Introduction
The High Court decision in Peter Nthei Muoki and Beluga Limited v Safaricom PLC, HCCOMM/E407/2022, is a significant decision on copyright protection in Kenya’s digital and fintech space. The Court found that Safaricom had infringed the 1st Plaintiff’s copyright in relation to the “M-TEEN MOBILE WALLET USSD CODE”, a product designed to allow parents to control and monitor spending by minors and young adults.
The decision is notable not only because of the award of Kshs. 1,400,067,000 in general damages, but also because the Court ordered Safaricom to pay 0.5% of its gross M-PESA revenue for each financial year in which it continues to operate the product or any substantially similar functionality.
Background to the Dispute
The Plaintiffs’ case was that Peter Nthei Muoki developed a product known as “M-TEEN MOBILE WALLET USSD CODE”, funded by Beluga Limited. The product targeted teenagers and young adults and was intended to give parents control over spending through a mobile wallet sub account.
The Plaintiffs stated that the product was registered with the Kenya Copyright Board and that its detailed insights were later shared with Safaricom. According to the Plaintiffs, the product was shared with Safaricom’s senior personnel between March and June 2021. They alleged that Safaricom later launched a similar product known as “Manage Child Account”, “Manage Junior Account” or “M-PESA Go” under USSD code *334#.
Safaricom denied the claim. It argued that the parent child control functionality had been conceived before the Plaintiffs approached it. It also stated that copyright law does not protect ideas, concepts, business models or functionality. Huawei, which was joined as an interested party, also denied knowledge of the Plaintiffs’ product and maintained that the relevant functionality had been developed independently.
The Main Legal Question
The central question before the Court was whether the Plaintiffs were trying to protect a mere idea, or whether they had expressed that idea in a form capable of copyright protection.
This distinction is important. Copyright does not protect an idea in the abstract. It does not give a person a monopoly over a business concept, a method, a functionality or a product category. A person cannot, for example, claim ownership over the broad idea of a parental control wallet or a mobile account for minors.
However, copyright protects the original expression of an idea. In this case, the Court found that the Plaintiffs’ work went beyond a general idea. It contained detailed USSD menu flows, structure, sequence, system responses, spending restrictions, beneficiary management and reporting mechanisms. The Court therefore treated the documentation as a literary work capable of copyright protection.
The Idea Expression Divide
The decision restates a settled principle in copyright law: ideas are free, but their original expression may be protected.
For innovators, this is a useful clarification. A product concept may not be protectable by itself. However, the written product architecture, technical flow, menu structure, process documentation or detailed system design may qualify for copyright protection where it reflects original skill, labour and judgment.
For corporates, the decision is equally important. A company may lawfully develop a product around a general idea that exists in the market. However, where it has received a detailed proposal from an external innovator, it must be able to show that any later similar product was independently developed.
Why the Court Found Copyright Infringement
The Court considered three main issues: ownership, access and copying.
- Ownership
The Court accepted that the Plaintiffs had produced a Certificate of Registration from KECOBO. The Court treated the certificate as prima facie evidence of ownership. It also noted that the product had been fixed in written documentation, which is a key requirement for copyright protection.
- Access
The Court found that the Plaintiffs had disclosed the product to Safaricom through engagement with one of its senior officers. Safaricom did not call that officer as a witness to rebut the account. The Court therefore treated the disclosure as uncontroverted.
- Copying
The Court relied on the similarities between the Plaintiffs’ product and Safaricom’s product. The Court found similarities in the structural logic of the two products, including parental control, spending limits, beneficiary management, pull back of funds, spend tracking and USSD based interaction.
The Independent Development Defence
Safaricom’s main defence was that its product had been independently developed and that Huawei had proposed the parent child control solution before the Plaintiffs’ disclosure.
The Court was not persuaded. It questioned the absence of a complete documentary trail showing independent development. It was also not satisfied with the explanation that the product originated from a verbal request by the Central Bank of Kenya Governor. In the Court’s view, a major product change by a large telecommunications company would ordinarily be supported by clear records, approvals, instructions, technical specifications and development documents.
The Court therefore drew an adverse inference against Safaricom. It held that Safaricom had failed to produce credible documentary evidence showing independent development and concluded that the Plaintiffs had established copying.
The Remedies Granted
Having found infringement, the Court considered the appropriate remedies.
The Plaintiffs had sought a permanent injunction to stop Safaricom from continuing to use the product. The Court declined to grant the injunction. It reasoned that the product was already in use by many consumers and that stopping it would cause disproportionate disruption. This part of the judgment shows the Court balancing intellectual property rights against public interest and commercial reality.
The Court also declined to order an account of profits. Safaricom argued that the product did not generate direct revenue as a standalone service. The Court accepted that it would be difficult to isolate profits from the specific product since Safaricom did not keep separate accounts for it.
Instead, the Court awarded general damages of Kshs. 1,400,067,000. The Court calculated this as 1% of Safaricom’s M-PESA revenue for the 2024 financial year. It also ordered Safaricom to pay 0.5% of gross M-PESA revenue for each financial year from the year ending 31 March 2025, for as long as it continues to operate the product or any substantially similar functionality.
Lessons for Innovators
The decision carries practical lessons for innovators.
- Innovators should properly document their ideas before disclosure. A general pitch may not be enough. Detailed product documents, technical flows, mock ups, source code histories, pitch decks, email trails and meeting notes may become critical evidence.
- Innovators should consider copyright registration where applicable. Registration does not create copyright, but it can help prove ownership.
- Third, innovators should avoid sharing detailed product information without legal protection. A non disclosure agreement may not always be accepted, but where it is available, it should be used. Where there is no non disclosure agreement, the innovator should still keep clear evidence of what was shared, when it was shared, and with whom it was shared.
Lessons for Corporates
The decision also speaks directly to companies that receive external proposals.
- A company that receives an unsolicited idea should have a clear process for handling it. If the company rejects the proposal, that rejection should be documented. If the company is already developing a similar product, it should preserve the internal development trail.
- That trail may include internal approvals, meeting minutes, vendor instructions, procurement documents, technical specifications, product development logs, emails and version histories. These records may become decisive if a dispute later arises.
- A bare claim of independent development may not be enough. Where a company had access to a claimant’s work and later launches a similar product, the Court may closely interrogate the company’s documents.
Conclusion
The decision in Peter Nthei Muoki and Beluga Limited v Safaricom PLC is a reminder that copyright does not protect bare ideas. It protects original expression. In the fintech context, that expression may be found in technical documentation, USSD flows, system architecture, menu sequencing and product design documents.
For innovators, the judgment confirms the value of careful documentation. For corporates, it reinforces the need for clean internal processes when handling third party proposals. The safest position for both sides is clear documentation, disciplined communication and proper legal safeguards before commercial discussions begin.
By:
- Haggai Chimei – Managing Partner
- Lennox Magara – Trainee Advocate
