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Why Kenya should set up fresh agenda to drive the war on counterfeits

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Anti-Counterfeit Agency officers display fake mobile phones during a crackdown on electronic shops along Luthuli Avenue, Nairobi. Photo/FILE

Following an outcry from Kenya’s manufacturing sector the Anti-Counterfeit Act No 13 of 2008 was enacted.

The Act establishes the Anti-Counterfeit Agency (ACA) with the express mandate to enlighten and inform the public on matters relating to counterfeiting; and to combat counterfeiting, trade and other dealings in counterfeit goods in Kenya in accordance with the Act or under any other written law.

The agency is further tasked with devising and promoting training programmes to combat counterfeiting; and co-ordination with national, regional or international organisations involved in combating counterfeiting.

With the promulgation of the new Constitution in 2010, the protection of intellectual property rights by the government has been given a major constitutional underpinning. Intellectual property rights are expressly protected by Articles 11(2) (c) and 40(5) of the Constitution.

This is welcome because to become a global leader in innovation it is necessary to establish strong legal mechanisms to provide necessary economic incentives required to innovate.

Innovation

But at the same time, fair use of intellectual property must be encouraged to support innovation and creativity.

Strong intellectual property enforcement efforts should be focused on stopping those stealing the work of others, not those who are using it as a platform to further build upon.

Industries that depend on intellectual property employ engineers, chemists, artists, authors, manufacturers and labourers As a result, anyone who invests in virtually any enterprise is also dependent on intellectual property protection.

The rationale for intellectual property laws and rights is that they provide certainty and predictability for consumers and producers in the exchange of innovative and creative products, and for investors shifting capital to the development of these products.

Where there are insufficient resources, ability, or political will to appropriately enforce these rights, exchanges between investors, producers and consumers may be inefficient, corrupt or even dangerous.

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Kenyans are reputed to have a strong entrepreneurial spirit, and coupled with creativity and ingenuity these attributes are a clear comparative advantage for the country in the regional and global economy.

Innovators around the world are working tirelessly to create a better world by creating products and services that improve the world’s ability to communicate, learn, understand diverse cultures and beliefs, to be mobile, to live better and longer lives, to produce and consume energy efficiently and to secure food, nourishment and safety.

Most of the value of this work is intangible. These intangible assets, often captured as copyrights, patents, trademarks, trade secrets and other forms of “intellectual property,” are key economic assets.

The Government must therefore of necessity support strengthened enforcement of intellectual property rights for a number of reasons. First is economic growth and job creation. Enforcement of intellectual property rights is a critical and efficient tool that can be used to strengthen the economy, support jobs and promote exports.

Intellectual property supports jobs across all industries, and in particular where there is a high degree of creativity, research and innovation such as the ICT sector.

A second rationale is consumer protection and public safety. Violations of intellectual property rights, ambiguities in law and lack of enforcement create uncertainty in the marketplace, in the legal system and undermine consumer trust.

When counterfeit goods find their way into the supply chain of critical items such as pharmaceuticals, pesticides or even fertiliser, significant harm is caused to the health and safety of the public.

With respect to farm inputs, economic wellbeing and food security is seriously compromised. Protecting intellectual property rights ensures adherence and compliance with numerous public health and safety regulations designed to protect the public.

Enforcement of intellectual property rights also has a national security dimension.

Consequences

In the United States counterfeit products have on occasion entered the supply chain of sensitive government operations.

One can only imagine the serious consequences of failure of mission critical equipment in the national security or defence sectors.

In addition, the profit from intellectual property infringement is a strong attraction to organised crime as an easy revenue source to fund their unlawful activities, including terrorism.

When consumers buy counterfeit goods, distributed by or benefiting organised crime, they are contributing to financing these dangerous and illegal activities.

The Internet and other technological innovations have revolutionised society and the way we obtain information and purchase products.

Lowering barriers to entry and creating global distribution channels, they have opened new markets and opportunities for exports of information, goods and services, including enabling small and medium sized businesses to reach consumers worldwide.

These innovations have also facilitated piracy and counterfeiting on a global scale.

Counterfeiters have developed sophisticated distribution networks. Today, the Internet allows for a counterfeiter to instantly create a global market at the touch of a button.

READ: KAM blames new technology for rise in counterfeit goods

These thieves impose substantial costs. They depress investment in technologies needed to meet global challenges and put consumer communities at risk.

So long as the rules and rights for intellectual property are predictable and enforceable, the government must continue to lead in the effort to improve local industries.

There are numerous challenges to meeting these goals of predictability and enforceability. Effort must be co-ordinated, efficient and comprehensive.

Solutions will require strong and decisive government action, transparency and co-operation from right-holders, importers, exporters and other stakeholders.

As provided by the Anti-Counterfeit Act, the various government agencies responsible for combating intellectual property infringement have worked together, with significant input from the public, to identify ways in which the Government can enhance intellectual property enforcement.

Going forward, the lead enforcement agency must develop a robust enforcement strategy action plan that will shape the co-ordinated fight to combat intellectual property infringement over the next decade. The action items can be placed within five categories of focus for the government.

• Legal and institutional reform to develop best-practice in intellectual property enforcement;

• Increased transparency and accountability through enhanced use of ICT;

• Ensuring optimal inter-agency collaboration and co-ordination to ensure efficiency;

• Regional harmonisation and approximation of intellectual property laws; and

• Securing the public sector supply chain through procurement reforms

However, from an ethical perspective, the Government cannot effectively ask others to act if it does not act itself.

To that end, the Government must lead by example and must work to ensure that it does not procure or use counterfeit products.

It may be necessary to review the Public Procurement Act and regulations to ensure government entities do not buy counterfeit goods and that suppliers of such goods are blacklisted.

Similarly, the government should take steps to ensure that it uses only legal copies of software. This prohibition on illegal use of software should be extended to entities doing business with the government.

Information and information sharing is another tool critical to effective enforcement. The Government should strongly support transparency in the development of enforcement policy; information sharing with, from and among government agencies (including law enforcement agencies); and reporting of enforcement activities.

It is also important to improve transparency in intellectual property enforcement policy-making. Stakeholder consultations will enhance public engagement through online and stakeholder outreach, and soliciting feedback from consumer and industry bodies.

The ACA currently compiles reports on the number of prosecutions of intellectual property infringements and the number of seizures of infringing products on a quarterly basis. These reports should be shared with the public on the agency’s website.

Given the current debate on rationalisation of the parastatal sector, in order to increase efficiency and effectiveness and to minimise duplication and waste, the Government should strengthen the co-ordination of law enforcement efforts by various agencies.

At the moment several enforcement agencies are charged with investigating criminal intellectual property infringements.

To avoid duplication and waste and to benefit from the specialised expertise of particular agencies, the mandated agencies should co-ordinate their capacity building and training.

The fight against counterfeiting, going by experience and international best practice, is a multi-faceted phenomenon. It therefore requires that the various agencies involved in combating counterfeiting co-ordinate their efforts in a formal and structured manner.

One weakness of the Anti-Counterfeit Act is that it does not provide for formal engagement among the various agencies involved in combating counterfeiting, as such it has not been easy to co-ordinate joint efforts.

Best practice

In conclusion, it is important to critically examine the set up of the agency against global best practice.

A proposal has been mooted to merge the Anti-Counterfeit Agency with the Kenya Intellectual Property Office (Kipo) and the Kenya Copyright Board (Kecobo).

While this proposal has merit, in the sense that all three agencies are involved in issues of intellectual property, there mandates are fairly dissimilar.

The merger of Kipo and Kecobo would create an institution akin to the UK’s Intellectual Property Office which deals with IP registration and limited enforcement of copyright.

ACA, however, has a much more criminal enforcement orientation, with responsibilities for policing both internal markets and border points.

A more natural fit for a merger would be as a specialised division within the mooted Customs, Border Management and Security Service. This is similar to the United States set up of Immigration and Customs Enforcement (ICE) under the department of Homeland Security.

Another possibility would be to have intellectual property enforcement undertaken by a specialised division within an elite police unit dealing with white collar crime in general, and illicit trade practices in particular, including smuggling and dumping.

Examples are the US’s Federal Bureau of Investigations (FBI), the Serious Organised Crime Organisation (Soca) in the UK, or the defunct Scorpions (now Hawks) police unit in South Africa.

No matter what form the Anti-Counterfeit Agency eventually evolves into, there is no doubt that the rationale for the existence of a robust anti-counterfeiting and intellectual property protection and enforcement regime will continue to exist and justify the use of scarce public resources to maintain the regime as an important facet of Kenya’s attainment of Vision 2030.

Mr Mallowah is the former chief executive of the Anti-Counterfeit Agency