NAIROBI, Kenya May 8 – Safaricom has been ordered to pay Sh1.4 billion in damages to a businessman after the High Court found that the telecommunications giant infringed on the copyright of the M-TIN Mobile Wallet USSD application.
In the judgment, the court declared that Safaricom violated the plaintiff’s rights under Kenya’s Copyright Act by unlawfully using features embedded in the M-TIN Mobile Wallet USSD code, which the court affirmed belonged to the businessman.
The court further directed Safaricom to pay ongoing royalties equivalent to 0.5 percent of its gross M-Pesa revenue every financial year beginning on March 31, 2025, for as long as it continues to operate the disputed service or any substantially similar parent-controlled account functionality.
While declining to issue a permanent injunction against Safaricom’s continued use of the product, the judge ruled that a compulsory licensing arrangement through royalty payments was a more practical remedy due to the commercial realities surrounding the widespread use of the service.
In a judgment, the court faulted Safaricom for what it described as shifting explanations during the proceedings, failure to produce critical documents, and rolling out the product while litigation was ongoing.
“Safaricom’s matter of shifting explanations, failing to produce critical documents, and rolling out the product during litigation falls short of the standards expected of a market leader,” the judge stated.
The court noted that although Safaricom had argued that it did not directly profit from the plaintiff’s product and that separate accounts for the service were not maintained, it was evident that M-Pesa transaction fees generated significant revenue for the company.
“It is common knowledge that M-Pesa transaction fees generate revenue. Safaricom’s product by facilitating transactions of millions of minors contributes to the defendant’s overall revenue stream,” the judge said.
According to the court, Safaricom’s publicly available financial records showed that M-Pesa revenue stood at KSh82 billion in the 2021 financial year before the plaintiff disclosed the product concept between March and June 2021.
The judge observed that revenue subsequently rose to KSh107 billion in 2022 a 30 percent increase coinciding with the development and launch of the disputed product before climbing further to KSh117 billion in 2023 and KSh140 billion in the 2024 financial year.
“Considering these facts and adopting a conservative approach, the court finds that reasonable damages of one percent of Safaricom’s M-Pesa revenue for the financial year 2024 would be appropriate,” the judge ruled.
The court consequently awarded KSh1.4 billion in general damages, describing the amount as commercially reasonable and proportionate to Safaricom’s financial capacity.
“I find that this sum is actually a negligible cost to Safaricom for using the plaintiff’s copyrighted work,” the judge added.
The court rejected Safaricom’s argument that the plaintiff was only entitled to nominal damages, stating that the businessman had been denied the opportunity to negotiate licensing terms after the company allegedly adopted the innovation without seeking permission.
“Safaricom did not seek a license, they simply took it and the plaintiffs were deprived of a negotiating opportunity,” the court ruled.
The judge described the case as a cautionary tale, emphasizing that innovation does not only emerge from corporate boardrooms.
“For innovators, it demonstrates that even David can prevail against Goliath when evidence is marshalled properly and truth is on his side,” the judge said.
“For corporations, it is a reminder that good ideas do not only originate in boardrooms. When an unsolicited proposal is received and rejected, the corporation must ensure that subsequent internal developments are genuinely independent and can be documented as such.”
The plaintiffs were also awarded the costs of the suit together with interest on the damages at court rates until payment in full.