The Nigerian Merchandise Marks Act: A viable or obsolete piece of legislation – Sandra Eke

Intellectual Property

30th December 2019.

 

Sandra Eke[1]

 

The Nigerian Merchandise Marks Act:

A Viable or Obsolete Piece of Legislation

 

Introduction

Unlike other intellectual property laws enacted in Nigeria, the Merchandise Marks Act[2] (“the Act”) doesn’t enjoy so much popularity. The Act, which was first introduced in the United Kingdom to preclude non-British nationals from distributing their goods in Britain and Europe under the false pretences that such goods had a royal warrant and were manufactured in Britain,[3] was also adopted in Nigeria to curb the growing incidences of forgery and falsification of trademarks and other related offence. The Merchandise Marks Act (MMA) was established during the colonial era in 1916[4] to prohibit and criminalise the forgery or falsification of registered trademarks by unauthorised persons and to prohibit the importation and sale of goods liable for forfeiture in Nigeria,[5] by imposing penalties on trademark counterfeiters. It prescribes punitive sanctions on criminal acts relating to false trade description of goods, forgery of trademarks, and false application of any trademark to goods so nearly resembling an existing trademark as to be calculated to deceive and/or cause confusion in the market.[6] The sanctions prescribed in the Act for these types of activities include imprisonment, payment of fines or both and forfeiture of every chattel or instrument used in committing the offence.[7] Since the enactment of the Act, it has not witnessed any amendment to best cover our evolving contemporary times, recognising the reality that the Act has already witnessed several amendments in the United Kingdom from where it was initially adopted.[8] The sanctions prescribed have become obsolete and are not sufficient to serve as effective deterrent against the commission of the stipulated offences contained in the Act, hence the urgent need to revisit this piece of legislation.

Offences relating to Trademarks and Trade Descriptions

The Act defines a trade description as any statement, or other indication, directly or indirectly as to the quantity, weight, suitability and standard of quality of any good; the location where the good is made and the method used in manufacturing the goods; the material used in making the goods; the goods which are the subject of an existing patent, privilege or copyright, and the use of any figure, word, or mark which, according to the custom of the trade, is commonly taken to be an indication of any of the above stated matters.[9]

It also defines a false trade description as:

“a trade description which is false or misleading in a material respect as regards the goods to which it is applied, and includes every alteration of a trade description, whether by way of addition, effacement, or otherwise, where that alteration makes the description false or misleading in a material respect; and the fact that a trade description is a trade mark, or part of a trade mark, shall not prevent such trade description being a false trade description within the meaning of this Act.”[10]

The MMA further provides for circumstances where a person would incur liability and be found guilty of an offence under the Act. One instance is when a person forges or falsely applies an existing trademark or trade description to goods in an attempt to deceive the public or makes, disposes or harbours any device or instrument for the purpose of forging a trademark.[11] However, if a person can establish that he committed any of the above stated acts without an intention to defraud, he may not be found liable.[12]

The Act did not exclude sellers of goods with false trademarks or descriptions. It provides that every person who sells or has in his/her custody, goods with forged trademarks or trade descriptions for sale or goods to which trademarks or marks very similar to existing trademarks have been falsely applied (with the intention to deceive the public) shall be guilty of an offence under the Act. Unless such person can prove that he had acted innocently or that he took all necessary precautions against committing the offences stated above and at the time of the commission of the alleged offence, he had no reason to suspect the genuineness of the trademark or trade description, and on request made by or on behalf of the prosecutor, he furnished all information within his power with respect to the persons from whom he obtained such goods or things.[13]

Also, the Act prohibits the importation of any goods which would be liable to forfeiture under the Act when sold.[14]

Exemptions granted under the Act

  1. Persons employed in ordinary course of business: The Act exempts a defendant from prosecution who may have been charged with making any machine or instrument with the motive of forging a trademark or falsely applying a trademark, or trade description, etc., if the defendant can establish that in the ordinary course of his business, he is employed, on behalf of other persons resident in Nigeria. A person is also exempt where he/she carries out the above stated offences as part of normal activities for which he/she was engaged to perform and was not interested in the profit or commission on the sale of such goods or that he took reasonable precautions against committing the offence charged. Further, that at the time the offence was committed he had no reason to suspect the genuineness of the trademark, mark or trade description and he furnished the prosecutor with all the information within his/her ability on the other persons on whose behalf the duties where performed.[15] The Act prescribes liability on the defendant for the costs incurred by the prosecution unless the defendant is able to establish that it gave sufficient notice to the prosecution and informed the prosecution of the intention to rely on the above stated defence.[16] This provision exempts employees of persons in breach of the Act from liability under the Act if they acted innocently and can establish the above stated defence.
  2. False Trade descriptions: The Act provides instances when a false trade description would not be termed as such. It provides that where a trade description is lawfully and generally applied to goods in a certain class, or produced in a specific technique to signify the particular class or method of production of such goods, the provisions of the Act will not apply to such trade descriptions.[17] The Act places a caveat on this provision, by providing that the exemption would not apply where such trade description includes the name of a place or country, calculated to mislead the public as to the location where the good was actually manufactured if such goods were really not manufactured in that location, unless there is added to the trade description, immediately before or after the name of that location, the true location where the goods were manufactured with a statement showing that they were made there, in an equally conspicuous manner with that name.[18]

Limitation of time for Prosecution

There is a limitation period for prosecuting offences stipulated under the Act. No prosecution for an offence against an alleged offender is permitted to commence after the expiration of three years from the time the offence was committed, or one year after the first discovery by the prosecutor, whichever expiration first occurs. This implies that anyone who alleges that another person has forged or falsely applied a mark or description to his or her goods with an intention of committing fraud has to report to the enforcement agencies timeously in order for the offence not to become statute barred at the expiration of the time given for bringing actions under the Act.

Punishments prescribed under the Act

The Act prescribes punishment for every person found guilty of an offence under the Act. It states that any person found guilty of an offence under the Act shall be liable upon conviction to imprisonment for a term of two years, or to a fine, or to both and in the case of a summary conviction before a magistrate court, such person shall be liable to imprisonment for a term of six months or to a fine of one hundred naira or forfeiture of every chattel, article, instrument or thing by means of or in relation to which the offence was committed.[19] Similarly, the Act also prescribes a fine of forty naira for any person upon summary conviction that falsely represents that a good is made by a person holding a warrant or other authority, or for the service of the President, or any ministry or department of the Federation, or any Government department.[20]

These stipulated punishments stated above are the reasons why the Merchandise Marks Act is gradually losing its relevance in terms of enforcement in Nigeria. The punishments prescribed are too lenient and highly inadequate in serving as an effective deterrent to persons found guilty of offences under the Act. For instance, a person found guilty upon summary conviction in the Magistrate court will be liable to imprisonment for just six months or to a meagre fine of one hundred naira. In recent times, the value of one hundred naira is almost worthless; it can barely afford a meal or even a drink. One hundred naira is what you gift to a school child to buy a snack during lunch hours in school. How can such penalty be effective enough to deter a habitual trademark forger or seller of goods with false trade descriptions? Apparently, in ancient times and at the time of promulgation, such an amount possessed a higher value, but in our fast evolving contemporary era coupled with the high inflation levels, such sums are no longer realistic. In fact, it can be argued that some trademark forgers may intentionally breach the provisions of the Act knowing full well that they can easily pay off the fines when found guilty of an offence under the Act, relative to the monetary benefits derived from engaging in the alleged unlawful activity. The amount of damage and loss of finance and reputation suffered by owners of existing trademarks is out of step with the meagre penalties prescribed under the Act for persons who are found guilty of causing such havoc and business damage.

In light of the foregoing, the Act needs to be amended to incorporate more stringent provisions and penalties that would better deter unauthorised persons from committing any of the prescribed offences.[21] This amendment would not only be advantageous to owners of existing trademarks but also help to curtail the activities of trademark counterfeiters who manufacture and distribute infringing products whose authenticity cannot be verified.

Conclusion

The purpose of creating a law that criminalizes certain offences is to deter persons from committing the proscribed conduct or behaviour. Although the Act possesses some laudable provisions broadly covering different offences of forgery or falsification of trademarks and trade description of goods, the viability of the Act in evolving contemporary times is questionable when compared with the increased penalties recommended in the proposed amendments to the existing IP laws in Nigeria, like the Industrial Property Commission (IPCOM) Bill[22] and Trade Mark Bill.[23] The penalties prescribed under the Act are not effective in deterring trademark counterfeiters from committing the stipulated offences nor are they sufficient to compensate those who have suffered harm from the unscrupulous activities of counterfeiters. It is noteworthy that neither of these two proposed bills which recommend a repeal of some existing IP laws, advocate for an abrogation of the Merchandise Marks Act. This raises some questions as to whether the Act was mistakenly omitted by the drafters of the bills or whether it was intentionally excluded because they believe that the Act still possesses some relevance in Nigeria? If the latter is the case, then it is expedient to recommend an amendment to the punitive sanctions in the Act to fit our dynamic era since the existing penalties are no longer viable.

 

 

For further information on this article and area of law, please contact

Sandra Eke at: S. P. A. Ajibade & Co., Lagos

by telephone (+234 1 472 9890), fax (+234 1 4605092)

Mobile: +234.7033857874 or Email: seke@spaajibade.com

www.spaajibade.com

 

[1]     Sandra Eke, Associate Intellectual Property & Technology Law, SPA Ajibade & Co., Lagos, Nigeria.

[2]       Cap M10, LFN 2004.

[3]       Andy Dingley, “Merchandise Marks Act 1887” available at: https://en.wikipedia.org/w/index.php?title=Merchandise_Marks_Act_1887&oldid=889553434 accessed 19th December 2019.

[4]       The Merchandise Marks Act 1916 [23 of 1915; 15 of 1956; L.N. 47 of 1955] has now been reproduced in

the 2004 Laws of the Federation of Nigeria.

[5]       S.3 & 16 MMA.

[6]       S.18 MMA.

[7]       S.3(3) MMA.

[8]       The amendments span from 1887 to 1953. In fact some territories in the United Kingdom have

replaced the Merchandise Mark Act with the Trade Descriptions Act 1968. See National Archives,

“Trade Marks Act 1968” available at: http://www.legislation.gov.uk/ukpga/1968/29 accessed 19th

December.

[9]       S.2(1) MMA.

[10]     S.2(1) MMA.

[11]     S.3 MMA.

[12]     Ibid.

[13]     S.3(2) MMA.

[14]     S.14 MMA.

[15]     S.6 MMA.

[16]     Ibid.

[17]     S.15 MMA.

[18]     Ibid.

[19]     S.3(3) MMA.

[20]     S.18 MMA.

[21]     Unlike the Copyright Act Cap C28 LFN 2004, which has witnessed up to three amendments since its enactment into our laws. Presently, there is a fourth attempt to amend the provisions of the Copyright Act, by virtue of the Copyright Bill 2015 already before the Nigerian legislative body.

[22]     Initially prepared in 2008. S.93(1) of the IPCOM Bill prescribes higher penalties like imprisonment for 12 months, or a fine not exceeding N100,000 or both for the offence of forgery of trademarks.

[23]     Trade Mark Bill 2016, SB.357.

 

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