Enact law to save global brands from local pirates

The Achilles heel for owners of well-known brands is that the alleged notoriety of the mark must be within Kenya. FILE PHOTO | NMG 

By WILLIAM MAEMA

Summary

• Companies Act doesn’t fully address the challenges faced by owners of brands routinely registered by ‘enterprising’ Kenyans.
• Protection of brands through registration is therefore an urgent imperative for any company contemplating doing business locally.

Kenya has in the past 15 years undergone economic transformation that has seen phenomenal proliferation of shopping malls and trading centres as well as the entry of major global brands that were hitherto unknown in the country.

World-class multinationals in virtually all commercial sectors have also set up shop in Kenya, bringing along coveted brands.

One of the most unwelcome shocks that greets the arrival of such businesses in Kenya is the realisation that they cannot use their valued brands here because some ‘enterprising’ Kenyan has already obtained trade mark registration for the same.

What follows thereafter is either a bruising and expensive court battle or a negotiated settlement involving the re-purchase of the brand by its legitimate owner at a price that can only be described as extortionist or a ransom.

Protection of brands through registration is therefore an urgent imperative for any company contemplating doing business locally.

Kenya being a ‘first-to file’ country means that registration of trade marks is done on a ‘first come first served’ basis irrespective of whether the mark is registered, owned or used by another party outside Kenya. It all depends on who gets to the door of the Trade Marks Registry first.

This is why the Registry normally indicates in its database the precise time of the day when an application was received and paid for.

Kenyan law provides some respite to owners of what are called “well-known” trade marks. These are brands that have acquired such a high degree of distinctiveness that they have become household names. Examples of such marks include “Olympic”, ‘Google”, “Coca Cola”, “McDonalds”, and “Nike”, among others. Such brands enjoy protection under the law even if they are not locally registered.

The proprietor of a well-known mark can successfully challenge prior registration of the mark by a third party or resist attempts by such registered proprietor to stop the legitimate owner from using the mark in Kenya.

The burden of proving that one’s mark is well-known lies upon the person claiming that the mark is well-known.

The World Intellectual Property Organisation (WIPO) has developed an elaborate criterion for determining whether a mark meets the required threshold of well-knownness.

The list of factors for consideration includes the degree of recognition of the brand by the relevant segment of consumers, level of advertising, promotion, sales volumes, among others. It must be a brand that requires no introduction to the relevant consumer.

The Achilles heel for owners of well-known brands is that the alleged notoriety of the mark must be within Kenya. The reputation of the brand outside Kenya is irrelevant. Therefore, a brand that has never been used in Kenya will not enjoy this privilege.

However, with the advent of the Internet and online shopping, this has become a spurious requirement considering that consumers in Kenya frequently encounter these brands online through advertisements, promotions and even purchases.

Courts in some jurisdictions like India have recognised the out-datedness of this threshold and determined that strong online presence of a brand would justify the recognition of a well-known trade mark based on evidence that consumers in the local jurisdiction know the brand well even if the online sales may not be significant.

Kenyan trademarks law should be amended by removing the local notoriety requirement. This will adjust the law to the current business realities presented by technological advancement. 

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Apart from well-known marks there is another breed of brands, currently unknown under Kenyan law as ‘famous marks”. These are brands that are a notch higher than well-known marks.

They are superstar brands whose reputation is so high that their use by anyone in respect of any goods or services is likely to mislead consumers into believing that the product or service is provided by or associated with the owner of the famous brand.

The use of such mark on any goods or services amounts to taking an unfair advantage of the famous brand.

The protection of famous marks entitles their owners to ward off not only competitors who deal in similar goods/services but practically anyone else using the brand for any purpose whatsoever. The logic here is that such use dilutes the value of the brand.

In jurisdictions where famous trademarks are protected by legislation such as the US and the EU, the brands enjoy a broader degree of protection than well-known marks to the extent that their protection is not limited to any specific goods or services and do not need to have been used locally.

The law acknowledges that their fame transcends geographical boundaries.

Kenya has made the first baby steps in the right direction by introducing a provision in the Companies Act, 2015 which prohibits incorporation of a company under a name that constitutes the registered trade mark of a third party.

This law, while laudable, does not address the full spectrum of challenges faced by the owners of global brands that are routinely registered by pirates in Kenya prior to the arrival of the legitimate brands.

The enactment of a law that provides for the protection of famous marks would save Kenya from fast becoming a pirates’ den for global brands.