Procedures and strategies for anti-counterfeiting: Nigeria

In spite of socio-economic challenges, Nigeria has continued to witness growth and expansion, diversification and a greater level of transparency. Contributing factors to this are Nigeria’s creative industries, which have grown somewhat informally, as well as a fast-emerging retail culture. Nigeria has a population of 170 million that largely comprises exposed and sophisticated people who – conversely – have low purchasing power. This oxymoronic reality makes the country a popular destination for counterfeit and pirated goods.

Nigeria has no specific anti-counterfeiting law – at least, not a broad one that covers all types of goods and all species of anti-counterfeiting. Hence, the fight against counterfeits involves the creative application of the various laws that affect rights holders in one way or another. Therefore, combating anti-counterfeiting may involve civil court action, criminal court action or a regulatory or administrative approach – and sometimes a combination of these.

Legal framework

The following legislation is involved in the fight against counterfeiting in Nigeria:

• the Copyright Act (CAP C2, 2004);
• the Counterfeit and Fake Drugs and Unwholesome Processed Foods (Miscellaneous Provisions) Act (CAP C34, 2004);
• the Customs and Excise Management Act (CAP 45, 2004);
• the Cybercrime (Prohibit, Prevention, Etc) Act, 2015;
• the Merchandise Marks Act (CAP M10, 2004);
• the National Information Technology Development Agency Act 2007;
• the Nigerian Police Act (CAP P19, 2004);
• the Patent and Industrial Designs Act (CAP P2, 2004); and
• the Trademarks Act (CAP T13, 2004).

Further, the following legislation establishes the regulatory and administrative bodies that play a key anti-counterfeiting role:

• the Consumer Protection Council (CPC) Act (CAP C25);
• the Economic and Financial Crime Commission (EFCC) Act (CAP E7, LFN 2004);
• the National Agency for Food and Drugs Administration and Control (NAFDAC) Act (CAP N1, 2004); and
• the Standards Organisation of Nigeria (SON) Act (CAP S9, 2004).

Border measures

Nigerian Customs has a mandate to ensure that all import and export duties are duly levied and collected for the federal government, and that contraband products are not brought into the country. These have always been the major focuses of Customs, which does not see combating counterfeiting as its main preoccupation.

However, an amendment to the Common External Tariff was made several years ago which placed “all counterfeit/pirated materials or articles including base or counterfeit coin of any country” on the Absolute Prohibition List. Therefore, Customs now has the power to fight counterfeiting in Nigeria.

Nevertheless, Customs has yet to institute a formal and functional system for dealing with counterfeiting, although some efforts are now being made in that direction. For now, it plays a role upon an interested party seeking an injunctive order, which may be obtained in a civil action (eg, directing it to set aside a shipment), or through the intervention of other government agencies that demonstrate interest in a particular consignment.

Criminal prosecution

Nigerian law provides two major routes for the criminal prosecution of counterfeiters.

False trade descriptions and related offences

The Merchandise Marks Act criminalises any act that involves:

• trademark forgery;
• false trade description;
• the manufacture, sale or possession of equipment used to forge trademarks; or
• the deceptive application and use of trademarks.

To enforce this law, a rights holder petitions the police pursuant to the general power of crime prevention and detection under Section 4 of the Police Act. Following the petition, the police may conduct independent investigations and thereafter organise raids to seize the offending products and arrest the perpetrators for the purpose of prosecution. However, prosecution may not be the main reason to avail of this option, since the police may not be very experienced or diligent in this regard. Nevertheless, the use of police raids as part of a multi-faceted approach has the following advantages:

• Repeated raids can cause disruption on the market. The associated stigma and inconvenience can help to deter offenders and would-be offenders;
• It is easy and quick to organise raids with the police;
• A raid can be used as a prelude to civil court action; and
• Effective prosecution may lead to imprisonment and fines.

Sale of counterfeit drugs and unwholesome processed foods

Section 1 of the Counterfeit and Fake Drugs and Unwholesome Processed Foods (Miscellaneous Provisions) Act provides that any party that produces, imports, manufactures, sells, distributes, possesses or displays for sale any counterfeit, adulterated, banned, fake, sub-standard or expired drug or unwholesome processed food in any form – or aids or abets another party to so do – commits an offence. The definition of ‘fake drug’ in this context includes where “anything accompanying the drug bears any statement, design or device which makes a false claim for the drug or which is false or misleading”.

Such matters are tried by the Federal High Court and the punishments on conviction include a fine of up to N500,000 and imprisonment for between five and 15 years.

The enforcement of this law is largely vested in NAFDAC.

Civil enforcement

Traditional IP legislation

A major strategy for combating counterfeiting in Nigeria is to resort to traditional IP legislation covering trademarks, patents, industrial designs or copyright, provided that the case involves violation of such rights. In a typical trademark infringement case, the following two civil causes of action are possible.

Trademark infringement action: This action is instituted pursuant to Section 5(2) of the Trademarks Act. To succeed, the plaintiff must establish that:

• it has a registered trademark, which is valid and listed on the Nigerian Trademarks Register;
• the mark being used on the offending product is identical or confusingly similar to its registered mark; and
• the offending products are the same as or similar to those for which the trademark is registered.

Passing off: Section 3 of the Trademarks Act preserves the right to seek redress against the violation of an unregistered trademark through passing off. This action seeks to protect a business or product from being misrepresented as another’s by use of a name, mark or get-up that is similar to an existing company or business name. To succeed, the plaintiff must show that a misrepresentation was made:

• by a trader in the course of trade;
• to prospective customers or ultimate consumers of the goods;
• which was calculated to injure the business or goodwill of another; and
• which caused or is likely to cause actual damage to the business or goodwill of the plaintiff.

Preliminary measures in the form of an interim injunction or Anton Piller search and seizure order can be obtained ex parte, without putting the adverse party on notice. This enables the bailiff and the plaintiff’s solicitors to enter the defendant’s premises to seize all offending products and incriminating documents that may be used as evidence during trial.

This action can be filed as a class action against all named and unnamed parties that are engaged in illicit trade in the offending products.

Available remedies include damages, accounting of profits, perpetual injunction and destruction.

Recent case law

In recent appellate decisions, the courts have settled certain elements of Nigerian IP jurisprudence, with positive implications for the anti-counterfeiting activities of agents and distributors.

In Nkiru Emechebe v Ceto International Nigeria Limited (CA/L/1347/2016) the Court of Appeal found that a distributor or agent cannot file a trademark infringement action in its own name, as if it were the trademark owner; rather, it must file the action in the name of the owner. Any action filed in its own name and without the express declaration that it is suing as an agent of the trademark owner does not have the requisite locus standi. The significance of this case is that it protects the trademark owner from unscrupulous agents and distributors which misappropriate its marks in the local market. This has been a longstanding issue in Nigeria.

In Piaggio & CSPA v Autobahn Techniques Limited (FHC/L/CS/1307/12) the Federal High Court, hearing an appeal of a decision of the registrar of trademarks, ruled that an agent or distributor may not exclude the trademark owner from enjoying the goodwill accrued in the local market simply because the agent has been involved in the promotion of the products in the local market. This is especially the case where it is clear that the agent enjoyed the active support of the trademark owner in the development of business in the local market.

In Toyota Motor Corporation v Subaya Metalware Nigeria Ltd (CA/L/1003/2016) the Court of Appeal emphatically held that mere trademark applications and their statutory advertisement in the Trademarks Journal do not constitute use in the course of trade and consequently do not amount to infringement. The court in this case also found that stereos used only in vehicles should not be classified under Class 9 of the Fourth Schedule of Trademarks. The court held that car stereos are properly classified under Class 12, since they are an integral unit of vehicles under that class. The court subsequently held that the sale and distribution of a car stereo in relation to a trademark in respect of class 12 would not amount to trademark infringement of the same trademark registered under Classes 9 and 11 of the Nice Classification.

Administrative/regulatory action

Experience shows that those who engage in IP violations are usually involved in other ancillary offences and violations in furtherance of their illegal businesses. The intervention of various government and regulatory agencies and authorities thus becomes relevant in combating counterfeiting. Which regulators to petition will depend on the nature of the products, the industry involved and the facts and circumstances of each case.

CPC: The primary function of the CPC is to provide redress for unfair or deceptive practices against consumers. As part of its mandate, the CPC can enforce all laws that are meant to protect consumers and require products to be properly labelled to assist consumers in identifying different products. Consumer deception through false advertisement (eg, the use of forged trademarks) forms the basis of the CPC’s intervention in IP infringements.

Through its designated inspectors, the CPC has the power to enter premises and seize and destroy offending products without first procuring a court order. The power to prosecute offenders is vested in the attorney general of the federation on the request of the CPC. In addition, the CPC believes in consumer education as part of its mandate and encourages rights holders in this direction.

SON: The SON is responsible for registering and regulating standard marks and specifications for both local and imported products in Nigeria. To act, the SON requires the rights holder to:

• register its products;
• obtain appropriate SON Conformity Assessment Programme and Mandatory Conformity Assessment Programme certificates;
• pay due port inspection charges; and
• provide evidence of trademark ownership.

The SON has the power to enter premises and seize or destroy products that are found to be dangerous or sub-standard or that violate the SON Act. These powers are enforceable on obtaining an ex parte order from a magistrates court. However, the SON cannot prosecute an offender; accordingly, prosecution is carried out by the Office of the Attorney General of the Federation.

NAFDAC: All food products, drugs and medical devices in Nigeria must be registered with NAFDAC. Accordingly, it has the power to seize and destroy unregistered products, as well as counterfeit products. Unlike the agencies mentioned above, NAFDAC officers can institute criminal proceedings (however, this requires the consent of the Office of the Attorney General of the Federation).

EFCC: The EFCC is vested with the prosecution of offences relating to economic and financial crimes. Section 46 of the EFCC Act defines economic and financial crimes to include “theft of intellectual property and piracy”; on this basis, the EFCC also addresses anti-counterfeiting. The EFCC is empowered under the act to bring legal action against offenders and may carry out criminal investigations, raids and prosecutions in respect of IP rights enforcement.

Anti-counterfeiting online

As part of its policy objectives, the explanatory note of the Cybercrime (Prohibit, Prevention, Etc) Act states that the protection of IP rights and private data is a key goal. The law was passed in 2015 and its effectiveness against counterfeiting is as yet unknown.

The Copyright Act is being reviewed and the new bill includes provisions relating to the activities of internet service providers and related matters, including takedown provisions.

Further, the Nigeria Internet Registration Association’s Dispute Resolution Policy (May 5 2008) established complaint and takedown mechanisms regarding abusive and bad-faith registrations. The remedies available when a party is found liable include cancellation of the domain name or transfer to a party with legitimate rights.

Preventive measures/strategies

A major preventive measure is the registration of appropriate trademarks in Nigeria in order to provide a basis for challenging unauthorised use. Further, rights holders should carry out regular market surveys and Trademark Journal watches to ensure that any unauthorised use of trademarks or application for registration of a trademark is discovered as soon as possible, facilitating appropriate action.

Rights holders that deal in NAFDAC-regulated products should be especially careful when appointing distributors to assist them in obtaining their NAFDAC registrations. The power of attorney must be unequivocally revocable and affirm that the rights holder is the proprietor of the trademark.

Rights holders are generally encouraged not to appoint distributors in Nigeria without ensuring that trademark registrations or (at least) applications have been filed. Regular checks on distributors are encouraged.

While the use of technology and holograms has advantages, experience shows that counterfeiters are quick to replicate them. Thus, constant market checks and some form of enforcement action are crucial to deter and discouraging trade in counterfeits.

Institutional engagement with market leaders in relevant major markets has also proved effective.

Jackson, Etti & Edu

3-5 Sinari Daranijo Street

Off Ajose Adeogun

Victoria Island, Lagos

Nigeria

Tel +234 1 280 6989

Fax +234 1 271 6889

Web www.jacksonettiandedu.com

Obafemi Agaba
Partner
[email protected]

Obafemi Agaba is a partner and head of the brand protection practice and fast-moving consumer goods section at Jackson, Etti & Edu. He is an astute IP litigator with a strong reputation for designing and executing tailor-made anti-counterfeiting campaigns for numerous local and international clients. He recently won three important IP-related appeal cases. He has facilitated several IP seminars, educating government regulatory agencies.

He was called to the Nigerian Bar in 2000, and holds an LLM in IP law from University College London and a postgraduate diploma in international copyright law from King’s College, London. He is vice president of the IP Law Association of Nigeria and serves on the International Trademark Association Anti-counterfeiting Committee.