Preem & Partners | 11th August, 2023
The Nigerian commercial ecosystem has often been criticised for its lack of ease for businesses, despite the existence of business-friendly policies and recent corporate/commercial laws. However, the Business Facilitation (Miscellaneous Provisions) Act, 2022, [referred to as “the Amending Act”], which came into effect on February 8, 2023, aims to address this issue and improve on existing business laws in Nigeria, including trademark law.
The main objective of the Amending Act is to promote ease of doing business in Nigeria and eliminate obstacles in the commercial space. It achieves this by amending various federal laws listed in its schedule, including the Trade Marks Act of 1965 [referred to as “the Principal Act”]. Specifically, section 67(1) of the Principal Act, which defines a trademark, is modified by Paragraph 69 of the Schedule to the Amending Act [referred to as “the Amending Paragraph”].
Under the Amending Paragraph, a trademark is now defined as follows:
a) a mark used or proposed to be used in relation to goods or services for the purpose of indicating a connection between the goods or services and a person having the right, either as a proprietor or as a registered user, to use the mark, whether with or without any indication of the identity of that person, and may include shape of goods, their packaging and combination of colours; and
b) in relation to a certification trade mark, a mark registered or deemed to have been registered under section 43 of this Act.”
In the following sections, we will discuss the changes brought about by this Amending Paragraph and its potential impact on Nigeria’s trademark law.
To understand the key changes in the Amending Paragraph, which introduced a new trademark regime, let’s compare it with the relevant definition paragraph from section 67(1) of the Principal Act:
“trade mark means, except in relation to a certification trade mark, a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods and some person having the right either as proprietor or as registered user to use the mark, whether with or without any indication of the identity of that person, and means, in relation to a certification trade mark, a mark registered or deemed to have been registered under section 43 of this Act.”
By comparing the two definitions side by side, we can identify three significant changes. Firstly, the Amending Paragraph now includes “services” in the definition of a trade mark [referred to as “service marks”]. Secondly, the phrase “in the course of trade” has been removed from the definition. And finally, the Amending Paragraph introduces the phrase “may include shape of goods, their packaging and combination of colours.”
In the following paragraphs, we will discuss the implications of these changes in both trademark regimes for brands and business owners.
1. Service Marks
The definition of a trade mark in the Principal Act was limited to goods, without providing a clear definition of “goods” itself. This posed challenges for brands that wanted to protect their services instead of physical goods. To address this issue, the Minister for Commerce and Industry, exercising the power of amendment granted by the Principal Act1 in 2007, expanded the registration classes for trademarks from 35 to 45 in the Trade Marks Regulation, to conform with international best practices2. This expansion included ten additional classes, specifically for service registrations. However, this action by the Minister was deemed “unlawful” due to various reasons.3
One reason for considering the expansion unlawful is that the Principal Act did not originally recognise service marks, and the Nice Classification system, which acknowledges service marks, had not been adopted in Nigeria at that time. Nevertheless, brands still registered their trademarks as service marks despite these legal uncertainties.
This created a situation where infringers of registered service marks could argue against infringement actions, claiming that service marks were not included in the definition of a trademark in the Principal Act. They also argued that section 5(1) and (2) of the Principal Act did not provide protection for services or grant exclusive rights over the use of a service mark. A decision by the Federal High Court in 20173 further strengthened this argument.
With the recent amendment and introduction of the new trademark regime, the Minister’s move to include service marks in the registration classes back in 2007 will more likely receive legal recognition. This development puts to rest any arguments regarding the registration of a service mark and the associated exclusive rights, bringing relief to service providers.
2. In the Course of Trade
In the Principal Act, it was a requirement that a trade mark must indicate a connection in the course of trade between the goods and the owner for the rights to be granted to the registered owner. This meant that a trade mark had to be used or intended to be used in the sale, manufacturing, or offering of goods directly to the public for profit-making purposes. In other words, if a trade mark was not actively used or intended to be used in the forefront of business activities related to goods, it would not qualify as a trade mark, and no rights would be granted to the owner.
This implied that goods that were not manufactured, sold, offered, or actively involved in negotiations for profit-making purposes would not be eligible for trade mark protection. Consequently, the trade marks of non-profit organisations, brands specializing only in purchasing goods, or trademarks consisting of a person’s name [example, Omotola] without a connection to trading goods, would not meet the criteria for trademark registration or protection. Furthermore, the absence of a connection in the course of trade could be a reason to have a registered trade mark removed from the trademark registry due to “insufficient cause.”5
However, the Amending Paragraph removes this requirement and no longer mandates a connection in the course of trade between the goods [or services] and the owner. This change has a significant impact: trade marks of non-profit organisations and brands specialising in purchasing goods will now be eligible for trademark protection, among other similar cases.
3. Shape of Goods, Packaging of Goods, Combination of Colours on the Goods
Unlike the Principal Act, the Amending Paragraph introduces the possibility of registering a trademark for the shape of goods, their packaging, and combination of colours. There are four key points to note regarding this change.
Firstly, this modification only applies to trade marks registered for goods [referred to as “product marks”] and not for services. Secondly, the registration of the shape, packaging, and colours combination of goods is considered ancillary to the trademark itself. They cannot be registered independently but are registered as part of the overall trade mark. Thirdly, these ancillary registrations are optional and not mandatory. It is up to the trade mark owner’s discretion whether to include the shape, packaging, and colours combination as part of their trade mark registration. Lastly, since a trade mark must be distinctive or become distinctive through use in order to be registered, the shape, packaging, and combination of colours must also meet the requirement of distinctiveness before being registered as part of the trade mark.
The implication of this modification is that a trade mark owner who wishes to register a trade mark for goods now has the choice to not only register the product’s name but also its shape, packaging, and combination of colours. This broader protection of product marks allows for a more comprehensive safeguarding of intellectual property.
The amendment of the Trade Marks Act is praiseworthy as it expands the previous definition of a trade mark, which only covered goods, to now include service marks, and the registration of trade marks along with the shape, packaging, and combination of colors. This change aligns with international best practices and brings Nigeria in line with the Paris Convention and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement, 1994), thus improving Nigeria’s business landscape. Both foreign and local investors will find Nigeria more attractive for business knowing that service marks are now recognised in the country. This positive development will have a beneficial impact on Nigeria’s commercial sector and contribute to the country’s GDP growth.
However, despite these positive aspects, the amendment still raises concerns regarding the protection, rights, and enforcement of trade marks. Firstly, since the amendment only applies to the definition of a trade mark and not to other provisions of the Principal Act, it remains uncertain whether the rights of owners of registered trade marks will be the same for registered service marks under sections 5(1), (2), and 9(1), (2)6* of the Principal Act. Secondly, based on this, in cases of infringement under section 5(2) of the Principal Act, the trade mark owner still needs to demonstrate that the infringer has used the trade mark in the course of trade, which maintains the limitation on the exclusive rights of a trade mark. This presents challenges for commercialisation and can have adverse effects on investments.
Therefore, it is recommended that a comprehensive amendment of the Trade Marks Act and the Trade Marks Regulations be undertaken to fully reflect the intention behind the Amending Paragraph. Such an amendment could have a significant positive impact on investment in Nigeria, potentially exceeding the current positive effects brought about by the Amending Paragraph.
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