Kenya’s High Court has handed Safaricom one of the most consequential intellectual property defeats in East African tech history. The ruling orders the telecom behemoth to pay KSh1.4 billion — roughly $10.8 million — to a Kenyan businessman whose mobile wallet concept the court found was lifted and embedded into M-Pesa without consent or compensation.
The court declared that Safaricom violated the plaintiff’s rights under Kenya’s Copyright Act by unlawfully incorporating features of the M-TIN Mobile Wallet USSD code — a product the court affirmed belonged to the businessman.
It is a rare and stinging rebuke of a company that has long dominated the continent’s mobile money narrative.
What Is USSD — and Why Does It Matter?
USSD (Unstructured Supplementary Service Data) is the backbone of mobile money across Africa. It’s the technology behind the short codes — like *126# — that let millions of people without smartphones or internet access send money, pay bills, and check balances.
Unlike apps, USSD works on any mobile phone, which is precisely why it became the foundation of M-Pesa’s extraordinary reach. The M-TIN Mobile Wallet at the centre of this dispute was built on this infrastructure — a USSD-based system designed to bring financial services to users at the feature phone level.
A David vs. Goliath Paper Trail
The court’s findings paint a damning picture of how Safaricom handled the original pitch. According to the judgment, the plaintiff disclosed the product concept to Safaricom between March and June 2021. What followed, the court concluded, was not coincidence.
Safaricom’s publicly available financial records showed M-Pesa revenue stood at KSh82 billion in the 2021 financial year — before the plaintiff disclosed the concept. Revenue then climbed to KSh107 billion in 2022, a 30 percent increase that coincided directly with the development and launch of the disputed product, before rising further to KSh117 billion in 2023 and KSh140 billion in 2024.
The judge drew a straight line between those numbers and the damages awarded. Adopting a conservative approach, the court pegged reasonable damages at one percent of Safaricom’s M-Pesa revenue for the 2024 financial year — arriving at KSh1.4 billion, which it described as commercially reasonable and proportionate to Safaricom’s financial capacity, adding that the sum was “actually a negligible cost to Safaricom for using the plaintiff’s copyrighted work.”
No Injunction, But a Royalty Meter Running
The court stopped short of ordering Safaricom to pull the product. Instead, it imposed a compulsory licensing arrangement. Safaricom was directed to pay ongoing royalties equivalent to 0.5 percent of its gross M-Pesa revenue every financial year beginning March 31, 2025, for as long as it continues to operate the disputed service or any substantially similar functionality.
In declining to issue a permanent injunction, the judge ruled that a compulsory licensing arrangement through royalty payments was the more practical remedy, given the commercial realities surrounding the widespread use of the service. In other words, too many Kenyans depend on the product to simply shut it down — but the inventor deserves to be paid every year it runs.
The Court’s Verdict on Safaricom’s Conduct
The judgment did not spare Safaricom’s courtroom behaviour. The court faulted the company for shifting explanations during proceedings, failing to produce critical documents, and rolling out the product while litigation was still ongoing — conduct the judge said fell “short of the standards expected of a market leader.”
On the question of profits, the court rejected Safaricom’s claim that the plaintiff was entitled only to nominal damages, ruling that the businessman had been denied the opportunity to negotiate licensing terms after the company allegedly adopted the innovation without permission.
“Safaricom did not seek a license,” the judge stated. “They simply took it, and the plaintiff was deprived of a negotiating opportunity.”
Source: Capital FM
