Law & Policy, Legal Drama

Part I – Who Owns Nollywood? IROKO Partners or Afrinolly – Illegal Restraint on Trade? Dubious License Agreements? Let’s Talk About It!

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Last week, I told you all about the threat made by Jason Njoku CEO of  IROKO Partners to sue Afrinolly for 100Million Naira. That story has since become viral. I also promised I would share my thoughts, this week, on the threatened lawsuit.

I begin with my conclusions and then get into specific legal issues at play here. While we speak of Nollywood, the issues here parallel those at play in the music industry, in terms of exclusive global digital distribution licenses obtained by IROKO Partners from Nigerian artists. I covered those issues in a prior post which you can read here.

My Conclusions Specific to the question in my headline are as follows:

1. If I were Afrinolly, I would call IROKO’s bluff and dare them to sue.

2. If I were Afrinolly, I would put aside a healthy budget for the take no prisoners kind of trial lawyers and for every legal blow Njoku and IROKO gives me, if they can even make actual contact, I would deliver twice as much. It would be a very ugly fight and by the time I am done, Njoku, IROKO and all those with a vested interest in IROKO would beg me to stop. This is business, nothing personal. IROKO came at me, first. My response and message would be simple. Next time, “let sleeping dogs lie.”

3. If I were IROKO, I would avoid broadcasting to the world that I would sue people. I would slap those I intend to sue with a lawsuit, without the media festivities. This way, if I do not sue, I am not left embarrassed and looking silly. I also save myself from being an easy target for lawsuits, in future, by not seeming like a punk, for lack of a better word. Again, strictly business, nothing personal. IROKO brought the fight first, they should finish it and do so strong.

4. I asked the question who owns Nollywood for a reason?

Jason Njoku wants 100% of the apple pie and does not want to share. As long as there are lawyers in show biz, Njoku will share the apple pie. There are two ways to share. He can share willingly or he can be forced to share.

In English, it means if I were IROKO, I would swallow a confidence pill so I can quit with the bullying, monopolization and my lousy attempts at limiting and stifling competition in the marketplace. Having non-savvy Nigerian filmmakers/content owners sign global exclusive digital license agreements, who Njoku admits know nothing about the intricacies of the digital distribution contracts they sign, will not stop competitors in the marketplace.

Indeed, Njoku and IROKO should set aside a huge chunk of their $10million raised from investors for legal fees because with the rate they are going, they will need it sooner than later, especially since Njoku is the one making threats to sue.

5. If I were IROKO and I decided to proceed with scaring the competition away with lawsuits,  I would sue Afrinolly, Samsung and every and all persons connected to Afrinolly streaming IROKO licensed movies via Afrinolly’s relationship with them. At the end of the day, my goal would be to make all these third parties pull out from Afrinolly because Afrinolly is a walking liability and they cannot afford to open their companies and shareholders to legal liability, even if Afrinolly can. At a minimum, I would scare Afrinolly into backing off and send a message to all that I am not to be messed with. This is strictly business, nothing personal.

The Key Legal Issues at the Heart of Njoku’s Threatened Lawsuit

For first time visitors of AML who are clueless about Nigeria’s film industry or need a refresher course, please visit my article written for Ladybrille Magazine which chronicles the history of Nollywood here.

However, before I go any farther, I believe it is critical to always give credit where it is due. It is simply undisputable, specific to Nollywood, that IROKO came into the game and changed it forever. Indeed, I believe history will, forever, especially if Njoku plays his cards well, document the revolution brought on by Njoku and IROKO in Nollyowood’s distribution game.

Prior to Njoku, there was way too much talk to the point of intellectual masturbation from the West and  Africa  as to Nollywood. Everyone had an idea, had something to say but there was no real concrete action in putting money in the pockets of filmmakers, right away and for a long time to come.

Njoku, while others talked, used basic common sense and hardwork. He went door to door, literally, in Nigeria’s difficult film markets (Alaba market included) and convinced film owners of Nollywood movies to license their copyrights to him so he could make more money for them and also for himself. This act and the revolution brought about via Nollywood Love (IROKO subsidiary) on YouTube and IROKO TV should indeed be applauded.

Despite the wonderful introduction of digital distribution to Nigeria in a pragmatic and very simplistic form, albeit labor intensive, I ask the same question I asked in my analysis of the BET Lilian Blankson case. The question is essentially as follows: Is an industry confined to the vision and goals of one person, where that person cracks a door that seemed uncrackable?

As I answered in Blankson’s situation, surely, the answer has to be ‘NO!’ There should be immense gratitude communicated through action and words to the industry’s forerunners but at the end of the day, even the forerunners must know how to get out of the way for the overall growth of the industry.

This brings me to the first primary legal issue I will discuss, in my AML Part I Nollywood feature, as a result of Njoku’s alleged threat to sue Afrinolly. It is the issue of Anti-competition/Anti-trust specific to Njoku’s actions.

AML Key Legal Issue#1: Is Jason Njoku/IROKO Partners’ Placing an  Illegal Restraint on Trade in Nollywood’s Movie Industry?

At the heart of the threatened litigation by Njoku is the argument that he has exclusive licenses with various filmmakers/owners culminating in over 5,000 movies in IROKO’s catalog. Many, if not all of these licenses, are exclusive licenses for global digital distribution. Njoku even mentions that he has some of these persons on camera granting these licenses. Accordingly, the argument is that no one else, including Afrinolly, across Nigeria, a country with over 150million people, UK, USA or any part of the world should be able to use the works licensed to Njoku without permission. Such use constitutes infringement of which he is entitled to sue and receive damages, if he prevails.

First, in a CNN interview last year, August 2011, Njoku was asked the question of competitors entering into the marketplace. He didn’t really answer the question but appeared to suggest IROKO could meet the challenges of more competitors in the markeplace.

Second, in that same CNN interview, he was asked whether those content owners he does business with in Alaba markets actually get the intricacies and details of his digital distribution scheme as he talks to them to license their films, he said, “no.” That answer, on camera, is HIGHLY significant with respect to contracts signed by these filmmakers and I will take that up in Part II of my discussions.

Third, in the USA and Europe, Njoku’s attempt to monopolize the movie industry in terms of digital distribution  would most likely be deemed a violation of Anti-trust/anti-competition laws. For the sake of our discussion, let’s narrow in on USA’s anti-trust laws.

USA Anti-Trust Law /Sherman Act of 1890

US Anti-trust (anti-competition) laws was born out of the whole idea that we do NOT want to have a concentration of economic power in the hands of a few people. Why? It is bad for both businesses and individuals. When a few control economic power, it leads to anti-competition practices. It leads to price fixing, it stifles creativity and ultimately depresses the economy which is bad for all. We do not want this kind of result for a democracy like the USA.

The U.S. congress leery about this effect, in 1890, passed the Sherman Anti-trust Act which essentially made this kind of restraint on trade discussed above, illegal.  If Njoku/IROKO Partners were doing business in the USA and entering into deals like this that usurped the whole of America’s movie industry through global exclusive digital rights which restricts competition, it clearly would be legal war zones of the highest order. You would  not need to look over your soldiers to see an army of trial lawyers closing in on Njoku as he runs as fast as he can with his huge apple pie that he refuses to share, figuratively speaking.

The reality, however, is that Njoku/IROKO Partners, at least so far, is not in the USA. So, let’s talk briefly about Nigeria’s Anti-trust laws where Njoku is based and where these legal issue arises.

Nigeria Anti-trust Laws – Nigeria’s Federal Competition Bill

Nigeria does NOT have an enacted anti-competition law such as that of the USA. There have been numerous talks, promises, conferences, a draft bill  et. al. proposing an Anti-Competition Act. It is yet to happen.

Indeed in 2002, Nigeria even hired the services of a firm in Washington DC to draft a proposed act titled The Federal Competition Bill. That bill has since been stalled.

As a result, the reality is the Nigerian consumer continues to suffer. The Nigerian consumer remains at the mercy of persons like Njoku who freely monopolize the market place, albeit Njoku is still very new in it. If Njoku, for example, sells the movies licensed to him at  10,000Naira each for access to watch it on IROKO TV and tomorrow raises his price to 50,000Naira, there is not much the Nigerian consumer can do. Indeed excessive pricing in all aspects of Nigeria’s retail life remains the order of the day. Items in the USA that are not even worth $50.00, can be sold in Nigeria for $300.00. Further, as a result of anti-competition laws, monopoly is the order of the day.

So, what gives? IROKO is essentially saying we have a monopoly, pretty much, with our exclusive global digital licenses from practically almost all Nollywood content owners in and out of Alaba market selling Nollywood movies. We can do whatever we want  including excluding competitors,  deal with it. “Yes, you! If you are thinking of entering the movie digital distribution market, forget about it! We have the exclusive global license starting with Nigeria and there is nothing you can do about it.”

Your response should be, “really?” Hmm . . . “where is my lawyer?!”

QUESTIONS ALL STAKEHOLDERS READING THIS AND JUST THE INTELLECTUALLY CURIOUS SHOULD BE ASKING.

  1. Should IROKO be allowed this unfettered restraint on intellectual property rights of Nollywood filmmakers/contentowners, even if “there (is) no gun held to their heads” as an IROKO representative once put it?
  2. Should IROKO be allowed unfettered discretion to restrain competition in Nigeria’s marketplace with its exclusive digital licenses nationwide and globally specific to Nollywood?
  3. Should IROKO be allowed the unfettered discretion to impede the transfer of technology by these exclusive licenses?
  4. Does IROKO’s action hurt the Nollywood consumer, if so, exactly how?
  5. Does IROKO’s action create a monopoly? If so how?
  6. Does IROKO’s action stifle creativity in Nollywood, if so, how?

I enjoy vigorous debate and believe the issues here are important as they have direct and real life impact on many industry professionals employed in Nigeria’s movie industry. There is no right side v. evil side so don’t treat it as such. The bigger question is what is in the industry’s best interest and who makes that decision given the role of the digital revolution? Also, the next key area I will explore that goes to the heart of Njoku’s threatened lawsuit is the licensing agreement he has signed with this movie content providers.

AML Key Legal Issue #2 –  Did Nollywood Filmmakers Really License the Rights Njoku/IROKO Partners claim to have? 

TO BE CONTINUED  . . . NOLLYWOOD STYLE.

Uduak
@uduaklaw

JASON NJOKU/IROKO TV

AFRINOLLY

 

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Africa Music Law™

AFRICA MUSIC LAW™ (AML) is a pioneering music business and entertainment law blog and podcast show by Fashion and Entertainment Lawyer Ms. Uduak Oduok empowering the African artist and Africa's rapidly evolving entertainment industry through brilliant music business and entertainment law commentary and analysis, industry news, and exclusive interviews.

Credited for several firsts in the fashion and entertainment industry, Ms. Uduak is also a Partner and Co-Founder of Ebitu Law Group, P.C. where she handles her law firm’s intellectual property law, media, business, fashion, and entertainment law practice areas. She has litigated a wide variety of cases in California courts and handled a variety of entertainment deals for clients in the USA, Africa, and Asia.

Her work and contributions to the creative industry have been recognized by numerous organizations including the National Bar Association, The American University School of Law and featured in prestigious legal publications in the USA including ABA Journal and The California Lawyer Magazine. She is also an Adjunct Professor at the prestigious Academy of Arts University in San Francisco.
For legal representation inquiries, please email (uduak@ebitulawgrp.com). For blog related inquiries i.e. advertising, licensing, or guest interview requests, please email (africamusiclaw@gmail.com). Thank you for visiting Africa Music Law™.

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2 Comments

  1. Acht Neuf says:

    I believe Mr. Iroko Partners (Iroko) pretends not to understand what “digital distribution” stands for. In the USA, any media retailer or a general merchant who has a license to distribute physical DVDs or CDs can venture into digital distribution. A perfect example is Amazon. One can have a physical DVD mailed; or downloaded in a digitized form; or streamed on demand. What if Amazon wants to market Nollywood movies and add some titles to its catalog? Will Iroko show up brandishing a lawsuit prohibiting the world retailer from selling Nollywood’s digitized music or force Amazon back to the stone-age to sell Nollywood VHS tapes? And if he starts streaming: “You can’t touch this” just like MC Hammer, he may end up following him to the bottom of the food chain.

    In addition, people purchase licenses to sell stuff and not to give things away for free. Iroko took those valuable Nollywood licences and handed them over to YouTube in trade with cheap bandwidth for uploading full length movies to be watched for free; and then collect whatever 50/50 crumbs Google Adsense want to throw his way to be split 60/40 with copyright holders every so often. Last time I checked, distributers set their terms and prices in order to enjoy instant gratification after a real sale, instead of relying on dubious ad revenue from corporate leftovers. In essence, Iroko is not a real digital distributor on YouTube like Sony Music who owns its content outright, but an “aggregator” who collects content by whatever means and then delivers it to a distributor, in this case YouTube, in exchange for Ad revenue.

    Hence, the only difference between Iroko and other YouTube users is the alleged permission to upload Nollywood content. I say “alleged” because some Ghanaian movies were deleted from YouTube only to re-appear as Nigerian movies under the Iroko brand, but that rant is for another day. However, what most YouTube users and Iroko have in common is the lack of copyright ownership (no production infrastructure), which usually protects original creators and investors (e.g. record labels). Whatever license Iroko got was permission to exploit the content after the date of sale, but he unjustly went on a YouTube deleting spree calling all Nollywood fans that uploaded content from 2005-2011 filthy pirates. Yet YouTube already took care of that problem where anyone can ID their content and monetize it without a middleman shark who chops 40%. Iroko even deleted short movie trailers which are usually protected under the US fair-use doctrine as non-infringing (YouTube jurisdiction).

    I personally know a YouTube promo lady with a $100,000/year US grant; who has a channel with 265,000,000 views and over 300 artists from all over Africa, most likely more than any African partner.( http://www.youtube.com/user/idamawatu ). She acquired permission to upload P-Square’s “Do Me” from Orchard Music that went on to amass almost 4,000,000 views, but Iroko intimidated her with his “exclusive” copyright claim and she had to delete the video. Then Iroko uploaded his version that has only clocked 500,000 to date, ( http://www.youtube.com/watch?v=iCBbeUjAKLU ). But why didn’t he delete P-Square’s “Do Me” VEVO version with over 8,000,000 views? ( http://www.youtube.com/watch?v=_3mHMWO_-mM ). It says right there on the page (C) 2008 Sugakane Enterprise and not Iroko! The lady brought this fact to YouTube’s attention and she was authorized to re-upload the video ( http://www.youtube.com/watch?v=wmlXT18kmJs ) stressing the point that digital distribution deals do not amount to copyright ownership.

    Even though Mr. Bully-man Iroko thought that he had moped out all the YouTube profits into his moneybag, he missed a spot called mobile devices. Unfortunately these platforms used not to serve Google ads appetizers before Nollywood feature films, so “free” Naija movies really means free, thus no money for Iroko and/or Nollywood. That’s when Afrinolly came in and developed an App to aggregate content that was already online under the http web-form to mobile links, with the blessing of owners of various operating systems (i.e. Samsung, Blackberry or Nokia). Afrinolly’s defense is clear since they do not store Nollywood content anywhere in its servers in a downloadable form. All they do is facilitating access to Iroko web content on mobile platforms. And as long as Afrinolly continues to raise the ratio of mobile views vs. pc views, there will be less and less cash to be had as ad revenue until YouTube optimizes its system to roll Google ads on handheld devices.

    Iroko should just admit his Nollywood venture was not well thought out. Instead of brandishing lawsuits, he needs to study the complexities of the Internet ecosystem. Buying a Nollywood license is a pre-emptive defense to protect Iroko from online copyright infringement claims and not a law enforcement badge to police the Internet against piracy. Plus endowing YouTube with free Nollywood licenses as a gift that kept on giving to Afrinolly was a big mistake. As a third party agent of Nollywood, Iroko can only sue Afrinolly for tortious interference with business contracts. Copyright infringement claims can only be brought by Nollywood creators with attesting a copy of their registration and/or the exclusive license issued to Iroko. It would have been different if Iroko had used the licenses wisely to reissue the content in a tangible medium such as Blu-Ray or DVDs and then register the products with the Copyright office under his name.

    Thank you Miss Lady Lawyer for this blog, it helps to combat a dangerous disorder that keeps on killing Africa, the lack of basic legal sophistication. And Mr. Iroko Partners, just like money can’t buy you love, it cannot buy you copyright ownership to content that you did not create. If it was that easy, what would stop billionaires like Bill Gates from throwing tons of money on Hollywood and then dictate dubious distribution terms that reek of unjust enrichment? Most American content owners value their YouTube fans in that they did not delete or block user content that was uploaded without permission, but slapped Google ads on them while collecting revenue for their artists. You only pulled that stunt of deleting Nollywood and Naija music content to secure your 60/40 split, otherwise user uploaded content would have been generating 100% revenue for artists and leave you out in the cold.

    1. Chukwuyere Izuogu says:

      Very clear explanation of the matter at hand. If that is the way the Afrinolly app works, then I guess they do have a safe harbour defence for copyright infringement, similar to that available to American online service providers under the Digital Millennium Copyright Act 1998. If this is the case, then I guess IROKO is on a very long thing.

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