The High Court has ordered Safaricom to pay KSh 1.4 billion and ongoing royalties after finding the telecom giant infringed a local innovator’s M-PESA copyright.
The High Court has ordered Safaricom PLC to pay approximately KSh 1.4 billion in damages after finding that the telecommunications giant infringed on a local innovator’s copyright while developing a parental-control feature within M-PESA.
The court also directed Safaricom to continue paying royalties tied to a percentage of M-PESA revenue for as long as the feature remains operational.
Safaricom Found Liable in M-PESA Copyright Dispute
The case revolved around a product concept known as “M-Teen Mobile Wallet,” developed by Kenyan innovator Peter Nthei Muoki and his company, Beluga Ltd.
The concept proposed a mobile wallet designed for teenagers and young adults, enabling parents to monitor transactions, control spending limits, and manage accounts using USSD technology on basic mobile phones.
Muoki argued that he shared detailed documentation of the product with Safaricom executives in 2021. He later claimed that Safaricom launched a similar M-PESA child account management feature based on his design and system structure.
Safaricom Argued the Idea Was Not Unique
Safaricom denied the allegations, stating that parent-child account controls were already common in banking and software systems.
The company maintained that it had independently developed its own version of the feature before Muoki presented his proposal. Safaricom also relied on a 2020 proposal from Huawei as evidence that work on the product had started earlier.
However, the dispute centered on a critical principle in copyright law: while ideas themselves cannot be copyrighted, the specific expression and structure of those ideas can receive legal protection.
Muoki’s legal team argued that Safaricom copied the detailed workflow of the system, including menu sequences, commands, and responses outlined in the original proposal.
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Why the Court Ruled Against Safaricom
In its judgment, the High Court acknowledged that the idea of a youth-focused digital wallet with parental controls was not entirely original.
However, Justice Josephine Mong’are ruled that Muoki’s documentation contained a unique and detailed structure explaining how the system would function, making it eligible for copyright protection as a literary work.
The court found that Safaricom had access to the plaintiff’s materials through meetings with company executives and failed to provide sufficient evidence proving independent development.
According to the ruling, Safaricom’s documentation contained gaps, inconsistencies in development timelines, and lacked key technical records needed to support its defense.
The court also concluded that similarities between the two systems were substantial enough to support claims of copying.
Huawei Proposal Failed to Convince Court
Although Safaricom presented a Huawei proposal dated September 2020, the court ruled that the evidence did not prove that a finalized product design or implementation process existed before Muoki’s disclosures.
The timing of events also played a major role in the decision. Muoki pitched the concept between March and June 2021, while Safaricom launched the disputed feature in November 2022.
The court determined that the sequence of events, combined with the similarities between the systems, strongly pointed toward copyright infringement rather than coincidence.
Court Awards KSh 1.4 Billion and Ongoing Royalties
Despite finding infringement, the court declined to issue an injunction that would have forced Safaricom to suspend the M-PESA feature, citing the potential disruption to millions of users.
Instead, the court awarded damages equivalent to 1% of M-PESA revenue for the 2024 financial year, amounting to roughly KSh 1.4 billion.
Additionally, Safaricom was ordered to pay an ongoing royalty of 0.5% of M-PESA revenue for as long as the company continues operating the feature or any substantially similar service.
The court also dismissed Safaricom’s argument that the feature does not directly generate revenue.
Justice Mong’are ruled that even if the service itself is not separately charged, it increases overall M-PESA usage, which ultimately drives transaction fees and broader platform revenue.
Landmark Case for Innovation and Intellectual Property in Kenya
The ruling is expected to become a landmark decision in Kenya’s technology and intellectual property landscape, particularly for startups and innovators seeking legal protection for digital products and software concepts.
In her final remarks, Justice Mong’are described the case as a reminder that innovation can emerge outside major corporations and emphasized the importance of respecting intellectual property rights.
“This case is a cautionary tale for innovators and corporations alike,” the judge said, adding that “good ideas do not only originate in boardrooms.”