 2018

Chijioke Ifeoma Okorie

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

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.

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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Wednesday, 17 October 2018


Curiosities in Kenya's TK law

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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Thursday, 11 October 2018

Chijioke Ifeoma Okorie

Intellectual property and crime: The Nigerian Copyright Commission files criminal charges against a music collecting society

As some readers will know, the Nigerian Copyright Commission (NCC) has this week moved to give effect to its suspension of the operating licence of the Collecting Society of Nigeria (COSON). The NCC has filed criminal charge FHC/L/338C/18 at the Nigerian Federal High Court, Lagos Division against COSON, Chief Tony Okoroji, Mr. Chinedu Chukwuji (General Manager), Mrs Bernice Eremieghe and Miss Anne Okomi (collectively, “COSON and its officers”). The alleged offence against COSON and its officers is that of carrying out the duties of a collecting society without the approval of the NCC.

Background – corporate governance issues
The background to this criminal charge filed against COSON and its officers is the meeting of the COSON’s governing board and subsequent meeting of COSON’s general assembly all held in 2017. See here and here.

At the meeting of the governing board, Chief Tony Okoroji was removed as Chairman and another board member, Mr Efe Omoregbe appointed in his place. However, when the general assembly had its annual general meeting, Chief Tony Okoroji was purportedly reinstated as Chairman. Upon petition by some members of COSON to the NCC alleging irregularities in the appointment process and proceedings at the meeting, the NCC inter alia directed COSON not to give effect to the resolutions regarding the removal and reinstatement of board members. Contrary to NCC’s directives, COSON continued to operate with Chief Okoroji at the helm of its affairs ostensibly giving effect to the resolutions reached at the meeting of the general assembly. The NCC, by a letter dated 30th April 2018, suspended COSON’s operating licence pending COSON’s compliance with the NCC’s previous directives.

Several stakeholders have made calls to the NCC to reconsider its decision and lift the suspension placed on COSON, while exploring other options towards calling COSON’s erring officers to order. See here.

What’s happened now?
Matters came to a head this week. The NCC has been investigating COSON’s activities since it issued the suspension order. COSON is alleged to have demanded and collected royalties from a public place, a company called Noah’s Ark. This action is alleged to amount to the performance of the duties of a collecting society i.e. carrying on the business of negotiating and granting licenses on behalf of copyright owners without the approval of the NCC.

Sections 39 (4), (5) and (6) of the Nigerian Copyright Act makes it an offence to operate the business of a collecting society without the approval or licence of the NCC. Apart from the inherent “taint” of conviction (e.g. disqualification from holding public office, disqualification from holding directorships in other companies upon an order of court etc.), the offence attracts a fine of N1,000 ($3) for individuals on first conviction and for subsequent convictions, fine of N2,000 ($6) or imprisonment for a period not exceeding six months or both fine and imprisonment. In the case of a body corporate, N10,000 ($27) upon conviction and N2,000 ($6) for each day on which the offence continues.

Some questions
It is trite that under Nigerian criminal law, an accused person is innocent until proven guilty. Accordingly, the accused persons here, i.e. COSON and its officers are presumed to be innocent of the offence of carrying on the business of collecting society without the requisite licence, until proven guilty. Also, in proving the commission of a crime, the prosecution must show that the accused person(s) is responsible for the actus reus (physical act) and had the mens rea (guilty mind or intention). See Bolanle Abeke v State (2007) 9 NWLR (Pt 1040) 411 SC. [The requirement to prove mens rea is not necessary where the offence is a strict liability offence. For example, the offence of having sexual intercourse with a child under section 31(3) of the Child’s Right Act.]

With respect to the offence envisaged by section 39(4) of the Copyright Act, the ingredients of the offence would be: (1) the absence of approval or licence to operate and (2) carrying on the business of a collecting society in the absence of such approval. The element of absence of approval or licence may be easy to prove, as the existence of operating licence is a question of fact evidenced by a letter of approval or renewal in the case of an expired licence. However, proving the element of “carrying on the duties or business of a collecting society” may not be so straightforward.

A conviction (or acquittal) in respect of the offence envisaged by section 39(4) is hinged on two questions: what is the “business of a collecting society”. When is an organisation said to carry on such business? It appears from the statement on the NCC’s website that the duties of a collecting society undertaken by COSON and its officers involved “demanding and collecting royalties from Noah’s Ark of 9 Sowemimo Street, GRA, Ikeja Lagos and carrying on the business of negotiating and granting licenses on behalf of copyright owners”.

As some readers would recall, Afro-IP has reported on and analysed various cases from the Nigerian courts on the issue of the status as well as the locus standi of an organisation that demands and collects royalties on behalf of copyright owners. See here, here and here. On the issue of locus standi, the courts have indicated that there is a difference between a collecting society and an owner, exclusive licensee and assignee of copyright. While the former cannot validly maintain an action for copyright infringement without an operating licence from the NCC, the latter may validly do so. [For example, Adeokin Records and another v Musical Copyright Society of Nigeria SC/336/2008; Compact Disc Technologies Limited and others v MCSN (2010) LPELR-CA/L/787/2008; MCSN v Adeokin Records (2007) 13 NWLR (Pt 1052) 616; MCSN v Detail (1996) FHCLR 473; Visafone Comm Ltd v MCSN (2013) 5 NWLR (Pt 1347) 250 etc.]

However, in all these cases, the courts have not categorically defined the concept of the “duties” or “business” of a collecting society even though they acknowledge that collecting societies are owners, assignees and exclusive licensees of copyright by virtue of the assignment given to them by each of their members. A definition of this concept is crucial as it determines which organizations would require the approval or licence of the NCC to validly operate. This is not solely a Nigerian problem. The requirement for aspiring collecting societies to obtain approval, licence or accreditation from some regulatory authority exists in many countries. Recently, South Africa’s Portfolio Committee on Trade and Industry requested public comments on specific clauses of its Copyright Amendment Bill. These clauses involve the requirement of collecting societies to be accredited and make it a crime to operate without such accreditation. If adopted, these clauses would also necessitate a clear definition of the business of a collecting society or a definition of who is a “collecting society”.

So, does demanding for and collecting royalties amount to operating the business of a collecting society such that doing so without NCC’s licence would amount to an offence? Only the court can tell. But, for sure, an acquittal or a conviction in this case (NCC v COSON & 4 others) will depend on how the court defines the expression, “performing the duties of a collecting society” as stated in section 39(4) of the Copyright Act.

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Tuesday, 2 October 2018

Afro Leo

Breaking News: ASA goes into liquidation in South Africa

Afro Leo has just been informed that the Advertising Standards Authority of South Africa has been put into liquidation. Despite efforts put in place by the business rescue process, including a dynamic CEO, it appears that the advertising and packaging industry has been unable to resurrect a body that enabled it to self regulate. Afro-Buff followed the ASA's attempt to revive in a series of posts over the last 18 months which can be accessed on this blog. A useful background post can be accessed here. The notice from the ASA read as follows:

Please take note that the ASA has been put into liquidation and we have been instructed to stop trading with immediate effect.
The marketing and advertising industry will not allow advertising to remain unregulated, and a new entity with the same purpose is urgently being established.
We realise that on many levels this will cause problems for some of your businesses, but can only say that we have done and continue to do everything we can to ensure that there is a financed and empowered self-regulator of advertising.
You can email us on gail @ if you have any queries, but we ask you to be patient in this regard."
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