Conflicts between Trade Marks Registry and Companies Registry: High Court Ruling in JamboPay v Jambo Express Limited Case

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“…whereas the Companies Act deals with the registration of companies and the responsible office is the Registrar of companies, the Act is often to find itself in conflict with the Trade Marks Act for as longs as there is no interlink between the two Acts of Parliament in practical sense. The conflict arises this way. For instance, a trademark is registered in respect of a class of services may conflict with a trade name of a company or company with similar activities or services. This lack of coordination between registering authorities has caused and will continue to cause extreme anxiety to consumers of the two services as well as judges who will be called upon to resolve those conflicts which would otherwise have been avoided were it not for the unhealthy state of institutional operations.” – Justice F. Gikonyo in Webtribe Limited T/A Jambopay v Jambo Express Limited [2014] eKLR at para 15

This blogger has come across a recent ruling by the High Court in the case of Webtribe Limited T/A Jambopay v Jambo Express Limited [2014] eKLR. In this case, Webtribe went to court claiming that Jambopay Express Limited infringes on Webtribe’s trademark Jambopay. In support of its claim, Webtribe produced a certificate of registration of trademark stating that the latter is the registered proprietor of the trade mark number 67127 consisting of the word ‘Jambopay’ registered in class 36 which is valid and subsisting from the 17th December, 2009. Jambopay Express Limited refuted Webtribe’s claim and produced Certificate of Incorporation number CPR/2012/86453 stating that the latter is a company that was registered on 11th October, 2012.

Although the main subject of the suit was the alleged infringement of a trade mark as well as a challenge to the registration of a company, the learned judge restricted his ruling to determining whether Webtribe had met the legal thresholds to be granted its request for a temporary injunction. The court found against Webtribe’s application and stated as follows:

“…a just determination of the issues herein especially of the plaintiff’s [Webtribe’s] right and alleged infringement of trademark does not just depend on the registration of the Trademark ‘Jambopay’ by the plaintiff but includes determination of other issues such as whether the protection provided to the name “Jambopay” by the trademark registered in favour of the Plaintiff overrides the protection of the name “Jambopay Express Limited” secured through the registration of the name as a company; and whether the defendant’s [Jambopay Express Limited’s] intent in registration of its trade name was to cause confusion among consumers and to capitalize in the Plaintiff’s goodwill in the online payment services market. Equally, the circumstance in which the Defendant Company was registered is in the center of this suit and whether it is an infringement as alleged. In light thereof, the material before the court is not sufficient for the Court to issue an injunction.”

As many readers may know, the Trade Marks Registry and the Companies Registry were previously both under the State Law Office. Therefore when registering a trade mark or reserving a company name, it was easier to close reference either the Companies Registry database or the Trade Marks Registry database to see if there were any conflicts. This has since changed. The Trade Marks Registry is under KIPI while the Companies Registry remains under the State Law Office. This legislative and institutional separation has brought about many challenges and disputes for people who are registering companies or trade marks in Kenya. As a result there has been an increase in “name-squatting” which impedes business and trade markets in the country. In aiming to resolve these disputes, aggrieved parties are forced to approach the High Court for determination which ends up being both expensive and time-consuming.

In an earlier case: Agility Logistics Limited & 2 Others v. Agility Logistics Kenya Limited, the court was faced to a similar dispute as in the present JamboPay case. In the Agility case, the court found that the plaintiff’s trademark protection overrides the defendant’s protection by the Companies Act. The court also found that the defendant’s registration at the Companies Registry was opportunistic. In arriving at this holding, the court in the Agility case stated as follows:-

“My take on the two pieces of legislation is that whereas the Companies Act governs registration of company names, the fact of registration per se does not extend protection to the name of the company itself as does the protection provided by a trademark.

Further, it is also pertinently clear that the protection extended by a trademark transcends the face value of a name and inheres in the name a distinctiveness that is associated with the reputation and goodwill that the proprietor of the mark has invested and earned through creation of value, quality and trust. So much so that a customer or user of the service needs only see the mark and associate itself with certain expectations and standards. This is not the case with a company name which is only a mark of identity to the legal person that is the company. Although company names may eventually earn the notoriety, reputation and association with certain standards in like measure as do trademarks, the extent of exclusivity and protection of the company name, without registration of a mark, would still fall short of the standard of protection conferred by a trademark.

The upshot of the foregoing analysis is that in the present matter, the protection provided to the name “Agility” by the trademark registered in favour of the Plaintiffs by far overrides the protection of the name “Agility Logistics” secured through the mere registration of the name as a company. The exclusivity in the use of the name that is conferred upon the Plaintiff through the Kenyan registration of the mark and worldwide by virtue of the status of “well known mark” confers locus standi upon the Plaintiffs to sustain a claim for infringement of the mark that the Defendant cannot equally enjoy by virtue of registration of the company under the Companies Act.”

This blogger will be closely following the developments and eventual outcome of the JamboPay case.

Copyright Licensing Requires Salesmanship: Lessons from the Banned “Wolf of Wall Street”

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One of the most talked about stories in the month of January was the decision by the Kenya Film Classification Board (KFCB) to ban the sale, exhibition and distribution of the critically acclaimed Hollywood film “The Wolf of Wall Street”.

KFCB claims that the film was “restricted” due to elements that include nudity, sex, alcohol, drugs and profanity found in almost every scene of the 3-hour long motion picture which chronicles the title character’s (Jordan Belfort’s) pursuit of the American Dream.

This blogger has watched the banned film and believes that it is a must-watch for all those involved in the sale/assignment and/or licensing of content. In particular, this blogger recommends several short clips from the movie where the lead character demonstrates the art and skill of making a sale.

In the above scene, Jordan Belfort is trying to turn a group of inexperienced, undisciplined misfits into Wall Street stock brokers. In order to illustrate to the basic fundamentals of making a sale, Belfort pulls out a pen and thrusts it in their faces, with the instruction: “Sell me this pen.” After one member of his team declines, another member of his team grabs the pen from him and states:

“Do me a favour and write your name on that piece of paper, there.”

When Belfort looks around for something to write with, the future salesman replies:

“Oh, you don’t have a pen anymore. Supply and demand, bro.”

This scene illustrates a fundamental point for all salespeople: Until a need is recognized, it simply doesn’t matter how great your product or service is. Therefore, there are essentially three parts to any sale: identifying the need, creating urgency and applying the need and urgency to the sale. In short, the role of the salesperson is to help the client reconnect with his/her needs and the urgency to act upon them.

In the case of content, the license is the most common sale because it allows users to enjoy certain rights in the content without transferring ownership in the content. In this connection, this blogger has in mind the four collective management organisations (CMOs) currently in operation within Kenya, namely the Reproduction Rights Society of Kenya (KOPIKEN)Kenya Association of Music Producers (KAMP), Performers’ Rights Society of Kenya (PRiSK) and Music Copyright Society of Kenya (MCSK). Each of these CMOs is in the business of selling licenses to users throughout Kenya with respect to the rights holders in the various categories of works they control. From the CMOs’ perspective, the ends justify the means when it comes to licensing users of copyright works: an increase in licenses issued means an increase in royalties distributable to copyright owners. Therefore licensing staff employ various tactics to create awareness on copyright law while emphasising the need for them to take out licenses for commercial exploitation of copyright works.

A common challenge among the CMOs is increasing the number of licenses issued while at the same time reducing their administrative (operational) costs. One possible solution is tele-licensing whereby licensing staff spend the majority of their time on the phone with potential licensees countrywide. The trick behind tele-licensing is to persuade a commercial user that it requires a copyright license to continue or commence its operations and making arrangements with the user for the CMO to dispatch a licensing staff to deliver an invoice and collect the license payments.

Once again, Jordan Belfort illustrates how tele-licensing could be done in the clip below where he sells penny stocks worth $40,000 in a non-existent company.

In the Kenyan context, a higher degree of salesmanship may be required than that displayed by Belfort in the above clip due to the ignorance of copyright law among a large portion of potential content users. In fact, some licensing staff argue that in some cases, unless they physically visit business premises in the company of uniformed police officers, content users will not take out copyright licenses. However, this blogger argues that despite the low levels of awareness among copyright users, there is still an important need for sales training among the licensing staff of all the CMOs to ensure that they understand the content licenses they are selling and how to create the need and urgency among content users to take out the licenses.

 

In the Kenyan context, a higher degree of salesmanship may be required than that displayed by Belfort in the above clip due to the ignorance of copyright law among a large portion of potential content users. In fact, some licensing staff argue that in some cases, unless they physically visit business premises in the company of uniformed police officers, content users will not take out copyright licenses. However, this blogger argues that despite the low levels of awareness among copyright users, there is still an important need for sales training among the licensing staff of all the CMOs to ensure that they understand the content licenses they are selling and how to create the need and urgency among content users to take out the licenses.

Revisting Copyright Protection of Databases in Kenya

In a recent decision by the South African High Court in Board of Healthcare Funders v Discovery Health Medical Scheme and Others [2012], Discovery Health South Africa was found guilty of copyright infringement in respect of a database developed by the Board of Healthcare Funders (BHF) known as Practice Code Numbering System (PCNS). PCNS is a set of numbers or codes which identify all of the medical practitioners and medical service providers in RSA together with related data. As Darren of Afro-IP explains:
“The PCNS is a tool for facilitating payment under the medical aid schemes and assists in preventing fraud by, for example, verifying that a claimant is claiming an amount from the scheme within his or her scope of practice and discipline”

Prior to 2010, Discovery was a member of the BHF, and by virtue of this membership it received data from the BHF on a weekly basis. This information related to changes of medical practitioners and associated data. Discovery was accused of extracting substantial portions of this information from BHF’s PCN system and importing it into the relevant fields within its own database. Meanwhile, sometime in 2010, Discovery cancelled its BHF membership. Thereafter, BHF went to court claiming that Discovery was infringing BHF’s copyright because it was using the PCNS without a license, in addition BHF sought to have Discovery deliver up all the infringing material in its possession, and BHF also claimed royalty payments against Discovery. Discovery challenged BHF’s claim in court on five grounds which were all dismissed by the court. However, for purposes of the present discussion, the focus shall be on the first issue raised by Discovery namely that no copyright exists in respect of PCNS.

The court defines PCNS thus: ” a compilation in so far as it consists of the combination of a series of digits to form the PCN coupled with the data which then in its totality forms the PCNS”. It is therefore clear that PCNS is a database. A database is commonly defined as a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means. In terms of S1(1)(g) of South Africa’s Copyright Act, “literary work” includes: “tables and compilations including tables and compilations of data stored or embodied in a computer or a medium used in conjunction with a computer but shall not include a computer program”. Therefore PCNS may fall within the category of literary works and be protected along with other compilations, provided certain requirements are met.

There are two inherent requirements for copyright protection namely originality and material embodiment. The latter requirement means that the work must be reduced to material form in order to attract copyright. The former requirement namely originality requires that a work must emanate from the author himself and not be copied from another source. In South Africa, the test for originality is as follows: if an author has expended labour and skill in creating the work, it will enjoy copyright protection, notwithstanding the bland nature of the work . This test is based on the ‘sweat of the brow’ doctrine and was applied by South Africa’s Supreme Court of Appeal in the leading case of Haupt t/a Softcopy v Brewers Marketing Intelligence (Pty) Ltd [2006]. The court in this case made it clear that although originality requires that the work must originate from the author and not be copied from an existing source, this is not to say that every work which is not copied would qualify for protection in terms of the Act:

“Save where specifically provided otherwise, a work is considered to be original if it has not been copied from an existing source and if its production required a substantial (or not trivial) degree of skill, judgment or labour.”

At paragraph 30 of the Discovery Health judgment, the court cites with approval the reasoning in the Haupt case as adopted from the British case of Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964]:

“In deciding therefore whether work in the nature of a compilation is original, it is wrong to start by considering individual parts of it apart from the whole as the appellants in the argument sought to do. For many compilations have nothing original in their parts, yet the sum total of the compilation may be original.”

The South African Courts’ decision to apply the sweat of the brow approach in interpreting the Copyright Act’s requirement of originality means that local database owners (like BHF) enjoy the copyright protection of both original and non-original databases. However it has been argued elsewhere that this advantageous position enjoyed by database owners should be weighed against the short-comings inherent in the sweat of the brow doctrine. The Feist Publications Inc v Rural Telephone Services Co [1991] case, a seminal U.S copyright law decision, provides the strongest criticism of this doctrine. The court in Feist stated that:

The “sweat of the brow” doctrine had numerous flaws, the most glaring being that it extended copyright protection in a compilation beyond selection and arrangement — the compiler’s original contributions — to the facts themselves.

This criticism stems from the existence of a long-standing principle that copyright should not be extended to cover basic information or “raw” data. This well established principle is based on the idea that only the elements of a work that are original to the author will attract copyright. Therefore, in the case of facts, they are merely discovered but not created which means that no one may claim originality because facts do not owe their origin to an act of authorship. But in South Africa, under the sweat of the brow doctrine, the sheer industrious collection of facts is sufficient to attract copyright.

This central flaw in the sweat of the brow approach offers a glimpse of the serious consequences that South Africa could face. First and foremost, the very low threshold of originality ultimately discourages both large scale local and foreign investment in database creation. Also, given the growth in the protection of information all over the world, those South Africans that end up developing creative databases targeted for both local and international use will opt for jurisdictions that offer more comprehensive protection of their work. These negative economic consequences as a result of the sweat of the brow doctrine, call for a consideration of other approaches to database protection in existence in order to be able to determine which of these would be applicable in and suitable for South Africa. Nevertheless it is readily conceded that raising the standard of originality for databases will not necessarily encourage more investment in the database industry; such is the lesson from the European Community’s sui generis protection: the 1996 EC Database Directive.

Conclusion:

This Discovery Health case provides important insight into the nature and scope of protection enjoyed by databases under South African copyright law. As noted, the sweat of the brow approach adopted by South Africa rewards the hard work of individuals involved in compiling of data without segregating between factual compilations and other more ‘creative’ literary works. However, it is argued that this low originality threshold for database protection is tantamount to providing copyright protection over raw facts/data themselves and distorting the long established idea/expression dichotomy. In this connection, it is possible that Discovery Health’s database would also be copyrightable and BHF may find itself back in court again only to discover the current copyright law regime works both ways!

Summary of the Industrial Property Act 2001

The main object of this Act is to provide for the promotion of inventive and innovative activities, to facilitate the acquisition of technology through the grant and regulation of patents, utility models, technovations and industrial designs. Section 3 of the Act establishes the Kenya Industrial Property Institute (KIPI).

KIPI is the main implementation and administration agency for industrial property in Kenya. It liaises with other national, regional and transnational intellectual property offices, patent offices and international organizations that are involved in industrial property protection. KIPI’s mandate includes: considering applications for and granting industrial property rights; screening technology transfer agreements and licences; providing to the public industrial property information for technological and economic development; and promoting inventiveness and innovativeness in Kenya.

The Act also establishes the Industrial Property Tribunal to deal with cases of infringement. Section 109 of the Act also criminalises infringement on others patents, registered utility models or industrial designs.

The application forms for patent, industrial design and utility model are available here.
The current fees payable to KIPI for patent, industrial design and utility model applications are available here.

 

Patents and Utility Models under the Industrial Property Act

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A patent is a legal document granted by a State that secures to the holder, for a limited period, the right to exclude others from making, using, selling, offering for sale, and importing the patented subject matter. Any new and useful process, product, composition of matter, or any improvement thereof, may be patented, if such invention meets these three requirements: (1) Novelty; (2) Inventive step i.e must not be obvious to a person of ordinary skills in that field of art, and (3) Industrial applicability.

The following are not patentable:

  • Discoveries or findings that are products or processes of nature, where mankind has not participated in their creations
  • Scientific theories and mathematical methods
  • Schemes, rules or methods of doing businesses or playing games or purely performing mental acts.
  • Methods of treatments of both human and animals by surgery or therapy as well as diagnostic methods practice thereto, except products for use thereof.
  • Inventions contrary to public order, morality, public health and safety, principles of humanity and environmental conservation

 

The steps to be followed for grant of a patent in Kenya are as follows:

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NB: Please note that the fees indicated in the diagram above may not be up-to-date, consult the link in the box above for the current fees.

Industrial Designs under the Industrial Property Act

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An industrial design refers to the ornamental or aesthetic features of a product.  In other words, it refers only to the appearance of a product and NOT the technical or functional aspects.

Any products of industry can be protected as an industrial design including: fashions, handicrafts, technical and medical instruments, watches, jewellery, household products, toys, furniture, electrical appliances, cars; architectural structures; textile designs; sports equipment; packaging; containers and “get–up” of products

The requirements for industrial design protection are: (1) Novelty;  (2) Originality i.e. independently created; and (3) Design must have “individual character” – when overall impression is evaluated against others.

The registration process for an industrial design in Kenya is as follows:

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NB: Please note that the fees indicated in the diagram above may not be up-to-date, consult the link in the box above for the current fees.