It has only been about 10 months since the enactment of the Nigerian Startup Act 2022 (hereinafter referred to as the Act) and its provisions are already gradually being implemented. As the various stakeholders continue to roll out and implement the content of the Act, it would be nice to see how the intellectual property provisions play out together with other provisions contained in the Act. If the intent of the Act is implemented to the fullest, it should increase the number of startups in the country as well as increase the survival rate and longevity of startups.
Startups have been recognised as one of the vehicles for commercialising and exploiting intellectual property as well as drive local development in any country. It goes without saying that many times a startup is the result of innovation, and as such intellectual property plays an integral role in the lifeline of the business. Recognising the important role played by innovation in the existence of a startup, the Act defines a startup as “a company in existence for not more than 10 years, with its objectives being the creation, innovation, production, development or adoption of a unique digital technology innovative product, service or process”.
The eligibility requirements for a startup contained in the Act, point to the relevance of intellectual property to any company seeking to be labelled as a startup, and indicates that intellectual property cannot be divorced from any company interested in being conferred the status of a startup. Section 13(2)(b) and (c) provide among other requirements that, for a business to be labelled as a startup, it should have its objects as “innovation, development, production, improvement and commercialization of a digital technology innovative product or process and should be a holder or repository of a product or process of digital technology or the owner or author of a registered software” (our emphasis).
It is interesting that the Act focuses on digital technology and software, especially since startups can also be product driven. It is possible that the law was intended to encourage and drive development in the field of digital technology in Nigeria since this is the direction the world is geared towards.
Further, the Act in section 31 identifies the importance of intellectual property rights in the growth and development of a startup. In a bid to encourage startups to fully exploit their intellectual property rights, the Act provides that the Nigerian Copyright Commission (NCC), as well as the Trademarks, Patents, and Design Registries should have designated space on the startup portal to assist startups with the registration of their intellectual property. Section 31(3)(b) and (c) further provide that these Registries must also assist startups with the institution of legal action for infringement of any intellectual property rights as well as assist with filing and registration of trade marks and patents at the international level. This provision was possibly introduced to assist with the cost implications of carrying out these actions. However, it raises a few questions. Is there a designated office in the Registries that could help startups institute infringement actions and follow through to the end? Given the lengthy duration of court actions is any dispute resolution channel available at the Registries for speedy resolution of disputes? Apart from the NCC that has powers under the new Copyright Act both to institute infringement actions on behalf of copyright holders and to establish a dispute resolution panel, other Registries are unable to carry out these acts.
It then follows that, to effectively implement the provisions on intellectual property in the Nigerian startup, it is necessary to amend the laws for trade marks, patents and design to bring them up to date with the current trends and provisions of the Act. In any case, startups can always engage the services of a lawyer that specialises in intellectual property to ensure that their rights are adequately protected within and outside Nigeria as well as in the event of infringement.
Finally, the importance of intellectual property to startups is further highlighted by the fact that the Act permits full deduction of expenses relating to research and development wholly incurred in Nigeria from taxation (section 25(3)).
It is encouraging to see that the Nigerian government is making legislative changes to promote creativity and innovation, and we hope the legislation governing all types of intellectual property rights will also be updated soon.