Court of Appeal clarifies issues of non-use, agency and genericness

Nigeria

In Procter & Gamble v G S & D Industry Limited (January 24 2012, reported in a 2013 Law Report), the Court of Appeal has overruled a decision of the lower court in which the latter had found that the trademark ARIEL had become generic through non-use or abandonment.

Appellant Procter & Gamble had obtained a registration for the trademark ARIEL in Nigeria as far back as 1969. It sought rectification of the register of trademarks, as well as other reliefs, against the defendant, which had registered another ARIEL mark.

The trial judge examined and applied interesting principles of law concerning non-use, genericness and agency - albeit slightly incorrectly, in the author's opinion. Therefore, the appeal court was correct to overturn the decision of the lower court. 

The trial judge had first stated that, in order to prove use in the Nigerian market, the appellant needed to adduce sufficient evidence of distribution, sale and advertisement of the product. The court also held that use by a subsidiary company does not constitute use that can be attributed to the parent company. According to the judge, the "act of the subsidiary company cannot be imputed to the parent company in the absence of an assignment by the parent company to the subsidiary company".

The Court of Appeal, presided by Justice Ogunwumiju, made the following findings:

  • The meaning of 'genuine use' cannot be limited to the production, sale and advertisement of the branded goods, while excluding other commercial factors such as registrations for the trade name/mark and advertisements in foreign media. The critical factor is that the Nigerian public must be aware that the product exists and is available for purchase in Nigeria. 

  • By invoking the principle of 'agency', an act by an agent (a subsidiary company) can be imputed to the principal (the parent company). In order for a foreign company to carry on business in the country, it must be registered as a Nigerian company. The appellant had incorporated a subsidiary company, and there was a presupposition that whatever business the appellant intended to carry out in the country could be done only through its subsidiary company. Any act by the Nigerian subsidiary (ie, use of a product owned by the parent company) must have been authorised. Such authority to act may be implied, actual or have been ratified. Here, the parent company had provided exhibits of use by the Nigerian subsidiary company and, in so doing, had ratified the subsidiary company's use. As the presiding Justice rightly stated: ''Ratification will be implied from any act showing an intention to adopt the transaction.'' 

Issues of genericness also arose, with the trial judge ruling - erroneously - that a trademark which remains on the register for a number of years without being used in relation to the goods for which it was registered becomes generic and falls into the public domain. Such mark must thus be expunged.

The Court of Appeal, in overturning the lower court's ruling, said that "it is self-contradictory to expunge a trademark for non-use and, in the same breath, declare that the same has become generic". A trademark that is removed from the register for non-use cannot, at the same time, have become so popular that it is now a generic name applicable to all products of a particular kind.

The Court of Appeal further held that the resultant effect of non-use cannot ipso facto be genericness and that a valid trademark can become generic only if the consuming public misuses the mark or name in such a manner that the mark becomes the name of the product in the public domain. 

Arguably, the Appeal Court correctly applied the principles of law and overturned the decision of the lower court. However, it is true that a trademark loses its ability to indicate the source or origin of the goods on two grounds:

  • non-use; and
  • genericness arising out of misuse.

In any case, the Court of Appeal's decision should be welcomed as it clarifies this area of trademark law.

Odunayo Ayorinde, Jackson, Etti & Edu, Lagos

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