The Tax Collection Technovation Tussle: A Test Case for Industrial Property in Kenya

“The law recognises the rights of employees who go beyond the call of duty. According to the Industrial Property Act, they have to be issued with a certificate and their rights to the invention must be established (…) Many people are not aware of this right under the Act and assume that all works they do automatically belong to the employer. Therefore, they fail to gain recognition for their innovations.” – Cathy Mputhia, Advocate.

The Kenya Revenue Authority (KRA) is charged with the responsibility of collecting revenue on behalf of the Government of Kenya. Recent media reports indicate that KRA is embroiled in a multi-million shilling intellectual property law suit over rental tax system developed by one of its employees.

Mr Samson Ngengi — who is in his third year as an employee of KRA – claims he developed the Geo-spatial Revenue Collection Information System (GEOCRIS), a software that maps property location, ownership and building details, as well as the tax status of a taxpayer, providing an effective tool for collecting rental income levy.

KRA was recognised and awarded for developing the GEOCRIS innovation at the 46th Inter-American Centre of Tax Administrations (CIAT) General Assembly that took place from April 23 to 26 this year.

What has raised eyebrows is KRA’s latest move to advertise bids for the development and supply of an information system linking a database of properties to owners and tax compliance records. Ngengi now alleges that this move by KRA is an attempt to usurp his intellectual property rights in GEOCRIS which is a markedly similar system to the one being tendered by KRA>

Ngengi has now successfully moved to court for interim orders barring KRA from dealing in GEOCRIS or developing any similar system until full hearing and determination of Ngengi’s case for compensation for KRA’s use of GEOCRIS and whether KRA should issue a technovation certificate to Ngengi in respect of GEOCRIS.

Comment:

In section 94 of the Industrial Property Act 2001, a “technovation” is defined as

“a solution to a specific problem in the field of technology, proposed by an employee of an enterprise in Kenya for use by that enterprise, and which relates to the activities of the enterprise but which, on the date of the proposal, has not been used or actively considered for use by that enterprise;(…)”

In this regard, it is clear that GEOCRIS relates directly to KRA’s tax collection activities as the only agency mandated to collect tax revenue on behalf of the government.
Ngengi’s alleged right to a technovation certificate in respect of GEOCRIS is covered under section 95 of the Act, however this right is not automatic and several requirements must be met, namely:

1. Ngengi must have filed a dated and signed request for a technovation certificate
2. Ngengi must prove that his duties as a KRA employee do not comprise the making and proposing of technovations which pertains to the field of activities for which he is employed.
3. Despite of the requirement under point 2, Ngengi can argue he is entitled to a technovation certificate where the degree of the creative contribution inherent in the technovation exceeds that which is normally required of a KRA employee in his position.

Ngengi will also be seeking to rely on section 99 of the Act which deals with the question of remuneration for a technovator. In the present case, Ngengi may not find it difficult to show that KRA has used the technovation or communicated it to a third person, as required by the Act.

However the Industrial Property Act provides a reprieve for KRA. section 97 (2) of the Act states:

“The enterprise may refuse to issue the certificate if it is of the opinion that the requirements of this Part have not been satisfied and shall notify the employee of the reasons therefor within a period of three months from the date of the proposal..”

In addition, KRA may also wish to challenge the High Court’s jurisdiction to hear this matter in light of the provisions of section 101 of the Act which provides for a mandatory dispute resolution mechanism, which must commence with arbitration, then appeals from the arbitration board are to be taken to the Industrial Property Tribunal. The section reads as follows:

“101. (1) Any dispute concerning the application of this part shall be submitted by any interested party to an arbitration board consisting of three members: one member appointed by the employee or technovator, one member appointed by the enterprise, and a chairman appointed by the two members. The arbitration board shall hear interested parties and thereafter deliver its ruling.
(2) Where the parties fail to agree on the appointment of the chairman, he shall be appointed by the Resident Magistrate’s Court having jurisdiction in the place where the enterprise is located.
(3) An aggrieved party may appeal against the decision of the arbitration board to the Tribunal.”

IPKenya will keep a close eye on the developments in this case and will issue a comprehensive comment once the case is concluded.

New Perspectives in Collective Management of Copyright and Related Rights in Africa

L-R: Sharon Chahale, June Gachui, Maurice Okoth, Marisella Ouma, Angela Ndambuki.

L-R: Sharon Chahale, June Gachui, Maurice Okoth, Marisella Ouma, Angela Ndambuki.

A Sub-Regional Workshop dubbed “New Perspectives in Collective Management” was held recently at the Headquarters of the African Regional Intellectual Property Organization (ARIPO) in Harare, Zimbabwe.

The workshop jointly organized by ARIPO, the World Intellectual Property Organization (WIPO) and the Norwegian Copyright Development Association (NORCODE) in corporation with the Confederation of International Societies of Authors & Composers (CISAC) and the International Federation of Reprographic Rights Organizations (IFRRO), had in attendance heads of Copyright offices, Commissions and Collective Management Organizations from several countries including South Africa, Kenya, Nigeria, Uganda, Zambia, Tanzania, Namibia, Mauritius, Mozambique, Zimbabwe, Ghana, Liberia, Gambia, Sierra Leone, Malawi, Botswana, Sudan etc.

At the end of Workshop, the participants agreed, that:

“Management of rights can only bear fruits when sound conditions exist in the marketplace. It is vital that effective enforcement measures and licensing of rights take place simultaneously, both targeting at the same goal – the livelihood of creators and performing artists and sound creative industries.” – Harare Resolution, November 2012.

IPKenya has found several interesting presentations that may be of interest:

“Challenges to the legislative Framework and Norm setting in the Digital Environment” – by Dr. Marisella Ouma, KECOBO.

“Management of Rights in Musical Works – How to Build it from Bottom Up” – Maurice Okoth, MCSK.

“Management of Performers’ and Phonogram Producers’ Rights – the Case Study of Kenya” – June Gachui, KAMP.

“Compulsory licencing – An idea whose time has come?” by Tsitsi Mariwo

“Developing Management of Rights in Visual Works – What are the pre-requisites?” – Mats Lindberg, BUS – Sweden.

Coming Soon: WIPO – KIPI Seminar on the Madrid System in December

This week’s Law Society of Kenya newsletter contains a notice that the World Intellectual Property Organisation (WIPO) in collaboration with Kenya Industrial Property Institute (KIPI) is organizing a series of one-day seminars in Kenya intended for business community, trade mark practitioners and representatives of the industrial sector.

The objective of the seminars is to familiarize the entrepreneurs with the international registration of marks and other related matters under the Madrid System.

The Seminars will be held on 10th, 11th and 13th December 2012 in Nairobi, Mombasa and Kisumu respectively.

For more information, contact Sylvance Sange on (+254)602210/11 or via email at ssange@kipi.go.ke.

Kenyan DJs Must Be Licensed for Commercial Use of Copyright and Related Rights in Music

It all started with this lone tweet from your favourite DJ’s favourite DJ:

Endless tweets, tweefs and radio interviews later, the air does not seem to be quite clear yet on the important role that DJs must play in the collective management of copyright and related rights in Kenya.

The common point of departure is the Copyright Act of Kenya Cap 12 of 2001. From this Act, it is clear that all the rights in a song or music work belong to the composer. However, as soon as the song or musical work is fixed or recorded, then the maker of the fixation or sound recording holds the copyright for that fixation or recording.

Now let us turn to Section 26(1) of the Act which states as follows:

“26. (1) Copyright in a literary, musical or artistic work or audio-visual work shall be the exclusive right to control the doing in Kenya of any of the following acts, the reproduction in any material form of the original work or its translation or adaptation, the distribution to the public of the work by way of sale, rental, lease, hire, loan, importation or similar arrangement, and the communication to the public and the broadcasting of the whole work or a substantial part thereof, either in its original form or in any form recognizably derived from the original…” [Emphasis added]

Essentially what this means is that copyright is the exclusive right to control various acts, including reproduction, distribution, communication and broadcasting. In the case of DJs, it is important to note that communication to the public means a live performance and the transmission to the public of a work or sound recording and includes the making available of that work or sound recording by electronic transmission.

In Kenya, the right to issue public performance licenses has been granted to Music Copyright Society of Kenya (MCSK) on behalf of composers of music and to the Kenya Association of Music Producers (KAMP) on behalf of producers of sound recordings. MCSK and KAMP are known as collective management organisations (CMOs). All CMOs in Kenya are licensed by the government through the Kenya Copyright Board (KECOBO).

It is a fact that DJs exploit musical works and sound recordings for commercial gain, hence the reason they need to take out a public performance license from MCSK and KAMP. The license fees collected by MCSK and KAMP is paid in the form of royalties to their respective members.

When the DJs carry out the public performance they should either perform the music as presented by the Manager, plungers and artists but we find that the DJ’s rip the music and store it in their data banks or other alternative storing devices. In this case there is exploitation of Reproduction rights. Whenever DJs make compilation of music they are exploiting Reproduction rights in musical works and sound recordings.

The other issue that needs to be clarified is that whenever they buy music, physical or digital, that is for personal and private use but the moment it is taken for commercial use then the relevant clearances need to be taken with both MCSK and KAMP.

Last but not least, it is important to understand that MCSK and KAMP issue licenses for both local and foreign works. In the case of MCSK, they are legally allowed to license for foreign works because they have signed reciprocal agreements with CMOs like MCSK around the world. MCSK has signed agreements with Performance Right Society (PRS) and the Mechanical Copyright Protection Society (MCPS) both of the United Kingdom, SAMRO of South Africa, MCSN of Nigeria, American Mechanical Rights Agency (AMRA) of the United States of America, SODRAC of the Canada, COSCAP of Barbados, ASCAP of the United States of America, SACEM of France, Music Authors’ Copyright Protection (MACP) of Malaysia, JACAP of Jamaica, Copyright Organisation of Trinidad and Tobago (COTT), etc… What this means is that MCSK receives royalties from all over the world when Kenyan music is used but it also sends out royalties to the foreign CMOs when their music is played here in Kenya.

In Kenya, the current public performance license fees to be paid is a grand total of Kshs 31,500, 21,500 goes to MCSK and 10,000 goes to KAMP. For more details on MCSK’s license fees and tariffs, visit their online page here.

Law School Dean and IP Scholar Nominated to Kenya’s Court of Appeal

Kenyan media report indicate that Prof. James Otieno-Odek is among a list of 16 candidates nominated by the Judicial Service Commission (JSC) to serve in the Court of Appeal, Kenya’s second highest court in the land after the newly-constituted Supreme Court. It may be recalled that Prof. Odek had previously been shortlisted for the position of Supreme Court Judge but his candidature was unsuccessful.

This blogger is glad that the government of Kenya has finally recognised Odek’s wealth of knowledge and experience. A graduate of Yale and Toronto Law Schools, Prof. Odek has over 25 years of postdoctoral work behind him and has been actively involved in research, teaching and policy formulation at national, regional and international level. Many will recall that Prof Odek was a candidate for the post of Director General of the World Intellectual Property Organization (WIPO) back in 2008. Previously he has been Managing Director of the Kenya Industrial Property Institute (KIPI) and was the Chairman of the WIPO Paris Convention for the Protection of Industrial Property. He is currently the Dean of the University of Nairobi School of Law and taught this blogger international intellectual property law at LL.M.

IPKenya hopes that the good prof’s nomination will sail through to presidential appointment. Odek’s presence in the Court of Appeal is a welcomed step in law reform and creating a robust jurisprudence in IP for Kenya.

Kenya: Cease and Desist Letter in respect of PepsiCo and Seven-Up International Trademarks

IPKenya has come across this letter in the papers by Seven-Up Bottling Company based in Kenya warning other companies to cease and desist from importing Pepsi-Cola soft drinks from “other” sources.
The subject of the letter reads: “RE: Sale and Distribution of Trade Mark Products of PepsiCo” and it states in part:

“It has come to our attention that many importers/traders have been importing, selling and distributing trademark soft drink beverages of PepsiCo Inc. and Seven-UP International in the Kenyan market. This letter serves to inform you that SBC Kenya Ltd (Seven-Up Bottling Company Kenya Ltd) is the only company authorised by PepsiCo Inc. & Seven-Up Bottling Company Kenya Ltd to sell and distribute soft drink beverages known and sold under the trademarks Pepsi Cola and Mountain Dew in Kenya.”

Comments:

IPKenya thinks that this is a strategy that ought to be employed by more large trademark owners operating in Kenya especially given the increasing cases of counterfeiting. In addition, last year the Competition Act of 2009 finally came into force and such a legislation may also play a role in ensuring that there is fair competition among all the players in the bottling industry.