Friday, 31 July 2009
"We are busy finalising the workshops for the Conference. I understand that the Guidelines will have been released by April 2010 and I am of the view that they will be of interest to the IP community. I attach a workshop proposal form and if anyone is interested in presenting a workshop on the topic, at the Conference, please complete the form and return it to me".The LES has generally put on excellent programmes in the past, with sessions that appeal to IP licensors, licensees and practitioners alike. Afro Leo hopes that this conference will be well supported.
The South African Exchange Control Regulations stipulate that the payment of royalties by a licensee residing in South Africa under an IP licence agreement to a non resident licensor requires exchange control approval from the South African Reserve Bank (SARB). If the terms of the IP licence provide that goods may be manufactured in RSA the SARB will look to the Department of Trade and Industry (DTI) for advice in assessing such approval. In reality this means that a typical licensee resident in RSA must submit an application to the DTI for its consideration. If the DTI approves the agreement, a Certificate of Approval will be issued to the licensee that will enable them to approach their banker directly and instruct the transfer of the royalties. Such a requirement may also be necessary where a licence covers RSA even though the licensee is based elsewhere eg the UK. Beware, licenses without exchange control approval may not be recognized by the RSA courts.
Where the licence agreement also contains clauses that stipulate down payments (eg Signature Fees), minimum payments (eg Minimum Guaranteed Royalties) and once off payments or to the extent the manufacture of products may take place offshore (to RSA), the DTI will make a recommendation to the SARB who would then consider whether or not to approve the payment(s). In practice though approval for agreements with these sorts of payments is often very difficult to obtain because the very nature of the clause may mean that it is possible for a situation to occur in which the flow of capital (in this case the royalty or down payment) out of RSA is greater than the value of the IP licensed into RSA. The very purpose of exchange control is therefore defeated. For similar reasons agreements that include Minimum Sales Targets or excessively high royalty rates (see below) are also often rejected.
Structuring to seek as few approvals as possible
In the event that approval is not granted reasons are provided by the DTI/SARB and one then has an opportunity to re-submit the application with the suggested amendments or otherwise contest the decision. If approval is granted such approval is for a maximum period of five years at a time whereupon the extension requests (up to a further five year period) would need to be made. It is obvious therefore that one should structure a licensing regime to as seek as few approvals as possible especially where multiple licensees are contemplated. Often this requires the establishment of a local business who acts as a master licensor who collects royalties and then makes one application to remit the payment or, where possible, pays out a dividend.
In all instances where a resident licensee enters into a new or a substitute agreement or the extension of an existing agreement with a non resident licensor they must submit an application. Applications are in the form of a completed questionnaire/explanation submitted in duplicate together with four copies of the draft/signed agreement and amendments/addendum, if applicable.
• Changes in the name of the licensee and/or licensor (submit the relevant "Certificate of change of name of company issued by the Registrar of Companies"); and
• Changes in the local bankers or branch with whom the SARB may communicate regarding the transfer of payments under the agreement.
The guidelines for the SARB/DTI application state that royalty rates for trade marks of up to 4% on consumer goods will be approved. This often means that is necessary to structure the royalty clause so that each of the different types of IP is separate eg for a logo trade mark one may need to carve out the royalty for the copyright in the artistic work and that pertaining to the trade mark to ensure that one comes under the threshold. In addition threshold royalty calculations for subsidiary licensees create lower thresholds on the basis of this calculation: R = A(115-.5B)/100. For a 100% wholly owned subsidiary (B) charged a 5% royalty (A) the adjusted royalty rate (R) is calculated as = 5(115 - 50)/100 ie 3.25%. For a 50% subsidiary licensee (B) charged a 5% royalty (A) the adjusted royalty rate (R) is calculated as = 5(115 - 25)/100 ie 4.5%.
The rationale behind exchange control is frequently the subject of heated debate and adding to the arguments for those that favour less/the abolition of control will be the time it takes to get approval. Despite the DTI promise of an assessment of the exchange control application within 10-14 days, most experience a two month waiting time for feedback from the SARB. In the context of the fast moving commercial world such a waiting time is ridiculously long. Take for instance a simple transaction involving the assignment of a trade mark to a non RSA resident – one needs to get a valuation (and incur the cost) and then wait for two months before approval is/is not granted. I have sat in meetings where local RSA IP advisors have simply said “do not transfer your IP assets to RSA because it is such a schlep if you ever want to get them back out” – a subject for another article perhaps!
Wednesday, 29 July 2009
Sunday, 26 July 2009
The report, co-produced by the World Economic Forum, the African Development Bank and the World Bank Africa, covers 33 African countries which, the report states, have high-quality scientific research institutions, invest strongly in research and development and are characterised by a significant level of collaboration between business and universities in research.
Afro Leo is not sure how to interpret all this information since the World Economic Forum website ranks the Top Ten African countries rather differently:
2 South Africa
8 The Gambia
Tuesday, 21 July 2009
"The new amendment entails that patent applicants at the National Phase of the Patent Cooperation Treaty (PCT) shall pay the annual fees starting from the international filing date since it is the actual date for all countries which have been designated when the application was accepted according to Article 11/3 of the PCT.
According to Article 11 of the Law 82 for 2002 and its Implementing Regulations issued upon the prime minister’s decision No. 1366 for the year 2003, the fees shall be paid when submitting the patent application. Moreover, the annual fees shall be gradually increased starting from the second year and till the end of the patent protection period.
Patent owners or applicants are granted a six-month period to rectify their status from the issuance of the notification or the renewal date whichever is later".
Sunday, 19 July 2009
The Nigerian Copyright Act has long provided for civil enforcement against copyright infringement. However, with a slow-moving justice system, few copyright trained attorneys and a government often noted for its levels of corruption, civil enforcement seemed like a dream more than a reality. That changed this month.
Musical Copyright Society of Nigeria (MCSN) successfully sued telecommunications provider Zain for copyright infringement, to the tune of 100 million Naira. (That’s about US$674,000 or £411,000.) Infringed works were used in advertisements and sold as ringtones. Nigeria’s Vanguard outlines the history of the case, from refusals to pay for licenses, through settlement attempts and to the court case.
One important aspect of this case is that the infringed songs included some owned by foreign rightholders. MCSN is responsible for collecting for these songs through its agreements with other collecting societies, such as PRS in the UK and ASCAP in the US. The fact that MCSN was able to obtain a successful judgment for infringement of foreign-owned songs is good news for international collecting societies, as well as good news for Nigeria.
Friday, 17 July 2009
The Nigerian newspapers have been filled lately with new activities in the ongoing fight against copyright piracy in Nigeria. Here is a brief summary of some of those activities.
The Daily Sun reports that lawyer Job Dangana has opened his own publishing shop. Currently focusing on publishing textbooks, Dangana believes that his publishing company can help fight piracy by producing quality books at reasonable prices. Pirated books are generally easy to spot in Nigeria, being of very low quality. However, the high prices of legitimate books, especially textbooks, often make them out of reach for the average purchaser. While Dangan is not aiming to make himself rich, it is hoped his business will add to the strengthening of a legitimate book industry in Nigeria. Dangan’s immediate goal is to help students in Nigeria:
My focus in publishing is not primarily to make money but to produce high quality books that could lay solid foundation for the future of students.
Teaming up with Customs and Police Forces
Reported by This Day, the Nigerian Copyright Commission is building partnerships with the Nigerian Police Force and the Nigerian Customs Service in the ongoing battle against piracy. These partnerships help the Commission by enabling action at ports where infringing goods may be entering or leaving the country, as well as at the source of the infringing materials. Director General of the Commission, Adebambo Adewapo explained the relationship between the agencies:
…the Commission will always rely on their respective active support and collaboration in the anti-piracy campaign…
Introduction of Source Identification Code
The Nigerian Copyright Commission has introduced a new technical piece in the battle against copyright infringement. The Source Identification Code, called SID for short, identifies where an optical disc (used for either CDs, DVDs or VCDs) was pressed. According to The Times of Nigeria, this type of system has been in use around the world since the mid 1990s. In Nigeria, it is hope that using SID codes will help identify products coming from unregistered optical disc plants, believed to be the main source of infringing CDs and DVDs within the country.
Trial to Begin in Case of Exporting Infringing CDs
Back in May, Afro-Leo reported on a Nigerian business man who was accused of attempting to import infringing CDs into South Africa. The Vanguard tells us that the trial began at the end of June, as expected. Interesting to those of us who are familiar with cases involving subpoenas of text records from cell phone companies, the accused’s cell phone text messages were allowed into evidence, but the messages were not obtained from the cell phone company’s records. Rather, a witness from the Nigerian Copyright Commission transcribed messages stored on the cell phone at the time it was taken from the accused.
Thursday, 16 July 2009
Last week, Nigeria’s Vanguard published an interview with music super-star 2 Face Idibia. One of the top things on 2 Face’s mind is enforcement of Nigeria’s copyright law. Like many Nigerian musicians, 2 Face acknowledges the ongoing dispute between collecting society MCSN and the government, and he urges the government to support MCSN’s efforts to collect royalties for its members.
That’s not really news anymore. Afro-Leo was, however, surprised by two other tidbits contained in the interview.
Nigeria Needs More Entertainment-Knowledgeable People
There is one area where 2 Face completely agrees with the government, although he may not realize it. Nigeria really needs attorneys trained in copyright and entertainment law areas.
We need more entertainment lawyers, more artistes’ managers and management companies, individuals and corporate bodies that will say to the artist, “Hey, you just concentrate on your talent, and we’ll take care of the rest.”
The Nigerian government also recognizes this as one of the biggest problems in the country. Without people trained in copyright or entertainment law, the Copyright Law provisions for civil remedies are practically worthless. This is why the Nigerian Copyright Commission has worked so hard to develop an Intellectual Property course for Nigeria’s Universities.
A New Way to Get Paid
2 Face’s latest album, The Unstoppable, which includes a track featuring R. Kelly, was done as a block deal. Instead of worrying about payments per album sold, 2 Face was paid a set fee upfront for the album. This arrangement helps protect 2 Face against Nigeria’s rampant copyright infringement by making the number of albums sold irrelevant to his income. As he put it in the interview, “My brother, there is no way you will not be told stories, when it comes to wanting to know figures of your album sold by the marketer.”
Wednesday, 15 July 2009
"Piracy down in many nations: The rate of personal computer (PC) software piracy dropped in 2008 in about half (57) of the 110 countries studied, remained the same in about a third (36), and rose in just 16.
Piracy up on a global basis: However, the worldwide PC software piracy rate rose for the second year in a row, from 38 percent to 41 percent, largely because PC shipments grew fastest in high-piracy countries such as China and India.
Dollar losses up: The retail value of unlicensed software — representing revenue “losses” to software companies — broke the $50 billion level for the first time in 2008. Worldwide losses grew by 11 percent to $53 billion. Excluding the effect of exchange rates, losses grew by 5 percent to $50.2 billion. "
Tuesday, 14 July 2009
Knowing colleagues in the UK, the changes to the UK IPO procedures will not all be hailed as improvements and will attract their fair share of criticism but they (and other changes) are an attempt by the Office to do things differently, more efficiently and perhaps even help the UK IPO stay in business. For a moment Afro Leo contemplates the trade mark registry in RSA (CIPRO) which is beset by delays, charges for online searches, still uses the antiquated single class filing system (not entirely their fault) and is apparently contemplating increased fees because national filings have fallen - quite the opposite to the incentives the UK IPO is offering to increase filings.
Both Registries are under pressure. In the UK, there is strong competition from the Community Trade Marks Office which has just dropped its fees and the UK IPO sits in Newport which is likely to make recruiting more difficult compared to when it was based in London, simply on the size of the catchment area. The dire state of the UK economy will also play a significant role. In RSA, it does not appear that CIPRO gets the ministerial attention/profile that it deserves or requires in order to fund the training to enable it to become truly world class and help them recruit. Take for example, a story which reached Afro Leo's ears recently that trade mark examiners attended classes for the SAIIPL Trade Mark Practitioner exams but did not sit the exams because CIPRO could not or would not pay for it (again he stands to be corrected).
It was not long ago that the UK IPO took a considerable time period to register a trade mark and yet today it is one of the most advanced registries in the world in terms of its performance. Both the UK IPO and CIPRO deal with around 30000 trade mark applications per year so the comparison is not completely irrational. CIPRO's intentions are good and some of their challenges quite unique. What can be done to assist them improve?
Thursday, 9 July 2009
Warren Weertman (Bowman Gilfillan) has alerted Afro Leo of the development in the UK that Companies will have to go to court every time they want counterfeit goods to be stopped at the UK's borders following a policy change that could send costs soaring for intellectual property rights holders (Out-law). Afro Leo notices that the draft Kenyan regulations do not yet include fee amounts for using the legislation. In RSA, despite the ease of getting court warrants to seize counterfeit goods, it has always been necessary to take court action to prevent goods from being released. Perhaps we have missed something but the judgment (here) that lead to the change in UK policy seems fair. Afro Leo says, with a smile, that it is good that UK legislation is finally falling in line with African legislation, or is it just HMRC's way of acknowledging the British Lions recent rugby defeat to the Springboks?
Dr Wim Alberts (IP consultant - Bowman Gilfillan) poses the question: Does the [ECJ] L'Oreal case blast Verimark (the RSA case comparative advertising case) away? Thanks to Sara-Jane Pluke (Moore Attorneys) Afro Leo has learnt of IP consultant Hans Muhlberg similar views/questions and some others, in a delightful piece here. Afro Leo notes how legislation in 27 EU member states is distilled into a short judgement by the ECJ to be applied in the UK and inevitably influence legislation in RSA which has followed (but not quite) the Harmonization Directive of the EU. The "not quite" bit makes life very interesting for trade mark practitioner in RSA especially when RSA judges controversially bring constitutional rights eg free speech into the fray.
And, as Kenya is launching its counterfeit legislation the Attorney General in Ghana is becoming very outspoken about the need for proper legislation in that country too. Adam Smith (World Trademark Review) has drawn this report to Afro Leo's attention which includes:
"In the case of Ghana, which is severely hit by the phenomenon, making job creation exceedingly difficult, the Attorney-General and Minister of Justice, Mrs Betty Mould-Iddrisu, Tuesday advocated the establishment of a separate Intellectual Property Office to fight piracy and counterfeit products in the country. "
The anti-counterfeiting law has been criticised because the broad definition of counterfeits is so vague that it could include generic drugs. According to the petitioners:
"Generic medicines are legitimate exact copies of their brand-name original. They are not counterfeits. They should not be confused with counterfeits. The manufacturing of generic medicines is not a criminal offence. ”We believe our government should combat counterfeiters and counterfeit goods, including medicines, but not at the expense of our health and our right to life".In Kenya generic drugs are up to 90 percent cheaper than their brand-name counterparts.
Advocates of the new law, including the Kenya Association of Manufacturers and brand-name drug-maker GlaxoSmithKline, argue that its language is clear and they have no intention of trying to block the import of generic drugs. The Act has not yet come into force but is expected to do so within weeks.
Monday, 6 July 2009
The project aims to establish a “functional protection system for geographical indications in Kenya that should contribute to the economic success of Kenyan products by giving them the opportunity to fill new market niches and to achieve higher profits across the entire value-chain”.
According to Engineering News, Benoni-based BAE Systems Land Systems South Africa has purchased the IP in the RG 34 light armoured design. Ironically, the vehicle was orginally designed and developed in South Africa, by specialist engineering enterprise Industrial & Automotive South Africa, under a contract from Sabiex.
Right: Did Benoni Inspire Bugs Bunny?
The proposal is for sui generis legislation which would seek to avoid introducing another form of intellectual property right. Only writers residing in-country will be entitled to payment. Remuneration would come not from already-strained library resources but from a central fund provided by Parliament.
Thursday, 2 July 2009
Wednesday, 1 July 2009
On a continent where individual countries have more languages than Europe, concerns about translation and wording are not new, especially for brand owners. But a recent announcement in Nigeria offers a not so subtle reminder to check, and double check, the possible meanings of your new brands.
The UK Guardian reports on the new joint oil and gas venture between Nigeria National Petroleum and the Russian company Gazprom. As is common in joint ventures, the companies took parts of each of their names and combined them. Unfortunately for the new company, they took the first part of each name and created Nigaz*.
For those who have spent any time in a country with lingering racial tensions, or who are familiar with the American hip hop music that has infiltrated most of the continent, the less than positive connotations with the company’s new name do not need to be explained. Reuters Africa reports that the new name has sparked a number of racism debates as well as plenty of caustic jokes and some opposition from Nigerians.
Afro-Leo wonders if those opposed to the name would find it less offensive were it not seen as coming from the Russian company. Thinking of a South African commercial seen in a Lusaka movie theater a few years back: a group of friends were sitting on some steps greeting each other with words similar to the new company’s name. Everyone was laughing and talking, just hanging out. Then, the only white guy in the group used the word to greet a friend, and everything went quiet. The other friends all stared at the white guy and words on the screen said something to the effect of ‘if you get it, that’s the point.’
The meaning of words can depend as much on who the speaker is as who the listener is. When considering new brand names and trademarks, it’s important to think of who the message is going to and who it is perceived as coming from.
*If actually pronounced like the first part of each word, the new name has a hard i sound, like nye.
Those who have been following the TVIEC and their concerns with the SABC will recall that the TVIEC, representing the content providers, were up in arms about the fact that currently an exception under the ownership legislation in the South African Copyright Act means that the commissioner of that work owns the copyright for cinematographic films (amongst other exceptions) and not the creator. Afro Leo expressed his initial views on the the TVIEC open letter to government here and more recently here. He is now delighted to find that the Position Paper summarises a full discussion on ownership of IP between MNET, WOW, SABC, eTV, On Digital, SASFED and the National Film and Video Foundation. The Position Paper can be located here. There relevant sections are:
3.15 What role should the Authority play in the regulation of IP rights taking into consideration the role currently played by CIPRO and the DTI
3.16 Is there an explicit legislative basis for the Authority to regulate IPRs
3.17 Is IPR [ownership] not supposed to based on a commercial agreement between the commissioning parties
3.18 How should conflict relating to IPRs be adjudicated
The Authority concludes at 4.4.5-4.4.7 that "The Authority has noted the problem of full ownership ...brought about by the exception. Considering the position [of copyright ownership] can be negotiated by contract, there is no compelling reason to amend the Copyright Act at this stage. Any discontentment ... should be brought to the attention of the DTI and CIPRO. ...The Authority will engage with the DTI and CIPRO and other relevant government departments on these issues"
Perhaps unsurprisingly, the SABC displayed the strongest view of maintaining the status quo. Afro Leo finds himself siding with a comment from WOW that, although the ownership position on copyright can be negotiated, the legislative position determines the strength of the relative negotiating positions. Afro Leo can also think of fundamental reasons why copyright should, as a base point, vest in the commissioner of the work. For example, it would be unwieldy to require separate licenses each time the cinematograohic work was used which, in itself, could restrict the ability to commercialise the work. The balance is that the owner of the work should somehow be obligated to, at the very least, attempt to commercialise the work. Again the post "when is a failure to exploit, exploitation" rings a timely bell, especially for the SABC.