A software developer's claim for KSh1.1 billion against Safaricom, alleging the company used his ideas for its M-Pesa Apps, has been dismissed by the High Court. The court ruled that no signed contract existed between the developer, Samuel Wanjohi (through his firm Popote Innovations), and the telecommunications giant, overturning a previous award.
The dispute centered on a proposed partnership in 2018 for a mobile payment solution named "Popote Pay." Wanjohi contended that Safaricom had agreed to a revenue-sharing model but subsequently abandoned the project and launched its own M-Pesa apps – the M-Pesa Super App and the M-Pesa Business App – in June 2021 without compensating him. He asserted that Safaricom had incorporated his "Popote Pay" model into these new applications.
Safaricom, however, maintained that the partnership agreement was never finalized or signed. The company stated that it had only reimbursed Popote Innovations for development costs under a separate settlement agreement in 2020, which it claimed upheld its copyright model.
Previously, Wanjohi's firm, Popote Innovations, had secured a KSh1.1 billion award in November of the prior year. This payout was based on an arbitrator's conclusion that Safaricom had utilized his firm's concepts for the development of the two M-Pesa apps. Safaricom subsequently petitioned the High Court to invalidate this award, characterizing it as baseless and founded on an incomplete agreement.
In its judgment, the High Court sided with Safaricom, stating that the arbitrator's award "offends the principles of contractual certainty, legality, and fairness and conflicts with the public policy of Kenya." The presiding judge determined that the award was "predicated on an unsigned and inoperative contract and that the finding of similarity between the apps was unsupported by expert or factual evidence." Consequently, the Court concluded that Wanjohi lacked a signed contract with Safaricom to justify any compensation.
This case highlights concerns among experts regarding how dominant technology companies might potentially hinder innovation. Such companies, with their extensive platforms and control over distribution channels, can be perceived as copying successful ideas from smaller firms and then outcompeting them. This practice allows them to leverage their control over distribution and user data to solidify their market dominance.
Experts have called for updated competition laws to better protect innovation, suggesting that current legislation may not adequately address these practices and could inadvertently favor established players.
Past Legal Challenges for Safaricom
This is not the first instance of Safaricom facing legal challenges over alleged idea theft. In 2021, Safaricom successfully defended a KSh209 million lawsuit brought by Mr. Jonathan Murangiri Gikabu. Gikabu had claimed that the telecom giant had appropriated his ideas for the launch of the "M-Pesa 1 Tap" application, which enables payments through a simple tap of a card, wristband, or phone sticker.
The Kenyan High Court dismissed Gikabu's case, finding that he had failed to present sufficient evidence to prove that Safaricom had taken his idea. Gikabu had argued that M-Pesa 1 Tap was his original concept, which he had shared with Safaricom in confidence in 2014. He described it as a product designed for faster product payments using NFC-powered phones, stickers, or bands at merchant terminals.
Gikabu subsequently filed his lawsuit after discovering the alleged use of his idea in Safaricom's NFC (Near Field Communication) mobile payment system for non-smartphones, known as 'M-Pesa 1 Tap'. Safaricom denied these allegations, countering that similar NFC technology had already been deployed in various contexts, including Card Planet, the discontinued Beba Pay service, and My 1963, a cashless fare payment card system for public transport.