Trading in goods must not only be honest but also not be, even unintentionally, unfair. That is the basic principle that guides the interest of all those who may wish to buy or sell goods- Onguto J in Harleys Limited v Sun-Pharma East Africa Limited  eklr
The High Court of Kenya has yet again made a preliminary finding in a trade mark infringement and passing off action, this time in the realm of pharmaceuticals. The parties- Harleys Limited and Sun-Pharma East Africa Ltd are proprietors of the trade marks ‘Letrol’ and ‘Letroz’ respectively both used in the treatment of breast cancer. In a typical concurrent use of trademarks case, the Plaintiff, Harleys Limited alleges that the Defendant’s Letroz is so similar to its ‘Letrol’ as to cause confusion to the average consumer and that the name and general packaging of ‘Letroz’ is aimed to pass off as ‘Letrol’. The Plaintiff sought a temporary injunction restraining the Defendant from selling their drug under the name ‘Letroz’.
The Defendant denied any wrong doing, contending that the name ‘Letroz’ had been used openly and extensively since 2009 even before the mark was registered in 2014. According to the Defendant, there was a lawful concurrent use of both marks, which is allowed under section 15 of the Trade Marks Act and such concurrent use led to the respective marks of ‘Letrol’ and ‘Letroz’ to be associated with the Plaintiff and the Defendant respectively.
Unlike other areas of intellectual property (IP) law, trademark law is a subject that is accessible to everyone. To understand why goods are marked with signs, why two or more businesses cannot use the same sign for the same goods or services, why it is not a good idea for those signs to be very similar to one another, why you should not be able to stop someone from using a sign if you have it but do not use it yourself, and so on – these are topics that quite amenable to general understanding.
On 22nd January 2015, Radio Africa Group (RAG) filed an application to register trademark no. KE/T/2015/85958 “KILIMANI MUMS” (WORDS) before the Registrar of Trade Marks. The application was filed in international classes 35 (Advertising; business management) and 41 (Education; providing of training) of the International Classification of Goods and Services for Purposes of Registration of Marks in respect of various goods and services.
Last year we launched our Trade Marks (TM) Database – a groundbreaking web-based portal for conducting free searches of recent trade mark applications advertised by Kenya Industrial Property Institute (KIPI). The TM Database is now available here. It currently has over 40,000 fully searchable trademarks and this number is growing by the day as more applications are added to our platform.
11th edition of the Nice Classification, Amendment, Amendments to the Nice classification, Goods, Goods and services, KIPI, Nice Agreement, Nice Classification, registration, Services, Trademark classification, Trademark registration, Trademarks, WIPO, World Intellectual Property Organization
The Nice Classification is the international classification of goods and services used when applying for the registration of marks. The 11th edition of the Nice Classification came into force on the 1st of January 2017. The USPTO (United States Patent and Trademark Office) published an article discussing the amendments in the recent edition of the Nice Classification. These amendments include 15 class headings and explanatory notes in 7 classes. The list of goods and services has also been extended to include a more comprehensive list of goods and services. This blogger would like to explore some of the amendments to the Nice Classification and the impact of these changes would have when applying for the registration of a mark.
Amani National Congress, ANC, ANC Kenya, Cap.506, Kenya Trademarks Act, Kenyan Trademark rules, Likelihood of confusion, NASA Kenya, National Super Alliance, Nice Classification, Paris Convention, Protection of well-known trademarks, Trademark registration, Trademarks, WIPO, WTO Agreement
With Kenya’s next general election scheduled for 2017, the campaign spirit is in the air and new political parties and alliances branding themselves to attract potential voters. Two of these newly minted political parties cum alliances are Amani National Congress (ANC) and the National Super Alliance (N.A.S.A). Readers may associate “ANC” and “N.A.S.A” with the well known political party; Africa National Congress (ANC) in South Africa and the National Aeronautics and Space Administration program (NASA) in the United States. This blogger will consider the “trademarkability” of “ANC” and “N.A.S.A” in Kenya.
“Black Friday “may be defined in two ways. First, it is day that marked stock market catastrophe. Originally, 24th September, 1869 was deemed “Black Friday” when a crash was caused by gold speculators who attempted to corner the gold market. Their attempt did not materialize as the gold market collapsed causing the stock market to plummet. Second, it is the day following Thanksgiving in the United States (US). Thanksgiving is celebrated and honoured as a national holiday in the US and Canada as well. However, other countries and religions also mark Thanksgiving days. “Black Friday” is often regarded as the start of the Christmas Season and major retailers offer very attractive promotional sales.
Of great interest to Trademark Law and practice, is the fact that the concept of “Black Friday” has transcended the US and Canadian jurisdiction to Europe and even Africa. It is interesting to note that according to the United States Patents and Trademark Office (USPTO) Trademark database, there are at least thirty (live or dead) Trademarks with the words “Black Friday” either registered as they appear or incorporating other words. Majority are registered under class 35 of the Nice Classification system particularly for advertising services.
“IP Check-In” (Follow @IPCheckin on twitter) is a vibrant group of Intellectual Property (IP) enthusiasts in Kenya who meet at Strathmore University Law School on the second Saturday of every month to discuss topical IP issues in Kenya as well as developments and emerging trends in IP from around the world. This month, this blogger joined the IP Check-In group and the topic under discussion was the effect of section 40D of the Kenya Trade Marks Act.
Section 40D of the Trade Marks Act states as follows:
(1) A trade mark in respect of which Kenya is a designated state, registered by ARIPO by virtue of the Banjul Protocol, shall have the same effect and enjoy the same protection in Kenya, as a trademark registered under this Act, unless the Registrar communicates to ARIPO, in respect of the application, a decision in accordance with the provisions of that Protocol, that if a mark is registered by ARIPO, that mark shall have no effect in Kenya.
(2) The Institute shall act as a receiving office, for the purpose of filing an application under the Banjul Protocol, where a regional application is filed with it and the applicant is a national or a resident of Kenya;
Recently, the High Court delivered an interesting judgment regarding the chargeability of intellectual property (IP) royalties and license fees for purposes of customs duty valuation. In the case of Republic v Kenya Revenue Authority Exparte Bata Shoe Company (Kenya) Limited  eKLR the Kenya Revenue Authority (KRA) issued a partial demand notice to Bata Kenya requiring the latter to make a total payment of KES 90,489,947.00 to The Commissioner of Customs Services within 30 (thirty) days from November 24, 2010. Despite several exchanges, KRA and Bata Kenya were unable to agree on the total amount of taxes owed by the latter. Bata Kenya then moved to court under judicial review proceedings seeking for KRA’s notice to be quashed on the grounds that distribution royalties are not subject to customs duty as they are not royalties related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of the sale of the goods being valued within the meaning of Rule 9(i)(c) of the Fourth Schedule to the East African Community Customs Management Act, 2004 (EACCMA).
Bata Kenya owes its entire existence to two separate agreements namely, a Trade Mark License Agreement (TLA) with Bata Brands and an Agreement on commission/service charge with China Footwear Services Limited (CFS) and Bata Shoe (Singapore) Pte Ltd (BSS). An overview of the TLA entered on 1st January, 2006 between Bata Brands (as the licensor) and Bata Kenya (as the licensee) states that the latter is allowed to use the ‘BATA’ trademark for all its business activities in Kenya (known as the Territory). In return, Bata Kenya is required to pay 2% of the total annual sales “after all withholding and other taxes, levies or dues of all kinds imposed by any authority in the Territory”.
In clause 10 of the agreement, one of the conditions for early termination of the TLA is non-payment of the royalty. As per clause 11 the effect of termination would mean that Bata Kenya would cease trading in products with the trademark ‘BATA’.
In light of the TLA, KRA assessed the customs duty payable by Bata Kenya to include the royalties payable by the latter to Bata Brands. To support its position, KRA stated that Paragraph 9(1)(c) of the Fourth Schedule of the EACCMA provides for two conditions to be satisfied to establish chargeability of royalties namely the royalty payment relates to the goods being valued and the royalty is paid pursuant to a condition of sale. In the case of Bata Kenya, KRA argued that both these two conditions were satisfied.
In reply to KRA’s arguments, Bata Kenya asserted that Paragraph 9(1)(c) of the Fourth Schedule of the EACCMA was not applicable as the royalty payments to Bata Brands were not related to the goods being valued and that the royalty paid was not pursuant to a condition of sale. On the non-relation between the royalty and the goods being valued, Bata Kenya argued that its resale prices are different from the prices at which the products are imported. On the question whether the royalty was a condition of sale, Bata Kenya urged the court to construe the term “condition of sale” based on the legal relationship between the licensee and the licensor and third parties.
The court ruled in favour of Bata Kenya and stated in part:
The royalty fees, in my view, are paid for the use of the trademarks in Kenya and they have nothing to do with the prices of imported products. (…) I therefore agree with the Applicant [Bata Kenya] that the Respondent [KRA] is asking it to pay taxes which it is not obligated by the law to pay. As per the TLA, the royalty payments are made on the sales proceeds after tax. The royalties paid are therefore too remote from the value of the imported goods. The Respondent has therefore stepped out of its boundaries and the remedies of judicial review are available to the Applicant.
In arriving at its decision, the court faced a formidable obstacle, namely the case of Republic v. Kenya Revenue Authority Ex Parte Beirsdorf East Africa Ltd  eKLR (the Beirsdorf case), a High Court decision by Musinga J (as he then was). In the Beirsdorf case, the court found that that the manufacturing and distribution royalties payable by Beirsdorf East Africa to Beirsdorf AG should be added to the customs value of the imported products since the royalties were being paid as a condition of sale. In making this finding, the court in the Biersdorf case stated as follows:
“In my view therefore, payment of royalties by the applicant to Biersdorf is a condition of sale of their imported patented goods. I agree with the respondent that if royalties were not a condition of sale anyone would be at liberty to import, manufacture or even distribute Biersdorf’s products without permission of the patent holder. That would be an unacceptable trade practice. The relevant law must be interpreted in a manner that makes economic sense.”
The Biersdorf case would therefore appear to be a departure from other commonwealth countries where the courts have construed the term “condition of sale” in the legal sense as opposed to in the ordinary economic sense. However, in the present case of Bata Kenya, the court rightly departed from the ruling in the Biersdorf case after making a critical analysis of the relationship between the licensee and the licensor and third parties. In the Biersdorf case, there was no intermediary between the Biersdorf (parent company) and Biersdorf (subsidiary company operating in East Africa). Therefore, as a condition of the subsidiary manufacturing and distributing the parent company’s patented goods, the subsidiary company was obliged to pay to parent company manufacturing and distributing royalties. It follows therefore that if the subsidary company were to refuse to pay such royalties it would not be able to manufacture and/or distribute Biersdorf patented goods within East Africa.
Bata Kenya’s case is clearly different from the Biersdorf scenario, in that there are several intermediaries between the trade mark licensee and the trade mark licensor. According to the court in the present case, the existence of intermediaries between Bata Brands and Bata Kenya creates remoteness in the nexus between the sales and the royalty payments by the latter. This remoteness means that the the royalty payments cannot be said to be a condition of the sale.
As explained above, Bata Kenya imports its products from manufacturers in China and it pays a buying commission/service charge to BSS onward transmission to CFS. As a result, the TLA between the Bata Brands and Bata Kenya has no nexus between the purchases made by the latter from China through BSS.
We think it is arguable whether, under rule 102 of the Trademarks Rules, the Registrar has unfettered discretion to extend time. – Court of Appeal at Nairobi.
The case of the Republic Ex-Parte Sony Holdings Limited v Registrar of Trade Marks & another  eKLR (the “Sony case”) becomes one of a handful of intellectual property (IP) related cases to find its way to the Court of Appeal. It is an important case as it invites the judicial arm of government to determine whether executive arm of government, through the Registrar of Trade Marks has acted outside the law in exercising its statutory functions.
The Sony case arose way back in 2009 when Sony Holdings applied for the registration of two trademarks (a word mark, and a word device). Sony Holdings submitted the proposed trademarks for registration by way of two letters dated 18th May 2009. The Registrar of Trademarks wrote back to Sony Holdings on 8th September 2009, giving notice of refusal to register the trademarks. The Advocate’s wrote back to the Respondent asking that he reconsider his refusal. The Respondent then gave approvals for the marks to be advertised in the Industrial Property Journal. The advertisement was done on 31st May 2011 as appears above and below.
However, on 26th January 2012, the Registrar of Trade Marks wrote to Sony Holdings, informing the latter that an extension of time had been granted to Sony Corporation to lodge a notice of opposition. Sony Holdings wrote back to the Registrar of Trade Marks on 29th February 2012 indicating its objection to the extension of time. The Registrar did not respond to the content of this last letter and instead wrote to Sony Holdings informing it that a notice of opposition had been filed on behalf of Sony Corporation, and asked Sony Holdings to file a counter statement within 42 days.
Therefore Sony Holdings’ case before the High Court was that the Registrar’s exercise of discretion in extending time to file the notice of opposition was illegal, irregular and wrongful. Warsame J. sitting in the High Court dismissed Sony Holdings’ application and held that the Registrar had not exceeded its statutory authority in extending the time for filing the notice of opposition. In this judgment, the learned judge makes two important points relating to judicial review in intellectual property administration. First and foremost, the High Court dismisses the internal exhaustion rule in administrative law which would require that an aggrieved party exhausts all avenues of recourse available under the enabling statute before approaching the courts for a review. In the present case, the court disagreed and stated that:
I am of the view that the present application is properly before the court because the Applicant [Sony Holdings] has alleged that the Respondent [the Registrar] acted in excess of his jurisdiction. An action taken in excess of jurisdiction can only be quashed by way of judicial review orders.
The second important point made by the High Court relates to the principle of legitimate expectation. This principle states that if a public body leads a person to expect that the public body will, continue to act in a way then the latter should not, without an overriding reason in the public interest, resile from that representation and unilaterally cancel the expectation of the person that the state of affairs will continue. In other words, for a legitimate expectation to arise, there must be a promise or representation that arises from the public body, that would be reasonably expected to continue. In the present case, the court explained why Sony Holdings could not rely on the principle of legitimate expectations as follows:
The fact that the trademarks had been advertised did not necessarily mean that the trademarks would as of right be registered. In fact, there was no representation to the Applicant that these marks would definitely be registered once the advertisement in the journal had been done.
Recently the Court of Appeal heard and determined an application by Sony Holdings for an order that pending the hearing and determination of the it’s appeal from the judgment of the High Court that there be a stay of opposition proceedings pending before the Registrar of Trademarks or any action under the Trademarks Act by the Registrar.
Sony Holdings argued that the substance of the appeal is the legality of the opposition proceedings before the Registrar and if the proceedings continue to conclusion then the substance of the appeal would be lost. Sony Corporation in reply argued that Sony Holdings would have a right of appeal or review to the High Court on the merits of the opposition proceedings and for that reason there would be no prejudice to Sony Holdings should the opposition proceedings before the Registrar of Trade Marks proceed to conclusion.
The Court of Appeal rejected Sony Holdings’ application for stay stating that any party dissatisfied with the decision of the Registrar would have recourse to the Courts.
Meanwhile, the root cause of this dispute remains the wide discretion given to the Registrar under Rule 102 in matters of extension of time. How does one establish whether such discretion has been exercised unreasonably, in bad faith or in disregard to the law?
This blogger will be keenly following the developments around this case both before the Registrar and the Court of Appeal.