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.

8 thoughts on “Safaricom and Intellectual Property Theft: Some Thoughts

  1. A great piece IPKenya. My take is that Mpesa and Mkesho do not strictly fall under S. 21 of the Industrial Act…they are more than just “schemes, rules or methods for doing business, performing purely mental acts or playing games”. The interface that created between the individual’s phone to the system at safcom and the mpesa agents’ phones…and even further to the bank… cannot be termed as a mere ‘method of doing business’. I hold the view that they meet the requirements for patentability – they are new, they involved an inventive step and there is a clear industrial applicability! But then am not surprised by the court’s decision…my friend who recently filed a copyright infringement application told me of how she had a protracted argument with the learned judge on whether the court was competent to handle the matter. The good judge was insisting the matter – a copyright issue – should be referred to the IPT! On the issue of awareness, i agree with you. There are countless cases of people who have had their innovations apparently ‘stolen’ from them by conniving individuals or corporates. But the sad part is that these fellows willingly walk there and ignorantly spill the whole information without first seeking legal advice. I am currently trying to help a gentleman who confessed to me that he avoided going to a lawyer because he thought he would be conned of his money for no reason. Now his patent lies in balance! NDA’s are an important tool to any innovator and we, at the IP agencies, ought to emphasize it. But it is coming out that we ought to start our awareness campaign in the courts!

  2. Hi,

    Thank you for theBloggers who have paid concern to highlight this
    issue of M-Pesa and the developments.

    Firstly i wish to note that there are alot of myths surrounding this
    issue. They need to be addressed by those who have the clear

    It appears that the greatest barrier to Mr. Ondieki’s case is
    appreciation of the procedures of IP- Law in Kenya. There are several
    cases and applications pending, both in the High Court and the Court
    of Appeal to determine the question of JURISDICTION. I also have a
    similar case involving copyrights and industrial design. (The High
    Court said it lacked jurisdiction, but Neither IPT nor KECOBO can
    decide this matter)

    I wish to make it clear that in Kenya the express PROHIBITION on
    software patenting was cleared by the Industrial Property Act,
    amendments of 2001. Thus, while there is no express provision for
    Software patent, there is no express prohibition against software

    It is my favoured view that softwares are rightly patentable in Kenya.

    I also think that for those in Human Rights Discourse this presents an
    area of considerable derbate.

    The Kenyan Constitution, 2010, interprets property to include
    intellectual Property. This effectively cements the place of
    Intellectual Property Rights in the Bill of Rights.

    The constitution requires the government to make creative efforts to
    protect the IP rights of individuals as well as communities. in light
    of the foregoing constitutional underpinings, i think it is timely and
    relevant to think on creating a balance between Human Rights and
    Public policy.

    To sum up my rather disjointed thoughts, i respondent to the M-Pesa
    issue and say that it should be patentable. And secondly, Ondieki has
    a very strong case, he should pursue it or else he’ll waste a lifetime

  3. I do agree with Sudi that IP awareness should start with the Courts. In most cases, decisions on IP issues do not make sense. For example, cases of trademark infringement are decided on principles of passing off! Some times, I wonder why the parties do not appeal… but then from recent cases, it would be appear that even that will not make much difference.

    Concerning the MPESA dispute, we can only wait the response of IPT , if the matter ever goes there.

    Apart from what we read in the press about “intellectual property theft” against Safaricom, would any one out there be having more detailed information on the exact nature of claim? For example, is it a patent infringement issue, breach of confidence, etc?

  4. if i may ask now that i have a business proposal and its most viable to safaricom what do i do to protect it against implementation and i getting kicked out of the project??

  5. hae safcom official i would you to organize a function for the upcoming deejays which are youths so that you can improve our society and motivate them

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