The Adams & Adams team is at the INTA 2016 Annual Meeting in Orlando, Florida, after the first Africa Roadshow in New York recently. The roadshow provided an economic overview of Africa; as well as sessions and panel discussions on pitfalls and strategies in protecting your IP rights in Africa; transfer pricing and IP; innovation in Africa; competition law, South Africa’s IP policy and substantive examination; and effective anti-counterfeiting strategies.
9.15: Nicky Weimar, senior economist, Nedbank South Africa, begins the day with an economic overview and some surprising stats: did you know the Seychelles has the largest GDP per capita in the continent, while Ethiopia’s economy grew 10.5% a year from 2005 to 2015, and consumer spending in Mozambique grew 15% in 2015?
Nicky explains how Chinese investment fuelled this growth, but notes that there has been a drop since 2012. She predicts “three tough years ahead”, but says beyond that there is great potential in the continent – partly due to under-utilised arable land and reserves of commodities. “But there is also more to Africa,” she says, as many governments are seeking to diversify their economies, for example by investing in manufacturing.
Conflicts and corruption still present challenges, she says, but things are improving. “We’ve seen significant improvements in places like Rwanda where you can now start a business online at virtually no cost.” Telephone and internet use are growing rapidly.
There are lots of questions, many asking Nicky to expand on some of the many charts she has presented on African economic data.
11.00: In our webcast session, Simon Brown of Adams & Adams begins by stating that all but two African countries have functioning IP systems (the exceptions are Somalia and Eritrea). Even in South Sudan, it is possible to obtain trade mark protection, he adds.
This panel is taking the form of a Q&A, with Charles Macedo of Amster Rothstein & Ebenstein playing the role of a US counsel, asking about protection in Africa. Brown tackles topics including trade mark examination, registration and opposition (including in the regional OAPI and ARIPO systems) while his colleague Jenny Pienaar addresses enforcement questions. Regarding the 17 countries of OAPI, she says: “You would have to sue for infringement in each country.”
There’s an interesting discussion about well-known trade marks. Pienaar says there is “substantial case law” in South Africa, and stresses the need to show that a mark is well known in the country where it is applied for. What about spillover reputation and goodwill? “You can show free flow of products between the two countries, but you would need substantial evidence,” says Pienaar.
Turning to enforcement, the speakers emphasise inconsistency, partly due to the lack of specialist IP courts. But she says there have been some positive decisions, notably in Kenya.
Kevin Curran of Ascensia Diabetes Care asks about packaging and labelling, and Pienaar emphasises the different regulatory requirements in each country, for example NAFDAC in Nigeria.
12.10: What is transfer pricing? asks Ashlin Perumall of Adams & Adams in today’s third session. “It’s the intersection between tax and intellectual property,” he explains: about 45% of export trading relates to subsidiary trading, and that leads to conflicts between revenue agencies. “IP is the most important area of transfer pricing today,” he argues.
Perumall introduces us to the Double Irish Dutch Sandwich, the arm’s length principle and the OECD guidelines. Many African countries have put transfer pricing measures in place, he adds, emphasising advance pricing agreements, fixed margins and safe harbours: “The trend will be to move to the arm’s length standard across Africa.” He stresses that “many countries are new to the party” and the lack of comparables increases the risk.
He then takes us on an epic tour of the TP regimes in South Africa (a high-risk country), Angola, Botswana (no TP legislation at this time), Egypt (very robust legislation), Ghana, Kenya, Mauritius, Mozambique, Namibia and Nigeria (a strong player with robust exchange controls).
Jac Marais adds some comments regarding the first two transfer pricing cases now pending in South Africa.
1.45: After lunch (left) we move on to “innovation in Africa”. The ever-smiling Fernando dos Santos of ARIPO talks about the “lack of awareness” of IP in the region, and how ARIPO can promote IP for the benefit of the continent. Activity is focusing on universities and research institutions, he says.
Lucinda Longcroft of WIPO expands on this theme, talking about how innovation from Africa can benefit the rest of the world. “There is enormous wealth of creativity and innovation in African countries,” she says, pointing to the call for innovations for the sustainable development goals, announced yesterday. Longcroft also sets out the November 2015 Dakar Declaration.
Andrew Hirsch of IIPI makes today’s first mention of the Big Five – not wild animals in Africa, but the five biggest patent offices. He adds that the top 15 countries in the world account for 95% of patents filed.
Hirsch introduces the Technology Bank for least-developed countries (LDCs), which he says will empower people and is feasible. “It will change the way people think about how they fit in with the world. It can change the debate,” he says. “The developed world needs to develop Africa. That’s in everybody’s interest.”
Moving to a micro level, Bonnie Nannenga-Combs of Sterne Kessler Goldstein & Fox describes her firm’s recently established pro bono practice, which is focused on economic, social and cultural rights. “We are looking for inventors that are disenfranchised either themselves or due to their region,” she says, adding that the IP system does not always function well in areas of poverty.
Nannenga-Combs gives some examples including: (1) obtaining patent rights for a tribe that harvests the genipa americana blue fruit in the Colombian rainforest, giving them a sustainable way to monetise and control their rights; (2) a patent application for a Native American individual who had developed a hydroponics system. If you can identify a potential innovator who may need help with the patent system and who is disenfranchised, says Nannenga-Combs, let me know!
2.50: Antitrust is a growth area in Africa, says Adams & Adams commercial partner Jac Marais, saying it is driven partly by consumer protection and partly by a means to control big business. “There is no one-size fits all approach in Africa,” he says. “That makes compliance in Africa always a bit tricky.”
Despite that, he says there is harmonisation partly thanks to COMESA. The latest news is that Comoros adopted antitrust legislation in the past few weeks, without any notice period: penalties are up to 5% of global turnover.
Kenya (a COMESA member) is an active antitrust jurisdiction, says Marais, with a Competition Act passed in 2010. Notably, in a fertilizer case, investigators from South Africa, Kenya and Zambia launched coordinated actions. By contrast, Nigeria has no antiturst law at present – but Marais says the country is “a huge risk” as it could adopt legislation overnight and target existing cartels.
In South Africa, there were six dawn raids in March alone. Among the targets of competition enforcers are providers of professional services (including attorneys) who have minimum prices.
Marais concludes with three antitrust trends: criminalisation, cooperation and the rise of regulation.
3.45: The next session is on IP policy in Africa. Fernando dos Santos says the laws are in place, but implementation and enforcement remain a challenge. Lucinda Longcroft connects IP policy with economic development, and points out that IP is controversial for many people, and those within the IP system need to spread the word about its benefits: “IP is a great tool for development.”
What is the status of the Pan-African IP Organisation (PAIPO), asks moderator Danie Dohmen. Dos Santos says it is a high-level initiative, but will take a long time to develop and must be driven by national IP policies.
Dohmen provides an update on South Africa’s IP policy, which is of particular interest to the pharma industry. The latest draft is close to being finalised, he says, but any legal changes will take five to 10 years. “A big thing we expect is the use of the TRIPs flexibilities,” he says. “We think there will be a big attempt to balanced IP rights with public interest/socio-economic needs.”
Witney Schneidman of Covington & Burling agrees it is important to “get the right balance”. One of the changes under discussion is a stricter invention threshold, but Schneidman says he’s “optimistic” the right balance can be found. Richard Parr of Merck is also on the panel and discusses access to medicines: he too is optimistic that things will be worked out.
Another expected change is the introduction of oppositions. Parr says he personally favours a post-grant system such as that in the EPO.
Compulsory licensing is discussed and Longcroft refers to the WIPO database on flexibilities in the IP system. Dohmen says a substantive search and examination system is likely to be introduced, based on the Malaysian system.
5.00: The final session of the day is on Effective anti-counterfeiting strategies in Africa.
Godfrey Budeli from Adams & Adams kicks us off with a thorough look at the extent of the counterfeiting problem in Africa. “The sale of counterfeit goods in Africa is extremely high,” he says. “The mind set of the African people is generally one of acceptance of counterfeit goods as result of ignorance and poverty.”
Budeli noted a number of challenges in countering this problem including limited resources, insufficient manpower, lack of knowledge of IP and inexperience in IP offices, widespread corruption, and outdated and/or no legislation at all.
However, companies can make use of a number of strategies. Two obvious ones are to register your trade marks and record that registration with customs. Not all countries have formal recordal systems in place, but Algeria, Morocco, Tunisia, South Africa, Zimbabwe, Ethiopia and North Sudan do. “The last three are in theory,” noted Budeli.
Budeli also strongly urged customs training. “Once an application made to customs or border police it is important to engage in customs training on regular basis,” he said. “Explain there is a problem with this particular brand, and could you please be on the lookout for these goods. You may think this training is unimportant but it is extremely useful!” Officials often get rotated to avoid bribery, for example.
Civil and criminal remedies are available but unlike EU brand owners required to take proactive steps. There is no designated counterfeit goods depots and no controlled destruction facilities.
Voluntary surrenders are also quick and cost effective. “This is efficient where small quantities are involved,” said Budeli. “It guarantees the destruction of goods, and no storage costs are applicable.”
Budeli gave some real life examples of manufacture locations for counterfeit goods. On one building in South Africa, Budeli commented: ‘Ladies and gentlemen, if you raid this building in the morning, if you go back in the afternoon it will look the same as before the raid.”
Andrew Hirsch, director general of the International Intellectual Property Institute, gave a presentation which included a number of factors that can help tackle the theft of IP. These include: connectivity and clusters; capacity of law, institutions, markets, educations; customers; culture; capital, human and other; traditional knowledge; genetic resources; and traditional and cultural expressions. On culture Hirsch noted: “You cannot even communicate properly if you don’t have a respect for culture.”
Lastly, Douglas Graham from Ideation started his presentation by revealing 30% of medicines in Africa is counterfeit. He noted three categories for stopping counterfeiting: local, central and global.
“For local, many come from currency. The kind of things you see here is global recognition, taggants in ink, paint, hidden indicia, holograms, serial numbers and check digits, and RFID chips. But all of these can be defeated by sophisticated counterfeiters and a lot of them are these days.”
This leads to central solutions such as DRM and central registries. But the problem is these can be hacked. “So you need a registry globally available, massively redundant and cryptographically concerned. So what do you get? A block chain.” Story by Michael Loney and James Nurton (Managing Intellectual Property)