Safaricom and Intellectual Property Theft: Some Thoughts

The Business Daily reveals that there are currently two accusations of intellectual property theft levelled against Safaricom, Kenya’s leading mobile telephone company:

a. “Maliza Storo”: a service that enables pre-pay subscribers to access airtime on credit for a fee of 10 per cent for each request.

b. “M-Kesho”: a mobile-based platform allows customers to perform basic banking transactions.

The accusations in both cases are more or less the same. Innovators pitched these ideas as business proposals to Safaricom. Safaricom accepts the proposals. Several months later, the innovators in question see their ideas have been implemented without Safaricom seeking their consent or paying any form of compensation.

IPKenya would like to make the following three overlapping points:

1. Patentability of business methods?:

There is/was an argument that mobile phone generated innovations such as Mpesa could be protected as process patents in Kenya. However, the Industrial Act is clear in Section 21 (b) that patentable inventions do not include:
“schemes, rules or methods for doing business, performing purely mental acts or playing games”

So IPKenya wonders why Justice Musinga has referred the mPesa case to the Industrial Property Tribunal. The Tribunal’s hands are tied. It will only confine itself to the four corners of the Industrial Property Act, 2001 which will not work in favour of the innovator.

2. The role of the IP offices:

The IP offices namely KIPI and KECOBO still have a long way to go as far as awareness creation is concerned. The challenge is to demystify IP and give all members of the public basic information on how they can use the IP system to safeguard their intellectual assets. Other information that the IP offices need to pass on to the general public is on the use of non-disclosure agreements, licensing agreements and other relevant forms of contracts.
These offices must also be more pro-active in lobbying for funding for innovators, creators, inventors with great ideas and projects but lack adequate funding.
IPKenya is also concerned about the peculiar practice at KECOBO where individuals are allowed to register business proposals, concepts, TV show plots and events as literary works. These individuals register these works under the false presumption that they are obtaining a monopoly over the ideas contained in their proposed works.
Instead IPKenya argues that the IP offices should put more emphasis on the role of branding. Inventors and creators must be encouraged to brand their innovative goods and services using the trademark system. The public needs to understand that copying can only be countered by establishing goodwill and brand loyalty as the pioneer and quality benchmark in a particular market.

3. The role of the Judiciary:

IPKenya would like to believe that the courts can help put an end to a disturbing trend of Safaricom’s exploitation of the ideas of innovative Kenyans. Here we pause to recall the case of Alternative Media Ltd v Safaricom, Civil Case 263 of 2004. The plaintiff alleged that the defendant had used the plaintiff’s artwork on the defendant’s scratch cards without the plaintiff’s authority. The plaintiff claimed that the defendant had infringed the plaintiff’s copyright and asked the court for compensation and to permanently restrain the defendant from committing further infringement. The court found in favour of the plaintiff, stating that it had proved it was the owner of the copyright in the artistic works in issue and that the defendant had infringed this copyright.

However, the present cases require the courts to go beyond interpretation and to actually create new law in the area of industrial property. Although section 21 of the Industrial Property Act purports to exclude “methods of doing business” from the scope of patent protection, it is undeniable that mobile technology in Kenya particularly mobile money transfer, is/was a process that is/was novel, inventive/non-obvious and industrially applicable. In the present case, all indications are that Safaricom has been unjustly enriched from the mPesa idea and other ideas it has turned into business products without giving any form of compensation to the innovators concerned.
More fundamentally, IPKenya argues that the industrial property law must be re-examined in light of this mPesa case with the possibility of allowing grants of patents to be issued for business methods.

UPDATE: Isaac Rutenberg over at Afro IP Blog has just published an article titled: “Safaricom, mPesa and business method patents: another view” in which he disagrees with the position I have taken on business methods patents in Kenya. Kindly share with us your views on this debate.