Essential Intellectual Property Rights Protection for E-Commerce Companies in Nigeria – Bisola Scott

Intellectual Property

30th December 2019.

 

Bisola Scott[1]

ESSENTIAL INTELLECTUAL PROPERTY RIGHTS PROTECTION FOR E-COMMERCE COMPANIES IN NIGERIA

 

INTRODUCTION

The internet has transformed the conventional way of trading, and businesses trade over the internet, either exclusively or in addition to having physical stores. This mode of trading is referred to as e-commerce, with the added functionality of electronic transfers of money and data to execute various business transactions.[2]  With the introduction of online retail stores such as Konga, Alibaba, and Jumia, Nigerians, like consumers elsewhere, are rapidly embracing online shopping.[3] Currently, the amount that has been expended on e-commerce transactions in Nigeria is estimated at $12 billion and projected to reach $75 billion in revenues per annum by 2025.[4] Some of the advantages of e-commerce include convenience in purchasing and subscribing to services, the provision of an array of products or services to choose from, and discounted prices as it is usually less expensive to operate.[5]

Intellectual property rights are the highest value-bearing component of e-commerce companies[6] and are protectable under intellectual property laws in Nigeria through the avenues of trademarks, copyrights, patents, trade secrets and confidential information. These rights are valuable assets which may generate income and enable a company acquire or maintain a competitive edge in the marketplace. It is vital that e-commerce companies protect their intellectual rights to prevent infringement and theft by third parties, which may result in reduction in revenue generated and sometimes affect the integrity of their brand. The key intellectual property rights in e-commerce businesses are highlighted below.

  1. Trademark Protection

The brand name, logo and slogan of an e-commerce company represent its trademark, which as they are usually employed to promote their brand. Exclusive right to a trademark can be acquired either by use in Nigeria and/or registration of the mark at the Nigerian Trade Marks Registry. Upon registration, the proprietor’s right in a trademark subsists for 7 years and is subject to renewals at 14 year intervals.[7] A trademark would give a company exclusive rights to use the mark in connection with the product or service they provide and enables users to distinguish the product or service from others. It also promotes the brand and may prevent third parties from marketing their company under an identical or confusingly similar trademark.[8] They are registrable as trademarks in Nigeria under class 35 of the international classification of goods and services.[9]

Also, e-commerce companies who produce their own products may also protect the trademark for each of the products by either using or registering them with the Nigerian Trade Marks Registry. An unregistered trademark may acquire protection by use and a proprietor or registered user of a trademark cannot restrain another proprietor from interfering or restraining the use of a similar or identical mark if its use precedes the proprietors use or registration of his mark.[10] Similarly, in American Cyanamid Co. v. Vitality Pharmaceutical Ltd.,[11] the Supreme Court held that the proprietor or registered user of a trademark is not entitled to interfere with an existing trademark even if identical or nearly resembling his own, if that other mark has been in continuous use before the registration of his own trademark. Although the proprietor of an unregistered trademark cannot   institute an action for trademark infringement, he may institute and passing off under common law where its trademark had been infringed.

  1. Copyright Protection

E-commerce operates over the internet either through a website and or computer/mobile applications. The website and computer/mobile applications including the creative website content and graphics are protectable under Nigerian Copyright Act (NCA)[12] as copyrightable materials. Copyrights protect the unique expression of a computer programme as described in the source and object codes.[13] The author of the computer programme is guaranteed automatic copyright protection in his source and object codes used in creating the website or application, if it is his original work and has been fixed in a definite medium of expression now known or later to be developed from which it can be perceived or reproduced either directly or via a device.[14] Although there is no statutory requirement for registration of copyright, the Nigerian Copyright Commission (NCC) established a voluntary copyright notification scheme for owners of copyrights to notify the Commission of its creation and existence in order to maintain an effective databank of their copyrighted works.[15]

Where an e-commerce company is not the author of the copyright in a website, and has appointed either its employee or an independent contractor to develop the website, the copyright in the website or application will belong in the first instance to the employee or independent contractor respectively, except it is otherwise stipulated in writing under contract.[16] If an e-commerce company intends to retain ownership of the copyright in its website, this should generally be stipulated in the employment or service contract. In addition, the e-commerce company may also request for an assignment of the computer programme from the employee. This principle applies to all the forms of copyright on a website or an application, including the website content and graphics. The company must ensure that the assignment or exclusive licence in a copyright is in writing as section 10(3) of the NCA stipulates that  ”No assignment of copyright and no exclusive licence to do an act the doing of which is controlled by copyright shall have effect unless it is in writing.”

  1. Patent Protection

E-commerce platforms are software or computer programmes which may be protected as patent under patent law in Nigeria, if they satisfy the basic requirements of patentability. Unlike copyright which protects source and object codes in software, patent protects the software invention including the method and processes used in developing the software, once they have been fixed in a tangible format. A patent cannot protect the source or object codes in software as these codes do not meet the requirement of patentability.[17] Not all software is eligible for patent protection and software is only eligible for patent protection, if it is new, involves an inventive step that is not obvious to people knowledgeable in the field and is capable of industrial application.

Software is eligible for protection if it consists of an improvement on previously patented software and it is also new, involves an inventive step and capable of industrial application.[18] It is also eligible for protection if it consists of an improvement on previously patented software and it is also new, involves an inventive step and capable of industrial application.[19] It is new if it has not been made available to the public before the date of filing of the patent application.[20] It would not be deemed to have been made available to the public if the developer had exhibited it in an official or officially recognized international exhibition, six months preceding the filing of the patent application. However, where it exceeds six months, it would be deemed to have been made available to the public. It must involve an inventive step which must not be obvious to a person in the same field either as to the method, the application, the combination of methods, or the product which it concerns, or as to the industrial result it produces[21] and it must be capable of being used in any kind of industry including agriculture.

An application for grant of patent is filed at the Patents and Designs Registry. The Patents and Designs Act (PDA) stipulates that the application shall contain the applicant’s full name and address, a description of the relevant invention with any appropriate plans and drawings including a claim or claims of the software.[22] A patent is granted for 20 years[23]  and at the risk of the patentee without guarantee as to their validity.[24] During the period of 20years, the inventor maintains exclusive right to use, assign or license the software, and can prevent the recreation and imitation of the software application. Issued patents are subject to an annual renewal obligation in the form of annuity payments to ensure their continued validity over the lifespan of the patent.

Unlike the NCA, the PDA stipulates that inventions made in the course of employment vest in the employer, and does not specifically provide for the use of contracts to determine or transfer ownership of an invention.[25] In practice, however, the actual/true inventor (in most cases the employee) would effect an assignment of his rights to the employer to back-up the application for the issuance of letters Patent.

Where an e-commerce platform is developed by an employee or an independent contractor, the software or application would belong to the e-commerce company as having been made in the course of employment. However, it is essential that an e-commerce company request for an assignment of the patent in the software from the employee or independent contractor to back-up the application for the issuance of letters Patent. An e-commerce company may also obtain a licence to the software based on the terms agreed by the parties.[26]

  1. Trade Secrets and Confidential Information

Trade secrets and confidential information are also essential intellectual property rights relevant to e-commerce companies. They include anything that is used in a business which gives it a competitive edge over competitors who do not know or use them.[27] For instance, the Coca Cola recipe and Google search algorithm are of substantial value and these companies recognized that protecting their trade secrets can help maintain their competitive edge in the marketplace. An e-commerce company may possess trade secrets, such as marketing techniques, business methods, business practices, and supplier lists.[28] Trade secrets may also include hidden aspects of a website/application such as source codes and object codes, and algorithms which have commercial value and give the owner a competitive advantage over competitors in the market.

Although trade secret protection is not a statutorily recognized right in Nigeria it is recognized and enforceable under the common law. E-commerce companies have to take reasonable measures to maintain their secrecy by signing non-disclosure agreements, restraining employees’ access to very sensitive information and taking steps toward preventing access to the public.[29] Trade secrets can be maintained indefinitely as long as their secrecy is preserved and kept from becoming public knowledge.[30] In addition to copyright and trademark protection, this mode of protection is recommended for software that is not eligible for patent protection in Nigeria, or as a commercial strategy to withhold related proprietary data for the application of the software.

CONCLUSION

It is important that ecommerce companies protect their intellectual property rights as protection enables them exercise their exclusive rights to use and restrict third parties from infringing on their rights. This is also important because the intellectual property rights may also be a major source income for the company and the company may decide to licence such rights to generate additional income.  These rights also increase the valuation of a company, which are important in financing and merger and acquisition transactions. It is also essential that e-commerce companies do not infringe on other companies intellectual property rights, and only use third-party rights after obtaining the required permission.

______________________________________________________________

For further information on this article and area of law,

please contact Bisola Scott at S. P. A. Ajibade & Co., Lagos by

Telephone (+234.1.270.3009; +234.1.460.5091) Fax (+234 1 4605092)

Mobile (+234.811.389.8102, +234.817.939.0319)

Email: bscott@spaajibade.com

www.spaajibade.com

1     Bisola Scott, Associate Intellectual Property & Technology Department, SPA Ajibade & Co., Lagos, NIGERIA.

[2]    Toppr, Emerging Trends in Business: Electronic Commerce, available at https://www.toppr.com/guides/business-environment/emerging-trends-in-business/electronic-commerce/, accessed on 15th December 2019.

[3]    Street toolz, The Future Of E-commerce in Nigeria, available at http://streettoolz.com/the-future-of-e-commerce-in-nigeria/, accessed on 10th November 2019.

[4]  U.S. Embassies, Nigeria – eCommerce, available at https://www.export.gov/article?id=Nigeria-E-Commerce, accessed on 15th December 2019.

[5]    Street toolz, The Future Of E-commerce in Nigeria, available at http://streettoolz.com/the-future-of-e-commerce-in-nigeria/, accessed on 10th November 2019.

[6]  Ajeet Khurana, Intellectual Property in Ecommerce: Your Greatest Asset, available at https://www.thebalancesmb.com/intellectual-property-in-ecommerce-your-greatest-asset-1141708, accessed on 15th December 2019.

[7]    Section 23(1) Trade Marks Act Cap T 13, Laws of the Federation of Nigeria 2004 (TMA).

[8]    Intellectual Property Protection for Software: What to Know, available at https://www.upcounsel.com/intellectual-property-software, accessed on 15th December   2019.

[9]          Established by the Nice Agreement (1957).

[10]   Section 7(a) and (b) TMA.

[11]   (1991) 2 NWLR (Pt.171) 15.

[12]  Nigerian Copyright Act C28 Laws of the Federation of Nigeria (NCA).

[13]   Scott Bell, Aly Dossa and Timothy M. SmithTo protect your source code, treat it like intellectual property, available at https://sdtimes.com/intellectual-property/to-protect-your-source-code-treat-it-like-intellectual-property/, accessed on 15th December 2019.

[14]   Section 1(2) (a) and (b) NCA.

[15]   See the Nigerian Copyright Commission website, available at http://www.eregistration.copyright.gov.ng/ncc/about, accessed on 15th December 2019.

[16]   Section 10(2) (b), C28 Laws of the Federation of Nigeria (NCA) 2004.

[17]  Source and object codes do not involve an inventive step and are not capable of industrial application.

[18]  Section 1(a) Patents and Designs Act, Cap. P2, Laws of the Federation of Nigeria 2004 (PDA).

[19]  Section 1(b) PDA.

[20]  Section 1 (3) PDA

[21]  Section 1(3) PDA.

[22]  Section 3(1) (a) PDA.

[23]  Section 7(1) PDA

[24]  Section 4(4) PDA.

[25]  Section 2(4) PDA.

[26]  Section 23(1) PDA.

[27] Jeff Jacobson, Managing Your Company’s Trade Secrets, available at https://www.practicalecommerce. com/Managing-Your-Company-s-Trade-Secrets, accessed on 15th December 2019.

[28]   Ibid.

[29]   Intellectual Property Protection for Software: What to Know, available at: https://www.upcounsel.com/  intellectual-property-software, accessed on 15th December 2019.

[30]  Ibid.

 

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