The curious case of Nyagaka Anyona Ouko, Safaricom responds - Part III

Having delivered his Mobile Cash Transfer proposal to Safaricom Ltd’s then Chief Executive Officer, Michael Joseph, Nyagaka Anyona Ouko was told to wait a few months as the company looked into it. It turned out that the only other time he would “hear” from the company again was when they launched M-PESA in 2007, on Kenya's Citizen TV.

As reported in Part II of this series, "The curious case of Nyagaka Anyona Ouko, the mobile money transfer innovator - Part II, Ouko felt his best option at developing his mobile cash transfer business was in partnership with Safaricom. When in April 2007 he saw the company was launching a similar service called M-PESA, he lost all hope and believed they had “stolen” his idea.

Safaricom disagree. Speaking to me, Nzioka Waita, Director of Corporate Affairs at the telecommunications services provider, said this is a good opportunity and platform for the company “to put to rest some of the misconceptions that have existed within the tech community.”

Is M-PESA really Kenyan or British?

In introducing this series, the initial question was "Is M-PESA really Kenyan or British?". In addressing this question, Waita explains that it is neither Kenyan nor British.

Waita said that “M-PESA as a mobile money transfer platform is the product of years of collaborative research and innovation driven by teams in Kenya, the UK and other parts of the world. As to who owns the intellectual property rights in M-PESA, that is also quite simple, the IP is in two forms, i.e. the trade mark and the proprietary software design and functionality. The IP in the trade mark M-PESA is jointly owned by Vodafone and Safaricom in Kenya, while Vodafone owns the trademark outside Kenya. The IP in the technology (read patents) is owned by Vodafone.”

Having said that, the assertion and conclusion that M-Pesa is British was made after looking at the parties involved in its development and funding.

“The article ‘Is M-PESA really Kenyan or British?’ is not entirely inaccurate in terms of the history of the development of M-PESA to the extent of the involvement of Vodafone, DFID and others. However, the story fails to mention that the product/service for which VF (Vodafone) was granted funding was actually a microfinance repayment solution. It was piloted in Thika, Kenya by Safaricom and Faulu Kenya. During the pilot, Safaricom realized that people would use the system to transfer money and not to repay their loans as they had the menu on their phones. At this juncture Vodafone commissioned Sagentia to re-write the software as a mobile money transfer solution.“ Waita added.

The unsolicited proposal and weighty priority

According to Waita, Vodafone filed an international patent application on August 11, 2006. The priority date on this application is August 12, 2005, which is the effective date of filing. This was filed in Great Britain.

Based on the chronology of events, this is before Ouko dropped off his “unsolicited proposal at MJ’s (Michael Joseph’s) office in April 2006”, Waita explains.

Although Waita does not say in as many words, the conclusion then is that it is impossible for them to have stolen the “idea” if they filed a year before receiving the aforesaid “unsolicited proposal” from Ouko.

It’s not that straightforward a conclusion as some experts have pointed out, normally the first document filed is the most “raw” document filed. It could be vague and contain an unrefined idea / concept as Waita already explained M-PESA as first commissioned by Vodafone, was not a mobile money transfer system and was later refined and altered.

As such, many inventors can want to alter a “raw” filing for a patent they already have because they want to include a new design or concept instead of applying for an altogether new patent as this changes the priority of the patent. This change is allowed as long as it takes place within a year.

A curious case

Safaricom’s Corporate Affairs Director further explained that even the certificate Ouko holds from Kenya Copyright Board (KECOBO) is immaterial and of no consequence.

“It is immaterial that Nyagaka obtained KECOBO’s certificate as that body only deals with copyright. The crux of his claim is that he ‘invented’ mobile money transfer but cannot support his allegations with a patent in his name. Even the certificate he holds from KECOBO is limited to ‘literary works’ meaning that he does not even have copyright to any software that would make his invention work. The claim does not meet even the most forgiving of IP law requirements that one would have to meet in order to claim ownership of a proprietary right in a product or process. Which is why the matter has not been presented to a competent legal authority for determination."

Waita contoured to explain that whereas Nyagaka’s story is for all intents and purposes an attractive tale of an enterprising Kenyan youth with a good business head on his shoulders, it is not a story that lends itself to any credibility in as far as his claim to being the inventor of M-PESA is concerned.

"There is no truth to his claims whatsoever and really the onus is on him to demonstrate beyond a written concept on airtime to cash transfer that he had an idea about the actual functionality of the product that is M-Pesa , its technological design, its process flows, its cost implications and implementation process. I would in this context urge you to be circumspect as you conclude the final part of your story and consider just how much work it took to develop M-Pesa to its current form and whether the claims made by Nyagaka match up to scrutiny. We will leave this to you and your readers as it is indeed a curious case.” concluded Waita.

Response from Safaricom Ltd on the M-Pesa series

Dear Tefo,

Executive Summary :-

Thanks again for reaching out to us to seek our comments on the development of M-PESA. It gives us a useful platform to put to rest some of the misconceptions that have existed within the tech community.

I would first start by addressing the question of whether the origin M-PESA is Kenyan or British. The answer is neither, as you will see from the write up below, M-Pesa as a mobile money transfer platform is the product of years of collaborative research and innovation driven by teams in Kenya, the UK and other parts of the world. As to who owns the intellectual property rights in M-Pesa, that is also quite simple, the IP is in two forms, i.e. the trade mark and the proprietary software design and functionality. The IP in the trade mark M-PESA is jointly owned by Vodafone and Safaricom in Kenya, while Vodafone owns the trademark outside Kenya. The IP in the technology ( read patents) is owned by Vodafone.

The Details

The article “Is M-Pesa really Kenyan or British?” is not entirely inaccurate in terms of the history of the development of M-PESA to the extent of the involvement of Vodafone, DFID and others. However, the story fails to mention that the product/service for which VF was granted funding was actually a microfinance repayment solution. It was piloted in Thika, Kenya by Safaricom and Faulu Kenya. During the pilot, Safaricom realized that people would use the system to transfer money and not to repay their loans as they had the menu on their phones. At this juncture Vodafone commissioned Sagentia to re-write the software as a mobile money transfer solution. It was never launched as a microfinance product and Faulu did not come on board until 2011.

The un-replicated success of M-PESA would not have been possible had it not been for Safaricom’s management support led by Michael Joseph and his team, Safaricom heavy investment in yet the most ubiquitous mobile money transfer distribution network in the world has been immense. The banking architecture and distribution networks that support the M-Pesa functionality were developed entirely by Safaricom, however some of those business methods are unique to Kenya and cannot automatically be replicated in other markets due to different operating and regulatory dynamics in those areas.

Regarding the IP story, the following are the facts:

1. The intellectual property rights in the Vodafone Money Transfer (VMT) system which is the core technology platform running the M-PESA system belong to Vodafone. This is not to say that Vodafone was the pioneer of mobile money transfer systems because as at least two existed in the Philippines before M-PESA , e.g. GCash by Globe Telecom. However Vodafone and Safaricom were the first to develop a successful and globally recognized money transfer platform and have effectively set the standards for all other competing systems.

2. The M-PESA trademark is jointly owned by Vodafone and Safaricom in Kenya. Safaricom has no proprietary interest in similar trademarks outside Kenya/elsewhere in the world.

Regarding the claims by Nyagaka Anyona Ouko:

1. Nyagaka was one amongst many Kenyans who used airtime as a cash equivalent. By his own admission his cash transfer system was based on airtime. It did not comprise a ‘wallet’ distinct from the customer’s airtime. Whether that ‘invention’ is patentable or not is debatable. It is also noteworthy that airtime to cash conversion has existed in Kenya from the inception of the prepay voice product.

2. Nyagaka would have to demonstrate the novelty of his idea and the inventive step for it to be patentable. Even if it were deemed by KIPI to be patentable (which apparently it was not, hence his referral by KIPI to KECOBO), the patentability of his invention would not invalidate the VMT solution or mean that VMT infringed on his invention. Indeed there are other similar platforms the world over – Obopay, Fundamo, Com Viva, etc.

3. Vodafone files an international patent application on 11 August 2006. The priority date on this application is 12 August 2005, which is the effective date of filing, having previously been filed in GB on that 2005 date (before Nyagaka dropped off an unsolicited proposal at MJ’s office in April 2006). The patent application is publicly available on this link: http://patentscope.wipo.int/search/en/detail.jsf?docId=WO2007020394&recNum=1&maxRec=1&office=&prevFilter=&sortOption=&queryString=FP%3A%28WO+2007020394%29&tab=PCT+Biblio and is also attached.

4. It is immaterial that Nyagaka obtained KECOBO’s certificate as that body only deals with copyright. The crux of his claim is that he ‘invented’ mobile money transfer but cannot support his allegations with a Patent in his name. Even the certificate he holds from KECOBO is limited to ‘literary works’ meaning that he does not even have copyright to any software that would make his invention work. The claim does not meet even the most forgiving of IP law requirements that one would have to meet in order to claim ownership of a proprietary right in a product or process. Which is why the matter has not been presented to a competent legal authority for determination.

Whereas Nyagaka’s story is for all intents and purposes an attractive tale of an enterprising Kenyan youth with a good business head on his shoulders, it is not a story that lends itself to any credibility in as far as his claim to being the inventor of M-Pesa is concerned. There is no truth to his claims whatsoever and really the onus is on him to demonstrate beyond a written concept on airtime to cash transfer that he had an idea about the actual functionality of the product that is M-Pesa , its technological design, its process flows, its cost implications and implementation process. I would in this context urge you to be circumspect as you conclude the final part of your story and consider just how much work it took to develop M-Pesa to its current form and whether the claims made by Nyagaka match up to scrutiny. We will leave this to you and your readers as it is indeed a curious case.

VBR

Nzioka Waita

Director, Corporate Affairs

Note: This article was first published on the HumanIPO website on 22 November 2012. HumanIPO has since shut down.

Update

Comments