Nigeria: Protection Of Intellectual Property In Nigeria; Effect Of Gray Market Goods; Challenges And Solutions

Last Updated: 16 April 2014
Article by Aderonke Adejugbe


It is the norm and custom in Nigeria that people are seen in the streets; young and old, male and female street hawking various personal goods ranging from books, wrist watches, toys, etc, in an effort to earn a living. It is also the general opinion of many that whilst such goods are very affordable, they are mostly sub-standard products. In spite of this fact, majority of these goods are purchased on a regular basis. For those who are particularly observant, a cursory look at the goods would more often than not reveal popular brands which are generally sold in the high streets at more expensive rates. Sometimes, you may find that the shades of colour are slightly different or the lettering of each word can be distinguished from those of the original brands, by a single letter or more. Such goods are known as "black goods". Simply put, they are counterfeit goods.

Away from the street markets, down to the classy stores (popularly known as supermarkets) where authenticity presumably prevails on the other hand, one may find that specific goods, carrying authentic brands and trademarks are sold at relatively cheaper rates than the price at which they are sold in the countries from which they are imported or manufactured. Of course, because of the relatively low prices at which these goods are sold, people are often eager to purchase them. Some of such goods are specifically manufactured for specific regions taking into consideration certain factors such as climatic conditions, cultural differences and applicable voltage (in respect of appliances) of the region, amongst others. Such goods are popular known as grey goods and in the legal parlance, importation of such goods is referred to as parallel importation.

Specifically, grey goods are products which are manufactured with the genuine trademark of the manufacturer and which is purchased in a foreign country and resold in another without the authorised consent of the trademark owner.1 This differs from black market goods or as they are popularly called, "fake goods" or "counterfeit goods" because of the distinguishing fact that they are genuine. Grey good marketers often have an advantage over the authorised dealers because they can take advantage of the fluctuating foreign exchange rates whilst the authorised importers must maintain stable inventories to satisfy customer demand.2

Whilst, piracy and counterfeiting constitute a burden for business owners in developing countries, and in particular, Nigeria, it appears that little or no attention is paid to the importation of grey goods and its impact on licensed users.

Indeed, there is no argument that the laxity of intellectual property protection is another burden which has largely constituted a bane in the economy of Nigeria and adversely affected businesses in Nigeria; both foreign and local. A typical example of such businesses is a company in Nigeria which a few years back, sold authentic Compact Discs containing music, videos and e-books which were sold at premium price. After about a year of commencing business however, the business owners were forced out of the business because of the competition from other sellers who sold similar products at lesser prices.

The impact of parallel importation is however evident in the automobile industry. In 2013, it was reported that Nigeria lost over USD 500 billion to importation of grey goods in the automobile industry through smuggling of vehicles which are meant for importation into other neighbouring countries.3 According to reports, the decline in custom revenue may be attributable to increased importation of automobiles through the grey marketers who avoid payment of duties.4 An independent survey of the automobile industry also shows that the importation of grey goods is striving at almost the same rate as official imports.


It is worthy of note however that intellectual property infringement is increasing daily in many parts of the world, particularly in developing countries. This is perhaps, partly attributable to the fact that many of these developing countries lack the technology to detect and control parallel importation, and partly because parallel importation is negligently encouraged. The issue of whether parallel importation indeed constitutes infringement of the trademark right has been argued back and forth in many countries. In Japan for example, it appears that for many years the courts took a strong stance against parallel importation when in the case of Nestle Nihon v Sankai Shoten5, a Japanese subsidiary imported Nescafe products from its parent company for sale in its country. A third party also imported the Nescafe products for sale in the same country and the court held that the actions of the third party constituted an infringement of the right of the subsidiary. In N.Mc co v Schulryro6on the other hand, which involved importation of "parker" pens, the court held that in so far as the goods imported by the third parties were the same in quality as the ones imported by Schulryo and that as long as the pens were genuine the third party could not be barred from importation of the goods.

Some may argue that placing a ban on importation of grey goods is against the spirit of antitrust law, which has although not taken effect in Nigeria has been long awaited.7 Accordingly, where a country legislates against parallel importation, the support for international trade may create an issue of trademark infringement. In 2008, the ECOWAS community, in an effort to encourage international trade, laid down certain guidelines for its member states. Specifically, Article 5 (1) of the ECOWAS treaty provides that;

" the following shall be prohibited as incompatible with the ECOWAS Common Market, all agreements between enterprises, decisions by associations of enterprises and concerted practices which may affect trade between ECOWAS member states and the object or effect of which are or may be the prevention, restriction, distortion or elimination of competition, within the common market and in particular, those which (a) directly or indirectly fix purchase or selling prices, terms of sale or any other trading conditions, (b) limit or control production, markets, technical development or...(2) any agreement or decision prohibited under sub-paragraph 1 of this Article shall be automatically void....."8

In other words, any agreements between any business and another which seeks to restrict trade to a particular territory within the ECOWAS would be void under this treaty. Thus, an exclusive distributorship agreement between a Nigerian business owner and another which restricts the trade of the distributor to a particular territory would be void pursuant to this provision. This treaty is in support of the principle of exhaustion. The exhaustion doctrine simply put, is the doctrine that supports the notion that once the proprietor of an Intellectual Property has sold or licensed the right to its trademark in connection with a product, the buyer may do as he pleases and sell such products when and where he pleases9 Thus, based on this principle, a licensing agreement or an assignment which bars the licensee from trading the goods of the proprietor in a specific region or beyond a specific region would be void.

Whilst the ban on importation of grey goods may appear to be in contravention with the spirit of competition within the Community, the provisions of the Nigerian Trade Marks Act10 (the "Trademarks Act") does not specifically provide for the ban of goods, neither does it support the doctrine of exhaustion applicable in the ECOWAS states and a number of other jurisdictions like the UK.

From the Nigerian perspective, more germane is the fact that applying the provisions of the Trademarks Act to prevent parallel importation into Nigeria may not be successful because the Trademarks Act merely provides that infringement occurs when a person uses a mark identical to that of the registered user in an attempt to deceive the buyers, by importing a reference to a person having the right either as proprietor or registered user of a trademark, in relation to any goods in respect of which the mark is registered.11 This is not the case in instances of parallel importation; the trademark is original and registered in respect of the goods and the user is authorised. Thus, the Trademarks Act will not apply.

In the UK, the laws on trademarks unlike the TradeMarks Act, specifically provides that "a registered TradeMark is not infringed by the use of the Trade Mark in relation to goods which have been put on the market in the European Economic Area under that trademark by the proprietor......" 12This provision is clearly in support of Article 101 of the Anti-Competition Agreements of the European Union13 which supports the doctrine of exhaustion.

Clearly, the doctrine of exhaustion as provided for under the ECOWAS treaty has not been domesticated into Nigerian legislation. As afore stated, whilst parallel importation is not specifically catered for under the Trademarks Act, and again whilst it appears that less attention has been paid to parallel importation and there are only a few notable judicial pronouncements on this issue, the attitude of the courts in a number of cases, appears to be in support of the fact that parallel importation amounts to trademark infringement.

In Honda Place ltd V Globe Motors Ltd (Suit No. LD/1643/96), the Plaintiff instituted an action at the Federal High Court, Lagos, against the Defendant. The facts before the court were that the Plaintiff entered into an agreement with the Defendant, for the dealership in the popular brand of vehicles, known as Honda, granting the Defendant the right to import and sell the cars allotted to the Plaintiff by the manufacturer. The Plaintiff sued on grounds that the Defendant had been importing Honda cars from the United States as opposed to Japan and that Honda cars from the United States were not conducive for the Nigerian market. The parties however settled the dispute out of court by executing a new agreement which was adopted as consent judgment of the court. In delivering the judgment, the court specifically ordered that the defendants cease to import Honda cars from the United States or any other country except Japan.

In another similar case, -Honda Motors Co. & Anor V Bright Motors & 4 Ors (FHC/L/SS/1442/97) 14, the Claimants sued at the Federal high court on the same grounds as in Honda V Globe Motors. The court granted the ex-parte applications of the Plaintiffs, mandating the police to seize all the Honda vehicles of the defendants under the supervision of the police, pending the determination of the suit.

Indeed, importation of grey goods as some may argue may positively impact the economy because of increased competition, which in turn increases market efficiency through promotion of free trade. However, it is harmful; to consumers and trademark proprietors because they may not meet the specific standards for the region into which they are imported not because the goods are sub-standard but mainly because they are not produced and fit for a territory. Also, such goods are not eligible for manufacturer's warranty services and refunds. The authorised dealer of Apple products in Nigeria recently warned Nigerians against purchasing apple products from unauthorised dealers in Nigeria, noting that whilst grey goods are cheaper, benefits of warranty, after-sales support and consumer education cannot be achieved.15 Ultimately, the consumer without knowledge of importation restrictions becomes dissatisfied with the goods which ultimately creates distrust for the trademark and its proprietor.

Importantly, another salient issue which comes to mind would be that where for example, there is a sole-distributorship agreement between the manufacturer of a product and the licensee, would allowing a third party import the same products into Nigeria not contravene the idea of sanctity of contract? If so, perhaps adopting the exhaustion doctrine may have the same effect on franchising agreements, where the franchisee is granted the sole right to distribute and sell any products which bares the mark of the franchisor, within a particular territory.


Ultimately, the solution may possibly be that rather than ban parallel importation completely and rather than imbibe the doctrine of exhaustion entirely, perhaps credence may be learnt from the principle of the court as laid down in the Japanese case. Perhaps, Nigerian law should allow for parallel importation but only to the extent that the importer is authorised to sell that product, the product does not differ in quality, it conforms with acceptable standards and is not prohibited from the region. In the alternative, Nigerian law may take a cue from the approach adopted by the United States Custom Service Regulation which bans the parallel importation as constituting an infringement except when the foreign trademark owner and the local entity importing the grey goods are owned by the same person or both parties have common ownership or control.16


1 J. Spanogle, International Business Transactions, Supplement Materials, 2013.

2 ibid

3 Premium Times, March 16, 2013

4 Bismark Rewane, last visited 3rd April, 2014

5 Tokyo District Court, May 29, 1965 (Unreported)

6 N. MC. Co v Schulryo Trading Co., Osaka District Court, Feb 27, 1970

7 The Anti-Competition Bill of Nigeria has not been passed into law

8Article 5, Supplemetal Act Adopting Community Competition Rules & The Modalities For Their Application Within Ecowas.

9 Phillipsons Consultancy Blog, "Parallel Imports and Exhaustion Doctrines; Lessons for Nigeria"

10The Trade Marks Act, , Laws of the Federation of Nigeria, 2004

11 Section 5, Trade Mark Act

12 Section 10(b) of the UK Trademarks Act, 1994.

13 The Treaty on The Functioning of The European Community

14 Unreported

15 Kenneth Omeruo ;

16 19, C.F.R. S 133. 21(c), 1985

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions