African companies more eager to assert their IP rights
The Commercial Division of the High Court of Uganda is set to hear an interesting dispute over the alleged infringement of BASCO Products (Kenya) Ltd's trademarks and get-up in relation to its paints business by a Ugandan company called BASCOM Company (Uganda) Ltd (BCL). BASCO is a Kenyan company with over 10 years experience in the paints business, while BCL was incorporated in Uganda in 2005.
Sometime in 2006 BASCO discovered that BCL was manufacturing and selling paints using a very similar combination of colours and marks to BASCO's own colours and marks. BASCO is the registered owner of four trademarks in Uganda under Class 2 of the principal trademark regulations. BASCO claims that its brand and marks are well known to consumers all over East Africa and, therefore, BASCO has a substantial reputation to protect in Uganda.
BASCO also argues that, being in the same industry, BCL's directors must have been aware of BASCO's products such as paints and varnishes which are widely distributed on the Ugandan market. BASCO alleges that the continued use of the name BASCOM by BCL is "calculated to deceive and mislead" the general public into believing that BCL's paints are BASCO's. This argument was supported by copies of local newspapers in which BCL widely advertises its products. As a result of the alleged infringement, BASCO seeks, among other things, an injunction, an undisclosed amount in damages and costs as a deterrent against BCL.
In its defence, BCL alleges that BASCO has no reputation in Uganda. BCL claims that although it was incorporated in 2005, it has been active in the manufacturing of paints since 2002. Further, it alleges that the name BASCOM has no nexus with that of BASCO, nor does the get-up used by BCL cause any confusion among the public. In addition, it maintains that it has a legitimate right to use its get-up and name because BASCOM is an abbreviation of the names of the owners of BCL. In conclusion, BCL prays for dismissal of the suit on the grounds that its lawful acts have occasioned no deception or injury to BASCO.
As this case has not yet been heard, or judgment entered, one can only comment on some issues raised by the nature of the pleadings. One of the glaring issues flowing from the defence is the confusion between registered names and registered trademarks. Clearly, BCL cannot be entitled to rely on a registered company name as a licence to use the same name for its products in contravention of an existing registered trademark. The situation would have been different if BCL had gone ahead to register a BASCOM trademark. If this had been the case, even if the registrar allowed registration in error, there could have been a modest chance of the defence succeeding. One of the things to note here is that there is no link between the Companies Act and the Trademarks Act as such. In other words, registering a company does not necessarily entitle the owner of this company to use or register this name as a trademark, without complying in all respects with the Trademarks Act requirements. It is likely that BASCO will have sufficient evidence to prove infringement because:
- BASCO has registered marks (whereas BCL does not);
- there is a close resemblance between the colours and get-up used by both parties; and
- both parties are manufacturers of paints (and are therefore in the same trade).
However, BASCO may have made a mistake in not seeking an interim order to prevent BCL from continuing to sell its goods in a manner that may compromise the market for BASCO's goods. Fixing cases, even those in the commercial court in Kampala can take time. As such, BASCO would have shown seriousness in preventing infringement by obtaining an interim order, pending the fixing and hearing of the main suit. Secondly, BASCO ought to have pleaded the damages prayed for more specifically. Even though it is praying for general damages, it is important to give an indication to court what quantum of loss has been suffered.
Whereas there is no telling when and what settlement will come out of this case, it is encouraging to note that increasing numbers of companies in East Africa are willing to take legal action to protect their brand names and IP rights. Hitherto, it has mainly been multinational corporations taking action to assert their rights.
Paul Asiimwe, Sipi Law Associates, Kampala
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