The Fearful Africa’s Startup IP Drain

Tekedia has been publishing a dose of legal opinions. As I noted in the Boston College Law’s International IP Summit yesterday, IP will define the wealth of nations and will radically alter the architecture of market systems, in ways no one has seen in recorded history, over the next 30 years. This is a knowledge era and it would be powered by IP and broad property rights.

The domiciliation of Africa’s finest companies in this knowledge era will be outside Africa because Africa’s property rights remain weak. What that means is that by 2030 when the current class of African companies are expected to be hitting the stock markets, they will not show up in Africa because indeed Africa does not own them. Most will list outside the continent.

Imagine if GTBank* and Zenith Bank, using Nigerian banks as examples, are not Nigerians, and not available in the stock exchange, you will agree that the Nigerian Stock Exchange will be a mirror of itself. These companies founded in the 1990s have led the market for years now.

But the current new species of companies are not legally Nigerians or Africans, and what that means is that even though they are fixing our local frictions, Africa may not capture the second phase of value which typically happens when some of them list. Most of these firms are registered in London, Delaware state (United States), and Paris. 

I have called this Startup IP Drain (I originally used Startup Legal Drain but it is evident that Startup IP Drain is better), just as we have Brain Drain. Unless fixed, Africa will lose IPs and global positioning and could be diminished for centuries. Unlike the industrial age companies like cement, water boards, etc, the future will be governed by IPs and if we have none, it would mean that we cannot predict a future we have failed to create!

But note – this is not the fault of the startups or the countries they have chosen; this is a pure play failure of leadership by African leaders.

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Comment: Africans are the most ridiculous species on earth, we know how to spot all the past, present and future problems troubling the continent, and it ends there.

Buck passing is our specialty, citizens blame political leaders, leaders blame their predecessors, their predecessors blame colonial masters, and it goes on and on, nobody ever takes responsibility; we are that irresponsible.

Africans gave up on Mother Africa long time ago, all we are left with are those pontificating and cataloguing the misdeeds of past and present leaders, you now wonder which generation will be saddled with the task of roaring Africa…

Politicians are never adept in jurisprudence, this continent produces all manner of legal scholars and luminaries, yet in the things that secure the future of a continent, where is the expertise? Of course it’s very easy to point to leadership, which unfortunately is nobody’s surname, so no one is ever held accountable.

A founder/entrepreneur has a responsibility for his continent, same for a lawyer, a politician, and all those whose actions or mistake can shape continental destiny, it’s not about shifting responsibility to one class of people, the person registering companies outside is as culpable as the politician.

My Response: good points as always. But on IP related issues, a founder has limited leverage. If you have a case in the Supreme Court of Nigeria that is not political in nature, your first court date will be around 2024 and you hope that date, there is no failed generator that would cause a postponement. If you have that system, you can blame leadership. And where that is the case, no company will like to wait years for legal matters to be resolved. Consider this: court cases do not kill many Nigerian companies but DELAYs in the court system do. Savannah Bank would have “survived” if the court did all within weeks as they do in the US. But by the time Nigeria finished, everything was done.

Comment #1 extended: Ndubuisi, that is where you expect legal scholars and practitioners to lead the charge, just like child trafficking or slavery, people must make IP legal issues front and centre, so that there will always be judges available to handle them.

We spend a lot of manpower on political cases, because that’s what most Nigerians know about, politics remains the biggest market here, so all eyes, noses and ears face that direction.

Again, there is dearth of human capital in our judiciary, the NJC saddled with recommending judges, how many of those judges are well grounded in these new areas? Our laws still don’t recognise patenting of software codes! These things are not just political issues, the knowledge and expertise are also in short supply, we are off pace in so many areas of contemporary society.

If the legal community do its home work, politicians will be able to make sense of these things, nobody wants to lose, but we must first teach our people how to win, that knowledge is not available at scale yet.

Every aspect of our national life is underperforming, but we think political leadership has all the answers, it is not true, our so called professionals are not so professional in anything worthwhile.

Comment #2: I definitely disagree, IP rights are not lex domicili (I.e. where a company is registered), IP rights conferred regardless of where they are registered goes to the person who registered. So if a Nigerian has patent rights in an invention in Delaware, he can still transfer the invention to Nigeria or anywhere in the world. The fact that an invention is registered in Delaware and patent granted in US doesn’t mean the rights conferred stays in the US, the right conferred is in the owner — who can then utilise it as he likes.

Response #2: If I may ask as a lay person, why do you think the company will even register in US and move the IPs out of Nigeria? Why is that a necessity?

Also, what do you think companies are investing in? Your statement – “who can then utilise it as he likes” confuses me because as an investor, you are actually investing in the IPs. Could you explain why you will give someone $1m and that person can still use the IPs as he/she likes.

Also, as an investor, it is not the same on the patent that matters. What matter is the assignee. So, Ndubuisi holds a patent but that patent could be assigned to Company A. So, not being a lawyer, I do not agree that Ndubuisi can still do as he likes on that patent.

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