JB Maina, M-Shwari Updates: Safaricom’s Copyright Battles Continue

Safaricom House

As many may already know, Safaricom, the largest mobile telecommunications company in Kenya is currently embroiled in a handful of intellectual property (read: copyright) law suits, with creators and innovators alike. See full list here. Recently, there have been some new developments in two of these cases, namely the M-Shwari and JB Maina cases.

To recap briefly, the M-shawri row arose late last year when 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. On the other hand, the JB Maina case has been in court since 2010 when Safaricom was accused of copyright infringement in respect of musical works of JB Maina alleged to have been uploaded on Safaricom’s portals.

The Daily Nation now reports that the Court has declined to grant Faulu Kenya’s application for an interim injunction pending determination of its suit for breach of copyright and violation of trade secret. While this blogger is inclined to agree with this preliminary ruling by Justice Havelock, several concerns the learned judge’s reasoning on this case were raised.

Turning to the JB Maina case, a recent court ruling reported in full here has awarded limited Anton Piller orders to the plaintiff, JB Maina against Safaricom. The effect of these orders is that it allows JB Maina in the company of a copyright inspector to enter Safaricom’s premises, inspect its machines, take records, make copies of records for purposes of gathering and preserving evidence necessary to prove his claim. The court has also granted JB Maina a temporary injunction restraining Safaricom from dealing in JB Maina’s works, in addition to awarding JB Maina the costs of the motion to be paid by Safaricom.

This blogger will revisit this return of Anton Piller orders in Kenya’s IP litigation landscape in a subsequent post. However for the purposes of the JB Maina case, there are a couple of interesting questions that this blogger believes must be at the back of Safaricom’s mind. The first question is whether there is need to have such a complex web of relationships between the right holders (copyright owners); the music collecting societies (the copyright assignees); the content service providers and/or premium rate service providers (the middle men); and itself as a major user of copyright works. This first question requires Safaricom to think hard about eliminating the middle men altogether so as to deal directly either with the music collecting societies or the copyright owners themselves on an exclusive basis. The second question which flows from the first is whether the acts currently performed by Safaricom in respect to musical works and sound recordings ought to be licensed in the first place. This second question arises based on the various unlicensed rights currently being exploited by Safaricom, namely reproduction, communication to the public in addition to the performing right in the musical download.

At the very least, it is hoped that the final conclusion of both these Safaricom copyright suits may provide useful IP jurisprudence that will help settle some of the unanswered questions in Kenya.

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.