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Title:  BKY Insurance Agencies Ltd v First Assurance Ltd
Venue:  High Court at Nairobi( Milimani Commercial & Admiralty division)
Case id:  Civil case no 762 of 2012
Authoring judge:  A. Mabeya
Date of Decision:  12th August 2013
Plaintiff: BKY Agencies Ltd
Defendant: First Assurance Ltd
Key words:  Trademarks    

Facts
The parties to this suit had entered into an agreement on 4th February 2011 on matters concerning the sale and distributing of an insurance product branded 'First Lady'. The plaintiff unilaterally applied to be the sole owner of the trademark 'First Lady' on 13th January 2011 and the application was successful. Pursuant to the agreement, the plaintiff gave the defendant a 30 days notice to terminate the agreement but the defendant continued trading in the product in dispute in defiance of the notice. The plaintiff sued the defendant for trademark infringement.

Issues
1.    Did the plaintiff have the locus standi to apply for registration to acquire ownership of the trademark 'First Lady'?

Holding
The court held that from the agreement, the plaintiff was merely a distributor of the insurance product 'First Lady' and therefore could not claim ownership of the product. The court therefore encouraged the defendant to take the necessary steps to challenge the registration of the trademark 'First Lady' by the plaintiff. The court dismissed the suit with costs to the defendant.

Cases Cited
1.    Twiga Chemical Industries Ltd v Rotam Ltd & Anor

Ruling
1.          Before this Court is the Plaintiff’s Notice of Motion dated 14th December 2012 brought under the provisions of Order 40 Rule 1, Order 51 rule 1 of the Civil Procedure Rules and Sections 1A,
 1B and 3A of the Civil Procedure Act. The Application sought interim orders to prevent the
 Defendant, its agents, officers, servants, workmen, employees or any other person acting or
 purporting to act for and on behalf on the Defendant from using the trademark name “First Lady”
 or carrying on any business under the said trade mark name. Prayer 3 of the Application sought
 such injunction pending the hearing and determination of this suit. The Application was brought
 on the grounds that the Plaintiff is the registered owner of the trademark known as “First Lady”
 under section 7 of the Trade Marks Act which entitles the Plaintiff to the exclusive use of the said
 trademark. The Plaintive noted that there was an agreement as between it and the Defendant
 dated 4th February 2011 (hereinafter “the Agreement”) which provided for a termination notice to
 be given by either party to the other of 30 days. The Plaintiff had issued such a notice to the
 Defendant but the latter had continued, without authority, to use the Plaintiff’s said trademark
 thus causing loss and damage to it.

2.        The Plaintiff’s Application was supported by the Affidavit of its Principle Officer, John Kageche
sworn on 14th December 2012. The deponent attached to his said Affidavit a true copy of the
 Certificate of Registration of Trade Mark detailing that the name FIRST LADY was registered as
 Trade Mark No. 70152 in class 36 (Insurance services). The registered proprietor was the
 Plaintiff and the effective date of registration was 13th January 2011 expiring on 13th January
 2021. The deponent noted that the Plaintiff and the Defendant had entered into the Agreement
 whereby the Plaintiff authorised the Defendant to use of the said trademark for the purposes
 indicated therein. Under clause 18 of the Agreement termination of the same could be effected
 by either party giving to the other 30 days’ notice. Mr. Kageche attached a copy of a letter from
 the Plaintiff to the Defendant dated 24th May 2011 in which he stated that the 30 day notice had
 been given to the Defendant. He maintained that as from 24th June 2011 the Defendant was
 prohibited from using the Plaintiff’s trademark FIRST LADY. He further maintained that it was
 quite clear that the Defendant was benefiting from revenue properly due to the Plaintiff, without
 being more explicit as to where such revenue was generated from.

3.          The Defendant filed a Replying Affidavit on 24th January 2013 sworn by its Managing
 Director Stephen Githiga dated 19th January 2013. The deponent detailed that the invention
 and development of the insurance product known as “First Lady” was a venture by the
 Defendant approved by the Commissioner of Insurance in the Defendant’s name. The parties
 had entered into the Agreement merely for distribution purposes with the Plaintiff as the “Agent”
 and the Defendant as the “Underwriter”. At no time during the negotiations, development and
 launch of the said insurance product was it ever disclosed by the Plaintiff to the Defendant that
 the former had registered a trademark for the same. The deponent maintained that this sudden
 disclosure came as a major surprise to the Defendant who considered it to be a clear
 demonstration of fraud and mala fides on the part of the Plaintiff. Pursuant to the disclosure that
 the Plaintiff had secretly registered in the said trademark in its favour, the Defendant was now
 going to commence proceedings before the Registrar of Trade Marks seeking amongst other
 matters, the expungement of the trademark from the Register. Mr. Githiga maintained that the
 Defendant cannot be alleged to have infringed the trademark since the concept for the said
 insurance product was the Defendant’s only and that the Plaintiff had never disclosed to it that it
 was registering the same. He drew the attention of the Court to the fact that the Plaintiff’s
 application for registration was lodged on 13th January 2011 and registered 8th November 2011,
 the Agreement being dated 4th February 2011.

4.            Mr. Githiga maintained that the Defendant could not be restrained by injunction for trading in or dealing with its own product merely because the Plaintiff had maliciously and fraudulently stolen
a march over the Defendant by secretly registering the trademark. The deponent then went into
 considerable detail as to what he had been advised by the Defendant’s advocates as regards
 the various sections of the Trade Marks Act (hereinafter “the Act”). He noted that it had been at
 all times within the Plaintiff’s knowledge that the Defendant, as an insurance company, was the
 sole entity licensed by the Insurance Regulatory Authority to develop, deal in and open the First
 Lady insurance product in Kenya. The Plaintiff, not being an insurance company, cannot “own”
 an insurance product in Kenya and its role was purely as an agent. In this connection, the
 deponent quoted relevant sections of the Insurance Act and maintained that the Plaintiff was in
 breach of the same. The Deponent then went into detailed matters pertinent to submissions
 rather than an Affidavit but did annex copies of various supporting documents in an effort to show
 that the word “First” was used in a number of products promoted by the Defendant in relation to
 its insurance business bearing in mind its name “First Assurance Ltd”.

5.           The Plaintiff, through the said John Kageche, filed a Further Affidavit upon leave being obtained from Court 28th November 2012. The same was dated 11th February 2013. Here again this
Affidavit brought on matters in relation to various sections of the Act upon which the deponent
 had been advised by the Plaintiff’s advocates on record for it. The deponent maintained that the
 Defendant had chosen to ignore the Notice of Termination as per the Plaintiff’s letter dated 24th
 May 2011. He also maintained that the Plaintiff had written to the Defendant on numerous
 occasions asking it to stop using the name “FIRST LADY”. He noted that no proceedings in
 opposition were ever filed by the Defendant opposing the registration of the trademark “FIRST
 LADY”. Mr. Kageche also noted that the Plaintiff lodged its application for the registration of the
 trademark on the 13th January 2011 before entering into the Agreement. It was the Plaintiff who
 had approached the Defendant with a product name and concept and certainly the Defendant
 was excited at the name resonating with that of the Defendant Company. The deponent also
 stated that it was obvious that the registration process was not an afterthought but a protective
 measure taken by agents for insurance companies that have ridden on the creativity of such
 agents and have adopted their ideas which they themselves never had the clear vision for. He
 noted that the registration process for the trademark had taken over six months.

6.           Mr.Kageche emphasised that the Plaintiff is not claiming to own the insurance product but is
claiming the name “FIRST LADY” duly registered to it and which ought not to be used by the
 Defendant in marketing its insurance product. Mr. Kageche drew attention to the fact that in the
 Recitals to the Agreement it was provided:
“WHEREAS the AGENT is desirous of placing and administering, it Special Scheme on Motor
Insurance with The Underwriter (hereinafter called ‘FIRST LADY Scheme’) AND WHEREAS the
Underwriter is desirous of providing Insurance cover for The Scheme in accordance with the
terms and conditions stipulated in the respective cover summaries.”
From this, the deponent concluded that the ownership of the Scheme at all times belonged to the Plaintiff as the Defendant was only providing the insurance cover for the same. Mr. Kageche concluded his further Affidavit by stating that he had been advised by his lawyers on record, that the Plaintiff was
entitled to the protection of its Intellectual Property by virtue of Articles 260 and 40 of the Constitution. He urged the Court not to be intimidated by the Defendant being a large insurance company which was
doing its very best to dispossess the Plaintiff of its Intellectual Property.

7.         The Defendant filed its written submissions in opposition to the Plaintiff’s Notice of Motion dated 14th December 2012 on 7th May 2013. The submissions commenced on the premise that the
Plaintiff’s entire suit as well as the Application before Court were based on a serious case of
 fraud and bad faith through which the Plaintiff, secretly and cunningly, registered the said
 trademark “FIRST LADY” in a step calculated to unfairly steal the name away from the
 Defendant. The Defendant maintained that the invention and development of the insurance
 product known as “First Lady” was a venture by it, approved by the Commissioner of Insurance
 in its name and that the Agreement was entered into by the parties hereto merely so that the
 Plaintiff would become the agent of the Defendant for distribution purposes, with the Defendant
 as Underwriter. The fact that the Plaintiff had secretly registered the trademark in its sole name,
 without consulting or informing the Defendant, was both a fraudulent act and a serious one of
 bad faith. As per clause 6 of the Agreement, the product was owned by the Defendant and would
 be distributed through the Plaintiff and/or any other intermediary on a direct basis with the
 Defendant as the underwriter. The Defendant also pointed to paragraph 13 of the Plaintiff’s
 further Affidavit in which the deponent had stated that the Plaintiff was not claiming to own the
 insurance product, what it was claiming was the name “FIRST LADY” registered to it. As a
result, the sudden disclosure of the trademark came as a major surprise to the Defendant. The
submissions continued by alleging that the Plaintiff had let the cat out of the bag at paragraph 15
 of the said Further Affidavit where it had detailed that it wished to enter into an agreement or
 partnership with another insurance company and use the same trademark in a new arrangement.  Finally, the Defendant detailed that the product was invented and developed by it after a lot of
 intellectual effort and it was consequently entitled to the protection of its intellectual property and
 to the protection of the law.

8.    As regards the law, the Defendant argued that section 7 of the Act, although conferring
 exclusive rights to a person registered as the owner of a trademark, did not stop an application
 enquiry into the manner, motivation, irregularities or intentions leading to such registration. It
 pointed to section 10 of the Act which provides an exception to the “exclusivity principle” where a
 user has continuously used a trademark from the date anterior to the application for registration.
 The Defendant noted the Ruling of my brother Mutava J. in Milimani HCCC No 447 of 2011
 Twiga Chemical Industries Ltd v Rotam Ltd & Anor. in which an injunction applied for by a
 registered owner of a trademark against a respondent was refused on the ground of fraud and ill
 motive employed by the Applicant in obtaining the registration and particularly, the finding that
 the Applicant had in fact “stolen” the invention from the respondent, who was the real owner of
 the product. It maintained that the secret registration by the Applicant of the said trademark was
 deliberately calculated by it so as to be used as against the Defendant for economic benefit. The
 Defendant could not be alleged to have infringed the said trademark since the concept for the
 Insurance Product was the Defendant’s and not the Applicant’s. To this end of the Defendant
 quoted from the finding of Mutava J. in the Twiga Chemical case as follows:
“The 1st Defendant has clarified that the two parties jointly participated in the promotion of the
 product ... My concern however is the unilateral manner in which the Plaintiff went ahead to
 register the mark ... As the sole distributor of the product for the 1st Defendant, the basic step
 that the Plaintiff was expected to take was to share the need for the protection of the mark with
 the manufacturer of the product and to involve the manufacturer in the registration of the product
 ...... the secretive approach taken by the Plaintiff in the registration of the mark cannot therefore
 go without raising eyebrows particularly in view of the eventual breakdown of the relationship
 between the parties.
 While on paper the Plaintiff is so registered, it has been shown .... that the Plaintiff does not
 possess any legal merits to the proprietorship of the mark. The Plaintiff has no ownership to the
 product which its mark seeks to protect ........
 If anything, I find it deserving that the 1st Defendant should take the necessary steps to challenge
 the subsequent registration of the trade mark by the Plaintiff, a move the Court has already been
 told is underway”.

9.        The Defendant drew the attention of the Court to the provisions of Order 40 rule 2 (2) of the Civil Procedure Rules, 2010. If the Court was so inclined to grant the injunction requested, it should do
so on condition that the Plaintiff do give security. The Defendant noted that it intended to make
 application under section 35 (1) of the Act to expunge the trademark from the register but, in any
 event, section 10 of the Act applied in this case in that the Defendant cannot be restrained from
 using the trademark since it continuously used that description for a long time now and before the
 Plaintiff’s Application for Registration was accepted on 8th November 2011. The Defendant also
 submitted that the said trademark offended section 14 of the Act in that the Plaintiff intended to
 deceive or cause confusion as regards the Defendant’s Insurance Product. In that regard, the
 Defendant also referred to sections 19, 2 (1) and 5 (1) of the Insurance Act which detailed that
 only a person registered under that Act could carry on an insurance business in Kenya provided
 he was so licensed to do so. The Plaintiff was in fact an agent of the Defendant who is defined
 under that Act as a person who, in consideration of the payment of a commission, solicits or
 procures insurance business for an insurer. Under those provisions of the Insurance Act, the
 Plaintiff could not develop, deal in and own the “FIRST LADY” insurance product in Kenya.
 Finally, the Defendant remarked that it had launched the Insurance Product in February 2011,
 over two years ago. It was already well-known in the insurance market and had acquired a
 considerable reputation as a result of widespread use, marketing, promotion and advertisement
 thereof solely conducted by the Defendant. As a result, the Defendant considered that this
 Application by the Plaintiff was suspect and clothed with ulterior motive.

10.        I have perused the Affidavits for and against the Application before Court. There is no doubt that the Plaintiff is the owner of the mark “FIRST LADY” as evidenced by the Certificate of
 Registration dated 9th November 2011. I have also perused the Agreement between the
 Defendant and the Applicant. The preamble thereto as set out above is significant. It seems to
 imply that the “FIRST LADY Scheme” is the brainchild of the Plaintiff who would wish to engage
 in the services of the Defendant, as underwriter, to provide the insurance cover therefore. Of
 course, the Defendant categorically denies that it is the Applicant’s Scheme. Indeed it has
 attached to the Replying Affidavit the proposal form for private motor insurance headed “FIRST
 LADY” with reference to the Defendant’s trading name of First Assurance. It also attached a
 copy of what is termed the “FIRST LADY MOTOR PRIVATE CAR POLICY” as indicated on the
 cover of the document and also on page 1. However, whether intentional or not, the Defendant,
 in the copy provided to Court, immediately after the cover above referred to, detailed the policy
 as commencing at page 14 going all the way to page 1. To my mind, apart from the cover and
 page 1, the document appears to be a straightforward private motor vehicle insurance policy. The
 Defendant in its Replying Affidavit never sought to distinguish as between this product and any
 other private motor vehicle insurance policy. To my way of thinking, the Defendant’s only use if
 the name “FIRST LADY” is to distinguish that the policy comes under the First Assurance brand
 of insurance products along with usage of the word “First” for other insurance products offered to
 the public by the Defendant company. The Plaintiff in its submissions has stressed that it is the
 trademark name “FIRST LADY” that it has registered not the insurance product. As far as I can
 see, what the Applicant wants to see happen is that this Court do direct the Defendant not to use
the name “FIRST LADY” when offering to the public, its private motor vehicle insurance product.
 It would appear to want that name to be allowed to be used by another underwriter instead of or
 in place of the Defendant, for whatever reason.

11.        In this regard, it is interesting to note that the letter of termination of the Agreement was dated
24th May 2011, well before the trademark name “FIRST LADY” was registered on 9th November
 2011. However, the process of registration was well underway by that date of 24th May 2011. It
 was also interesting to note the correspondence attached to the Replying Affidavit of Mr. Githiga
 dated 19th January 2013 exhibited as “SG 1”. Although the Defendant did not provide the Court
 with a copy of its letter to the Insurance Regulatory Authority dated 17th January 2011, the
 authority in its letter in response dated 9th February 2011 referred to it and requested the
 Defendant to furnish it with a policy wording, proposal form, claim form and draft marketing
 brochure in respect of the proposed policy. The letter of 17th January 2011 was dated before the
 Agreement. To my mind therefore the Defendant would appear to be protected by section 10 of
 the Act which details:
“10. Nothing in this Act shall entitle the proprietor or a licensee of a registered trade mark to
 interfere with or restrain the use by any person of a trade mark identical with or nearly
 resembling it in relation to goods in relation to which that person or a predecessor in title of his
 has continuously used that trade mark from a date anterior –
a. to the use of the first-mentioned trade mark in relation to those goods by the proprietor or a
 predecessor in title of his; or
b. to the registration of the first-mentioned trade mark in respect of those goods in the name of
the proprietor or a predecessor in title of his, whichever is the earlier, or to object (on such use being proved) to that person being put on the register for the identical or nearly resembling trade mark in respect of those goods under subsection (2) of section 15”.
Certainly, by the time that the Plaintiff had registered the name “FIRST LADY” in November 2011, the
Defendant was clearly utilising its insurance product “FIRST LADY MOTOR PRIVATE CAR POLICY”  and had been doing so continuously for some time.


12.           With that in mind, it clearly appears that the Defendant’s submission that under the Agreement the Applicant was merely a distributor of the Insurance Product, lends considerable weight to its argument. As a result I find some assistance in the words of Mutava J. in the aforementioned
 case of Twiga Chemical at paragraph 18:
“This leads me to the question on whether a distributor can claim property rights over a
 trademark. From the legal position discussed above, the ownership of the trademark can only be
 claimed by the owner of the goods or the licencee of such owner. In the case before the court,
 the relationship between the plaintiff and the 1st defendant is created by the Distributorship
 Agreement under which the plaintiff was appointed to distribute the products of the 1st
 defendant. The issue arising therefore is whether the Distributorship Agreement conferred
 licecencee status, upon the 1st defendant. Section 3 (4) of the Trademarks Act requires that for a
 person to acquire licencee status both the proprietor and the licencee of the mark must apply to
 the Registrar of Trademarks for registration of the licencee as such. Without delving further into
 the legal requirements of application for registration as a licencee/registered user of a trademark,
 I can immediately make the finding that no licencee status was created under the Distributorship
 Agreement as no application in that regard was made to the Registrar. In any event, registration
 as a registered user under Section 3 of the Trademarks Act merely confers limited rights to the
 licencee to make use of the trademark of the proprietor and does not confer upon the licencee
 the right to claim ownership in the mark distinctly from the right of the proprietor of the mark and
 certainly does not fathom a right upon the licencee to register a competing mark, as has
 happened in the present case”.
I would also endorse the words of my learned brother when he detailed that his concern was as to the
unilateral manner in which the Plaintiff in the Twiga Chemical case had gone about registering the
trademark which connoted:
 “an ulterior motive going beyond the necessity to protect the mark so as to safeguard the
 investment in promoting the product.”
 The learned judge went on to say:
“The secretive approach taken by the plaintiff and the registration of the mark cannot therefore
 go without raising eyebrows particularly in view of the eventual breakdown of the relationship
 between the parties”.

13.           I have found it necessary to quote extensively from my brother Judge’s finding in the Twiga
Chemical case which I find to be almost on all fours with this matter before me and I adopt his
 findings entirely. I find no trouble in endorsing the Defendant’s submissions that it should take
the necessary steps to challenge the registration of the trademark “FIRST LADY” by the Plaintiff.
 I do not consider that the Plaintiff possesses any legal merit to the proprietorship of the trademark. The Plaintiff has no ownership of the Insurance Product which its trademark purports to protect. As a result, the Application brought by the Plaintiff dated 14th December 2012 is dismissed with costs to the Defendant.

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