Image by Mohamed Hasan

Background

Over the past three days, we have been sharing details of the conversation we had with the entrepreneurs on the world intellectual property day (WIPD). We focused on how they got their ideas to the market, the value of intellectual property (IP) including trademarks, the impact of registration of IP and related status of well-known trademarks. This piece will focus on infringement. In particular, what happens when there is wrongful use of the business’ IP? The emerging theme from the conversation was the challenge of having to contend with ‘copycats’ to their brands or having their commercial models being copied by adverse parties.

Tales of IP (mis)appropriation are common in entrepreneurial circles. From allegations of IP theft by local and foreign corporations¹ to tales of innovators having their business models replicated soon after launch. It is clear that the entrepreneurs’ experience with infringement is not unique. For the purpose of this piece, this blogger shall focus on three key insights that arose from the discussion.

1. Infringement as a reminder of the value of protection

According to Alex Kamau (co-founder, Let’s Drift), despite the negative perception associated with brand copying, it could still be viewed as validation that the business idea was viable. To him, people don’t copy bad ideas. More importantly, he added that such acts should nonetheless prompt an entrepreneur to take steps to protect their businesses.

It was particularly noted that entrepreneurs may often forgo IP protection as they don’t deem it necessary or valuable to their business. Unfortunately, they then end up filing for such registration when it is ‘too late’ after the value of the brand has already been affected. The delay in registration is often due to the related financial costs including registration costs and legal fees. Alex Kamau compared these costs to other financial needs required to operationalize the business and noted that the priority is always the latter. This creates a live struggle for scarce funds between IP protection or operationalizing the business. To him, this is the reason why some entrepreneurs go for IP protection at a later stage when it may be too late. From this conversation with Alex, we note a dual perspective of infringement: On one hand, it is a negative act as it is detrimental to startups’ commercialization efforts whilst on the other hand it should also be viewed by entrepreneurs as a timely reminder on the value of protecting their ideas.

An example of the latter perspective was seen when Caroline Mutabacho (co-founder, Nature’s Touch LLP), detailed how their enterprise was prompted to seek trademark registration after their brand content was copied by a social media user. This is a key insight not only for entrepreneurs but also other stakeholders in the IP value chain. At CIPIT, we have observed the low uptake of IPRs among entrepreneurs in Kenya. Existing evidence attributes this to minimal knowledge of IPRs. In 2019, out of the 1041 patent applications filed at Kenya Industrial Property Institute (KIPI), 340 applications were by Kenyan residents. In addition, the Kenya National Innovation Indicators Survey 2015 reported that an average of only 12% of firms recorded uptake in IPRs. This is in spite of the survey noting a fairly high innovation intensity among the respondents where implementation by the enterprises was 45% for product innovations and 40% for process innovations.

The low uptake of IP can be attributed to the general lack of awareness about IPRs, lack of assistance from staff at intellectual property offices, inability to meet required fees, inability to meet required standards in applications,² and lack of knowledge of the value of their intellectual assets. The combination of these factors underline the need to educate and enhance awareness amongst innovators on the value of protecting their innovations.

2. IP Protection online

One of the most important marketing and customer relationship tools for startups in modern times is the use of social media platforms. These platforms allow enterprises to advertise, build and maintain brand awareness amongst users. By putting out useful and timely content about the business or their products, a number of enterprises have successfully leveraged social media to build a consistent brand presence. However, from an IP standpoint, there is an inherent risk in entrepreneurs’ use of social media. In a bid to build brand recognition, entrepreneurs share information about their businesses and products, some of which may be the subject of IPRs e.g. trademarks. The act of sharing such content give every user including adverse parties the freedom to appropriate, lawfully or otherwise, information shared publicly. This creates an opportunity for adversaries to create similar content or enables copycats or competitors to reap the goodwill built up by the entrepreneur thereby infringing on IPRs.

Caroline Mutabacho (co-founder, Nature’s Touch LLP) stated how she noticed a follower who had been following their enterprise’s social media pages for the sole purpose of reposting the business’ images as their own. This is a prime example of where a business using social media, with the aim of increasing brand recognition, ends up inadvertently exposing their IPRs to the risk of appropriation. The lack of control over the use of one’s brand coupled with the anonymity and pseudonymity offered by social media sites poses an increasing challenge to an enterprise’s efforts at expanding their digital reach.

This necessitates proactive efforts on the part of entrepreneurs to protect their business’ brand. As reiterated in the conversation, the most effective way to do this is to, as a deterrent measure, apply for a trademark over the enterprises’ name, logo and/or business slogan etc. Trademark protection grants the applicant exclusive use over any of the business’ protected marks thereby allowing them to enforce their IPRs in case of infringement. In addition, inserting the business logo accompanied by a trademark designation/symbol in any content shared online also serves as a deterrent any potential misappropriation.

It is also worth noting that whilst social media sites also offer inbuilt protocols regarding IP infringement, these procedures are often temporary i.e. removal of infringing content or blocking infringing user’s account, thereby giving adverse parties leeway to create other accounts and repost infringing content.

In addition, a simpler method of resolving the infringement, as noted by Caroline Mutabacho, is to contacting the user directly. This would be an effective method where the other party was unaware of the existing brand and is willing to cease the infringing activities.

Alternatively, a different method of addressing infringement is to adopt the First-mover advantage. A first mover is a product or a service that is the first to market thereby gaining a competitive advantage.³ The first-mover advantage is a management concept which provides that a firm’s ability to be perform better than its competitors can be as a result of being first to market in a new product category.⁴ This concept was introduced by Alex Kamau who stated that innovating fast and being ahead of your competitors in terms of improving one’s products or services was an efficient way not only to address infringement but curb its impacts on the enterprise.

3. Collaboration over competition

Lastly, another interesting approach to infringement that arose during the conversation was the concept of ‘collaboration over competition.’ Specifically, the conversation regarding how entrepreneurs’ address IP infringement introduced a discussion around the benefits of collaborating or working with competitors and infringing parties as opposed to competing with them.

Alex Kamau stated that time and energy is lost every day as (businesses) ‘fight’ over IPRs. He posed an important question of whether it would be productive for entrepreneurs to spend their time litigating over infringement claims or rather spend their time exploring ways to innovate. Through this, he sparked an important discussion regarding the concept of collaboration during innovation.

The foundational principle behind the IPRs regime is to encourage innovation by offering exclusive protection for the product of such innovations. It is widely believed that the incentive to innovate is proportional to the level of protection offered.⁵ While this is generally accurate, it is not always the case because the incentive to innovate is also dependent on other factors such as context and circumstance.⁶ Studies show that in developing countries, a restrictive IPRs system actually hinders innovation by preventing access to technical knowledge that smaller firms need to ‘jumpstart’ their innovative activities.⁷ In addition, the success of technology hubs in the African continent has been attributed, in part, to collaboration with other support organisations and greater networks.⁸ In the context of the WIP day discussion, collaboration may therefore be beneficial to entrepreneurs in terms of assisting them to further develop their innovations and ‘take their ideas to the market.’ To this end, Alex Kamau commented it would be an asset for entrepreneurs to collaborate with like-minded people including competitors. From his experience, he mentioned that he was able to find most of the enterprise’s resources from his peers.

In conclusion, we are particularly pleased that the conversation sparked discussions regarding open collaboration which is a key focus of CIPIT’s research in the area of innovation policy in developing countries. This serves as further proof that robust IPRs systems may not always be conducive especially in settings where constraint-based innovation is prioritized. Further, the fact that this concept arose in a discussion with entrepreneurs highlights the fact that open collaboration is a practical issue that merits consideration in policymaking.

CIPIT thanks the entrepreneurs for their valuable insights.