Breach of Promise of Marriage: A Legal Perspective

Everyday, people fall in love, fall out of love, get married, do the impossible in the name of love, hearts are broken, tears flow freely, parties propose openly, jilted individuals commit suicide among other occurrences. It is inherent in human nature to desire to love and be loved. Often, such love interests result in marriages…

“The love that once bound these two people and got frosted. Can be likened to verse xxxv of Shakespeare “Sonnets a sort of Lamentation”. And also verse 1 of “Passionate Pilgrim” Thus we have in this case” so much love.  And then so much pain”. It is the way of the World.”

PATS – ACHOLONU, JSC

 

 

INTRODUCTION

Ifeoma (real name withheld), a fair skinned pretty lady who worked as a cook at a busy canteen in a Lagos suburb fell in love with Bobo (real name withheld), a brilliant indigent undergraduate. As their relationship blossomed, Bobo proposed marriage to Ifeoma. However, due to their meagre resources, they decided to hold on in order to enable Bobo to finish his university education and get a job before settling down in marriage. A considerable part of Ifeoma’s meagre monthly salary was invested in Bobo’s education. She had to make do with whatever remained and tips which she sometimes received from customers, which were hardly enough. We all knew her with two sets of cloths that were used interchangeably; a faded Ankara gown and an over worn mismatched skirt and blouse. She sacrificed all and did it with unreserved joy with the hope that one day, her fiancé would graduate from the university, get a good paying job, settle down in marriage with her and all her sufferings would become a thing of the past. Her sonorous voice could be heard miles away from the canteen ringing with the melody “Our Love is here to stay”, a love song by Billie Holiday, most times and this helped her to navigate each day without the thought of the present pain. Bobo finished from the University with a very good grade and immediately after the Youths Service, he got a very lucrative job with an oil servicing company in Lagos. He came to the canteen after securing the good job spotted in his new “Lamborghini Veneno Roadster” sportscar. That same day, he asked Ifeoma’s boss to give free lunch to all customers and it was a happy day. We were all happy for Ifeoma that her sacrifice paid off at last, or so we thought, only to hear few days later that Ifeoma committed suicide leaving behind a suicide note. To say people were shocked was an understatement as no one saw it coming! It was after reading the suicide note that we all got to know that Bobo got married to a lady he served with during his Youths Service and he only came to the canteen that day to say “bye bye” to Ifeoma as he found her too low for his newly acquired status. Ifeoma was buried the same day amidst bitter tears and rain of curses on Bobo and his entire generation.

 

Akeem was a carpenter, who managed to get his Primary Six Leaving Certificate. He was not so brilliant, as a result of which he learnt the art of carpentry at a very early age and became a successful furniture maker for most people, both home and abroad. He fell in love with Ronke, a fair skinned Yoruba lady in the vicinity who was very brilliant but had to resort to  hawking  bread since she could not afford school fees to further her studies. She already passed her WAEC with flying colours but had totally given up hope of furthering her studies till she met Akeem. Akeem vowed to sponsor her education to the utmost of her ability  with the agreement that both of them would settle down in wedlock immediately after obtaining her university degree. True to his words, he sent Ronke to a university in the UK and was responsible for all expenses including feeding and clothing. In fact, from the pictures seen on social media Ronke lived like a queen while in UK. Not only did Akeem give Ronke full support, he also provided for her impoverished parents back in Nigeria and, based on Yoruba custom, took them as his “ana” already. Little did he know that Ronke in collaboration with her parents had other plans. As a result of Akeem’s full involvement in Ronke’s schooling, he knew that the School’s graduation was fixed for late November of her year of graduation, so he had already fixed their engagement for the first week in December of the same year, believing that Ronke would be back by then. However, he got the shock of his life when Ronke sent a message to him that she would not be coming to Nigeria immediately after her graduation as she was already engaged to a Caucasian  and that she was even in her early stages of pregnancy. Thinking it was a practical joke, he ran to his “ana” only for Ronke’s father to unleash the rude awakening  that he was a fool to have believed that his daughter, with all her education would stoop so low as to marry a stark illiterate like him. Akeem is presently in Police custody standing trial for the murder of Ronke’s father, whose life he snuffed out the day after he received the shocking revelation. He had been consumed by uncontrollable pain and anger and this led him to strangling Ronke’s father to death.

 

The two stories above are just a few examples of the experiences that some would-be couples go through.  Everyday, people fall in love, fall out of love, get married, do the impossible in the name of love, hearts are broken, tears flow freely, parties propose openly, jilted individuals commit suicide among other occurrences. It is inherent in human nature to desire to love and be loved. Often, such love interests result in marriages. Consequently, it is not far-fetched to suggest that the longing to be in a loving relationship and to not be alone, whether within the framework of a marriage or otherwise, has become a permanent fixture of human existence, especially in Africa.  Studies have shown that many couples feel empty, unaccomplished and unfulfilled until united with each other  in matrimony.  Society itself is not left out of the frenzy  for “lovey-dovey” relationships as it encourages the union of a man and a woman, and singleness is often accorded a negative connotation , especially when approaching a certain age. All these factors probably explain why many people rush into relationships, make  promises of marriage, only for one of the parties to pull out at the eleventh hour for one reason or the other, which may be either be genuine or borne out of selfishness.

A love relationship with marriage in view, comes with lots of investment in terms of emotions, passion, time and resources. It is for these reasons that it becomes extremely painful or impossible to let go when separation is consensual, especially by a party who seemed to have invested more. This paper focuses strictly on the “breach of promise to marry” which shall be considered within the context of Nigeria.

The concept of breach of a promise to marry may be evaluated under the following headings:

  • Marriage as a form of contract
  • Laws governing Marriage in Nigeria
  • Breach of promise to marry
  • Remedies for breach of promise to marry
  • Defenses to breach of promise to marry

 

 

  1. MARRIAGE AS FORM OF CONTRACT

marriage is defined as “a legal Union of one man and one woman as husband and wife. Marriage as distinguished from the agreement to marry and from the act of becoming married is the legal status, condition or relation of one man and woman united in law for life, or until divorced, for the discharge to each other and the community of the duties legally incumbent on those whose association is founded on the distinction of sex. A contract, according to the form prescribed by law, by which a man and a woman capable of entering into such contract, mutually engage with each other to live their whole lives (or until divorced) together in a state of union which ought to exist between a husband and wife.”

In Amobi v. Nzegwu[3], the Supreme Court per Ariwoola, JSC defined marriage thus: “Marriage under the Marriage Act generally means the legal union of a couple as spouses.  In other words, it is “the voluntary union for life of one man and one woman to the exclusion of all others.”

In the definition above,  a key feature that stands out is that marriage is a contract. Black’s Law Dictionary[4] defines contract, inter alia, as “1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law…2. The Writing that sets forth such an agreement…3. A promise or set of promises by a party to a transaction, enforceable or otherwise recognizable at law”. It is a voluntary agreement between parties and willingly entered into. However, the freedom enjoyed by parties to contract carries with it the inevitable implication of sanctity of their contracts. Just like any other contract, marriage has its elements.

 

A careful consideration of the definition of contract stated above will reveal that a contract is a promise. What then is a promise? As defined in Black’s Law Dictionary,[5]  a promise is “the manifestation of an intention to act or refrain from acting in a specified manner conveyed in such a way that another is justified  in understanding that a commitment has been made; a person’s assurance that a person will or will not do something.” The Supreme Court per Onu, JSC in Agoma v. Guiness (Nig) Ltd[6] adopted the definition of promise in Osborn: The Concise Law Dictionary, Fifth Edition (1964) where it was defined as “The expression of an intention to do or forbear from some act.”.

For a better understanding of the discourse, it is necessary to define the word “Breach”. According to the Black’s Law Dictionary,[7] a breach is “a violation or infraction of a law, obligation or agreement …whether by neglect, refusal, resistance or inaction.”  Breach of promise according to Black’s Law Dictionary[8] then is “the violation of one’s word or undertaking, especially a promise to marry. Under English common law, an engagement to marry had the nature of a commercial contract, so if one party broke the engagement without justification, the innocent party was entitled to damages.”

 

It should be noted that there cannot be a breach of marriage until a contract to marry has been made. In other words, before a party can sue for a breach of promise to marry, discussion between parties must have gone beyond mere speculations, whispering of “sweet nothings” but must have become concrete as an agreement existing between parties. It does not have to be written or spoken; as such, it can be inferred through the conduct of the parties.  In the case of Ezeanah V Atta[9] the Supreme Court per Tobi, JSC held that “while the law may at times require that an agreement to marry should be in writing, the law will be prepared to hold in appropriate cases that the parties intended to marry in the absence of any written agreement. In this respect, the court will take into consideration the institution of marriage as a trade in the relevant society and how persons generally engage themselves in agreement of marriage”. Most times, before either party can allege a breach, the relationship would have passed through certain stages. Generally, with exception of few cases, relationships pass through proposal, courtship, introduction and engagement before marriage. As earlier said, marriage is a contract and at this juncture, we shall look into the features of contract as it relates  to marriage. These features must be present in an agreement before there can be a breach of promise to marry. The following are the contractual features that define a marriage; offer, acceptance, intention to enter into legal relation, consideration, certainty and capacity.

We shall briefly look into each of these features.

 

  1. OFFER- An offer is like a proposal made by an individual to another person, in this context, from a man to a woman or vice versa. This offer is not made to the whole world but to a particular person. Therefore, an advertisement on Facebook, Twitter or any other social media searching for a spouse is not an offer but a mere invitation to treat. In such a circumstance, the person that accepts such is actually the person making the offer which must be accepted by the other person. In order to constitute an offer, it must be stated in specific terms and must be direct. An offer can be revoked before acceptance should the offeror (man/woman making the proposal) change his or her mind but such revocation must be duly communicated to the other party. The offer should not be conditional or else, it won’t be valid till the fulfillment of that condition. In FGN & Ors. V. Zebra Energy Ltd.[10] it was held per Ayoola, JSC that “Where an offer is subject to condition the formation of the contract is postponed until the happening of the event on which the offer is conditioned. If the condition of the offer is that unless something is done within a stipulated time, the offer is determined, such an offer cannot be valid until after the happening of the event.”
  2. ACCEPTANCE- The other party to whom the offer has been made must accept it. Acceptance need not be immediate but must be within a reasonable time. For instance, if a man makes an offer of marriage to a lady in year 2018 only for the lady to communicate her acceptance in year 2020, such acceptance cannot be seen as valid as it has not been within a reasonable time. Also, the acceptance must be communicated to the offeror. A woman to whom an offer is made and accepts such in her heart without communicating same to the man cannot be seen to have accepted the offer. An acceptance must not be qualified. Where the acceptance is made on certain conditions or on certain new terms different from the terms on which the offer is made, such cannot be seen as acceptance of the offer. If Mr. X proposes to Miss B and the latter accepts only on the ground that Mr. X sends her abroad, such cannot be seen as acceptance. In the case of Bilante Int’L Ltd V. N.D.I.C [11] the Supreme Court per Adekeye, JSC held that “An offer must be unconditionally and unqualifiedly accepted. An offer is impliedly rejected if the offeree instead of accepting the original offer makes a counter offer which varies the terms proposed by the offeror. A counter – offer is a statement by the offeree which has the legal effect of rejecting the offer and of proposing a new offer to the offeror. It puts an end to the previous offer of the initial offeror. The legal effect of a counter – offer is to terminate the original so that it cannot subsequently be accepted by the offeree.” Thus, an offer should be accepted on the very terms it has been made.

  3. INTENTION TO ENTER INTO A LEGAL RELATION- In the case of Sonnar (Nig) Ltd & Anor. V. Partenreed M. S. Nordwind Owners of the Ship M. S. Nordwind & Anor.[12] the Supreme Court per Eso, JSC considered how to determine the intention of parties to enter into a legal relationship and stated that, “Since the decision in the late nineteenth century in the case of Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256, the tests applied by the courts in order to determine the intention of parties to a contract have been objective rather than subjective. Would a reasonable man have regarded the offer made to him as one which was intended to create a legal relationship?” In a case of a promise to marry, to establish that parties intended to enter into a legal relationship, in other words that they agreed to marry, it must pass the test of reasonableness. It must be such that a reasonable man would have regarded as a promise of marriage intended to create a legal marital relationship and not mere cohabitation. It must be shown that there was a mutual understanding and meeting of minds between the parties that they agreed to get married.



  4. CAPACITY- In order to constitute a valid contractual agreement to marry, parties must both be capable of getting married. Incapacity of either party will render such agreement void. For instance, an offer or acceptance of marriage by a minor cannot be seen as valid even if ratified in adulthood. Such offer must be made or the acceptance made again when the minor attains maturity or such will not be valid. Again, a party must not suffer from mental incapacity at the time of entering into the agreement. Parties must be of full age (21 years under the Act) and sound mind. In the case of Uwah & Anor. V. Akpabio & Anor.[13], it was held per Muhammad, JSC that “it is trite that persons of full age and sound mind are bound by the agreement lawfully entered into by them…” A mentally imbalanced person cannot make or accept an offer. However, Section 18 of the Marriage Act provides that “If either party to an intended marriage, not being a widower or widow, is under twenty – one years of age, the written consent of the father, or if he be dead or of unsound mind or absent from Nigeria, or of the mother, or if both be dead or of unsound mind or absent from Nigeria, of the guardian of such party before a license can be granted or a certificate issued.”


  5. CERTAINTY AND POSSIBILY- The agreement will stand only if it is certain and possible. Some circumstances like place of domicile, legal documents, etc. can make it uncertain and virtually impossible for parties to marry. Where such situations are so obvious, there cannot be a valid agreement between the two parties. In the case of Alfotrin Ltd V. AG Federation & Anor. [14]it was rightly held that “…if the terms are unsettled, uncertain or vague that they cannot be ascertained with reasonable degree of certainty, there will be no valid contract enforceable at law unless the uncertain part of the contract is unsubstantial and can be separated from the vital parts thereof”.
  6. CONSIDERATION- The apex court defined consideration in the case of BFI Group Corporation V. B.P.E.[15] per Adekeye, JSC. as “some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. In law, parties to a contract are free to conclude their bargain on whatever terms are deemed to be appropriate. Once the consideration is of some value in the eyes of the law, the courts have jurisdiction to determine whether it is adequate or inadequate. In principle therefore, no consideration is too small or too much or unfair in the absence of fraud, duress or misrepresentation.” From the cited case, it is very clear that consideration need not be money. Where the offeree suffers or abstains from exercising some of his/ her rights as a result of an offer to marry, such will suffice as consideration. Only that the thing/act given as consideration must be of value.

B.  LAWS GOVERNING MARRIAGES IN NIGERIA

In Nigeria, marriages are governed by legislations including the Marriage Act, the Matrimonial Causes Act, Customary Law, etc. The Marriage Act provides for the celebration of marriages while the Matrimonial Causes Act makes provisions for matrimonial causes.

 

C. BREACH OF PROMISE TO MARRY

Earlier in this paper, we had stated that marriage between parties is a contract. In the case of a breach, the aggrieved party can sue for damages. It should be borne in mind that either of the parties can bring an action for breach of promise to marry. The right to sue for a breach of promise to marry is not limited to the womenfolk but can also be instituted by a male who is aggrieved.

 

In order to successfully bring an action for breach of promise to marry, the Plaintiff must be able to prove the following:

  1. That the other Party made a promise of marriage. This kind of promise is different from just hopeful expectations, or casual suggestions.. It must be concrete and there must be a meeting of the minds between the parties. The party making the promise must clearly show his intention (through words, actions or conducts) and the other party the promise is being made to must accept it. The promissee must understand what the promisor is saying and the former must have accepted it. Acceptance need not be instant. It may be later but must be within a reasonable time.
  2. That the other party reneged on the promise. In order to prove a breach of promise to marry, the aggrieved party must be able to show that the other party failed to fulfil his/her promise. Where there is a stipulated time for the fulfillment of the promise to marry, it must be fulfilled within such time, and where no time is stated, it must be fulfilled within a reasonable time. Where the fulfillment of the promise is conditional, then there cannot be a breach until such condition has happened.

These two conditions precedent were clearly stated in the case of Ezeanah V. Atta [16] (where the Supreme Court per Tobi, JSC (as he then was) held that “Two elements are necessary to constitute a breach of agreement or promise of marriage. First, the party jilted must prove to the satisfaction of the court that there was in fact a promise of marriage under the Matrimonial Causes Act, 1990, or under Islamic Law or under Customary Law on the part of the other sex. Second, the party reneging has really and as a matter of fact failed or refused to keep to the agreement of the marriage”.

There are two types of breach of promise to marry. The first one is non – performance while the second one is anticipatory breach. There is non – performance where a date has been fixed for marriage but the other party refuses to honor such or where there is a condition precedent to the marriage taking place and the party who ought to discharge such obligation refuses to. Anticipatory breach on the other hand occurs where a party prior to the date fixed for the wedding cancels it or better still decides to elope with another person leaving the jilted party alone. Such aggrieved party whether a male or female can actually sue for breach of promise to marry. In recent times there have been instances of a groom not showing up on the day of wedding, calling the wedding off after the traditional marriage and other strange occurrences. In such situations, the aggrieved party can institute an action in court and sue for damages.

In some other cases, a lady might forfeit her education or even relocate to another country because of the promise to marry. On the part of a man too, he might invest his resources in the education of a lady, train her by spending a fortune with the understanding and agreement of marriage only for the lady to suddenly realise that  that the man is “too low” for her new found status. All these and more are instances of breach of promise to marry and can be taken up by the aggrieved party and an action instituted against the offending party.

 

D.  DEFENCES TO BREACH OF PROMISE TO MARRY

In a situation where there is a breach of promise to marry, the party in breach could have some defenses, depending on the circumstances. The Matrimonial Causes Act[17] provides instances where a marriage will be rendered void. In Oghoyone v. Oghoyone,[18] Rhode – Vivour, JCA (as he then was) stated that “A void marriage is a marriage that produces no legal consequences. That is to say it is a marriage that never took place.” In other words, in the eyes of the law, there is no marriage ab initio. The said section provides as follows:

“3.    Void marriages and prohibited degrees of consanguinity  

(1)     Subject to the provisions of this section, a marriage that takes place after the   commencement of this Act is void in any of the following cases but not otherwise, that is   to say, where‐  

(a)     either of the parties is, at the time of the marriage, lawfully married to some  other person;  

(b)     the parties are within the prohibited degrees of consanguinity or, subject to  section 4 of this Act, of affinity;  

 (c)     the marriage is not a valid marriage under the law of the place where the marriage takes place, by reason of a failure to comply with the requirements of the   law of that place with respect to the form of solemnization of marriages;  

(d)      the consent of either of the parties is not a real consent because ‐  

(i)      it was obtained by duress or fraud; or  

(ii)     that party is mistaken as to identity of the other party, or as to the nature of the ceremony performed;  

(iii)    that party is mentally incapable of understanding the nature of the marriage contract;  

(e)      either of the parties is not of marriageable age.

From the provisions of section 3(1)(a) – (e) of the Matrimonial Causes Act reproduced above, it is clear that under those circumstances, even where there is a marriage and not just a promise to marry, such will be rendered void. Also, the grounds for dissolution of marriage are set out in sections 15 and 16 of the Matrimonial Causes Act. It is most respectfully submitted that the grounds stated in the two sections will also avail a Defendant as defences in an action for breach of promise of marriage.  Therefore, where there is a promise of marriage only to discover any of the circumstances listed sections 3, 15 and 16) of the Matrimonial Causes Act, the other party who was not aware of such at the time of agreement or promise could, actually, justifiably, renege on the promise of marriage. He/she cannot be liable for breach of promise to marry even if it was shown that he/she entered into such agreement with prior knowledge of the offending situation. Few other defenses are listed as follows:

 

  1. DECEIT/MISREPRESENTATION

When a party sets out with the aim of deceiving the other party into a promise to marry, and the other party reneges on this ground, the latter cannot be sued for breach of promise to marry. Nowadays, we have instances of people undergoing surgery that radically changes their appearance, use of excessive make-up to cover a badly scarred face, and lots more. In instances like these, where a promise is based on deceit as a result of which the aggrieved party goes back on his/her promise after discovery, the promisee cannot sue for breach. Again, it is common nowadays to see transgenders who have had to undergo surgeries to change from their original sexes. If the innocent party discovers for instance that the person he/she promised to marry was originally of a different sex, he/she would be justified to renege on his/her promise.

 

II. INFIDELITY

Where a party, whether a man or a woman, discovers (with proof, not mere speculations) that the other person is not faithful but is busy messing/sleeping around, such party can opt out of the agreement to marry.

 

III.  ILLNESSES AND DISEASES

Where a party is suffering from diseases that makes it impossible to marry e.g., mental disorder, it can be a defense to breach of promise to marry.

 

E.  REMEDY FOR BREACH OF PROMISE TO MARRY

In the case of Uso v Iketubosin,[19] the defendant promised to marry the plaintiff in 1947. In 1957, the defendant married another woman in breach of his promise to the plaintiff. The Court held that the defendant’s act constituted a breach for which the plaintiff was entitled to damages. Suffice it to reiterate  that where there is a wrong, there must be a remedy – ubi jus ibi remedium. This principle of law has been applied by our courts in deserving cases. In Bello V. AG, Oyo State [20], Karibi- Whyte, JSC (as he then was) stated as follows:

“…  I think it is erroneous to assume that the maxim ubi jus ibi remedium is only an English Common law principle. It is a principle of justice of universal validity couched in Latin and available to all legal systems involved in the impartial administration of justice. It enjoins the courts to provide a remedy whenever the Plaintiff has established a right. The court obviously cannot do otherwise. …. the court will give a remedy where the facts as disclosed fall within a remedy recognized by law. I think this is a correct principle deducible from Falobi V. Falobl (Supra).”

A wrong in form of breach of promise to marry is not just a moral wrong but also a legal wrong as it is identified under our Laws and provisions as such. Most times, awards for damages are in form of money and properties.  It is very important that an award of damages in this kind of action is at the discretion of the Honorable Court which must be judiciously and judicially exercised upon proof of both promise to marry and breach of same. The Evidence Act, 2011[21] provides that “No Plaintiff in any action for breach of promise of marriage shall be entitled to succeed unless his or her testimony is corroborated by some other material evidence in support of such promise; and the fact that the defendant did not answer letters affirming that he had promised to marry the Plaintiff is not such corroboration.” It therefore follows that in order to prove to be entitled to damages for breach of promise to marry, the testimony of the aggrieved party must be corroborated. According to Black’s Law Dictionary,[22] “Corroboration is a confirmation or support by additional evidence or authority” In Iko v. State,[23] Kalgo, JSC (as he then was) adopted the statement of Lord Morris in D.P.P. v. Hester[24] that “The purpose of corroboration is not to give validity or credence to evidence which is deficient or suspect or incredible but only to confirm and support that which as evidence is sufficient and satisfactory and credible: and corroborative evidence will only fill its role if it itself is completely credible evidence.” It is clear from the provisions of section 197 of the Evidence Act[25] that the form of corroboration required is material evidence such as letters or other documentary evidence.

However, as already stated, there must be proof of promise to marry otherwise it will be seen as a mere love affair without more. In the case of Ezeanah V. Atta[26] the Appellant and the Respondent were lovers. In the course of their relationship, the Respondent lavished gifts as the dominant partner on the Appellant, including sponsorship for further studies in England. What brought the parties to Court was the ownership of Plot 999 Cadastral Zone B6, Mabuchi District, Abuja, which was acquired during their relationship. The Appellant claimed before the Abuja High Court for the ownership of the property by seeking for declaratory, mandatory injunctive  and damages as reliefs. The Appellant claimed that she applied for and completed the application form for the land in her own handwriting and signed it, and that she paid an application fee of ℕ300 and an additional sum of ℕ6,700.00 demanded by the Federal Capital Territory. The certificate of occupancy was issued in the name of the Appellant but the Respondent took possession thereof and refused to give her the Certificate of Occupancy and instead started developing the land. On his part, the Respondent claimed that there was a breach of promise to marry on the part of the Appellant upon which basis he could no longer oblige her the property, the subject matter of the litigation, the consideration having failed. The Trial Court gave judgment in favor of the Appellant but the Court of Appeal overturned the judgment when the Defendant Appealed. On further Appeal, the Supreme Court set aside the judgment of the Court of Appeal and restored the judgment of the Trial Court. In the words of Tobi, JSC “Premarital gifts in order to qualify as gifts in furtherance of an agreement to marry, must be clearly and unequivocally traceable to an agreement on the part of the parties to marry. Where gifts part from any of the parties to the other on love and not on the business of agreement to marry, with all the ingredients of offer, acceptance, consideration, intention to create legal relation and capacity to contract the agreement, the court must not come to the conclusion that parties agreed to get married hence the gifts. That is not the talking of the law.”[27] (emphasis supplied). In his concurring judgment Pats – Acholonu, JSC stated as follows:

“In fact, this is a case that the respondent should have spared himself the agony of going through the court processes. For him, when the going was good he lavished love (I imagined it was reciprocated), money and eventually landed property on the appellant. When the tide turned, he fell back on non-existent agreement to marry and urged the Court to go the extra mile of pronouncing the existence of a resulting trust. I refuse to lend hand to assuage the feelings of a lover whose romance went awry. The love that once bound these two people and now got frosted can be likened to verse xxxv of Shakespeare “Sonnets” a sort of lamentation, and also verse 1 of “Passionate Pilgrim”. Thus we have in this case so much love and then so much pain. It is the way of the world”.[28](emphasis supplied)

Again, it should be noted that in a case of breach of promise to marry, the court cannot order specific performance. The court only makes an order of performance where it is possible. In the case of Help (Nig) Ltd V. Silver Anchor (Nig) Ltd[29] Tobi, JSC held that “This Court can only decree specific performance for a purpose which can be achieved or enforced. It cannot decree specific performance in vain. In other words, this Court cannot decree specific Performance which cannot be achieved or enforced.”

 



CONCLUSION

Marriage is not only a family, traditional, cultural, moral or religious issue. It is also a legal issue and should never be taken lightly as a breach of promise of marriage is actionable in law. When there is a breach of promise of marriage, an aggrieved party, whether male or female, may institute an action for damages. Such an aggrieved party does not have to suffer in silence, and should never resort to self – help, a remedy which has been condemned in a plethora of decided cases. In Agbai & Ors. v. Okogbue,[30] Nwokedi, JSC stated that self – help “is a primitive remedy capable of causing a breach of the peace … the magnitude of which no one may conjecture …” Where there is a clear breach of promise of marriage, aggrieved persons should therefore avail themselves of the machinery of the law to seek redress. If in the near future, we read less stories of the sort that were told at the outset of this discourse, and a number of persons approach the courts seeking redress for breach of promise of marriage, the purpose of this article would have been well served.

 

This article was authored by Theophilus Ochonogor and Charity Ayo Olaifa of Alliance Law Firm.

 

 

REFERENCES:

[1]              Tenth Edition at page 1117                                                

[2]              Sixth Edition Centennial Edition ( 1981- 1991) at page 972

[3]              (2013) LPELR 21863 (SC) at page 61.

[4]              Supra, note 1 att page 389- 390

[5]              Tenth Edition at page 1406

[6]              (1995) LPELR – 251 (SC) at 29, paras E – F

[7]              Tenth Edition at page 225

[8]              Tenth Edition at page 226

[9]               (2004) LPELR- 1198 (SC) at pages 20 – 21, paras E – C.

[10]             (2002) LPELR-3172 (SC) at pages 42 – 43’ paras F – B

[11]             2011) LPELR – 781(SC) at page 28, paras C – F

[12]             (1987) LPELR – 3494 (SC) at page 26, paras A – C.

[13]             (2014) LPELR-22311(SC) at pages 25 – 26 Par E – B

[14]             (1996) LPELR-414(SC) at pages 29 – 30, Paras B – A,

[15]             (2012) LPELR-9339 (SC) PP. 39-40, Paras E-C)

[16]             (2004) LPELR – 1198 (SC) at pages 19 – 20 Paras F – B

[17]             Section 3(1)(a) – (e)

[18]             (2010) LPELR – 4689 (CA) at page 11D – F.

[19]             [1975] WRNLR 187  

[20]          (1986) 5 NWLR (Pt. 45) 828 at 870 – 871

[21]              Section 197

[22]             Tenth Edition at page 421                                                                             

[23]             (2001) LPELR 1480 (SC) at 13E – F.

[24]             (1973) AC 296 at 315

[25]

[26]             (2004) LPELR – 1198 (SC).

[27]             (2004) LPELR – 1198 (SC) at pages 36A – E

[28]              (2004) LPELR – 1198 (SC) at pages 73B – F.

[29]              (2006) LPELR – 1361(SC) P.21, PARAS. B-C.

[30]              (1991) LPELR – 225 (SC) at page 30C – D.

Data Privacy and Data Protection Law in Nigeria

The transformational value of data in today’s world cannot be overemphasised. The right to data privacy and protection is an internationally guaranteed right, which enjoys protection universally. Data protection is the process of safeguarding important information from corruption, compromise or loss…

 

ABSTRACT

The transformational value of data in today’s world cannot be overemphasised. The right to data privacy and protection is an internationally guaranteed right, which enjoys protection universally. Data protection is the process of safeguarding important information from corruption, compromise or loss. The importance of data protection increases as the amount of data created and stored continues to grow. Consequently, a large part of any data protection strategy is hinged on ensuring that data can be restored quickly after any corruption or loss. Protecting data from compromise and ensuring data privacy are other key components of data protection; however, where there are no laws to enforce in the event of breach, the value of those rights is lost. In order to uphold the sanctity of these rights, sovereign nations of the world put in place regulations and other mechanisms to guarantee them. Nigeria is not left out in this global community of data privacy and protection regulation. This paper seeks to evaluate the laws which regulate and protect data in Nigeria and how they could impact her data privacy and data protection regime.

 

Keywords: Data Protection, Data Privacy, Safeguards, Corruption, Compromise.

 

  1. INTRODUCTION

This paper seeks to interrogate the significant provisions of the National Information and Technology Development Agency Regulation (NITDA Regulation) that impact data protection and data privacy in Nigeria. The challenge of securing data privacy/protection is a worldwide phenomenon. The NITDA Regulation is Nigeria’s most comprehensive attempt yet to tackle this phenomenon and to bring it within tolerable limits.   

The world’s most valuable asset is no longer oil, but data.[i][1] Data has been described as individual units of information, which may be measured; collected and reported; stored and analysed. In computing, data is information that has been translated into a form that is efficient for movement or processing.[2] Data is considered to be the ‘oil’ of the digital era.[3] The world’s most valuable companies include tech giants such as Google, Apple, Facebook and Amazon (GAFA) and Baidu, Alibaba and Tencent (BAT) whose subscribers are routinely required to provide their data to facilitate access. The internet and smartphones have contributed significantly to making data more valuable, available and abundant. Almost every human activity generates a digital trace. For example, our heart beat, our pulse, a running event, navigating through traffic are all activities which produce data when connected to the internet. The more cars, watches and phones that are connected to the internet the more data that can be generated. Artificial Intelligence through algorithms has become so smart today that they can now review contracts, conduct legal research and mediation, predict exposure to disease and determine when a machine needs servicing. The data industry has demonstrated such exponential growth that certain multinationals now position themselves as data purveyors and merchants.

 

Typically, internet subscribers and social media users are required to provide personal data and sensitive information to facilitate access and use of these platforms. Almost all transactions conducted online require the release of some form of personal data. Although, social media users are often advised of data privacy terms, they do not necessarily preclude the use or sharing of such personal data in specified circumstances. This introduces the risk of having personal sensitive information being potentially shared with or sold to high level security agents or blue-chip companies to enable surveillance and data gathering.

 

According to a survey by McAfee, more than 40% of people worldwide are of the view that they lack control over their personal data, and one–third of parents do not know how to explain online security risks to their children.[4] In 2008, there was widespread information regarding how top brands such as Facebook, Panera Bread and Sacramento Bee experienced data breaches that exposed several millions of personal records to abuse by criminals.[5] There appears to be a lucrative market for data, and hackers tend to sell data they steal to professional scammers.

 

These worrying statistics and developments have generated widespread concerns around how to improve security frameworks over the personal data we provide, in the knowledge that data protection laws never fully offer complete protection against malicious attacks and users are best advised to understand the basics of data privacy and how to protect themselves. Google, Uber and Facebook have experienced breaches of the private data of users over the years and, on each occasion, these supposedly trusted companies failed to report/disclose the breaches (when they occurred) to enable customers take steps to protect themselves. The failure by these companies to disclose data privacy violations when they should have, underscores the importance of users taking personal data security as their personal responsibility.

 

The General Data Protection Regulation (EU) 2016/679 (‘GDPR’) and the 2018 reform of the GDPR are regulations under EU law concerning data protection and privacy for all individual citizens of the European Union (EU) and the European Economic Area (EEA). It also deals with the export of personal data outside of the EU and EEA. In Nigeria, while there are several legislations containing ancillary provisions which seek to protect data privacy, the most comprehensive statutory instrument for this purpose is a subsidiary legislation made pursuant to the National Information Technology Development Agency Act, 2007 (‘NITDA Act’). The NITDA Act empowers the National Information Technology Agency (NITDA) to inter alia develop guidelines/regulations for electronic governance and monitor the use of electronic data interchange in both the private and public sectors of the economy.[6] Deriving from this provision, NITDA then developed and issued the 2013 Guidelines for Data protection and thereafter, the Nigeria Data Protection Regulation 2019 (‘NITDA Regulation’), which is the extant body of rules regulating the subject in Nigeria. A significant feature that distinguishes the NITDA Regulation from other legislation in Nigeria is the element of it being a data protection-specific body of rules as opposed to it being an ancillary provision in a legislation which is not primarily concerned with data privacy protection.

 

  1. RELEVANT LEGISLATION IMPACTING DATA PROTECTION AND DATA PRIVACY UNDER NIGERIAN LAW

Based on the functions of the Governing Board, National Information Technology Development Agency,[7] NITDA would appear to be the apex regulator for data privacy and protection in Nigeria. However, this is without prejudice to the powers exercisable by the regulators listed in the specific legislations which have data privacy and protection provisions, regarding their enforcement of those provisions in the manner set out in the legislations creating them. The provisions contained in the NITDA Regulation do not also affect the existing rights of natural persons or Nigerians under any other extant law, regulation, policy or contract.[8]

 

2.1       NITDA Regulation

In Nigeria, while there are several legislations containing ancillary provisions which seek to protect data privacy, the most comprehensive statutory instrument for this purpose is a subsidiary legislation made pursuant to the NITDA Act. The NITDA Act empowers the National Information and Technology Agency (NITDA) to issue guidelines to cater for electronic governance and monitoring the use of electronic data exchange. Deriving from this provision, NITDA then developed and issued the Nigeria Data Protection Regulation 2019. A significant feature which distinguishes the NITDA Regulation is that it is a data privacy and protection-specific body of rules as opposed to it being an ancillary provision in a legislation whose primary objective is not data protection.

 

2.2       The 1999 Constitution of the Federal Republic of Nigeria

As is applicable to most jurisdictions, Nigeria’s data privacy and data protection regime emanates from the fundamental legislation of the land i.e. the Constitution of the Federal Republic of Nigeria 1999, as amended (“the Constitution”), which, by virtue of section 37 thereof protects the rights of citizens to their privacy and the privacy of their homes, correspondence, telephone conversations and telegraphic communication. Data privacy and protection are thus extensions of a citizen’s constitutional rights to privacy. 

 

2.3       The Child Rights Act

Nigeria adopted the Child Rights Act (CRA) in 2003 to domesticate the United Nations Convention on the Rights of the Child, which is a human rights treaty designed to guarantee the civil, economic, political, social, health and cultural rights of children. The CRA is a legislation to provide for and protect the rights of a Nigerian Child, who is defined as a person under the age of 18 years. Section 3 of Part II CRA incorporates by reference the provisions of Chapter IV of the Constitution, which deal with the fundamental rights of citizens. Also, section 8 of the CRA which covers a child’s rights to private and family life states that a child is entitled to his privacy, family life, home, correspondence, telephone conversations and telegraphic communication. 

 

2.4       Freedom of Information Act 2011(FOIA)

The purpose of the FOIA is to make public records and information held by Government agencies more freely accessible by the public. However, it specifically makes an exception with respect to personal records and information and matters concerning personal privacy.  In this regard, section 14 of the FOIA limits Government agencies from disclosing the personal information of citizens unless the individual’s consent is obtained, or the information is publicly available.

 

2.5       Cybercrimes (Prohibition, Prevention etc) Act 2015 (CPPA)

The fundamental purpose of the CPPA is to establish a framework for the prohibition, prevention, detection, prosecution and punishment of cybercrimes in Nigeria. It imposes an obligation on mobile networks, computer and communications service providers to store and retain subscriber information for a period of two years. Significantly, it requires such service providers to accord premium to an individual’s right to privacy as enshrined in the Constitution and to take steps towards safeguarding the confidentiality of data processed. 

 

2.6       Central Bank of Nigeria Consumer Protection Framework 2016 (CPF)

The Central Bank of Nigeria (CBN), in furtherance of its mandate to promote stable financial system, established the CPF to, among other objectives, engender public confidence in the financial system. The CPF itself is a subsidiary legislation made pursuant to the Central Bank of Nigeria Act 2007 (CBN Act) as amended and the Banks and Other Financial Institutions Act, 2007 (BOFIA). The provisions of section 3.1(e) of the CPF are to the effect that consumer information must be protected from unauthorised access and disclosure. In order to enable disclosure, financial services institutions are required to obtain written consent of customers before their data may be shared with third parties or for promotional purposes.

 

2.7       The Nigeria Communications Commission (Registration of Telephone Subscribers) Regulations 2011 (NCC Regulations)

Pursuant to section 70 of the Nigerian Communications Act 2003 (NCA 2003), the NCC is empowered to make and publish regulations concerning multiple subjects including but not limited to permits, written authorisations, licenses, offences and penalties relating to communication offences. Drawing from this authority, the NCC issued the NCC Regulations which apply to telecommunications companies. Regulation 9 of the NCC Regulations specify that, in furtherance of the rights guaranteed by section 37 of the Constitution and subject to any guidelines issued by the NCC or a licensee, any subscriber whose personal information is stored in the Central Database is entitled to request updates;[9] to have the data kept confidential;[10] not to have subscriber information duplicated except as prescribed by the NCC Regulations or an Act of the National Assembly;[11] and to preserve the integrity of the subscriber’s information.[12] Also, licensees are required to utilise subscriber’s information in accordance with the law;[13] likewise, licensees and other named parties are required not to retain biometrics of any subscriber after transmission to the Central Database.[14] Regulation 10 of the NCC Regulations is to the effect that any release of the personal information of a subscriber must be subject to the consent of the subscriber or in accordance with the provisions of the Constitution of the Federal republic of Nigeria or any other Act of the National Assembly or the NCC Regulations as may be amended from time to time. 

 

2.8       The Credit Reporting Act 2017 (CRpA)

The CRpA was enacted for the purpose of improving access to credit information and standardising risk management in credit transactions. It provides the framework for credit reporting, licensing and credit bureaux. Section 9 of the CRpA is to the effect that Data Subjects i.e. persons whose data are maintained by credit bureaux, shall be entitled to the privacy, confidentiality and protection of their credit information subject to certain exceptions listed under section 9(2) to 9(6) of the CRpA.

 

  1. A REVIEW OF THE NIGERIA DATA PROTECTION REGULATION 2019

The objectives of the NITDA Regulation are to safeguard the rights of natural persons to data privacy, foster the safe handling of transactions which involve the exchange of personal data, prevent acts of manipulation relating to personal data, and ensure that Nigerian businesses remain competitive in the international market place through adoption of legal and regulatory frameworks which secure personal data and meet standards of international best practices.

3.1       Scope of Application

The data protection provisions embodied in the NITDA Regulation extend to all transactions regarding processing of personal data irrespective of the means, all natural persons residing in Nigeria or natural persons outside Nigeria who are citizens of Nigeria, in so far as the operation of the NITDA Regulations does not impair the privacy rights of natural persons or Nigerians under other extant laws, regulations, policies or contracts. 

 

3.2       Governing Principles of Data Processing

Personal data should be collected and processed observing specific, lawful and legitimate purpose as consented to by a Data Subject i.e. owner of the data being collected and processed:

  1. Personal data shall be adequate, accurate and respect dignity of the human person; 
  2. Storage of Personal data should be on a need-to-retain basis; 
  3. Personal data should be secured against foreseeable hazards; 
  4. The custodian of personal data owes a duty of care to the Data Subject; 
  5. The custodian of personal data is accountable for his acts or omissions; 
  6. Lawful Processing of Personal Data.

The conditions under which Personal Data would be deemed to have been lawfully processed have been highlighted below:[15]

  1. Where consent of the Data Subject has been procured;
  2. Where processing is necessary for the performance of contract to which the Data Subject is a party; 
  3. Where it is required for compliance with a legal obligation which the Data Controller i.e. the person or body of persons who determine the purposes for which and manner in which Personal Data is being or to be processed, is required to discharge; 
  4. Where it is required to protect the vital interests of the Data Subject; 
  5. Where it is required for carrying out a task in the public interest or in the exercise of an official public mandate imposed on the Data Controller.

3.3       Procuring Consent from a Data Subject

The NITDA Regulation prescribe the circumstances under which consent may be extracted from a Data Subject as follows:[16]

The specific purpose of collection of Personal Data must be made known to the Data Subject before his consent may be secured and deemed lawful;

The Data Controller is obliged under the law to ensure that consent of the Data Subject is obtained without fraud, coercion or undue influence; and in doing so, regard must be had to the legal capacity of the Data Subject, whether the Personal Data consented to be unambiguous. The Data Subject must be aware of his right to withdraw his consent at any time (provided that he is bound by acts carried out pursuant to initial consent before withdrawal), and also, the nature of the consent must be examined, to determine whether it is conditional or excessive for the performance of the contract, and whether data is transferable to a third party under a contract.

 

 

3.4       Privacy Policy to be Displayed

All media through which Personal Data is being collected must display in a simple, conspicuous and understandable manner, their applicable privacy policy. The minimum requirements for such a privacy policy are as set out below:[17]

  • What represents consent for the Data Subject;
  • Description of personal information that is collectible;
  • Purpose of Personal Data being collected;
  • Technical methods deployed to source and store personal information, cookies, web tokens etc.;
  • Whether third parties have access, and if so, nature of;
  • Principles governing data processing;
  • What remedies can be resorted to in the event of breach of privacy policy;
  • Limited period for exercising remedy;
  • No limitation clause would avail any Data Controller who is in default of the NITDA Regulation.

 

3.5       Data Security and Third-Party Data Processing Contract

The NITDA Regulation imposes an obligation on persons involved in data processing or control of data to develop security measures to protect data including safeguards against hackers, setting up firewalls, employing data encryption technologies and similar approaches.[18] 

NITDA Regulation provides that data processing by third parties should be governed by written contracts between such third parties and the Data Controller. [19]

 

3.6       Penalty for Default

Breach of the privacy rights of any Data Subject under the NITDA Regulation shall, apart from other criminal liability, attract, with respect to Data Controllers dealing with more than 10,000 Data Subjects, payment of a fine of 2% of annual gross revenue of the preceding year or payment of N10 million, whichever is greater; and with respect to Data Controllers dealing with less than 10,000 Data Subjects, a fine of 1% of the annual gross revenue of the preceding year or payment of ₦2 million, whichever is greater.[20] 

 

3.7       Transfer of Personal Data to a Foreign Country and Exceptions

NITDA Regulation circumscribe the manner in which the transfer of Personal Data to a foreign country is to be effected. While observing the provisions of the Regulation and conducting such transfers under the supervision of the Honourable Attorney General of the Federation (HAGF), the following considerations shall be taken into account:

  1. The foreign country provides an adequate level of protection;
  2. Legal system and enforceability of human rights in the foreign country;
  3. Effectiveness of supervising authority for data privacy in the foreign country;
  4. International commitments of the foreign country with respect to protection of Personal Data.

In the absence of a decision by the HAGF as to the adequacy of the above considerations, such transfers shall only take place where consent of the Data Subject has been secured; transfer is necessary for the performance of a contract or is required for the performance of a public interest purpose; or in establishment, exercise or defence of legal claims or in defence of the vital interests of the Data Subject.

 

3.8       Rights of a Data Subject

The NITDA Regulation provide elaborately for the rights of the Data Subject and these rights include the minimum requirements for processing personal data, right of the Data Subject to be informed of appropriate safeguards for data protection, rights of the Data Subject to request deletion of personal data in appropriate cases and reiteration of the protection of fundamental rights as afforded by the constitution of the Federal Republic of Nigeria.

 

3.9       Implementation Mechanism           

The NITDA Regulation has established rules which govern the manner in which the provisions of the Regulation should be implemented. The major planks on which implementation rests are discussed below.[21]

All public and private organisations in Nigeria that control the data of natural persons must publish to the general public their respective Data Protection Policies within three months of issuance of the NITDA Regulation.

Furthermore, a Data Protection Officer shall be designated by every Data Controller to ensure adherence with the provisions of the NITDA Regulation and such Data Controllers are required to ensure continuous capacity building for Data Protection Officers;

NITDA shall register and license Data Protection Compliance Organisations (DCPOs), which shall have responsibility for monitoring, auditing, training Data Controllers on its behalf.

All organisations are required to, within six months of the issuance of the NITDA Regulation, conduct an audit of its privacy and data protection practices having regard to the provisions of the Regulation. Also, where a Data Controller processes the Personal Data of more than 1000 Data Subjects over a six-month period, a soft copy of the summary of the audit mentioned above should be submitted to NITDA.

Finally, on an annual basis, Data Controllers who manage the Personal Data of over 2000 Data Subjects over a twelve-month period, shall no later than 15 March of the following year, submit a summary of the Data Protection audit in the manner specified by the Regulation to NITDA.

 

  1. EFFECTS OF THE PROVISIONS OF THE NITDA REGULATION AND ITS STATUS IN THE NIGERIAN DATA RIVACY AND DATA PROTECTION REGIME

The establishment of NITDA Regulation is one deserving of commendation by all. It is, indeed, the most elaborate attempt by Nigeria to codify the private right to data and its protection. What this portends is that it provides confidence to all stakeholders, local and foreign, who seek to invest and do business in Nigeria that it has data laws comparable to any in the world. It represents an important step towards keeping abreast with the digital revolution and a stamp of approval for the value of safeguarding digital rights within Nigeria. Nigeria’s technological advancement is perennially on an upward trajectory and the net effect of embracing a comprehensive data privacy and protection regime will manifest in a number of positive ways, some of which we have attempted to highlight in the paragraphs that follow.

 

4.1       Upholding and Guaranteeing the Right to Privacy

The adoption of a data privacy and protection legislation is an acknowledgement of the right of persons to preserve those rights as guaranteed under the Nigerian constitution. This promotes information exchange and development of our digital economy space.

 

4.2       Reinforcement of Nigeria’s Cyber Security Regulations

With the establishment of NITDA Regulation, Nigeria has assumed a definitive stand on the war against cybercrimes, which has become a domestic and cross-border menace. It has placed Nigeria as a respectable member of the comity of serious-minded nations who are committed to stamping our cybercrimes or, at least, mitigating the debilitating consequences they wreak on several economises across the world. It is important to mention that security upgrades in networks, servers and infrastructures have been a primary source of cyber protection along with other policy and security changes until recently. The passing of the NITDA Regulation has directly impacted data privacy and security standards while also indirectly encouraging businesses to develop and improve their cyber security measures, limiting the risks of any potential data breach.

 

4.3       Uniformity of Data Protection

Prior to the establishment of the NITDA Regulation, it was safe to assert that Nigeria had no uniform or comprehensive body of rules regulating data privacy and protection save for those earlier highlighted in this paper. The NITDA Regulation has thus, brought about a sense of sanity and standardisation in this space which satisfy international expectations.

4.4       Premium Budgeting for compliance with NITDA Regulations

With consequential enforcement action, this legislation provides a credible basis for cracking down on offenders for non-compliance with its provisions. We expect that companies will increasingly channel resources towards bringing their operations in alignment with the provisions of the NITDA Regulation including appointment of Data Protection Officers.  

 

4.5       Reforms in Marketing

Marketers have, typically, relied heavily on the personalised data gathered from our internet practices and tendencies to reach target markets and shape their campaigns. They will have to get explicit permission to use personal data and be clear about how they gather that information, going forward. The changes and increased barriers brought about by data privacy laws may turn some in-house marketing teams and agencies back to traditional marketing methods.  Also, many sites charge their users nothing to use their site but will pay to keep everything running by selling data about their users to advertisers. Some speculate that there may be an increase in sites charging for memberships and subscriptions to maintain their sites without the free data. 

 

  1. CONCLUSION

Without question, the NITDA Regulation constitutes a transformational attempt to radicalise the data privacy and protection regime in Nigeria. As shown in this paper, several countries of the world have adopted the principles set out in the internationally recognised standards of the GDPR in formulating their domestic laws in this area. Nigeria has similarly followed suit and come up with the NITDA Regulation which encapsulates wholesale changes to what hitherto existed.

We expect a paradigm shift in the way corporations and individuals carry on business and interact with respect to the data in their possession. While we have highlighted scenarios that could landscape this space in a post-NITDA Regulation era, we challenge the government to ensure that its provisions are effectively enforced. A robust enforcement framework primed to give teeth to its provisions will, in our view, enable realisation of its promise.

This article was authored by Uche Val Obi, SAN; Managing Partner, Alliance Law Firm.

 

 

REFERENCES

[1] The Economist, ‘The World’s Most Valuable Resource is no Longer Oil, but Data’   Economist (6 May 2017) <https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data> accessed 25 October 2019

[2] Jack Vaughan, ‘Guide to telling stories with Data: How to share analytics insights’ (Techtarget, July 2019) <https://searchdatamanagement.techtarget.com/definition/data> accessed 25 October 2019

[3] The Economist (n 1)

[4] The Manifest; ‘Data Privacy Concerns: An Overview for 2019’ <https://medium.com/@the_manifest/data-privacy-concerns-an-overview-for-2019-2ccea79aa6f8> accessed 5 August 2020

[5] ibid

[6]  NITDA Act, s 6(c)

[7] NITDA Act, s 6(a) – (n)

[8]NITDA Regulations, Paragraph 1.2(c)

[9] NCC Registration of Telephone Subscribers, reg 9(1)

[10] ibid reg 9(2)

[11] ibid reg 9 (3)

[12] ibid reg 9(4)

[13] ibid reg 9(5)

[14] ibid reg 9(6)

[15] NITDA Regulation, para 2.2(a-e)

[16] ibid paras 2.3 (1) & (2)

[17] ibid para 2.5(a) – (i)

[18] ibid para 2.6

[19] ibid para 2.7

[20] ibid para 2.10

[21] ibid para 3.0(3.1)-(3.8)

Confronting The Menace Of Rape In Nigeria And Helping Survivors To Heal

In her book titled “The Purity Myth: How America’s obsession with Virginity is Hurting Young Women”, Jessica Valenti engages the trivialization of rape in society and how, typically, the victim tends to be blamed for playing a contributory role in her dehumanization and most excruciating experience. She posits as follows: “Now, should we treat women as independent agents, responsible for themselves? Of course. But being responsible has nothing to do with being raped. Women don’t get raped because they were drinking or took drugs. Women do not get raped because they weren’t careful enough. Women get raped because someone raped them.”

  1. Introduction

In her book titled “The Purity Myth: How America’s obsession with Virginity is Hurting Young Women”, Jessica Valenti engages the trivialization of rape in society and how, typically, the victim tends to be blamed for playing a contributory role in her dehumanization and most excruciating experience. She posits as follows: “Now, should we treat women as independent agents, responsible for themselves? Of course. But being responsible has nothing to do with being raped. Women don’t get raped because they were drinking or took drugs. Women do not get raped because they weren’t careful enough. Women get raped because someone raped them.”

The American experience on rape issues is a prototype of societal sentiment in Africa, perhaps even direr, especially in Nigeria.  The notion that, somehow, when a person gets raped in Nigeria, (statistically, usually a woman) the victim must share in the causative factors leading up to the despicable conduct of their violators, has, historically, been partially responsible for the general reluctance of survivors to step out of their closets to report the crime. This should not be the case in any developing society that seeks to enthrone a framework of accountability for the actions of adult members of society.

As in America, rape is grossly underreported in Nigeria owing to fear of reprisal, victim shaming and as alluded to the above, the blame – allocation to survivors. Nonetheless, on June 15, 2020, at a press conference with State House correspondents at State House, Abuja, the Inspector General of Police in Nigeria, reported that 717 rape cases were recorded between January and May 2020. He stated further that 799 suspects had so far been arrested, while 63 cases had been conclusively investigated and charged to court, with 52 cases still under investigation.[1]

The advent of the Covid 19 pandemic has led the Federal Government of Nigeria to impose a bouquet of public health measures including social/physical distancing protocols, enhanced personal hygiene practices and varying levels of lockdowns across the country. Disturbingly, since then, there has been an increase in reported cases of sexually-related offences which include acts of sexual violence, statutory rape, defilement, sexual abuse and harassment. However, this article is focused primarily on the criminal behavior of rape and defilement.

In Nigeria, there are several laws in place regulating sexual conduct and related offences. These are codified mainly in the Criminal Code, Penal Code, Childs Rights Act and Violence against Persons (Prohibition) Act. As we know, the existence of these various legislations has not resulted in curbing the incidence of these sexual offences as there still exists an increasing number of reported cases which, it would seem, have spiked significantly during this pandemic. For instance, the Lagos State Government-run Domestic and Gender Violence Response Team (“DGVRT”) recently reported that it had been besieged with increased reports of sexual violence since the start of the lockdown in March, 2020. In fact, the DGVRT reported that before the lockdown, an average of 8 cases was being received daily but that since the lockdown the number had increased to about 13 new cases daily. The DGVRT also stated that the team had received 390 reports in March, 2020 alone which signified a 30 percent rise in cases of sexual violence.[2]

A number of reasons have been adduced or are responsible for this surge, details of which will be considered in the course of this piece. It bears mentioning at this juncture that governments with high incidence of rape cases need to look beyond just legislation to fix the problem; they would also need to consider deep cultural and social dysfunctions within their societies that either encourage sexual violence or do not prevent it.  The continuing menace of sexually related offences in our society exacerbated by the recent surge in such cases is the primary motivation for this article. Victims and survivors have had to bear the unusual burden of being presumed guilty until proven honest, when that burden should ordinarily reside with an assailant. This article helps to illuminate, inter alia, some of the more pressing issues relating to rape and defilement in our society and how survivors can be assisted to heal, recover and reintegrate into society as valuable contributors and not as damaged or bitter stakeholders.

 

  1. What is rape?

Rape is defined as the unlawful carnal knowledge of a person without his or her consent, or with consent, if the consent is obtained by force or by means of threats or intimidation of any kind, or by fear of harm or by means of false and fraudulent representation as to the nature of the act.[3]  When the term ‘carnal knowledge’ or ‘carnal connection’ is used in defining an offence, it is implied that the offence, so far as regards that element of it, is complete upon penetration.[4]  Therefore to prove that the offence of rape has been committed, there must have been a complete act of penetration. The offence of rape is similar to that of defilement. Defilement is, in simple terms, the unlawful carnal knowledge of minors. Statutory rape, on the other hand, is a situation where an adult has ‘consensual’ sexual intercourse with a person who has not attained the statutory age of consent.

 

  1. Surge in incidence of rape

The Covid 19 pandemic and the attendant lockdown order mandated individuals to stay home and most non-essential businesses to temporarily shut down. As earlier alluded to, there has been an increased incidence of rape and defilement cases during the lockdown and a number of reasons have been adduced for this state of affairs. For instance, ActionAid Nigeria reported that since the lockdown in March, 2020, it had recorded 253 cases of gender-based violence in Bauchi, Cross River, Enugu, Kebbi alone, which data only represents the number of reported cases and does not, therefore, include cases not reported[5].

The European Institute for Gender Equality has identified this phenomenon as a global problem and has stated that, although women and men experience the increased gender-based violence, women and girls have, indeed, been worse hit. Consequently, the United Nations has sensitized countries across the globe regarding this development, which it attributes to forced proximity of people caused by the global lockdown. [6] Arguably, the inability of law enforcement agencies in Nigeria to devise effective strategies towards curtailing acts of violence amongst citizens has in turn resulted in the increase in cases of sexual violence which is evidenced in the nature and sheer brutality of the recently reported cases of rape and murder of girls and women, particularly in the month of May, 2020[7]. It is pertinent to state here that even before Covid 19 existed, sexual offences in Nigeria had been a matter of growing concern, however, it seemed to have taken a turn for the worse since the advent of the pandemic. [8]

 

  1. Reasons for surge and challenges associated with proof and prosecution of rape cases

The difficulty in prosecuting sexual offences in Nigeria has only worsened the rape pandemic as, in most cases, the perpetrators are allowed to walk free and emboldened to re-enact such despicable conduct on future unsuspecting victims. Some of these challenges in prosecuting sexual offences range from the reluctance of victims to report such crimes, the existence of loopholes in the relevant criminal laws relating to sexual offences, ignorance of persons on the proper procedures and channels to follow when such offences occur, the inability to prove such cases successfully when instituted, and the seeming reluctance of judicial authorities to impose the full punishment prescribed by law on convicted offenders.

The reluctance of victims of sexual offences to report cases is a major factor that has compounded the prevalence of such offences. This factor could be traced to the popular notion that a victim must have committed some contributory act (such as wearing clothes that exposed parts of their bodies, moving around late at night, visiting persons of the opposite sex alone etc.) that made him/her susceptible to that crime. The mainstreaming of this societal belief system that entails blaming the victim rather than the perpetrator, is in this writer’s view, at the heart of fixing this social menace: it undermines the effectiveness of any proactive step taken to tackle the problem. The recent case of a mother beating up and blaming her 2-year-old daughter for getting raped and paying no attention to the rapist is a classic case in point.[9] This discourages victims from speaking up as they reckon that their complaints would be treated with kid gloves by the Police.

Lacunas exist in our existing laws on sexual offences which militate against effectual prosecution of complaints.  For instance, the offences of rape and defilement are not gender specific, however, the Criminal Act and Penal Code[10], the prominent laws on sexual offences in Nigeria, both recognize females as the only gender capable of being abused sexually. These provisions make penetration of the vagina an essential element in establishing rape and allied offences. These provisions, in effect, automatically exclude from application cases of sexual abuse against males. The Criminal Code also regards a male below the age of 12 years as being incapable of having carnal knowledge.[11] In the author’s considered view, this provision is completely flawed and does not take into account present day realities in which male children of lower ages have been reported to be involved in such acts. Where the law does not recognize an act as an offence, how then can a victim of same obtain justice and how can such perpetrators be brought to justice?

Section 218 of the Criminal Code Act goes further to prescribe a limitation period within which such actions must be instituted. It provides for a period of 2 months within which an action must be brought after the commission of the act. The legal effect of this provision is that any action brought after the limitation period will not be sustainable in a court of law. This provision is an exception to the general rule that there is no time limit for the institution of criminal actions. Arguably, the purpose of this provision as to limitation might be to ensure that there is still reliable evidence linking an accused to the crime, however, this could be exploited by unscrupulous suspects or prosecutors who simply need to ensure that prosecution is delayed by every “legal” means available until expiry of the period limited, in order to enable suspects walk away free and prowl around town for their next victim.

Section 221 of the Criminal Code provides that anyone who has or attempts to have carnal knowledge of a girl above the age of thirteen and under the age of sixteen or a woman or girl of unsound mind is guilty of a misdemeanor and liable to imprisonment of 2 years with or without caning. This provision regards such acts as a misdemeanor as opposed to rape which it regards as a felony. It also prescribes a lesser offence for the commission of same as opposed to that of rape which is met with a punishment of life imprisonment. The section goes further to provide that the accused may rely on the defence that he believed on reasonable grounds that the girl was of or above the age of 16 years. This provision is further qualified by Section 222(c)[12] which requires that for an accused to rely on this defence he must be below the age of 21 years and had not been previously charged with such offence. Just like Section 218 of the Criminal Code, it insists that such actions be instituted within 2 months.

Also, the issue of marital rape is not envisaged or even covered by Nigerian Law. Interestingly, the two dominant laws on sexual offences intentionally exclude marital rape from their definition of rape[13].This is not the case in other jurisdictions such as  the States in US which have criminalized marital rape since the 1990s; reason being that, whether within marriage or outside it, sex is and should always be consensual. Also, African Countries like Angola, Cameroon, Gabon and Ghana have since adopted laws that condemn and criminalize marital rape. The reluctance to criminalize this offence in Nigeria has been attributed to her traditional views of marriage, interpretations of religious doctrines and ideas about male and female sexuality. It is, thus, not difficult to appreciate why acts of sexual violence between spouses tend to be accommodated/tolerated in Nigeria, ostensibly, on the foundational belief that marriage constitutes an act of permanent consent. Sexual violence between spouses tends to be worse in cases of child marriages, where the children are forcefully and sexually abused under the guise of the marriage institution. For instance, a case was recently reported of a minor who stabbed her husband to death for forcefully attempting to rape her without her consent.[14]

Another area in which the law has proven to be inadequate is the lack of convergence on the legally accepted age of consent. The Child Right’s Act prescribes 18 years as the age of consent and declares any act of sexual intercourse with any person below that age as unlawful and a criminal offence.[15] However, not all states have domesticated that law; in fact, about 12 Nigerian states, most of which are located in the Northern part of the Country, are yet to domesticate the same. The Penal Code prescribes 14 years as the age of consent as it provides that a child below the age of 14 is incapable of giving consent.[16] The Criminal Code has no specific provision on the age of consent, however, one could assume from the tenor of the Act that a person below the age of 13 is regarded as a child. There is need for harmonization of the age of consent for this purpose and for same to be operational throughout the country. This author proposes that the age of consent be no lower than 18 years, as a veritable tool for controlling sexual offenses against children, especially in cases of statutory rape.

The enactment of the Violence against Persons (Prohibition) Act, 2015, (VAPP Act) has helped to widen the scope and frontiers of sexual offences. For instance, it defines rape as the intentional penetration of the vagina, anus or mouth of another person with any part of his or her body or anything else.[17] By this definition, the victims of the offences of rape and defilement are no longer restricted to females but may now include males as it should be. It also recognizes the fact that any intentional penetration of the anus and mouth and not just the vagina constitutes rape. It goes further to introduce the establishment and operation of a register for convicted sexual offenders which is to be made accessible to members of the public. The provisions of this Act shall also supersede any other provisions on similar offences in the Criminal Code, Penal Code, and Criminal Procedure Code.[18] While this is an interesting introduction into our jurisprudence for name and shame purposes, it should be noted that this Act only applies to the Federal Capital Territory, Abuja and, by extension, only the High Court of the Federal Capital Territory has jurisdiction to hear and grant any application under this Act.[19]To their credit, similar laws have been enacted in some other states like Anambra, Ebonyi and Oyo while states like Ekiti[20] and Lagos State[21] already had pre-existing similar laws. It is recommended that other states of the Federation consider domesticating these principles by incorporating them in existing laws or enacting altogether new but similar legislations.

The Criminal Code, Child Rights Act and the Violence against Persons (Prohibition) Act provide for life imprisonment as the punishment for the offence of rape[22]. For the offence of defilement of a child, the Criminal code prescribes punishment of 14 years imprisonment. However, our courts tend to be reluctant to impose this punishment on offenders and instead opt for a reduced sentence. For instance, in Boniface Adonike v. The State[23], the Appellant was convicted and sentenced to six years imprisonment with six strokes of the cane for the offence of defilement of a five- year old child even though the law upon which the Appellant was charged prescribed life imprisonment for commission of the offence[24]. Similarly, in the cases of Afor Lucky v. The State, Segun v. The State[25] and Oludotun Ogunbayo v. The State (Supra); reduced sentences were imposed. This attitude of the courts being sympathetic to the culprits rather than the victims does not serve as sufficient deterrent to would-be rapists, especially, considering how condemnable and barbaric such acts are. For many victims and survivors, they may neither obtain a sense of closure nor be able to heal psychologically, in the knowledge that their assailants only received a smack on the wrists as retribution.  Our courts should be required to impose the full punishment prescribed by law as a means of signaling the strong sense of abhorrence her society feels towards such conduct.

Yet another factor contributing to this state of affairs is the unduly protracted nature of criminal proceedings in our courts and the dispute resolution mechanisms available in the land. Records show that there had been only about 65 rape convictions reported in the various law reports on sexual offences from 1973 to 2019[26]. Also, that although 283 cases of defilement were reported in Lagos in 2011, only 10 were prosecuted and convicted.[27]

It is instructive to note that, typically, prosecutors find it difficult to successfully prove rape during criminal trials. This difficulty could be traced to the usually private nature of the offence and the stealth involved in consummation of the crime.  Even in cases where there are witnesses to the offence, such victims are still required to prove that penetration occurred, which is no easy task. In cases where there are no witnesses or absence of medical evidence of penetration, it then revolves around the probative value that a court of law accords the evidence provided by a victim as against that of an accused person. In order to facilitate less cumbersome proof of the offences under consideration and to discharge the burden imposed by law, the following factors must be taken into consideration:

 

4.1       Medical examination

Victims of rape and other acts of sexual violence are encouraged to undergo medical examination immediately after the act. A medical examination will involve a simple examination of the victim by a medical practitioner to confirm the fact that indeed there was penetration or other assault of any kind. This examination is usually followed by a medical report which will be tendered in court to prove the offence. This is important because it provides evidence that the victim had been abused and states in details the extent of the abuse. The provision of a medical report provides evidence that establishes one of the most essential ingredients of a sexual offence, which is the fact that sexual intercourse occurred. This evidence must be definitive in its description of the offence as the court may be reluctant to grant a conviction where a medical report is ambiguous or vague in details.

It is important to state here that the ability to produce a medical report does not in itself provide irrefutable proof of rape; as with other evidence, same must be proved beyond reasonable doubt before a court of law. The medical practitioner who prepared the report would be called upon to give evidence and be cross-examined on it. Where it is, however, proved to be genuine, the same would constitute good and credible evidence upon which the courts may convict, especially, when it fits into the timeline of events. The procurement of DNA evidence from the victim during medical examination in cases of rape and defilement can, however, create irrefutable evidence that the offence was, indeed, committed by a Defendant where the DNA obtained from the victim is found to match that of the Defendant.

 

4.2       Statement to the Police.

Victims of the offence are also encouraged to file a statement with the Police immediately after the offence is committed. This statement is a narration of the details of the offence which will then be signed and dated by the victim as well as the Investigative Police Officer (IPO). Also, after a crime is reported, the IPO is expected to conduct an investigation by visiting the scene of the crime and making a report based on his findings. Details such as torn clothes, existence of semen in clothes, noticeable bruises on the victims are to be included in the report and such material evidence would be collected by the Police and kept as evidence pending when they could be tendered in court. This will amount to good and useful evidence that could be relied on by the courts in establishing the offence of rape.

4.3       Any other evidence that corroborates the evidence of the victim.

Corroboration simply means independent evidence tending to support and strengthen other evidence before the court and confirm in some material aspect that the accused committed the offence. Corroboration need not only be the testimony of a witness, it may be in the form of a medical report, testimony of a medical practitioner that examined the victim immediately after the act, a Police report from scene of crime, authentic footage from CCTV cameras or authentic video or audio files (strict compliance with section 84 Evidence Act, 2011) establishing the offence. It should be noted that the absence of the above will not in itself prevent the court from convicting [28](except where the testimony is from a child below the age of 14[29]); rather, its existence could make the courts more inclined to convict an accused.

Where a victim is armed with both a medical and a Police report, both linking the accused to the crime, the same may be deployed in court to prove the offence. Where an action has been instituted, the prosecution must prove beyond reasonable doubt that there was sexual intercourse between the victim and the accused (to prove this, the prosecution must establish that there was penetration), that the act of sexual intercourse was carried out without the consent of the accused person. Where the victim is a child, the prosecution must prove, in addition to the above, that the victim of the offence was a child at the time the offence was committed.[30]

 

  1. Recommendation.

The scourge of rape and defilement in our society isn’t about to go away unless society adopts deliberate steps to understand its socio-cultural causes and what legislative and institutional reforms are required to contain and ultimately reduce it. Assailants, typically, leave their victims physically and emotionally traumatized. Some survivors are scarred for life and become psychological wrecks. Given the criminal nature of the act and the stigmatization associated with survivors, efforts towards finding sustainable solutions would require a multi-dimensional approach. I have considered and hereby propose the following action points for general application across the country.

 

5.1       Sex offenders’ register

This is a register of all convicted sexual offenders in any given country or state as the case may be. This system enables government authorities to monitor and keep track of the activities of sex offenders including those who have completed their sentences. In some jurisdictions, convicted sexual offenders may be required to notify persons living close to or around their residential areas of the fact that they are sex offenders as a means of helping their neighbors be on guard against them.[31] Child sex offenders may be restricted from living in certain residential areas including those in close proximity to schools, day cares and residential areas with a lot of under aged children. In some jurisdictions, sex offenders may be restricted from using the internet freely and from joining certain social media platforms. While, in most countries, these registers are usually only accessible by law enforcement agencies, in the United States, the registry is open and accessible to the public and can be accessed from anywhere in the world as the details are uploaded online.[32] Nigeria does not have any standard sex offender registry. In fact, the only law that makes reference to the operation of a sex offender registry is the VAPP Act, which is not enforceable in all states of the Federation and even the states where it is applicable are yet to fully domesticate and operationalize same. It is hoped that the introduction of “naming” and “shaming” of sex offenders, which a sex register affords society, will help redefine the unhelpful narratives about rape victims and discourage persons with such proclivities from actually consummating such offences. A paradigm shift from victim-shaming to offender-shaming will help raise societal consciousness about the debilitating and multiplier effects of rape on victims, their families and the communities they live in.

5.2       Public Education and Enlightenment

There is need for a comprehensive sensitization program to be undertaken through both the print and electronic media, digital channels and the organization of seminars, workshops and campaigns in schools, churches, mosques and other religious gatherings, hospitals, social and cultural clubs and groups, to educate society about the major fallacies relating to sexual related issues and how they can be properly addressed. These would help change the negative narratives about sex and educate people on acceptable sexual behaviors within our communities. Also, sex education for children and adults in order to inform them of their rights and limits on sexual related issues should be encouraged. Parents should also pay closer attention to children and teach them the accurate names of private body parts as this will empower them to understand their bodies, ask questions and report any behavior that could lead to sexual abuse.

 

5.3       Reform of existing laws relating to rape

There is a case to be made out for reform and amendment of existing laws on sexual offences so as to provide wider and better protection for victims of gender-based sexual violence. With respect to child-related sexual offences, it is important to raise the ante pursuant to ensuring that children are protected from this scourge and persons with such predispositions are deterred from actualizing their aims. It bears reiteration that the laws protecting children in Nigeria are either not fully operational or not properly enforced in the states where they have been enacted. Also, there should be stiffer and more severe punishment for the abuse of children as opposed to the usual slap on the wrists that offenders receive. Existing laws like the Child Rights Act and the Violence against persons (Prohibition) Act, should be operational in all states in Nigeria. It would help if the security architecture in the country is revisited with a view to improving the level of security and quality of life that citizens are entitled to take for granted under the social contract principle.

5.4       Support from Counselling and Rehabilitation Centres

Dealing with the aftermath of sexual violence is critical to the process of healing, rehabilitation and reintegration into society of survivors. There are organizations dedicated to providing the necessary assistance to victims. Victims of sexual offences are encouraged to get help from centers and organizations dedicated to providing multi-dimensional and multi-level assistance and support services ranging from provision of access to forensic medical assistance, pro bono legal aid as well as rendering of professional counselling services to victims. These organizations also try to encourage victims of rape to speak up so that the perpetrators can be brought to justice, named and shamed. Some organizations and centers include the Mirabel Centre[33], Women at Risk International Foundation (WARIF)[34] and Sexual Offences Awareness & Response Initiative (SOAR)[35].

Other non-governmental and non-profit organizations are encouraged to throw their weight behind the movement to stamp out, or at least, significantly reduce the menace of rape and defilement in our society. Where innocent persons have been brutalized by sexual predators, it is important for society to continue to enlarge the support system available for healing and rehabilitation. The alternative is to grow an increasing pool of bitter, rebellious and anti-social victims waiting to unleash vengeance on a society perceived to be unfeeling, uncaring and aloof. This is a “community” that society can ill-afford to breed. The time to act is now and act we must!

 

This article was authored by Ebele Iyayi and Pearl Eriyamremu, both of whom practice at Alliance Law Firm.

 

REFERENCES:

[1] Nigeria Records 717 Rape Cases in Five Months – Official; https://allafrica.com/stories/202006150851.html; accessed 1st July 2020.

[2] https://www.premiumtimesng.com/news/top-news/395296-amidstcovid-19-lockdown-nigeria-sees-increased-sexual-and-gender-violence.html accessed 10th June 2020.

[3] Section 357 Criminal Code Act

[4] Section 6 Criminal Code Act

[5] https://businessday.ng/news/article/actionaid-records-253-cases-of-gender-based-violence-in-bauchi-cross-river-others/ accessed 10th June 2020.

[6] Amidst COVID-19 Lockdown, Nigeria Sees Increased Sexual and Gender Violence; https://pulitzercenter.org/reporting/amidst-covid-19-lockdown-nigeria-sees-increased-sexual-and-gender-violence; accessed 1st July 2020.

[7] The recent cases of Uwa Omozuwa who was raped and killed in a Church, Tina Ezekwe, a 12 year old girl gang raped by 12 men for 2 months, and Barakat Bello, an 18 year old girl who was raped and killed at her home, comes to mind.

[8] See note 6

[9] <https://www.lindaikejisblog.com/2020/6/nigerian-mother-beats-blames-and-calls-her-2-year-old-daughter-an-ashawo-after-being-raped-video.html> accessed 8th June, 2020

[10] Section 357 of the Criminal Code Act, Section 282 Penal Code, Section 218 Criminal Code Act.

[11] Section 30 Criminal Code Act

[12] Criminal Code Act

[13] Section 6 Criminal Code Act, Section 282 Penal Code

[14] http://saharareporters.com/2020/05/22/17-year-old-wife-admits-murdering-husband-bauchi> accessed 31st May, 2020.

[15] Section 31 Child Rights Act.

[16]Section 282(1)(e) Penal Code  Naan Upahar & anor v. The State(2002) LPELR – 5937(CA)

[17] Section 1 Violence against Persons (Prohibition) Act, 2015

[18] Section 45(2) Violence against Persons (Prohibition) Act, 2015

[19] Section 27 Violence against Persons (Prohibition) Act, 2015

[20] Ekiti State Gender-Based Violence Prohibition Law 2011

[21] Lagos State protection against Domestic Violence Law, 2014

[22] Section 358 Criminal Code Act, Section 31 Child Rights Act, Section 1(2) Violence against Persons (Prohibition) Act, 2015

[23] (2015) LPELR- 24281(SC)

[24] Section 218 Criminal Code Law of Delta State

[25] (2016) LPELR – 40541 (SC); (2011) 3 NWLR (Pt. 1382) 96

[26] https://www.icirnigeria.org/fact-check-no-it-isnt-true-nigeria-has-recorded-only-18-convictions-in-rape-cases/> accessed 8th June, 2020

[27] Ibid

[28] Oludotun Ogunbayo v. The State (2007) LPELR – 2323 (SC), where the Supreme Court held that it is not a rule of law that an accused cannot be convicted on the uncorroborated evidence of the prosecutrix.

[29] Section 209 Evidence Act 2011

[30] Chima Ude Oka v. State (2018) LPELR- 43914 (CA) PP 27 -31 paras C-C

[31] https://en.m.wikipedia.org/wiki/Sex_offender-registry accessed 1st July, 2020

[32] Ibid

[33] Located at Lagos State University Teaching Hospital (LASUTH) Ikeja, Lagos Open from 9am – 5pm – Monday – Friday, and 10am – 4pm on weekends & Public Holidays. They can also be reached on these numbers: 07013491769, 01-2957816, 08176275732, 08176275695; and on Twitter: @MirabelCentreNG and Facebook: , website, http://mirabelcentre.org/

[34] https://warifng.org/

[35] https://soar.org.ng/

The National Insurance Commission (NAICOM) Again Postpones & Further Segments Compliance With The Recapitalization Of Insurance Companies In Nigeria – Matters Arising For The Sector

There has been recurring clamour for recapitalisation of the Insurance sector in Nigeria owing to what has been perceived as declining public confidence in the sector’s integrity, ability to honour insurance claims and general state of well-being. In other to arrest this loss of confidence, NAICOM has introduced

There has been recurring clamour for recapitalisation of the Insurance sector in Nigeria owing to what has been perceived as declining public confidence in the sector’s integrity, ability to honour insurance claims and general state of well-being. In other to arrest this loss of confidence, NAICOM has introduced a Tier-Based Minimum Solvency Capital (TBMSC) framework for recapitalization of insurance companies. The TBMSC methodology is a multi-level capitalization structure which proposes proportionate capital requirement designed to support the nature, scale and complexity of the businesses conducted by insurance companies.

Consequently, NAICOM issued a Circular No. NAICOM /DPR/CIR/25/2019 dated May 20, 2019 on the minimum paid-up share capital requirement for insurance and reinsurance companies in Nigeria which, in effect, increased the minimum paid up share capital of both insurance and reinsurance companies (except those of Takaful and Micro-insurance companies) effective May 20, 2019 with respect to new applications for insurance licenses, while existing insurance and reinsurance companies were required to comply no later than June 30, 2020.

 

The table below shows the increased minimum paid up capital requirements vis-a-vis existing limits:

 

S/N CLASS OF BUSINESS EXISTING MINIMUM PAID UP SHARE CAPITAL (₦’BN) REVISED MINIMUM PAID UP CAPITAL  (₦’BN)
1. Life 2.0 8.0
2. General 3.0 10
3. Composite 5.0 18
4. Reinsurance 10. 20

 

Circulars Extending Deadlines

Further to the Circular dated May 20, 2019, NAICOM issued Circular NAICOM/DPR/CIR/25-01/2019 dated July 23, 2019 making clarifications on how existing insurance and reinsurance companies could effectively be recapitalized. The salient directives in the Circular are summarized as follows:

 

  1. The minimum share capital recapitalization can be achieved through any or a combination of-
  1. Existing paid up share capital;
  2. Cash payment for new shares issued;
  3. Retained earnings-capitalization of undistributed profits;
  4. Payments in kind (other than by way of cash) for new shares issued such as properties, Treasury Bills, Bonds which must be converted into cash not later than 3 months to the deadline for recapitalization; and
  5. Share premium.

 

  1. The recapitalization can be achieved through merger and acquisition which shall be concluded not later than 60 days to the deadline for the recapitalization.

 

  1. Escrow account must be opened with the Central Bank of Nigeria for the deposit of cash payment of shares. Thereafter, deposited funds shall be released not later than 30 days after the confirmation and issuance of a new license.

 

  1. Shareholders fund as at the last date of recapitalization of existing insurance/reinsurance companies shall not be less than the minimum paid-up share capital.

 

  1. Statutory deposit in line with the provisions of the Insurance Act 2003 shall be made not later than 30 days to the deadline for the recapitalization.

 

On December 30, 2019, NAICOM issued a further Circular No. NAICOM/DPR/CIR/25-03/2019 which extended the deadline for recapitalization to December 31, 2020 due to the feedback from stakeholders.

Due to the incidence of the Covid-19 Pandemic that has and continues to disrupt economic and financial systems across the globe, including Nigeria, it became necessary for NAICOM to intervene once again, by relaxing the earlier deadline and conditions for recapitalization in the industry. Consequently, by virtue of Circular No. NAICOM/DPR/CIR/25-Q4/2020 issued on June 03 2020, NAICOM has directed the extension of the deadline and segmentation of the recapitalization process into two phases as follows:

 

  1. 50 % of the minimum paid up for insurance and 60 % for reinsurance shall be met by 31st December 2020;

  2. Insurance companies are required to fully comply with the approved minimum paid up capital not later than 31st September 2021.

In summary, insurance companies are now required to comply with a two-phase deadline in pursuit of ramping up their minimum share capital obligations in satisfaction of the recapitalization policy of NAICOM, as shown in the table below:

 

S/N CLASS OF BUSINESS EXISTING MINIMUM PAID UP SHARE CAPITAL (₦’BN) EXPECTED MINIMUM PAID UP CAPITAL BY Dec 31, 2020 (₦’BN) EXPECTED MINIMUM PAID UP CAPITAL BY SEPT 30, 2021 (₦’BN)
1. Life 2.0 4.0 8.0
2. General 3.0 5.0 10.
3 Composite 5.0 9 18
4. Reinsurance 10. 12 20

 

NAICOM has emphasized that insurance companies that fail to comply with the required minimum paid-up capital by the end of 31st December 2020 may be restricted on the scope of businesses they will be allowed to transact. All other terms and conditions contained in the previous circulars on recapitalization have been retained.

We are of the firm view that the decision to revise the recapitalisation conditions and extend the deadline is a well thought out one. Suffice it to reiterate that the Covid-19 pandemic has caused geo-political disruptions and ravaged economies across the globe, such that global economic and financial systems are still developing coping mechanisms to remain afloat. The capacity of businesses, especially those within an already unattractive insurance industry, to raise much required capital has only been made that much more difficult.

 

Conclusion

It bears mentioning that, with some industry players currently carrying negative book values of equity, the prospects of raising/attracting equity capital may prove extremely difficult, even as we note that a number of other stakeholders may have initiated the process of raising the desired additional capital from existing shareholders by means of right issues.

That being said, it would seem that a veritable avenue for helping industry participants ramp up their capital and satisfy the new minimum capitalisation requirements would be to consider the model of mergers, acquisitions and reorganisations. This methodology could help attract increased value generation, maximisation of cost efficiencies and increased market share. Expectedly, the Federal Competition and Consumer Protection Commission (FCCPC) would be required to play an active moderating and stabilizing role in this process in order to minimize the incidence of monopolies, higher cost of insurance products and abuse of dominant position. In creating a level-playing field for all players, the FCCPC would facilitate healthy competition in this space and prioritise consumer protection.

This article has been authored by Rose Adaji (Senior Associate) who practices at Alliance Law Firm        

Distinguishing Intellectual Property Valuation (IPV) From Other Company Assets In Mergers And Acquisitions

With the increasing desire for expansion of businesses and development in the corporate world, companies engage in highly sophisticated corporate restructuring options to remain relevant. The result of this desire has led to the increasing rate of mergers and acquisitions in today’s business trends. In some instances, mergers and…

 

  1. Introduction

With the increasing desire for expansion of businesses and development in the corporate world, companies engage in highly sophisticated corporate restructuring options to remain relevant. The result of this desire has led to the increasing rate of mergers and acquisitions in today’s business trends. In some instances, mergers and acquisitions may occur when an unlisted acquirer obtains the controlling shares of a listed target and may want to continue to operate in the name of the acquired target entity so as to enjoy its listed status and associated goodwill- this transactional approach which is referred to as the Reverse Acquisition in mergers and acquisition parlance. Examples of this nature help to demonstrate how a deep understanding of the corporate assets such as IP and the like could influence decision making around business combinations. Indeed, many organizations often fail to appreciate the commercial value of, and the dangers to their Intellectual Property (IP), even when IP accounts for a high measure of the company’s worth when these corporate restructuring options are being executed.

 

When organizations develop their IP, there is usually this urge to make high returns from their investment despite their minimal resources. And when its objective is not maximized, it could be devastating for the company.[1]

 

A company’s assets may be broadly divided into two categories: Tangible assets – including structures, facilities, financial assets and infrastructure – and Intangible assets – ranging from human assets and knowledge, ideas, brands, goodwill, strategies and other intangible assets. Usually, corporeal assets have constituted a large chunk of company assets and they are considerable in determining the position of the company in the market place. Increasingly, and largely as a consequence of the information technology revolution and the growth of the service economy, companies are realizing that, the goodwill of a company is far more valuable than their physical assets.

 

In Nigeria, the essence of IP in business is insufficiently understood; it is probably under-valued, under-managed or under-exploited.[2]  Worldwide, IP is recognized as a very relevant asset of many of the world’s largest and most influential companies; it is extremely key to market dominance and continuing profitability of leading corporations. It is often a major objective in mergers and acquisitions and knowledgeable companies are increasingly adopting permissible ways to relocate assets to areas where the tax obligation is low. Accounting Standards are not necessarily useful in demonstrating the worth of IP rights and intangible assets (IPRs) in company accounts[3]; however, an international accounting method could be adopted in the valuation of IP where the value of a company’s IP portfolio could be measured separately and independently of its tangible assets.  It is worth mentioning that the dynamic of assets appreciation is changing and a paradigm shift to powerful software and ground-breaking thoughts as the main platform for generating income in most corporations worldwide is becoming commonplace. One crucial way of doing so is by protecting intangible assets within a suitable legal framework and where they meet the standards for intellectual property protection, acquiring and maintaining IP rights.[4]

In developed countries around the world, there is an ever-growing shift towards the knowledge economy, or industries based on innovation and intangible assets. In such a climate, businesses that base their operations on intangible assets and innovation have a higher likelihood of thriving. Intellectual property can help businesses legally protect and capitalize on these inventions. Contrary to popular belief, the number one reason firms acquire intellectual property is not for litigation purposes, but to have legal and transferable proof of ownership to some of their most important intangible assets. Intellectual property valuation can help corporations determine the true value of their businesses and capitalize on assets that they may not have been aware of possessing.[5]

Furthermore, changes in international commercial communities have influenced the expansion of business models where IP is a central element creating value and potential growth. In addition to these changes, international accounting practices place pressure on firms to recognize and value all identifiable intangible assets of a firm as part of a transaction, especially, in mergers and acquisitions.

As a result of these developments, proper valuation of IP, followed by measures to protect that value, have become a key element of the success and dynamism of a modern firm. The importance of intangible capital and its acquisition have accounted for more than half of the increased output in developed economies over the course of the last few decades.[6]

 

  1. Diligence in IP Valuation

Significant due diligence should be undertaken when the fundamentals of a given transaction consist of assets such as trademarks, knowledge and technologies.  The commercial standards of such transactions largely orbit around intellectual property and these could include trademarks, patents, industrial designs and copyrights.

Registered and granted intellectual property rights, such as granted patents, trademark registrations, and copyright registrations, which are acquired by application to intellectual property offices, provide legal evidence of a beneficiary’s ownership over intangible assets as well as give such beneficiary the right to exclude others from use of the rights. This means several things: owners have the means to protect themselves against infringement by competitors; owners can profitably license assets and sell same to others to provide them with rights they would otherwise not have; increase in the gross value of a beneficiary’s business.

The precise monetary worth of intellectual property, however, can be challenging to determine, as there are several factors that determine the value of the intangible assets in question. Registration or grant of an intellectual property right is sometimes a precondition to valuation, especially quantitative valuation, and enables the process of monetizing intangible assets.[7]

Conducting a valuation of intellectual property rights has significant benefits. Assessing the value of your patent, trademark or copyright may simplify the licensing or assignment process, and help you determine the royalty rates that should be paid to you as a result of using your intellectual property assets. Further, ascribing a reasonable valuation to your intellectual property, if not currently accounted for, increases the overall value of your business and provides you with collateral for loans or mortgages.[8]

The valuation of IP is therefore vital in the structure of commercial transactions. Unfortunately, this characteristic is often ignored by companies not knowledgeable in these sorts of deals, resulting in transactions that are either overestimated or underestimated or loss-making.  It is therefore important to scrutinize and assess the worth of the IP during the negotiation process, before the conclusion of a commercial transaction. One of the key factors affecting a company’s success or failure is the degree of value attributed to the exploitation of IP. Management in these organizations clearly need to gain an understanding of the value of their IP rights. This is so because this understanding facilitates a deeper knowledge of the value to be placed on the assets under their management. Markets, institutions and shareholders need to be educated. Abuse can assume many forms ranging from outright sale of an asset, a joint venture or a licensing contract. It is equally important to mention that exploitation and abuse exposes a company to increased risks.[9]

 

  1. IP Valuation Methods

The rule in commercial valuation of intellectual property relates to the fact that the value of an object cannot be estimated in the abstract and all that can be estimated is the value of such object in a particular place, particular time, and in a particular circumstance. More often than not, there could be two or more interested parties, and the valuations proposed could depend upon their circumstances. Failure to take these conditions and those of the owner into account could result in a less-than-satisfactory valuation.[10]

The value of intellectual property could be determined by many factors, but a major principle guiding valuation is how such intellectual property is valued when compared with similar assets in the same industry. When determining the worth of intellectual property, two methods of valuation have traditionally been used: Quantitative and Qualitative methods of valuation.

Quantitative valuation relies on measurable data or numerical information to produce an estimate of the value of your assets. It attempts to answer the question by providing a monetary value or contribution that the intellectual property provides, whether directly to the business or indirectly by increasing the value of other parts of the operation or appeal to investors.

Qualitative methods of valuation attempt to provide a non-monetary estimate of the value of intellectual property by rating it on the basis of its strategic impact, brand loyalty held by consumers, its impact on the company’s future growth, and other intangible metrics that do not rely solely on numbers[11].

There are majorly three major methods for IP valuation using the quantitative method: The Market Approach, the Cost Approach which is based on estimates of future economic benefits, and the Income Approach:

 

3.1       Quantitative Methods

3.1.1    Market Approach: The market approach is based on paid prices as a pointer for the value of an asset. The fundamental principle is that under certain conditions supply and demand lead to equilibrium in competitive markets. This approach encompasses the direct market value method and analogy method. The direct market value method seeks to use directly regarded transaction amounts for the subject asset. This method requires an energetic marketplace for the good, which means that the operated assets have to be same, willing purchasers and vendors can be found at any time and prices are widely known while the analogy method is when appraisers try to find transactions with comparable assets and transfer the paid prices to the valuation object. When comparable transactions are found, a common denominator or index has to be found in order to compute a multiplier for transferring the regarded prices to the valuation object[12].

 

3.1.2    Cost Approach

The cost approach seeks to ration the worth of a good by measuring the cost for the substitution of the asset by another. The basic supposition of this approach is that the cost to build or buy new possessions equals the value of its ownership. In this approach, it is basically composed of the reproduction cost and replacement cost methods. The reproduction cost method uses the cost of an exact imitation, while the replacement cost method guesstimates the cost of the manufacture or acquisition of a good with a corresponding benefit. This means the asset must have the same efficacy but may be quite different in method and appearance. Because of the uniqueness of intellectual property an exact imitation normally cannot be formed. So, when using a cost approach, it is more fitting to use replacement costs in this context[13]. Basically, what this means is the amount used in purchasing an IP asset should outweigh the cost of generating and using the same asset as both should be of equal value but not significantly much. This “cost to create” or “cost to replace” method disregards changes in the period value of money, upkeep and has very little to extol itself other than effortlessness of use.

 

3.1.3    Income Approach

Within the income approach diverse methods can be distinguished according to the way of determining the income flow: Direct Cash Flow Method, Relief from Royalty Method, Multi-period Excess Earnings Method, and Incremental Cash Flow Method.

The direct cash flow method uses the cash flows that are directly attributable to the subject asset. A condition for this is that the cash flows can be measured directly. This will especially be the case if the technology is not used in production processes by the owner himself but is made available to third parties by licensing. The license fees can be used directly as cash flows in the valuation calculation.

The idea of the relief from royalty method is that the income resulting from the ownership of the IP can be measured by the saved license fees, which would have to be paid, if the property would be licensed from another owner. The method requires that licensing agreements for similar assets can be monitored and transmitted.

The multi-period excess earnings method tries to isolate the cash flows attributable to the IP by deducting fictive fees (contributory asset charges) for all other assets from the entire cash flow of the unit. Those charges can be seen as rent or leasing fees for the use of those assets. So, the multi-period excess earnings method uses the opposite way of the relief from royalty method.

The incremental cash flow method seeks to value the benefit of IP by comparing the income of the considered unit with the property to a situation without it. The difference between the cash flows for each period in the two situations shows the additional cash flow that is attributable to the asset being valued[14].

The essence of the income approach is that it takes cognizance of the profits and economic value the remainder of the IP will generate after purchase.

There exist other less commonly used methods of quantitative valuation that often encompass elements of the larger umbrella methods described above but may focus on obtaining specific metrics. Such methods include the brand value equation method, liquidation value and income differential analysis. Depending on the purpose of prospective IP valuation, one or more of these methods may be helpful.

 

3.2       Qualitative Methods

3.2.1    Rating/scoring

To arrive at a definitive score in terms of valuation of IP, there are certain methods that one could adopt to achieve it. Most methods measure strategy, technological advancement and brand strength, as well as evaluating the risks and opportunities that are involved with the asset. The rating system can also be used for IP asset classification, as used in the Prism method, determining the type of function IP plays for the company and assigning a strategy based on the determination made.

3.2.2    Value indicators-based Method

It includes rating methods such as IP Quotient (IPQ), which primarily rates patents based on the strength of the portfolio and the variables that affect patents. This allows for internal comparisons to be drawn based on indicators.

3.2.3    Competitive advantage Method

It assesses the competitive advantage that is brought by intellectual property by comparing it to other non-branded companies in the market. It evaluates intellectual property on several characteristics (often a mix of qualitative and quantitative elements) to determine the brand’s performance and strength.

Because of their largely non-monetary nature, qualitative methods are often used for internal and/or strategic purposes. They can be used to understand the profitability of an IP portfolio and evaluate opportunities and risks, and to develop an overall strategy for businesses. Qualitative methods often tend to be based on common-sense indicators as well, making them viable for presentations to non-expert audiences and audiences without a strong financial grasp on the complicated quantitative measures that yield valuation metrics.[15]

 

3.3       IP Valuation in action

A useful illustration on the value of IP valuation may suffice here. Facebook’s billion-dollar acquisition of Instagram speaks volumes for the tremendous value attached to social media platforms. The fact that the social media giant would put forward such a large sum of money for a company (and a product) that generates no revenue (Instagram is free) is mesmerizing. This is even more so when one considers that Facebook acquired all of Instagram’s user base, instantly made inroads into the iOS and Android markets and has extended its own capabilities from merely being a social media network to a network that now facilitates the creation and sharing of unique user-generated content.

Before the purchase of Instagram, the projected value of the company was being rumored to range between $100 million to $500 million. Nevertheless, it was finally purchased at $1 billion. The rising valuation of the company was representative of the growing audience it had been garnering. It reached nearly 30 million registered users before it launched an Android app, a transformational event for the company. The summary is that Facebook purchased the entire essence of Instagram culminating into its IP valuation. The reason for the purchase is not the subject of this article, but the value attached to the brand known as Instagram is noteworthy here.[16] It is relevant to consider what approach Facebook adopted in this epoch-making merger. It would seem that it took the cost and income approach to arrive at its valuation. In adopting the cost approach, Facebook realized that the cost to acquire an IP asset in Instagram was far less significant in value than the cost of developing a new photo-sharing platform. In fact, the database and goodwill of Instagram will probably be more than that of creating a new platform. 

Bringing this home to Nigeria, in 2018, another event which emphasized the importance of IP valuation was the horizontal merger between Yudala – the acquirer, and Konga – the target (both online retailing firms), after which both companies became one entity, operating under the Konga brand name. Before the merger, Konga was Nigeria’s second largest online mall, second only to Jumia. Yudala was also a strong online and offline retail business with an expansive network of fully stocked offline stores. Together, they have become Africa’s largest online e-commerce business. The two companies in the above example; Konga and Yudala, are businesses whose existence revolve around the utilization of their IP assets. The acquisition of Konga by Yudala was unique, in that, the acquirer changed its brand name to that of target because of the inherent IP value of the target.[17] Prior to the merger, it was perceived that Yudala’s agenda was essentially to utilize Konga’s trademark which, Yudala believed it could effectively leverage to boost her brick-and-mortar retail business model. What approach did Yudala latch on in achieving this merger? Considering that this was a novel merger in the e-commerce sector in Nigeria, the market approach to the acquisition of Konga may not have been significantly considered. The overwhelming approaches may have been the Income and Cost approach as Facebook did. In fact, there was an argument that buyers outside Lagos would be more comfortable visiting a Konga shop than a Yudala shop.

The pivotal analysis is that Yudala acquired Konga to leverage its trademark and technology in a bid to make Yudala go online, and to expand its offline stores. “In the end, trademark and technology were the targets in the acquisition.[18]

Furthermore, recent developments in the Nigerian banking sector have further underscored the value of branding and IP rights. In the recent ‘friendly merger’ of Access Bank (the acquirer) and Diamond Bank (the acquired) on April 1, 2019[19], the name ‘Access’ was retained while the re-branded logo of the acquired was retained. Indeed, Access Bank completely purchased the assets of Diamond Bank. However, the merger demonstrated how much value is attached to brands; Access Bank took into account that immense value and then opted to retain an essential IP asset of the acquired- the Diamond i.e. her bank logo. It is fair to deduce that Access bank attached strong weight to the value that the Diamond Bank brand would bring to the table in reaching the decision it did. Practically, Access Bank took the avenue of appreciating the market cost and the income cost of the IP in Diamond bank’s logo.

When assessing the value of an intellectual property, it is essential to first conduct due diligence to determine:

  • the existence, validity and enforceability of the IP rights;
  • the territorial scope covered by the IP rights;
  • the competitive scope of the IP rights by analyzing the scope of the granted claims;
  • the risk of invalidation of the granted IP rights;
  • whether the IP right is subject to a security interest in favor of a third party;
  • whether the IP rights have been assigned and/or licensed to others;
  • whether there is any issue with the ownership of the IP through an analysis of the chain of title;
  • whether the IP rights are being litigated; and whether the rights would rely on third parties’ intellectual property rights in order to mature to commercially viable products.[20]

 

  1. Conclusion

We have examined critically, the different methods of undertaking IP assets valuation and the essence of their valuation. We have learnt that brand owners need to be more commercially aware of what their brand valuation could be worth. We also understand that the primary rule of commercial valuation is to the effect that the worth of assets cannot be quantified in the abstract and all that can be quantified is the value of an asset in a particular place, at a particular time, and in particular circumstances. It is strongly advised that entities that have the intention of valuing their IP should endeavor to use any of the quantitative approaches to achieve such valuation, and while embarking on this, professionals should be employed to do so observing the highest ethical standards and international best practice.

It is also recommended that brand owners should understand the importance of taking steps to protect their brands according to the laws of the land. This is important because, where brands are not adequately protected their owners may not be able to fully exploit the commercial value of the brand regardless of the method of valuation deployed.

 

This article was authored by Blessing Ajunwo-Choko and Doyin Fadare, both of whom practice at Alliance Law Firm.

 

 

REFERENCES:

[1]https://www.wipo.int/export/sites/www/meetings/en/2005/smes_qtc/presentations/wipo_smes_qtc_05_
king.pdf
   Accessed March 27, 2019

[2]https://www.wipo.int/export/sites/www/meetings/en/2005/smes_qtc/presentations/wipo_smes_qtc_05_
king.pdf
   Accessed March 27, 2019

[3]Ibid

[4]https://www.wipo.int/sme/en/ip_business/ip_asset/business_assets.htm accessed on March 27, 2019

[5]https://www.heerlaw.com/determining-value-intellectual-property accessed on January 28, 2020

[6] https://www.marsh.com/us/insights/research/importance-of-intellectual-property.html accessed on March 27, 2019

[7] https://www.heerlaw.com/monetizing-intellectual-property accessed on February 4, 2020

[8] ibid

[9] Ibid (1)

[10] Ibid

[11] Ibid (5)

[12]Valuation of Intellectual Property: A Review of Approaches and Methodshttps://pdfs.semanticscholar.org/a9e2/a7a4377ae882031424f3e81c6c2b5a92c257.pdf accessed on April 1, 2019

[13] Ibid

[14] Ibid

[15] Ibid (5)

[16] https://gigaom.com/2012/04/09/here-is-why-did-facebook-bought-instagram/ accessed on March 27, 2019

[17]http://www.jacksonettiandedu.com/wp-content/uploads/2018/10/ip-valuation-as-a-value-enhancement-1.pdf accessed on March 27, 2019

[18] Peter Oluka, Examining Konga-Yudala Merger https://techeconomy.ng/2018/04/23/examining-konga-yudala-merger/ accessed on March 27, 2019

[19] https://www.pmnewsnigeria.com/2019/04/01/merger-with-diamond-bank-access-launches-new-brand-logo/ accessed April 1, 2019

[20] https://www.tamimi.com/law-update-articles/intellectual-property-valuation-a-must-in-commercial-transactions/ accessed on March 27, 2019

FCCPC Issues Guidelines on Simplified Process For Foreign-To-Foreign Mergers With Nigerian Component

On 13 November 2019, the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) published Guidelines on the Simplified Process for Foreign to Foreign Mergers with Nigerian Component (Guidelines). Prior to the assent to the Federal Competition and Consumer Protection Act (“FCCPA”) on 5th of February 2019, Merger and acq …

 

On 13 November 2019, the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) published Guidelines on the Simplified Process for Foreign to Foreign Mergers with Nigerian Component (Guidelines).

 

Prior to the assent to the Federal Competition and Consumer Protection Act (“FCCPA”) on 5th of February 2019, Merger and acquisition was regulated by the Securities and Exchange Commission (SEC) pursuant to sections 117 – 130 of the Investments and Securities Act, 2007 (ISA). However, with the enactment of the FCCPA, mergers and acquisitiions are now regulated by the provisions of the FCCPA which provide for the establishment of the Federal Competition and Protection Commission (FCCPC) which is now saddled with the responsibility of reviewing all mergers and business combinations in order to ensure that they do not impede or distort the market.

 

The Securities and Exchange Commission (SEC) and Federal Competition and Consumer Protection Commission (FCCPC) recently issued joint guidance on submission of notifications for proposed mergers, acquisitions and other business combination notifications.

 

The FCCPA mandated FCCPC (to the exclusion of SEC) to set, publish and gazette thresholds applicable to all mergers and combinations, regardless of the size of the transaction i.e. whether large, medium or small. This new responsibility of FCCPC does not however abrogate the powers of SEC to regulate transactions involving public companies. The role of the Commission in relation to Mergers will now be in the exercise of its primary function as the regulator of the capital market. The regulatory purview of the Commission will be restricted to mergers and acquisitions by or involving public companies as well as transactions involving a change of shareholding of capital market operators. The review and approval by the Commission on mergers will be restricted to the objective captured in Section 121(1) (d) of the Investments and Securities Act, which is to ‘determine whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger’ as well as other statutory mandates of the Commission. The Federal Competition and Consumer Protection Commission on the other hand will consider the anti-competitive effects of a transaction in a relevant market. It should be noted that the provisions and application of Sections 131-151 of the Investments and Securities Act, 2007 remain unaffected by the enactment of the Federal Competition and Consumer Protection Act. Consequently, the Commission will continue to enforce compliance with the takeover provisions and monitor acquisition of shares of public companies.

 

In a bid to address the issues emanating from the transition from SEC to FCCPC regime, SEC and FCCPC issued the Guidance to ensure seamless and continuous commercial transactions and market operations. Based on the Guidance, which became effective on 3 May 2019 (and is applicable until further notice/directive):

  • All pending notifications awaiting review by SEC will now be jointly reviewed by SEC and FCCPC.
  • All subsequent notifications/requests for approval are to be filed at FCCPC’s office in Abuja or with the SEC/FCCPC interim review desk office in Lagos or Abuja.
  • All applicable fees are to be paid to FCCPC.
  • Every complete application filed with SEC prior to the effective date of the Federal Competition and Consumer Protection Act and for which appropriate processing fees had been paid would be continued and completed.

 

The joint advisory provides some clarity on how companies should proceed in respect of current or potential transactions. This interim structure is not expected to extend indefinitely as the FCCPC is likely to issue more robust guidelines for the entire process. The FCCPA already includes some salient distinctions on the scope of mergers which is different from what was provided under the ISA and also gives the FCCPC powers to set thresholds for mergers. Companies are keen to see how the FCCPC will address such issues, but until then, the procedure remains largely the same.

 

In furtherance of its mandate, the FCCPA recently issued a guideline on the Simplified Process for Foreign to Foreign Mergers with Nigerian Component. The Guidelines, which is divided into nine (9) parts constitute a merger notification ‘form’ specifically for foreign-to-foreign mergers, indicating, among others, the type of information required regarding the merging parties, and mandatory supporting documentation to be provided and the applicable fees.

 

From all indications, taking a cue from other African jurisdictions, it seems these Guidelines are the first of their kind in Africa providing specific rules for (i) the treatment and notification of foreign-to-foreign mergers and (ii) outlining a simplified procedure for foreign-to-foreign mergers process in Nigeria.

 

Under the Guidelines,  FCCPC undertakes to review foreign-to-foreign mergers under the simplified procedure within 15 business days, subject to the payment of an additional fee of NGN 5 million (approx. USD 13 800). However, the Guidelines is silent on the applicable number of days the review will take place should an applicant pay the normal fee provided in the Guidelines.

Under the Guidelines, the filing fees for foreign-to-foreign mergers are as follows:

 

Threshold Filing fees
Merger with combined turnover of NGN 1 billion (approx. USD 1.4 million) or more (where turnover refers to domestic turnover of the merging parties) The higher of:
• NGN 3 million (approx. USD 8 300); or
• 0.1% of the combined turnover
Merger where target undertaking has turnover of between NGN 500 million and NGN 1 billion (i.e. between approx. USD 1.4 million and USD 2.8 million) NGN 2 million (approx. USD 5 500)
For a foreign-to-foreign merger to be reviewed under the simplified procedure (i.e. within 15 business days) An additional NGN 5 million (approx. USD 13 800) is payable

 

The above filing fees must be interpreted in the context of the merger thresholds published in Government Notice 85 of 2019 which, essentially, provide that a merger is notifiable where the parties’ combined annual turnover in Nigeria in the preceding financial year is more than NGN 1 billion (approx. USD 2.8 million), or where the target’s annual turnover in Nigeria in the preceding financial year is more than NGN 500 million (approx. USD 1.4 million). The above filing fees are only applicable to foreign-to-foreign mergers. Another Guideline may be issued for merger threshold within Nigeria affecting Nigerian entities but for now, the merger threshold issued by the SEC prior to the enactment of the FCCPA is still operational.

 

A link to the Guideline can be found here:

 

http://fccpc.gov.ng/guidelines/mergers/

Highlights Of Discrimination Against Persons With Disabilities (Prohibition) Act 2019

In the light of what appears to be a lack of appreciation for the rights of persons with disabilities within Nigeria, the imperative of having a special piece of legislation completely dedicated to addressing their rights had become long overdue. President Muhammadu Buhari (GCON) recently signed into law …

 

INTRODUCTION

In the light of what appears to be a lack of appreciation for the rights of persons with disabilities within Nigeria, the imperative of having a special piece of legislation completely dedicated to addressing their rights had become long overdue.

President Muhammadu Buhari (GCON) recently signed into law, the Discrimination Against Persons With Disabilities (Prohibition) Act 2019 (hereinafter referred to as “the Act”) with the principal objectives of achieving full integration of persons with disabilities into the society and establishing a National Commission for persons with disability to cater for their socio-economic rights.

The Act generally reaffirms the equal status that persons with disabilities enjoy with persons without disabilities under the laws of the land and proceeds to create mandatory provisions for preserving that equality and ensuring that they benefit from a level playing field as far as is possible. With the rights of persons with disability being reinforced in this way, any form of discrimination against them is strictly prohibited and attracts sanctions under the Act. We now attempt to highlight some of the more significant provisions of this landmark legislation.

 

 

SCOPE OF APPLICATION OF THE ACT

The Act is applicable to the whole Federation without any exception.

 

 

MAJOR PROVISIONS OF THE ACT

 

  • Prohibition of discrimination

The Act prohibits any form of discrimination against any person on the grounds of disability and imposes penalties for breaches. For instance, where a body corporate discriminates against a person with disability, such a body corporate is liable to a fine of N1,000,000 (One million Naira) and, in the case of an individual, a fine of N100,000 (Hundred thousand Naira) or imprisonment of 6 months or both. This is without prejudice to the rights of the aggrieved person instituting a civil cause of action against the offender regardless of whether the criminal prosecution resulted in a conviction or acquittal.

In order to sensitize the general public about the value of persons with disability to society, the Federal Ministry of Information has been mandated to undertake public awareness programmes to inform the public about their rights, dignity, capability and achievements. See sections 1 and 2 of the Act.

 

  • Accessibility of physical structures

Pursuant to sections 3 to 6 of the Act, persons with disability should be afforded lifts, ramps and other accessibility aids to enable access to all physical structures on an equal basis with others; similar access must be afforded in public buildings and road side walks. All planning approvals should have due regard to the needs of persons with disability including those with wheel chairs. A period of 5 years from the coming into effect of the legislation has been afforded already existing public buildings and structures which were formerly inaccessible to ensure that their buildings were accessible going forward.

In similar vein, all seaports, railways and airports are required to make adequate provision to facilitate ease of access by persons with disability, including the provision of functional wheelchairs; ensuring that they are accorded priority on queues and during boarding and dis-embarkment; and effecting the translation of information in a format appropriate to the person with disability present. See sections 13 to 15 of the Act.               

 

  • Socio-economic rights

The right to free, inclusive and appropriate education and liberty for persons with disability is guaranteed under the Act. These rights contemplate inter alia that such persons are prohibited from being deployed for collection of arms; free education to secondary school level, provision of educational assistive devices, incorporation of braille, sign language and other skills in the curriculum of primary, secondary and tertiary institutions and subsidized education for special education personnel. See sections 17 to 20 of the Act.

With respect to healthcare, the Act prescribes free treatment for all persons with mental disability in all public institutions. Pursuant to enjoying these rights and privileges in full, it is advised that such a mentally disabled person should obtain a permanent certificate of disability under section 22 of the Act.  The conditions for procuring such a certificate comprise evidence of mental disability and a recommendation by a doctor to that effect. Where mental illness arises during the course of treatment, a term of 180 days must elapse after the issuance of a temporary certificate of disability.

However, where a permanent certificate of disability is unlawfully issued or obtained, the offender is liable upon conviction to a fine of N200,000 (two hundred thousand Naira) or a term of imprisonment of 1 year or both.

  

  • Opportunity for Employment and Politics

The Act provides that a person with disabilities shall work on an equal basis with every other individual and has the right to an opportunity to gain a living by work freely chosen or accepted in the labour market and work environment that is open. See section 28 of the Act.

Furthermore, the Act stipulates that all public organizations are to reserve at least 5 % of employment opportunities for persons with disability. See section 29.

 

  • The National Commission for Persons with Disabilities

The Act establishes the National Commission for Persons with Disabilities as a corporate body with common seal and perpetual succession. Its responsibilities include policy formulation and implementation, public enlightenment, data collection and record-keeping of information regarding persons with disabilities, receipt of complaints from persons with disabilities whose rights have been violated and institution of schemes which promote the welfare of persons with disabilities.

 

 

 CONCLUSION

 

The enactment of the Act is a statement of intent by the National Assembly and the Federal Government that Nigeria has turned a significant corner in the pursuit of establishing a more egalitarian society. Without a doubt, disabled members of our society have been denied a fair chance at competing effectively with others. Their rights have been frequently trampled upon and they have had to climb difficult hurdles just to enjoy rights that are otherwise protected under the Nigerian constitution.

As earlier indicated, the coming into effect of this legislation helps provide additional muscle to the enforcement of rights of persons with disabilities by ensuring specificity and enlargement of their rights. With the establishment of a National Commission, it is hoped that urgent steps would be taken to sensitize Nigerians about the rights of persons with disabilities and the tremendous value they could bring to the task of nation building. We also expect that the various penalties and sanctions embedded in the Act for violations of its provisions would be duly enforced as and when appropriate as we prepare to transit to an environment which nourishes a culture of respect, empathy and value for persons with disabilities.

 CONTRIBUTORS:

ROSE ADAJI

IBIM O. DOKUBO

  

 

 

Legal Framework For Effective Protection Of Computer Software Programs In Nigeria

The steady development of technology and the invention of various computer software and programs are a welcome development for the Nigerian economy because of the opportunities they create for employment and income generation. However, owing to the sensitivity and vulnerability of computer software

 

 

INTRODUCTION

The steady development of technology and the invention of various computer software and programs are a welcome development for the Nigerian economy because of the opportunities they create for employment and income generation. However, owing to the sensitivity and vulnerability of computer software as an intellectual product, it is highly susceptible to intellectual theft.  In view of this, it has become inevitably necessary to ensure the legal protection of computer software products against intellectual property theft.

 

The software industry is a high-earning sector of the economy in many developed countries of the world as the sector rakes in billions of dollars.  As Information Technology (IT) continues to develop in Nigeria, there has been a constant increase in the rate of computer software piracy. This has resulted in loss of income and resources for IT practitioners and the Nigerian economy as a whole. The Business Software Alliance (BSA)[i] has revealed that, in recent times, a whooping sum of $20 billion is lost annually as a result of the sale and distribution of pirated software in the global market.  This underscores the significance of the issue of computer software piracy globally and why it is imperative to tackle it effectively.

 

In Nigeria, many software developers are yet to realize the significance of software protection and the need to take proactive steps towards securing legal protection for such rights. This has led to serious breaches of their ownership rights in computer software that they worked so hard to develop. This article is aimed at creating awareness about the various means of protecting intellectual property rights of computer software developers from theft and how that protection can be secured under the law.

 

What is Computer Software?

 

Computer Software is defined as a program which enables a computer to perform a specific task, as opposed to the physical components of the system (hardware). The program involves the sending of instructions from the application software, through the system software, to the hardware which ultimately receives the instruction as a machine code.[ii]

 

Computer software is usually protected by the encryption of software codes to such software or legally, by registering the software under the laws governing patents and trademarks. A notice of the development of the software could also be lodged with the Nigerian Copyright Commission or a copyright collecting society in Nigeria for record purpose; as copyright ordinarily vests in the developers without a legal requirement for registration.[iii]

 

Owing to the immense value and significance of computer software to both individuals and corporate organizations, it has become very important to ensure the effective legal protection of computer software as an intellectual property. Globally, software is legally protected and many software developers, programmers and organizations view software as intellectual property to be jealously guarded because of its economic value.  Treating computer software and related products as intellectual property creates an opportunity for firms, organizations and individuals to exercise a reasonable level of control over the use of computer software and how it gets to the public. However, in cases where software is not patented, copyrighted, trademarked or protected by trade secrets or other forms of legal protection, users may exploit the unauthorized use of the software thus resulting in the loss of commercial revenue to their inventors. An even worse scenario could also involve the loss of the right to use the software developed by its true inventor.

 

Concept of Intellectual Property

 

Intellectual Property is a piece of work which emanates from the ingenuity of an individual or corporate organization. It is usually abstract. Examples of intellectual properties are books, poems, songs, movies, computer software, patents, industrial designs but to mention a few.

Suffice it to mention that owners of intellectual property rights are faced with the threat of having their works pirated, imitated or stolen, thus depriving the creators due credit for their creativity, a loss of opportunity to create viable source of income and loss of fulfillment. In many cases, business organizations with valuable intellectual property such as software have to employ adequate strategies to guard against intellectual property theft including from their own employees.

 

Some of the avenues which could be employed in the protection of the intellectual property of a company’s or an individual’s computer software is getting the employees or business associates of the said individual, as the case may be, to sign non-disclosure agreements or restricting employees’ or associates’ access to intellectual property such as a software under development.

 

MODES OF COMPUTER SOFTWARE PROTECTION:

The various means which could be employed to protect software from unauthorized use in Nigeria include copyright, patents, execution of trade secrets /non-disclosure Agreement and trademarks. Some software developers prefer one medium of software protection to the other based on the scope and advantage of the legal protection covered by each. As a software developer, making a decision on which type of software protection to employ is a very critical step in the process of securing adequate protection.

 

Trademarks are another option, but they don’t protect intellectual property software code. What they protect is the name of the software, or a symbol which is used to advertise the software.[iv]  Trade marking your software’s brand name is a good way to keep others from marketing a product under a confusingly similar name to pass off one’s software.

 

 

COPYRIGHTS AS A FORM OF PROTECTION FOR COMPUTER SOFTWARE

A copyright is described as a right granted to the author or originator of certain literary or artistic productions, whereby the creator is granted, for a limited period, the sole and exclusive privilege of multiplying copies of the literary or artistic works and publishing or selling them.  It is a protection which is usually granted to original artistic, computer software programs, literary, musical, cinematographic films, sound recordings, broadcasts and publications. It creates an opportunity for the owner of a creative work or innovation to own the exclusive right to produce, publish, translate, broadcast or adapt such works.

In the Nigerian Legal System, intellectual property protection for computer software can be achieved under copyrights or patents registration. A computer software can be protected under the Copyrights Act of Nigeria.[v]

 

 

PATENTS

There seems to be a variety of opinions as to whether or not computer software is an appropriate subject for a patent grant in Nigeria. It bears noting that while certain inventions may be eligible for patent protection, not all software-related inventions are patentable as they are required to satisfy certain conditions in order to qualify. The Patents & Designs Act CAP P2 LFN 2004 (hereinafter “Patents & Designs Act”) stipulates the conditions for eligibility of a work for patent grant as follows:

 

  1.  It must be a new invention.
  2. It must constitute a non obvious improvement on a previously patented invention.

In either case above, it must be capable of industrial application. [vi] Once the foregoing conditions are established, a work or invention qualifies for a patent grant. An application could then be made to the Registrar of Patents & Designs for the purpose.

In order to protect the function of software, a software developer would require a software patent. A software patent would ensure the protection of elements such as:

 

  1.   Systems 
  2.  Functions 
  3.  Solutions to computer problems


The two kinds of patents available for the protection of software are:

 

  1.   Utility
  2.   Design

Utility ensures the protection of what the software does (application), while the Design protects any decorative part of the computer software.[vii]

 

As opposed to the Copyright Act, the Patents & Design Act ensures the protection of the invention itself. By virtue of same, persons desirous of creating a software program that does the same thing as a computer software does but with a different code are thus prevented from doing so. However, the patent doesn’t protect your specific lines of code against plagiarism the way a copyright does.[viii]

 

The Validity of Computer Software Patent Registration Outside Nigeria:

A Nigerian software patent is only valid in Nigeria. If protection of a patent is sought in other countries, one will necessarily need to make a separate application in each of those countries. This is due to the fact that patent laws vary from country to country and are largely territorial in application.[ix]

 

Differences between patent and copyrights protection in Nigeria:

 The major difference between a patent and a copyright is that, while a patent can protect your computer software program from imitation, software copyrights have a more limited scope and will only guarantee the protection of your software  in situations where an individual copies an actual executable or source code or graphics from your software.

 

 

TRADE SECRETS AS A VIABLE MEDIUM OF PROTECTING COMPUTER SOFTWARE

A trade secret refers to information which is available to an individual or a company and at the same time unavailable to other individuals, businesses or corporate organizations. The utilization of trade secrets in businesses gives the individual or company an edge over its competitors. One does not have to file any documents or apply with any agency to register a trade secret. However, there are reasonable measures to be employed to keep a computer software a trade secret. Some of these measures include:

 

  1. Keeping the software away from the public;
  2. Employees or contract staff in a software development firm must sign non-disclosure agreements;
  3. Ensuring that intellectual property data is stored in compartments, and give access only to employees on a need-to-know basis. 

It is important to note that a trade secret can last for as long as you want.  However, unless someone discovers your secret by what the law construes as “fair means” your trade secret will last forever. In a case where an individual or organization independently discovers a trade secret similar to that of another individual or organization, such individual or organization is entitled to continue its use of same and no legal action will lie against them.

 

Sometimes, companies and individuals do not regard trade secrets as an adequately secure means of guaranteeing the protection of their valuable software inventions. However, an advantage trade secrets have over other legal means of computer software protection is that it extends to other minor things, such as customer lists, which may not easily be protected by copyrights, patents or trademarks. Illustrative of this is a computer software developer who writes a program that predicts UEFA Champions League matches with a 90% accuracy. If the inventor patents his software, after 20 years, everyone would have the opportunity to create, use, and sell similar software. However, if the inventor treats the programs of the software as a trade secret, he or she could ensure effective and adequate control of the source code indefinitely and no individual or organization will figure out how he or she achieved such accuracy.

 

Inventors are encouraged to take adequate steps towards developing and securing a trade secret protection program for computer software programs.  It is necessary for a software developer to maintain confidentiality of the source code in order to ensure the protection of his computer software program from intellectual theft.  A proper protection program will include processes such as drafting confidentially agreements, having password protection, ensuring limited access to source codes, and creating a limit to the number of individuals or organizations with access to such sensitive information.

 

It is important to note that Nigeria is a signatory to an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). An objective of the TRIPS agreement is to establish a nexus between international trade and intellectual property law. The agreement which is regulated by the World Trade Organization (WTO), stipulates the minimum standards that govern intellectual property issues across the WTO member states.  Article 39 of TRIPS agreement creates a specific provision for the protection of trade secrets.[x]

 

Paid Software Developers and Right to Resulting Copyright

The Copyright Act provides that whoever produces or creates an innovation owns the copyright. However, there are certain exceptions to this rule which include the principle of work for hire.[xi]    Section 10 (1) of the Copyrights Act primarily   provides for ownership of a computer software program to be vested in the independent contractor where he/she created the program.[xii]

However, there are cases where some of the jobs an independent contractor undertakes for a company or an organization may fall under the “work-for-hire” principle. They include:

 

  1. Part of audiovisual work
  2. A translation
  3. Supplementary work
  4. A compilation
  5. A test or test answers
  6. An atlas
  7. A set of directions

In situations such as this, a contract between an independent contractor and the company could be executed to provide for the company to subsequently own the copyright. Another option is for the independent contractor to license his/her/its copyright to the company rather than handing over the copyright.

 

Whether as a business outfit or an independent contractor, it is important and proper to ensure that these details are clearly stipulated before the commencement of such contract. Who owns the copyright of software is of great essence. This is because of the multiple rights that a copyright vests in its owner. For example a copyright over computer software programs empowers the copyright owner. [xiii]

 

  1. To give it away or sell copies; 
  2. To create “derivative works”;
  3. To reproduce it;
  4. To post the code on a website

 

 

CONTRACTS AND LICENSING TO PROTECT SOFTWARE INTELLECTUAL PROPERTY.

 

It is interesting to note that copyrights and patents have restrictions with regards to the protection of computer software. In order to cater for the risks associated with the protection of computer software intellectual property, a lot of individuals/organizations adopt the use of contracts and license agreements.

 

A license allows another party, such as a business entity, to use the software you developed.

 

On the other hand, handing over the copyright, or assigning the copyright, gives the party to whom the copyright is being handed over to legal ownership of your software invention. Regardless of the medium you choose to adopt, your contract needs to be specific, detailed and adequate for the purpose.

 

 

THE RELEVANCE OF LICENSING AS A MEDIUM OF PROTECTING SOFTWARE INTELLECTUAL PROPERTY

 

  1. Licensing in some cases serves as a better alternative to individuals and corporate bodies than the sale of a computer software intellectual property. 
  2. A license ensures the protection of your computer software from persons or individuals that might want to reverse-engineer, copy, or hand it out. 
  3. In a bid to ensure that a license covers all relevant areas, licenses are typically granted via the execution of an agreement.

 

PROTECTING COMPUTER SOFTWARE THROUGH TRADE MARKS

 

Prior to marketing software, it is important for software developers to take adequate steps to create, develop and protect the brand name for the software. A trademark is a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods and some person having the right either as proprietor or as registered user to use the mark whether with our without any indication of the identity of the person, and means, in relation to the certification trade mark, a mark registered or deemed to have been registered under Section 43 of the Trademarks Act. [xiv] Trademarks are used to protect the name of one’s company, product, internet domain names, symbols, logos images, symbols, slogans, colors, product designs and product packaging.

 

Protecting your computer software by trade marking your software name is very crucial especially in cases where your computer software is not secured by other forms of legal protection. For instance, an internet browser may not be patentable or protected by copyright. However, a trademarked brand name can create a perception of the browser by the public as a unique product solely associated with a particular business organization.

 

CONCLUSION:

 

It is hoped that the reader has acquired a deeper insight into the legal framework available in the country for developers, to secure the effective protection of computer software from infringement, which leads to loss of credit and future income.

 

In a world where software technology is thriving in dynamism and creativity, the use of the legal protection is of utmost importance to facilitate the growth of the Nigerian information and communication technology industry and ensure that the remuneration due to developers of computer software in the industry is accruable to them.  

                                                                                                                  

This article was authored by John I. Ibe, Esq. who carries on his legal practice out of Alliance Law Firm.

 

REFERENCES

 

[i] Business Software Alliance is a company which undertakes the provision of programs to enhance copyright protection, cyber security, trade, and e-commerce. It tracks illegal software downloads and distribution of pirated software on the internet through online auction sites. The company provides various forms of protection for software providers’ intellectual property rights, enforces software copyright legislation, and encourages compliance. Its cyberspace policy review dashboard tracks policymakers’ progress in various categories set forth in the administration’s report by providing updates and industry assessments.

 

[ii] Science Daily,
“Computer Software”.https://www.sciencedaily.com/terms/computer software.htm, accessed 11th March 2019.

[iii] Mathew R. Harri, “Copyright, Computer Software and Work Made For Hire” Published by Michigan Law Review. Vol. 89. No 3. Dec 1990 Page 661.

[iv] Arek Dvornechuck, “How To Copyright and Trademark a Logo” ebaqdesign.com. https://ebaqdesign.com/blog/trademark-logo,accessed 13th March 2019.

[v] Section 51 of the Copyrights Act CAP C28 LFN 2004 on the description of literary works to include computer programs states as follows:

 

“literary work” includes irrespective of literary quality, any of the following  works or works similar thereto –

 

  1.   novel, stories and poetical work;
  2.   plays, stage directions, film scenarios and broadcasting scripts;
  3.   chorographic works;
  4.   chorographic works;
  5.   computer programmes
  6.   text-books, treatises, histories, biographies, essays and articles;
  7.   encyclopaedias, dictionaries, directories and anthologies

[vi] Section 1 of the Patents & Designs Act, prescribes the conditions for patentability. It provides as follows: 1 (1) Subject to this section, an invention is patentable (a) if it is new, results from an inventive activity and is capable of industrial application or. (b) if it constitutes an improvement upon a patented invention, and also is new, results from inventive activity, and is capable of industrial application. Three conditions are primarily set by this provision for patentability: 1. The invention is new 2. The invention involves an inventive step 3. The invention must be capable of industrial applicability The secondary provision which is made under section 1(1) (b) is that an invention will still be patentable if it is an improvement on an already patented invention.

[vii] Joe Rung, Esq., “What are The Different Types Of Patents” Legal Zoom.com.: www.legalzoom.com, accessed 28th September 2018.

[viii] Upcounsel website, “Software Patent or Copyright: Everything You Need to Know” upcounsel.com. www.upcounsel.com/software-patent-or-copyright, accessed 8th March 2019.

[ix] Ufoma Akpotaire, “Some Basic Facts about Patents In Nigeria” (Posted on January 6, 2019) Nigerian Law Intellectual Property Watch. www.nlipw.com, accessed 28th September 2018.

[x] Article 39 (1) TRIPS states as follows: “In the course of ensuring effective protection against unfair competition as provided in Article 10 (b) of the Paris Convention (1967), members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3.”

39 (2) Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices  so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

39 (3) Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public or unless steps are taken to ensure that the data are protected against unfair commercial use.

[xi] FindLaw.com, “Copyright Ownership: The Work Made For Hire Doctrine I”: https://corporate.findlaw.com/intellectual-property/copyright-ownership-the-work-made-for-hire-doctrine, accessed 11th March 2019.

[xii] Section 10 (1) of the Copyrights Act provides that “Where an independent contractor creates a computer software program, the copyright belongs to the independent contractor.”

[xiii] Justia Legal Resources,“Copyright Ownership”, www.justialegal resources.com, accessed 28th February 2019.

[xiv] Section 67 of the Trade Marks Act 1965 with regards to the use of trademarks provides as follows:

 

“A trademark is a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods and some person having the right either as proprietor or as registered user to use the mark whether with our without any indication of the identity of the person, and means, in relation to the certification trade mark, a mark registered or deemed to have been registered under Section 43 of the Trademarks Act.”

Review Of The New Federal High Court Asset Management Corporation Of Nigeria (AMCON) Proceedings Rules, 2018

The Asset Management Corporation of Nigeria (AMCON) was established under section 1 of the AMCON (AMENDMENT) Act 2015 to, amongst other functions, acquire eligible bank assets from eligible financial institutions and to hold, manage, realize and dispose of eligible bank assets (including the collection of ….

1. Introduction

 

The Asset Management Corporation of Nigeria (AMCON) was established under section 1 of the AMCON (AMENDMENT) Act 2015 to, amongst other functions, acquire eligible bank assets from eligible financial institutions and to hold, manage, realize and dispose of eligible bank assets (including the collection of interest, principal and capital due and taking over of collateral securing such assets) under the Act.

In a bid to give effect to the AMCON Act, being a special enactment and to achieve its purpose of quick recovery of toxic assets of the Federal Government, the Federal High Court issued the AMCON Practice Directions 2013 pursuant to sections 254 of the 1999 Constitution as amended, sections 53 and 61 of the AMCON Act and order 57 rule 3 of the Federal High Court (Civil Procedure) Rules 2009. On the 1st March, 2013, the then Chief Judge of the Federal High Court, Ibrahim Auta, in exercise of the powers conferred on him by section 254 of the Constitution, section 44 of the Federal High Court Act, Sections 53 and 61 of the AMCON Act 2010, Order 57 Rule 3 of the Federal High Court (Civil procedure Rules), issued the AMCON Practice Direction, 2013 to guide the Courts in the effective handling of AMCON matters. A careful perusal of the Practice Direction, 2013 reveals a very comprehensive and well detailed provision, devoid of technicalities, aimed at quick and effective handling and disposal of AMCON matters. This Practice Direction alongside the AMCON (Amendment) Act, 2015 have been used over time for the determination of AMCON matters until 13th December, 2018 when the Chief Judge of the Federal High Court, Honourable Justice Adamu Abdu Kafarati, issued the Federal High Court Asset Management Corporation of Nigeria (AMCON) Proceedings Rules, 2018 (hereinafter referred to as “the AMCON Proceedings Rules, 2018” or “the AMCON Rules”) relying, inter alia, on the powers conferred upon him by section 254 of the 1999 Constitution as amended.

2. Objectives of the AMCON Proceedings Rules, 2018

 

Order 1 rule 1 of the AMCON Proceeding Rules, 2018 clearly states the objectives of the Rules; the main objective being to enable the Court deal with AMCON claims quickly and efficiently. The Judges of the Federal High Court are enjoined by Order 2 Rules 1 & 2 of the AMCON Rules to further the objectives of the Rules by active case management which includes doing any of the following:

i. Identifying the issues at an early stage;

ii. Deciding the order in which issues are to be resolved;

iii. Encouraging the parties to use an ADR mechanism;

iv. Encouraging parties to settle the whole or part of the case;

v. Fixing timetables and otherwise controlling the progress of the case;

vi. Dealing with as many aspects of the case as possible on the same occasion even when not scheduled;

vii. Making use of technology; and

viii. Giving directions to ensure that the trial of a case proceeds quickly and efficiently.

3. Major Provisions of the AMCON Proceedings Rules, 2018

 

A careful perusal of the AMCON Rules discloses the following as its major provisions:

i. Clear delineation of how actions are to be commenced by writ of summons, originating summons, originating motion or petition

All AMCON claims shall be commenced by writ of summons, originating summons, originating motion or petition or any other method provided under the AMCON Act and it explained the circumstances for their use.

ii. Lifespan of originating processes tagged claims

Order 3 Rule 8 of the AMCON Rules provides that an AMCON claim form shall be valid in the first instance for one year from the date of issue. The judge may upon application order a single renewal for a period not exceeding six months. An application for renewal is to be brought before the expiration of the claim form.

iii. Timeline for services of AMCON processes

Order 3 Rule 11 of the AMCON Rules is to the effect that AMCON originating processes shall be served on the other party within 7 days of its filing, default of which will attract a penalty as prescribed in the schedule to the AMCON Rules. A defendant is entitled to 5 days to reply if any.

iv. Default fee for each day of default for late filing of memorandum of appearance

Order 3 Rule 13 of AMCON Rules imposes a fine of N5,000 for each day of default in filing memorandum of appearance after 5 days allowed in Order 3 Rule 11(3) of the Rules.

v. Electronic filing provided for

The provisions relating to e-filing in the Federal High Court (Civil Procedure) Rules shall apply to all AMCON claims and any party represented by a legal practitioner is required to file a memorandum of appearance with comprehensive details of his phone numbers and email addresses; see Order 6 of the AMCON Rules. Also, where the parties undertake to serve the processes electronically, they shall file a certificate of service in the court.

vi. Defects in documents to be treated as mere irregularities

Pursuant to Orders 7 and 16 of the AMCON Rules, the effect of non-compliance in commencing an action or at any stage of the proceedings may be treated as an irregularity and will not nullify the proceedings, any document, judgment or order made.

vii. Personal service of originating or other processes on the defendant not necessary

Under Order 8 Rule 3 of the AMCON Rules personal service of originating processes on the defendant shall not be necessary where the defendant undertakes in writing to accept service by his legal practitioner.

viii. Grant of default judgment by the Court in default of appearance or defense

Default judgment may be granted in default of appearance or defense by the trial court, as provided in Order 9 of the AMCON Rules. This default judgment may, however, be set aside if wrongly entered.

ix. Summary judgment procedure provided for

Where a claimant believes that there is no defense to the claim he may sue for recovery of a debt, a liquidated money demand or any other claim. Under this procedure i.e. summary judgment procedure under Order 10 of the AMCON Rules, the Claimant is required to file a motion on notice seeking summary judgment in a suit filed and setting out the grounds supported by a statement of claim and an affidavit stating that there is no defense to the claim and a written address.

x. Court to explore possibilities of settlement of the dispute

Order 11 rule 1 of the AMCON Rules provides that the court shall, in appropriate cases, grant not more than 21 days to parties within which to explore possibilities of settlement of the dispute.

xi. Parties to file respectively issues for determination

Before a matter proceeds to trial, Order 11 Rule 2(1) of the AMCON Rules provides that parties shall file their respective issues for determination. Sub – Rule (3) provides that where the parties have filed their respective issues for determination and the parties have not agreed on the issues for determination, or that the judge is of the opinion that the issues formulated by the parties do not adequately address the controversies between them, the judge may, in spite of the issues formulated by the parties, formulate appropriate issues for determination and such shall be the issues for determination at the trial of the matter.

xii. The court may grant interim orders

Under the provisions of Order 12 Rule 1(1)(a) – (p) of the AMCON Proceedings Rules, 2018 the court has powers to grant numerous interim orders stated thereunder including an order of interim possession under section 49 of the Act, an account-freezing order under section 50 of the Act, an interim order of injunction, an order to deliver up goods, an order restraining a party from dealing with any assets etc.

xiii. Mortgagee or Mortgagor may approach the court for reliefs

Under the provisions of Order 15 of the AMCON Rules a mortgagee or mortgagor, whether legal or equitable, or a person who is entitled to or who has property subject to legal or equitable charge or foreclosure may claim any of the reliefs stated thereunder. These include payment of moneys secured by the mortgage or charge, sale, foreclosure, delivery of possession, redemption, or re-conveyance.

4. Comparing the Practice Directions with the AMCON Rules

 

After a careful perusal of the provisions of both the AMCON Practice Direction, 2013 and the AMCON Proceedings Rules, 2018, it can be clearly seen that the latter incorporates the salient provisions of the former, while also making fundamental innovations. Some of those innovations are as follows:

i. The AMCON Rules allow for oral application for substituted service unlike the Practice Direction which stipulates that all legal arguments must be in writing.

ii. The AMCON Rules allow the judge to award claims/benefits not sought by parties. There was no such provision in the Practice Direction.

iii. The AMCON Rules allow the judge to make use of similar Rules when a particular matter is not provided for in it; but no such provision exists in the Practice Direction.

iv. The AMCON Rules give the judge full discretion of the conduct of the case notwithstanding the provisions of the Rules. There is no such discretion under the Practice Direction.

v. Defects in documents and proceedings are to be treated as mere irregularities and the court may allow such defects to be regularized or remedied on such terms as the court may direct.

5. Conclusion

It is important to note that the AMCON Proceedings Rules, 2018 did not repeal the AMCON Practice Directions, 2013. However, in view of the wide provisions made in the new Rules, the need to continue to have recourse to the Practice Direction may have become redundant. Indeed, the new 2018 Rules is an attempt to improve on the 2013 Practice Direction, which had been in use in the past five years.

We consider the period of 7 days for the service of AMCON processes, the period of 5 days for the Defendant to reply thereto, and the default fee of N5,000 for each day of default to be onerous. Although, we appreciate the reasoning behind these provisions, they may, ultimately, limit access to justice. It is hoped that, during future reviews of the AMCON Rules, the Bar would be consulted. Whatever may be its shortcomings, however, the AMCON Rules will no doubt be a good working tool for judges of the Federal High Court in the administration of justice in AMCON matters which come up before them.

CONTRIBUTORS:

THEOPHILUS OCHONOGOR

GABRIEL ONOJASON

AYO OLAIFA

Highlights Of The Federal Competition And Consumer Protection Act Of Nigeria

Competition in any economic environment tends to promote productivity and innovation, which then creates an enabling environment for economic development and employment. An economy where competition thrives is an attractive destination for foreign direct investments,

 

Introduction

Competition in any economic environment tends to promote productivity and innovation, which then creates an enabling environment for economic development and employment. An economy where competition thrives is an attractive destination for foreign direct investments, just as its benefits result in lower prices, multiple choices and improved quality of goods and services.

A developing economy such as Nigeria may be particularly vulnerable to practices which discourage competition and respect for consumer rights. This is typically due to the absence of a strong regulatory framework, weak social and economic infrastructure and licensing regimes which facilitate the ease of doing business.

It is against this backdrop that we, at Alliance Law Firm, welcome the introduction of the Federal Competition and Consumer Protection Act (FCCPA) 2018, which represents a more robust attempt to address the anti-competitive practices and weak consumer rights culture prevalent in Nigeria. It avowed objectives include the provision of more comprehensive protection for consumers by preventing abuse and institutionalizing a more effective framework for penalizing restrictive trade and business practices.

Scope of Application of the FCCPA

The  FCCPA applies to all commercial activities undertaken in the country for profit and satisfaction of public demand, whether undertaken by privately or publicly held corporate entities, corporate bodies in which either the Federal, a State or Local Government has controlling stake or agencies of the Federal Government.

Framework for Regulation

The FCCPA repeals the Consumer Protection Act, Cap 25, Laws of the Federation of Nigeria, 2004, establishes the Federal Competition and Consumer Protection Commission (“the Commission”); and the Consumer Protection Tribunal (“the Tribunal”) to facilitate efficient, fair and competitive markets in Nigeria.

The primary responsibility of the Commission is to administer and enforce the provisions of the FCCPA and any other legislation relating to competition and the protection of consumers. Its powers include compelling all manufacturers and suppliers to certify that their goods and services meet minimum quality standards and to seal up the premises of such manufacturers and suppliers where such standards have been breached.

The Tribunal shall adjudicate over all conducts prohibited under the FCCPA and its decisions shall be binding on the parties and registrable at the Federal High Court (for the purpose of enforcement only) because in the hierarchy of courts, the Tribunal has equivalent powers to the Federal High Court. Consequently, judicial reviews of the Tribunal’s decisions lie to the Court of Appeal.

Subject only to the constitution of the Federal Republic of Nigeria, the provisions of the FCCPA shall override the provisions of any other enactment in so far as it relates to competition and consumer protection matters.

 

Competition

The FCCPA makes copious provisions relating to the limitation of restrictive agreements which tend to promote monopolies; empowerment of the Commission to investigate abuse of dominant position, creation of monopolies in the market place for goods and services, and where corporate bodies subject to such investigations choose not to cooperate, impose appropriate fines to ensure compliance. Also, it makes specific provisions for mergers and acquisitions and seeks to regulate such consolidations in such a manner as would prevent anti-competition practices and violate the letters and spirit of the FCCPA.

Consumer Protection

By way of promoting consumer protection, the FCCPA addresses the question of price regulation as a tool for strengthening protection of consumers. It also makes elaborate provisions for consumer rights and how the Commission and the Tribunal may intervene to offer guarantees and protection. Furthermore, it stipulates the duties of manufacturers, distributors and suppliers of goods and services the breaches of which entitle consumers to seek redress as appropriate. The provisions concerning the enforcement of consumer rights detail the relevant steps that consumers may adopt in the enforcement of their rights and the protection that the legislation provides in securing those rights.

Conclusion

Without an iota of doubt, the enactment of the FCCPA and its introduction into Nigeria’s competition and consumer protection landscape is a long overdue development. Nigeria’s economy is replete with examples of perennial consumer rights’ abuses and anti-competition practices. It is hoped that the more robust nature of the FCCPA would provide a veritable platform for engendering a climate of respect for consumer rights and progressive competition practices.

CONTRIBUTORS:

ROSE ADAJI

DOYIN FADARE

CHISOM SAM-OBASI

Executive Order 7 Of 2019 On The Road Infrastructure Development And Refurbishment Investment Tax Credit Scheme

Pursuant to the powers conferred on him by the Constitution of the Federal Republic of Nigeria and the provisions of section 23(2) of the Companies Income Tax Act (CITA)[1], the Nigerian President, Muhammadu Buhari, GCFR, recently signed into law, Executive Order No. 007 of 2019

 

 

REVIEWING THE COMPANIES INCOME TAX (ROAD INFRASTRUCTURE DEVELOPMENT AND REFURBISHMENT INVESTMENT TAX CREDIT SCHEME) AND RELATED MATTERS

 

  1. INTRODUCTION

Pursuant to the powers conferred on him by the Constitution of the Federal Republic of Nigeria and the provisions of section 23(2) of the Companies Income Tax Act (CITA)[1], the Nigerian President, Muhammadu Buhari, GCFR, recently signed into law, Executive Order No. 007 of 2019 to be cited as the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019 (“EO7 of 2019” or “the Scheme”).

EO7 of 2019 comprises six paragraphs, with each containing several sub-paragraphs, and deal with issues ranging from establishment of a management committee charged with responsibility for implementing and administering the Scheme to the issuance of the road infrastructure tax credit itself.

The main objective of the Scheme is to accelerate road infrastructure development for balanced economic growth in Nigeria by granting approval to private sector entities to construct and refurbish eligible roads across the country in exchange for tax credits, which could then be applied against company income tax payable. Thus, the motivation for the Scheme derives from the desire to take advantage of private sector funding and discipline to enhance road infrastructure development in the country. The Scheme has a life span of ten years reckoning from the commencement of EO7.

Upon inauguration of the Scheme, the President[2] indicated that it would provide another opportunity to demonstrate the commitment of the administration to conceive, design, develop and deliver Public Private Partnerships (PPPs) with notable investors in order to close the road infrastructure gap in the transportation sector due to revenue shortfalls that have hampered government’s efforts to fully fund critical projects. The President further explained that through these innovative funding mechanisms, government would be able to address the challenges of project funding, cost variation and completion risks that have plagued the development of the nation’s critical roads infrastructure assets.

Under the Scheme, companies that are, for instance, disposed to spending their own funds on constructing roads to their factory and business locations, will recover their construction costs by paying reduced taxes, over a period of time. Consequently, the Scheme focuses on the development of eligible road infrastructure projects in an efficient and effective manner in order to create value for money and guarantee participants in the Scheme timely and full recovery of their construction/project costs by way of company income tax credits.

It bears noting that there are existing infrastructure tax credits provided by the Companies Income Tax Act (as amended) (“CITA” [3]) and the Pioneer status incentives granted under the provisions of the Industrial Development (Income Tax Relief) Act (“IDITRA”)[4]. Without doubt, some of the burning questions that may agitate the minds of potential and actual participants of the Scheme include whether participation under the Scheme would bar enjoyment of other infrastructure tax credits provided for under the CITA and whether there are any advantages that the terms of the Scheme offer in comparison with its predecessors? This article would attempt a review of the provisions of the EO7 of 2019, CITA and other infrastructural tax relief regimes, and their potential to accelerate infrastructural growth in Nigeria.

 

  1. EXISTING TAX INCENTIVES ON INFRASTRUCTURAL DEVELOPMENT

In the past, government has intervened through, inter alia, trust funds and tax incentives to address Nigeria’s infrastructural deficit.

A company operating in Nigeria is expected to pay the rate of 30 kobo for every naira in respect of the total profits for each year of assessment.[5] Section 23 (2) of CITA generally empowered the President to exercise his discretion to exempt by order‐

(a)  any company or class of companies from all or any of the provisions of this Act; or

(b)  from tax all or any profits of any company or class of companies from any source, on any ground which appears to it sufficient.

The various tax incentives on infrastructure and funds established under legislation in Nigeria are as follows:

 

  1. Pioneer status under the provisions of the Industrial Development (Income Tax Relief) Act
  2. Rural investment allowance
  3. The Companies Income Tax (Exemption of Profits) Order 2012
  4. Road Trust Fund 2017
  5. Presidential Infrastructure Development Fund 2018

 

  1. Pioneer Status under the provisions of the Industrial Development (Income Tax Relief) ActPioneer status is a tax incentive which exempts the applicant company from corporate income taxes for an initial three-year period which is renewable for one or two years.[6]

 

  • Rural investment Allowance:

 

It is important to note that section 34 of the CITA contains provisions which aim to encourage companies to invest in rural areas and provide the infrastructure/facilities incidental to such investments, by way of government offering a rural investment allowance. However, a major reason for the ineffectiveness of this incentive scheme is the requirement for the relevant trade or business to be sited in a location that is at least 20 kilometres away from similar amenities provided by the government[7]. Also, the incentive does not permit companies to carry forward the allowance whenever it cannot be fully exhausted[8]. EO7 of 2019 doesn’t share these limitations. For the purpose of more clarity, the provisions of sections 34 and 40 of CITA are reproduced below:


Sections 34 and 40 (11) of CITA on  Rural investment allowance:

(1) Where a company incurs capital expenditure on the provisions of facilities such as electricity, water, tarred road or telephone for the purpose of a trade or business which is located at least 20 kilometers away from such facilities provided by the government, there shall be allowed to the company in addition to an initial allowance under the Second Schedule to this Act an allowance (in this Act called “rural investment allowance”) at the appropriate per cent certain as set out in subsection (2) of this section of the amount of such expenditure:

 Provided that where any allowance has been given in pursuance of this section, no investment allowance under section 32 of this Act shall be due or be given in respect of the same asset or in addition to the allowance given under this section.

 

(2) The rate of the rural investment allowance for the purpose of this section shall be as follows

(a)        no facilities at all…………….  100%

(b)        no electricity……………………. 50%

(c)        no water………………………….  30%

(d)        no tarred road……………………15%

(e)        no telephone………………………5%

 

(3) For the purpose of this section the rural investment allowance shall be made against the profits of the year in which the date of completion of the investment falls and the allowance or any fraction thereof, shall not be available for carry forward to any subsequent year whenever full effect cannot be given to the allowance owing to there being no assessable profits or assessable profits less than the total allowance for the year the investment was made.

 

Section 40(12) of CITA, however, provided that a company shall not be allowed to claim the investment tax relief for more than 3 years and the relief shall not be available to a company already granted pioneer status. 

Save as has been stipulated in paragraph 4(15), E07 of 2019, which prevents a participant who has enjoyed a road infrastructure tax credit on an eligible road from benefiting from any other tax credit, capital allowance, relief or incentive on project costs incurred on an eligible road, there is no restriction as to how long the tax credit granted under EO7 of 2019 may be enjoyed.

 

 

  •  The Companies Income Tax (Exemption of Profits) Order 2012

    The Companies Income Tax (Exemption of Profits) Order, 2012 (the “Order”) was made by the President in exercise of his powers under section 23(2) of the Companies Income Tax (CIT) Act, Cap C21, Laws of the Federation of Nigeria, 2004 (as amended).

    The Order was made on 27 April 2012, but was only made public on October 4, 2012. The Order had a commencement date of 27 April 2012 and was designed to be in force for 5 years from the commencement date.

    Paragraph 3 of the Order granted qualifying companies a CIT exemption of 30% of the cost incurred in providing infrastructure or facilities of a public nature. Based on the paragraph, “infrastructure or facilities of a public nature” include: power (electricity); roads and bridges; water; health, educational and sporting facilities; and other facilities as may be approved from time to time by the Minister of Finance and published in the Federal Government Gazette upon the recommendation of the Federal Inland Revenue Service (FIRS).

    The Order provided that the Infrastructure Tax Relief (ITR) will be granted in addition to the usual deductions allowed in respect of the costs incurred under the relevant provisions of the CIT Act, “and shall form part of the deductible expenses of the company”. In effect, the ITR was treated as an allowable expense to be deducted in arriving at assessable profits, and not as a relief to be set off against assessable profits. An ITR was claimed by a company in the assessment period in which the infrastructure or facility is provided.

    To qualify for ITR, the relevant infrastructure and/or facilities must have been completed by the company and available for use by the company and the public or the community where the infrastructure/facilities are sited. However, the Order provided exceptions where public use is impracticable or an exemption is obtained from the Minister of Finance.[9]

     

  •  Road Trust Fund 2017

    The Federal Executive Council at its meeting on Thursday, 26 October 2017, approved the establishment of Road Trust Fund (RTF). RTF was conceptualized as a PPP initiative by Federal Ministry of Finance (FMF) and Federal Ministry of Power, Works and Housing (FMPWH). The aim is to incentivize private sector participation in the development of federal road infrastructure through a tax credit scheme.

    RTF is a revision of the infrastructure tax relief (ITR) incentive under the erstwhile Companies Income Tax (Exemption of Profits) Order, 2012. ITR granted companies that incurred expenditure of public nature (including road construction), tax relief of 30% of the cost of incurred on providing the infrastructure. The relief is enjoyed via deduction from the income tax of the company.

    Unlike ITR, RTF operated under a collective model to mobilize private capital from companies which were used to undertake road projects through stand-alone collective infrastructure funds using a special purpose vehicle. It involved financial intermediaries which were expected to promote RTF projects and solicit for funds from interested companies. The design and cost of the roads were approved by the FMPWH and also certified by the Bureau of Public Procurement (BPP).

    Expected benefits for companies who took advantage of the Scheme include:

    • 100% recovery of costs incurred on road infrastructure as tax credit against total tax payable over a three-year period
    • Accelerated depreciation to enable cost recovery in 3 years rather than 4 years for standard assets
    • Ability to intervene in roads critical to a company’s business

       Some of the benefits of the RTF to the country include:

    • Increased funds for road development and accelerated road provision across the nation
    • Alternative funding to the government for road infrastructure development which will reduce pressure on the federal budget
    • Efficient delivery of road projects and reduction of project costs.[10]

 

  •  Presidential Infrastructure Development Fund 2018

The federal government on May 17, 2018, announced the establishment of a Presidential Infrastructure Development Fund (PIDF), which is to be managed by the Nigeria Sovereign Investment Authority (NSIA).

The fund is to be invested specifically in critical road and power projects across the country.

The National Economic Council (NEC) has also authorised the initial transfer of $650 million to the NSIA from the Nigeria Liquefied Natural Gas (NLNG) Dividend Account, as seed funding for PIDF.

This initiative was to eliminate the risks of project funding, cost variation and completion that have plagued the development of the nation’s critical infrastructure assets  such as the 2nd Niger Bridge, Lagos to Ibadan Expressway, East—West Road, Abuja to Kano Road, Mambilla Hydroelectric Power over the last few decades.[11]

 

  1. REVIEW OF THE COMPANIES INCOME TAX (ROAD INFRASTRUCTURE DEVELOPMENT AND REFURBISHMENT INVESTMENT TAX CREDIT SCHEME) ORDER 2019

The E O 7 of 2019, to be cited as the Companies Income Tax (Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) Order, 2019 approved a tax credit scheme to attract private sector involvement in the provision of road infrastructure assets across Nigeria. The Scheme is expected to be in force for a period of 10 years from its commencement; and the President of the Federal Republic has the power to amend the Order from time to time as may be deemed necessary. A participant in the Scheme can be any company registered in Nigeria, a pool of companies or institutional investors.

It is an Order comprising 6 paragraphs which deal with the recital to the order; the establishment of the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme; the Road Infrastructure Tax Credit; issuance of Road Infrastructure Tax Credit Certificate; utilization of the Road Infrastructure Tax Credit; the interpretation clause and citation. The order also contains two schedules. Schedule one deals majorly with the composition and functions of Scheme’s management committee; information required to be submitted to management committee by applicants seeking to be participants in the Scheme; requirements for issuance of the tax credit certificate and conditions for transfer of a tax credit certificate. Schedule two relates to the memorandum of understanding (template) which would be entered with participants after the President has approved an eligible road project.

An attempt to provide more granular details of the various paragraphs in the Order appears below.


The Road Infrastructure Tax Credit (RITC)[12]

The Scheme entitles Participants[13] to utilize the project cost incurred in the construction or refurbishment of eligible roads as a credit against companies income tax that is payable. In doing so, Participants are afforded a single uplift equivalent to the prevailing Central Bank of Nigeria Monetary Policy Rate (MPR) plus 2% of the Project Cost[14].  And where such uplift is granted, it shall not constitute taxable income in the hands of the Participant or a Beneficiary[15].

Participants are at liberty to utilize this RITC from the relevant fiscal year in which the project is incurred, until it is fully utilized. However, the amount of RITC that may be utilized in any year of assessment shall be limited to 50% of the company’s income tax payable by the Participant for that year of assessment. Where there is any unutilised tax credit, it shall be available to be carried forward by the Participant to subsequent tax years.

However, as with similar schemes in the past, where a Participant takes benefit of the RITC under the Scheme, it shall not be entitled to claim any other tax credit, capital allowance, relief or incentive on the Project Cost incurred in respect of that Eligible Road[16] under any law in force in Nigeria.

 

            Administration and Implementation of the Scheme

The responsibility for administering and implementing the Scheme belongs to the Road Infrastructure Refurbishment and Development Tax Credit Scheme Management Committee (“the Committee”) set up under EO7 of 2019.[17]Also, the Committee will approve the issuance of RITC certificates to Participants annually, in proportion to the Project Costs incurred by them in that year. Furthermore, the Committee is charged with the task of registering Participants under the Scheme. Other agencies of government have been empowered to play different roles under the Scheme and these other agencies are as follows:

 

  1. Federal Ministry of Finance
    The Federal Ministry of Finance is in charge of the establishment and maintenance of funds for the operations and management of all road projects executed under the Scheme. 
  2. Federal Ministry of Works

    This Ministry has three major roles to play in relation to the Scheme and they are as follows:

    • Publication of the design and specification of Eligible Roads;
    • issuance of contract award letter following approval of road infrastructure development contract where it may be required; and
    • carrying out periodic quality control inspection exercises. 
  3.  Bureau of Public Procurement (“Bureau”)

    All costs and contractors would be scrutinized and approved by the Bureau in line with legal requirements. The Bureau will ensure that costs are not inflated and that unqualified contractors are not engaged for the projects.

     

  4. Federal Inland Revenue Service (FIRS)

Under the Scheme, the FIRS is required to undertake the following major actions:

  • Issuance of certificates to Participants through the Committee;
  • maintenance of a registrar of Participants and Beneficiaries and a record of issued RITC certificates to Participants and Beneficiaries of the Scheme;
  • preparation of an annual return of all RITCs;
  • updating of the record of issued RITC certificates, de-registration of old Participants and issuance of new certificates to new Beneficiaries.

 

Eligible Participants[18]


The following identified class of entities is eligible to participate under the Scheme:

  • Companies (other than a corporation sole) registered under CAMA or any other law in force in Nigeria.
  • Pool of companies operating through a special purpose vehicle registered with and designated by Securities and Exchange Commission (SEC) for the purpose of the Scheme.
  • Institutional investors duly registered as a company or companies under Companies and Allied Matters Act of any other law in force in Nigeria.
    The Road Infrastructure Tax Credit Certificate[19]

It is important to mention that Participants cannot benefit from the Scheme unless they have been issued with a RITC certificate. When the Committee has approved the Participant’s application for RITC, the FIRS shall then issue a RITC certificate to such Participant on an annual basis.


Application of Road Infrastructure Tax Credits (RITCs)

The following rules shall regulate the manner in which tax credits secured under the Scheme may be applied by a Participant to the payment of company income tax until fully utilized.

  • It bears mentioning from the outset that even where a company possesses a RITC certificate, no tax credit shall be applied for settlement of company income tax unless claimed by a Participant or Beneficiary[20] in its tax returns for the year of assessment.
  • Participants in the Scheme are entitled to recover the cost incurred by them in the construction or refurbishment of Eligible Roads as credit against companies income tax (“CIT”) payable. However, such companies are limited to utilizing the tax credit obtained to defray a maximum of 50% (fifty percent) of the CIT payable for the relevant year of assessment. However, that limitation is dispensed with where the Participant has been involved in the construction or refurbishment of Eligible Roads in Economically Disadvantaged Areas[21].
  • Participants are also entitled to a single uplift, equivalent to the CBN Monetary Policy Rate plus 2% of the Project Cost. This uplift will not be subject to tax.
  • A Participant is entitled to dispose of or transfer its RITC to other companies in the same manner a security may be sold in a relevant securities exchange.
  • An unused RITC within the year of assessment can be carried over by the Participant or Beneficiary to a subsequent tax year. This is clear departure from earlier tax relief measures which tend to impose timelines for their enjoyment[22].

Requirements to be fulfilled before a Private Company can benefit from the Scheme:

  • Registration and certification by the Committee as a Participant or representative of a Participant of the scheme;
  • designation as a Beneficiary under the Scheme;
  • provision of evidence of certification of the Project Cost by the Committee;
  • tax credit must be claimed by the Participant in its tax return for that year of assessment;
  • Evidence that the project is economically viable, cost efficient and can be completed in a timely manner (within 12 to 48 months).

Tradability and Registration of Road Infrastructure Tax Credit (RITC) Certificate

An exciting introduction by the Scheme is the ability of holders of the RITC certificate to trade it as a financial instrument on a relevant securities exchange and have same registered accordingly. Consequently, Participants are at liberty to undertake a disposal of the whole or part of their certificate to willing buyers on a relevant securities exchange in the same manner as they would shares, bonds and other securities. However, such sale must be reported to the Committee, which will then have to de-register the Participant and register the new Beneficiary.

Furthermore, where such Participant or Beneficiary indicates that it no longer wants the certificate for trade on the relevant securities exchange, it shall notify the Committee and provide evidence of its de-registration. EO7 of 2019 further states that the tax credit may qualify as an asset in a Participant’s or Beneficiary’s financial records and will have to comply with International Financial Reporting Standards (IFRS). However, although the essence of the Scheme is to offer tax credits to Participants, any gains arising from the disposal of the tax credit will be subject to tax.

 

 

  1. POTENTIAL IMPACT OF THE ROAD INFRASRUCTURE TAX CREDIT SCHEME ON THE EASE OF DOING BUSINESS ENVIRONMENT

One of the major ways in which the Ease of Doing Business in any country may be incentivized is the interventionist role that government plays in providing an enabling environment and attracting private sector capital and discipline towards the acceleration and enlargement of infrastructural development; this then triggers direct industrial growth, with attendant positive impact on inflationary trends, employment rate, per capita income and other growth indices.

 

Arguably, the RITC Scheme under review is a welcome introduction into our tax regime; aimed at enabling interested Participants better manage their tax obligations in such a way that guarantees an upward growth trajectory for profits, goodwill and corporate citizenship. Some of the more apparent improvements on previous tax relief systems include:

 

  • Better articulated framework for the administration, implementation and control of a tax credit scheme, which specifically delineates the scope of power, authority and obligations of the different stakeholders and what their limitations are. There is clarity of purpose and vision.
  • Characterization of tax credits obtained under the Scheme as tradable securities, which has never been an attribute of similar schemes in the past. This quality makes a tax credit a potential asset on a company’s balance sheet which could prove pivotal in balance sheet management.
  • The absence of any limitation as to how long a tax credit may be utilized. In other words, a tax credit may continue to be carried forward until fully utilized by a Participant or Beneficiary.
  • Ability of a Participant or Beneficiary to apply the tax credit secured to defray up to 100% of its company income tax payable in a year of assessment, if the tax credit was obtained in relation to a road infrastructure construction or refurbishment concerning an Economically Disadvantaged Area[23]. This would otherwise not be available to a Participant or Beneficiary whose tax credit arose out of a road project constructed or refurbished in other areas.
  • The Scheme is a specific road infrastructure tax credit initiative designed to consolidate expansion of road infrastructural development in Nigeria on a scale that has, perhaps, not been experienced before.
  • There is clarity and no conflict with previous tax relief schemes. For example, the provisions of EO 7 of 2019 provides that “A participant entitled to a Road infrastructure tax credit on an eligible road shall not be entitled to claim any other tax credit, capital allowance, relief or incentive on the project cost incurred in respect of that eligible road project under any law in force in Nigeria, in addition to the Road Infrastructure tax credit”[24]. The implication of this is that a Participant or Beneficiary of a RITC cannot claim any other infrastructural tax incentives existing under any law in Nigeria using the same Eligible Road Project.
  1. POTENTIAL CHALLENGES WITH THE SCHEME

Without question, the Scheme represents a bold step towards closing the road infrastructural gap in the country.  However, we anticipate that its implementation would not be without some teething challenges, which, unless addressed, could limit the promise that it offers. The Committee may need to, through recommendations and proposed amendments to the President, secure clarity around some critical aspects of the Scheme. Some of the more topical areas have been discussed below:

 

  • The definition of “Eligible Road” seems to be within the exclusive discretion of the Minister of Finance[25]. Potential investors, participants and beneficiaries have no way of planning ahead or budgeting under the Scheme as they all have to await the pleasure of the Minister on the choice of roads to select for the purpose. Is the Scheme specifically for federal roads or are state roads also contemplated, given that states and local governments are also entitled to a share of company income tax revenue?
  • Reckoning that road infrastructural development is usually a capital intensive exercise, chances are that companies may, from time to time, consider debt as an option for raising required funding in order to ultimately enjoy tax credits. There does not appear to be any consideration for borrowing and its related costs as a component of “Project Costs”[26]. While it is arguable that the intention of the uplift (plus two (2) percent of the Project Cost) may be to compensate for borrowing cost or time value of money expended, suffice it to state that it may not sufficiently address the accruing costs on borrowed funds which apply on an ongoing basis. As presently constituted, potential investors may be circumspect about deploying debt as an option under the Scheme.
  • It would appear that the life span of the Scheme is ten (10) years[27] from the date of commencement of the EO7 of 2019 i.e. 25th January, 2019. Thus, the presumption is that Participants or Beneficiaries under the Scheme would cease to enjoy tax credits after 25th January, 2029 or thereabouts. If this is the intention of the Scheme that would mean that only companies that can complete their road infrastructure projects before that expiration date would be attracted to the Scheme. The question may arise; what would happen to uncompleted projects by that date or unutilized tax credits?
  • In the event that a Project Cost is not approved, how will the associated costs be treated? In practice FIRS takes the rebuttable view that unapproved costs are also not allowable for tax purposes.[28]
  • While the Scheme may have provided for the procedure to be followed before tax credits can be issued, it has not taken care of what remedies are open to aggrieved participants or beneficiaries who, having satisfied all requirements for such issuance, are, nevertheless, denied tax credit certificates; or scenarios in which such tax certificates have been issued but are still not honoured by relevant agencies of government. The provision for arbitration in the Memorandum of Understanding may not be a one-size-fits-all resolution mechanism for disputes especially when the associated costs of arbitration are capable of eroding whatever gains may have been secured under the Scheme.
  • The preparedness of the government of the day to respect the letters and spirit of the EO7 of 2019 as a veritable tool for re-energizing development of Nigeria’s road infrastructure assets is critical to the success of this intervention.
  1. CONCLUSION

It is the expressed intention of the Federal Government of Nigeria to provide adequate facilities for the free mobility of people, goods and services throughout the federation, for the purpose of national integration and protecting the rights of citizens to engage in legitimate economic activities concerned with the production, distribution and exchange of wealth, goods and services[29]. Thus, the establishment of this Scheme is a step in the right direction.

 

One of the critical success factors for any government policy is the political will to committedly honour the letters and spirit of the policy framework it has, itself, designed for execution. The absence of sincerity of purpose exhibited by some leaders in this respect has frequently led to policy summersaults or abandoned and uncompleted projects; or where completed, such projects have proven to be of substandard quality.

 

Many public utilities and industries, typically, perform below optimal efficiency and revenues levels owing to the stereotypical mindset that government resources belong to all and to no one in particular. In other words, there is a stark absence of ownership commitment in so far as government assets are concerned. It is in the light of this dismal performance of public sector-managed projects and services and the astronomically high cost of executing them, that it is always a breath of fresh air when government breaks from its stranglehold on construction of public/social infrastructure by inviting private sector partnership to deliver on socio-economic services that it has perennially failed in.

 

Typically, in PPP arrangements, the private partner is compensated through either: User-based payments (i.e., toll roads, airport or port charges), availability payments from the public authority [i.e., PFI] etc. or a combination of the above. In user-based payment structures, the government or public authority often needs to provide some financial support to the project to mitigate specific risks, such as demand risk, or to ensure that full cost recovery is compatible with affordability criteria and the public’s ability to pay. Government support mechanisms can take many forms, such as contributions, investments, guarantees and subsidies, but they should be carefully designed and implemented to allow for optimal risk allocation between the public and private sectors. When government support is present, the objective is to increase private capital mobilization per unit of public sector contribution.[30]

 

It is the earnest expectation of the authors that government would continue to observe international best practices in partnering the private sector mindful of the imperative of using the Scheme to promote ease of doing business in Nigeria. The Scheme has not been conceptualized as a charity or philanthropic venture. On the contrary, it has been designed to directly profit Participants by improving their capacity to enhance value for their stakeholders.

 

If well managed, it could signpost a fresh beginning towards addressing the debilitating road infrastructure deficit apparent in every part of Nigeria. Early indications suggest that it may have begun to attract the interest of serious minded investors, who have the pedigree to take on gigantic projects and execute them with distinction.[31] Government must continue to act consistently and with integrity in the implementation of the Scheme in order to gain and sustain the trust of the private sector even more.      

 

THIS ARTICLE WAS JOINTLY AUTHORED BY SIMEON OYAKHILOME OKODUWA AND ROSE ADAJI, BOTH OF WHOM CARRY ON PRACTICE AT ALLIANCE LAW FIRM.

 

CONTRIBUTORS: CHISOM SAM-OBASI AND DOYIN FADARE

 

REFERENCES:

[1] Companies Income Tax Act; CAP C21, Laws of the Federation of Nigeria(LFN), 2004

[2] https://www.vanguardngr.com/2019/01/buhari-signs-executive-order-7-to-tackle-roads-infrastructure/ accessed on 11th February, 2019.

[3] Companies Income Tax Act, CAP C21 LFN, 2004

[4] Please see list of additional 27 industries/products granted pioneer status by the federal executive council on Wednesday, august 2, 2017 via https://www.vanguardngr.com/2017/08/fec-approves-27-new-industries-pioneer-status/ accessed on 15/2/2019.

[5] See section 40 of CITA

[6] See https://pwcnigeria.typepad.com/files/pwc-regulatory-alert_pioneer-status_august-2017.pdf accessed on 15/2/2019

[7] Section 34(1) , CITA

[8] Section 34(3), CITA

[9]Victor Onyenkpa, Newsflash on The Companies Income Tax (Exemption Of Profits) Order, 2012 website

http://www.mondaq.com/Nigeria/x/203002/Corporate+Tax/Newsflash+On+The+Companies+Income+Tax+

Exemption+Of+Profits+Order+2012 accessed on 11th February , 2019

[10] FG introduces infrastructure tax credit scheme through Road Trust Fund, [website] https://blog.deloitte.com.ng/fg-introduces-infrastructure-tax-credit-scheme-through-road-trust-fund/ accessed on February 11, 2019

[11] Lekan Paul. FG Establishes Presidential Infrastructure Development Fund, https://www.abusidiqu.com/fg-establishes-presidential-infrastructure-development-fund/ accessed on February 11, 2019

[12] See Paragraph 2, EO7 of 2019

[13] A “Participant” is defined under paragraph 5; EO7 of 2019 to include companies (other than corporate soles) registered under CAMA, a pool of companies under a Special Purpose Vehicle designated by SEC to operate under the Scheme and institutional investors registered as companies under CAMA.   

[14] “Project Costs” are defined under paragraph 5; E07 of 2019 as any expenditure incurred by a participant for the construction or refurbishment of an eligible road but as certified by the Scheme’s management committee. In other words, the committee shall exercise a discretion as to what costs may be allowed as part of “Project Costs”.

[15] Pursuant to paragraph 5; EO7 of 2019 a “Beneficiary” means a company appointed by a Participant to utilize the whole or part of the road infrastructure tax credit initially issued to such a Participant under the Scheme or a person who has purchased the rights to utilize the said tax credit.

[16] See Paragraph 5; EO7 of 2019 where “Eligible Road” has been defined to mean a road approved by the President as eligible for the purpose of the Scheme upon recommendation by the Minister of Finance, which is subsequently notified to the participant and then published.

[17] See Paragraph 1; EO7 of 2019

[18] See note 13

[19] See Paragraph 3; E07 of 2019

[20] See note 15

[21] See note 16

[22] Section 40(12) CITA

[23] Pursuant to paragraph 5; EO7 of 2019 “Economically Disadvantaged Area” means an area in any geopolitical zone/state designated as “Economically Disadvantaged” by the President upon the advice of the Minister of Finance, who, for this purpose, shall have regard to matters including the average income level of the inhabitants vis-a-vis the minimum wage, the availability of infrastructure and volume of economic activity.

[24] See Paragraph 4(15) of E07 of 2019

[25] See note 19

[26] See note 14

[27] See Paragraph 1(3); EO7 of 2019

[28] Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme

 https://pwcnigeria.typepad.com/files/pwc-tax-alert_road-infrastructure-development-scheme_jan2019.pdf accessed on February 11, 2019.

[29] See Recital to EO7 of 2019

[30] Aliyu Idris & Ors, Public Private Partnership in Nigeria and Improvement in Service Delivery: An appraisal; OSR Journal Of Humanities And Social Science (IOSR-JHSS) Volume 10, Issue 3 (Mar. – Apr. 2013), PP  63-71e- ISSN: 2279 – 0837, p-ISSN: 2279 – 0845. http://www.iosrjournals.org/iosr-jhss/papers/Vol10-issue3/L01036371.pdf

 

Learning Some Of The Nuances Of Patents Registration In Nigeria

A patent is an exclusive grant or right issued by the relevant government authority within a country in order to ensure the protection of new inventions, developments, technical solutions or improvements which are considered …

Introduction

 

A patent is an exclusive grant or right issued by the relevant government authority within a country in order to ensure the protection of new inventions, developments, technical solutions or improvements which are considered to have created a positive modification in the way(s) the earlier inventions were made or utilized.  Patent rights are like any other property rights which allow the inventor to benefit from his or her own invention. Invention means a solution to a specific problem in the field of technology[1]. These rights, just like every other intellectual property right, were first outlined in Article 27 of the Universal Declaration of Human rights[2], which sets forth the rights and benefits derivable from the protection of moral and material interest resulting from authorship of any scientific, literary or artistic production.[3]

The value of a patent is to then accord the inventor an exclusive market monopoly for a defined period of time towards maximizing the potential commercial benefits accruable from the invention. The patent thus incentivizes the inventor; providing fertile ground for enhanced productivity and the creation of more inventions.[4]

In the course of registering patents in Nigeria, some stakeholders i.e. inventors, professionals and the like, have internalized certain myths, which have no grounding in law and the practice of registering patents. This article seeks to inter alia, engage the process and importance of patents registration, and demystify some of the emerging stereotypes associated with the process, some of which actually impede the speedy completion of registration.

Brief summary of the process involved in the registration of patents In Nigeria

 

It is important to note that the law applicable to the registration of patents in Nigeria is the Patents and Designs Act of 1970.

 

The Patents and Designs Act provides that a patent may be granted for an invention where:[5]

  1. The invention is new.
  2. It constitutes an improvement upon a patented invention and is also new. It does not matter that such invention is similar to an earlier one. What matters is that the new invention satisfies all the requirement of novelty[6]. Once these two conditions are satisfied, the Invention will be deemed patentable.[7]
  3. It is capable of industrial application (useful).
  4. Inventions, the publication of which may discourage immoral or offensive behavior (although not expressly provided for in the Act). The TRIPS Agreement (Article 27.2) further specifies that members may exclude from patent protection certain kinds of inventions, for instance, inventions, the commercial exploitation of which would contravene public order or morality[8].

 

To ensure that a patent in Nigeria is duly registered, the first step is to confirm that the innovation has not already been patented, by conducting a search.

The under listed items are the requirements involved in processing the registration of patents in Nigeria[9]:

  • A petition or request for a patent signed by the applicant or his agent and containing the applicant’s full name and address[10];
  • A specification which includes a claim or claims in duplicate; plans and drawings, if any, in duplicate;
  • In appropriate cases, a declaration which is signed by the true innovator requesting that he/she be mentioned as such in the patent and giving his name and address[11];
  • A signed power of attorney or authorization authorizing an agent to act on behalf of the owner of the innovation in cases where the application is made by an agent[12];
  • An address for service in Nigeria in cases where the applicant’s address is outside Nigeria[13];
  • Payment of the prescribed fees[14].

Once an application for the registration of a patent is granted, the patent is valid for 20 years[15].

Some of the nuances that have become associated with the process of patent registration have proven to be merely clogs in the wheel of the registration process. We have sought to engage the more prevalent ones only in the succeeding paragraphs.

  1. An inventor needs not conceal details of the invention in order to avoid intellectual theft.

 

Some Nigerian inventors  wrongfully assume that the legal requirement to fully disclose details of one’s invention in the specification of claims form, plans and drawings, inadvertently exposes one’s invention to intellectual theft. Nothing could be further from the truth.

Indeed, the correct position is that, in the course of ensuring compliance with the legal requirement to fully disclose the details of one’s invention in the requisite forms, one is, in fact, afforded legal protection from intellectual theft. This is because under intellectual property law, the issuance of a patent gives the applicant (Inventor) the exclusive right over the invention[16]. This in turn bars third parties from making, selling, importing and utilizing any patented invention except with the consent of the inventor or after a period of twenty years from the date of conclusion of the filing of a patent application may have elapsed.[17]

Prospective applicants are therefore encouraged to rest, assured in the irrefutable knowledge that, they suffer no risk of theft if they disclose full details of their invention, and to take advantage of patents registration by fully disclosing those details, as failure to do so is what may, in reality, expose one’s invention to intellectual property theft.

Protection for innovators through registration under the Patents and Designs Act was reinforced in the case of Arewa Textiles Plc .v. Finetex Ltd.[18], where the Court of Appeal held to the effect that the right to apply for letters of patent with respect to an invention was not a mere moral adjuration but a duty under section 24(1) of Patents and Design Act to register assignment, transfer or interest held in a patent, if an inventor desires the protection of the law. This decision was followed in the case of Bedding Holdings Limited v INEC & 5 Ors [19].

 In this case, the plaintiff was a limited liability company registered in Nigeria and specializing in the general fabrication and manufacture of products such as Transparent Ballot Boxes and Collapsible Polling Booths. The plaintiff contended that it had acquired patents rights over the process and application of Direct Data Capture machines for the compilation and collection of various biometric information.  The first defendant is the federal government agency responsible for the conduct of elections in Nigeria while the 4th to 6th defendants were companies engaged by the 1st and 2nd defendants to procure Direct Data Capture machines and related items required to compile the Nigerian Voters’ Register.

The plaintiff filed the suit at the Federal High Court, Abuja seeking special damages in the sum of N17,258,820,000.00 (Seventeen Billion, Two Hundred and Fifty Eight Million, Eight Hundred and Twenty Thousand Naira Only) and alternatively, injunctive orders protecting its intellectual property rights and general damages of N20,000,000,000 (Twenty Billion Naira).The defendants denied infringing any rights and the 4th defendant counter claimed for the revocation of the patient rights.

Dismissing the counter claim of the 4th and 6th defendants, judgment was entered in favour of the plaintiff as he had proved his case from the preponderance of the evidence before this court. While he tendered evidence to show that he has the right to the said intellectual property, none of the defendant’s claimed to have any. Some of the defendants’ also did not even adduce any evidence in this case, to show that they did not infringe seriously on the plaintiffs two patented products.

 

  1. Details of inventions must not be publicly disclosed before filing an   application for patent registration:

Despite the legal  requirement to make a full disclosure in the course of applying for Patent Protection by specifying claims and drawings, this should in no way, manner or form lead one to making the mistake of publicly disclosing details of one’s invention before the registration of the  patent[20]. Therefore, publication by oral disclosure, by document or by prior use will invalidate novelty and render the product unpatentable[21]. A clear distinction between these two scenarios needs to be internalized from the outset.

However, an exception to the above rule is where an inventor, over the course of an official exhibition, displays his invention within a period of 6 months before filing the patent application[22].

  1. 3. Ideas are not patentable but there are no requirements to have an actual prototype

Under the laws of patent registration, ideas cannot be patented. As a result, inventions submitted for patent registration must be supported with a detailed written description of the invention such that a specialist in the field to which the invention pertains can understand the realities of the said idea.

This is not to suggest that ideas are not valuable. It is of course, undeniable that an idea is an essential first step towards any invention; obviously, nothing will happen without an idea which makes ideas a valuable tool for any innovation. Ideas are not monetarily valuable and without some identifiable manifestation of the idea, there can be no intellectual property protection obtained and no exclusive right will flow. The advisable means to protect an idea would be by executing a confidential and non-disclosure agreement at the early stage of an invention for the purposes of protecting such idea. However, if such agreement is breached, one could only sue for breach of contract. So, the goal of an invention should be to go beyond the level of an idea and progress to towards something concrete that will amount to an invention.

 

  1. 4. Patents on plants, Animals or other biological processes cannot be obtained in Nigeria

The Registry for Patents, Trade Marks and Designs does not grant patents in respect of plants, animals, varieties and biological processes for the production of plants. However, this is not the position in foreign jurisdictions like South Africa, Kenya and the United States of America.

See Section 1 (4) of the Patents and Designs Act, Chapter 344, Laws of the Federation of Nigeria, 2004 which provides as follows:

 

(4)       Patents cannot be validly obtained in respect of-

  • plant or animal varieties, or essentially biological processes for the production of plants or animals (other than microbiological processes and their products);

(5)       Principles and discoveries of a scientific nature are not inventions for the purposes of this Act[23]

  1. Obtaining a patent in a foreign jurisdiction does not amount to the protection of the invention in Nigeria

In view of the fact that patents are territorial in nature, it is important to note that each country owns its patents. In light of that, an inventor who registers a patent in a foreign country but fails to register same in Nigeria cannot sue for infringement of his patent in Nigeria. To sue for infringement of patents in Nigeria, any patent obtained from a foreign jurisdiction must also be registered in Nigeria.

However, this is different where the foreign country is a convention country to Nigeria. So long as there is in force an order declaring a country to be a convention country, a patent application or a design application in Nigeria, if an earlier corresponding application for the protection of an invention or the legislation of a design has been made in that convention country, shall be treated as having been made on the date when that earlier application was made. However, such earlier application must be made, in the case of an invention, twelve months before the date of application in Nigeria; while for designs, more than six months from the day of application in Nigeria[24].

Provided that this subsection shall not apply where the earlier application was made.

Where an inventor has filed an international application under the Patent Cooperation Treaty, the Trademarks, Patents and Designs Registry in Nigeria shall rely on the International Search Report thereby providing an opportunity for the inventor to save search fees.

In other words, after the filing of an international patent registration application in line with the requirements of the Patent Corporation Treaty, an international search report will be issued to the applicant/ inventor. In the circumstance, the patent registry in Nigeria would then consider same as an evidence of a prior art.

In a nutshell, it bears reiterating that the above issues are critical elements for individuals or companies to bear in mind before or during the course of undertaking patents registration in Nigeria. Failure to comply with these rules could lead to non-registration of such designs and even in cases where such designs are already registered, the Court could render such registration null and void[25].

THIS ARTICLE WAS WRITTEN BY BLESSING AJUNWO-CHOKO

[1] WIPO, Intellectual Property Handbook ([WIPO 2004 2nd edn], WIPO  Publication NO.489(E))18.

[2] United Nations Universal Declaration of Human Rights 1948.

[3] The importance of intellectual property (Patent, Copyrights and Trademark) was first recognized by the two fundamental intellectual treaties administered by World Intellectual Property Organisation (WIPO), the Paris convention for the protection of industrial property in 1883, and the Berne convention for the protection of literary and artistic works in 1886.

WIPO believes that Intellectual property is native to all nations and relevant in all cultures, and has proven to have contributed to the progress of societies. The great Africa-American chemist and inventor, George Washington Carve, born in the 1960s recognized the truth of this message. Carve is the inventor of crop rotation method for conserving nutrient in soil and he also discovered hundreds of new use for crops such as peanuts, which created new markets for farmers in United States of America.

[4] Section 2(2) of the Patents and Designs Act, Cap P2LFN 2004 accords statutory protection on the right of the true inventor. The section provides that the true inventor is entitle to be named as such in the patent, whether or not he is the statutory inventor and the entitlement in question shall not be modified by a contract.

Section 2(4) of the Patents and Designs Act states that where an invention is made in the course of employment or in the execution of a contract for the performance of specified work, the right to patent in the invention is vested in the employer or as the case may be in the person who commissioned the work. Provided that where the inventor is an employee, then if his contract of employment does not require him to exercise any inventive activity but he is making the invention through the use of data or means which his employment has provided or put at his disposal or the invention is of exceptional importance, he is entitled to fair remuneration taking into account his salary and the importance of the invention.

[5] Section 1(1)(a)&(b) of the Patents and Designs Act states that  an invention is patentable :

  1. If it is new, results from inventive activity and is capable of industrial application; or
  2. If it constitutes an improvement upon a talented invention an also is new, results from inventive activity and is capable of industrial application.

[6] F.O. Babafemi, Intellectual Property: The law and Practice of Copyrights, Trademarks, Industrial Designs in Nigeria (1st edn, Justinian Books ltd.2007) 354.

[7] James Oitomen Agbonrofo v. Grain Haulage and Transport Ltd [1998] f.h.c. 1. 236.

[8] WIPO, Intellectual Property Handbook ([WIPO 2004 2nd edn], WIPO  Publication NO.489(E))18

[9] Section 15(1),  Patents and Designs Act

[10] Section 15(1)(i) & (ii), Patents and Designs Act

[11] Section15(1)(b)(ii),  Patents and Designs Act

[12] Section 15(1)(b)(iii),  Patents and Designs Act

[13] Section 15(1)(a)(ii), Patents and Designs Act

[14] Section 15(1)(b)(i), Patents and Designs Act

[15] Section 7(1), Patents and Designs Act

[16] Sections 6(1) and 19, Patents and Designs Act;  See further Dyktrade Ltd v. Omnia Nig. Ltd. [2000] 12N.W.L.R.(Pt. 680)8.

[17] Section 25(1) of the Patents and Designs Act provides that the rights of a patentee or design owner are infringed if another person, without the licence of the patentee or design owner, does or causes the doing of any act which that other person is precluded from doing under Sections 6 or 9 of the Act, as the case may be.

[18] Arewa Textiles Plc v. Finetex Ltd. [2003] 7 N.W.L.R. (Pt. 819) 322

[19] Beddings Holding Limited v INEC &5 Ors (2014) 3CLRN

[20] Section 13(3), Patents and Designs Act

[21]F.O. Babafemi, Intellectual Property: The law and Practice of Copyrights, Trademarks, Industrial Designs in Nigeria (1st edn, Justinian Books LTD. 2007) 350.

[22] Section 13(4), Patents and Designs Act

[23] Lindley J. in the case of Fox v. Kensington and Knightsbridge Electric Lighting Co. Ltd (1891) 8 R.P.C. 277, stated that “An invention is not the same thing as a discovery. When Volts discovered the effect of an electric current from the battery on a frog’s leg, he made a great discovery, but no patentable invention”.

[24] Section 27(2), Patents and Designs Act

[25] Section 22,  Patents and Designs Act