Olufola Wusu

Fola Wusu

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The Federal Government on the 2nd of July 2012 signed an agreement with an American and Nigerian joint venture group, Vulcan Petroleum Resources Limited and Petroleum Refining and Strategic Reserve Limited, for the construction of six modular refineries. The six refineries are estimated to gulp $4.5bn.

Joint ventures in the oil and gas sector in Nigeria are an easy way for businesses to put together their expertise and assets to carry out common projects.

A key area that is often ignored by joint venture participants is intellectual property in Joint Ventures, such as patents, trade secrets, research, software (the subject of copyright), and trade-marks. 

Intellectual Property in Oil and Gas Joint Ventures/Operating Agreements;

The basic types of Intellectual property prevalent in the oil and gas sector are the following; Patents, Trademarks, Copyrights, Trade Secrets and Others like brands, Know-How, Know – Who and Professional Credentials & Credibility.

 

What is a Joint Venture/Operating Agreement?

A joint venture is an association of corporations or other legal entities who agree by contract to engage in a common undertaking for joint profit. Typically in Nigeria the Joint Venture is usually between Nigeria and the Oil Majors. The NNPC represents the interest of the government in the joint ventures.

The JOA regulates the relationship between the parties, including funding by the partners. In addition a Memorandum of Understanding (MOU) governs fiscal matters.

The parties to a joint venture (ventures) contribute money, intellectual property and other assets to produce oil and gas from a given acreage or even construct an oil refinery.

 

Intellectual Property in Joint Ventures in Nigeria

When reviewing Joint Venture Agreements in Nigeria, Intellectual Property issues are given scant attention or swept under the carpet.

Pitfalls unique to Joint Ventures

Employees acting on behalf of the joint venture/one of the venturers:

Intellectual property created in the course of employment is typically owned by the employer, if it is not clear who the employee/contractor is acting for at the time of creation it may be unclear who owns the intellectual property.

 

The Nigerian Experience…

Indigenous companies have been awarded oil blocs and some entered into joint ventures with established oil majors, but found themselves holding the short end of the stick after being schemed out of the equation.

 

Protect Trade secrets/other Intellectual property…

Intellectual Property Theft —IP and trade secrets concerning the oil bloc need to be protected to prevent its removal by staff and the technical partner and its being used in such a way that prejudices the original grantee of the oil bloc.

Non-compete contracts with Technical Partners

They need to use a mix of non-compete contracts, agreed damages clauses with Federal Support Agreements and effective trade secret protection to prevent their technical partners from gathering information about their oil bloc and later scheming to get same awarded to it with the resulting litany of court cases spanning from Lagos to London.

When reviewing Joint Venture Agreements in Nigeria, Intellectual Property issues are given scant attention or swept under the carpet.

Pitfalls unique to Joint Ventures

Employees acting on behalf of the joint venture/one of the venturers:

 

The Nigerian Experience…

Indigenous companies have been awarded oil blocs and some entered into joint ventures with established oil majors, but found themselves holding the short end of the stick after being schemed out of the equation.

 

Protect Trade secrets/other Intellectual property…

Intellectual Property Theft

Network Breach

A Possible Paradigm Shift

Include Intellectual Property Terms in the Joint Venture Agreement

Innovation Savvy contract counsel

Envisage Possible Improvements…

Clearer Employee Roles…

The way forward…

This writer sees a future where research and innovation will play an increasingly important role in the Nigerian energy industry with more joint ventures being formed to capitalize on/commercialise new innovations or to pool resources to create new solutions as distinct from developing oil acreage or building refineries.

            Conclusion

A willingness to work with the locals and the middle men by enlisting their support to combat the more horrific types of illegal refiners down the line will be a useful tool in stamping out crude oil bunkering in Nigeria. Let brute force be the last card…

Olufola Wusu Esq.

Copyright © 2012

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