The African continent offers up an abundance of opportunities for businesses; it is rich in natural resources and the climate is conducive to various agricultural initiatives. Increased urbanisation has created opportunities for property investors, transport- and infrastructure development, and digitised financial products that foster financial inclusion. Due to its unique challenges, Africa also provides excellent space for businesses to innovate and make a difference by addressing the hunger crisis, drought and lack of access to energy on the continent, for example.
Local businesses and foreign investors entering the African market will undoubtedly create IP assets as they establish and cement their brand, develop new technologies to solve the continent’s challenges, and introduce new products and services to new customer bases.
Unfortunately, far too many of these businesses treat IP protection as a mere afterthought or implement it in a vacuum rather than rightly emphasising their IP as a vital part of their overall business strategy, says Webber Wentzel partner Bernadette Versfeld. “A business’s intellectual assets are, in many instances, its most valuable assets.”
On numerous occasions, Versfeld has been briefed by companies that failed to adequately identify and protect their IP in their ventures into Africa through the registration of their IP rights and by formalising arrangements by means of appropriately drafted agreements. “For the very reasons that you protect your other business assets, you equally need to protect your IP assets, failing which there are likely to be significant financial implications,” says Versfeld. “The legal costs associated with IP litigation, far exceed the costs incurred to protect a business’s IP, and if litigation is unsuccessful this has a significant impact on the value of a business because it affects the ability to licence the IP at a favourable royalty rate and in the process decreases the sales price you are likely to achieve,” she clarified.
“If your strategy is to get to market first and you fail to first protect your IP, you could very well lose your competitive advantage,” Versfeld emphasised. “Many businesses don’t realise that IP rights are territorial and that they need to protect their IP in each African country they intend to trade in.”
There are a number of other areas that need to be taken into account when considering IP strategy including tax and exchange control consequences; employment issues, for example, the ownership of IP created by employees; and competition issues, to name but a few, explained Versfeld. “Having the benefit of an expert with knowledge not only of the legal issues, but also an appreciation for the idiosyncrasies of the African market is crucial,” she says.
“The continent offers many opportunities which are capable of being fully realised provided that the creativity of local and foreign investors and entrepreneurs is appropriately leveraged by an informed IP strategy,” Versfeld concluded.
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