Fair Trade, Monopoly And Competitiveness: Appraising The Legal Rights Of Franchisees Against Parallel Imports In Nigeria

In the United States of America (“the U.S.”), neither an exclusive right of control is given to owners of branded products that have been put on the market in any of the States within the U.S., nor an outright ban placed on parallel importation of such goods. The U.S. Customs Service regulation on importation of branded goods (effective March 26, 1999) allows importation of goods which are physically and materially different from those authorized for sale in the U.S. even if they carry the same trademark; as long as the goods carry a label with information identifying them as so.

In the West African sub-region, the treaty on free trade which encompasses the principle of exhaustion of IPR in marketed products has remained ineffective unlike the EU’s Treaty of Rome. In 2008, the Economic Community of West African States (“ECOWAS”) in an attempt to foster international trade within the region developed the ECOWAS Competition Rule. The ECOWAS Treaty therefore prohibits all agreements which may affect trade between ECOWAS member states and the object or effect of which are or may be the prevention, restriction, distortion or elimination of competition.

Notably to date, neither the domestication of the ECOWAS Competition Rule nor an enactment of a locally developed competition law has taken place in Nigeria. For this reason therefore, a parallel importer who is sued by an IP owner of a branded product, cannot make the ECOWAS Competition Rule a defence before the courts in Nigeria. The legal rights of IP owners to the exclusive control of their branded products in the country and the legal options available to enforce such rights will therefore continue to vary, according to the facts of each case.

CONCLUSIONS

In view of the fact that Nigeria is currently seeking to raise its level of competitiveness by opening its economy to more international trade and investments, it will be more expedient to adopt policies, like in the U.S., which will attempt to strike a fair balance between the proprietary rights of patentees, trademark owners and their franchisees on the one hand and the rights of the average entrepreneurs and consumers to legitimately trade and have free access to choices on the other.

In the meantime, in so far as Pfizer Specialties Limited Vs. Chyzob Pharmacy Limited continues to represent the state of the law on parallel imports in Nigeria, it is clear that ‘parallel imports’ is not actionable in Nigeria. Consequently, legal redress to parallel imports will have to be pursued through a multifaceted course of action which may include enforcement of contractual right; injunction for the preservation of proven economic interest; relief against the violation of registered licenses and trading standards; and any other actions in tort against unlawful interference with trade.