Kenya’s M-PESA technology and emerging intellectual property issues

In Kenya the M-PESA mobile technology has continued to spur intense debates. It has as far as attracted law suits as well as discussions by various bloggers on the issues at hand. More importantly however is its exposure of the limitations of the Kenyan IP system in protection of certain important business methods. 

The word M-PESA stems from “M” for mobile and “PESA” a Swahili word for money. This is a phone based money transfer system that allows users of Safaricom a Kenyan phone company to make money transactions. One can withdraw and deposit money, transfer money to other users, pay bills eg electricity, water and phone, and buy airtime. This means that one can make money transactions from anywhere easily without having to go to a bank. I

see it as a mobile bank. Safaricom however is not a bank in the real sense. It is a mobile telephone service provider and so the M-PESA service cannot be regulated under the banking industry.

M-PESA has not qualified to be protected under any IP regime so far. It therefore is not regulated by any system or statute. There are various IP issues that have been raised by the existence and exploitation of this mobile technology system.

First and foremost the “person” who claims to be the owner of the idea has moved to court to challenge the exploitation of the idea without his permission or benefit. He has claimed to be the right holder of the intellectual property contained therein.

The plaintiff moved to court about four years ago claiming that he invented the idea of M-PESA and presented it to the Safaricom phone company. He was invited to demonstrate his invention and before the deal was sealed Safaricom went ahead to implement the innovation without his consent or making any payments to him. He was seeking an injunction against Safaricom or payment of damages or profits arising there from.

The high court judge in denying jurisdiction of her court to the matter referred it to the Industrial property tribunal. The question still begs who is the rightful owner of the M-PESA idea? This could have been cured by existence of non disclosure agreement but many a times, the common “mwananchi” (common man) in Kenya has no clue about NDAs. That also means that issues of IP are still not very well understood in Kenya and awareness of IP issues is still very low.

Secondly the innovator or company that is implementing this method has not been able to protect it under any IP regime and therefore risks infringement on it. Where a person or persons use time and resources to develop a brand such as this one, are they entitled to protection under the IP system? Thirdly one wonders whether regulating the M-PESA system would bring good or harm. Should Safaricom be allowed to monopolise the technology without stifling innovation in Kenya? If regulation was to be provided should it then be regulated under the IP system? Would Safaricom suffer damage and loss if they were not granted protection for this system and would they cease to make the kind of money they are making from it now?

M-PESA is really a business method and in Kenya so far business methods are not patentable.

There have been suggestions that the M-PESA business model could be protected as a patent. However in Kenya the Industrial Property Act under section 21(2) states that
“An invention may be, or may relate to, a product or a process”.

It however goes further to say that

(3) The following shall not be regarded as inventions and shall be excluded from patent protection –
…. (b) Schemes, rules or methods for doing business, performing purely mental acts or playing games

This simply means that M-PESA business model is not patentable. In my opinion the M-PESA system meets the requirements under patent law. It was a novel idea; it involved an inventive step and also is/was industrially applicable.

However it has been argued that even in the absence of patent protection for M-PESA, Safaricom still makes a lot of money.

This system also cannot be protected under copyright system. The copyright system seems to offer insufficient or far too little real protection for such a method. M-PESA also does not fall under trademarks as Safaricom itself is already a brand trademark in Kenya.

M-PESA system has revolutionalised Kenya and other mobile have come up with similar services. It has been argued in the past that this has caused Safaricom to improve their services and continue innovating.

Some people think this would not have happened if there had been protection granted, eg through a patent. Safaricom has since come up with other services like MKESHO. This is a bank account introduced by Equity bank and Safaricom where one can deposit or withdraw money and even access credit services and saving services.

In conclusion it is worth to note that as innovators come up with many methods of doing business and improving innovations and investments, the more limitations of our IP regimes are exposed.

Kenya may have to explore new methods of accommodating emerging technologies under the IP system. This however testifies to numerous opportunities of investment in such a country that is just still new on the whole IP and innovation platform.