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By *Perpetua Mwangi

The fact is that there is a market for counterfeit products that has contributed to the expansion of this outlawed industry. More often than not, consumers are not able to access legitimate brands because on one hand, they are misled by counterfeiters and on the other hand, legitimate brands are outside their means hence consumers settle for versions of the brands they desire. In fact, the market for counterfeit products is vast and readily accessible, occasioning unfair competition.

During past Jamhuri Day Celebrations, the Head of State issued an executive order to investigate intellectual property (IP) infringement and destroy counterfeits on sight. He reiterated that counterfeits are a major impediment to the growth of the manufacturing sector, which is the first pillar among the ‘Big Four’ Agenda. This kind of political goodwill reinforces the legislative commitment in addressing intellectual property rights (IPRs) infringement.

With the explosion of technology, counterfeiters are benefiting from the digital space. Whilst, it is a logistical nightmare for law enforcement and, for brand owners seeking to protect and enforce their IP, reputation and revenue streams.

Introduction

On 20th November 2019, Justice John M. Mativo of the High Court’s Judicial Review Division, delivered a judgment in Republic V. Anti-Counterfeit Agency Ex-Parte Caroline Mangala T/A Hair Works Saloon.[1] The sum effect of the judgment is that the common law right of passing off is a form of infringement of IPRs in goods and services thath amounts to counterfeiting under the Anti-Counterfeit Act.

The Applicant, Caroline Mangala, a Kenyan business lady operating a beauty shop called Hair Works Saloon (sic), sought Judicial Review Orders against the Anti-Counterfeit Authority, whose officers seized beauty products by the brand Makari De Suisse on the basis that they were counterfeit.  The crux of her application was that the seizure was unfair, illegal and tainted by bad faith considering that she had submitted samples of the same products to the Kenya Bureau of Standards (KEBS) to ascertain whether they were counterfeit or not, to which KEBS confirmed the product being of acceptable standard. The application occasioned chance for the court to address intellectual property issues as below.

  1. IP Considerations in Anti-Counterfeit Regulations

JO Global Venture Limited allegedly agents of M/s Victoria Albi Incorporated and alleged owners of the trademark Makari De Suisse filed a complaint with the Anti-Counterfeit Authority (ACA) alleging trademark infringement. As a general rule, for one to pursue complaints in IP Regulations, registration is a key starting point on issues of locus.

In fact, Section 5 of the Trade Marks’ Act precludes parties from seeking redress for a trademark violation, unless that mark is registered. The Applicant argued that the Complainant was not a registered owner of the mark Makari De Suisse in Kenya under the provisions of the Trade Marks’ Act, even though an application had been lodged and still pending examination at the Registrar of Trade Marks. The Applicant’s main argument was that the Complainant did not have a duly registered trade mark in existence capable of laying a basis to lodge a complaint for infringement.

Among other legal issues, the Court considered the correlation between counterfeiting and standardization of goods. Though standardization of products is a mandate of KEBS, it does not oust the mandate of ACA in curbing counterfeiting. The Court agreed that there are times when goods will be substandard but not counterfeit, or counterfeit but not substandard or both counterfeit and substandard. [2]

In PAO & 2 Others v Attorney General[3] the Court held that the test as to whether goods are counterfeit lies in Section 2 of the Anti-Counterfeit Act.  Therefore, even in cases where products have passed the required standards after laboratory tests by KEBS, the ACA may still pursue issues of counterfeit, especially to ensure that there is no IP violation, whether under the Trade Marks’ Act or in common law.

  1. Presumption of IPR Ownership

Section 26(5) of the Anti-Counterfeit Act, provides that where the subsistence of IPRs in respect of suspected counterfeit goods or the title or interest in IPRs is in issue, the complainant shall be presumed to be the owner of the copyright or the related right, until the contrary is proved.

Therefore, an interpretation of the foregoing provision reveals that to file a complaint at ACA on the basis of IP rights violation, one does not need to prove registration of the same mark. This is unlike the requirement to prove registration under Section 5 of the Trademarks Act.  

This means that the ACA in dealing with counterfeiting also enforces protection of IPRs, which is an overlap to the provisions under the Trade Marks’ Act.  Essentially, counterfeiting includes making any goods that are imitations of protected goods without the authority of the owner of the IPR.

  1. Fate of unregistered IPRs

As a rule of thumb, there is need for every IP owner to take necessary steps to ensure that their rights are legally enforceable. Registration offers one way of proving the existence and ownership of the rights at any one given time. Failure to register IPRs often leaves room for infringement and consequently, unnecessary and lengthy litigation.

That notwithstanding, there is a doctrine of “common law Trademarks’’, as held in Capital Estate and General Agencies (Pty) Ltd & others v Holiday Inns Inc. & others.[4]This doctrine is to the effect that, the fact that in a particular case there is no protection by way of patent, copyright or registered design, does not license a trader to carry on his business in unfair competition with rivals. Therefore, though subject to several disputes and arguments, one cannot purport to unfairly utilize another’s intellectual property rights on the basis that they have not been registered.

The common law tort of passing off can be used to enforce unregistered trademark rights. One only needs to satisfy the “Classic Trinity-reputation and goodwill, misrepresentation, and damages“ as established in Reckitt & Colman Ltd v Borden Inc. (Jif Lemon case)[5].

  1. Conclusion

The effect of the recent judgment is that there is now a mixed approach in enforcement of IPRs. A quick glance at the mood set in the judgment reveals the possibility of multiagency regulation and coordination in enforcement of IPRs. The ACA and KIPI can collaborate to ensure that no one benefits from other people’s IPRs unfairly.

Protection of IPRs is not only guaranteed by mainstream Intellectual Property Regulation Instruments like the Trade Marks’ Act but also the Anti- Counterfeit laws in Kenya as interpreted by Justice Mativo. The Anti-Counterfeit Authority has a mandate to ensure protection of IPRs. The mandate is exercised whether the IPR is registered or not owing to the presumption of ownership by the complainant. Once the presumption is questioned, there is an avenue for separate proceedings, either before the Courts or before the Registrar of Trade Marks’ to make a determination as to ownership.


*Ms Perpetua Mwangi is the Head of the Intellectual Property Division at Simba and Simba Advocates. 

[1] [2019] eKLR, Judicial Review No. 325 of 2018.

[2] Ibid 2 at paragraph 25

[3] [2012] eKLR

[4] 1977 (2) SA 916 (A) at 925H)

[5] [1990] 1 All E.R. 873.