by Legalnaija | Jul 7, 2020 | Uncategorized
Customers are usually frustrated by the bank
because of unlawful placing of Post No Debit (PND) on customer’s account. Post
No Debit (this is where the customer is blocked from transacting with his/her
account).The law protects the customer by laying down rules for the bank to
follow before placing PND on any customer’s account. However, these rules are
often breached. This short and illuminating article is what you need whenever
your bank attempts to violate your legal rights. It is important to state in
legal parlance that, there is a technical meaning for: Bank, Banker, Customer
and employee (in order to keep it simple, this article will utilize the ordinary
usage of the aforementioned words).
There
are several reasons why customer’s account may be blocked by the bank. However,
it is good to start by enumerating the duties of the bank to a customer and
vice versa.
DUTIES OF THE BANK TO THE CUSTOMER
1. Duty to maintain secrecy
2. Duty to honor cheques
3. Not to pay without authority
4. Duty to give accurate advice on
investment
5. Duty to exercise due care
DUTIES OF CUSTOMER TO THE BANKER
1.
Duty
to carefully draw cheque to avoid fraud
2.
Duty
to report forgery/fraudulent transactions
POWERS OF THE BANK TO FREEZE CUSTOMER’S
ACCOUNT
Generally,
the bank cannot freeze customer’s account without a court order. However, the
banker is empowered to freeze customer’s account where there is evidence of
fraud via the account. Basically, the
bank can freeze customer’s account for the following reasons;
1. Customer’s
indebtedness to the bank:
The customer may take loan from the bank but where there is default in
repayment, the bank reserves the power to block the customer from withdrawing.
2. Fraudulent
transaction: this
may occur where there is writing of bad cheque, money laundering, terrorist
financing, illegal activities etc.
3. Tax
levy/student loan: The
government can request a bank to freeze an account where there is unpaid taxes
and student loan.
4. Order
of court: There are
several reasons why the court may issue an order to freeze customer’s account;
for example, a creditor can seek judgment against the customer. Where the
creditor successfully obtained court order against the customer, the bank is
empowered to freeze the customer’s account. The Central Bank Nigeria’s Governor
can exercise its power under BOFIA and other relevant laws to obtain court
order against customer’s account. The security agencies like EFCC, ICPC,
Police, DSS and other prosecutorial authorities can apply to the court and seek
an order to freeze customer’s account.
The reasons in number 1, 2, and 3 above
afford the bank absolute right to freeze customer’s account without recourse to
court order. Any other reasons apart from the grounds stated in number one to
three above, requires court order. However, in practice, bank resort to
arbitral freezing of customer’s account without following due process of law.
The court has cautioned the bank against the temptation of freezing customer’s
account without receiving court order. In the recent case of Adetokumbo
Adetola v. Access Bank Plc LD/ADR/800/17, the court held the bank
liable and awarded damages in the sum of Twenty Five Million Naira in favour of
the claimant. In that case, at Ikeja High Court per Hon. Justice S. O. Nwaka
stated that, “it is not in the power of
the EFCC to authorize a Post No Debit (PND) on any customer’s account. The EFCC must not usurp the powers of a court
of law. The duty of care owed the claimant by the bank is nothing but
breached…. This is a society whose affairs are supposed to be governed by and
conducted in accordance with the law. The EFCC and the bank taking law into
their hands is nothing but shameful”.
The
court emphasized that, the bank’s inaction of not demanding for an order of
court or an official letter authorizing it to place PND on the claimant’s
account amounted to negligence.
Suffice
to say, security agencies, any third party and other authorities cannot direct
the bank to freeze customer’s account without court order.
HOW TO UNFREEZE YOUR BANK ACCOUNT
1. Visit the bank and seek for
explanation. The bank will inform you of the reason why the account was
blocked. If you are not at fault, demand that the PND be lifted.
2. Where there is no fraud, you are not
indebted to the bank, you are not under any tax obligation, the bank should
lift the PND immediately else you can sue for damages.
3. Where there is a court order against
your account, seek legal advice from your lawyer.
From
the foregoing, it has been established that, the customer’s exclusive right
over his/her bank account is protected by the law. Where the bank violates the
rules, the customer can exercise his/her right in court and claim damages. The
bank must exercise its power of PND with caution in order to avoid unnecessary
law suit which may go beyond monetary claims to destroy hard earned good will.
Read
other articles by the author:
1.
https://thenigerialawyer.com/tenancy-crisis-part-one-nature-of-tenancy-covenants/
2.
https://thenigerialawyer.com/tenancy-crisis-part-two-how-to-calculate-notice-to-quit-the-procedure-for-recovery-of-property/
3.
http://insidearewa.com.ng/tenancy-crisis-part-one-nature-of-tenancy-covenants/
4.
https://www.legalnaija.com/2020/06/tenancy-crisis-part-one-nature-of_6.html?m=1
5.
.DIVORCE:
https://thenigerialawyer.com/grounds-for-divorce-a-legal-digest/
6.
Life after Law School.
https://www.legalnaija.com/2020/05/life-after-law-school-setting-up-right.html?m=1
Contact the Author:
Twitter: @OkpiBernard
Email: okpibernardadaafu@gmail.com
Phone: +2349032116272
OKPI
BERNARD ADAAFU (OBA) ESQ
(LL.B, B.L, ACIArb, MCMC) is an Associate at KANU G. AGABI, SAN (CON) &
ASSOCIATES, Abuja, Nigeria.
by Legalnaija | Jul 7, 2020 | Uncategorized
Introduction
The
massive macro-financial shock caused by Covid-19 has continued to ravage the
global economy putting all systems and nations under severe financial instability
never seen in history. Stock Markets around the world have been pounded and
ravaged, and oil prices have fallen to an all-time low. Nigeria is not spared
from this crisis. Total revenue expected to be realised from the 2020 National
budget was N8.42trillion. However, following the Covid-19 pandemic, revenue
projection was reduced to N5.16trillion. This represents a drop of close to 40%
or N3.26trillion. Key sectors like manufacturing, maritime, aviation, hospitability
and the creative industry, collapsed resulting in huge financial and job losses.
The first-quarter report of the Nigerian Bureau of Statistics (NBS) shows a slow-paced growth of -0.68% as GDP
contracted by 1.87% when compared to the fourth quarter of 2019. If this
continues into the second quarter there are ominous signals of an impending
recession. The World Bank 2020, Global Economic Prospects, June 2020, forecast that the Covid -19
pandemic will plunge all countries into the worst recession in history. GDP of advanced economies are projected to
shrink by 7 percent. The outlook for emerging market and developing economies
is bleak as they are forecast to contract by 2.5 percent. This would represent
the weakest showing by this group of economies in at least sixty years. The
crucial issue is – How do we avoid and or minimize the impact of inevitable recession
on our economy?
The first and critical policy
action is to harmonize fiscal and monetary policy. Fiscal policy must be expansionary. In other
words, big spending is required to massively stimulate the economy. This is called
Keynesian
economics named after the
economist John Maynard Keynes. Keynesian economics served as the standard
economic model in the developed
nations during the latter part of the Great Depression, World War II, and the post-war economic expansion
(1945–1973). American President, Franklin Delano Roosevelt used the Keynesian
economic model by spending massively on public works programs to get America
out of the great depression. The mantra for Nigeria is to spend big to get out
of recession. We acknowledge the government has adopted an expansionary policy
by borrowing massively but we must have a clear strategy. First, we must
determine our Public Sector Borrowing Requirements (PSBR). Additionally, we
will need to identify an inventory of Public Sector Spending Requirements
(PSSR). The PSBR and the PSSR should be indexed to identify funding gaps. Additionally an inventory of government
assets should be created as we have many wasting assets that can be converted
to cash. Using the abandoned Federal Government Secretariat in Lagos as the
index case, informed valuers believe it has a forced market value of N100
Billion. This can build the East West Road. Abandoned projects abound, Ajaokuta
Steel, Aladja Steel, the Newsprint at Iwopin, the various steel rolling mills
around the country, the Onitsha Port, etc. It is believed these assets are
worth at least N15, Trillion yet untapped. These wasting assets, if sold will
boost fiscal policy immensely. Turning to Monetary Policy, we clearly need a very
flexible monetary policy with interest rates pegged at no more than 5%
(Single-digit) to create a framework for quantitative
easing and open market operation (OMO).
Quantitative easing (QE) makes
borrowing easy for business. QE makes burden on business lighter. OMO flood the
economy with liquidity. A harmonized fiscal
and monetary policy will lay the foundation to rebuild the economy. Three requirements to avoid a recession are Job
creation, revenue mobilization and control of cost of governance. If we get the macroeconomic environment right,
which is the alignment of fiscal and monetary policy, it will release economic
energy to create Jobs estimated at between 5 and 6 Million, year on year. With
respect to revenue generation with the right framework, massive funds can be generated
and pumped into the economy. With respect to cost of governance, everybody
knows it is far too high. In the revised 2020
budget, 73.5% of total expenditure are for salaries and debt servicing, while
only 26.5% are for capital expenditure. This is unsustainable.
We cannot continue to borrow to pay high recurrent bills. Rather we must invest
in capital expenses to reflate the economy. The Government has taken steps to
implement the Orosanye report but there needs to be a timeline for
implementation. Corruption is a leading cause of high cost of governance. It is
important to review anti-corruption strategies to reduce public corruption.
Tackling the menace of big government and public corruption will give us more
balanced revenue to debt profile. With the macroeconomic framework highlighted
above, we can now review some critical factors that can help grow the economy
and avoid recession.
Diversification of the Economy
This is one area
government needs to urgently activate because of the massive budget deficit. Nigeria
runs a mono –cultural economy as 85% of her revenue is derived from crude oil exports.
As a result of the price shocks
occasioned by Covid – 19, crude oil receipts have gone down and are no longer
able to sustain the economy. The total revenue
expected to be realised as stated in the 2020 budget is N8.42trillion,
including a deficit of N2.17t. However, following the Covid -19 pandemic, fiscal
deficit has grown from N2.17t to N5.37t, which must expectedly be financed by
fresh borrowing. We are now running a deficit budget and borrowing massively.
Unless we diversify the economy, we will continue to borrow to the point where
it becomes unsustainable. Many governments have paid lip service to
diversification, but this is the time to develop a very strong policy on
diversification. We must follow the example of the United Arab Emirates which
diversified their economy by reducing dependence on oil receipts from100% to
only 35% by going into service and smart industries. Some of the sectors to diversify our economy
are;
Agriculture
Agriculture is
one of the largest contributors to Nigeria’s GDP and has the potential to
create massive numbers of new Jobs, especially in Northern Nigeria that has
very fertile agricultural land. But our policy on agriculture must move away
from subsistence to mechanized agriculture. The Central Bank of Nigeria’s
Anchor Borrowers programme that made Nigeria self-sufficient in rice production
has shown the potential of the Agriculture Sector. The Central Bank has
identified 10 crops to support namely rice, wheat, milk, tomato, fish, cotton
etc. This is a great leap forward for the sector. Mechanized Agriculture will
not only create Jobs but also improve National Security by offering employment
to our teeming youths exploited for banditry and terrorism.
Transportation
This is a massive sector
that can create millions of jobs and billions in revenue. But the starting
point is to have a cohesive multi-model transportation policy to take care of
the 4 critical sectors of air, sea, road, and rail. Once there is an effective
transportation policy it will impact each of the 4 sectors in the following
ways:
Aviation/Space
Aviation is a major transportation sector.
Unfortunately, Nigeria has no presence in the international Aviation business.
Nigeria Airways has long been comatose. Foreign aircraft dominate the Nigerian
airspace and earn well over 2 trillion Naira annually to our exclusion. 2
trillion Naira is substantial in our national budget. A Fly Nigeria Act will
ensure that public funds to purchase air tickets must originate and fly on a
Nigerian carrier. The Fly Nigeria Act will create an instant market of goods,
passengers and services for our national carrier. Jobs will be created and
revenue generated to the advantage of the economy.
Space technology is huge. The late English theoretical
physicist and cosmologist, Stephen Hawking referred to
space as the future of mankind.
Regrettably, Nigeria is not harnessing this sector. Space has many major applications for
developing our economy. We will mention two examples. First, space can be
applied to the energy sector as remote sensing establishes the quantum of our
hydrocarbons. Second, is the link
between space and national security. Satellite technology intelligence gives us
vital footprints in the national security infrastructure. The growing threat of
terrorism and the adverse impact on economic stability can be checked by
intelligence provided by space satellites. Nigeria has no space legislation.
This hurts economic transformation.
Railway and
Road Transport
The opportunities for rail and road are
unimaginable. They connect people and
open markets so goods and services are exchanged. Government is investing
heavily in this sector but a lot more investment is required. The CBN recently
launched InfraCo, a $39 Billion (N15 Trillion) infrastructure development fund
but N15 Trillion is not enough. Rail and roads need a lot more investment
because its revenue and job potentials are huge. The Post-COVID economy must
create what is called socialized jobs. American President, Franklin Roosevelt
used social jobs to push America out of the Great Depression, by creating the
Tennessee Valley Authority, and employed over 4 million people. To accomplish
all these, a strong Public-Private Sector Partnership (PPP) is vital.
Maritime
This sector has
been completely ignored but it has the capacity to generate over Seven Trillion
Naira annually and four million jobs over 5 years. All that is required is the implementation of
local content and Cabotage rules especially relating to the oil and gas sector
which is currently dominated by foreigners. Our Cabotage legal regime must be
enforced to stem capital flight and boost capacity for Nigerian Ship owners. Several
critical bills relating to the maritime sector pending before the National Assembly
require immediate enactment and implementation. Some of the bills are the
Petroleum Industry Bill (PIB), the Ports and Harbour Bill, Maritime Zones Bill,
Ocean Bill etc. There is also an urgent need to review the Nigerian Shipping
Policy Act of 1987. The enactment of a law on maritime zones is also long
overdue. The Maritime Zones bill will extend Nigeria’s EEZ of 200 nautical
miles by another 150miles. This will create massive new revenue streams and
generate jobs in the maritime sector.
Hydrocarbons and Solid Minerals
Although oil
receipts are down, our huge gas reserves present opportunities for alternative
revenue sources. Russia’s revenue from gas exports in 2017 was $ 38.1 Billion.
The success of Nigeria’s LNG has demonstrated that gas revenue is massive but
only if exploited. Nigeria can also
derive revenue from petrochemicals like methanol which Nigeria currently
imports. But the legal framework must be right. The legal framework relating to hydrocarbons is skewed in favour of
foreign companies in the entire value chain. In at least four cases, banking,
insurance, shipping, legal service, capital flight is massive. In relation to
shipping alone, it has been suggested that Nigeria loses over 10 Billion
Dollars annually. Revenue loss will continue unless the legal framework is amended
to domesticate the value chain in hydrocarbons.
It is important to review the legal framework for local content with a
view to strengthen implementation and enforcement. It is also very important to
address the issue of corruption in the extractive industry. The continuing lapses
and loss to the nation in oil and gas revenue as revealed in the Report by
Nigerian Extractive Industries Transparency Initiative, NEITI, which indicate
lack of implementation of previous Reports, supports this. To ensure speedy
reforms in the oil & gas sector, the Petroleum Industry Bill has to be
passed into law. Our hydrocarbon resources especially gas is absolutely a major
source of revenue, and employment.
Solid
mineral is another sector that has not been adequately harnessed. Nigeria is
estimated to have about 34 solid minerals, with every Nigerian state boasting
of at least one of these minerals. This can generate $ 10 Billion and 5 million
Jobs. The Democratic Republic of Congo in 2017 alone saw the sector generate $
1.68 billion, accounting for 55.16% of the total government revenue and 17.40%
of the GDP. Solid minerals is
undoubtedly capable of making a more pronounced impact on the country’s employment
rate and generating more revenue for the government however, to derive the
highest possible benefit from this sector, a proper policy and legal framework needs to be put in place.
Information Technology
Nigeria can
leverage its status as a multi-billion-dollar tech hub to develop its IT sector
and become a global IT services destination. Github, a leading software
development platform, recently reported that Nigeria is home to the fastest
growing developer community on their platform. The country has benefited from
companies like Andela which brought world-class training and job opportunities
to budding Nigerian programmers. Gebeya is promoting a similar model of
training the next generation of African developers. Nigeria’s growing supply of
programmers will likely be met with rising demand from the country’s constantly
expanding tech hubs. The potential of the business-to-business (B2B) or
enterprise software sector is also good news for the country’s ITC sector.
African companies are expected to spend $3.6 trillion on B2B services in 2025.
Nigeria is well-positioned to be part of this growth given the coexistence of
traditional industries and B2B tech startups. The combination of a growing
local talent pool and a bustling B2B sector means that the IT sector can drive
economic growth for decades to come.
Entertainment
Nigeria’s
entertainment industry already plays an important role in the Nigerian economy
but their full potential remains untapped. The industry was projected to
generate $1 billion in export revenues this year and bring in crucial foreign
currency. The industry has an added benefit over the natural resource sectors
since entertainment products are non-rival goods. This means that the local
consumption of a movie or a song, for example, does not prevent the export of
that same song to international markets. This allows Nigerian entertainment
products like songs, movies, and books to generate wealth indefinitely. The
entertainment industry drives job growth and employs millions of Nigerians in
complex value chains. Nollywood, Nigeria’s film industry, produces an average
of forty films a week and directly employs 300,000 Nigerians. Nigeria’s
upcoming fashion industry is perhaps the best example of old value chains
meeting new ones: designers are using local cotton to create garments being
modeled at international fashion weeks. The fashion industry directly employs
and benefits farmers, distributors, designers, and more.
Trade policy
Nigeria has no
trade policy which is why it is a major dumping ground for foreign goods. We
spend billions of dollars importing basic food commodities
that can grow locally. We must grow what we eat. We need to reverse this with a robust trade
policy. Trade policy refers to the rules and regulations on imports, exports, tariffs,
duty etc. Trade policy rests on a tripod of critical factors – import
substitution, tariffs, border enforcement and compliance. We need to enact
trade remedies legislation and a trade Expansion Act. These legislation will impose anti-dumping
duties on non-essential products. There are also special duties and measures we
can impose on exports into Nigeria which are subsidized by a foreign country.
The trade remedies legislation will prohibit imports if it is adjudged that
they will cause material injury to local industries, for example by impeding
local growth. It is also important to
enact legislation that will support the recently established Nigerian Office
for trade negotiation (NOTN). It is crucial that the office is elevated to
ministerial level. We need to establish a National Customs and Border
Enforcement Services. This Border Enforcement Services will need new
legislation to merge immigration and customs services. The Border Enforcement
Service will replicate the US Customs and Border Enforcement Agency. The merged
service will reduce duplication and proliferation of agencies at the borders.
To comply with ECOWAS protocol and the African Continental Free Trade Agreement
(AfCFTA), the border closure policy should be replaced by a border enforcement
policy. A strong trade policy will help create millions of jobs, grow local
industries and expand the economy.
Access to Capital
Capital is the
oxygen and life blood of the economy. One of the areas where we can tap into
capital is the Housing/property market. Eighty per cent (80%) of Nigeria’s
businesses rely on land and housing as collateral. Unfortunately, the slow
administration of the Land Use Act in terms of consents and permits has meant
that the banks have not accepted untitled property as collateral. This has
caused incalculable damage to businesses in need of capital. A recent study
shows that the housing inventory of Nigerian property exceeds six trillion
dollars. Nigerian property and housing market is dead capital because 80% of
them have no title or bad title and therefore not good as collateral for bank
loans. So creating the proper legal
framework to make dead capital fungible (easily transferable) will create an
instant credit market and enable Nigerians to borrow on their property. A Land
Use Administration Act will introduce new rules to make the consent process more
efficient and give confidence to banks to accept title documents as collateral.
This process will create an instant credit market to drive the economy and will
easily contribute at least 5% to GDP.
Government stimulus intervention
Because of Covid-19,
the economy has taken a very big knock. It is the responsibility of government (like
most western countries) to reboot the economy by supporting businesses with a
business support fund of at least 50 trillion. We applaud the government for
the injection of funds to support the economy. We note the following:
·
Nigeria Economic Sustainability Plan (NESP),
12-month, 2.3 Trillion Naira ‘Transit’ Plan between the Economic Recovery and
Growth Plan (ERGP) and the successor plan to the ERGP
·
Ministry of Trade and Industry, MSME Survival Fund, The Guaranteed
Off take Stimulus Scheme and the Credit Support to MSMEs and Priority Sector
and
·
Central Bank of Nigeria N10 billion loans and grants approved for various
groups and organisations for pharmaceutical and healthcare-related research,
under the COVID-19 intervention scheme.
·
The Special Public Works programme expected to engage 774, 000
Nigerians to cushion the effect of
COVID-19 pandemic.
It is a good
start but not enough. The Government should look to ways and means by the CBN
to inject at least 50 trillion into the economy. Government can intervene
through a National Credit Guarantee Agency to support viable business proposals
so they Business can easily access credit. Major economies of the world run on
credit. The key is that the creditor is assured that he will be paid by
government guarantee. Another key institution is the Development Bank
(DBN). Nigeria has a Development Bank, but unfortunately undercapitalized. The
DBN needs to be properly capitalized to boost the economy.
Enabling Business Environment
The factors
listed above will not work without an enabling business environment. The first
step is to have an efficient legal and regulatory system. For instance, the Nigerian judicature is
based on the 1875 Judicature Act. The consequence is that cases take too long
to resolve. It takes between 5 to 20 years to resolve simple contractual disputes.
Investors, both local and international, will not invest in a country where simple
contractual disputes take between 5 to 20 years to resolve. We must give
urgency to this sector and reverse legal failure. A speed of justice policy
will reduce delays. In this regard, the National Assembly must consider
enacting the Administration of Civil Justice Bill to ensure efficient
administration of civil disputes. Also,
new methods of dispute resolution should be considered such as Alternative
Dispute Resolutions, small claims courts, traditional and customary
arbitration. Quasi-judicial administrative tribunals can be established for sectors,
following the UK example. In England there are many administrative courts for
Telecommunications, Taxation, Transportation, Insurance, Education, Financial
Services, Trade, Investments, etc.
Finally, the Nigerian legal and regulatory framework must be
reviewed and structured to create the enabling environment that can support the
development of a digital economy. Enactment of the Company and Allied Matters
Bill will be an important step to improve the business environment for
entrepreneurship and to provide greater clarity for investment funds. Once
enacted, it will be important to develop regulations to support the Companies
and Allied Matters Bill and other relevant recently passed legislation, such as
the Secured Transactions Act, to ensure effective implementation. Additionally,
there should be a review of legislation impacting digital entrepreneurship
including the following:
i.
The Intellectual
Property Policy and Legislative framework
ii. Cybercrime Prevention Act
iii. The Venture Capital Incentive Act
The Tax incentives system akin to the pioneer tax system is
needed to ensure that the regulatory environment is investment friendly rather
than an impediment to the growth of the economy.
Discipline of Execution
Nigeria has a plethora of laws, regulations,
guidelines and Executive Orders. The challenge is lack of implementation of
these laws and regulations. Unless rules are enforced, Nigeria will not easily
overcome recession. A vigorous government policy is needed to implement diversification,
strong trade policy and access to credit etc. There needs to be timelines and
harmonization of work of the various government agencies ministries. Nigeria can generate 10
million Jobs and over N100 trillion with full compliance with policy
implementation. This will help to mitigate the impact of the impending
recession. The
President must take charge and ensure vigorous implementation.
Conclusion
The story about
diversification of the economy is an old argument going back 30 years and in
fact the Nigerian economy is actually diverse but the problem is lack of
government consistency which has meant that although we have diversity, no
revenue flows out. We can only succeed
if the twin administrative tools of power of focus and discipline of execution
are applied. This presentation is made from the point of view of a development
lawyer. It is up to the economists to draw what they can to mitigate the
impending recession.
by Legalnaija | Jul 2, 2020 | Uncategorized
Artificial
intelligence first made appearance in science-fiction books and movies, like the
Metropolis of 1927, in the first half of the 20th century which are
believed to have steered the consciousness of mathematicians, scientists, scholars
and philosophers to the concept of artificial intelligence. The first humanoid
robot, Herbert Televox, was built by Ron Wensley in
1927. Herbert Televox could lift a receiver to accept a phone call, he
could also control simple processes by operating switches according to the
signals it received. Herbert Televox, however, lacked the ability to speak and
was simply humanoid in appearance (1). However, robotics
has since then advanced in both appearance and abilities. Sofia is a particularly
remarkable creation as she is the first robot to achieve citizenship status (2). Sofia has a family,
a delicate appearance and is capable of more than 50 facial expressions. AI is
affecting the world’s economy and has become an essential part of the
technology industry as it makes appearance across the world. As machines become
increasingly capable, it is bound to not only rely on Intellectual Property law
but transform Intellectual property concepts, triggering a need for IP law
reforms.
Technology is
advancing at an unparalleled speed. Faster and quicker than we can meet up with
or make preparations for. Generally speaking, Technology and Innovation
intersect with Intellectual Property rights as they confer exclusive rights to
inventions and creations on the inventor or owner of a work, protecting said
works from idea theft or expropriation, consequently encouraging inventiveness
and out-of-the-box thinking. Today, Technologies are advancing beyond what
available Intellectual property provisions can secure. The implication is that
law makers are now faced with an obligation to revisit and modify laws suitable
for the upsurge in discoveries of new technology and knowledge across the
globe.
Artificial Intelligence,
also called Machine Intelligence, is distinct from Natural Intelligence
displayed by humans and animals. Although there is no universally accepted or
all-encompassing definition to the concept, it can either refer to the
intelligence displayed by machines or a discipline of computer science that is
aimed at developing machines and systems, such as robots, that can carry out
tasks and chores normally considered to require human intelligence, such as visual
perception, speech recognition, decision making and translation between
languages. Machine learning and deep learning are two subsets of AI (3).
Is Nigeria ready for
AI? Nigeria’s Federal Ministry of Education is making plans to include robotics
and artificial intelligence (AI) in the post-basic and secondary education
curricula in Nigeria (4).
According to the plan, this is aimed at bringing students up to par with 21st
century technology and education standards. This is expected to begin with the
104 federal unity colleges spread across the country’s six geo-political zones.
While we may argue whether or not Nigeria is ready and why, what is important
is that it is time Nigeria keys into AI technology bearing in mind its
potential benefits, how it will help citizens to live better lives, how it will
upshoot her economy, bringing Nigeria to limelight. Recently, the University of
Lagos, in an effort to improve learning and safety in the face of the COVID-19
outbreak took delivery of some robots. Ready or not, it is happening.
AI
and Patents
According to the
World Intellectual Property Organisation (WIPO), since the emergence of
primitive AI in the 1950s, researchers have published over 1.6 million
AI-related scientific publications and filed patent applications for nearly
340,000 AI-related inventions (5).
The impact of AI on Intellectual Property (IP) is circled around patent law and
patent protection of AI technologies (6).
However, more relevant IP concepts that protect AI are Copyright and Trade
secret.
Patent protection
gives its owner the legal right to exclude others from making, using, or
selling an invention for a limited period of time on the condition that the
patentee will publish an enabling public disclosure of the invention at a
future date. Patent protection is highly valued among AI developers as it gives
the patent owner a monopoly. Hence, competitors who are found to have exploited
the patented AI technology will be ordered by the court to cease the act of
infringement whether or not they had knowledge of the patent or patented
technology at the time of developing their technology. Nonetheless, lack of
knowledge may be relevant to whether the court also awards damages or an
account of profit.
What if inventions
are made by an AI system? According to Stephen Hawking, “…there is no deep
difference between what can be achieved by a biological brain and what can be
achieved by a computer. It, therefore, follows that computers can, in theory,
emulate human intelligence and exceed it”.
Under the United
States Patent Law, inventor is defined as the individual or individuals who
invented or discovered the matter of the invention. Many have argued that the
law’s references to an inventor as an “individual” could be applied to a
machine. However, the US Patent and Trademark Office (USPTO) has ruled that
artificial intelligence systems cannot be credited as an inventor in a patent (7). This position is
the same in the United Kingdom and in Nigeria. Hence, patent may be claimed by
the inventor or the owner of the AI system.
AI
and Copyright
Copyright protects
the software programmes which are the “building blocks” of the AI system (8). In Nigeria,
computer programs are eligible for copyright protection under literary works
provided that they satisfy the requirement of originality, ownership and
fixation under Section 1 of the Copyright Act. Copyright protection arises
automatically upon creation and extends to the expression of the source code
embodied in the software that underlies the AI technology. In contrast to
patents, a copyright term is much longer (the author’s life plus 70 years) and
copyright protection is cheaper and less strenuous since it is not required
that the documentation be registered (5).
Do AI systems own
copyright in their works? Another facet to this discourse is whether artistic, dramatic,
literary or musical works that are creations of Artificial Intelligence are
protectable under Copyright Law. As AI systems advance, we find them doing
things that ordinarily require human intelligence or creativity. A suitable
example is E-David, a painting robot, who takes pictures with an added camera
feature and making his own decisions, draws original pictures or paintings from
these pictures. According to Section 2 of the Copyright Act, provided that a
work is not copied, has an element of originality and is fixated, it is
protectable. However, the copyright act is silent on whether the author of a
work can be anything other than a human. Seeing as AI machines are yet to be
recognized under Nigerian Laws, they cannot own copyright.
AI
and Trade secrets
Trade secrets is
highly effective in protecting important business information especially from
competitors. Trade secrets trade secrets assist with the non-disclosure of
information, which includes formulae, compilations, programs, methods, techniques,
processes, designs and codes of various AI inventions (9),
which have a quality of intrinsic confidentiality, the secrecy of which is highly
valuable to its owner. They
are enforced through actions for breach of confidence or, if a non-disclosure
agreement or clause exists, breach of contract (5).
Like copyright, Trade secrets require no registration to be protectable;
rather, trade secret protection arises automatically provided that the trade
secret owner can establish that the information is not already in the public
and that if it were disclosed to a competitor, could cause real or significant harm
to the owner of the secret. Trade secret protection can theoretically last
forever, as long as secrecy is maintained and the information is not publicly
known.
With the advent of
AI, computers and machines will potentially create millions of original works
which may not be protectable under Intellectual property laws unless amendments
are made. This defeats the purpose of Intellectual property which is to encourage
ingenuity, protect the production of creative minds and attribute honour to
whom honour is due. Hence, the need for Intellectual property law reforms.
Written by:
Adeniran
Oluwabukunmi.
References
1. A Brief History of Robotics: The Origin of The
Fisrt Humanoid Robot. LUCA Robotics.
2.
Stone, Zara. Everything You Need To Know About Sophia, The World’s First
Robot Citizen. 2017.
3.
Artificial Intelligence and Intellectual Property. WIPO.
4.
Oluwanifemi, Kolawole. Nigeria may not be ready to include robotics and
artificial intelligence in its secondary school curriculum. Techpoint.Africa.
February 25, 2020.
5.
Nina, Fitzgerald and Andrew, McClenahan. Introduction to the protection of IP
rights in artificial intelligence. 2019.
6.
Kurzweil, Ray. Intelligent Trademarks. 2008.
7.
John, Porter. US patent office rules that artificial intelligence cannot be a
legal inventor. The Verge. April 29, 2020.
8.
Mayowa, Oluwafunmilayo. Who owns Copyright in an AI Invention? 2019.
9.
Andrea, Jeffries, Emily, Tait and Jason, Garr. Protecting Artificial
Intelligence IP: Patents, Trade Secrets or Copyrights? 2018.
10.
Ijeoma, Olorunfemi and Ikenna, Uwadileke. Artificial Intelligence technology:
Is Nigeria ready? Vanguard. April 22, 2019.
Photo Credit – www.myconstructiontip.com
