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NNPC takes the lead in safeguarding Intellectual Property in the Oil and Gas Industry

 NNPC imagesIt was reported in the news that the Nigerian National Petroleum Corporation (NNPC) Retail Limited has sued the Natural Network Petroleum and Gas Company (NNPG) Limited and two others over infringement on its trademark.  NNPC had in a suit joined Corporate Affairs Commission (CAC) and the Registrar of Trade Marks, Patent and Designs as second and third defendants respectively.

From this action, it would seem that the NNPC is keen on taking the lead in safeguarding Intellectual Property (IP) in the Oil and Gas Industry in Nigeria. It remains to be seen whether indigenous oil and gas companies will follow suit of their own accord or await regulatory changes, making IP Asset development, research & development mandatory, thus leading to IP and Innovation development.

This article attempts to highlight some key IP Issues indigenous Oil and Gas Companies may need to note.

The need for Innovation/Intellectual Property Commercialization

A report issued by PricewaterhouseCoopers in 1999 found that the global IP licensing market totalled more than US$100 billion, giving an idea of how economically important IP assets are today. Right now the total worldwide IP licensing market is estimated to be $250 billion annually.

ExxonMobil is reported to have collected more than US $129 million in 2011 from licensing its IP to third parties, and this number is increasing every year.

IBM alone generates nearly $2 billion a year from out-licensing its IP. The asset value of patents worldwide is estimated at $1 trillion.

U.S. IP licensing revenues were estimated at $120 billion in 2003 and are expected to have reached $500 billion by 2010. University licensing royalties in the U.S. total nearly $1 billion annually.

In 2013, the Shell Oil Company received 189 patents from the U.S. Patent and Trademark Office. Research with patent portfolio analysis tools shows that Shell was assigned 207 U.S. patents in 2014 held by Royal Shell. Shell spent $1.2 billion on R&D.

The Chinese government paradigm

The Chinese Government is fostering home-grown innovation and IP commercialisation through tax incentives. From 2006 through 2010, Chinese oil and gas companies cumulatively boosted R&D spending by 29 percent annually and upstream patenting activity by 66 percent annually. In downstream, the Chinese energy conglomerate Sinopec is amassing a large patent portfolio, at home and abroad.

 

 

Nigeria’s Window of Innovation

For our industries to thrive we need Governmental support for our local industry, government has given some support in the Nigerian Local Content Act? However technological growth and development does not happen by chance, in this writer’s opinion our local companies have a duty to take full advantage of governmental support by actively innovating and commercialising their resulting innovation and Intellectual Property.

Nigerian companies may need to pay a little more attention to research, development and the resulting innovation that increases profitability which should be protected and commercialised by IP possibly Patents, Trademarks, Copyright  and Trade Secrets etc.

During exploration, extraction and transportation of Oil and gas, value is added to the unrefined Oil and Gas by technology, and other business practices that help process the extracts into useful and valuable consumer products.

The innovation, technology and business processes (Intellectual Property Assets) involved, are often protected by IP and become valuable assets to Oil and Gas companies, when they are registered and competitors prevented from accessing and using proprietary innovation for free.

Owners of such IP Assets may actively commercialise their assets by licensing them to companies willing to use these IP Assets in exchange for a license fee.

Trademark as an IP Assets in the Oil and Gas industry

The first barrel in any great oil and gas company is a good name. It should be registered as a trademark.  A trademark is a symbol or a sign which differentiates the goods and services of one business from another one. A trademark provides protection to the owner of the mark by ensuring the exclusive right to use it to identify goods or services, or to authorize another to use it in return for payment of license fees.

The Oil and Gas Industry is particularly susceptible to trademark issues as internal and external consumers rely on their trademarks to purchase goods and services from them.

Filling Stations and Trademark lawsuits

The Managing Director of NNPC Retail Limited, Mr. Fagbola Ladipo was reported to have alleged that the infringement on the NNPC trademark by the first defendant had begun to cause a dwindling in the sales of NNPC in Ondo State. He also alleged that the first defendant was imitating the NNPC logo by using its colour combination of red, yellow, green, uniform, emblem and the acronym NNPC…

The Russian Legal Information Agency (RAPSI/rapsinews.com) reported that sometime in 2003, a court awarded Rosneft oil company $95,000 in its trademark infringement lawsuit against EKA-AZS fuel company, which operates a large chain of filling stations.  The parties told the court they entered into a franchise agreement in 2005 for a term of 5 years, under which EKA-AZS paid $1,000 for the right to use Rosneft’s trademarks to sell fuel at 40 filling stations. Rosneft maintains the defendant illegally used trademarks for five months after the contract expired on September 29, 2010.

Sometime in 2015 LUKOIL North America filed a lawsuit in U.S. District Court for the Eastern District of Pennsylvania against R.K. Keystone Mobile Mart Inc., Gurmeet Singh, As Airport Texaco Inc. and Swapnesh Sharma, alleging trademark infringement and trade dress infringement.

According to the complaint, the defendants own and operate the former LUKOIL fuel station at 3575 Airport Road in Allentown even though the station no longer is a franchise under the LUKOIL name.

Sometime in 2011, it was reported by Bloomberg that BP filling station operators in the western U.S. sued BP Plc. seeking $200 million in damages over allegations the company’s sales and inventory software they are forced to use is “an unmitigated disaster.”

Branding in oil and gas

Oil and Gas companies seldom attempt to suggest that they have perfectly “green credentials”. It may be more prudent to emphasise their capacity for innovation which benefits society in future and their importance in providing energy for today’s society.

 

The world’s most valuable Oil & Gas brands

Please find below a table of the world’s most valuable Oil and Gas Brands, at number 8 is Petronas, a national oil company just like the NNPC.

 

Rank 2015 Brand Name Domicile Brand Value ($) 2015
1 Shell Netherlands $30,716,000.00
2 ExxonMobil United States $18,242,000.00
3 Chevron United States $18,163,000.00
4 PetroChina China $17,521,000.00
5 Sinopec China $16,135,000.00
6 Total France $15,203,000.00
7 BP UK $14,743,000.00
8 Petronas Malaysia $9,480,000.00
9 Eni Italy $8,037,000.00
10 Gazprom Russia $ 6,961,000.00
11 Statoil Norway $6,528,000.00
12 ConocoPhillips United States $6,062,000.00
13 Petrobras Brazil $5,945,000.00
14 Mobil United States $4,696,000.00
15 CNOOC China $4,523,000.00
16 Esso United States $4,471,000.00
17 Enbridge Canada $4,340,000.00
18 Exxon United States $3,995,000.00
19 Schlumberger United States $3,994,000.00
20 PTT Thailand $3,681,000.00

 

Interestingly, some Energy brands operating in Nigeria’s upstream sector are struggling to erase negative perceptions especially as it concerns environmental compliance. We have recently seen a number of IOCs divest assets onshore possibly due to a whiplash from host communities over alleged unacceptable environmental practices. All these point to the importance of IP to an Oil and Gas company’s profitability.

 

Conclusion

The challenges facing our oil & gas industry ranging from the fall in crude oil prices to the perception of oil & gas companies by the local populace and the changing global energy landscape make it needful for active collaboration between all stakeholders. In addition, for our Local Oil and Gas companies to grow they may need to take their Research and Development and resulting IP like patents and trade secrets seriously, they may also wish to leverage on the advantages conferred on them by the local content policy currently being pushed by the government. It goes without saying that technological development does not happen by chance, it can be encouraged by good policies like the local content policy serving as a spring board for the inventiveness of our local companies to flourish. 

[1] Source http://www.eregistration.copyright.gov.ng/? last accessed on 30/03/2015

Olufola Wusu Esq © 2015

fola@megathoslaw.com

Olufola Wusu is a Commercial, Oil and Gas and I.P. Lawyer based in Lagos

OLUFOLA WUSU IS NOTED FOR HIS “DYNAMIC PRACTICE” AND “COMMERCIAL ACUMEN”. HE IS PRAISED FOR HIS “FIRST-RATE SKILLS” IN ASSISTING CLIENTS…

NNPC GROUP

NNPC GROUP

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PROTECTING YOUR BUSINESS IDEA-(“Legal Protection for Intellectual Property “As it appeared in Punch 21/05/12) http://www.punchng.com/feature/the-law-you/legal-protection-for-intellectual-property/) and (“Protecting your Business Idea “As it appeared in THISDAY Lawyer 27/03/12) http://www.thisdaylive.com)


Many people have great ideas for new products or services but don’t have the means to get them to market and more often than not tend to look for a larger company to help them commercialize their idea.

There are different types of  types of protection available for works or material that can be described as proprietary, but there may be strategic and financial reasons why applying for IP rights may not be commercially advantageous.

Intellectual property (IP) law is a complex area and as such you should consider seeking professional advice, for instance from an attorney, before deciding how to proceed.

If your idea is so unusual that you think it’s profitable, before you show it off, you’ll want to have that company sign a nondisclosure agreement promising it won’t steal it. This is because there is no patent protection for an idea in Nigeria.

 

Legal basis for protecting an idea?

In Nigeria Intellectual property rights protect the exploitation of ideas, information and inventions that are of commercial and proprietary value(not all things can be protected)

There is ample protection for the intellectual property rights of both Nigerians and foreigners this includes copyright, patents and industrial and design rights in line with international treaties and conventions.

The laws enumerated below make up the legal regime for the protection of Intellectual Property Rights in Nigeria.

Nigerian Copy Right Act, Cap. C 28 Laws of the Federation of Nigeria 2004

 Patents and Designs Act, Cap P2, Laws of the Federation of Nigeria 2004; and

 Trade Marks Act, Cap. T13 laws of the Federation of Nigeria 2004

 Intellectual property protection includes Copyright, Patent, Industrial Design and Trademark.

An idea that has not been exploited is not protected under the legal regime governing intellectual property; simply put an idea on its own is not protected by law.

For an idea to be protected it must be exploited or at least reduced into a fixed form for it to come under a head of protection under the Intellectual property regime in Nigeria.

Copyright exists in creative and artistic works such as books, movies, paintings, photographs and software. A copyright gives the holder of such copyright the exclusive right to control exploitation, production and adaptation of such a work for a certain period of time.

Section 1 of the Copyright Act states very categorically that class of works that are eligible for protection, the list is exhaustive and sadly it does not include ideas.

As matter of fact unless an “idea” or work falls under any of the above headings, that idea or work will not be eligible for copyright protection. As a rule ideas are not protected only works are protected by copyright.

Copyright exists in work on the basis of originality and fixation. Simply put for a   work to be eligible for protection under copyright such a work must be original and must be reduced into a fixed form.

Thus if an idea is reduced into a fixed form as long as the two requirements for copyright protection are met, then copyright protection would lie in favour of such a work and as such it may be wise to reduce such an idea into a fixed form and get copyright protection for such a work.

     

       Practical steps to protect an idea

Many people have great ideas for new products or services but don’t have the means to get them to market and often look for a larger company to help them. If your idea is so unusual that it’s profitable, before you show it off, you’ll want to have that company sign a nondisclosure agreement / confidentiality agreement promising it won’t steal it.  This is because there is no patent protection for an idea in Nigeria!

Get a good lawyer in your industry to help you write a nondisclosure agreement. Some agreements spell out exact confidentiality measures and obligations and monetary penalties if the signer is found to have breached the agreement, though you don’t want terms so harsh that nobody would sign it, although reluctance to sign the agreement would usually be a sign that the company might just be willing to borrow your idea behind your back.

Without such protection, winning an infringement claim may be difficult. If you do encounter a copycat, it may be worth hiring a lawyer to investigate the merits of your case. If the manufacturer replicated your product and packaging to the point of customer confusion or copied something that’s protected under trademark or copyright law, you might have a strong legal case.

     

       Basis of a Non-disclosure /Confidentiality agreement

It is trite law that every person who receives information which has the necessary “quality of confidence” about it knowing that he is required to keep it confidential is likely in law to be deemed to have accepted (either expressly or impliedly) obligations of confidence relating to that information (at least if he does so before he receives the information). Accordingly, as a matter of law, a written secrecy agreement is not strictly necessary. 

Nevertheless, it is highly desirable for the protection of the person disclosing the information that such an agreement should be entered into by any recipient of it, since having documentary evidence of the information regarded as confidential and the acceptance of confidentiality obligations relating to it will assist him in enforcing them against the recipient.  

No gainsaying the fact that the process of entering into the Agreement will also be evidence that the disclosing party operates a practice of maintaining confidentiality which will be of assistance should he need to take proceedings for breach of confidence against the recipient or any third-party such as ex-employees of his own or of the recipient.  

Additionally, which may be just as important in some cases, the recipient will have a clear statement as to what he may and may not do with the information provided and if this is clear any breach of same will be easier to prove. 

 

       Possibility of Litigation

However it’s more probable a company would go the extra mile to alter your product or design just enough to dodge any legal issues. And please keep in mind that enforcing those legal protections in court can be prohibitively expensive. In Nigeria just like it obtains in other jurisdictions, a lawyer will first send a cease-and-desist letter, describing the believed offense and requesting the offender to stop producing the product and possibly pay damages. If letters don’t work, the next step is usually a lawsuit.

Please bear in mind that a law suit In Nigeria can cost hundreds of thousands of Naira in legal fees and filing fees and take away plenty of time from your business. Lawsuits in Nigeria simply take a long time, on average four years at the High Court and there’s no guarantee you’ll win.

Control Exposure to your idea

In the end, the best way to protect yourself is by being extra cautious about whom you share your idea with. It’s worth talking extensively with others in your industry and getting referrals before disclosing your concept to anyone and when in doubt “non-disclosure” is in itself a more potent device than a “non-disclosure agreement”.

            Conclusion

Simply owning intellectual property rights does not generate money.

To produce income the owners of these rights must exploit them financially through various types of commercial agreements including but not limited to licensing arrangements and/or
assignments of rights.

In a sense, all of these commercial agreements are an
attempt to turn intellectual property into intellectual capital that will then increase your cash flow!

Olufola Wusu Esq. © 2012

Principal Counsel  at Megathos Law Practice

Olufola Wusu is a Solicitor & Advocate and Intellectual Property consultant

He can be reached at fola@megathoslaw.com

@Olufola_MY_IP

OLUFOLA WUSU ESQ

MAY 2012

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by Olufola Wusu Esq

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