Brief overview

The challenge of combating counterfeit goods remains prevalent in several African countries, and it affects various sectors, including pharmaceuticals, ICT, agriculture, logistics, chemicals and automotives to fast-moving consumer goods. Counterfeiting not only poses risks to consumer health and safety but also undermines legitimate businesses and stifles innovation.

In response to these emerging issues, Kenya has established a robust legal framework aimed at protecting intellectual property rights and curbing the proliferation of counterfeit products in the Kenyan market. This article aims to provide an overview of the key laws, regulations, and compliance requirements that businesses must adhere to in order to protect their intellectual property in the course of investment, trade and commercialising their intellectual property. We have also analysed global trends in anti-counterfeiting and the practice adopted in other jurisdictions around the world.

Legal framework and institutional framework

The fight against counterfeiting in Kenya is anchored in the Anti-Counterfeit Act, 2008 (the Act) and Regulations enacted there under. The Act establishes a legal framework for the detection, prevention, and enforcement of counterfeit activities, thereby promoting fair trade, enhancing consumer confidence, and supporting the growth of a competitive market that respects intellectual property.

The Act provides for the establishment of the Anti-Counterfeit Authority (ACA) (the Authority), which is tasked with the enforcement of anti-counterfeit measures. In addition, the Act defines what constitutes counterfeit goods and outlines the powers of the ACA, including the authority to inspect, seize, and destroy counterfeit goods, and prosecute offenders. The Act also sets out the penalties for those involved in the manufacture, importation, distribution, or sale of counterfeit goods.

Scope and application of the legal framework

The Act defines “counterfeiting” to mean –  the unauthorised actions involving intellectual property rights in Kenya or abroad, including the imitation of protected goods through manufacturing, production, packaging, or labelling to create identical or substantially similar copies; creating goods that confuse or mislead consumers into thinking they are the protected goods; violating an author’s rights by making unauthorised copies; and deliberately and fraudulently mislabelling medicine regarding its identity or source.

The anti-counterfeit laws in Kenya therefore apply to a broad range of stakeholders involved in the production, distribution, and sale of goods.

Compliance requirements

Section 32 of the Act makes it an offence for any person to engage in various activities related to counterfeit goods in the course of trade. These offences include possessing, controlling, manufacturing, producing, making, selling, hiring out, bartering, or exposing for trade any counterfeit goods. Additionally, it is illegal to distribute, import, export, or transit counterfeit goods through Kenya, except for private and domestic use by the importer or exporter. The law also prohibits the possession or control of any packaging or labels with counterfeit marks that are likely to cause confusion or deception.

To prevent liability arising from the commission of offences under the Act, stakeholders are required to comply with the provisions of the Act together with the Anti-Counterfeit (Recordation) Regulations (the Regulations). Particularly, section 34B requires trademarks relating to goods to be imported into Kenya, irrespective of the place of registration, to be recorded with the Authority.

In this regard, the IPR owner, who is the holder of a certificate of registration evidencing the protection of intellectual property rights or their authorised agent, is required to file an application to record an IPR relating to goods to be imported into Kenya in the prescribed form. The Authority may approve or deny the application.

Once the trademark is recorded with the Authority, it remains in effect for one year from the date of approval. The Authority thereafter, issues to the importer of goods a certification mark in the form of an anti-counterfeit security device.

The aim of the recordation is to ensure that an importer declares the IPRs relating to the goods they intend to import into Kenya. This is usually conducted through the KENTRADE’s trade facilitation, and applications submitted through the ACA Integrated (IPR) Management System (the AIMS system).

The Regulations establish the framework for ensuring that only goods with properly recorded intellectual property rights enter the Kenyan market, thereby protecting rights holders and reducing the circulation of counterfeit products.

Importers, whether or not they are the IPR owners, have a legal obligation to ensure that the goods they import for commercial purposes are recorded with the Authority. Failure to do so may result in the goods being classified as counterfeit, leading to legal and financial consequences.

Importers who are not the IPR owners must notify the ACA of their intention to import goods by submitting Form ACA 2B, accompanied by the applicable fee.

Challenges arising from compliance

The key objective of IPR Recordation is to prevent the importation of counterfeit goods into Kenya, thereby protecting both brand owners and consumers from harmful counterfeit products. The Authority reported that 80% of IP-infringing products were imported into Kenya, whereas only 20% were locally manufactured, hence the need for the recordation system.

While we agree that the system is well-intended to curb counterfeiting practices in Kenya, we find that some key challenges ought to be addressed as highlighted below:

• Not all IPRs are protected

Section 34B (12) of the Act envisages that the recordation requirement is to apply to the recordation of various forms of IPRs such as copyrights, patents, trade names, or any other forms of intellectual property rights. However, the key focus seems to be on the protection of trademarks. It is still unclear whether the Authority is capable of effectively enforcing recordals concerning registered patents and designs.

• Authorised use of IPRs

Section 34B (3) of the Anti-Counterfeit Act requires an IPR owner, when applying to record their IPR, to provide details of foreign persons or business entities authorised or licensed to use the intellectual property. This includes a statement of the authorised use and details of any parent company or subsidiary under common control that uses the trademark abroad.

Despite these declarations by IPR owners, importers, whether authorised or not, are additionally required to declare the IPR of the goods by submitting Form ACA 2B along with a USD 20 fee for such notification to the Authority.

While the USD 20 fee is indicated under the Regulations as a one-time notification fee, the Authority states that this fee is payable per consignment for every instance of the application. This recurring fee for declaring the IPRs of goods is costly.

Additionally, the Authority specifies that only the IPR owner, their authorised agents, licensees, and assignees are exempt from paying such fees. This requirement, despite not being provided for in the Anti-Counterfeit Act, disregards authorised importers, distributors, subsidiaries, or foreign entities authorised by the IPR owners but who are neither registered agents, licensees, nor assignees. In practice, the Authority requires IPR owners to register such entities as authorised agents to act on their behalf in the prescribed Form ACA 15 and pay the prescribed registration fees and renewal fees considering the registration of agents is only valid for a year. This is particularly costly for IPR owners.

• The AIMS system downtime

Notably, the AIMS system has been inaccessible for the past couple of months. This has largely been due to unresolved system issues by the ACA. This has resulted in difficulty in applying for recordation, renewal, and registration of agents. Whereas IPR owners would have otherwise been willing to comply, they have been subjected to penalties and import charges that they would have otherwise been exempted from.

Additionally, this has resulted in difficulties in conducting searches on the IPR database. This prevents entities seeking to comply from confirming the status of IPRs.

Global trends in comparison to Kenya’s anti-counterfeit practices.

To understand the practice in other jurisdictions, we have discussed below the current approach taken in the US and Singapore. Regarding the US, the US Customs & Border Protection (CBP) is the authority mandated to detain, seize, forfeit, and ultimately destroy merchandise bearing infringing trademarks or copyrights registered in the US and seeking entry into the US. IPR owners in the US register their trademarks and copyrights with the United States Patent and Trademark Office (USPTO) or the United States Copyright Office (USCOP) and are required to record their IPRs with the CBP via the CBP e-Recordation Program.

The CBP, unlike the ACA, which seeks to protect all IPRs, only provides for the protection of trademarks and copyrights. While it is important for the ACA to protect all IPRs from infringement and counterfeiting, it is equally important to have systems in place to enforce their mandate. Presently, the ACA does not have a comprehensive system for the protection of patents and utility designs.

Additionally, the recordation of IPRs in jurisdictions such as the US is not mandatory. The voluntary nature of such systems enhances compliance, as the CBP has focused more on training and informing IPR owners on how to protect their IPRs. Specifically, the CBP has created a “partnership” model with the trade community, partnering with IPR owners and industry organisations to increase enforcement of their IPRs at the border. The CBP then provides for the recordation of IPRs as one of the methods by which IPR owners can partner with them. This approach fosters a collaborative environment where IPR owners feel more engaged and responsible for their own protection efforts. 

Moreover, the legal framework in Singapore offers robust civil remedies, including injunctive relief, damages, an account of profits, delivery up or destruction of infringing goods, and legal costs. These remedies empower rights holders to take action, deter infringement, and seek compensation for damages.

In contrast, Kenya’s civil remedies for intellectual property rights holders may be limited and less accessible. The process of enforcing rights through civil litigation in Kenya can be complex, time-consuming, and expensive. Consequently, rights holders in Kenya face challenges in protecting their intellectual property and obtaining adequate compensation for infringements.

Recommendations

For the Authority to effectively exercise its mandate and reduce the administrative burden on businesses, it should consider extending the validity period of IPR recordation from one year to a longer term, such as five years.

Additionally, the Authority should speedily resolve the issues with the AIMS system to ensure it is consistently accessible. The Authority can partly achieve this by investing in robust IT systems with the capability to handle large volumes of recordation, renewals, and enforcement actions efficiently.

Moreover, for the Authority to enhance compliance and foster a collaborative environment, it should adopt a voluntary IPR recordation system. This approach would focus on educating and training IPR owners on best practices for protecting their intellectual property. By making recordation voluntary, the ACA can build stronger partnerships with IPR owners and industry organisations, encouraging them to take an active role in the enforcement of their rights.

Finally, the Authority should study and adopt best practices from other countries with successful IPR enforcement systems, such as the US and China. This will also effectively enhance cross-border collaboration to tackle the importation of counterfeit goods effectively.

Conclusion
Despite the challenges highlighted above, Kenya’s anti-counterfeit laws provide a solid framework for protecting intellectual property and ensuring that businesses operate within legal boundaries. Compliance with these laws is not only a legal requirement but also essential for maintaining brand integrity, protecting consumer trust, and fostering innovation.

By proactively registering intellectual property rights (IPRs), authenticating products, and collaborating with regulators, businesses can effectively combat counterfeiting and contribute to a safer, more transparent marketplace.

To support compliance and cooperation with the authorities, the Anti-Counterfeit Team at Bowmans remains at hand to guide clients effectively in navigating the relevant compliance requirements.