Longhorn Publishers Kenya

The Business Daily reports that Longhorn Publishers have acquired the works of iconic educational textbooks writer and publisher, Malkiat Singh. The details of this deal are reported as follows: Longhorn Publishers will pay Singh KES 83 million in cash and annual royalties of about KES 24 million for the next 10 years (12% of yearly sales). The octogenerian Singh is a household name in Kenya’s textbook publishing market, with over 20 titles approved by the State for Primary Education. It is reported that the buyout deal does not include the purchase of Singh’s publishing house, Dhillon Publishers therefore as part of the deal, he is restricted from publishing with Longhorn rivals over the next decade.

While announcing the deal, Longhorn Managing Director Musyoki Muli is reported as saying:

“We will be offering Mr Singh a royalty rate of 12 per cent on net sales which is slightly higher than the average of 10 per cent (….) The publisher was experiencing some challenges in marketing the brand; challenges which we hope to overcome through the rebranding that we have just carried out and backed with vigorous marketing.”

Comment:

This has been a big year for intellectual property (IP) related mergers and acquisitions in Kenya. Thus far, the biggest IP deal is in trademarks where L’Oreal acquired Nice & Lovely in a 3 billion shilling deal (discussed here). Now it seems that copyright has also stepped into the limelight with the announcement of Longhorn’s recent buyout.

On the face of it, the media report is misleading as it wrongly equates assignment and buyout/transfer of copyright. In the case of a buyout/transfer, Singh would no longer own any rights to his literary works and Longhorn would be the new owner of all rights in Singh’s works. In the present case, Singh has merely assigned his reproduction rights to Longhorn for a period of ten years, after which these rights will revert back to him.

Such an assignment is governed by section 33(3) of the Copyright Act which requires that all assignments of copyright and exclusive licenses to carry out restricted acts must be in writing signed by both the assignor/licensor and assignee/licensee. This condition appears to have been met by Longhorn and Singh and their agreement appears to include distribution as well as reproduction. More importantly for Longhorn, the agreement grants it exclusive rights under copyright law and this exclusivity is reinforced by the inclusion a non-compete/restraint of trade clause for the duration of the agreement. An important consequence of Longhorn’s exclusive agreement with Singh is that Longhorn enjoys the right of action and remedies as if it were Singh where any of its rights are infringed as defined in the Copyright Act. This is guaranteed under section 34 of the Act.

Publishing rights, especially the question of locus standi to institute civil suits for copyright infringement were canvassed in the recent case of Njeri Wangari & Another v. Oxford University Press (E.A) Ltd. [2012] eKLR:

“As regards the 2nd Plaintiff [Nsemia Inc. Publishers]’s claim, the Defendant’s defence is that it did not know that the works complained of had been published by any other party, that there is no agreement between the 1st Plaintiff and the 2nd Plaintiff as regards “Mines and mind fields MY SPOKEN WORDS” and that if the same exists, it does not satisfy the provisions of Section 33 (3) of the Copyright Act and that therefore the 2nd Plaintiff lacks locus standi to bring the present proceedings (….) My view is that, the evidence produced by the Plaintiffs in the Supporting Affidavit did not address or answer these issues (….) Accordingly, I find that the 2nd Plaintiff’s application against the Defendant is unmeritorious. Since the claim by the Plaintiffs is intertwined, on the issue of copyright I will dismiss the entire application with costs.”

An important question left unanswered is that scope of Longhorn’s exclusive right of reproduction. This would be particularly important given that the much-hyped laptop-for-schools project by the government. Under this recent deal with Singh, can Longhorn digitise Singh’s works and license them to the government under the laptop-for-schools project?