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Ideas & Debate

Proposed law on counterfeits will hurt businesses

Administration Police officers in Kisumu Destroy counterfeit goods recovered from a shop at Kisumu Bus terminal on March 16, 2016. FILE PHOTO | NMG
Administration Police officers in Kisumu Destroy counterfeit goods recovered from a shop at Kisumu Bus terminal on March 16, 2016. FILE PHOTO | NMG 

Whichever way one looks at it, the Statute Law (Miscellaneous Amendment) Bill, 2018 that seeks to amend the Anti-Counterfeit Act, 2008, is an ill thought out legislation which, if passed, will hurt brand owners more than the counterfeiters it is seeking to rein in.

It is a perfect case of throwing out the baby with the bathwater.

Kenya has no doubt become the Wimbledon Stadium for counterfeiters. Despite having had an anti-counterfeiting law for the last 10 years, sale and consumption of counterfeits appears to be the new normal.

Trade in counterfeits is a multi-billion shilling industry that spans all sectors of the economy from medicines to building materials, car parts to baby foods, clothes to cosmetics, alcoholic beverages to electrical appliances, anti-retroviral drugs to water.

Practically no fast moving mass market product is safe from counterfeiters.

In general, counterfeit trade thrives at the intersection of weak legislation or enforcement (which ensure easy availability of counterfeit goods) and low purchasing power.

Contrary to common assumption, ignorance is not a major factor. Most consumers purchase counterfeit goods with full knowledge that they are counterfeit but justify the purchase on grounds that genuine products are too expensive, obviously oblivious of the risks involved in consumption of counterfeit goods.

Apart from the vainglorious step of christening the Anti-Counterfeit Agency (ACA) by renaming it the Anti-Counterfeit Authority ostensibly to raise its profile to that of premier parastatals such as the Kenya Revenue Authority, Kenya Airports Authority and Communications Authority of Kenya, the new proposals have little else that is praiseworthy.

The Bill seeks to create new offences that will not only hurt business (including e-commerce) but also criminalise legitimate business. It creates another layer of registration of intellectual property rights that is totally unnecessary in light of existing laws.

If passed, it will be an offence to import into Kenya goods that bear brands, which have not been registered by the ACA. This means, for instance, that a brand owner, whose trademarks are already registered under the Trade Marks Act will be committing an offence by importing those same goods unless the brand has been registered with the ACA.

This focus on the brand owner begs the question whether the current widespread counterfeiting in Kenya is attributable to genuine brand owners or counterfeiters, who own no brands at all.

Since the Trade Marks Act already provides for registration of brands and the Kenya Industrial Property Institute (KIPI) is the only statutory body mandated by law and equipped with resources to examine and register brands, the ACA should only be requiring the brand owner to furnish it with evidence of the protection of the relevant intellectual property right being infringed as a condition for enforcement. There should be no need for a second registration of the brand with the ACA.

Besides, the proposed changes will not only increase the cost of brand protection but also dilute the sanctity of trade mark registration in Kenya.

Upon registration, the owner of a registered mark acquires exclusive rights over the mark and is entitled to the protection of that mark by the State against infringers and counterfeiters.

To require him to undertake a second registration by the ACA as a condition for enforcement of the registered rights is to indirectly impugn the registration conferred under the Trade Marks Act.

The proposed requirement also overlooks the fact that based on international conventions to which Kenya is a party, the enjoyment of copyright cannot be subjected to any form of restrictions such as the proposed recordal.

Instead, the proposed law makes it extremely difficult for brand owners to successfully lodge complaints with the ACA against counterfeiters. The additional registration requirement provides counterfeiters with a lethal defence against counterfeit claims.

The Bill also seeks to make importation of unbranded goods illegal except for raw materials. This is a curious and oppressive provision which is going to stifle business in many goods that are generally imported and sold unbranded such as shoes, clothes, utensils, ornaments, etc.

Further, the proposal overlooks the fact that intellectual property rights are private rights and no one can be forced to use or register a brand in order to trade in any kind of goods. Unbranded goods do not infringe anybody’s intellectual property rights.

Also overlooked is the fact that some trademarks may have expired or may simply be unregistrable for any number of reasons. Copyright may also have fallen into the public domain and become unprotectable.

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