Copyright Dispute over Safaricom’s “BLAZE” Campaign: Transcend Media Granted Anton Pillers Against Saracen Media

court order transcend saracen blaze kenya safaricom copyright case 2016

“We wish to underscore the importance of fostering creativity through respect and protection of intellectual property rights of others. A nation cannot be built on disregard for originality and promotion of copy cats.” – Excerpt from a press statement by Transcend Media Group.

This blogger has come across the recent case of Transcend Media Group Limited v. Saracen Media Limited & 2 Ors Civil Case No. 3644 of 2016 in which Senior Magistrate E.K Usui has granted temporary injunctive orders sought by Transcend, the applicant against Saracen and the two other respondents. The court granted Anton Piller orders allowing Transcend to enter the premises of the respondents to preserve, seize, collect and keep machines, data, documents and storage material relating to Transcend’s copyright work under the supervision of Kenya Copyright Board (KECOBO) officers. In addition, the respondents have been restrained by the court from any further infringement, alienation, distribution and storage of Transcend’s copyright work pending hearing of the suit.

According to a Business Daily report here, the genesis of this copyright dispute is a Sh208 million tender by Safaricom seeking to procure the services of an advertising agency to handle the mobile network operator’s youth segment brand communication which is now called BLAZE. Transcend submitted its strategy proposal and creative body of works to Safaricom but lost the bid to Saracen. Transcend alleges that Safaricom awarded the business to Saracen and a Company (Fieldstone Helms Limited) owned by former Transcend staff who were involved in Transcend’s bid including the team leader. As a result, Transcend claims that Fieldstone Helms is now “illegally implementing” Transcend’s intellectual property (IP).

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In Regulation We Trust: Kenya Copyright Board Proposes New Set of Administration and Enforcement Provisions

kenya copyright board kecobo

To date, Kenya Copyright Board (KECOBO) has published two sets of draft proposals of amendments to the Copyright Act on collective management organisations (CMOs) available here and on intermediary liability for internet service providers available here. KECOBO has now published a third set of draft legislative proposals namely a draft copyright regulations 2016 available here. These three sets of draft proposals will be the subject of a day-long consultative public forum to be held next week on February 11th 2016 at the Auditorium of NHIF Building starting at 8:00am. For those who will not be able to attend the public forum, KECOBO has set up an email account to receive your comments on the drafts, which is: publicforum@copyright.go.ke. This blogpost is a commentary of the key features of the draft copyright regulations 2016 proposed by KECOBO.

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Coulson Harney IP Partner Dragged to Court by MMC Africa in Multi-Million Shilling Partnership Dispute

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This blogger has recently come across the case of Edward Muriu Kamau & 4 others all trading as Muriu, Mungai & Co. Advocates v John Syekei Nyandieka [2014] in which Muriu, Mungai & Co. Advocates (MMC Africa) asked the Court to appoint a single Arbitrator to hear and determine a dispute between the firm and one of its former partners, John Syekei who is now Partner and Head of Intellectual Property (IP) at Coulson Harney Advocates (CH). The court however declined to appoint an Arbitrator and directed both parties to submit a nominee to the Chairman of the Institute of Arbitrators, who in turn will consider the candidacy of the nominees and appoint a sole arbitrator from the list submitted by the parties. A copy of the ruling is available here.

According to MMC Africa, it offered partnership to Syekei vide a Partnership Deed dated 1st July, 2009. The partnership offer of 5% shares in the Firm was on account of Syekei’s expertise and personal achievement in the area of IP. Syekei accepted the offer and executed the Deed on executed on 7th July, 2009. On 4th March, 2010, MMC Africa claims that Syekei resigned from the Partnership with immediate effect, contrary to the Deed which required that any outgoing Partner should give adequate notice and precluded an outgoing Partner from soliciting business from the firm’s clients for a period of six (6) months. MMC Africa contends that Syekei in breach of these provisions, solicited the Firm’s clients while planning his departure; refused to hand over his portfolio or work after resignation; interfered with the Firm’s information and technology system; and further to this, induced two of the Firm’s employees to also resign and join his prospective employer.

Syekei denies MMC Africa’s assertions claiming that the latter grossly misrepresented the value of the Firm at Kshs 500 Million. As result of this representation, Syekei accepted the Firm’s offer of 5% shares believing it would be equivalent to Kshs 25 Million, which according to the Deed would be paid from the profit pool made by the Firm on a quarterly basis. However Syekei avers that the Firm did not make good its intention of deducting Syekei’s share of the profit to go towards the purchase of his shares. More fundamentally, Syekei contends that he was only permitted to inspect the audited partnership accounts of the Firm for the years 2005, 2006 and 2007 after signing the Partnership Deed, wherein he learnt that the Firm had declared losses in 2005 and 2006; and made a profit of slightly more than Kshs. 600,000/=. According to Syekei, this discovery of the Firm’s state of affairs was clearly at variance with the representation made to him that the Firm was valued at Kshs. 500,000,000. Syekei contended he was unhappy with the running of the firm and decided to resign however the partners of the Firm declined him from serving the contractual period as per the Deed. It was also Syekei’s contention that he did not induce any staff of the Firm to leave employment and that any such employee left the Firm out of his or her own volition.

In light of the above, both parties agreed that, according the signed Deed, any dispute arising between the Partners, including any outgoing Partner, about the Partnership or its accounts or transaction would be submitted to arbitration. However the parties bitterly disagree on the qualifications of the arbitrator, with MMC Africa preferring the arbitrator to be a senior advocate and Syekei insisting the arbitrator be a seasoned auditor or accountant.

In arriving at its ruling, the court finds as follows:

“The tone and pitch of the submissions show this is a hotly contested matter. (…) A dispute has been declared and no party says anything to the contrary. The sole arbitrator who was appointed resigned or withdrew or better still, declined appointment for good reason. So no party is in default here. This application may not, therefore, strictly speaking be said to be one arising out of the procedure under section 12(5) and (7) of the Arbitration Act. I think, in the circumstances of this case, the dispute being between the Partners, and is about the Partnership or its accounts or transactions, the Arbitrator should be nominated on the request of any Partner by the Chairman for the time being of the Institute of Arbitrators and according to the provisions of the Arbitration Act.”

This blogger submits that this on-going partnership dispute between CH’s IP Partner and MMC Africa will have ripple effects on private legal practice in Kenya as a whole and IP practice in particular. We will be closely following the developments in this case.

L’Oréal Acquires Nice & Lovely Trademark in Multi-Billion Shilling Deal

Media reports (here, here and here) indicate that the world’s largest multinational cosmetics company L’Oréal has acquired Kenya’s Interconsumer Products Ltd’s flagship Nice & Lovely brands, in a multi-million dollar acquisition reported this past week.

L’Oréal opened shop in Nairobi in late 2011 and has for the past 18 months been in talks with Interconsumer Products Ltd for a buyout deal. To facilitate the conclusion of the deal, Interconsumer Products Ltd transferred the beauty division to a new company dubbed Interworld Cosmetics, which has now been acquired by L’Oreal. The French based cosmetics giant has now renamed the new business Interbeauty Products.

This blogger salutes Interconsumer Products Managing Director Mr. Paul Kinuthia. We have all read the story of how Mr. Kinuthia grew his business from a modest sole proprietorship in the late 1990s to a major cosmetics manufacturer in East Africa. This success story of Interconsumer Products Ltd is even more significant and instructive when viewed from an intellectual property (IP) perspective.

The mark NICE and LOVELY was registered in favour of Interconsumer Products Ltd at the Kenya Industrial Property Institute (KIPI) in 2002 but had been in use by Interconsumer since 1999. From this date onwards, Interconsumer has been actively policing its intellectual property rights in the NICE AND LOVELY mark particularly as its products begun to gain prominence not just in Kenya but in neighbouring countries, particularly Uganda.

In 2004, Interconsumer moved to the Commercial Division of Uganda’s Commercial Court to seeking restrain Nice & Soft Investments Ltd., its servants and/or agents and/or distributors from manufacturing, selling or exposing for sale or in any way dealing in cosmetics using the names “Nice & Soft”. This case was reported as Interconsumer Products Ltd V Nice & Soft Investments Ltd (2003) Miscellaneous Application No. 256 Of 2004 (available here and here). In this case Interconsumer alleged, inter alia that the respondents without any form of authority were selling cosmetics goods in Uganda under the mark “Nice & Soft” and had attempted to register a trademark under the said names to the detriment of Interconsumer. Therefore, Interconsumer argued that it’s trademark was in danger of being wasted and irreparably damaged by virtue of such use by the respondent who is selling inferior goods similar to those of Interconsumer. On the question of whether there was trademark infringement, the court noted that the respondent’s application for registration was before the Registrar of Trademarks prior to the filing by Interconsumer of the suit which suit does not aver that it is a challenge to registration. On the question of whether there was passing off, the court found that the Interconsumer pleaded the ingredients of passing off, namely the acquired reputation. The actions taken by Interconsumer to protect its NICE AND LOVELY trademark in Uganda are instructive and must be borne in mind when considering the amount L’Oréal has just paid to acquire this well-known mark.

However before this acquisition deal, many will remember that in Interconsumer had previously locked horns with L’Oréal in both the Ugandan and Kenyan courts over the NICE AND LOVELY trademark. In the Ugandan case reported as L’Oreal and Another vs Interconsumer Products Ltd Application no. 13 of 2006 (available here), L’Oreal moved to the Commercial Division of the High Court to review the decision of the Registrar of Trademarks setting aside opposition proceedings and granting registration of two trademarks, SMOOTH & LOVELY and NICE and LOVELY applied for by Interconsumer.

In the Kenyan case, L’Oréal once more moved to the High Court to challenge the decision of the Registrar of Trademarks in rejecting its opposition of the registration of the mark NICE & LOVELY HERBAL OIL MOISTURIZER by Interconsumer. In a ruling delivered last year on 21st February, the High Court dismissed L’Oréal’s appeal against the decision of the Registrar rejecting L’Oreal’s opposition to the registration of the mark by Interconsumer. The court agreed with the Registrar on several important grounds including that the mark NICE & LOVELY was not similar to DARK AND LOVELY (owned by L’Oréal) and that there could be no confusion as defined under section 14 and 15 of the Trade Marks Act. The Court also agreed with the Registrar’s conclusion that L’Oreal had failed to show that its trademark was well known in Kenya. Furthermore, the Court agreed with the Registrar’s finding that the respondent had used the mark NICE and LOVELY since 1st March 1999 and the appellant had not tendered any evidence to show that it had objected to the use of the mark in the last five years. Therefore, the common law doctrine of honest concurrent use was applicable therefore both NICE & LOVELY and DARK AND LOVELY marks could co-exist in the Trademarks Register. A detailed synopsis of this unreported case is available over at the afroip blog here.

Viewed against the above backdrop, L’Oréal’s acquisition of NICE & LOVELY is an important lesson for trademark owners not only in Kenya but throughout the East African region. Interconsumer’s investment in registration and enforcement of its (IP) rights was a crucial factor in sealing this major buy-out deal.