The recently reported High Court case of Evans Gikunda v. Patrick Quarcoo & Two Others [2018] was born out of a business deal gone bad. At the heart of this dispute is a music application (app) that the plaintiff (Gikunda) claims to have conceptualised, designed and developed between 2012 and 2016. However Gikunda joined the employ of the 2nd Defendant (Radio Africa Group Limited) in 2013 where the 1st Defendant (Quarcoo), the Chief Executive at Radio Africa, ‘persuaded Gikunda to partner with him to ensure that the product gets to market’.
According to Gikunda, Quarcoo proposed that that once Radio Africa’s Board of Directors sanctioned its participation in his app, they would share out the ownership of the app as follows: Radio Africa – 40%; Gikunda- 30%; Quarcoo- 20%; and the remaining 10% to a strategic partner. However, in mid-2016, Gikunda resigned from Radio Africa after which he alleges that Quarcoo and Radio Africa sold the app, without his knowledge, to the 3rd Defendant (Safaricom).
This blogger has come across a recent judgment in the case of Mercy Munee Kingoo & Anor v. Safaricom Limited & Anor [unreported] Malindi High Court Constitutional Petition No. 5 of 2016 delivered by Mr. Justice S.J Chitembwe on 3rd November 2016. At the heart of this Petition was the claim that section 30A of the Copyright Act is unconstitutional. This Petition raised two important issues for determination: firstly, whether the petition is ‘res judicata’ in light of two earlier decided High Court Petitions (discussed previously here and here) in which section 30A was not found to be unconstitutional and secondly, whether the amendment of the Copyright Act and introduction of section 30A is unconstitutional for failure to observe the principles of public participation.
“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).
While the outcome of this commercial suit is still pending, we have come across a recently delivered judgment in the case of Petition No. 350 of 2015 David Kasika & 4 Ors v. Music Copyright Society of Kenya in which several MCSK members alleged that the collection of royalties by MCSK under the CRBT license agreement in question violates their constitutional rights, that the making available of works for download on Safaricom’s CRBT service amounts to a private performance as such section 30A of the Copyright Act does not apply and thus the CMOs cannot collect royalties on behalf of its members as required under the section. Finally, the petition invited the court to weigh in on several damning allegations made regarding mismanagement by MCSK in its collection and distribution of members’ royalties.
Recently, a leading newspaper published a story here stating that Safaricom Limited had obtained interlocutory orders against Colour Planet Limited stating that the latter was “forbidden from interfering with any contracts Safaricom has under the banner Okoa Stima, suggesting to any third party that Safaricom does not have the right to use the name Okoa Stima.” The rest of the story is filled with several contradictory and confusing facts regarding trade mark searches made, trade mark applications filed and trade mark registrations with respect to the Okoa Stima mark by both Safaricom and Colour Planet.
This blogpost is intended to set the record straight on the specific issue of the chronology of events at the Trade Mark Registry of Kenya Industrial Property Institute (KIPI) involving both Colour Planet and Safaricom between March 2015 and January 2016. For intellectual property (IP) practitioners, this post may also serve as a cautionary tale on the importance of care and caution when handling your clients’ matters pending before KIPI.
This blogger has recently come across an astute ruling by the High Court in the case of Music Copyright Society of Kenya v Chief Magistrate’s Court & Inspector General of Police [2015] eKLR. Justice L. Kimaru sitting in the High Court was approached by the authors’ collecting society, Music Copyright Society of Kenya (MCSK) to stay orders issued by the Magistrate’s Court freezing all the bank accounts of MCSK following a request by the Serious Crimes Unit under the Directorate of Criminal Investigations (DCI). DCI requested that MCSK’s accounts be frozen as it investigates complaints made by MCSK members in regard to alleged misappropriation and theft of funds at the collecting society.
After carefully evaluating the facts before him, Kimaru J ruled that the investigations were lawful and based on several complaints received by DCI from MCSK members and that the orders to freeze MCSK’s accounts were within the precincts of the law.
This blogger has recently come across the case of Bernsoft Interactive & 2 Ors v. Communications Authority of Kenya & 9 Ors Petition No. 600 of 2014, a recently filed constitutional petition seeking injunctive orders to compel internet service providers (ISPs) in Kenya to block websites engaged in piracy and declaratory orders that the State has failed in its constitutional and legal obligations to protect the intellectual property rights of Kenyans. The state organs that are targetted in this Petition including the telecommunications regulator, Communications Authority of Kenya; the copyright office, Kenya Copyright Board and the principal legal advisor to the Government, the Office of the Attorney General. A copy of the petition is available in .pdf here.
The major ISPs (in terms of the number of subscribers in Kenya) have all been enjoined in the suit including: Safaricom, Airtel, Jamii Telecom, Wananchi Group, Access Kenya, Liquid Telecom and Telkom Kenya.
The petitioners cite the infamous site: http://www.wapkid.com which allows users to illegally download sound recordings and audio-visual works online. The ISPs are accused of allowing its subscribers to use its internet networks to illegally acquire copyright works through sites such as wapkid. In this connection, it is alleged that the ISPs allow the transmission in digital form, these copyright protected music through their networks and into, and out of, the personal computers, phones and various gadgets that are used for online copyright piracy.
To illustrate its claims, the Petition submits into evidence the above screenshot of a Wapkid page linking to the location where one of the Petitioner’s members, Sauti Sol’s musical work known as “Sura Yako” is hosted. Through the “premium” or “free” options on the wapkid site, the user can download the unauthorized copy of Sauti Sol’s audiovisual work to his/her computer or phone or tablet for unlimited viewing or further distribution.
The matter came up for hearing before High Court Justice Lenaola earlier this month.
This blogger commends the petitioners for their efforts and will be closely following the developments in this case.
2013 was an election year for Kenya which resulted in the swearing in of Uhuru Kenyatta as the fourth President of the Republic. Kenyatta has been very supportive of the creative economy and has on several occasions reiterated his administration’s commitment to creating a conducive environment for creators to reap from their intellectual property (IP) assets. However, Kenyatta’s mark on IP this year was the decision to reform all state corporations and parastatals in Kenya which has set in motion plans to merge the copyright office, the industrial property office and the anti-counterfeit agency into one national IP office.
In 2013, trade marks stole the show with several far reaching rulings by the Registrar of Trademarks as well as the landmark acquisition of a local trademark by a multinational cosmetics company. In addition, trademark administration has continued to be the major revenue earner for the national IP office, Kenya Industrial Property Institute (KIPI) especially through the Madrid System.
The Red Bull case (available online) was an important decision in that it expanded the Kenyan IP jurisprudence in respect of the doctrines of “conceptual similarity” and “well-known marks”.
In the Basmati case, a clear distinction was drawn between trade marks and geographical indications within the context of Kenya’s international obligations under the World Trade Organisation (WTO) Agreement on Trade Related Aspects of IP (TRIPs) adopted in section 40A of the Kenya Trademarks Act.
In the Pyrex case (available online), the Registrar found that the withdrawal of a threat of opposition does not amount to a surrender of your rights to institute cancellation proceedings in respect of the same trade mark. This ruling was important because it provides a practical application of two amended provisions of the Act, namely Section 36A and 36B of the Act.
This year saw the enactment of the Science, Technology and Innovation Act, Consumer Protection Act, Media Council of Kenya Act and Kenya Information and Communication Amendment Act, all of which will affect IP administration and enforcement both directly and indirectly.
For more stories from 2013, check out the IPKenya archive on the right hand side of this page and information from other sites on our twitter feed.
“What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade (….) The goodwill of a business is one whole.” – Lord MacNaughten in The Commissioners of Inland Revenue v Muller & Co’s Margarine Limited [1901] AC 217 223-224.
According to a recent Consumer Insight survey, Ariel by Procter & Gamble East Africa (PGEA) enjoys a market share of 25 per cent, Omo by Unilever Kenya (UK) is at 18 per cent, Sunlight also manufactured by UK is at 17 per cent, Toss by Kapa Oil Refineries is at 6 per cent and Ushindi by PZ Cussons is at 6 per cent. According to this survey, despite Ariel’s re-entry into the Kenyan market, it has become “the leading brand” and has “successfully captured a loyal following” thanks to it’s Enzymax formula and ‘one wash’ campaign which has really “connected with consumers”.
The Business Daily now reports that PGEA has been sued by UK with respect to its “one wash” detergent advertising campaign for Ariel which the Omo manufacturer alleges is non-factual. The adverts in question (an earlier version of which is available above in Swahili) promote Ariel as the best stain removal detergent “in one wash” and is compared as a superior choice to the “other popular powder detergent in the market” (an alleged reference to UK’s Omo detergent). UK contends that the adverts thus depict Omo as incapable of removing the stains in “one wash”, arguing that the claim is not based on any independent research. Therefore UK alleges that PGEA’s ‘one wash’ advertisements are unlawful. From an intellectual property (IP) perspective, advertisements are important mode of building and promoting IP rights.
The High Court last month granted UK interim orders restraining PGEA from “running or airing the Ariel One Wash campaign advert in its current form at all media houses and all forms of print and electronic media” until the matter is back in court. Subsequently, it was reported that the court directed that the suit be referred to a Tribunal of the Advertising Standards Board of Kenya.
Comment:
The central question which arises in the present case is whether one manufacturer may compare its product in an advertisement with that of his competitor and indicate that its product is better or that there are defects in its competitor’s products.
This practice is known as comparative advertising.
According to Prof Owen Dean, IP Chair at Stellenbosch University, a trader who resorts to comparative advertising is “attempting to “ride on the back” of a well known and successful product and to use the repute of that product as a platform from which to generate sales of his own product.”
Kenya has a broad framework of national and international legal frameworks that have a direct impact on the regulation of comparative advertising. First and foremost, the Paris Convention, signed and ratified by Kenya, contains important provisions on competition. Article 10bis reads as follows:
“(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.
(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.
(3) The following in particular shall be prohibited:
– false allegations in the course of trade of such a nature as to discredit the establishment, the goods or the industrial activities of a competitor;
– indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quality, of the goods.”
In addition Article 2 of the TRIPs Agreement requires members of the WTO to comply with the substantive provision of the Paris Convention as highlighted above.
Nationally, comparative advertising is regulated through common law and statute.
Kenya’s principal legislation governing false or misleading advertising is the Competition Act. For our present purposes, it is important to note the definition of asset in this Act which includes both “asset” includes both “intellectual property” and “goodwill”.
Most notably, section 55 of the Act makes it an offence to engage in false or misleading advertising. The section reads as follows:
“55. False or misleading representations
A person commits an offence when, in trade in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, he―
(a) falsely represents that—
(i) goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;
(ii) services are of a particular standard, quality, value or grade;
(iii) goods are new;
(iv) a particular person has agreed to acquire goods or services;
v) goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have;
(vi) the product has a sponsorship, approval or affiliation it does not have;
(b) makes a false or misleading representation—
(i) with respect to the price of goods or services;
(ii) concerning the availability of facilities for the repair of goods or of spare parts for goods;
(iii) concerning the place of origin of goods;
(iv) concerning the need for any goods or services; or
(v) concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.”
In common law, the torts of passing off and injurious falsehood relate to forms of conduct which constitute an infringement of a competitor’s right to attract custom whose object is the trader’s goodwill. The common law action of passing off is expressly recognised in section 5 of the Trademarks Act. Whereas the common law tort of injurious falsehood seems to have received tacit recognition in section 6 of the Trade Descriptions Act which states as follows:
“6. (1) It shall be an offence for any person, in the course of any trade-
(a) to make a statement which he knows to be false; or
(b) recklessly to make a statement which is false, as to any of the following matters-
(i) the provision in the course of any trade of any services, accommodation or facilities;
(ii) the nature of any services, accommodation or facilities provided in the course of any trade;
(….)
(2) For the purposes of this section-
(a) anything(whether or not a statement as to any of the matters specified in subsection (1)) likely to be taken for such a statement as to any of those matters as would be false shall be deemed to be a false statement as to that matter; and
(b) a statement made regardless of whether it is true or false shall be deemed to be made recklessly, whether or not the person making it had reasons for believing that it might be false.”
Thus far, it appears that the relevant law cited is in favour of UK’s claim of false, misleading advertising. However PGEA may seek to refute UK’s claims by relying on the Constitution of Kenya, 2010 as well as non-binding/persuasive jurisprudence from South Africa.
In South Africa, the question of comparative advertising arose in the case of Post Newspapers (Pty) Ltd v World Printing & Publishing Co Ltd 1970 where both parties were publishers of two newspapers – Post and The World. Both papers targeted the same potential readership and so they competed for advertising. Under the cover of a circular letter, the respondent sent a market review to some advertising agents. In it, Post was unfavourably compared with The World as an advertising medium. The applicant sought an interdict prohibiting the dispatch of those documents. Nicholas J referred with approval to some English cases, in which it had been said: “The general position in law is: comparison – yes; but disparagement – no.”
In refusing the application, the court held that:
“To the extent that the statements complained of involved merely a comparison of The World and Post, they are not actionable. There are, however, statement which amount to a disparagement of Post as an advertising medium. If these statements were shown prima facie to be untrue, the applicant would be entitled to relief. The applicant does not, however, say that these statements are untrue, nor is there any evidence that they are untrue.”
Therefore in terms of South African case law, purely comparative advertising is not unlawful – unlawfulness only occurs if the competitor is discredited by untrue allegations. This precedent would bolster PGEA’s case against UK. However South African scholars in the law of torts, Van Heerden & Neethling disagree with the holding in this case. They argue that comparative advertising always entails a disparagement of a competitor’s goods and therefore it constitutes an impairment of the latter’s goodwill and it is unlawful unless there are grounds for justification.
Aside from reliance on South African precedent, the makers of Ariel may chose to focus on the protection of intellectual property rights expressly guaranteed under the Constitution. In this connection, counsel for PGEA would argue that the state must balance consumer rights (Article 46) as advanced by UK together with the IP rights of PGEA in its advertisements (Article 40). Connected to this right to property is PGEA’s constitutional right to freedom of expression which is also enshrined in Article 32.
This blogger has previously discussed here and here the various intellectual property rights that may be owned within the context of advertising, most notably copyright in all literary, artistic and audio-visual works and trademark rights with respect to brand names, logos and slogans. In this regard, it is important to note that UK has not disputed PGEA’s IP rights relating to the adverts. Therefore by ordering that the Ariel ‘One Wash’ adverts be removed from media circulation, it may be argued that the courts have infringed on PGEA’s IP rights in the adverts. Article 40(5) compels the courts to support, promote and protect the IP rights of the people of Kenya. Any limitation of rights under the Constitution must be justified under Article 24 of the Constitution. PGEA would also argue that the restraining order by the court is a deprivation of property and therefore would have to comply with Article 40(3) of the Constitution.
It was naive of the Plaintiff [Faulu Kenya] to suggest that it was the only entity to recognise the potential of the mobile phone platform to reach potential customers with banking products. – Faulu Kenya Deposit Taking Micro-Finance Limited vs Safaricom Limited HCCC No. 756 of 2012 at page 13.
This blogger has come across a recent High Court ruling in the Faulu Kenya vs Safaricom case. Faulu Kenya made an application for temporary injunctions to restrain the Safaricom from offering to its subscribers and the public generally, the cash saving and advance product called M-Shwari howsoever both during the pendency of its application and the entire suit. To recap briefly, the M-Shwari row arose late last year when Faulu Kenya claimed it was the first entity to come up with the idea of a mobile money service that allows users to save, borrow loans and earn interest using their mobile phones. As a result, Faulu Kenya moved to court to claiming that Safaricom had infringed former’s copyright rights in a concept paper containing the idea.
The Honourable Judge Havelock, in the present ruling, dismissed Faulu Kenya’s application with costs awarded to Safaricom. From an intellectual property perspective, Faulu Kenya appears to have exposed serious flaws in its copyright claim, including its understanding of rights under copyright and the offence of infringement. Therefore this blogger concurs with the ruling of the learned judge.
Comments:
A good starting point would be to examine each of Faulu Kenya’s submissions in this matter as summarised on page 11 of the ruling:
i. To the extent that the respondent has and offered to the market the offensive product, it infringes on the applicant’s [Faulu Kenya’s] copyright to the work.
The subject matter of Faulu Kenya’s rights under copyright is its concept paper which relates to the idea of a mobile money service that allows users to save, borrow loans and earn interest using their mobile phones. Therefore the question, one must ask is whether Safaricom have carried out any restricted act relating to the literary work claimed by Faulu Kenya?
In the opinion of this blogger, the fact that Safaricom has offered a product or service similar to the concept described by Faulu Kenya does not fall within the definition of infringement contained in section 35 of the Copyright Act.
ii. To the extent that the respondent has not evidenced having had the concept in the offensive product in the manner proposed by the applicant, prior to receiving the applicant’s proposal and concept on 25th February 2011, then it is more likely than not that the offensive product is a reproduction in a material form of the applicant’s concept and therefore an act of infringement of the copyright therein.
Faulu Kenya appears to be cleverly shifting the onus of proof from itself to Safaricom. However this blogger submits that the onus solely rests on Faulu Kenya using the popular three-pronged test for proving infringement, namely: (a) Similarity, (b) Causal connection between original work and infringing copy; (c) Copyrightability of the original work. Faulu Kenya ably deals with requirement (c) at pages 8 and 9 however as we have seen above, requirement (a) is absent since there are two separate copyrightable subject matter both relating to the same idea. The same reasoning could be extended to requirement (b). This requirement relates to the question of access, which presupposes that the original work and the infringing copy fall under the same category of work as defined in the Act.
All in all, this blogger submits that it is both factually and legally impossible for Faulu Kenya to claim that the Safaricom M-Shwari service is an infringing copy of its concept paper therefore this defeats any claim by Faulu Kenya on the grounds of intellectual property infringement.
IP Kenya 