KRA case highlights dilemma facing employee innovators

In 1978, Apple co-founder Steve Jobs began work on a revolutionary innovation that was poised to change the course of the world of computing.

The Apple Lisa project would see the first personal computer with a graphical user interface go into mass production targeting business users.

However, four years into the project Jobs was forced out of the team and three years later was fired from Apple, the company he had co-founded and that had just gone public.

The story of the iconic CEO’s exit and return a decade later is one that inspires innovators in tech companies across the globe.

The story resonates profoundly with employed inventors who find themselves navigating through a grey area that has often led to the end of promising careers and cost millions of shillings in legal expenses.

The most recent case involves the Kenya Revenue Authority (KRA), a public institution and one of its employees.

Last week, Samson Ngengi went to the High Court and obtained orders barring KRA from procuring or implementing a rental tax mapping and collection system until his efforts in developing a similar system are recognised and he is adequately compensated.

Mr Ngengi states that he developed the software that maps property location, ownership and building details, as well as the tax status of a taxpayer, providing an effective tool for collecting rental income levy.

The tax collector has admitted to losing billions in un-collected rental income tax in the past on account that there is no upto date property database in the government records.

An interactive software that creates such a database would be a magic bullet for the authority and promises to be a lucrative deal to the individual or company whose system is adopted.

Last week, KRA commissioner general John Njiraini said that the authority cannot do business with its own employees and asked Mr Ngengi to resign and tender for the provision of the service as an independent developer.

The David vs Goliath court battle between Mr Ngengi and KRA that is slotted for hearing on December 5 will set a precedent for employee inventors who are juggling intellectual property considerations and loyalty to employer.

Most of cases involving intellectual property disputes between employee inventors and employers are settled out of court through arbitration.
Section 30 (1) of the Industrial Property Act 2001 states that the right to a patent shall belong to the inventor.

However, in Section 32 (1), the Act states that the right to a patent for an invention made in execution of a commission or of an employment contract shall belong to the person who commissioned the work or the employer.

Valuable products

The law does, however, recognise the efforts of the inventor stating that where the invention is of exceptional importance the employee shall have a right to equitable remuneration taking into consideration one’s salary and the benefit derived by the employer from the said invention.

Herein lies the dilemma for both employers and employees when dealing with projects outside office hours that yield valuable products key to a company’s strategy.

According to Dr Isaac Rutenberg, the director at Strathmore University’s Centre for Intellectual Property and Information Technology Law, each case is unique and depends on the employment contract.

“There are several scenarios that come in play when employees come up with inventions under the word of their employer and the individual cases are handled based on the contract that bonds the employee to their employer,” he said.

In the first instant an employer can come up with an invention within company time and resources. In such instances the invention belongs to the company and due reward should be attributed to the employee as per its policy.

Strategic benefit

However, the second instance is the one that is more difficult to determine and one that most employers dread. What happens when an employee comes up with an innovation outside normal working hours but it is the one that would be of strategic benefit to the company?

“Mostly it becomes more of an ethical and moral issue than a legal one,” explains Dr Rutenberg.

“An employee is expected to have some form of loyalty to his employer and so whether he/she decides to quit and pursue the innovation further will be a moral decision.”

For employers, handling creative employees demands the right kind of motivation to ensure that employees are encouraged to continually come up with new ideas and at the same time outstanding developers do not leave the company to become competitors.

The motivation does not necessarily have to be monetary. Software engineers at Google are encouraged to use 20 per cent of their time pursuing their dream projects. Notable applications to have come from this programme are Gmail and Google News.

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