Kenya: Skepticism over Prospects for New Anti-Counterfeit Agency

Monday, 16 March 2009

The new Counterfeit Act 2008 stipulates the establishment of the new Anti-Counterfeit Agency (ACA). Given the significant losses to the industry and tax authorities from counterfeits, this is a welcome development in principle. In reality, the outlook is not very encouraging. By Albert Muriuki. Scepticism over Anti-Counterfeit Agency After years of lobbying, Kenya finally has a legislative framework as a safeguards against counterfeiting, an issue that has been for years dodging the manufacturing industry in the country. Counterfeiting costs Kenya dearly: According to the Kenya Association of Manufacturers (KAM), counterfeits cost local firms more than KES50b in 2008. The Kenya Revenue Authority (KRA), in turn, estimates that counterfeiting costs the government over KES6bn in lost revenue annually. The new Anti-Counterfeit Act, 2008, assented to by the president a day before Christmas in 2008, aims to prohibit trade in counterfeit goods. For this purposes, the law creates an Anti-Counterfeit Agency (ACA) that is to be set up by August 2009 and is intended to enlighten and inform the public on matters relating to counterfeiting, to combat counterfeiting, trade and other dealings in counterfeit goods in Kenya as well as devise and promote training programmes on combating counterfeiting. The ACA will also co-ordinate with national, regional or international organisations involved in combating counterfeiting and carry out any other functions prescribed for it under any of the provisions of the new law. The legislation stipulates that the ACA will be headed by a chairman who has to be either a lawyer or a scientist with experience in the field of trade, industry or intellectual property. The new law considers the creation of the new ACA as a core step in combating counterfeiting in Kenya. Experts across the field welcome it in principle, but remain cautious as to how effective it will be: “Of course the creation of the ACA is a welcome development, but we must remember that Kenya has set up agencies before that have not always resulted in concurrent benefits for the respective sectors even though the taxpayer is worse off for it. Look at the Kenya Anti Corruption Commission (KACC) or the National Environmental Management Authority (NEMA)   are they really delivering as they should irrespective of the huge amount of taxpayers money that goes into them?” poses Emmanuel Wetangula, an expert in intellectual property law and an associate at Mohammed Muigai and Company Advocates. He adds that the setting up of the ACA is an indication that the Attorney Generals office has failed in its duties: “If we have seen all the back and forth between KACC and the AG’s office, we should not be overtly optimistic about the ACA functioning exceptionally well. The issue of overlapping of functions, duties and powers is bound to crop up here, too.” Trade in Counterfeit Goods Outlawed According to the Attorney General (AG) Amos Wako, the new law is supposed to augment other existing laws in the country to fight counterfeiting. In particular, the Anti-Counterfeiting Act will work in conjunction with the Industrial Property Act of 2001, the Copyright Act of 2001, the Trade Marks Act (which is currently being reviewed), the Seeds and Plant Variety Act the Trade Descriptions Act, and the Weights and Measures Act. However, the new Anti-Counterfeiting Act goes a step further and gives powers and functions that where hitherto unaddressed by the law in Kenya. The AG emphasises that the Anti-Counterfeit Act seeks to prohibit the release of counterfeit goods into the channels of commerce in this country: The Act now makes it an offence for anyone to deal in counterfeit goods commercially. This includes the sale, manufacture, distribution as well as importation of counterfeit and pirated goods. “This is the right thing to do actually,” says Allen Gichui of Walker Kontos & Co. Advocates, a litigation lawyer who represents many industrial companies in Kenya that have complained about counterfeiting. “By making it criminal for example to sell counterfeit goods, the new law – if properly enforced – will ensure that counterfeit products do not have an avenue for sell, curtailing the practice, with no profits, there can be no counterfeiting,” he says. He notes, however, that the issue of identification of counterfeit and pirated products can be difficult: “Although ignorance is no defense in law, we have to consider circumstances in Kenya. Some of the kiosk owners who will be targeted by this section are barely literate. How will they be able to identify that what they have been brought to by their distributor is not fake? These are issues that must be considered. It will be quite unfortunate if such people are targeted. Don’t forget in Kenya that the ‘small fish’ are the ones normally targeted while the ‘big fish’ walk away.” When determining counterfeit cases and considering which penalty to impose, the new law now gives the courts the discretion to take into account the risk that the counterfeit goods have to human or animal life, health or safety or danger to property as well as to the environment. The new law also provides a clear procedure for lodging a complaint and how the same will be handled by the ACA and also specifically provides for legal provisions which will provide expedient procedures for preserving evidence. Under the new law, penalties are pegged onto the retail value of the legitimate goods. For instance, in the case of a first offender, the penalty will be three times the market value of the goods and or three years in prison. In the case of a subsequent offender, five times the value of the goods and or five years in prison. Since counterfeiting is a cross boundary issue, and affects several countries, the new act includes border measures by granting the customs authorities with the rights to seize and detain goods that are suspected to be counterfeit. Obstructing a customs official or any other officer so mandated to check goods or will attract a fine of up to KES2,000,000 and or three years in prison. Enforcement Issues  The AG concedes that without proper implementation and enforcement, the new law might not live up to its billing: “Laws, as experience has shown, without effective enforcement, have little impact on those they are meant to protect. There is [therefore] a need to have implementing structures to enforce the laws,” he says. But although the AG claims that the government has put in place various administrative structures, such as the police, the judiciary, the copyright office, the customs department, weights and measures and the bureau of standards to assist the ACA in doing its work, experience in Kenya has shown that issues such as endemic corruption and entrenched vested interests will make the fight against counterfeiting difficult. For example, citizens, businesses and corruption monitors such as Transparency International (TI) regularly consider the Kenya Police as one of the most corrupt state bodies in the country. Based on past experiences, it can be expected that they will use the new regulations for their own financial benefit and export yet more kickbacks from importers and traders. Similarly, customs officials at the Kenyan borders have been known to be extremely corrupt. His experiences with the illegal import of second-hand cards through what amounts to illegal cartels in collusion with customs officials  EAC: Locally Manufactured Vehicles Stuck at Internal EAC Customs Borders,  make William Lay, the General Manager of General Motors East Africa, doubt the enforceability of the law.  Wetangula also highlights the lack of sufficient resources and the lack of capacity among investigators, law enforcers and especially among prosecutors: in Kenya, the latter are policemen with little legal training who have to argue in court against trained lawyers: “The general lack of knowledge and information on intellectual property laws in Kenya is a challenge in ensuring the law is a success. Until that is addressed, we might just be setting up a body to burden the tax payer more.” Share this article with others: Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment