We are proud to announce that our Principal Partner, Mr. Afamefuna Nwokedi has been appointed Chairman of the Nigeria Bar Association (NBA) Committee on Intellectual Property.

8th NBA Annual Business Law Conference

The Section on Business Law (SBL) of the Nigerian Bar Association recently concluded its 8^th Annual Business Law Conference. The conference which commenced on 25^th May and ended on 27^th May was themed Exemplary Governance : Enhancing Economic Development in Nigeria. The conference featured several keynote speakers some of which were The Speaker of the House of Representatives, Aminu Tambuwal, former Deputy Secretary General of the United Nations, Lord Mark Malloch Brown and Governor Babatunde Fashola (SAN) of Lagos State. It also featured key stakeholders from Nigeria’s corporate sector.

Our Principal Partner, Mr. Afamefuna Nwokedi was a panellist at the 2^nd Session of the Intellectual Property Committee sub-themed, “The Role of Government in the Development and Enforcement of Intellectual Property in Nigeria”.

Redbull vs. Bulldog: Trademarks Registry rules in favour of Bulldog.

The Bulldog vs. Redbull contentious train wagon eventually arrived at Nigeria. Stillwaters Law Firm (SLF) represented the Applicant for Bulldog and after a fierce opposition, got ruling in favour of the Applicant.

Companies and Allied Matters (Amendment) Bill 2014

There is bill pending before the National Assembly seeking to amend section 80 of the Companies and Allied Matters Act (CAMA). If passed the amendment will correct the lacunae in section 80 of CAMA which allows infants to be members of a company simply by neglecting to count them when calculating the statutory minimum number of members in a company.

There is also another provision in section 20(1) and (2) of the present CAMA which allows an infant to join in the formation of a company so long as there are two or more other qualified subscribers. Unfortunately, the bill does not attempt to also amend this position and if passed, would pose a paradoxical conflict within the Act.

Publication Of Designs By The Trademarks Registry

Over the years, efforts have always been on the publication of only trademarks in the Trademarks, Patents and Designs Journal published by the Registry of Trademarks, Patents and Designs. In what can be described as a trail blazer since the publication of the journal in Nigeria, the Registrar of Trademarks published both patents and industrial designs in the journal published on 31st December 2013. This is indeed a welcomed development in an attempt to revolutionize the practice and procedure of the registering designs and trademarks in Nigeria. We hope the momentum would be sustained.

Intellectual Property Automated System (IPAs) Launched In Nigeria

It was a milestone achievement in the development of intellectual property in Nigeria when the Federal Government launched the first Intellectual Property Automated System, IPAS on January 28, 2014 after 100 years of manual service. The Minister of Industry, Trade and Investment, Olusegun Aganga who launched the IPAS noted that with the IPAS, services would not only be more efficient, quicker and cheaper, but will also ensure transparency and accountability. We look forward to improved services from the Registry.

Nigeria, The Book Capital of the World 2014

The World Book and Copyright Day, celebrated in Nigeria. Port Harcourt in River State, Nigeria was designated by UNESCO, the world body responsible for the commemoration of the World Book and Copyright Day, as the Book Capital of the World for the year 2014.

This great honour to Nigeria has been attributed in many circles to be the fruits of the unrelenting effort of the Nigerian Copyright Commission (NCC) in combating the menace of piracy. The literary prowess and exploits of Nigerian authors like Nobel Laureate, Prof. Wole Soyinka, late Chinua Achebe, Chimamanda Ngozi Adichie among others have also been lauded as a major contributory factor to the recognition of Nigeria by the UNESCO.

At the NCC’s yearly event in commemoration of the World Book and Copyright Day, 2014, the Director-General of NCC, Mr. Afam Ezekude announced a comprehensive review of the Nigerian Copyright Act to address some issues to bring the Act in line with international best practices and ensure that challenges of contemporary technologies are well taken care of. He also stated that the Commission had stepped up the tempo of its anti-piracy operations, confiscating a total of 5,757,522 assorted copyright works worth approximately N7 billion (USD 42.3 million) and arrested 371 suspects.

Digital Music Licensing to begin in Nigeria

A coalition of the stakeholders in the Nigerian music industry and the Copyright Society of Nigeria (COSON), at the first Nigerian Digital Music Licensing Summit held last year in Lagos set up a working committee to establish the rules and structure for Digital Music Licensing in Nigeria.

The committee under the Chairmanship of Mr. Tony Okoroji of COSON convened a meeting on Thursday, October 9, 2014 to begin deliberation on the proposed rules and tariff to be adopted for implementing digital music licensing. Stillwaters Law Firm is represented in the committee.

We shall closely monitor and relay the coalition’s decision in subsequent publications.

Competition Law proposes via institutionalized legal framework, a free market economy where prices are not fixed by the competitors in a bid to manipulate the final consumer, rather it ensures a free economy with lower prices and better services. Competition Law is the foundation upon which every reliable free market economy no matter its structure must rest. It supports fairness in economic activities. Competition Law is otherwise referred to as Antitrust Law in other jurisdictions.

Restrictive practices under the Federal Competition Commission Bill 2005

The Bill shall apply to public utilities (however in relation to such, the Commission, before it exercises any function shall consult with the body responsible for the regulation of the given utility), Governments (Federal, State and Local) as well as all conducts both within and outside Nigeria by persons either carrying on business or resident in Nigeria. The Bill stems to promote a balanced development of the Nigerian economy.

The Bill in a bid to promote healthy competition in the Nigerian economy protects the economy against competition distortion or restraint of trade which culminates in restrictive practice. Restrictive practice is any practice whereby either party owns a significant interest in the other or has at least one director or substantial shareholder in common and any combination of the parties.

In acquiring or holding significant interests, a party or parties may engage in activities which are restrictive in nature and capable of lessening competition by restricting inflow and outflow in the market through market restriction, restraint of trade, abuse of dominant position, any agreement for minimum sale and Monopoly.

Market Restrictions

This is any practice whereby supply is limited to a defined market or a supplier exacts a penalty of any kind from the customer, if the customer supplies any products outside a defined market. The supplier’s action stems to limit influx of supply by restricting it to only his products or associated brands designated by the Supplier or the nominee by inducing the customer with better bargains or favorable terms.

Such practice is restrictive in nature as it limits patronage to the benefiting Supplier by virtue of the inducement of favorable terms to the customer. This has its own effect on healthy competition in the market as each party seeks its own good at the risk of disrupting free flow of goods in the market.

Restraint of Trade

This is any arrangement between parties within or outside Nigeria with the primary intention of controlling commerce. This includes acts involving conspiracy whether directly or indirectly to fix prices or other trading conditions, market division, collusion tendering, production restriction, irregular trading conditions which places others at a competitive disadvantage and subjecting acceptance to a contract to certain conditions. This tends to reduce the volume of trade to a benefitting party’s advantage and restrict competition in the market. A practical example is  a thought as to what would have been the case had the Nigerian Communication Commission (NCC) not put in place measures to regulate pricing as well as interconnectivity between the various networks.

Abuse of dominant position or market power

A party enjoys a dominant position or market power either by virtue of its economic strength or reputation built over time. An enterprise enjoys a dominant position where it enjoys the control of more than forty percent of a market. This occurs where a party restricts entry, prevents and eliminates competition in the market; Imposes unfair pricing or anti- competitive practices which directly or indirectly limit production and includes irrelevant conditions to contracts.

Monopoly

It is trite that a monopolistic market does not encourage a free economy. It does not allow for equal bargaining power in the market, it is a restrictive practice and the Bill makes such practice unlawful. A monopoly exists where 51% of the goods are supplied by one and the same party. Similar to this was when some newspapers reported that a major player in the construction industry, Dangote Cements, threatened to temporarily shut down its Obajana plant if the government continued to allow the importation of cement into the country. The basis for the threat was that there was excess supply of cement in the market. This veiled threat was in a bid for the Company to continue to enjoy control as a major player in the market.

Celebrity endorsement is the use of a celebrity’s acquired fame and reputation by a business or company to sell their product or service in exchange for valuable consideration. In modern times, it entails in most cases, the use of the celebrity’s image in product packaging or advertisements. In this current age of social media, some endorsement deals include an agreed payment per tweet or photo promoting the business’ products or service on the celebrity’s social media accounts like instagram or twitter. Recent examples in Nigeria include Pepsi’s endorsement deals with popular singers Tiwa Savage and Wizkid.

Celebrity endorsements have tremendous economic advantages for a business or product when executed correctly. Endorsements are associated with increasing sales and have been known to increase the stock values of businesses. Apart from financial benefits, the endorsing celebrity enjoys a reputational boost which logically translates into increased worth in the endorsement and entertainment market.

In recent times several celebrity endorsement relationships have gone south and in the less prudent cases, left a bitter taste in the mouth of the sponsoring businesses. A failed endorsement relationship could translate into costly and oftentimes embarrassing losses to the business. It can be very heart-breaking for a business to spend millions of naira printing product packages bearing the celebrity’s image and several millions more in billboard, TV, and social media advertising only to be rudely jolted back to reality after a court unfavourably interprets a clause of the agreement or after a celebrity falls from grace. The recent case of Lance Armstrong’s confessions and the consequently failed deals readily come to mind. A study estimated the shareholder loss caused by Tiger Woods’ extramarital affairs in 2009 to be between $5 billion and $12 billion. It therefore means that considerable care and skill must be exerted in negotiating an endorsement agreement to clearly spell out the duties and obligations required for a smooth relationship.

Choose Your Fate Wisely

Much like in a marriage, compatibility is key. For instance, a business whose target market is the family might want to strongly reconsider offering an endorsement deal to a celebrity whose art is inclined towards nudity or is adult oriented. Such celebrities would work best endorsing a line of evening wear, perfumes or alcoholic beverages as opposed to Cussons’ Imperial Leather soap or Dufil’s Indomie Noodles.

The celebrity too, must not just be driven by the benefits of a juicy deal but must consider whether the business’ ideals match his/her own in order not to lose credibility among the fans who sustain his/her celebrity status. A celebrity who has built a considerable fan base hinged on his/her political neutrality and activism would do best to avoid a notoriously partisan business.

Research

It is important that a business thoroughly researches the favoured celebrity at the time of offering the deal to be sure that there is nothing in the celebrity’s past or a likelihood of an event occurring in the future that may tarnish the image and brand of the business.

Offer

Every offer must be contingent upon the negotiation and execution of a final written agreement. Making an unconditional offer has the effect of binding the offeror (business) to a contract given life by the celebrity’s acceptance. It is important to always leave room for negotiations to iron out the kinks in the agreement before closing the deal.

The “Morals” Clause

Celebrity endorsements are reputation based agreements. A celebrity who loses his/her fan base is of no worth to the business anymore. Sadly, Death and Disgrace Indemnity is not offered by most insurance corporations in Nigeria. Therefore businesses have to painstakingly ensure in the morals clause of the agreement that they are allowed a certain flexibility to react and protect their investments in the event of a scandal. A good morals clause should clearly specify what immoral or illegal conducts the celebrity is expected to avoid during the period of endorsement and should also put into consideration the current reputation of the celebrity and the inclination of the celebrity’s art. A business cannot reasonably demand pious behaviour from a controversial musician. A morals clause provides for termination or suspension of an agreement upon breach of the terms in it. It is important never to make the exercise of a morals clause by a business contingent upon conviction because in the event of a criminal charge, it may take a longer time than the business would fancy for a conviction to be pronounced. A good morals clause allowed companies in deals with famous persons, the likes of Tiger Woods etc. to protect their goodwill from sinking with that of the celebrities.

Exclusivity

Exclusivity restricts the celebrity from advertising, using or endorsing directly or indirectly competitive products or services. Both parties must agree on what is to be considered competitive to the business. For instance, an artiste endorsing a bank’s services should not endorse a mortgage institution known to be affiliated with a competitor bank. It is best practice to provide in the terms of the agreement, a clause compelling the celebrity to seek the approval of the endorsed business before entering into any other endorsement deal. It is important to bear in mind however, that the more restrictive the exclusivity clause is, the higher the endorsement price will be.

I want it and I want it NOW!

One issue that enjoys no more than cursory attention thus making it the major cause of disputes is the availability and scope of service of the endorsing celebrity. Celebrities have busy schedules. While the availability clause should be flexible, it is pertinent in negotiation to ensure that critical dates in the tenure of the deal are identified and specifically committed to. It is also necessary to specify the celebrity’s scope of services in such a manner as to accommodate eventualities and protect the business owner from having to re-negotiate inclusion of a new scope of service at the mercy of the celebrity. Activities and services like photography and video shooting sessions for commercials, billboards, and product packages and personal presence for events and product launches must be specified. With the proliferation of social media, platforms like twitter, facebook, instagram and youtube should be covered.

Renewal

The endorsed business should be sure to include an option for renewal in its favour, i.e. an option to renew, exercisable by the business. This will provide a safe escape route where the celebrity is no longer desirable.

Intellectual Property Rights

A clause stating that the sponsoring business shall retain ownership of all intellectual property (trademarks and copyright) in the works and products that emanate in the course of the endorsement deal is vital. After investing millions of naira in advertisement and branding, the sponsoring business should reserve the right to use such video and pictorial adverts including product packages even after the tenure of the deal. It is advisable that the sponsoring business specifically provide in the agreement that copyright in all works produced in the course of the deal with the creative input of the celebrity shall be deemed assigned to the business in perpetuity. It is important to tailor the IP clause to the effect that work produced with the contribution of the artist within the tenure will be considered a “work for hire”, thus intimating an employer-employee relationship for the purposes of copyright.

Trivial specifics or not?

Matters such Territory, ADR and the Jurisdiction clause should be not be trivialised. The agreement must clearly and unequivocally spell out the geographical areas covered by the agreement or where the products of the agreement may be used by the business. However, with the current trajectory of ICT, the geographical lines may be getting very blurred.

Options for ADR must be provided in case of a dispute, and where parties are from different countries, they should both agree to submit to the courts of a particular jurisdiction in the eventuality of litigation.

Conclusion

Before a celebrity or a business owner goes smiling to the bank with millions in endorsement fees and millions in dividends from increased sales, the negotiation and execution of the endorsement agreement must be undertaken with surgical precision.

[1] A “Mindshare” Manifesto, Eric Almquist and Kenneth J. Roberts, http://www.lippincottmercer.com

[2] http://en.wikipedia.org/wiki/Vin_Mariani

Foreign Investment (FI) is one of the major sources of economic development and can exist in different forms such as; Foreign Direct Investment (FDI), Portfolio Investment, Commercial Loans etc. FIs are generally very susceptible to risks and thus require special protection. For instance, a Foreign Investor (investor) who incorporates a company in the Host–State -because of such long term commitment – may not be able to forfeit such an investment and leave the Host-State at will. Therefore, for FI in any State to be promoted, assurances of long term investment protection and certainty must be made.

Bilateral Investment Treaties (BITs) thus emerged as a means of achieving the protection and certainty gravely lacking and desperately needed under the Foreign Investment Law.  Simply put, a BIT is an agreement between two independent States, guaranteeing one State-party (Home-State), that its nationals (the investors), investing in the other state-party’s environs (Host-State), would be accorded certain standard of treatment during the investment period. Additionally, they permit settlement of investment disputes between Investors and defaulting Host-States in International Investment Tribunals (Investor-State arbitration).

This first of a 3 series article makes a synopsis of BITs regime. As a first step, a sketch of the history and rationale behind the adoption of BITs is drawn. At this point emphasis is made on the pre-BIT regime to expound the importance and reason behind the rampant adoption of BITs. Following this is a summary of the actors involved in a BIT, as well as the principles, structure and content of a typical BIT.

It should be noted that this part of the series does not aim at addressing the criticisms or lapses in the BITs regime neither is the Regime portrayed as perfect. It merely gives an insight to the regime and lays a foundation towards understanding the contemporary issues surrounding it.

History And Rationale Behind The Adoption Of Bits: The Pre-Bits Era

Before the advent and usage of international investment treaties, Investors were protected under Customary International Law. This era was however plagued with a lot of uncertainties. For example, the remedies available to aggrieved investors were restricted to the local remedies available in the Host-States and Diplomatic Protection (also known as State-State dispute). Most investment disputes were therefore settled in the Host-State’s domestic courts and were only in exceptional cases- after the exhaustion of local remedies- taken to international tribunals through diplomatic protection. This was very unwelcome because even if the national laws of a Host-State were capable of providing adequate protection to an investor (which most times were not), such laws are very vulnerable to change -for instance if there is a change in government- and consequently largely unreliable.

Furthermore, Diplomatic Protection entailed that aggrieved investors were protected by their Nations (Home-States). Thus, when an investor was aggrieved, the Home-State intervened and initiated the dispute on the investor’s behalf. The downside to this Protection is that the dispute becomes a dispute between States, leaving the investor at the mercy of the Home-State.

Consequently, in the bid to circumvent this rather cumbersome and unreliable dispute settlement techniques, States began entering into BITs granting investors right to bring direct claims against a defaulting Host-States (instead of going through their Home-States or exhausting local remedies) in international investment tribunals (Investor-State arbitration).

It is worth mentioning that during this era, before the prevalent adoption of BITs, various abortive efforts to establish a multilateral investment agreement, such as the International Trade Organisation (ITO) and the Multilateral Agreement on Investment (MAI) were made. The failure to achieve a multilateral investment agreement further occasioned the emergence of international investment treaties as the primary source of rules governing FIs. The initial investment treaties which emerged to afford protection to investors were the “Treaties of Friendship, Commerce and Navigation” and have currently evolved into the contemporary BITs.

The BITs brought greater security and certainty in foreign investment law. Asides the investment protections provided in the BITs, one of their most attractive features is that they are binding for a long period of time (usually between 10-20 years) and cannot be altered without the mutual consent of both parties.

Presently, the International Investment Regime is comprised of over Three Thousand Two Hundred (3,200) international agreements, of which BITs constitute more than Two Thousand Eight Hundred and Sixty 2,860 of them.  A lot of States even have Model BITs which serve as a guide or precedent for negotiating new BITs.  Nigeria for one, has presently concluded BITs with Twenty-Two different countries.

Actors Involved In Bits

The major actors involved a BIT are:

The “Host-State”– the State where the investment is made. It usually consists of developing States.

The “Home-State”– the State of the foreign investor i.e. the capital exporting State. It comprises mostly of developed States.

The “Investors”– These are the citizens of the Home-State who are investing in the “Host-States”. They comprise mostly of multinational companies/corporations.

The “Impacted Non-State Actors”– These are the group of people who are not direct parties to the BITs but are affected by the activities of the investors.

The “Arbitration Tribunals”– These are responsible for the resolution of disputes arising under the BITs.

Principles Of Bits

The principles enshrined in the BITs are; encouragement of FI, protection of FI, and liberalization of the market.

Contents And Structure Of Bits

Although BITs may differ in language, most of them tend to adopt similar structures and provisions.  The contents of a BIT can substantively be divided into two parts;

1. Substantive Rights-

These refer to the standard/quality of treatment required to be given to the investors. They include:

1. a) National Treatment (NT) clause- this assures foreigners equal treatment with the nationals of the Host-State.
2. b) Minimum Standard Treatment clause- assures investors fair and equitable treatment (FET) and full protection of their investments.
3. c) Assurances against expropriation without compensation and due process.
4. d) Provisions guaranteeing free repatriation of profits
5. e) Most Favoured Nation Treatment (MFN) clause- assures investors equal treatment with all other investors from third-countries.
6. Dispute Settlement Procedure-

In addition to these substantive rights, the BITs also provide for procedures for settlement of investment disputes such as:

Arbitral rules

The BITs provide for the arbitral rules to be adopted by tribunals in settlement of investment disputes. Some of these rules include; The International Centre for Settlement of Investment Dispute rules (ICSID- which is the most prominent), The United Nations Commission on International Trade Law (UNICITRAL), International Chamber of Commerce (ICC) and the Stockholm Chamber Of Commerce (SCC). 

Applicable laws

Furthermore, BITs sometimes provide for the applicable laws in which the terms of the BITs are to be interpreted.

Selection of arbitrators

BITs also provide for procedures in which arbitrators are to be selected. Usually they provide that arbitrators are selected by the parties involved in the dispute. Each party is usually permitted to choose an arbitrator, while a third one, is selected by the arbitrators chosen by the parties (preferably the parties also take part in choosing the third arbitrator).

Conclusion

The failure to accomplish a multilateral investment agreement and the increasingly desperate need for foreign investment protection (especially in developing countries to boost their economy) has led to the proliferation of International Investment Treaties -most especially BITs- as the major source of Foreign Investment Law. Although this Regime is laced with a lot of controversies, it is without doubt that the BITs have brought a degree of certainty and security to International Investment Law.