Question of the Week
Dear IP ABC, I am Avesi Tersoo CEO of VESISOO Nigeria Limited. Two years ago I made a new industrial design for a laboratory test tube called Tersoo Tube. Tersoo Tubes has a new 3-dimensional form that makes it unique in shape, giving it aesthetic quality. Apart from aesthetics, the new shape enhances the functionalities of the test tube. To market Tersoo Test Tubes, I targeted research & development (R&D) institutions, hospitals, and schools. We neither publicized the creation of the design nor sold it. Instead, we licensed it to Dan Yel Ltd for one year for N10 million. Under the license, Dan Yel Ltd sold the product to the public as Tersoo Tubes. This was a year ago.
Months after the licensing agreement elapsed without renewal by Dan Yel Tubes, I discovered a new but identically designed test tube in the market called Dan Tubes. It is owned by Dan Yel Ltd. I reached out to the CEO of Dan Yel Ltd, demanding that they take the product out of the market. He disagreed, claiming that having failed to register the design as an industrial design, I no longer have any rights to the design. Do I have to register my design in order for it to be protected?
Answer
Dear Avesi Tersoo, the answer is YES, you must register your new design in Nigeria as an industrial design to enable you enjoy legal protection. This legal protection gives you exclusive right to your design. Under section 13(1) of the Patents and Designs Act, a design to be registered as an industrial design is presumed to be new at the time of the application for registration except you have made the design available to the public.
Having failed to register your Tersoo Test Tubes design and the design has been made available to the public following your licensing agreement with Dan Yel Ltd, you are not legally entitled to neither protection nor exclusivity.
But this does not completely make you helpless. Since you had a licensing agreement with Dan Yel Ltd and the company failed to renew its license, you can sue Dan Yel Ltd for breach of contract. The provisions of your licensing agreement will determine the extent of legal protection your company would enjoy based on contractual rights. Nothing more.
If Tersoo Test Tubes had not been made available to the public, it is registrable as an industrial design since it is a design with a 3-dimensional form that serves both aesthetic and technical use.
An industrial design is any combination of lines or colours or both, and any 3-dimensional form, if: (i) the creator intended that the design be used as a model or pattern to be multiplied by industrial process; (ii) the design is not intended solely to obtain a technical result.
Tersoo Test Tubes was designed in a unique shape to achieve not solely a technical result but achieve an aesthetic quality as well. This makes it eligible for industrial-design protection under Nigeria’s Patents and Designs Act.
By failing to register the design, it is now effectively in the public domain. Generally, anyone can come up with the same design anytime, anywhere.
If the creator was unaware of the public availability of the design, the design would still have been considered new in favour of the creator.
Under section 13(1) of the Act, if an industrial design had been made available to the public anywhere and at anytime by means of description, use, or in any other way, this defeats the presumption of newness.
But if the creator could not have known that the design has been made available to the public, the design would still qualify as new. To qualify, the creator is required to satisfy the Registrar that he had no knowledge of such unauthorized availability to the public (section 13{2}). Also, if an industrial design has only been exhibited in an official or officially recognized exhibition within 6 months before application for registration, it shall not be deemed to have been made available to the public (section 13{2}).
In your case, the two exceptions above do not apply. This is because by virtue of your licensing agreement with Dan Yel Tubes over a year ago, you authorized availability of the design to the public. For this reason, your recent discovery of Dan Tubes in the market is immaterial as far as design rights are concerned.
What about the licensing agreement you had with Dan Yel Ltd?
A licensing agreement is a legal written agreement between a licensor who is the owner of the work in question and the licensee who seeks the licensor’s permission to use, sell or make copies of the subject matter of the agreement.
Section 23(1)(a) of the Patents and Designs Act requires that a design owner may by a written contract signed by the parties grant a license to exploit the relevant design. Paragraph (b) then gives the licensor all the statutory rights of the design owner anywhere in Nigeria, subject to any restrictions in the licensing contract. Also, section 23(2)(a) requires that the license must be registered with the Trademarks, Patents, and Designs Registry otherwise it shall have no effect against third parties.
Applying the requirements above to your case, your licensing agreement with Dan Yel Ltd does not enjoy protection under the Act. This is because of 2 reasons: (1) You are not a ‘design owner’ under the Act since you have failed to register the design; and (2) you have not registered your licensing agreement with the Registry. (Even if you wanted to, the licensing agreement is not qualified for registration as long as the related design remains unregistered.) This is a classic case where Lord Denning’s words in the celebrated case of Mcfoy v. UAC apply when the law Lord (of blessed memory) said: “You cannot not put something upon nothing and expect it to stand”. Apt.
Therefore, you are not entitled to protection under the Act. This leaves you at the sole mercy of your licensing agreement as a private contract between you and Dan Yel Ltd.
Can you sue Dan Yel Ltd for selling your new-shape, test-tube product without your permission after your licensing agreement elapsed?
The Patents and Designs Act does not invalidate or make illegal design-rights licensing agreements that have not been registered with the Registry. What it does is limit the bindingness of unregistered licensing agreements regarding registered designs to parties in the contract only. Until registered, it does not bind third parties.
Yours is an unregistered licensing agreement for an unregistered design. The Act is silent regarding this. It renders you helpless under the Act. Effectively, not only is ownership of your design a mere allegation but also your licensing-agreement document is mere paper. Both design and document are unrecognized under the Act. Consequently, you are not entitled to any statutory relief by way of accounts of profits, damages, injunction, or otherwise, as guaranteed under section 25 of the Act.
Therefore, your remedy against Dan Yel Ltd’s action is in common law, not under the Act. You may consider suing the company for breach of contract, not design-rights infringement.
To learn more about all your legal options against future licensees and to best protect your business’s intangible assets, consult an IP lawyer or law firm.