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The Effect of Non-Registration of Contracts for Transfer of Technology in Nigeria: Beecham Group Ltd v. Esdee Food Products Nigeria Ltd1

  • O. A. Fagbemi

The main object of the National Office of Industrial Property (NOIP) Act 1979, is the regulation of all contracts and agreements for the transfer of technology to Nigeria. It attempts to achieve this by requiring all such contracts and agreements to be registered with the NOIP and for their terms to be predicated upon state or judicial consent.

In Beecham's case, the Court of Appeal decided that failure to register relevant contracts or agreements with the NOIP does not affect their validity. It is the submission of this note that the decision of the Court of Appeal was wrong: such contracts or agreements become tainted with illegality and, therefore, should be null and void.

Although this was an action for infringement of the plaintiff's (Beecham Group Ltd), registered trade mark “Lucozade”, this note will concentrate on the point of law (raised for the first time at the appeal), that non-registration of the transaction whereby the proprietorship of the mark was transferred to the plaintiff, rendered the transaction void. The defendant's argument was that the plaintiff had no locus standi to institute the action or use the trade mark, because it had failed to register a transaction that was registrable within the context of section 4(d) of the NOIP Act.

The Court of Appeal disagreed:

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2 This statute was passed by a military regime on 28 September, 1979, as Decree No. 70, Laws of Nigeria 1979. But following the Presidential Adaptation of Laws (Redesignation of Decrees etc.) Order (Statutory Instrument No. 13 of 1980) all Decrees (and Edicts on any matter within the Federal Legislative competence) made prior to 1 October, 1979 are to be addressed as Acts in conformity with the Constitution of Nigeria 1979.

3 S. 5.

4 Ss. 4 and 6. The NOIP is the agency of state to carry out this function. The intended procedure for regulation is that upon the legal conclusion of execution of contracts for transfer of technology, they are to be submitted to the NOIP. The NOIP is then to ensure that they do not contravene any of the specifications in s. 6(2).

5 S. 9 gives to aggrieved parties, a right of appeal to the courts against a decision of the Director or Council of the NOIP not to register a contract or agreement.

6 See generally pp. 115, 116, and 117.

7 At p. 116.

8 See pp. 116 and 117.

9 See Akaighe v. Idama [1964] 1 All N.L.R. 322 at 327 where the Supreme Court of Nigeria ruled that a “document must be read as a whole and its parts interpreted in that light and an effort must be made to achieve harmony amongst its parts,”.

10 3 L.T. at 494.

11 For a judgment that proceeded on similar analysis as that presented here, see Nnamani J.S.C. in lfezue v. Mbadugha (1984) 1 S.C. N.L.R. 427, at 477479.

12 It is submitted that the use of the words “not later than” in conjunction with the word “shall” in s. 5 (particularly in the context of the Act) also disclose the peremptory character of the requirement.

13 See Orojo, J.; Nigerian Commercial Law and Practice, (London, 1983) at p. 58 that“ … a contract may be expressly prohibited or the prohibition may be implied from all the circumstance … In the case of implied prohibition, the court is faced with a question of construction of the statute to ascertain whether or not the object is to forbid the contract.”

14 See Bowmaker v. Tabor [1941] 2 All E.R. 72.

15 See Liverpool Borough Bank v. Turner above; Ifezue v. Mbadugha above; and St. John Shipping Corporation v. Joseph Rank Ltd [1956] 3 All E.R., at 687688 where Devlin J. said: “… a prohibited contract will not be enforced. If the prohibited contract is an express one, it falls directly within the principle. It must likewise fall within it if the (prohibition) is implied … The same reasoning must be applied to a contract which although legal in form is performed Unlawfully …” In the view of the writer, s. 5 stipulates a manner of performance for those contracts or agreements contemplated by the NOIP Act.

16 [1939] 1 All E.R. 513, 523.

17 1962 N.R. N.L.R. 92, at 94.

18 See Annual Report of The NOIP 1983, (Lagos, 1984) at 5. Moreover the regulation of terms on which technology is transferred to Nigerian parties cannot but be considered to be of utmost public importance once it is viewed in the context of efforts to indigenise the Nigerian economy.

19 Above. These submissions that a sublease of state land, without the prior approval of the State Governor, was illegal as being contrary to public policy were rejected.

20 Egerton v. Brownlow H.L.C. 1, at 123.

21 See Kasumu v. Baba-Egbe [1956] 3 All E.R. 539(P.C);Fashina v. Odedina [1975] Nig. Comm L.R. 201. On the other hand Nigerian courts have denied that subleases of State land, made without the statutorily required prior consent of the governor or other appropriate State authority are void on grounds of public policy. See Solanke v. Abed above and Harry v. Martins [1949] 19 N.L.R. 42.But contrast Esi v. Moruku [1940] 15 N.L.R. 116 which is now considered per incuriam. These cases give credence to Lord Wright's further view in the Vita Foods case that “public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds”—above at 523.

22 See n. 21 above.

23 At p. 272.

24 These two assertions are admitted in UNCTAD document TD/B/779: Formulation of a Strategy for the Technological Transformation of Developing Countries.

25 This is the effect in law of an illegal contract. The courts “will not assist in enforcing an agreement which is illegal”–Leontaritis v. Nigerian Textile Mills Ltd [1967] Nig. Comm. L.R. 114 at 122.

26 Although there is no direct evidence of the precise extent of such incidence, the National Office in its Annual Report for 1984 (Lagos, 1985) admitted to it efforts to minimise, if not eliminate, what Nigerian firms considered as the interference of the office in their private affairs—see paragraph 2:2. It also notes that non-response by companies to inquiries from the NOIP is rampant—see paragraph 2:3.

27 It is the view of the author that the Exchange Control regulations (and therefore NOIP Act, s. 7), proscribe even the enjoyment, locally, of payments due under such transactions.

28 The lacuna, referred to is the failure of the NOIP Act to provide express sanction against non-compliance with s. 5. This does not derogate from the view that the Act impliedly nullifies all unnotified contracts or agreements of transfer of technology as illegally performed and therefore void.

29 Source: UNCTAD document TD/B/C.6/81: Compilation of Legal Materials Dealing with Transfer and Development of Technology. Under this clause, proof of registration is required“to be able to enjoy the benefits, incentive aids (etc. provided by government) or for establishing or expanding industrial (etc. activities)”.

30 See n. 8 above.

31 No. 29. Laws of Nigeria 1965. Section 5 relates to registration under Part A of the Trade Marks Register, S. 6 deals with Part B. There is no indication, in the judgment, of which Part the Trade Mark—“Lucozade” was registered.

32 It therefore follows that the registration of the plaintiff as registered proprietor is ineffective.

33 No. 60 Laws of Nigeria 1970. It is submitted that the provisions of section 9(4) (a) Patents Act 1970, on Nullity of a Patent sufficiently cover the prospects of complaints by persons who may have, in the interim, become licensees. The courts are quite able to determine cases where royalties should be repaid.

1 [1985] 3 N.W.L.R. to be referred to in this note as Beecham's case.

* The author is extremely grateful to Professor Gerald Dworkin, Centre for Commercial Law Studies, Queen Mary College, London, for his comments and suggestions.

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