The Year 2012 Review: Intellectual Property in Kenya

As we prepare to usher in a new year, a quick look back at 2012 is quite in order. Without further ado, here are the most read IPKenya stories during 2012:

 

 

January:

“Are we all lazy? The debate over innovation in Africa”

“The Fight Against Piracy: Open Source Software versus Microsoft”

 

 

February:

Makerere Lecturer Sues Bank of Uganda for 1 Billion Shillings in Copyright Infringement Suit

The ‘Africa IP Forum’: Doomed to Fail?

 

lake elementaita kenya by diasporadical

 

March:

Agility Logistics Case: Registration of Business Name vs Registration of Trademark

MCSK Boss Finally Speaks Out

 

April:

 

 

Kenya’s New Copyright Tribunal Appointed

Landmark ruling on constitutionality of the Anti-Counterfeit Act

Moline vs. Mololine Trademark Battle

PS: Presiding Judge in the Moline case was determined unfit to continue in office by the Vetting of Judges and Magistrates Board in December 2012.

May:
kemboi dance

 

Trademark case: Strategic Industries Limited v Strategic Industries Limited

INTA 2012 Overview

Intellectual Property and Sports in Kenya: Copyright Protection of Image Rights?

 

June:

 

kenyanpoet-mines-and-mind-fields-book-cover

 

Copyright Infringement Case of the Year: Njeri Wangari aka KenyanPoet vs. Oxford University Press

The Challenge for Creative Commons in Kenya

Parliament Set to Pass Important Amendments to the Kenya Copyright Act

Kenya Welcomes Conclusion of WIPO Beijing Treaty for Audiovisual Performers

 

July:

 

“Sue, Baby, Sue!”: Miguna’s Peeling Back the Mask and the Digital Copyright Infringement Debate

Non-Existent Intellectual Property Financing: Blame it on the Banks or on the Innovators?

A Challenge for Law Schools in Kenya to Take IP Seriously

 

August:

 

NAIROBI SKY LINE

 

The Launch of Strathmore University’s Center for IP and IT Law (CIPIT)

Uganda: Is it copyright infringement to use a politician’s speeches as ringtones?

Tobacco Plain Packaging Law: Intellectual Property Rights versus Human Rights in Kenya

The Newly-Appointed 2012-2015 Kenya Copyright Board of Directors

 

September:

 

Children circle

‘One Society, One Right’? 50 Years of Collective Administration of Music Copyright in Africa: Changes at SAMRO and MCSK

Why Intellectual Property Law in Kenya Should Recognise Colour Trademarks

 

October:

 

A Tale of Two Conflicting Collective Management Organisations in Nigeria

A Look at Kenya’s Draft Bill on Protection of Traditional Knowledge and Expressions of Folklore

 

November:

 

 

Kenyan DJs Must Be Licensed for Commercial Use of Copyright and Related Rights in Music

The Tax Collection Technovation Tussle: A Test Case for Industrial Property in Kenya

 

December:

 

The Ghost of M-Pesa: Faulu Kenya Cries Intellectual Property Theft over Safaricom’s M-Shwari

A Comparative Perspective: Why Business Method Patents Cannot Be Too Quickly Dismissed

 

As 2012 comes to an end, IPKenya would like to thank all our readers, commenters and supporters. The blog had 28,000 views, there were 85 new posts this year and 22 blog subscriptions.

We look forward to 2013!

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A Comparative Perspective: Why Business Method Patents Cannot Be Too Quickly Dismissed

moses njoroge muchiri advocate

IPKenya has received a commentary from Moses Njoroge Muchiri, Advocate and Researcher at the Max Planck Institute for Intellectual Property and Competition Law in Munich, Germany. Muchiri (pictured left) drew my attention to his paper which is comprehensive review of the current legal developments in the protection of computer implemented Business Method Patents (BMPs) comparing the U.S. and E.U. The paper titled: “Business Method Patents Revisited: Recent Developments in the Protection of Computer Implemented Business Methods in the U.S. – Between the Promotion of Innovation and Protection of Investments?” is available on SSRN here.

Recently Muchiri came across IPKenya’s commentary on the CIPIT conference on Software Patents and thought it useful to add his voice briefly to the discussion, as follows:

1. There is a plausible reason why many of the participants in the CIPIT conference would elaborate more on the pros and cons of patenting software patents (of which BMPs are a subset). And one of the main reasons behind that is purely economic in nature. Patent law is the one area of law where the relationship between law and economics is very visible and highly dynamic. To discuss whether ‘property rights’ should be extended to such ‘new age inventions’ as software and even business method patents (many of which are embodied within software patent claims or in reverse) one has to consider that ultimately, property rights are justified only to the extent to which their existence is economically justified as beneficial to the greatest number of economic concerns and situations. This theory lies at the heart of fundamental both traditional and neo- economics as can be seen in the age old literature of Adam Smith. Infact, to a greater extent, I have come to believe that the issue of patentability of BMPs and Software patents is one that should be discussed and possibly answered more by economic analysts. This view was discussed at my institute and I shared this view with a senior Professor of Law who shared this thought. Perhaps lawyers should be less involved with this issue at a policy level, being a more policy oriented question demanding an understanding of the intricate balance between law and economics required to create the broadest space for innovation possible. Which then at a micro-economic level, would also involve an analysis along Competition law lines to analyse for instance whether the creation of quasi-property rights would foreclose certain markets where those rights have been created and thereby pre-empt any possibility for legitimate inter-brand competition. Only where such market foreclosures exist in sufficient scales, would there be a reason to question the existence of a particular patent.

2. It is not whether patents on BMPs should generally be or not be granted; but rather whether a SPECIFIC or a particular business method patent (or a specific software patent) should or should not be granted. This debate has been on-going in academia, business and even among stakeholder professionals in the relevant fields. I disagree that the only people who like these sorts of patents are lawyers or even patent examiners. This line of thinking was actually made by an opponent of BMPs in 2002 after the U.S. Federal Circuit decision in State Street Bank v. Signature Financial 149 F.3d 1368 (Fed. Cir. 1998). Note: Many opponents of BMPs have cited this decision, inaccurately I might add, as the decision through which the Supreme Court allowed patents to be obtained for business methods. Firstly, the patent in issue in State Street was an already granted patent, it was not allowed by the judiciary. Secondly, BMPs can traced to exist from as early as the 19th Century in the U.S. Thirdly, the patent in State Street was not strictly speaking a business method patent. Opponents also cite that Article 52 (2) (c), EPC (European Patent Convention) expressly provides against BMPs and Software Patents. However, many forget to consider Article 52(3), EPC where such patents will not be granted only to the extent that they relate to such subject matter “as such.” Meaning that pure BMPs and Software patents cannot be granted by the EPO. As a result there are currently in excess of over 40,000 BMPs and Software patents granted by the EPO. Why would such number of patents still be granted by an institution that is renown for having one of the strictest patent examination procedures? This is because patents will be examined INDIVIDUALLY not in general terms.

3. The US Supreme Court in Bilski v. Kappos (2010) had a momentous occasion to do away with BMPs once and for all but they did not do so for several reasons. Although they did deduce that the method patent at issue was not patentable, they arrived at that conclusion by holding chiefly that the machine and transformation test was not the main test for patentability of business method AND software patents. What does this mean then? While it is true that one is more likely to get a patent for hardware than software, this has little to do with the tangibility or intangibility of the invention being claimed. This further also elaborates the point that it is not the business of the judiciary to decide what is or is not patentable technology. The judiciary can only interpret the boundaries of the application of patent protection for a specific claimed invention.

4. Tests of patentability. Invariably the issue now rests not upon whether business methods and software patents should be granted protection, but rather reducing the flow and influx of these sorts of applications. But how should this be achieved? Two ways. (i) rigorous pre- grant examination tests. In the US they have developed quite a number of these tests to supplement the machine or transformation test e.g. the Useful-Concrete-Tangible test; teaching-suggestion-motivation test and other technical tests based on §§101 and 102 of the US Patent Act. (ii) secondly; rigorous post grant tests e.g. secondary post grant review. The Supreme Court has endorsed the use of various tests and not just the machine transformation test to the exclusion of the others. in the wake of the new America Invents Act and recent Supreme Court and Court of Appeal for the Federal Circuit (CAFC) decisions, recently the USPTO has implemented various administrative reforms such as secondary review procedure for all granted BMPs. Again in the EU, the reason why BMPs exist is because of the requirement for technical effect.

5. Most of the criticism leveled against BMPs is almost entirely directed at the quality of such inventions i.e. issues dealing with these claims being obvious in light of the prior art. It is not a question about whether or not BMPs should be patented, It is a question on Patent EXAMINATION procedures and review standards. The right focus should be on improving the quality of examination standards and making these patents difficult to obtain. It should also be possible for the public and 3rd parties (essentially anyone with information on useful prior art) to object to patent applications for business methods and software. Again, the institutional capability of patent granting institutions should be improved by engaging highly qualified staff patent examiners who are familiar with the arts in these industries and fields. This way questionable patents will be avoided in the long run. It is these sorts of reforms that the USPTO has currently began to entrench successfully. In a few years we should expect to see a very streamlined patent granting process not just in the US, but also in Japan and Europe regarding these sorts of inventions. We should expect to see many dubious method patents to be invalidated.

6. A requirement for closer scrutiny: Unfortunately many people cite patents without really taking a closer look at the contents of these patents. I read through hundreds of patent claims for hundreds of business method invention claims. And admittedly some are very obvious. But those are but a small minority compared to the broad range of classes for business method inventions. US Patent Examination Class 705 which is the broad class under which most business methods are granted has over 15 sub-classes and each of them contains tens of thousands of granted method patents.
Example: the Amazon 1-Click patent is often cited for being obvious. But for argument sake; if this BMP is stifling to innovation, then we could legitimately expect other e-commerce business players’ efforts to establish themselves as serious contenders in the same market of e-commerce to be prevented from entering the market or at the least face dwindling customer base. But that is hardly the case. One would need to analyse: (i) whether Amazon gained any additional customers as a result of the 1-Click patent (ii) whether other competitors (eg Barnes and Noble or eBay) would face reduced returns as a direct or indirect result of amazon’s patent. I doubt whether this patent has had any such effect at all. But this emphasizes my earlier note, that this has a lot more to do with economic analysis as it does law. There are some substantial economic and legal scholars who have analyzed the economics of this issue, and their articles crunch heavy numbers to answer it. Please see my SSRN paper and symposium Slides for more details.

7. Every patentable technology has had its own peculiar misgivings at one time or another. What are the marginal boundaries of patentable subject matter? This is where law certainly comes in, LEGAL INTERPRETATION. It is not to be forgotten that even the US Constitution and Patent Act have both been framed very widely to be as accommodative as possible while still retaining some restraints. Now here is where it all depends on schools of legal interpretation. Between literal positivists and purposivisim. What is patentable technology? This is the wrong question to ask and its merits or demerits lead us nowhere really. The right question should be, “Can this invention be patented?”

Lastly, I do understand Dr. Rutenberg’s position. And in some aspects, even I share a sort of hunch that these sorts of patents should not exist. But it is only some of the reasons that are often loudly adduced in attacking BMPs that I do not agree with. Furthermore, I completely agree on the importance of branding over patenting and indeed also seeking out alternative forms of protection for which I strongly advocate.

The Ghost of M-Pesa: Faulu Kenya Cries Intellectual Property Theft over Safaricom’s M-Shwari

In a recent news article titled “Safaricom loses first round of M-Shwari row with Faulu”, it is reported that Mr Justice Jonathan Havelock, sitting in the High Court, made the following two determinations in respect to Faulu Kenya’s suit against Safaricom’s M-Shwari:

1. The court denied Faulu Kenya’s request that Safaricom be barred from any dealings in the M-Shwari service until the former’s case is heard and determined.
2. The court rejected Safaricom’s bid to have Faulu Kenya’s bid moved to the Industrial Property Tribunal and stated that it had jurisdiction to hear and determine the case.

To recap, Faulu Kenya filed a lawsuit last week in the Kenyan High Court seeking to halt Safaricom from operating M-shwari, arguing that it is similar to its Kopa Chapaa service, which has been in operation since last year in partnership with Indian mobile operator Airtel Kenya. Faulu Kenya claimed that it had pitched to Safaricom the idea of a mobile money service that allows users to save, borrow loans and earn interest using their mobile phones.

During this pitch, Faulu Kenya alleges that it presented to Safaricom a prepared concept paper detailing how the platform was going to operate. Faulu Kenya also claims that it entered into a non-disclosure agreement with Safaricom, which it claims that Safaricom disregarded when it developed and launched the M-Shwari product. However Safaricom now claims that it had knowledge of a similar product to Faulu Kenya’s, having signed a pact with Commercial Bank of Africa (CBA) eight days before the Faulu agreement.

Safaricom has made a lengthy statement on this matter via their official site, which reads in part:

“While this matter is already in court and is therefore subject to sub judice rules, Safaricom Ltd seeks to clarify that M-Shwari is a proprietary product of Safaricom Limited which is the successful result of a 2-year product development process.

As you are aware, Safaricom Ltd has had a strong focus on Financial Inclusivity since 2007, when it launched M-Pesa. The commitment has been sustained through relevant enhancements informed by proactive research into user habits, dynamic customer needs and emerging trends, relating to the use of M-Pesa and other mobile finance solutions.

In developing M-Shwari, Safaricom Ltd and the Commercial Bank of Africa followed the due legal process as required by the Laws of Kenya.

As Kenya’s leading integrated communications company, Safaricom has consistently worked hard to conceptually develop innovative solutions for all Kenyans. As a result Safaricom has built an enviable intellectual property portfolio.

While the allegations are lamentable and unfortunate, Safaricom will seek to have the matter resolved through the right legal processes. We believe that this law suit is tainted with malice because it is founded on untrue allegations(…)”

Comment:

Certainly, this latest row between Faulu Kenya and Safaricom is reminiscent of previous intellectual property (IP) disputes surrounding Safaricom’s flagship M-Pesa product. As one commentator rightly notes, everytime Safaricom launches a new M-product, an “intellectual property” lawsuit is not too far behind therefore such suits are “all part of the cycle of an m-product”.

Fortunately, the learned judge, Mr. Jonathan Havelock did not fall into the trap of his learned sister Lady Justice Joyce Khaminwa, who was persuaded by Safaricom to make a ruling in the M-Pesa litigation that the High Court had no jurisdiction to handle the matter directing that the litigant Mr Christopher Ondieki ought to file his suit at the Industrial Property Tribunal.

This blogger submits that if this litigation proceeds to its full conclusion, Hon. Justice Mr. Jonathan Havelock will have the rare opportunity to, once and for all, provide Kenya with useful jurisprudence on the nature and scope of intellectual property protection, with a clear emphasis on the copyrightability of mobile-based ICT innovations, the oft-misunderstood idea/expression dichotomy and perhaps the patentability of M-products generally.

This may also be a worthwhile opportunity for the learned judge to examine both M-Shwari and Kopa Chapaa and determine whether both products can co-exist in the market bearing in mind Kenya’s new laws on competition and the alleged existence of a non-disclosure agreement signed by both Safaricom and Faulu Kenya.

All in all, this is a case that we will all be following keenly as it now proceeds to the hearing stage.