Zimbabwe, once the bread basket of Africa, has been treated with trepidation when it comes to investment due to reasons that have been well documented over the last decade. There is evidence though that some investors are now seeing the country as an exceptional investment opportunity but is this new gained status ephemeral? Recent news reports about the Indigenous and Economic Empowerment Act & Regulations are likely to force the optimists to reconsider, or adopt a licensing model to achieve their objective.
Indigenous and Economic Empowerment Act and Regulations - background and some uncertainty
Take for example a brand business - there is likely to be a greater emphasis by the foreign IP owner on terms and conditions governing the use of the brand (such as quality control, minimum sales and revenue targets, exclusivity, auditing etc) to ensure that his return on investment is maximised and to minimise possible damage to the brand, in the absence of control at board level. Furthermore there will be greater attention paid to the ownership of foreground IP (IP developed during a licence by the licensee) so that, from a foreign owner's point of view, his IP does not become a launch pad to progress at local level which may in future make the foreign owner redundant if that IP is owned locally. Investors will need to carefully consider not only local IP and contractual laws but also speed and reliability, if there is ever a need to enforce them. The recordal of licenses at the local registry could also protect the foreign IP owner from any future claims that IP is owned by the national company.
The new laws, which will be sector specific, are also likely to increase the need for trade mark and patent filings by investors because those filings function as title deeds to their property and therefore are a critical comfort. There is likely to be a need for foreign brand owners to file defensively in Zimbabwe because locals may see these new laws as an opportunity to squat or use reputable foreign brands without consent, as happened to Mcdonalds and a host of others, when sanctions were applied against South Africa in the 80s. Furthermore, because a change of control caused by the indigenisation policy may lead to termination of existing licences (as this type of provision frequently ends up in termination clauses) current licenses may well need to be reviewed as part of any indigenisation plan. This review is likely to lead to re-negotiations of existing licences for the reasons given above.
Other IP considerations