Intellectual Property: What should Operators watch out for?

Intellectual Property: What should Operators watch out for?

Good Morning Operators,

In this week's edition of our CFO newsletter, we turn our focus to an often under-appreciated yet crucial aspect of managing a business — Intellectual Property (IP).

Despite its pivotal role in safeguarding innovations, strengthening competitive edges, and enhancing revenue streams, IP considerations frequently fly under the radar in CFO circles. When Felicia Solomon, Partner at MMS Advocates, suggested it as a topic for our newsletter; I jumped on the opportunity to highlight the importance of IP assignments and underscore the critical role CFOs and other operators play navigating the complexity of this topic.

From ensuring the alignment of IP strategy with the broader business objectives to recognizing the intricate balance between risk and opportunity, the management of IP is an area ripe for more robust involvement by financial leaders.

Our goal for this edition of the newsletter is to equip you with the insights needed to make informed decisions about IP, ensuring it is not only protected but also leveraged effectively to support your company's growth and innovation objectives.

Enjoy,

Lévi Kedowide, Founder | TUKA

We asked our experts…

As mentioned above, Felicia Solomon answered a few questions about the Intellectual Property (IP) landscape in Kenya. Below is part 1 of our conversation on IP in Kenya.

Could you give us an overview of the landscape of IP in Kenya?

IP encompasses various intangible assets, including trademarks, patents, copyrights, trade secrets, and industrial designs, which are essential for businesses across diverse sectors. In Kenya, protecting these assets is crucial for businesses to safeguard their competitive advantage, maintain market exclusivity, and maximize the value of their innovations and creative works.

Kenya has a vibrant legal and institutional framework for safeguarding various forms of Intellectual Property, which include, the Trade Marks Act, Cap 506, the Industrial Property Act, the Copyright Act, 2001, the Kenya Information & Communications Act, 1998 among others. As for institutions governing Intellectual Property, examples include the Kenya Intellectual Property Institute (KIPI), the Kenya Copyright Board (KECOBO), among others.

What are the common pitfalls businesses should avoid when they register trademarks in Kenya?

1. Lack of thorough trademark search: Failing to conduct a comprehensive search to ensure the availability of the desired trademark can lead to conflicts with existing trademarks, resulting in rejection or opposition proceedings.

2. Inadequate specification of goods/services: Trademark applications must accurately specify the goods or services associated with the mark. Vague or overly broad descriptions may result in objections from the trademark office or challenges during enforcement.

3. Failure to meet filing requirements: Adhering to the procedural and documentary requirements set by the trademark office is crucial to avoid delays or rejection of the application. This includes providing accurate information, paying the requisite fees, and submitting required documents within the stipulated timeframe.

4. Ignoring local nuances: Understanding local cultural sensitivities, language preferences, and market dynamics is essential when selecting and registering trademarks in Kenya to ensure relevance and acceptance among consumers.

5. Non-use of Registered Trademark: Non-use of a trademark is ground for removal/revocation of that trademark. Any aggrieved person can make an application to have a trademark revoked on grounds of non-use, so it is imperative that all registered trademarks are used as intended. Currently, in Kenya, if one does not use their registered trademark for a continuous period of five (5) years or more, then an application for revocation may be made against their trademark.

Can you discuss the strategic considerations for IP assignments, particularly in relation to business partnerships and collaborations?

IP assignments involve the transfer of ownership or rights to intellectual property assets between parties. In the context of business partnerships and collaborations, strategic considerations for IP assignments include:

1. Clear delineation of rights: Defining the scope of IP rights being transferred or licensed, including any limitations or restrictions, is critical to avoid disputes and ensure each party's expectations are met.

2. Protection of proprietary information: Implementing confidentiality agreements and safeguards to protect confidential information shared during collaborations is essential to prevent unauthorized use or disclosure. Further, when dealing with employees, or work-for-hire consultants, it is imperative that their contracts contain express provisions on IP assignments, stating that all present and future IP developed by the employee or work-for-hire consultants, are wholly assigned to the company. This will ensure that companies’ IP rights are safeguarded, and that they keep their competitive edge by avoiding instances of employees or consultants walking out with valuable pieces of IP.

3. Consideration of future developments: Anticipating potential changes in business strategies, technological advancements, or market dynamics can inform the negotiation and drafting of IP assignment agreements to accommodate future contingencies.

4. Compliance with regulatory requirements: Ensuring compliance with relevant laws and regulations governing IP assignments, such as mandatory registration or disclosure obligations, is essential to avoid legal challenges and uphold the validity of the assignment

We will continue this series on IP in the next newsletter with an emphasis on the presence of IP in Mergers & Acquisitions.

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