The Co-operative Bank of Kenya has won a long-running intellectual property dispute, with the High Court rejecting claims by a tech firm that the lender stole its real estate payment innovation.
In a judgment on fintech (financial technology) patents, the court upheld an earlier ruling of the Industrial Property Tribunal that Intestyl Technologies Ltd’s registered system was not independently protected because it wholly depended on the bank’s existing infrastructure.
The system was designed to help landlords reconcile mobile payments.
“The invention was neither standalone nor unique,” the court stated, citing Section 103(3) of Kenya’s Industrial Property Act.
The court ruled that the innovation’s complete reliance on the Co-op Bank’s systems invalidated the registration.
The dispute originated from Intestyl’s 2020 utility model registration for a “Computer Implemented Banking System for Real Estate Management.” This was a digital platform designed to help landlords reconcile real-time mobile payments.
Intestyl and its director, Alex Muigai, alleged that the bank had integrated their technology into its Open Banking Project after gaining access during collaboration talks, a claim the court found unsupported by evidence.
Although Intestyl accused Co-op Bank of exploiting its disclosure during partnership negotiations, the court found that the firm’s failure to prove standalone functionality was fatal to its case.
Intestyl and its director stated that they had approached the bank to commercialise the invention and had entered into an application programming interface (API) service agreement with the bank.
The court heard that the bank had allowed Intestyl to utilise the APIs for funds transfers, status queries, instant notifications, Pesalink and M-Pesa, and callbacks for the purpose of implementing the invention.
The dispute hinged on allegations that Co-op Bank unlawfully integrated the invention into its Open Banking Project, despite initially collaborating under an API agreement.
The tech firm began product testing, which included the full disclosure the utility-model-protected invention, and the bank gave them full access to the core banking system.
It was alleged that they worked jointly to modify the lender’s banking system to ensure compatibility and integration with Intestyl’s invention, and the systems worked seamlessly.
The tech firm and its director blamed the bank for commissioning the Open Banking Project, alleging that it had appropriated some features from their invention.
They also accused the bank of offering a licence for the invention to third parties in disregard of their rights over the utility model.
Mr Muigai and Intestyl jointly accused the bank, together with Proptech Kenya and Ezen Partners Limited, of manufacturing, commercialising and exploiting their invention for sale without their consent or knowledge.
However, the court found that Intestyl’s system only facilitated M-Pesa payments through the bank’s pre-existing Pesalink and funds transfer interfaces — a function that the tribunal likened to a “parasitic” add-on rather than a standalone innovation.
This is because Intestyl’s innovation required Co-op Bank’s core banking system to operate, meaning it failed to meet the legal threshold for infringement.
It was noted that the nature of Intestyl’s invention required the bank to allow its use on its APIs, which was allegedly already existed and were in use by other fintech companies.
It was concluded that, since the invention required a host to survive, it could not therefore be infringed.
“The appellants’ utility model could not function without Co-operative Bank’s banking system,” the judgment stated, adding that Intestyl failed to prove misuse of any protectable expression.
The court emphasised that Kenyan law protects the tangible implementations of ideas, rather than abstract concepts that depend on third-party systems.
It noted that computer-driven business methods fall outside the scope of patents under the Industrial Property Act.
Given the appellants’ utility model relied on the bank’s banking system, it disqualified it from infringement.
“The Intestyl’s system was to collect M-Pesa payments on behalf of landlords, and to re-route the payments to the collective merchants’ accounts, via EFT and Pesalink API,” said the court.
“That made the system dependent on the first respondent’s banking system, to function, and the functioning would have been impossible without the first respondent’s banking system,” it added.
Co-op Bank had countered that the utility model’s registration was flawed, as it neither described its industrial applicability nor its operational specifics.
The bank denied wrongdoing, arguing that the tech firm’s model was neither novel nor self-sustaining, as it relied entirely on its existing Pesalink and M-Pesa APIs. The bank described the lawsuit as frivolous.
The court agreed, further rejecting Intestyl’s bid for injunctive relief and affirming the tribunal’s finding that the invention lacked uniqueness.
The judgment noted that Intestyl had failed to disclose sufficient technical details of its invention during proceedings to substantiate its claims of infringement.
