Human Goodwill: Expanding the Scope of Intellectual Property in Nigeria

Introduction

When Kanu Nwankwo was projected as “Papilo” in the “Peak Milk” advert after Nigeria’s tremendous victory at the historic 1994 Olympic football match, Nigerians were moved by that sentiment/psychology and almost every local footballer, nay, every home touched by love for this footballer took to drinking no other milk but Peak Milk. The huge sales recorded by the company after that advert is not in doubt.

If we are faced with the doubt of venturing into an investment with a company, and we are shown some documents proving that the owner or perhaps one of the company’s director is the eminent Nigerian industrialist, Aliko Dangote, perhaps our doubts will cease and we will thrust into the business confident that it will succeed. I am sure every country has such reputable individuals with such driving force.

The perception that induces members of the public to repose confidence in products, services or entities in which a particular person or group of persons is/are associated with is what I refer to as “human/personal goodwill”. In this case, it is not the company or its brand per se that brought in the sales, subscribers or goodwill et al, but the person or persons in the advert or company. As such, that person’s voice, name, signature, presence, image, etc, culminates into what has been called – human goodwill. My principal partner, Mr. Afam Nwokedi, whose opinions have been extensively captured in this paper prefers the term “personality rights” and defines it as: Indeed, the driving force of a company’s success does not only depend on its own brand but sometimes it is largely based on the reputation and goodwill of the human person seen to be associated with the company or brand. Simply put, if the reputation or goodwill of the hands and legs of a business entity is in doubt, that business will undoubtedly face economic challenges, its brand notwithstanding. An example that easily comes to mind is the AOL case.¹

It is the human behind the veil that promotes the company through its altitude to customers, its reputation, its impeccable services, et al. While we do not disagree that brands/trademarks can also promote the company, we are saying that even so, reputable humans are used to promote the brand recognition. And let us not forget that a company’s goodwill may come to ruin through the reputation of its director.²

Unfortunately, there is no law that protects the economic benefits of this hard-earned human reputation and goodwill. Directors, who are part of the company management and policy makers do not engage in direct advert, but the personalities they bring to bear in the company by way of their reputation somewhat constitute a measure of an indirect advertisement, and such reputation translates goodwill to the company in transactional terms. The irony of the above scenario is that while most director’s tenure is often transient (i.e resignation, retirement etc), the company may for a long while post say, the director’s resignation, continue to benefit from the goodwill brought in by that director; albeit the director in question if employed, is most unlikely to receive any remuneration thereafter. An unfair situation, to say the least.

Human reputation and goodwill or personality rights, whatever you may choose to call it, is not strictly speaking, recognized in Nigerian or in practice as an intellectual property right. It does not surface in valuations during mergers, acquisitions, take-overs, etc. No, it is unknown to the jurisprudence of many countries, not even Georgia whose laws seem to prefer the use of reputation to goodwill on trademark matters, thereby confusing the distinction of both terms. In Nigeria, what is recognized is the company’s goodwill not the personality right. Indeed, a recognition of personality right as an intellectual property would allow for the exploration and actualization of sustainable corporate governance, moral and economic growth of the company/country, and create more employment opportunities.

As much as I appreciate that certain questions may come into our minds, such as – Is the director or promoter not being paid remuneration for the job done? (of course, what we are saying is outside the scope of employment). Should the salary not be taken as commensurate with whatever reputation or goodwill his person may bring to the firm/company? (This cannot be as salary is for work done. Goodwill should be paid for as adverts are paid for). Should the company continue to pay the personality used in the promotion for life? (Surely if the company continues to enjoy the goodwill and make sales, after all, trademarks are renewed and royalties are paid for copyrights on continuous basis).

What law recognizes personality right as an intellectual property? How do we value and calculate such right? How do we distinguish and subtract the benefits accruing from such right from that which a company acquires through its trademark? Is reputation synonymous with goodwill? We shall attempt to answer these questions but first let us examine the meaning, scope and distinction or relationship between intellectual property, reputation and goodwill.

Intellectual Property, Human Goodwill and Reputation: Explication of Terms

Intellectual property has never been satisfactorily defined. Nigeria laws did not attempt to define it. However, it has been described to include the rights relating to literary, artistic and scientific works; performances and performing artists, photographs and broadcasts, inventions in all fields of human endeavor; scientific discoveries, industrial designs, trademarks, service marks, commercial names and designations, protection against unfair competition and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.³

The laws on the above subject therefore, is what is referred to as intellectual property laws. Like many other countries, Nigeria intellectual property related laws include Copyright Act, Trade Marks Act and Patents & Design Act. Mention of intellectual property rights are also made in passing in other laws. While the Copyright attaches importance to the content of the created work, Trademark focuses on the reputation and goodwill attached to the products and services which must be distinctive to the company alone. But as we shall see, the courts have always confused reputation and goodwill as if they are the same. Patents and Designs concerns itself with the created or improved inventions or designs. These laws do not provide expressly for the recognition of the reputation and and goodwill of the man qua man to be an intellectual property. Reputation on the other hand, has been described as:

“the common opinion that people have about someone or something: the way in which people think of someone or something”.⁴

Thus, one may have reputation but not goodwill. But to have goodwill, one must first possess reputation. It follows that we can refer to reputation in terms of a company or a human being. However, the English meaning of the term reputation appears to be different from the legal meaning. Goodwill on the other hand means:

“business: the amount of value that a company’s good reputation adds to its overall value”.⁵

It is obvious that goodwill is what is to be used when we think of monetary value. Hence, a reputation that does not bring money to the table has no goodwill. Buckley tried to explain this when he stated that: A man who engages in commercial activities may acquire a valuable reputation in respect of the goods in which he deals, or of the services which he performs, or of his business as an entity. The law regards such a reputation as an incorporeal piece of property, the integrity of which it is entitled to protect. He wished to confirm that the property right is not a right in the name, mark, or get-up itself but that it is a right in the reputation or goodwill, of which the name, mark, or get-up is the badge or vehicle. The words ‘reputation’ and ‘goodwill’ are often used interchangeably, but it is really in connection with goodwill that passing-off is applied. It is possible after all to have a reputation without goodwill.⁶ However, it was Gvantsa Gugeshashvili who embarked on a deep analysis of the distinction between “goodwill” and “reputation” while considering Georgia laws on trademark. She said:

“Judging from the above-mentioned, one readily concludes that the meanings of goodwill and reputation should not be identified with each other. Goodwill is a priority or benefit, which can be acquired by an enterprise or its product, or any means of identification (in the above-mentioned case, geographical indication) as a result of entrepreneurship. As to reputation, we can discuss the concept as a priority, which comes from the specific characteristics of the particular place. While acquisition of goodwill is impossible without taking measures leading to success in the market, the reputation of a certain place emanates from that very place. It is impossible to identify goodwill with reputation when the case concerns a specific geographical place. This place may definitely have a good reputation, but goodwill can be acquired by the enterprise and its means of identification and not by the place. An analysis of goodwill would not be complete without discussion of the issue of the relationship between goodwill and trademarks.
Trademarks, whether registered or not, symbolize goodwill. A trademark is a name or symbol used to denote the commercial origin of a product. Moreover, a distinctive mark embodies the goodwill of the trader, which enables the trader’s enterprise to draw customers. This capacity of an enterprise is based on its commercial status established through carrying on business and using the trademark for particular goods and services”.⁷

The above distinction by Gvantsa helps us to understand the distinction between reputation and goodwill, but the context of usage may not be taken as a general rule since her (Gvantsa) focus was on Georgia’s law which used the word ‘reputation’. Interestingly, she had recommended that ‘reputation’ as used in the law should be changed to ‘goodwill’. In Nigeria, which is a common-law country, Reputation sometimes is used interchangeably when what is meant is goodwill. For instance, in I.T (Nig) Ltd v B.A.T (Nig) Ltd ⁸ ., the court held that in a passing-off proceeding, what the company must prove is:

a. That it has acquired a reputation in respect of the trademark, in other words, that the mark has become distinctive of his product and his customers and public have come to associate the mark with their business.

b. That the defendant had engaged in acts which are capable of misleading the plaintiff’s customers or members
of the public into believing that the defendant’s business and that of the plaintiff are connected.

c. Likelihood of deceit.

A full reading of the above judgement would show that the court dismissed the appeal and upheld the respondents position because the respondent, Benson and Hedges where able to show evidence that apart from the fact that they were No. 1 tobacco company, they had 75% share of the tobacco market in Nigeria and have generated huge sales of which part of the proceeds have been used to improve the Nigerian Economy. It is doubtful if reputation without proof of goodwill will succeed in a passing-off action. In an infringement action, however, the registered proprietor may evade that burden of proof by simply showing that the brand was registered. If the opposing party raises the issue of non-use or lack of distinctiveness that the proprietor may then need to lead evidence showing goodwill. In the above cited case, the court affirming and citing the reasoning of the trial judge went on to say at p. 621, that: “this evidence of goodwill of exhibit G is unchallenged. Thus it can be seen that there is more than sufficient acquired distinctiveness resulting from sales and heavy advertising throughout Nigeria since 1973 going by exhibit E3…” Accordingly, we can safely conclude that while reputation and goodwill are different, reputation is necessary to have goodwill. Reputation is the fame (standing still) without the commercial value or returns, while goodwill (in motion) is the commercial values or returns acquired through that fame.

Goodwill and the Law

The Companies & Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004 recognizes ‘considerations other than cash to be one of the various means by which a person or any legal entity may acquire shares in a company, provided that the articles of the company allows for it and such consideration must be valued. ⁹ The implication of the above is that intellectual properties, once recognized by the articles and valued, can be taken as payment for the shares in a company which will then give the subscriber the benefits of earning dividends from the company. The question we must now answer is this – does intellectual property include human reputation and goodwill or only goodwill as it attaches to companies or businesses and their brands? It is no longer in doubt that Intellectual property protects and recognizes the goodwill associated in businesses via their tradenames, brands etc. ¹⁰ It is also not in doubt that Intellectual property protects the copyrightable works of a person. What is not settled or perhaps what has not been brought to bear is the recognition and protection of the “personality” when it brings in goodwill. In the latter instance, two perspectives come to play. The famous personality used directly for advert promotion and a reputable director or person working in a managerial capacity in an organisation. With regards to famous persons used for adverts, many writers have approached the issue under the caption ‘Image rights’ and ‘right to privacy’. Unfortunately, majority of those writers have explored the terms in narrow perspectives. When the image, sound recording, etc of a famous person is used for commercial gains without consent, surely, that person can sue for damages and for an injunction or can sue or negotiate for royalties.

Most lawyers unfortunately make it a ‘pay-and-go’ contract while the advert remains on air generating goodwill for the company from time to time. This is most unfortunate for the person who may not know better or have been ill-advised. When the works of famous personalities are being used for advert to obtain or promote goodwill, the law expressly made provisions for the protection of same i.e cinematograph film, sound recording, literary works, broadcasts, musical and artistic works under Copyright Act.¹¹ Also, image rights can be enforced under Common Law.¹² The Trade Marks Act (Registering the image) and the Cyber Security and Information Protection Act can be explored in protecting image rights.¹³ At least the first aspect is covered. Most foreign states i.e Washington, sees these rights under a single umbrella of ‘personality rights’ which focuses on name, voice, signature, photograph or likeness.¹⁴ The distinction between the person’s image, privacy or name seem to be relaxed. Some other countries recognize personality rights but with different variations.¹⁵ With regards to personality rights as it concerns association and goodwill, i.e, famous reputable persons working for an organisation in a managerial capacity, there seem to be no law protecting that conceivable right. The Trade Marks Act which is the most appropriate law that should provide a form of protection for such rights is lacking in content and substance. It focuses more on commercially exploitative brand based issues. Surely, a person cannot say ‘I am the brand’. But why not? Is the presence of Dangote himself in a new company, not a goodwill on its own? We can begin to call names. Really, why not? The laws of tort in various states provides an example of the possibilities and potentials in developing “personality right” as it were. While the tort is more concerned with the protection of a person’s reputation from a social perspective, capturing such protection under the umbrella of Defamation, which invariably is concerned with injury to reputation resulting from written or spoken words by others;¹⁶ “personality right” on the other hand will place more thrust in the economic utilization of the goodwill attached to the person’s reputation through daily business associations. This is the goodwill that association brings in managerial capacity and not a “sign post” arrangement. It is important to note that a statement is defamatory where it tends to lower the person in the estimation of right-thinking members of the society; to expose him to hatred or ridicule; to cause other persons to shun or avoid the person; to discredit the person in his office or trade; or to injure his financial credit. The foregoing instances are the limited length the law of Torts could cover. If the reputation of a person is jealously guided by law and damages can be recovered therefrom, why can’t the law protect the economic benefits that is attached to reputation i.e goodwill, where of course it is proven that a commercial economic benefit is derived from that goodwill/reputation? The realities of the need for such laws is reinforced by an increasingly global trend that requires moral purity and transparency as part of the prerequisite for determining good business managers.

“Personality right” on the other hand will place more thrust in the economic utilization of the goodwill attached to the person’s reputation through daily business associations. This is the goodwill that association brings in managerial capacity and not a “sign post” arrangement.

Personality rights in most jurisdictions, have been defined to be the right of an individual to control the commercial use of his or her name, image, voice, likeness, or other unequivocal aspects of one’s identity. It is generally considered a property right as opposed to a personal right. Personality right, has we have seen, also captures what writers call image rights and right to privacy. However, the focus of image right is on advertorials in the manner of “your face” setting. Moreover, image right does not particularly relate to competence in the area where the image is portrayed. What it feeds on is basically a reputation devoid of notoriety. Also, persons with certain advertorial qualities, although not famous, may also sue under image rights for the use of their image without consent notwithstanding that they are not famous. Personality right as it relates to name (human goodwill) on the other hand comes with the image and competence. It follows therefore that any beneficiary of personality right must be shown to have more than average competence in the field in which the right is sought to be exploited.

Applying the Aliko Dangote example to this case, there is a consensus of opinion that Aliko Dangote is an astute businessman, it may even be suggested that he is keen football follower, but imagine him, on the basis of his popularity/reputation, requesting to play for the Super Eagles in a World Cup Qualifier, love of country aside, your opinion on this is as good as mine. Also, privacy rights is a term used often to argue image rights. It is a constitutional right in Nigeria which has not enjoyed its full interpretation. The right protects the person, homes, conversation, telegraphic communication, et al, from publicity and to be left alone.¹⁷ Thus, neither does the term ‘image rights’ or the term ‘privacy rights’ fully captures the vast area of personality rights especially as it relates to the reputation and goodwill attached to a person’s name.

Recognition of Human Reputation/Goodwill as an Intellectual Property: Importance and Benefits

Should reputation and goodwill attached to a name be recognized as an intellectual property, the ethics and morals of the society will be greatly enhanced. Thus, citizens knowing that good conduct and name can put food to the table would conform to social standards. Furthermore, there will be a positive competition amongst business person or persons interested in capitalizing on the financial variables offered by this “right” to create an accountable and transparent business platforms in all areas of endeavor. Undoubtedly, employment opportunities will increase. The rate of crime will decrease.

We see great potentials and new selling points in the development and marketability of the concept of “personality right”. Boundless opportunities in the areas of equity investment through consideration. Person without the finance for buying shares in a company, will have opportunity of investing in the company through well determined channels of valuating the measure and value that the goodwill in the reputation of such person may bring to bear in that specific industry that he seeks to manage and invest in. Invariably and Ultimately, the end result will be such that the right derivable from the valuation of goodwill in a reputation can be assignable or transmissible, when such right has been translated into equity investment in any entity. As such, such personality right investor can pass on the legacies of the goodwill in his reputation to his beneficiaries who can continue to earn dividend in the company. The moral justification of recognizing such right will be that youths will have no reason to blame their fathers/mothers for being honest and noble without material gain. Directors or other managers of repute in the company, whose presence brings in goodwill for the company can be duly paid valued royalty apart from their normal remunerations for the work done. Another ripple effect will be a more pronounced appreciation of the quantum of damages awarded in the common law of tort as it relates to defamation. The paltry sums awarded by the court in defamation cases will be reviewed.

During take-overs, mergers, acquisitions, etc, greater appreciation and value added measures will be taken by prospective owners to retain and compensate employees/directors whose reputation and goodwill have sustained the company. Also, false adverts can be regulated as no one would want to destroy his/her reputation and goodwill by subscribing to be associated with deceptive adverts.

Challenges in the Valuation of Personality Rights

I understand that one of our fears or question would be – how do we calculate such a complex, capricious and abstract thing as human reputation/goodwill? This was the same questioned put forward all over the world that slowed down the embrace of intellectual property. However, some climes have gotten far ahead in resolving problems inherent in IP valuation. For a start, goodwill can be valued based on the acceptable formula of valuation for each country, organization or market. The first caution we must make here, given the distinction between reputation and goodwill in the beginning of this article, is that human reputation is not the subject of valuation. Rather the goodwill that comes from such reputation is what should be valued.

We can also appreciate this stand when we know that goodwill is now being valued by professional valuers in other jurisdictions where standard methods for Intellectual During take-overs, mergers, acquisitions, etc, greater appreciation and value added measures will be taken by prospective owners to retain and compensate employees/directors whose reputation and goodwill have sustained the company. Also, false adverts can be regulated as no one would want to destroy his/her reputation and goodwill by subscribing to be associated with deceptive adverts. property valuation has been established.¹⁸ Nigeria IP law firms and valuers, it appears, are still crawling.

Conclusion

Intellectual property must not be stretched to an irreconcilable or incomprehensible right. However, Intellectual property rights are so far away from being duly recognized and appreciated in Nigeria. Personality rights should and ought to be an intellectual property right capable of economic-cum-financial benefits.

1. The 10 Best (and 10 Worst) Companies for Customer Service, http://www.comparebusinessproducts.com/fyi/10-best-and-10-worstcompanies-customer-service
2. Susan Adams, ‘The World Most Reputable Companies’, in Forbes, http://www.forbes.com/sites/susanadams/2014/04/08/the-worlds-most-reputable-companies/#2a43d3da58c6
3. WIPO Convention (1967), Art 2.
4. http://www.merriam-webster.com/dictionary/reputation
5. ibid
6. H P Bulmer Ltd. v. Bollinger SA. See D. Bainbridge. Intellectual property. 4th edition. Financial Times Management. London, San Francisco, Kuala Lumpur, Johannesburg, First published in Great Britain 1999, p.59
7. Gvantsa Gugeshashvili, ‘Is goodwill synonymous with reputation?’ http://www.juridicainternational.eu/public/pdf/ji_2009_1_126.pdf
8. I.T (Nig) Ltd v B.A.T (Nig) Ltd (2009) 6 NWLR (Pt 1138) at p.647-648
9. Sections 135, 136 and 137 (1)-(6)
10. Trade Marks Act, 1965
11. Copyright Act, 1988 (same is currently under review in Nigeria)
12. Prince-Alex Iwu, ‘Photo Privacy and Media/Image Rights in Nigeria’ Linkedin, https://www.linkedin.com/pulse/legal-regime-enforcement-image-rights-nigerian-question-iwu?trk=mp-reader-card
13. Ayokunle Adetula “Image Rights and IP in Nigeria” http://barcode.stillwaterslaw.com/1.1/2015/12/21/image-rights-and-ip-in-nigeria/
14. Washington State Legislature, RCW Chapter 63.60. https://app.leg.wa.gov/rcw/default.aspx?cite=63.60&full=true
15. https://en.wikipedia.org/wiki/Personality_rights
16. Kodilinye & Aluko, ‘The Nigerian Law of Torts’ (Rev. edn: 1996), Spectrum Books Ltd, Ibadan. At p. 136.
17. 1999 Constitution of the Federal Republic of Nigeria, section 37.
18. Weston Anson, ‘Alternate Approaches to the Valuation of Intellectual Property’ http://www.ipwatchdog.com/2015/02/11/alternate-approaches-to-the-valuation-of-intellectual-property/id=54651/; WIPO, ‘List of Documents on IP Valuation’ http://www.wipo.int/sme/en/documents/valuationdocs/index.htm;
19. Fortunately, Stillwaters Law practitioners are constantly undergoing training on IP valuation and appears to be the only firm in Nigeria with the technical and analytical skill thereto. However, it does not value human goodwill.