Kenafric ‘Fuma’ Footwear Denies Counterfeiting Claims by Puma

Kenafric Fuma Footwear

This blogger has previously blogged here and here about Kenafric’s fatal attraction to well-known trade marks, to put it mildly. The latest victim of Kenafric’s attraction is none other than Puma AG Rudolf Dassler Sport (Puma for short). In this connection, this blogger came across a recent ruling in the case of Kenafric Industries Limited & another v Anti-Counterfeit Agency & 3 others [2015] eKLR.

In this case, Puma through its representative Paul Ramara lodged complaints at Anti-Counterfeit Agency (ACA) against Kenafric for trade mark infringement. ACA and Ramara went to Kenafric’s premises and demanded to check the same for goods in the name of Puma a demand Mikul Shah a director at Kenafric declined to comply with due to the fact that his company had not been served with any Court order directing the said search and entry. Consequently, Shah was arrested, taken to Ruaraka Police Station and charged with the offence of obstruction and released on bond.

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Blind Opposition to Caller Ringtone Deal between Safaricom and Collecting Societies: High Court Case of Irene Mutisya & Anor v. MCSK & Anor

Robert Collymore CEO Safaricom

This blogger has recently come across Nairobi High Court Civil Case No. 262 of 2015 Irene Mutisya & Anor v. Music Copyright Society of Kenya & Anor. In this case Mutisya and another copyright owner Masivo have filed suit against Music Copyright Society of Kenya (MCSK) and mobile network operator Safaricom Limited for copyright infringement. The copyright owners filed an urgent application on 30th July 2015 for a temporary injunction to restrain Safaricom from remitting license fees to MCSK pursuant to a recently concluded license agreement for caller ring-back tones (CRBT) made available through Safaricom’s Skiza platform. The copyright owners also asked the court to restrain both Safaricom and MCSK from implementing the CRBT License Agreement pending the hearing of the application.

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Legality of Equitable Remuneration Challenged: High Court Petition of Xpedia & 4 Ors v. Attorney General & 4 Ors

equitable remuneration

Editor’s Note: On 31st July 2015, the urgent application in this Petition No.317 of 2015 dated 29th July 2015 was heard and certain interim orders were granted. A copy of the orders is available here.

This blogger has confirmed a recent media report that two content service providers and three copyright owners have jointly filed a petition challenging the constitutionality of the right to equitable remuneration under the now infamous section 30A of the Copyright Act. The Petition was filed against the Attorney General, Kenya Copyright Board (KECOBO), Kenya Association of Music Producers (KAMP), Performers Rights Society of Kenya (PRiSK) and Music Copyright Society of Kenya (MCSK).

As stated above, the crux of the Petition filed by Xpedia Management Limited, Liberty Afrika Technologies Limited, Elijah Mira, Francis Jumba and Carolyne Ndiba is that KAMP, PRiSK and MCSK should be stopped by the court from receiving or collecting royalties under section 30A of the Copyright Act in respect of works owned or claimed by the Petitioners.

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Lessons from Kenafric on Intellectual Property Rights and Permissions

BEN 10 Cartoon Network CN Poster

The Business Daily recently reported that Time Warner Inc and Kenafric are in talks to settle their copyright and trade mark infringement dispute out of court. It is reported that both parties recently appeared before the soon-to-retire IP-savvy Justice JB Havelock to request more time to conclude settlement discussions.

As we had previously discussed here, Cartoon Network Africa through its parent company, Time Warner had moved to the High Court to stop local confectionery giant Kenafric from using its cartoon “BEN 10” on the wrappers of its bubble gum products. Time Warner argued that the association of the chewing gum with its brands was damaging to the reputation of BEN 10 and goods branded with the label including toys, video games and clothing valued at Sh275 billion therefore Kenafric’s use of the name BEN 10 amounts to trade mark infringement of BEN 10 Trademarks. In addition, the sworn affidavit by Cartoon Network’s Vice President Louise Sams claimed that the unauthorised reproduction or adaptation or publication or broadcast or sale or distribution or possession or importation of the offending chewing gum by Kenafric constituted copyright infringement.

KENAFRIC BEN 10 BUBBLE GUM BRAND

In its defence, Kenafric argued that the Cartoon Network products in question are registered under different classes under the Nice Classification hence Time Warner cannot challenge Kenafric given that the latter deal in different products. Kenafric also argued that the US firm has no local operations that can make consumers links its products with those of Kenafric, which are mostly sold within East Africa. All in all, Kenafric contended that the line of trade of the two companies is distinct and there are no similarities between their goods that can confuse customers.

In the meantime, many intellectual property (IP) commentators agree that Kenafric runs the risk of being dragged to court in similar fashion by the Coca Cola Company for its wrappers which appear to infringe on the “FANTA” and “SPRITE” marks. These infringing get-ups are available below:

KENAFRIC SPRYTE BUBBLE GUM

FANTY MAGIC KENAFRIC

Be it as it may, this blogger argues that Kenafric’s public experience with intellectual property enforcement should serve as a lesson to other commercial entities on how not to use the IP of other entities.

From a copyright perspective, literary and artistic works that make up a trader’s brand image cannot usually be used without that owner’s permission. Of course, the copyright owner may refuse to give permission for use of their work. In the case of Kenafric’s operations, it is clear that its uses would not fall within the scope of the fair dealing provisions and would not be subject to compulsory licensing through the Competent Authority. Therefore Kenafric would have to seek and obtain permission in writing to use, reproduce or adapt any trader’s copyright works.

Therefore, Kenafric would have to negotiate a licence to cover the use it intends to make of the work. This licence is essentially a contract between Kenafric and the copyright owner including the terms and conditions of use and payment or royalty for the use. The Copyright Act distinguishes between exclusive and non-exclusive licenses however the license must be in writing.

From a trade marks perspective, if Kenafric wants to use other people’s trade marks, it must obtain permission. Trademarks may be registered or unregistered. The registration of a mark gives the proprietor of that mark the exclusive right to the use of the trademark upon or in relation to the goods in respect of which it is registered, or in relation to services for the purpose of indicating that a particular person is connected, in the course of business, with the provision of those services. It follows that the proprietor of the mark may sue for infringement where there has been an unauthorised use of the registered mark. In addition, the registered owner of a trademark also retains the right to protect any reputation acquired through use by means of a passing-off action.

Therefore if Kenafric wants to use a trade mark, it must approach the owner and enter into a licence agreement with them. As one of the largest confectionary companies in the East African region, this blogger is of the view that Kenafric has sufficient bargaining power to negotiate favourable licensing terms and conditions with respect to both trade mark and copyright uses. As witnessed previously in the Mandela Foundation case against Zuji Travel Agency, globalization has made it easy for IP owners to detect IP infringement all over the globe, therefore the onus is on IP users to take all reasonable precautions to ensure that they obtain the necessary permissions and licenses from the IP owners.

In the case of most commercial entities such as Kenafric, formalized licensing arrangements provide a desirable win-win outcome for all parties involved as opposed to costly and lengthy court cases. What remains to be seen is whether Kenafric and other local companies will learn from the Ben 10 case.

Unanswered Copyright Issues as Musician JB Maina Agrees to Sh15.5m Settlement with Safaricom

jb-maina

Media reports here and here indicate that musician JB Maina has accepted Safaricom’s out-of-court settlement offer of KES 15.5 Million in the case of John Boniface Maina v Safaricom Limited [2013] eKLR. To recap briefly, the JB Maina case has been in court since 2010 when Safaricom was accused of copyright infringement in respect of musical works of JB Maina alleged to have been uploaded on Safaricom’s portals, particularly its caller ring back tone service known as ‘Skiza’.

Prior to the reported settlement, the court had already granted JB Maina a temporary injunction restraining Safaricom from dealing in JB Maina’s works, in addition to awarding JB Maina the costs of the motion to be paid by Safaricom. Thereafter the court allowed JB Maina’s application for Anton Piller orders against Safaricom. These orders allowed JB Maina to enter Safaricom’s premises, inspect its machines, take records, make copies of records for purposes of gathering and preserving evidence necessary to prove his claim of copyright infringement. The final straw in the JB Maina case was an application filed by JB Maina for Safaricom Chief Executive Officer to be held in contempt of the anton piller orders issued by the court and committed to civil jail. This move prompted Safaricom to seek the leave of the court to allow for an out-of-court settlement of the suit with JB Maina.

With above information in mind, it comes as no surprise that Safaricom would be keen to pursue and conclude an out-of-court settlement in this matter with JB Maina. However this blogger argues that this settlement has left several critical issues unanswered:

1. The Separation of Infrastructure Provision from Content Provision

In this regard, Safaricom’s position has always been that it is an infrastructure provider that enables rights owners and their licensees to avail their music to end users. In the present case, the licensees are Content Service Providers (CSPs) who are duly licensed by the relevant collective management organisations (CMOs) to avail music. In this regard, Safaricom maintains that where licensed CSPs provide music using Safaricom’s infrastructure, it is enough that the CSPs produce to Safaricom all the required copyright licenses issued to it by the CMOs. It is on this basis that Safaricom enters into Content Provision Agreements (CPAs) with CSPs whereby the latter undertake to obtain all necessary licenses, rights of use, assignment and approvals from any relevant authorities and copyright owners for the provision of the Content and ensure that such licenses and approvals are updated and valid throughout the term of the CPAs. Critically, the CPAs state that CSPs undertake to defend and/or settle all intellectual property (IP) infringement claims brought against Safaricom and keep the latter fully indemnified.

In light of the above, Safaricom argue that as an infrastructure provider, it need not be licensed by CMOs or rights owners since the CSPs availing the music to end users are already licensed by CMOs and/or rights owners.

However, this blogger contends that the above argument is problematic for two main reasons, namely it betrays the widely accepted understanding of “communication to the public” and “infringement” under domestic and international copyright laws. In this regard, it is submitted that both functions of infrastructure provision and content provisions entail an exploitation of the right of communication to public and/or making available as defined under Article 8 of the WIPO Copyright Treaty and Section 2 of the Kenya Copyright Act. With regard to the issue of infringement, section 35 clearly contemplates two levels of infringement namely primary and secondary or direct and indirect. It is submitted that Safaricom may be liable for secondary or indirect copyright infringement as an infrastructure provider since it causes to be done or furthers the doing of an act which is controlled by the rights owners.

2. The Role of Content Service Providers

Safaricom advances two main reasons why it is averse to dealing directly with rights owners like JB Maina. Firstly, it argues that under the Kenya Information and Communication Act (KICA) read together with the Unified Licensing Framework gazetted in 2008, only CSPs who hold a current license from the Communications Authority of Kenya (CAK) are mandated to provide music to end users. Therefore Safaricom would only deal with CSPs and/or rights owners once they are duly licensed by CAK. Secondly, Safaricom appears to suggest the current arrangement of CSPs as middle-men is consistent with the provisions of the Kenya Competition Act i.e. preventing the monopolisation of content provision by a handful of CMOs or rights owners.

This blogger argues that this arrangement do not always work to the advantage of CMOs and rights owners since the CSPs are at liberty to under-state royalty payments received from Safaricom. Therefore, rights owners like JB Maina and CMOs like MCSK, KAMP and PRiSK must insist on dealing directly with Safaricom or at least having tripartite agreements where the copyright owners can be on the same level as the CSPs.

It is clear that JB Maina’s case raised important issues regarding rights owners that are not members of any of the music CMOs. However there are two other likely scenarios that would require Safaricom to deal directly with a rights owner. Firstly, where the rights owner is a member of a CMO but has selectively limited its assignments to the latter and/or the works to be administered by the latter. Secondly, where the rights owner has assigned all rights exclusively to both the CMOs and the CSPs (A frequent occurence!).