Monday, April 12,
2021 / 04:30PM
/ By Davidson Oturu and Frances Obiago (AELEX) / Header Image Credit: AELEX
Franchising is becoming more popular globally
and with more franchises getting established in Nigeria, it is important that
franchisors adequately protect the underlying rights that give value to
franchises – their intellectual property rights (IPRs).
What are IPRs?
IPRs are rights that are acquired over
intangible creations of the human mind. It enables the creators of the IPRs
enjoy financial benefits and recognition for what they create and invent. The
existing IPRs are patents, trademarks, designs, copyright and trade secrets. For
example, by having a trademark over the iphone, Apple Inc’s phones are easily
identifiable and recognisable. The mark can also not be replicated by a third
party as Apple can bring an action for the passing off and infringement of its
Securing a Franchise
Franchising commonly involves the use, by a
franchisee, of the IPRs belonging to the franchisor. A franchisor’s aim is for its consumers to
enter any of its franchisee’s stores and receive the same experience it would
get from patronising the franchisor.
For this purpose, a franchisee is typically
granted a licence to use specified IPRs in relation to the franchised products
and for pre-approved marketing materials.
This use by
the franchisee exposes the franchisor to the risk of his IPRs being used for
unauthorised purposes. Furthermore, where the franchisor has not registered the
IPRs in the jurisdiction where it is being used, the franchisee may decide to
register the IPRs in its own name, rather than that of the franchisor.
these issues, franchise agreements usually contain provisions prohibiting a
franchisee from dealing with the franchisor’s IPRs except as permitted by the franchisor.
In addition to inserting clauses regulating the use of IPRs in the franchise
agreement, and to ensure that the franchisor is adequately protected, it is
advisable for a franchisor to also obtain registration for his IPRs in Nigeria
before they are licensed to the franchisee.
put the franchisor in a good position to enforce his right to the IPRs in the
event of infringement by the franchisee or any other third party as, by
registering the IPRs, the franchisor is statutorily entitled to institute civil
actions against the franchisee and claim reliefs such as damages, injunction
and account of profits.
Some key factors
to be considered by franchisors in relation to securing the rights to their
IPRs in Nigeria include the following:
Nigeria is a
first-to-file jurisdiction. As such, for a franchisor to obtain statutory
protection for his trademark, it must be registered in Nigeria. An
application to register a trademark is to be made to the Registrar of
Trademarks and must contain the specification of goods or services the
franchisor seeks to protect with the trademark.
may however be able to enforce his rights to an unregistered trademark in
Nigeria under the common law tort of passing off.
does not provide for the registration of works eligible1for protection as copyright arises
automatically upon the creation of such a work.
A work is not eligible for copyright protection unless sufficient effort
has been expended to give it an original character and it is fixed in a
definite medium of expression.
notwithstanding, in fulfilling its mandate of creating a databank of authors
and their works, the Nigerian Copyright Commission (NCC) has established a
voluntary notification process by which authors can notify it of their works.
the NCC of the creation of an eligible work is advantageous as it serves as
evidence of the existence and date of creation of the work which may be helpful
in the event of a dispute regarding ownership of the work.
The right to
a patent or design is vested in the person who is first to file an application
in Nigeria or validly claim foreign priority, regardless of whether he is the true
inventor/creator or not. As such, for a franchisor to enjoy protection for his
invention/design in Nigeria, he must take steps to register such invention/design
with the Patents and Designs Registry in Nigeria.
and Trade Secrets
trade secrets are not afforded statutory protection in Nigeria. However, a
franchisor may protect the trade secrets or know-how that it makes available to
a franchisee through the use of a confidentiality or non-disclosure agreement.
to the foregoing, it is advisable for a franchisor to register the licence granted
to a franchisee with the Trademarks Registry or Patents & Designs Registry,
as applicable. For this purpose, a short form licence agreement, separate from
the franchise agreement, will be required.
of a patent or design licence is important as an unregistered licence will be
of no effect against third parties until registration is effected. With respect
to trademark licences, registration with the Trademarks Registry is recommended
as the licensee/franchisee will be deemed a registered user of the trademark(s)
and his use of the trademark will be deemed as use by the licensor/franchisor
for any purpose for which trademark use is required under the Trademarks Act.
1. Eligible works include literary, artistic and musical
works, cinematograph films, broadcasts and sound recordings.
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