Thursday, 10 September 2020

Afro Leo

In the world of COVID-19, has the value of the Intellectual Property become an afterthought? Guest Post

Mergers: cautionary tales

Mergers and Acquisitions (M&As) are happy hunting grounds for lawyers

and accountants.

With the increasing numbers of distressed companies due to Covid-19 and the economic recession, the opportunities are increasing by the day. Add to this the weakness of the Rand and overseas investors, awash with cash, must be watching with heightened interest. Perhaps the main hurdle to inward investment is the ANC and regulatory issues which can be challenging. But while, as Michael Katz argued (“trade Carefully”, FM, July2), legal and financial examinations are always necessary, the metrics have changed.

Twenty years ago, an investor would focus on NAV and the 80% of the value that is tangible. Today the roles are reversed: intangible assets, like patents and brands sometimes make up 80% of a company’s value.

This is likely to accelerate. We live in a digital world turbocharged by Covid-19, a world of brands and reputation. As Microsoft CEO Satya Nadella put it, he’s seen more transformation in three months than the previous three years.

But this raises another challenge: figuring out if the assets are real, valued realistically and not in dispute. Nowadays, all major brands have their own profit and loss accounting. From this you can see that another option rather than a full-blown M&A is to buy or sell brands, provided they are separable from their owner. As companies review their strategies, they’ll ask which brands remain relevant, which are past their sell-by date and are there brands out there you would love to own that may be available? 

Take the explosion in video conferencing options as we all work remotely. For many Skype was the main option but now we have quite a few more, including options from Microsoft and Google. A newcomer that has taken the market by storm is Zoom. Canny investors piled into Zoom Technologies in April, pushing its share price up threefold in five weeks. Only, it was the wrong Zoom:  over the same period in April, Zoom Communications had risen a modest 30% until the US securities & exchange commission suspended trading in Zoom Technologies. Since then the right Zoom has soared on the market.

Egg on its face

One of the most publicised oversights when it comes to due diligence of brands happened when Rolls-Royce sold its car division. The original company was founded in 1904 as an engineering group, though today it is best known for supplying aero engines to Boeing and Airbus. In the early 1970’s the group was close to liquidation and the UK government bailed it out. In 1973, the automotive division became a standalone company, Rolls-Royce Motorcars  Limited, with its assets Rolls-Royce and Bentley cars. In 1998 Volkswagen won a bidding war with BMW to buy the car company for $790m. But unbeknown to Volkswagen, it had bought the plant, designs, a unionized work force and a car - but not the trademark Rolls Royce, which remained with the parent company.  That left it with spätzle on its face. So Volkswagen could build a car to all intents and purposes a Rolls Royce but no call it a Rolls-Royce. It though it had bought a car but ended up with a dog. But it didn’t end there, as BMW then bought the rights to the Rolls Royce trademark for $66m. The result today is that we have a Bentley produced by Volkswagen and a Rolls-Royce produced by BMW. 

Welcome to the new world of brands where Volvo is owned by the Chinese, Land Rover by the Indians and Mini by the Germans. It illustrates how, in most deals, the value of the intellectual property remains an afterthought. The world’s most valuable brand is Amazon, with the brand itself making up over 24% of total business value. Look at the S&P 500, and you’ll see that more than 77% of the value of these companies, in total, is made up of intangible assets. International investors are cognisant of these facts. It means that, for this new world, due diligence has to be far more rigorous than it used to be.

Jeremy Sampson is the managing director of Brand Finance Africa

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Afro Leo

OUP event: Enforcement of Intellectual Property Rights in Africa

Just a brief note to inform you that there will be a free webinar to mark the launch of ‘Enforcement of Intellectual Property Rights in Africa’ today 10 September at 3 PM UK time. Marius, Vanessa and Sarah  would be very happy if you could join this event. You can register here Afro Leo will be attending.

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Sunday, 21 June 2020

Afro Leo

Copyright reforms likely unconstitutional says SA President in major decision

The President of South Africa has made a much-awaited announcement regarding the controversial Copyright Amendment Bill and Performer’s Protection Amendment Bill in South Africa. His decision to refer the Bills back to the National Assembly is because they “may not pass constitutional muster” and could be at risk of being set aside by the courts.
The reasons:
  • Incorrect tagging –the Bills were incorrectly tagged as section 75 Bills when they are section 76 Bills that affect cultural matters and trade.
  • That the Bills will enact law that may be retrospective and arbitrary deprivations of property. Copyright owners will be entitled to a “lesser share of the fruits of their property than was previously the case” and there is uncertainty as to how it would operate.
  • A failure to consent on the material amendments including the fair use provisions.
  • Impermissible delegation of legislative authority to the Minister regarding the deprivation of property i.e. copyright from those to whom it was assigned in the past.
  • Several new exceptions constitute:
    • arbitrary deprivation of property and violate the right to freedom of trade, occupation, and profession.
    • may conflict with international treaties signed by South Africa.
For these reasons the National Assembly is requested to consider “the Bills afresh so that their objectives can be realized speedily and without the risk of any constitutional challenge”.

Afro Leo spoke with Afro Chic who has been following the developments on CAB very closely: “I wonder what different outcome would have been achieved had a different process taken place? What is clear from this is that copyright is considered “property” for the purposes of Section 25 of the Constitution. This has potentially far reaching implications in the current context of national debate on appropriation of property without compensation in the land reformation process. One wonders what, potentially unintended, consequences may come from that.”
Stephen Hollis, Adams & Adams, who has been a crusader for a number of trade associations that do not support the Bills in their current form is delighted, citing this as “a huge win for the creative sectors” whilst at the same time commenting that “now the real work begins”. Stephen should also be delighted because much of reasoning in the President’s communication was extracted directly from submissions that were carefully prepared by him and others.
Blind SA, who had initiated legal proceedings to compel the President to comply with his duties and who advocated for many of the changes in the Bill, stated that they will “study the State Attorney’s letter [containing the President’s decision] and the options available to Blind SA”.

Denise Nicholson, librarian at Wits University and well known proponent for signature of the Bills, was obviously disappointed - "One has to question, if he views these issues as unconstitutional, why Ramaphosa only acted in terms of his constitutional obligations after blind people had to take him to the Constitutional Court and the USTR and EU stepped up their economic bullying.  Had he acted responsibly in terms of Section 79(1), maybe these issues could have been resolved by now for the benefit of all stakeholders. Many of the provisions in the Bill would have been extremely helpful for libraries, archives, teaching and learning, research and innovation, during the lockdown period. 

Perhaps the USTR, EU, and multibillionaire conglomerates that are the main beneficiaries of copyright from South Africa, especially from the educational and library sectors, perceive this as a 'win'.  Well, it is indeed a sad day for access to information for education, research, innovation, AI, people with disabilities, digitization programmes and preservation of our cultural heritage, authors and creators, libraries and archives, etc. They all need many of the provisions in the Bill to function in a digital world in the 21st century. 
Of course, everyone wants this matter resolved fairly and efficiently, and for the benefit of all South Africans. But, the President's failure to act decisively and within a reasonable period as required by our Constitution has prejudiced everyone. Access delayed is access denied for all!"
It will not be easy or quick for the National Assembly to deal with the constitutional aspects of the Bill. The processes for section 76 Bills are significantly different from those of section 75 but that may not be the biggest hurdle says Afro-Chic who considers that the National Assembly will likely need to refer the matter back to the Department of Trade and Industry. In snakes & ladders, that is like going from the final tier to the first, chimes in Afro Leo.
Public consultation needs to follow due process which will take time. On a positive note, the whole process has brought copyright onto the national agenda and there is at least agreement on the need for urgent reform. What happens next is likely to require strong leadership and collaboration to take the process forward. There will need to be ladders to make the game move faster.
For those new to action, please read the numerous posts on this blog tracking the progress of CAB and the divergent views on it. Here are some of them:
Image Credit: Jacqui Brown 
Edited on 22 June to include comments from Denise Nicholson
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Wednesday, 10 June 2020

Afro Leo

Afro-IP chats to authors of Enforcement of Intellectual Property Rights in Africa on Afro-Live

Enforcement of Intellectual Property Rights in Africa by Marius Schneider and Vanessa Ferguson was published by Oxford University Press in May 2020.

Filling a gap in the market, this is the first book dedicated to providing a detailed overview of the law and practice in relation to intellectual property rights enforcement in all 54 African countries. For the first time, a comprehensive manual on the conditions and procedures under which the civil and criminal courts, the police and customs take action with regard to counterfeit and pirated goods is publicly available.

The book fully explains civil and criminal enforcement procedures, as well as customs recordals. Clear structure makes information easy and quick to find. It has been written in plain English and accessible to lawyers and non-lawyers alike.

You can listen to the full interview with the authors over on the Afro-Live tab on the website or by clicking here

For more information about the book including an overview, description, table of contents, author information and reviews click here.

Afro Leo congratulates Marius and Vanessa on their endeavours. This book will be a valuable addition to anyone interested in Africa as a market for their goods or services, and globally as it addresses the transhipment of goods across Africa. 
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Saturday, 6 June 2020

Afro Leo

A Lockdown Poem by Kelly Thompson

This is a guest post from Kelly Thompson.

A Lockdown Poem.

I like our firm, I really do,

Floors 1 and 4 and 3 and 2.

From the far-flung branches to the basement and canteen,

the cubicles and boardrooms and stairs in between.


Piles of papers and mile-high files;

Books and computers and trolleys in the aisles.

From all of these things we’ve had to flee,

To work from home and stay Covid-free.


The clicks on the keyboard, the ping of the lift,

Those mundane sounds would now be a gift.

When I work alone in my solitary room,

the only other faces I see are on Zoom!


My wine supplies are dwindling, grey hairs growing out,

I’m starting to rethink what life’s all about.

It’s not about the hustle and the bustle and the rush,

The work gets done without the stress and the crush.


Awareness grows in the pauses “in between”,

the quiet time, the stillness, and nature so green.

Creativity flourishes, the mind expands

and humans just must find a use for their hands.


So I work and I walk and I bake and I eat,

And then I do it all again the next day, on repeat.

I’m a lawyer, a teacher, a mother, a cook,

I entertain myself with Netflix, I read the odd book.


But still something is missing, something’s not quite right,

There’s a niggle that’s waking me up in the night.

Going paperless is fabulous, family time is great;

So what’s bugging me so much? (Was it something I ate?).


Then it comes to me in that space between asleep and awake,

The thing that is causing my poor heart to ache.

It’s the people I miss, the chats and the smiles,

Even the grumpy ones, I miss them for miles!


A cup of tea with a colleague, a shared laugh in the passage,

The absence of these is surprisingly savage.

So upon reflection, it seems this much is true:

I don’t mind not seeing floors 4, 1 or 2…


What I am actually missing is all of YOU!

A guest post by Kelly Thompson.

Kelly is a partner at Adams & Adams Pretoria.

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Friday, 5 June 2020

Afro Chic

South Africa: More than 80 academics, researchers and teachers call on President to fix the patent laws

More than 80 leading academics, teachers and researchers have written to the President surrounding the need to make changes to South Africa’s patent law, particularly around issues pertaining to COVID-19. It details their urges to the President to engage in a process of law reform- something to which his offices have already committed, although progress in this regard has been slow. The letter relates to both existing and prospective patented and patentable equipment that may be used to combat or mitigate the effects of the pandemic and includes products such as respirators and personal protective equipment (PPE) as well as diagnostic testing equipment and medicines. 

The writers of the letter call on the President to make equipment available to all who need it, in line with both national and international imperatives- especially with regard to substantive examination of patent applications, lawful flexibility, and patentability criteria. The concern of the writers of the letters is that much of the equipment needed in the fight against the virus has been rendered unaffordable due to patenting- making it out of reach for many who need it. The writers express concern that in our current law, there is no requirement for substantive examination of patents to ensure they meet the requirements to be granted a patent which allows for loopholes such as patent evergreening which extends patent monopolies beyond 20 years and blocks entry of generic products. 

These generics can be more affordable thus making the products more accessible. The writers also highlight that our current law also compromises supply security in South Africa- this has happened in many instances in the pharmaceutical domain in respect of medical conditions but is a problem that can be solved as was the case with antiretrovirals, where introduction of generics made treatment affordable and thus accessible. In 2018, the writers articulate, Cabinet approved the Intellectual Policy of the Republic of South Africa Phase 1. It has now been two years since the approval but the relevant legislation has still not come before Parliament. 

The writers thus call for the draft legislation to be tabled expeditiously. In addition to this, the writers call upon the president to take special measures to ensure affordable access to COVID-19-related items. This could include a CIPC moratorium on the issue of patents over such products or compulsory licensing. 

Brought to you by Afro Chic

Image Credit: United Nations COVID-19 Response

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Afro Chic

Protect yourself with proper PPE

The advent of the COVID-19 pandemic has brought with it a sense of immense panic. There is universal concern as to how to protect oneself, loved ones, colleagues and others around them. The pandemic means we cannot do business as usual and personal protective equipment (PPE) has become the necessity of the day. In these turbulent economic times, this has become a pie of which many want a slice, often to the detriment of the innocent consumer who have, in many instances- purchased counterfeit products which are of inferior quality and do not serve to adequately protect them from getting the virus or from passing it along to others.

The stark reality is that few in society know what makes for adequate PPE or what type of PPE is appropriate for their use. Clamouring to get hold of PPE in a hurry has meant that people have simply grabbed whatever they could find- regardless of its origin. In addition, the sudden requirement of PPE for both health care professionals and others has made for a shortage of equipment, sometimes leaving people feeling like they have no choice but to make use of inferior equipment that is a replica of a registered item. Indeed, these are unprecedented times and it is important to provide guidance in obtaining the correct equipment and to understand the consequences of not doing so.

Adams and Adams published a blog on this subject. It states that many unregistered, substandard and expired goods have arrived at the borders of South Africa and that many are being advertised on social media platforms and elsewhere online. It cautions about the dangers of making use of such equipment indicating that it will not protect people from the virus. It also indicates that it is possible for consumers to know the difference between original and counterfeit products through examining whether they are approved by the European CE standard, the South African National Standards and International Organisation for Standardisation and South African Bureau of Standards. This can be done through examination of the certifying documents the PPE comes with or on the PPE itself. This must be checked by the end user. 

Branded items are a good way of showing solidarity for a cause but also carry a risk. Should the branded item be found to be substandard- in this case should branded PPE be below par- the organisation who branded the item and sold or gave it to a consumer may well run the risk of liability should the product be proven to be inferior. For this reason organisations wishing to put their names and logos on PPE should first have verified that the PPE has a legitimate origin. It must also be ascertained whether it is the appropriate kind of PPE to be distributed to a specific consumer group. Certain PPE, for example, ought to be reserved for healthcare workers owing to shortages of this equipment and it is a lack of goodwill to provide this equipment to members of the public.

The importance of proper, safe and tested PPE cannot be overstated. It is up to all of us to ensure that the equipment that we use or distribute is safe and as effective as can be expected. There is a lot we do not know about the virus but what is certain is that we can all play our part in slowing its spread. Stay safe- not just by grabbing any PPE that seems available, but by making use of tried, tested and legitimate PPE.

Brought to you by Afro Chic

Image credit: United Nations COVID-19 Response

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