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Safaricom loses first round of M-Shwari row with Faulu

Safaricom has lost the first round of a court battle against Faulu Kenya after the High Court declined to refer a copyright infringement dispute between the two institutions to a tribunal. Photo/FILE
Safaricom has lost the first round of a court battle against Faulu Kenya after the High Court declined to refer a copyright infringement dispute between the two institutions to a tribunal. Photo/FILE  Nation Media Group

Safaricom has lost the first round of a court battle against Faulu Kenya after the High Court declined to refer a copyright infringement dispute between the two institutions to a tribunal.

Faulu Kenya last week accused the mobile service provider of copying its idea and is asking the court to stop Safaricom from using M-Shwari — a saving and lending service that the mobile operator launched in partnership with Commercial Bank of Africa (CBA).

Safaricom had objected to dispute being heard in the High Court and instead wants it handled by Industrial Property Tribunal — a matter Mr Justice Jonathan Havelock Thursday ruled against.

“I do not consider that the Industrial Property Tribunal is the correct forum for the adjudication of this dispute,” he ruled. “This court has unlimited jurisdiction and, to my mind, is the proper place for the plaintiff to air its grievances.”

Mr Justice Havelock said that the microfinance institution had not registered its ‘concept paper’ as a patent and hence the tribunal had no powers to determine the row.

The five-member tribunal is established under the Industrial Property Act and is mandated to hear and determine disputes relating to patents, industrial designs, utility models and tech innovations.

Safaricom has denied copying the concept from Faulu and reckons that the service of accessing credit through the mobile phone is not new, citing products unveiled by KCB Group, Family Bank and Equity Bank that run on M-Pesa platform.

Save and borrow

Following the ruling, Faulu made a fresh application seeking to stop Safaricom from using the M-Shwari service saying it is now a disputed product and its continued use would disadvantage it.

However, the commercial court declined to issue the injunction sought and will hear the dispute on January 21.

Documents filed in court by Safaricom on Tuesday showed that the mobile operator signed the agreement with Faulu Kenya on April 12 for a savings and lending service and with CBA on April 4.

M-Shwari is a value addition service on the Safaricom’s money transfer service, M-Pesa, allowing users to save and borrow money (between Sh100 and Sh20,000) from CBA.

However, Faulu claims that it was the author of M-Shwari idea, which it has now implemented with Airtel as Kopa Chapaa mobile loan services.

Faulu claims that it developed a cash advance service in 2011. The service would be operated on the mobile telephony platform and customers would be able to apply for, receive and make payments through a mobile telephone network.

It states that it is already using the product in partnership with Airtel under the brand name Kopa Chapaa cash advance services, which it says has already been approved by the Central Bank of Kenya.

Faulu alleges that it had proposed to Safaricom to enter into a partnership with it to offer the service through M-Pesa and presented to it a concept paper with details of the proposed service.

The microfinance firm also accuses Safaricom of breaching a non-disclosure agreement they had signed and contravening its trade secrets and copyright by offering M-Shwari.

However, the mobile service provider has denied the claim.

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