Legislative Implementation of Flexibilities - Kenya

Title:	Section 69 of the Industrial Property Act No. 3 of 27/07/2001
Field of IP:	Patents
Type of flexibility:	Ex-officio IP office control of anti-competitive clauses in licensing agreements
Summary table:

Provisions of Law

Prohibited Terms in Licence Contracts

69. The Managing Director may refuse to register a licence contract if he is of the opinion that any clause in a licence contract imposes unjustified restrictions on the licensee with the consequence that the contract, taken as a whole, is harmful to the economic interests of Kenya, and that the effect of any such term contained in the contract is;

(i) to permit or require the importation of technology from outside Kenya when substantially similar or equivalent technology may be obtained on the same or more favourable conditions, without importation from abroad;

(ii) to require payment of a price, royalty or other consideration which is disproportionate to the value of the technology to which the contract relates;

(iii) to require the licensee to acquire any materials from the licensor or from sources designated or approved by him, unless it is otherwise impossible, for all practical purposes, to ensure the quality of the products to be produced;

(iv) to prohibit the licensee from acquiring, or to restrict his acquisition of, any materials from any source, unless it is otherwise impossible, for all ' practical purposes, to ensure the quality of the products to be produced;

(v) to prohibit the licensee from using, or to restrict his or her use of any materials which are not supplied by the licensor or by sources designated or approved by him, unless it is otherwise impossible, for all practical purposes, to ensure the quality of the products to be produced;

(vi) to require the licensee to sell products produced by him under the contract exclusively or principally to persons designated by the licensor;

(vii) to require the licensee to make available to the licensor, without appropriate consideration any improvements made by the licensee with respect to the technology to which the contract relates;

(viii) to limit the volume of the products produced by the licensee with the help of the technology to which the contract relates;

(ix) to restrict or prohibit the export of the products produced by the licensee;

(x) to oblige the licensee to employ persons designated by the transferor not needed for the efficient transfer of the technology to which the contract relates, provided that, for persons so needed, the contract shall provide for training of persons to replace them within a reasonable period;

(xi) to impose restrictions on research or technological development carried out by the licensee to absorb or adapt the technology in connection with new products, processes or equipment;

(xii) to prohibit or restrict the use by the licensee of any technology other than the technology to which the contract relates;

(xiii) to extend the coverage of the contract to technology not required for the use of the technology which is the main subject of the contract and to require consideration for such additional technology;

(xiv) to fix prices for the sale or resale of the products produced by the licensee with the help of the technology to which the contract relates;

(xv) to exempt the licensor from any liability consequent upon any defect inherent in the technology to which the contract relates or restrict such liability;

(xvi) to prohibit or restrict the use by the licensee, after the expiration of the contract, of the technology acquired as a result of the contract, subject, however, to any right of the licensor under the patent;

(xvii) to require that disputes arising from the interpretation or performance of the contract be governed by a law other than the law of Kenya or that such disputes be brought before courts located in a country other than Kenya;

(xviii) to establish the duration of the contract for a period which is unreasonably long in relation to the economic function of the contract, provided that any period which does not exceed the duration of the patent to which the contract relates shall not be regarded as unreasonably long;

(xix) to restrict the licensee from entering into sales, representation or manufacturing agreements relating to similar or competing technologies, when such restrictions are not needed for protecting the legitimate interests of the licensor, including, in particular, protecting the licensor's industrial or intellectual property rights or ensuring that the licensee exercises his best efforts in respect of any manufacturing, distribution or promotional obligations;

(xx) to prevent the licensee from adapting the technology to local conditions or introducing innovations in it or change to alternative inputs, or which require the licensee to introduce unnecessary designs or specification changes, if the licensee makes adaptations on his own responsibility and without using the licensor's name, trade or service marks or trade names, and except to the extent that this adaptation unsuitably affects those products, or the process for their manufacture, to be supplied by the licensor, his designates, or his other licensees, or to be used as a component or spare part in a product to be supplied to his customer;

(xxi) to impose acceptance of additional technology, future inventions and improvements, goods or services not wanted by the licensee;

(xxii) to impose restrictions on territories, quantities, prices, customers or markets arising out of patent pool or cross-licensing agreements or other international technology transfer interchange arrangements which unduly limit access to new technological developments or which would result in an abusing domination of an industry or market with adverse effects on the licensee, except for those restrictions appropriate and ancillary to co-operative arrangements such as co-operative research arrangements;

(xxiii) to impose restrictions which regulate advertising or publicity by the licensee except where restriction of such publicity may be required to prevent injury to the licensor's goodwill or reputation where the advertising or publicity makes reference to the licensor's name, trade or service marks, trade names or other identifying items;

(xxiv) to impose confidentiality after the expiry of the licence agreement or to impose unreasonably long periods for secrecy following the commissioning of manufacturing facilities using the licensed technology, or to impose measures which limit technological learning and mastery, except those which relate to industrial property rights;

(xxv) to impose requirements for payments even under conditions of force majeure;

(xxvi) to impose restrictions which prevent or hinder export by means of territorial or quantitative limitations or prior approval for export or export prices of products or increase rates of payments for exportable products resulting from the technology licensed;

(xxvii) to impose quality control methods or standards not needed by licensee, except to meet the requirement of a guarantee or when the product bears a trade mark, service mark or trade name of the licensor;

(xxviii) to allow the licensor to participate permanently in the management of the licensee's business as a condition for obtaining the technology;

(xxix) to restrict the licensee from taking measures that will enhance local technological capability and which are not prejudicial to the licensor's industrial property rights;

(xxx) to restrict the use of local expertise in management and consultancy or in any other positions;

(xxxi) to require payment of royalty for patents granted outside Kenya;

(xxxii) to apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing the licensee at a competitive disadvantage; or

(xxxiii) to make the contract subject to acceptance of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.