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Trade Secrets in Kenya: A case for Small & Medium Enterprises
Trade Secrets in Kenya: A case for Small & Medium Enterprises 150 150 Admin_salclaw

trade secret
It is evident that the Kenyan economy is being driven by the SME sector. The hosting of the Global Entrepreneurship Summit by Kenya and the rush by investors, banks included to inject billions of shillings into the SME sector is a testament that Kenya is indeed a hotbed for opportunities. The growth of the Kenyan SME sector is characterized by entrepreneurs who are innovative, wildly creative, and ambitious with a burning urge, need and desire to always push boundaries. These breed of entrepreneurs is always willing to wander into uncharted territories with an aim of breaking set societal ceilings.
The characteristics of the drivers of the Kenyan SME sector has given rise to countless innovations that give their respective business a competitive edge against their competitors. It is thus becoming necessary for SMEs to implement appropriate intellectual property management strategies to protect their trade secrets.
Trade secrets include sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, manufacturing processes e.t.c. Broadly speaking, any confidential business information which gives an enterprise a competitive edge may be considered a trade secret and where the unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret and includes industrial or commercial espionage, breach of contract and breach of confidence. Due to the fact that constant innovation is the only distinguishing factor amongst the SMEs, protection of trade should thus follows as a mandatory measure. It is only through innovations that SMEs can expand their capacity, generate capital investments, increase productivity, advance technologically and increase their overall market share.
Contrary to patents, trade secrets are protected without registration, that is, trade secrets are protected without any procedural formalities. Consequently, a trade secret can be protected for an unlimited period of time. For these reasons, the protection of trade secrets may appear to be particularly attractive for SMEs. However for some information to be considered a trade secret it must comply with the following requirements referred to in Art. 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) which Kenya is a party to:
• The information must be secret (i.e. it is not generally known among, or readily accessible to, circles that normally deal with the kind of information in question).
• It must have commercial value because it is a secret.
• It must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements).
SMEs should rely on trade secrets for the protection of their intellectual property due to the following reasons:
• Trade is not limited to time and thus operates indefinitely as long as the secret is not revealed to the public.
• Trade secrets involve no registration costs apart from the costs of preparing the various documentation that protects the secret.
• Trade secrets have immediate effect as opposed to the patenting process which takes about 2 years in Kenya.
• Trade secret protection does not require compliance with government regulations apart from formalities of contract law.
• Where a secret is not patentable then a protection as a trade secret is appropriate.
• Broad range of protectable subject matter
• Applies to innovations that are in the conception stage
• May be used in combination with other IP protection mechanisms to protect complex inventions Unlimited
• Assists in appropriating returns to innovation investment
• Assists in arranging for financing of further commercial development
• Availability of legal remedies in cases of breach.
Some of the strategies that can be used by SMEs to protect their trade secrets include:
• If a secret is patentable then organizations should consider whether they should patent them
• Ensure that only few high level executives have access to trade secrets and ensure that even the access to this special group is highly controlled.
• Use of confidentiality and non disclosure agreements with employees and business partners where such people come into contact with any confidential information.
For any SMEs that may want to adopt the use of trade secrets, it is always important to have the following as your standard checklist:
• Identify and catalogue your trade secrets.
• Put in place physical, technical, and contractual measures for protecting your trade secrets.
• Document trade secret protection measures you take as a reference tool in case of disputes.
• Develop and implement a trade secret protection policy and sensitize all employees on the provisions of this policy.
• Always have non-disclosure agreements (NDAs) before entering negotiations with third parties.
Written by,
Eugene Sudi
Managing Partner
SUDI & ASSOCIATES

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JOB VACANCIES
JOB VACANCIES 150 150 Admin_salclaw

 

The law office of Sudi & Associates is seeking to competitively fill the following vacant positions:

1 Receptionist/Secretary

Must-

  1. Have a bubbly, cheery and chatty personality
  2. Well-organised, friendly and polite
  3. Professional appearance
  4. Solid communication skills both written and verbal
  5. Ability to be resourceful and proactive in dealing with issues that may arise
  6. Ability to organise, multitask, prioritise and work under pressure
  7. Self-motivated
  8. Good with computer systems
  9. Must have at least a diploma in the relevant field
  10. Must be between 20-29 years of age

2 Legal Assistants

Must-
(1) be in their final year of law school or about to graduate;
(2) have excellent academic credentials;
(3) have good communication, research and analytical skills;
(4) have ability to handle pressure and work under minimum or no supervision;
(5) have excellent interpersonal skills; and
(6) have exemplary computer skills.

How to apply
Please send your Application together with a detailed CV, copies of academic and other relevant testimonials to info@salclaw.co.ke on or before close of business 18th July, 2015.

 

 

 

 

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PRENUPTIAL AGREEMENTS: Blessing or Curse?
PRENUPTIAL AGREEMENTS: Blessing or Curse? 150 150 Admin_salclaw

PRENUPTIAL AGREEMENT

A premarital agreement (also called prenuptial agreement or “prenup”) is a legal step taken before marriage whereby a prenup establishes the property and financial rights of each spouse in the event of a divorce.It is  a written contract between two  people who are about to marry setting out the terms of ownership of assets, how to treat future earnings between the two, control of the property of each and how the property will be divided in case of dissolution of the marriage. Prenups are common if one or both parties have substantial assets, or if where one has children from a previous marriage, or where ones property is subject to inheritances, or where parties have high incomes or where other people not party to the marriage have interest in one’s property.

Section 6 (3) of the Kenyan Matrimonial Property Act provides that parties to an intended marriage may enter into an agreement before their marriage to determine their property rights. A prenuptial agreement takes precedence over other principles of subdividing matrimonial property. While many would hold the opinion that proposing a prenup signifies that one is entering a marriage contemplating divorce statistics speak a different language, more divorce petitions are being filed in our Kenyan courts. A survey by Infotrack Kenya done on behalf of the Saturday nation 5 years ago revealed that, “only 40 per cent of Kenyans are happily married, the rest are either unhappy or not sure how to describe their unions while some 29 per cent of married Kenyans admit their marriages are headed for the rocks, while 31 per cent say they are not certain whether they are in a happy or unhappy union” Due to the rising divorce rates the need to provide for how your property will be divided becomes even greater.

The fear of the unknown is reason enough for one to opt for a pre-nuptial agreement, a pre-nup is like insurance i.e. when you get a life cover, medical cover or accident cover one does not anticipate that this things will ever happen and in most cases they never happen, the insurance cover provides that peace of mind that in case of any unfortunate eventuality you are covered. A pre-nup therefore presupposes that in case a divorce happens then this how you shall divide property.

A prenuptial agreement is therefore a key component of proper financial planning and ensures that your property does not form the basis of  a contentious issue as you get into marriage.

Advantages of having a prenuptial agreement include:

  1. Protects the separate property of spouses where one acquires property without the input of the other spouse.
  2. Protects property that has been acquired before a marriage.
  3. Provides for responsibilities and rights of the parties to a marriage, this however should not be contrary to the law.
  4. Facilitates smooth and faster divorce proceedings since property distribution has already been determined. One needs to note that property distribution is one of the things that makes divorce proceedings protracted, acrimonious and highly combative. A prenup helps to avoid such situations.
  5. Protects third parties who have an interest in property owned by a spouse.

In conclusion, the decision of whether to enter into a prenuptial agreement or not is a very personal decision. Each individual and couple is unique. Therefore, you should base your decision on your own unique situation and circumstances.

Written by

Mweresa Eugene Sudi

e-mail: sudi@salclaw.co.ke

SUDI & ASSOCIATES

 

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Lending Out Money Safely
Lending Out Money Safely 150 150 Admin_salclaw

lend money
We have time and again encountered clients who lend money to colleagues, friends, family and other acquaintances on the basis of a trust relationship and in most cases by a way of an oral gentleman’s agreement. It has however become evident that many of this debts are never paid the end result of such informal transactions being broken relationships, broken trust and losses made.
If you want to safely lend money to somebody who is personally known to you it is always advisable get a qualified advocate to prepare a legally binding loan agreement between you and the borrower. Where such an agreement specifically provides for the provision of security for the loan advanced.
It is always important therefore to demand for security where you are lending someone a huge amount of money that you cannot afford to write off. A security can be in the form of the following:
Chattels mortgage- this is a term used to describe a loan arrangement in which an item of movable personal property is used as security for the loan. A chattel mortgage is a loan that is secured by chattel rather than by real property. Where movable property will include cars, household items, form produce e.t.c. With a chattel mortgage, the lender holds a lien against the movable property (chattel) until the loan has been satisfied, at which point the borrower resumes full control of the chattel. In case of default the lender can exercise their right of repossession in respect to the chattel.
Another way in which a lender can secure a debt is by way of transfers, in this regard a loan agreement provides for the depositing of ownership documents of the security e.g. a log book, the loan agreement thereafter specifically provides for the execution of post dated transfer documents between the parties and where the borrower defaults then the lender through his lawyers will be at liberty to lodge the said transfer for registration and thereafter repossess the security.
A loan agreement can provide for the borrower to do a power of attorney in respect of the security in favor of the lender, and thus where the borrower defaults  the executed power of attorney is registered in favor of the lender and the lender gets the power to deal with the security as they please.
A loan agreement can also have guarantors who pledge to fulfil the borrower’s obligation should the borrower default.
In conclusion it is always important to visit an advocate for proper guidance on how to safely lend money.
Written by
Mweresa Eugene Sudi
SUDI & ASSOCIATES

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STANDARD OF PROOF IN IMPEACHMENT PROCEEDINGS
STANDARD OF PROOF IN IMPEACHMENT PROCEEDINGS 150 150 Admin_salclaw

audits, research & drafting
Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law.In determining the burden of proof in impeachment proceedings has been debatable across the world, while contributing to the never ending debate Senator Miriam Defensor Santiago of the Senate of the Philippines while giving a keynote speech at the Joint Annual Convention Of The Philippines Society Of Hypertension said that, “an impeachment trial is a unique process, because it is a hybrid. Impeachment is both quasi-judicial and quasi-political. It is neither a civil case nor a criminal case. A criminal case is designed to punish an offender and to seek retribution. In contrast, impeachment is the first step in a process that tries to remedy a wrong in governance. It has been said that the purpose of impeachment is not personal punishment, but rather to maintain constitutional government, through the removal of an unfit official from a position of public trust.” The words quoted above are important in that they give the Kenyan Senate much needed direction on a question that has elicited unsettled debates depending which side of the road one lies
Therefore in determining the standard of proof, the question that comes to mind is the nature of impeachment proceedings i.e. are they civil, criminal or administrative. The standard of proof in civil cases in Kenya is on a balance of probabilities, while that of criminal cases is beyond reasonable doubt.
Proof beyond reasonable doubt is that degree of proof which produces a conviction in an unprejudiced mind which arises from moral certainty and not absolute certainty that the person to be convicted is guilty of a crime. One is therefore right to conclude that the end result of proving a case beyond reasonable doubt as is in criminal proceedings is a conviction. Bearing in mind the above it is therefore necessary to analyze the nature of each type of proceedings i.e. civil, criminal and administrative so as to determine the required standard of proof.
It is in order to conclude that impeachment proceedings are neither civil in nature nor criminal in nature. Impeachment proceedings are administrative in nature. Justice Joseph Story of the United States Supreme Court held that, “The design of impeachment is to remove the impeachable officer from office, not to punish. An impeachable act need not be criminal. That explains why the Constitution states that the officer removed shall be subject to prosecution in an ordinary criminal case” From the above quote it is clear that impeachment proceedings are not criminal in nature but administrative due to the simple fact that the end result is purely the removal of an officer from office.
Having determined that impeachment proceedings are neither civil nor criminal but indeed administrative in nature, the next question that arises is, what is the standard of proof in administrative proceedings?
Yale Law professor Charles Black Jr. who had published “Impeachment: A Handbook” in 1974. Prof. Black had written about “overwhelming preponderance of the evidence” as a suggested mid-level standard for impeachment cases. Black wrote: “Weighing the factors, I would be sure that one ought not to be satisfied, or anything near satisfied, with the mere ‘preponderance’ of an ordinary civil trial, but perhaps must be satisfied with something less than the ‘beyond a reasonable doubt’ standard of the ordinary criminal trial, in the full literal meaning of that standard. ‘Overwhelming preponderance of the evidence’ comes perhaps as close as can to denoting the desired standard.”
The words of Charles Black which we are swayed by, suggest that the standard of proof in administration cases should be high above a balance of probabilities as required in civil cases but should not reach beyond reasonable doubt as required in criminal cases. This assertion by Charles Black would be the most appropriate as it would guarantee the integrity of the impeachment proceedings

In the United States there has been debate on the burden of proof required in impeachment proceedings. The argument of beyond reasonable doubt i.e. the highest threshold in proving a case has been argued by those facing impeachment proceedings, on the other hand the members of the houses of senate and congress have argued for a lower standard of proof. The argument on the appropriate standard of proof in impeachment proceedings was played out in the 1986 Senate impeachment trial of Judge Harry Claiborne, where the attorney’s of the judge filed a motion to designate beyond a reasonable doubt as the applicable standard for the Senate in reaching its determination in support of the motion they argued that the constitutional language made it clear that an
impeachment trial was in the nature of a criminal proceeding; the standard of proof in all
criminal trials is beyond a reasonable doubt; historically impeachments have been
conducted in the nature of a criminal proceeding; and the consequences for the defendant
were grave, requiring the prosecutors to be held to the highest standard of proof, beyond
a reasonable doubt. The response of the House Managers in opposition to the Claiborne motion noted that the reasonable doubt standard was designed to protect criminal defendants who risked forfeitures of life, liberty and property. Such a standard was inappropriate, they maintained, because the Constitution limits the consequences of a Senate impeachment trial to removal from office and disqualification from holding office in the future, explicitly preserving the option for a subsequent criminal trial in the courts. The end result was that the Senate refused to impose the reasonable doubt rule as the Senate standard, individual members undoubtedly applied that standard in their own minds when weighing the sufficiency of the evidence in the Claiborne case.
In summary the United States Senate has traditionally left the choice of the applicable standard of proof to each individual Senator. While rejecting a motion to make the criminal standard the standard in the Claiborne impeachment, the discussion made clear that it was simply a decision to allow each member to make that choice and not a repudiation of the standard itself. Individuals might apply that or any other standard of their choice. A walk through history and an examination of the discussions of legal commentators may aid individuals in weighing their choices, but provides no definitive answers. Indeed, such an exercise is perhaps most useful in highlighting basic questions that members will want to ask themselves when searching for the appropriate standard.
I support the position of the United States and more particularly the position of Charles Black i.e. the standard of proof should be higher than on a balance of probabilities and lower than beyond reasonable doubt due to the simple fact that impeachment is an administrative function of the Senate and though quasi judicial, it is neither civil nor criminal in nature. We are also guided by Professor
Rotunda suggests that the appropriate standard of proof should be “clear and convincing
Evidence, this is an intermediate standard used in some important civil cases, more than preponderance and less than a reasonable doubt. Clear and convincing evidence is typically defined as that measure or degree of proof which will produce in the mind of the trier of facts a firm belief or conviction as to the allegation sought to be established.”

Written by
Mweresa Eugene Sudi
Sudi & Associates

 

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Legal Basis for Property Rates
Legal Basis for Property Rates Admin_salclaw

Legal basis for property rates

Article 209(3) (a) of the Constitution of Kenya gives County governments the power to impose property taxes. Land rates are just but one of the many kinds of property taxes that the County governments can impose. Such kind of property taxes plays a major role in the financing of local authorities not only in Kenya but across the world. Land rates are an avenue by which County Governments are meant to raise revenue to supplement what the National Government is devolving in order ensure the respective development agenda is achieved. Thus the most important form of tax collected by local authorities now County Governments in Kenya are the rates which are levied on land and buildings. The Valuation Rating Act Cap 266 and Rating Act Cap. 267 are the basis of rating. Under the law, rates in Kenya are payable by individual property owners, business and the government. They are payable to the local authority in which the property is located. Remissions are given for timely payments, while rate payers are penalized for payments outstanding after the year they fall due.

In our country the valuation of property tax by local authorities as they were before the enactment of the new Constitution is guided by the Valuation of Rating Act. Assessment is done using an area rating (based on size) in combination with either an ad valorem system based on land or on both land and buildings. All local authorities levy the property tax based either on area and/or unimproved site valuation. Buildings are not taxed in Kenya i.e. only land is taxed. Typically area rating is used in the more rural counties while ad valorem land taxation is used in the more urbanized areas. Some local authorities use both area rating and site valuation rating simultaneously.

There are institutions which are by law exempted from payment of rates, including cemeteries, hospitals, public religious worship places, museums and national parks, etc. These institutions are specified in the Rating Act and are gazetted with the approval of the Minister.

Land owned by the National Government in Kenya is taxed by the county governments like it is private property such taxation is facilitated by Section 23 of the Rating Act which is the basis upon which the National Government pays rates to the Local Governments (Counties) in the form of Contribution in lieu of rates. In accordance with the Rating act such contribution is compulsory by the National Government the government however has not been making full payments in respect of the said rates. The law and literature available does not also define what contribution in lieu of rates is.

It is clear that property taxes are meant to contribute to a substantial amount of the revenue that county governments collects, it is possible therefore that the National Government, the Legislature, the Judiciary and other state organs might own a substantial amount of Land in the Counties and thus if such state organs refuse to pay property taxes on the basis that they are government, then we will cripple devolution by limiting the revenue raising capacity of the respective County Governments.

In other jurisdictions the government is exempted from paying property taxes, in our jurisdictions the government pays property taxes in the form of contribution in lieu of rates, in jurisdictions like South Africa and Namibia a 20% reduction is provided on tax owed with respect to government land, while in other jurisdictions the Government makes a lump sum ad hoc contribution to local authorities for services rendered in lieu of paying explicit property taxes.

Options to be considered in Kenya

  • Kenya has the option of maintaining the current system where the National Government makes compulsory contributions in lieu of rates. This system should however be changed and aligned with the new devolved structure as provided for the Constitution of Kenya 2010.
  • Kenya has also the option of exempting state organs from paying property taxes completely. Such a system will however cripple the revenue raising capacity of county governments because state organs own a large acreage of land that is within the jurisdiction of County Governments.
  • Kenya can adopt the system that was provided for in the Local Authorities Transfer Fund Act where 5% of the National Revenue collected went to local authorities. Such a mechanism however may not be practical because the Constitution already provides that not less than 15% of the national revenue shall be devolved to the Counties. Thus if such an idea is to work the wording should be to effect that a percentage of the national revenue shall be collected and devolved to the Counties for the purposes of paying land rates for land owned by the National Government. Such percentage should be calculated after stock taking to determine how much land is owned by the National Government in each county.

In light of the above and the fact that the it is clear that there is lack of a clear policy direction with respect to implementation of Article 209(3) (a) that gives County Governments the mandate to impose property taxes on the National Government and other state organs.

Written by
Mweresa Eugene Sudi
Sudi & Associates

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