KENYA PASSES LONG AWAITED ANTI-COUNTERFEIT GOODS BILL

UNCLAS NAIROBI 000086 USDOC FOR ITA/MAC/OIPR CASSIE PETERS AND USPTO OFFICE OF ENFORCEMENT STATE PLEASE PASS USTR PATRICK DEAN COLEMAN, WILLIAM JACKSON, AND JENNIFER CHOE GROVES STATE PASS USAID/EA AND USAID GEORGE SAMBUNARIS STATE ALSO FOR AF/E, AF/RSA, AF/EPS, EB/TPP/IPE CARRIE LACROSSE AND JOSHUA HALLOCK, AND EB/TPP/MTA TREASURY FOR REBECCA KLEIN HOMELAND SECURITY FOR CBP/DHS AND ICE/DHS E.O. 12958: N/A TAGS: KIPR KCRM ETRD PHUM EINV EFIN ECON PGOV KE SUBJECT: KENYA PASSES LONG AWAITED ANTI-COUNTERFEIT GOODS BILL REFS: (A) 08 NAIROBI 0479 (B) 08 NAIROBI 0337 (C) 07 NAIROBI 1877 ¶1. Summary: On 10 December 2008, Kenya's Parliament finally passed a long awaited anti-counterfeit goods bill, which substantially raises penalties for individuals convicted of manufacturing, importing, and selling knockoffs. President Mwai Kibaki signed it December 24 and it is expected to be published next week. The new law establishes two government agencies tasked with putting a stop to the production and sale of illicit goods. End Summary. -------------- Kibaki signs Anti-Counterfeit Law -------------- ¶2. In late April 2007, on "World Intellectual Property Day," Kenyan Attorney General Amos Wako promised to fast-track parliamentary adoption of a long awaited anti-counterfeit goods bill (ref C). Despite his vow, Parliament did not pass the bill until December 10, ¶2008. President Mwai Kibaki signed the bill December 24. It is expected to be published in the government gazette next week. ¶3. As the business community hoped, the Anti-Counterfeits Goods Act of 2008 substantially raises the penalties for individuals convicted of manufacturing, importing, and selling knockoffs. If found guilty, counterfeiters would be subject to a minimum five-year prison sentence and a fine three times the value of the pirated product. A repeat offender would be subject to a prison sentence of a maximum 15 years. ¶4. The new law also establishes two government agencies, an "Anti-Counterfeit Agency," charged with policy formulation, and an "Inspectorate Agency," whose officers are empowered under reasonable cause to enter into any premises suspected of manufacturing or warehousing illicit goods and arrest, without a warrant, any person suspected of manufacturing, importing, and/or selling counterfeit goods. (Presently, the Kenya Revenue Authority has limited statutory authority to carry out these tasks.) The law provides that chief executive of the Kenya Association of Manufacturers (KAM) may be an Anti-Counterfeit Agency board member, thereby incorporating the interests of the private sector. -------------- A Law with Teeth -------------- ¶5. According to Brenda Gitonga, chief executive of the American Chamber of Commerce of Kenya (ACCK),members of the Pharmaceutical Society of Kenya are especially delighted with the new act. Steve Smith, president of the Kenya Private Sector Alliance (KEPSA), described the measure as a "good start," but emphasized it is still necessary for Parliament to pass an appropriations bill in support of the law's new agencies. Susan Onyancha, deputy head of the World Customs Organization's Regional Intelligence Liaison Office for Eastern and Southern Africa, hailed the new law, saying it "gives us teeth to bite." However, for the law to be effective, she added, it must have popular buy-in. "The next crucial step," Onyancha emphasized, "is to embark on creating awareness among the customs border control officers as well as the consumers." ¶6. Kenya Institute for Public Policy Research and Analysis (KIPPRA) economics professor Joseph Keiyah told economics specialist on December 19 that he believes the new law will promote investment (both foreign and local) and innovation but questions the government's capacity to implement it since it stipulates that all goods will be inspected at all points of entry into the country. However, during a separate December 19 conversation, Ministry of Finance Deputy Chief Economist Josephine Kanyi reassured economics specialist that the government does have the capacity to implement the new legislation. (Note: According to a recent press report, Industrialization Minister Henry Kosgei singled out Somalia as the country's biggest gateway for counterfeits.) ¶7. In addition to the passage of the anti-counterfeit goods bill, Kenya is in the process of decoupling its Kenya Copyright Board Office (KCB) from the Office of the Attorney General and thereby making it an independent agency, with law enforcing authority. It is already charged with enforcing Kenya's Copyright Act, which protects literary, musical, artistic, audio-visual works, sound recordings and broadcasts, and computer programs. Criminal penalties associated with piracy in Kenya include a fine of up to KSh800,000 (about $12,310),a jail term of up to 10 years, and confiscation of pirated material. It employs a small police detachment. Since May 2008, the KCB has conducted 20 compliance raids on software users and filed eight new indictments against businesses suspected of selling pirated textbooks. ¶8. Despite the efforts of the KCB, the sale of imported pirated audio and videocassettes is rampant. An estimated 80% of all software used in Kenya is pirated. According to the Business Software Association (BSA),an estimated USD 3.5 million is lost every year as a result of the use of illegal software, mainly by businesses. In 2006, the Ministry of Trade and Industry indicated that over KSh36 billion (about $554 million using the 2006 exchange rate) is lost annually due to the sale of counterfeit goods and a further KSh6 billion (about $92 million) is lost in tax revenues to the government. A 2008 survey done by the Kenya Association of Manufacturers (KAM) concluded that piracy and counterfeiting cost local producers about $715 million in potential sales and robs the government of $270 million in potential taxes every year. -------------- Kenya's IPR Framework -------------- ¶9. Kenya has a comprehensive legal framework to ensure intellectual property rights protection, which includes the Industrial Property Act (2001),the Trade Marks Act (Cap 506),The Standards Act (Cap 469),The Trade Descriptions Act (Cap 505),the Weights and Measures Act, the Public Health Act, the Copyright Act (2001),and the Seeds and Plant Varieties Act. The Global Competitiveness Index (GCI) report (2007) indicates that Kenya had the highest rate of patenting in sub-Saharan Africa after South Africa, which contributed to its impressive innovativeness pillar ranking of 46 out of 131 countries. Despite Kenya having the necessary legal framework, it is lagging behind in the Intellectual Property Rights Index (IPRI). Kenya's low index score of 3.3 and rank of 59 out of 70 countries are attributed to the presence of a high number of counterfeit products, including substandard generic drugs, pesticides, and herbicides, and pirated music CDs, movie DVDs, and software in the local market. Ranneberger