Employment, Non-Competition and Intellectual Property: High Court Case of AMC International v. ABMC International

ABMC 2ND EXECUTIVE HUMAN RESOURCES BOOSTERS SYMPOSIUM 2013 DISPUTE COPYRIGHT TRADEMARK KENYA AMC INTERNATIONAL NAIROBI

This blogger has come across a recent ruling in the case of Africa Management Communication International Limited v Joseph Mathenge Mugo & another [2016] eKLR. In this case, the court declined to find the defendants (which included 2 ex-employees of the plaintiff) in contempt of court orders made preventing them from passing off and carrying themselves as a sister or associate company of the plaintiff (a former employer of the defendants). In addition the plaintiff sought to have the ex-employees committed in prison for three months for violating orders restraining one of the ex-employees from being a director in the 2nd defendant company for a stipulated period of 18 months.

This blogpost examines this case which illustrates the importance of ensuring that employers take proactive steps to secure all their intellectual property (IP) assets against employees no longer in employment and that such former employees are reasonably restrained by contract from trading using the IP assets of the former employer.

 

On or about the 12th, 13th and 14th September, 2012 the Plaintiff, AMC International carried out an event known as the Human Resource Executive Symposium 2012 at the Hilton Hotel in Nairobi, in which the 1st Defendant, Mugo was its contact person. Thereafter, Mugo was relieved of his duties at AMC International on 15th November, 2012 when it came to AMC’s knowledge that the Mugo had established the 2nd Defendant, ABMC with a view of passing it off as an associate company of AMC. Accordingly, AMC filed suit to restrain Mugo and ABMC from carrying on with the above noted activities which culminated in the orders of 13th June, 2013 which were extended on 28th June 2013 which were as follows:

“THAT a temporary injunction be and is hereby issued restraining the defendants from passing off and carrying themselves to the general public as a sister company or associate company of the plaintiff and to further stop printing any materials or brochures in close resemblance with the plaintiffs for 14 days only to avoid any further exposure of the Plaintiff.

(….)

THAT a temporary injunction restraining the 1st defendant from being a director of the 2nd Defendant company for the contractually stipulated period of 18th months from 14th November, 2012 pending the hearing and determination of this suit.”

In the earlier case of Africa Management Communication International Limited v Joseph Mathenge Mugo & another [2013] eKLR, the court ruled that that Mugo was in breach of the aforesaid orders by organizing and marketing a symposium called “the 2nd Executive Human Resource Symposium, 2013” scheduled for the 4th, 5th and 6th September, 2013 (see poster above), which was being passed off as a continuation of the Plaintiff’s 2012 Executive Human Resource Symposium. AMC contended that the said event by ABMC had a similar name and was targeted at the same clientele as AMC’s event. With regard to the passing-off claim, the court found for AMC and stated as follows:

“It is not in dispute that the Plaintiff first held the Human Executive Symposium in 2012 and has goodwill to it. I have also seen the exhibits of the Plaintiff, especially “PPD 3” and compared them to those of the Defendants.  I have already found that the  brochures for both the Plaintiff and the Defendants are similar to the naked eye, even though the same are of a different colour.  No doubt the brochures produced by the Defendant can easily confuse members of the public as to the origin of the event. I also find it suspect that the Defendants would choose to call the event “the 2nd executive Human Resources Event” when it has never organized a 1st Human Resources symposium.  The Human Resources Symposium of 2012 in Kenya was never held by the alleged Human Resources Boosters but the Plaintiff.   In this regard, there is a prima facie basis to believe that 3rd parties dealing with the Defendants may be misled to think that the Defendants and the Plaintiff are linked.   There is evidence on record that the 1st Defendant was either in the employ of the Plaintiff or was somehow connected with the Plaintiff when the event was first held in 2012.  Then the names of AMC international and ABMC International may be another issue.  The said inference for confusion may be drawn from exhibit “PPD7” annexed to the Affidavit in support of the application of the 12th June, 2013 which was an email from a client demanding from the Plaintiff Kshs.139,000/- which it had paid to the Defendants, thinking that they were the designated agents of the Plaintiff. On this point alone, I find that the Plaintiff has established a prima facie case against the Defendant for passing off, since the elements of such a claim have been established on a prima facie basis.”

As a result the court found the 1st Defendant to be guilty of contempt of court of the order made on 13th June, 2013 and committed him to jail for 30 days effective immediately.

In the subsequent case of Diana Mbinya Musya v Africa Management Communications & International Limited [2014] eKLR, AMC prevailed in a suit filed by another former employee, Musya attempting to restrain AMC from notifying its current and potential clients about the scheme by ABMC from passing itself off as AMC and informing them that Musya and Mugo (another ex-AMC employee) were no longer AMC employees. Musya worked at AMC from the year 2010 until  30th April, 2013 after voluntarily resigning on 10th April, 2013. AMC soon or later discovered that on Musya leaving her employment aforesaid, she joined ABMC and even she may have even been employed by ABMC at the latest by 1st of April 2013 while she still worked for AMC before resigning by end of April, 2013.

According to AMC,  Musya joined ABMC which was a competing company doing similar business and appearing to have a deceptive similar sounding name working with another person known as Joseph Mugo who was also a former AMC employee before joining ‘ABMC’ as an employee, who would later be committed to civil jail for contempt of court as discussed above in the 2013 case.

Returning to the present 2016 case, ABMC managed to convince the court that their event, by the name, Regional Human Resource Summit, was advertised in a brochure that was totally different from AMC’s events whether in colour, lay-out, print-out  or in any other imaginable aspect. In finding for ABMC, the court stated as follows with regard to the 2013 ruling discussed above:

“24. My understanding of the above passages [from the 2013 ruling] is that the Court ordered that the Defendants should not hold a scheduled event slated for 4th, 5th and 6th September 2013 , since the same could have easily confused consumers as to the origin of the event. The Applicant complains of event of 30.10.2013 – 1.11.2013.

25. The Brochures used for advertising the said event closely resembled those of the Plaintiff Company as assessed by Mabeya J in paragraph 29 above only served the purpose of confusing the consumers. In the premises, I would have to agree with the Defendants’ assertions that they did not violate any court order as the court only made reference to an upcoming event slated for the 4th, 5th and 6th September, 2013 and not of  30.10.2014 – 1.11.2013. Further to this, the brochures dully attached to the Replying affidavit of Joseph Mathege Thuo in my assessment are not similar to those of the Plaintiffs and are not confusing to the public.”

As this case proceeds to trial and ultimately for final determination, this blogger would argue that the series of court rulings thus far illustrate the importance of non-compete, non-disclosure and restraint of trade clauses in employment relationships.

 

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