Kenyan IP battle could set precedent for jurisdiction

A legal battle in Kenya between microfinance company Faulu Kenya and mobile network operator Safaricom could set a new precedent for IP trials in the East African jurisdiction.

Faulu has taken Safaricom to court alleging copyright infringements relating to mobile banking product M-Shwari, claiming it is similar to its own Kopa Chappa, a 10-day loan service.

Safaricom launched M-Shwari in November 2012, in partnership with the Commercial Bank of Africa to allow customers to save and borrow money through their mobile phone. The service currently has over 700,000 subscribers.

The case was heard by the Kenyan High Court after Safaricom's call for an IP tribunal was refused.

William Maema, a partner at Iseme, Kamau & Maema Advocates in Nairobi, said that very few IP cases are determined in the Kenyan courts, adding: "The M-Shwari case is likely to set a good precedent if it goes to full hearing.”

While its request to enforce an injunction against Safaricom’s operation of M-Shwari was rejected, Faulu alleged that its launch at the end of November last year was in breach of a non-disclosure agreement contracted between the companies, after they had proposed to develop a similar product together.

That the breach of contract concerns the use of a shared idea that was not protected by copyright could make litigation problematic.

Maema said: “Under Kenyan copyright law and indeed in most jurisdictions, ideas are not protectable per se but the permanent form in which they are expressed or recorded [is].

“Thus, the mere use and disclosure of the idea by Safaricom does not necessarily amount to copyright infringement unless it can be shown that Safaricom substantially copied or reproduced the recorded material supplied to them by Faulu. Having said that, and depending on the agreements signed between Safaricom and Faulu, there may be issues of breach of contract and confidentiality.

“One of the biggest challenges currently facing the Kenyan judiciary as far as IP jurisprudence is concerned is the lack of specialised judges with IP knowledge and training. This means that while potentially the M-Shwari case [c]ould set a good precedent, this might not happen depending on the judge who is allocated to hear and determine the matter."

Safaricom maintained that the concept of a mobile money service is not a new one. A statement on Safaricom's website said: “It remains our view that Faulu's suit was not filed on good faith and we look forward to the full hearing of the case as this will give us an opportunity not only to debunk the claims by Faulu, but to assert that Safaricom Limited respects the value of intellectual property rights.”

Faulu Kenya did not respond to a request for comment.

The commercial court will hear the dispute on January 21st.