Remember the Eazyhire vs Easyhire saga?
It was the pinnacle of how blatantly an idea can be copied and implemented by impostors. Even Rocket Internet who are known to deliberately clone ideas of successful US startups are not as brutal. Most comments on the article were empathetic to Josh Okpata, founder of Eazyhire and everyone seemed to agree on one thing: the actions of the founder of Easyhire are morally unacceptable.
But is that where it ends?
The short read
If you are not given to a long read and legal jargon, the summary is that the founder of Eazyhire has a legal case to prosecute and potentially win against Easyhire. In essence, EASYHIRE is potentially in trouble with everything to lose if Eazyhire takes legal action.
The long read
According to the original article, the founder of Eazyhire alleged that Easyhire adopted his idea (i.e. to provide a platform that allows anyone to rent, lease or hire anything as long as the object of the rent, lease or hire is legal), employed a similar colour scheme in the design of its website, motto, Facebook and Twitter tagline. Apparently, the only difference between both brands is the replacement of the word, ‘z’ with the word ‘s’ in the name of both brands.
The above scenario demonstrates the need for companies, particularly startups seeking to build a brand in their chosen industry, to take the necessary legal steps to protect their intellectual property and consequently, their brand.
Without dwelling on the legal ramifications or moral repercussions of the allegations of the founder of Eazyhire, we would attempt to explore the legal issues that could arise from the above scenario.
CASE 1: Is there an Intellectual Property infringement?
Intellectual Property rights (‘IPR’) protect the exploitation of ideas, information and inventions for their economic or proprietary value. However, an idea in and of itself, is not accorded legal protection by the law. For an idea to be protected, it must be exploited and/or be reduced in a fixed form to come under a head of protection under Intellectual Property laws.
Obviously, most startups, like Eazyhire are the products of great ideas reduced into a product or service provided by the said startup. The essence of protecting your IPR, and consequently your brand, is to prevent a copycat from replicating your idea and your brand to the point that it results in consumer confusion and loss of business.
In the scenario above, the obvious intellectual property issues seem to arise from the alleged similarities in the names ‘Eazyhire’ and ‘Easyhire’, the domain names ‘Eazyhire.com.ng’ and ‘Easyhire.com.ng’; the services offered and the Social Media branding.
What is in a name?
From the intellectual property(‘IP’) point of view, the name by which a business is known, described, associated with or carries on business is a very integral and important part of his business because it indicates the kind of business he does and is what his customers refer to patronise him. Your trade name is your brand and what differentiates you from your competition. Thus, though Konga and Jumia provide the same service, their trade names are so distinctive that their customers are not confused into mistaking one for the other. This is because IP law prevents a person from using a name similar to that already in existence without the consent and authority of the owner of the name.
From the scenario, there is no doubt that the names ‘Eazyhire’ and ‘Easyhire’ are similar. They sound alike and the only difference between both names is the replacement of the letter ‘z’ with ‘s’.
In Nigeria, legal protection is accorded to the name by which an organisation conducts its business and provides services to the public. Thus, the Companies and Allied Matters Act (CAMA) requires that a trade name be registered at the Corporate Affairs Commission within 28 days of the commencement of business to ensure that no name is used that might deceive, confuse or mislead the members of the public as to the distinctiveness between the two separate trading entities.
Once the name is registered with the CAC, no other entity can use such a trade name or attempt to register a separate or independent business using the same or a similar trade name.
LEGAL ADVICE 1: Seek legal action against Easyhire as a registered business entity
Eazyhire may file an action at the Federal High Court against Easyhire, with the Registrar-General of the Corporate Affairs Commission as a Defendant, for an injunction preventing Easyhire from registering and using the name (if not registered) or striking out the name from the register of names, if registered with the CAC.
The basis for the action above is Section 30(1) of the CAMA which specifically provides that the “Registrar-General shall reject the registration of a name which so nearly resembles an already registered name so as to be calculated to deceive the public”.
There is no doubt that the names ‘Eazyhire’ and ‘Easyhire’ so nearly resemble each other in a manner calculated to deceive the public. Hence the application to strike out the name ‘Easyhire’ from the register of names.
However, aside from the protection accorded to the trade name of a business under the CAMA, the trade name as a trademark of a business could be accorded legal protection.
CASE 2: Is there a trademark infringement?
A trade name is the name by which a business distinguishes itself and its trading objects from all other business. A trademark is that mark, word, name, logo, phrase or other graphic symbol which distinguishes a good or service offered by one undertaking from those offered by another. A trade name could be the trademark of the company e.g. ‘Sony’, ‘Ford’, ‘Dangote’.
Is your Trademark registered?
In Nigeria, greater legal protection is accorded to a registered trademark. Thus, the trade name of a startup should be registered as a trademark. Admittedly, most startups in Nigeria (probably because of the exorbitant cost associated with registering a trademark) overlook the economic value of registering trade name and consequently, their brand. This is because once a trade name is registered as a trademark, no other entity can use such a trade name.
LEGAL ADVICE 2: File a legal action to protect your exclusive right
Thus, if ‘Eazyhire’ is a registered trademark in the trademark registry, it shall be entitled to file an action in the Federal High Court seeking to protect its exclusive right, to the exclusion of all others, to use its trade name or a name similar to its trade name and an injunction restraining Easyhire from using Eazyhire’s trademark.
LEGAL ADVICE 3: File a legal action to protect your tort
However, in the event that the trade name is not a registered trademark, Eazyhire may be entitled to a cause of action in tort under the equitable doctrine of ‘passing off’. The essence of this tort is to prevent unfair competition by preventing the alleged infringer of a trademark from carrying on his business in such a manner as to mislead or calculated to deceive the public into believing that the infringer’s product or service is that of the owner of the trademark.
Thus, Easyhire commits the tort of passing off if it carries on its business under a name or description similar to Eazyhire or otherwise does anything to mislead the public into believing that its services are those of Eazyhire thereby taking advantage of Eazyhire’s reputation and goodwill.
To succeed in an action for passing off, Eazyhire will need to prove that Easyhire’s name, domain name, colour scheme and activities are ‘calculated’, likely to deceive the public, and take advantage of Eazyhire’s reputation and goodwill. Here, liability is strict such that even if Easyhire’s conduct is entirely honest and innocent in the sense that it had no intention of deceiving the public, it would still be liable once Eazyhire is able to prove that Easyhire’s conduct were calculated to deceive the public.
Some Legal antecedents
(1) A very good example is the case of Niger Chemist V. Nigeria Chemist & Anor (1961) 1 All NLR 171. In that case, Niger Chemist carried on business as a chemist since April 1952 and had several branches in Onitsha and other towns in Eastern Nigeria. Nigeria Chemist on the other hand founded a firm carrying on exactly the same business in Onitsha under the name ‘Nigeria Chemist’. Both were registered at the CAC. The Court granted an injunction against Nigeria Chemist on the basis that their use of the name ‘Nigeria Chemist’ was intended to deceive the members of the public to believe that they have a relationship of some sort with Niger Chemist.
(2) In Continental Pharmaceutical Limited V. Sterling Products Nigeria Plc. & Smithkline Beechan Plc. (1995) Suit No. FHC/L/CS/460/95, is a legal battle that lasted for about 16 years where the Defendant used the white and blue logo with the packaging concept of Panadol for its own product ‘conphamol’, damages of N500 million was awarded against the Defendant for infringing the copyright of the Plaintiff.
CASE 3: Is there a domain name infringement?
Of special mention is the need for a startups to protect their domain name. This is because domain names perform the same function online that trademarks perform offline.
A trademark makes your product or service prominent in the marketplace while a domain name protects the product or service worldwide. According to a quote attributed to Bill Gates, the founder of Microsoft, “Domains have and will continue to go up in value faster than any other commodity ever known to man”
Thus, a startup should ensure that its domain is well-protected for security, world-wide prominence and to prevent loss of profit. In Nigeria, a domain name can be registered as a trademark provided that the domain name satisfies the conditions required to be duly registered and protected like a trademark. To be registered as a trademark, the domain name must be unique and capable of identifying and distinguishing the goods and services of a company from that of other companies and also act as a reliable source identifier for the concerned goods and services on the internet.
LEGAL ADVICE 4: Seek legal action for infringement against both your domain name and branding
The owner of the domain name ‘Eazyhire.com.ng’ can seek legal protection against infringement of hid domain name. In addition to the name, if Eazyhire registers a combination of colours as part of its logo or brand, the combination of colours can be identified and registered as an ‘accompanying device’. Thus, Eazyhire will be entitled to legal protection of its exclusive use of the combination of colours via the statutory action of passing off (which is different from the action in passing off for an unregistered trademark).
These are some of the legal issues that arise from the scenario highlighted above.
POST SCRIPT: Josh Akpata granted an interview where he noted that his startup has necessary documents (including trademark rights) and he will send a “cease and desist” letter to the imposter
New Report: Nigerian startups raised a combined $38.01m in Q3 2019, just 7% higher than Q3 2018. Download the report.
Attend Techpoint Startup School, a 5-day intensive training for budding African tech founders and CEOs. Classes start 2nd of December. Enrol now.
Cynthia Igodo is the lead Legal adviser at VoguePay and is a general practice lawyer with interest in payments, FinTech, cyber-fraud and telecommunications law. You can connect with her on LinkedIn or shoot her a mail at [email protected]