The two-day event provided an opportunity for key players in the production and distribution of music to engage with copyright experts from around the world to deliberate on the rules of engagement in the digital environment so as to ensure that practitioners who are involved in the value chain in Nigeria get a fair deal and to guarantee the stability and sustainable growth of the Nigerian music industry.

Papers were presented by experts on topics, including:

(i) “Understanding How the Digital Music Business Works in Nigeria” by Mr. Audu Maikori; (ii) “Aggregating Music for the Digital Market Place” by Mr. Lawrence Wilbert; (iii) “The Digital Music Market Place and Copyright” by Mrs. Tarja Koskinen-Olsson; (iv) “Digital Music Licensing: Current Issues” by Mrs. Inger Elise Mey; (v) “Monetization of the Digital Exploitation of Musical Works and Sound Recordings as it Affects Creators and Publishers, Performers and Record Companies” by Mr. Rob Hooijer; (vi) “Employment Opportunities in a Structured Music Industry” by Mr. Yunusa S. Labaran; and (vii) “Monetising Music in the Internet Age: The CAPASSO South Africa Experience” by Ms. Nothando Migogo. The presentations were complemented by panel discussions, one of which was moderated by our Principal Partner.

The following resolutions were passed at the Summit after careful deliberations:

1. All contributors to the making and production of music, including songwriters, composers, publishers, performers, label owners and other persons in the value chain should benefit from any revenues accruing from the exploitation of the music.
2. The prevailing sharing arrangements between right owners, content providers, aggregators, telecommunication network operators and other digital platform owners, under which network operators keep between 70 and 80 percent of the revenue accruing from the sale of music on digital platforms is unfairly skewed against the owners of copyright works and this imbalance should be addressed to ensure fairness and guarantee the sustainable growth of the Nigerian music industry.
3. The Nigerian Copyright Commission, in regulating the activities of collective management organizations (CMOs), should take cognizance of the emerging platforms and the challenges of exploitation in the digital environment and the need provide a clear, simple and functional licensing regime on these platforms.
4. Government should immediately ratify all relevant international copyright treaties, particularly the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty, and ensure that these treaties are implemented.
5. The Nigerian Copyright Commission should speed up the on-going reform process to address the protection, administration and enforcement of rights in the digital environment.
6. Relevant organs of Government, including the National Assembly, should provide support for, and facilitate the implementation of the outcome of the copyright reform process of the Nigerian Copyright Commission, through a speedy promulgation of an updated copyright legislation.
7. The Nigerian Communications Commission, the National Information Technology Development Agency, the Nigerian Copyright Commission and Internet Service Providers should collaborate to check copyright abuses on the Internet and facilitate the taking down of, and application of penalty provisions to, websites dealing in infringing music.
8. The Nigerian Copyright Commission should address the increasing menace of illegal offline downloads and increase its enforcement activities to stem the infringement of copyright in music through such activities.
9. The Nigerian Copyright Commission should strengthen its Copyright Inspectors and have them cooperate with practitioners in the music industry for effective enforcement of the provisions of the Copyright Act.
10. Government should immediately implement the provisions of the Copyright (Levy on Materials) Order, 2012 to compensate right owners for the private copying of their works.
11. COSON should, in collaboration with the National Bureau of Statistics, initiate action to develop reliable statistics and verifiable database in the music industry to better measure the value of the industry and provide credible information for investors, regulatory bodies, tax authorities and decision makers.
12. All relevant stakeholders in the Nigerian music industry should address the current practice of using musicians as brand ambassadors for telecommunications operators and other corporate organizations and educate right owners on the proper assignments of rights, bearing in mind the overriding interests of the industry, the musicians and other persons whose interests are affected by such practice.
13. Telecommunication operators and other digital platforms should be more circumspect in their promotional activities so as not to devalue or adversely affect the sustainable growth of the Nigerian music industry.
14. COSON should work with other relevant institutions, agencies and interested persons to develop a long-term blueprint for the sustainable growth of the creative and music industry in Nigeria.
15. A Digital Music Monitoring Group should be set up to work closely with the Nigerian Copyright Commission, the Nigerian Communications Commission, the National Information Technology Development Agency, and other relevant bodies to develop specific methods for the implementation of the resolutions of this Summit and monitor progress in the exploitation of music in the digital environment, reporting at regular intervals on the state of progress made.

COSON inaugurates Nigerian Digital Music Monitoring Group

As a follow up to the resolutions passed at the Nigerian Digital Music Summit recently concluded on September 29, 2015, COSON has inaugurated of the Nigerian Digital Music Monitoring Group on Thursday, October 22, 2015. Members of the Group include top music industry executives, copyright experts, government agencies and representatives of telecommunications operators in Nigeria mandated to work closely with the Nigerian Copyright Commission, the Nigerian Communications Commission, the National Information Technology Development Agency, the National Assembly and other relevant bodies to develop specific methods for the implementation of the resolutions of the Summit.

New NAFDAC anti-counterfeiting policy

NAFDAC recently issued a policy aimed at deterring the importation of sub-standard goods from China.

At the risk of incurring a fine of up to one million naira for non-compliance, all importers of food, cosmetic, medical devices and drugs from China are mandated to provide a Clear Report of Inspection and Analysis (CRIA) in addition to existing regulatory requirements.

IFPI appoints Nigeria’s first ISRC manager

Spinlet, owners of the popular Nigerian digital music platform of the same name were recently appointed Nigeria’s first International Standard Recording Code (ISRC) manager by the International Federation of Phonographic Industry (IFPI).

This marks an improvement in digital music content licensing, aggregation and distribution.

NNPC sues CAC in Trademark Infringement Action

In an interesting turn of events, the Nigerian National Petroleum Corporation Retail Limited (NNPC) sued Natural Network Petroleum and Gas Company Limited (NNPG) for alleged infringement of its trademark in the mark NNPC.

The Corporate Affairs Commission (CAC) and the Registrar of Trademarks were also sued in the action.

The Plaintiff seeks an order of the court, amongst others, directing CAC to remove NNPG’s name from the register of companies and an order, amongst others, directing the Registrar of Trademarks to never accept for registration the word NNPG.

NNPC also claims ₦15millino in damages for infringement of its trademark.

Public Notice on Data Capture at the Registry

The following public notice has been issued by the Commercial Law Department of the Federal Ministry of Trade & Investment:

Federal Ministry of Industry, Trade & Investment

COMMERCIAL LAW DEPARTMENT

PUBLIC NOTICE ON DATA CAPTURE PROJECT

1. This is to notify the Public in General, Owners of Trademarks, Patent and Design Rights Owners and Legal firms/IP Practitioners that the Registry for Trademarks, Patents & Designs, Commercial Law Department, Federal Ministry of Industry, Trade & Investment, Abuja shall commence the digitization of its Trademarks data with effect from 1st October, 2015.
2. The objectives of the data capture exercise include the creation of a digitized database that would amongst others:

(i) Modernize and accelerate work process as well as service delivery;

(ii) Improve on the credibility of documents issued by the Registry;

(iii) Facilitate the conduct of electronic searches by both the Registry and stakeholders; and

(iv) Boost the confidence of investors in the Nigerian Economy.

3. The Registry therefore implores Right Owners, Agents, IP Practitioners and Stakeholders to demonstrate understanding and cooperation while this process lasts and to ensure that all their records with the Registry and promptly updated and/or renewed on/or before 28th September, 2015.

Since mobile money was introduced in Nigeria in 2011, there have been reservations, ambivalence and criticism of the efficiency of the Mobile Money Operators (MMOs) in the payments ecosystem, with most critics citing insufficient capital and lack of industry knowledge by the MMOs as a big challenge.

Nigeria currently has 21 licensed Mobile Money Operators (MMO), the highest number of MMOs in the world and the Central Bank of Nigeria (CBN) is said to have commenced the process of revoking the licenses of dormant MMOs. However, coasting on the success of its efforts in recent years at stabilizing the banking sector, CBN recently examined the regulatory framework of the mobile money industry and on April 1, 2015 approved the Guidelines on Mobile Money Services (Guidelines) in Nigeria.

The Guidelines

CBN is authorised by section 47 of the CBN Act which deals with payment and settlement systems, to promote and facilitate the development of efficient and effective systems for the settlement of transactions including the development of electronic payment systems, hence the powers to issue the aforementioned guidelines.

The Guidelines specify the minimum technical and business requirements for the various recognized participants in the industry and aims to promote the safety and effectiveness of the industry services.

Two models of mobile money services are identified and established by the Guidelines;

1. The Bank-led Model: This model recognises a bank or consortium of banks rendering mobile money services either alone or in partnership with other approved organisations. It however stipulates that the Lead Initiator shall be a bank. (The Lead Initiator is saddled with the responsibility of providing and managing the core infrastructure for a national mobile payment system.)
2. The Non-Bank led Model: This model on the other hand recognises duly licensed corporate organizations delivering mobile money services. It however, specifically stipulates that the Lead Initiator must be a duly licensed corporate organization other than a deposit money bank (DMB) or a Telecommunications provider (Telco).

It acknowledges Mobile Money Agent Networks and stipulates that the CBN guidelines for Regulation of Agent Banking issued in 2013 shall apply to them.

In the Guidelines, the MMOs are mandated to obtain periodically reviewable licenses from CBN, a unique Scheme Code from the Nigeria Inter-Bank Settlement System (NIBSS) and unique short codes from the Nigerian Communications Commission (NCC). As with guidelines for other players in the financial market, the run-off-the-mill Know Your Customer (KYC) requirements are provided for MMOs to comply with. They also demand procedural logging of all transactions by the MMOs and prohibits airtime deductions in respect of such transactions. Card transactions are subject to KYC and the Guidelines on the Issuance and Usage of Cards in Nigeria. The security of such transactions is taken into consideration by the Guidelines which mandate that they comply with PCI DSS standards.

Market Participants

The Guidelines recognize 5 participants in the mobile money services industry and assigns certain privileges, roles and responsibilities to them;

1. Banks (as Scheme Operators): they are expected among other things to provide financial, clearing and settlement services to the mobile payments system and are in charge of verification, approval and accountability for the credibility and integrity of partner organisations. They are also mandated to educate consumers on appropriate use of the services while providing them with an adequate enquiry or complaint channel.
2. Licensed Corporate Organisations: these are expected to provide and manage the requisite and compliant solutions for mobile payment services. They are also required to provide access to CBN on a demand basis for on-the-spot assessment and transaction verification, including a monthly assessment performance report. Of note however, is the requirement to keep records of transactions for a minimum of 7 years.
3. Infrastructure Providers: these are responsible for providing infrastructure to enable switching, processing and settlement facilities for mobile money services.
4. Mobile Network Operators: CBN’s regulation of the Telcos in this guideline is mostly concerned with preventing monopoly or anti-competition practices in the mobile money services industry. The Telcos are to provide the telecom network infrastructure and are prohibited from favouring any MMO over another in terms of traffic and price. They are of course, to ensure that mobile money services remain free and that airtime value is not used for payment or transfer of monetary value. They are also to file monthly statutory returns to CBN including; nature, value and volume of transactions, incidents of fraud and nature and number of consumer complaints.
5. Consumers: the Guidelines list a series of consumer entitlements. They are however assigned the responsibility of PIN/Password protection, proper confirmation of transaction details before authorization and prompt reporting of fraud cases, errors and complaints. They are afforded the right to escalate complaints to CBN’s Consumer Protection Department only where resolution of complaints through the bank’s complaint channels are exhausted or unduly delayed.

Settlement

The critical issue of settlement is addressed and strictly regulated by CBN which mandates that settlement accounts be opened as Nominee Accounts with DMBs on behalf of MMO customers. A notable feature of the Guidelines, regarding settlement, is the ultimatum that a minimum Shareholder’s Fund unimpaired by losses of ₦2 billion must be maintained by Scheme Operators, with effect from June 1, 2016.

Generally, two levels of settlements are set out and are to be complied with;

1. Inter-Scheme Settlement (consisting of On-Us Transactions and Not-on-Us Transactions) which will be provided by the NIBSS; and
2. Final Settlement which will be done through the CBN Inter-Bank Funds Transfer System (CIFTS).

Risk Management

There are minimum risk mitigation/management standards covering Credit, Settlement and Business continuity risks, the latter which mandates the existence of a board approved Business Continuity Plan (BCP) that must be tested through a fail-over process, at least twice a year.

Dispute Resolution

Apart from providing minimum transaction and technology standards, the Guidelines provide dispute resolution mechanism and guides. The general disposition of CBN on disputes is anti-litigation and pro-settlement. Customer complaints are expected to be resolved in 48 hours, while disputes arising between parties must be settled within 14 days. Customers are allowed to escalate complaints to CBN where dissatisfied with the above resolution, after which they may resort to Arbitration according to the Arbitration and Conciliation Act.

On cessation of services, MMOs are to furnish CBN with a 120 day notice in writing of intention to discontinue operations.

Sanctions for not complying with the Guidelines range from withholding of corporate approval, financial penalties and suspension from operation to revocation of operation license.

Requirements for Mobile Money License

Upon payment of a non-refundable application fee of ₦100,000 to CBN, the following are required for grant of a mobile money license; Consortium’s Certificate of Incorporation, profile, emails and contact numbers, Memo and Articles of Association, Shareholding structure, Return on Allotment of share and particulars of Directors. The applicant is also required to provide CV’s of company’s Board and Management, company’s organogram, Business plan featuring company’s profit sharing agreement and 3 years financial projections.

The IT Policy of the company covering Privacy, Information Ownership/Disclosure, Backup and Restore, Network Security, Encryption, Confidential Data, Password, 3^rd Party Connection, Incidence Response and Physical Security is required.

Other requirements include; Enterprise Risk Management Framework, BCP, Draft Agreements with Technical Partners, Participating Banks, Switching Company(ies), Merchants, Telcos and any other party. The applicant must also submit 3 years Tax Clearance Certificate for each party in the Consortium, Project Deployment Plan and Evidence of Shareholders’ Fund of ₦2 billion before the license is issued.

Challenges facing the Mobile Money Market

Globally, USD 7.5 billion was generated in the month of December 2014 alone. It is indisputable that mobile money is the future of payments the world over. Nigeria as a member of the MINT nations, remains a ripe market for investment in mobile money operations as several organizations, government bodies and enterprises are increasingly resorting to the mobile platform as a means of bill payments, bulk disbursements and merchant payments.

However, the market is beset by certain challenges which CBN and the Electronic Payment Providers Association of Nigeria (E-PPAN) have both expressly and impliedly recognised. These, if addressed, especially in the light of CBN’s regulatory moves, will leave a highly profitable industry for market players.

1. Urgent need for recapitalization: with the exception of the bank-led MMOs, only a handful of licensees are performing maximally. This has been attributed to the fact that licenses were easily and cheaply obtained by these independent MMOs who were at the material time, largely unaware that mobile market operations as retail businesses are capital intensive.
2. Lack of industry knowledge: dormant operators are so because of lack of industry knowledge at the time of obtaining license. There is therefore a need for the input of expert professionals to resuscitate the dormant operators.
3. Uneven distribution of mobile payment services: Banks have demonstrated their ability to flourish in the mobile money market, especially by leveraging on their existing customer base. Unfortunately, it is common knowledge that the distribution network of these banks and their operations are uneven and inadequate. These banks have the bulk of their operations (much like their branches) lopsidedly concentrated in urban areas, leaving a larger rural demographic of the country yet untapped. The CEO of NIBSS, Mr. Adebisi Shonubi this year reminded stakeholders that the operators were licensed principally to serve as transaction channels for deepening financial inclusion in rural areas across the country. The unfortunate situation however, is that the independent MMOs have largely resorted to competing with bank-led MMOs in the urban areas, neglecting the rural golden goose.

Recommendation

CBN has been forthcoming by laying down well considered regulations and commencing a purge of the Nigerian mobile money services market. If there was ever a time for investment in the mobile money market, it is now as there is a need for recapitalization of the existing operators which would naturally initiate increased participation of requisite market experts thereby resolving the challenges identified above.

]]> https://stillwaterslaw.com/a-guide-to-the-nigerian-mobile-money-market-in-2015/feed/ 0 https://stillwaterslaw.com/433/ https://stillwaterslaw.com/433/#respond Mon, 21 Dec 2015 15:15:55 +0000 http://barcode.stillwaterslaw.com/1.1/?p=433 INTRODUCTION

The music industry is rapidly evolving into a purely digital industry, with streaming and downloading advancing as the primary means of gaining access to music. According to IFPI’s Digital Music Report 2015, revenues from digital music services in 2014, for the first time, was at par with those from physical sales, representing 46% of global music sales. This evolution has resulted in, amongst others:  a shift of revenue generation from record companies to the publishing, distribution and telecommunication companies; a drastic reduction in CD sales and a significant tilt towards royalties as a primary source of revenue; and an overall increase in consumer accessibility to music.

The speed at which the Digital Music Industry (DMI) keeps evolving makes the future of the music industry largely unpredictable and any summary of its structure largely inconclusive and temporary. Albeit, it is definite that increased access to music through affordable downloads and streaming services will not stop.

This article aims at making a summary of the Digital Music Industry- elucidating the key players (the Digital Value Chain- DVC) and business models in the contemporary DMI- and identifying the various aspects of the present rules of engagement between members of the DVC that need to be changed to enable all players, especially the primary rights holders, get a fair deal.

THE DIGITAL MUSIC INDUSTRY

The DMI consists essentially of the Digital Value Chain and the various Digital Business Models.

Digital Value Chain

The key players in the DVC can be classified into 3 categories:

1. The Primary Right Holders (PRH) – These are the non-negotiable members of the DVC, essentially comprising of the Authors/Composers, Artistes, Publishers and Record Labels.  Their available rights include: public performance, mechanical, synchronization, distribution and print rights. The percentage of revenue accorded to each party within this category depends on the   agreed terms of engagement.

2. The Intermediaries- These refer to the Collective Management Organizations (CMO)/Copyright Collecting Societies (such as COSSON and CAPPASO) and the Aggregators/Distributors (e.g. Bandcamp, Freeme digital, CdBaby and Tune-Core).

The Aggregators have become very essential in the DVC especially as most major Music Service Providers (MSP) are unwilling to deal directly with PRH. Hence, they act as middlemen between the PRH and the MSP, primarily packaging music (including the rights in the musical composition and sound recordings) supplied by the PRH and distributing same to the MSP as well as collecting sales figures and revenue from the MSP and reverting same to PRH. Additionally, they help in reducing the negotiating asymmetry that would exist between the powerful MSP and the small PRH should direct negotiations take place. These Aggregators, most times, also offer premium packages which could include services such as: direct sales, publishing, marketing and other promotional services for PRH who opt from them.

The CMO on the other hand are organizations established by the copyright laws or upon personal agreements, having authority to collect royalties and license copyrighted works on behalf their members (the PRH) both nationally and/or internationally. Although these organizations play complementary roles with the Aggregators in terms of collection and distribution of royalties on behalf and to the PHR, however the CMO majorly focus on areas of music exploitation that are difficult to manage such as Radio and TV broadcasting as well as use in hotels and/or other public places.

3. Music Service Providers (MSP) – These are the digital download and streaming services.

· digital download services.

These platforms provide permanent music downloads for consumers on payment of certain prescribed fees. Digital music files sold through these platforms are usually on a per-track basis. MSP within this sector include: Telecommunication Companies -which are presently popular in Nigeria for Caller Ring Back Tunes (CRBT) downloads- and online music stores- such as ITunes, Amazon Mp3 and Google Music.

· Music-streaming services

These services allow consumers listen to songs through the internet without having to purchase the downloadable files, usually upon payment of a minimal monthly subscription charge. Examples of these MSP are: Apple Music (launched June 30 2015), Spinlet, Tidal, Music Key, The Kleek, Spotify and Google Play Music.

Some of these MSP however offer Free, Freemium or Free Trial services to consumers, whilst adopting other non-free alternatives such as advertising and/or other premium services.

It is worthy of note that online downloads and music streaming services are not essentially independent of each other. On the contrary most of these MSP are hybrids performing both services and employing consequential business models.

The Digital Business Models

From the foregoing, three primary business models can be discerned: i) Online Retails Model ii) Service Subscriptions Model and iii) Advert Supported Model.

Online Retails model – Under this model, the PRH (upon an agreed fee/ commission) employ services of the Aggregators to distribute their music to the MSP and upon successful sales, revert the proceeds to them. Proceeds from these sales are shared amongst all members of the value chain i.e. from the MSP to the PRH, according to the terms of engagement.

Service Subscriptions model- This model is usually employed by music streaming services.  It entails the MSP entering into licensing agreements (with respect to both musical composition and sound recordings of the track/song) with major labels, authorized Aggregators or CMO and sub-licensing access to subscribers (consumers). Proceeds from subscription charges are similarly shared amongst all members of the value chain according to the terms of engagement.

Although this model is presently not very popular in Nigeria -mainly because of expensive data services- and have been internationally criticized for low returns to artists (largely because most consumers use the free packages), it is however the fastest growing sector in the global DMI, presently representing 23% of the DMI and generating 1.6 Billion US dollars in trade revenues.   The IFPI 2015 report recorded that in 2014, local artists in Sweden witnessed a 111% increase in revenue generated through this channel which was higher than what the record producers witnessed (which was a 47% increase). Additionally, with the emergence of new major players like Apple music and Tidal which came on board  this year (2015) there is indeed a potential for growth in this category.

Advert supported model – This model is mostly adopted by MSP offering free or freemium services to consumers. These platforms essentially use contents provided by artists or fans to build an audience, which it sells to advertisers. Although this business model may seem unappealing as artists make little or no direct revenue from the use of their songs on these platforms (especially in respect of purely advert supported platforms), however these MSP provide suitable platforms for artist to: interact with fans, announce tour and performance dates as well sell tour/performance tickets etc.  Over all they increase the web visibility of the artists.

ASYMMETRY IN THE RULES OF ENGAGEMENT

On the surface, the digital business models laid out above seem fair and straight forward. However,  in reality, the PRH specifically the artists are the least  benefiting (monetarily), being at the bottom of the chain and having to rely largely on revenues from tours, shows and endorsements rather than royalties from use and sale of their songs. The current situation largely results from the unfair rules of engagement exiting between members of the DVC in relation to the revenue sharing. For instance in Nigeria, the Telecommunication network operators  who are one of the major players in the DVC charge up to 70/80% of the end user price with respect of songs vended through their platforms, leaving 30/20% to be shared amongst other members of the chain. These sorts of agreements are largely unfair and ought to be addressed.

CONCLUSION

Asides piracy, inequality in the terms of engagement between members of the DVC is the major challenge preventing artists form adequately reaping returns for their works. In light of this, an eminent need for measures addressing this asymmetry has arisen.

The Arthur is of the opinion that a collaboration of all major stakeholders in the DMI with the Nigerian Copyright Commission towards laying down a structured guideline governing these agreements/licenses, (addressing key issues like:  What and when percentages are to be paid, to whom they should be paid, whether there should be a cap on percentages etc) would go a long in addressing this problem.

Businesses rise and fall as a result of how they deal with their intellectual property among other things. The intellectual property of a business includes trade marks, patents, designs and copyrights. While the above may be true for businesses, it may not be for personalities. It is undoubtedly the fact that celebrities across various human endeavours develop strong personalities that may create an economic value around their image especially when expressed in the public domain. This is aptly expressed in celebrity endorsements of products and services. An image includes a physical likeness or representation of a person, animal, or thing, photographed, painted, sculptured, or otherwise made visible. Image rights refers to the control over an image by the personality whose image is portrayed or by the image’s creator. The provision of image rights in law enables the definition, valuation, commercial exploitation and protection of image rights associated with a person or thing.¹

It is important to point out from the outset that while legal issues arising from the unauthorised production, reproduction and use of images may be considered to be so closely connected to intellectual property especially trademarks and copyrights, it also cuts across several other areas of law as may be defined by jurisdictional laws

Image Rights in Nigeria

There is no known law specifically governing image rights in Nigeria. However, section 37 of the 1999 constitution of the Federal Republic of Nigeria (as amended)² provides for rights of privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications. The right to privacy and family life is a part of the fundamental human rights of every citizen which as enunciated by Nigerian courts in several decided cases³ cannot be waived. With the recent international acclaim accruing to Nigerian musical acts and artists and the subsequent increase in celebrity endorsements by businesses, there is every reason to believe that issues bordering on image rights of celebrities will soon start to crop up in legal discourses and legal actions instituted in our courts for imageright infrngements among others. Under Nigerian copyright law, the maker of an image has the rights over the use to which the image may be deployed. Properly put, a photographer has a right over the pictures taken by him except where it is made under a work for hire relationship. However, there may be complexities to what seems rather straightforward. For example, can a sitting Nigerian President use the image of a Nigerian representative taken at a sports mundial to enhance his electoral prospects in a general election? Is it legally permissible for a business to use the picture of a celebrity’s taken in the process of consuming its product to advertise its brand without the celebrity’s consent or authorisation? These examples are not exhaustive. In the instant case, as there are no statutory authorities specifically governing image rights in Nigeria, celebrities may not be afforded the maximum exploitation of the commercial value of their images due to unauthorised exploitation. Furthermore, there is no known judicial authority on image rights in Nigeria. Consequently, it could be argued that where a selfie was used for advertisement or marketing purposes without due authorisation, there may not be compensation under Nigerian law if an action is instituted against the unauthorised user under image rights. Notwithstanding the aforesaid, where a person’s image is registered as a device at the Nigerian Trade Marks Office, an unauthorised use of that device would be regarded as an infringement under the Nigerian Trade Marks Act.

Image Rights in  USA

Generally referred to as Publicity Rights⁴, various states in the United States of America have developed a robust legal framework to prevent the exploitation of the economic benefits attached to the use of a person’s image. The fact that an action against an unanthorised use of a claimant’s image may have close links with trademarks or copyrights posits a potential overlap with Federal laws. The New York’s Court of Appeal decision in ROBERSON V. ROCHESTER FOLDING BOX COMPANY 171 N.Y. 538 (1902)⁵ where the Court failed to recognise the claimant’s right of privacy in her images circulated by the Defendant spurred the enactment of Sections 50 and 51 of the New York’s Civil Rights Law. The aforementioned sections make it a misdemeanor to use in advertising or trade without consent, the name, picture or protrait of a person. With this development, over 30 states now recognise image rights either in common law or under statute in the United States of America.

Image Rights in  UK

While the United Kingdom has helped shaped the laws of Nigeria in many areas as a result of the colonial roots, it is trite that where there are no local laws covering a particular subject or dispute, foreign decisions can be of a persuasive effect in Nigerian courts.⁶  The decision of the Chancery Division of the English High Court of Justice in ROBYN RIHANNA FENTY & Ors v. ARCADIA GROUP BRANDS LIMITED (T/A TOPSHOP)  ANOR [2013] EWHC 2310 (Ch)⁷ gives us a clear view into the state of English law in respect of image rights. In this passing off action, the Defendant, a well known fashion retailer,started selling a t-shirt with the Claimant’s image in March 2012. The image in dispute was a photograph taken by an independent photographer. Topshop had a licence from the photographer who took the Claimant’s pictures, it did not however have a licence from the Claimant. The Claimant contended that the sale of this t-shirt without her permission infringed her rights. At the conclusion of the trial, the Court found for the Claimant when it held in the following words

“The mere sale by a trader of a t-shirt bearing an image of a famous person is not, without more, an act of passing off. However the sale of this image of this person on this garment by this shop in these circumstances is a different matter. I find that Topshop’s sale of this Rihanna t-shirt without her approval was an act of passing off.”⁸

In the earlier part of the judgment delivered by Judge Birss on paragraph 2, he held as follows:

“It is important to state at the outset that this case is not concerned with so called “image rights”. Whatever may be the position elsewhere in the world, and however much various celebrities may wish there were, there is today in England no such thing as a free standing general right by a famous person (or anyone else) to control the reproduction of their image”.

This decision was affirmed on appeal. Noticeably, while there is no known law guaranteeing image rights in the United Kingdom, the state of the law in respect to image rights in the United States of America is settled.

In Nigeria, a possible legal route for detterence against the unauthorised use and exploitation of the economic benefit in an image may reasonably lie in the Cybersecurity and Information and Protection Act. According to the provisions of this Act, an offence is committed where such a person uses a computer to violate any intellectual property right protected under any law or treaty applicable in Nigeria. For an action to lie under Cybersecurity and Information and Protection Act, the image used without authorisation must have been either trademarked or copyrighted and the use of such image would likely relate to online marketing and advertisement.⁹ Hence where an image is protected under the relevant trademark or copyright laws in Nigeria and the right vested in the proprietor by such registration is violated through the use of a computer, the affected person may rightfully seek redress or compensation for the violaton of his intellectual property right. This would seem to be the best legal redress available to anyone whose image rights have been violated in Nigeria.

It is expected that Nigerian Courts would take up the challenge whenever they are called upon to develop this area of the law through judicial activism.

1. http://ipo.guernseyreregistry.com/article/103037/What-are-Image-Rights accessed on July 22, 2014
2. S.37 of the Constitution of the Federal Republic of Nigeria as amended
3. Ezedukwa v. Maduka & Anor (1997) LPELR-8062 (CA); FRN v. Daniel (2011) LPELR-4152 (CA)
4. In the Estate of Elvis Presley v Russen (513 F Supp 1339 (1981), 1353); Brotman J. defined the ‘right of publicity’ as “…the right of an individual, especially a public figure or a celebrity, to control the commercial value and exploitation of his name and picture or likeness and to prevent others from unfairly appropriating this value for their commercial benefit.”
5. Accessed at http://www.lawnix.com/cases/roberson-rochester.html on April 28, 2015
6. Okon v. State (1988) 1 NWLR (Pt. 69) 172; Olafisoye v. FRN [2004] 4n.w.l.r (Pt. 864) 613
7. Accessed at http://www.bailii.org/ew/cases/EWHC/Ch/2013/2310.html on July 12, 2014
8. Rihanna v. Topshop (Supra) at para 75
9. S.21 of the Cybersecurity and Information Protection Act

]]> https://stillwaterslaw.com/image-rights-and-ip-in-nigeria/feed/ 3 https://stillwaterslaw.com/tax-and-ecclesiastical-bodies-in-nigeria/ https://stillwaterslaw.com/tax-and-ecclesiastical-bodies-in-nigeria/#respond Mon, 21 Dec 2015 15:02:23 +0000 http://barcode.stillwaterslaw.com/1.1/?p=429 This paper seeks to shed more light on the provisions of the law relating to taxation of religious bodies. This has become necessary to balance the state of our laws with the emotion-laden clamor for enforcement of tax collections against such entities in view of the eerie display of wealth and ostentatious living of some ecclesiastical leaders.

Religious/Ecclesiastical bodies are registered under PART C Companies and Allied Matters Act 2004. Entities registered under this Part are referred to as Incorporated Trustees with special features which include:

1. The income and property of a body or association whose trustee or trustees are incorporated under this part of the Act shall be applied solely towards the promotion of the objects of the body as set forth in its constitution and no portion thereof shall be paid or transferred directly or indirectly, by way of dividend, bonus, or otherwise by way of profit to any of the members of the association.
2. Nothing in subsection (1) of this section shall prevent the payment, in good faith, of reasonable and proper remuneration to an officer or servant of the body in return for any service actually rendered to the body or association.
3. With the exception of Ex-Officio members of the governing council, no member of a council of management or governing body shall be appointed to any salaried office, of the body, or any office of the body paid by fees.
4. No remuneration or other benefit in money or money’s worth shall be given by the body to any member of such council or governing body except repayment of out-of-pocket expenses or reasonable and proper rent for premises demised, or let to the body or reasonable fee for services rendered. See section 603 of the Companies and Allied Matters Act CAP C20 2004 for reference.

It is discernable from the above that the law places stringent constraints on the utilization of proceeds earned by such entities except for activities that promotes its objects. The question that begs therefore is what is the state of our tax legislation in relation to such entities?

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By the combined effect of Section 23 (1) of the Companies Income Tax Act 2011 (as amended), Section 26 of the Capital Gains Tax Act and Section 19, Para 13, Third Schedule of Personal Income Tax Act 2011 (as amended), Ecclesiastical institutions are expressly exempted from taxation with a caveat that the exemption is not applicable where the religious body engages in trade or business. These provisions as well as the overriding provision that Ecclesiastical institutions ought to be registered as non-profit entities under part C of CAMA give rise to three interesting scenarios:

Scenario A: Where the Ecclesiastical institution does not undertake trade of business would it be subject to tax laws? The express reading of the above referenced laws clearly indicates that such an entity would not be subject to taxation of any kind except Personal Income Tax payable by its employees.

Scenario B: Where the Ecclesiastical institution undertakes trade and business in its registered name as an incorporated Trustee, would it be subject to tax laws? The argument has been advanced that since Incorporated Trustees are by law not expected to make profit, they ought not to be subject to taxation. This argument in my view is flawed by the fact that the law only restricts incorporated trustees from distributing its earned profits as dividends or benefits to Trustees and instead insists that every income earned be ploughed back into promoting the objective of the entity. This includes income made from trade and business.

Furthermore, profit for the purpose of determining taxable income is different from that referred to in CAMA as it assumes a more technical meaning. The Net Profit of the entity is determined from its profit and loss account then Disallowable deductions are added to this figure. Allowable expenses/deductions, deduction of capital allowances and relevant percentage of the income tax are subtracted to arrive at taxable profit. This in my view leaves the entity with a sizeable amount to plough back into the business and fulfill the intent of CAMA. In fulfilling the intent of CAMA there appears to be a contravention of the provision of our tax legislation which invariably is the yardstick for the organization’s tax exempt status. This is due to the fact that our tax laws is explicit in its provisions that any income from trade or business by these bodies is taxable.

The next consideration then is what constitutes trade. The fifth schedule of the Personal Income Tax Act (PITA) attempted a definition provided thus:

“Trade or business to mean trade or business or that part of a trade or business the profits of which are assessible under this Act”.

This definition has provided little or no clarity as it is simply a repetition   of the keywords. In Arbico Ltd. v. FBIR (1996) 2 All NLR 303, the Supreme Court attempted to address the fluidity in the definition of trade by exemplifying two important axioms:

• Firstly, that the word “trade” should be interpreted in its widest sense in accordance with its common everyday meaning;
• Secondly, that an isolated one-off transaction can still constitute a trade.

Scenario C: What is the fate of Ecclesiastical institutions not expressly exempted in other tax legislations? I submit that such legislations like Value Added Tax are applicable to Ecclesiastical Institutions except in respect of items listed in the Schedule to the Act and humanitarian services were they enjoy zero VAT rate. There is however a misconception that these institutions are exempted from all income taxes when in reality it is simply its income as an organization that is exempted except of course it engages in trade. The income of its staff are subject to personal income tax and this institutions are also required to file tax returns.  .

In the US, while some bodies are automatically tax exempt, others are required to specifically apply for this status. The Internal Revenue Code also similar provisions with CAMA in that it prohibits the sharing of its income by its members. The same legislation however prohibits these bodies from engaging in substantial lobbying activities, political campaign activity, contravention of these would result in the loss of its tax exempt status (Section 501( c )(3) of the IRC).

Religious bodies are required to meet certain requirements these are nonprofit, cannot use the organization’s assets to provide a benefit to a related person or entity. Also trade or business income not related to its exempt purpose are generally taxable provided that these activities are not the organization’s primary or a substantial party of their activity. Where these occurs the income is subjected to Unrelated Business Income Tax (UBIT); there are however certain exceptions (www.irs.gov.). Where the income is from trade related to its tax exempt activities, same is not taxable

It appears apparent that tax exemptions to religious bodies are not uncommon. Where their law permits the organizations to do related businesses, our Law expressly states that any profits from trade or business is liable to tax.

The clamor for the taxation of these bodies is premised on the eerie display of wealth and ostentatious living epitomized by some ecclesiastical leaders and this is quite understandable. In the face of this, it is important that we are reminded of the fact these bodies have helped shape social and moral development and this must have been a consideration before it was confirmed tax exempt. Rather than broaden the scope of our tax legislations to accommodate business activities by these bodies, it is my humble opinion that these bodies have been suitably recognized by the government for their contribution to public good and it only fair that they contribute to the government revenue should there be any gains or profits from any business transacted by them. It is to this extent and bearing in mind the provisions of our tax legislations that I humbly opine that the income of religious bodies are not taxable. However, any income from any trade or business transacted by them is liable to tax.

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