INTELLECTUAL PROPERTY-A CASE REVIEW OF KENYA’s IT SECTOR

Intellectual property has been used to describe creations of the mind, such as artistic inventions, symbols and images used in commerce (Arvin Halkhores, 2010).

Intellectual Property Law gives protection and certain rights of the owner.

Rights and protections for owners of intellectual property are based on 3 kinds of patents (National patents, PCT patents designating Kenya, ARIPO patents designating Kenya,) trademarks and copyright laws; and state trade secret laws.

KIPI (Kenya Industrial Property Institute) was established on 2nd May 2002 with the major functions of  administration of industrial property rights, provide technological information to the public and promote inventiveness and innovativeness in Kenya by providing training on industrial property.

Intellectual Property of Software-Kenyan Case

The IT sector has experienced an exponential growth over the last decade.  Mobile applications, websites, and corporate outsourcing are being adopted into the Kenyan market as a way of commercializing the ideas.

It is worth noting that there is lack or insufficient regulations to govern the sector in Kenya so far. There is therefore little protection for the typical Kenyan IT entrepreneur.

There are more questions than answers when it comes to IT, and so you wonder?

 Is there a difference between an idea/concept and an innovation?

 Are inventions and innovation the same?

What can you or not protect?

Can you patent a technological innovation?

What is the role of IP in information technology?

Let us attempt to wade through some of these questions.

An idea on its own is not patent material. Although an idea that is proven to solve an existing problem can be termed as an Invention which is eligible for patent. An invention can be a product or process, but to patent it, it must be new.

Note that once one shares their idea at a conference or publish it online, then you no longer have the right to patent the invention. Further to that once the idea is in public space, it is technically not “New’’ and therefore not eligible for patent.

There has been arise in ICT Hubs in Kenya and generally in Africa many of which face great challenge when it comes to matters IP. Case and example was the raging debate in regards to the true owners of MPESA technology.

ICT hubs are known as places where ideas are shared and discussed by technology entrepreneurs.

Technological innovations emerging from ICT Hubs often start out as ideas shared and discussed with colleagues and mentors who assist in the thought process behind the design of products or the business plans.

Technological innovations in an ICT hub environment can be classified as follows:

i.          Product vs. process

ii.          Radical (basic or fundamental) vs. incremental (improvement)

iii.          Disruptive vs. sustaining (sequential and/or complementary)

Many of the tech startups that work from the various ICT Hubs in Kenya lack structures that will ensure their ideas are protected legally to become long-term sustainable both locally and globally.

Major challenges cited by industry experts is that many startups take a significant amount of time to come up leaving them vulnerable to copycats with significantly more resources that merge and beat them out of the market and that many of these start ups patent things that can easily be discovered by competitors and failing to keep trade secrets

On the other end of the spectrum, tech startups see the legal system as a toothless dog. Taking the IP processes to action is seen as challenging, expensive, a waste of time and hinders competition to the extent that it is often seen to be playing a negative role in innovation.

Lets us briefly look at the various types of Intellectual Property in IT

There are four types of intellectual property rights relevant to Information Technology which tech startups need to be well informed as part of building their structures each of which offers different type of legal protection:

i.          Patents,

ii.          Copyrights,

iii.          Trade secrets

iv.          Trade marks.

Patents, copyrights and trade secrets can be used to protect the technology itself. Trademarks do not protect technology, but the names or symbols used to distinguish a product in the marketplace

 Requirements for filing a Patent Application

Acquiring a patent as a legal protection ensures that these tech startups are covered when they venture into the corporate world.

Their ideas remain their sole property and this protects their inventions and creations from their competitors. However, when it comes to software it is not the applications that are patentable but the algorithms, functions and methods embodied in the software product.

Acquiring a patent for software can protect features of a program that cannot be protected under copyright or trade secret law.

The Process of patenting begins with filing an application for a patent through Form IP3.

The requirements in filing the application are:

i.          A request made through IP3;

ii.          A description;

iii.          One or more claims;

iv.          One or more drawings (where necessary)

v.          An abstract that entails 150 words.

Patents offer inventors monopolies on their creations for specific periods, and thus provide incentives for research and development. Without the possibility of patent protection, many people might not take the risks or invest the time and money involved in devising and perfecting new products.

But patents do more than keep creative wheel spinning. Process of patenting involves the steps below:

i.          Prepare the Patent Application

ii.          File the Patent Application

iii.          Formalities Examination

KKIPI will then establish whether the applicant has complied with all the requirements under the Law for filing an application.

If one has not fully complied with the requirements, they will be invited to make amendments to the Application. If the application has complied fully with all requirements, it will proceed to: substantive examination, amendment of application followed by advertisement of patent.

There is no deadline within which KIPI must publish the patent application. However, an 18-month period is observed under the international Patent Cooperation Treaty (PCT) system of filing for patents. Therefore an inventor may choose to file for a patent under the PCT system of the World Intellectual Property Organization (WIPO).

Copyright protection extends to the particular form in which an idea is expressed. In the case of software, copyright law would protect the source and object code, as well as certain unique original elements of the user interface.

In order for a copyright to be accepted for registration the following requirements must be met:

i.          The work must be of original authorship. Originality in the Copyright sense means that the work must not have copied from somebody else.

ii.          Application shall be a prescribed form obtained from the Copyright Office or downloaded from the Kenya Copyright Board Website.

iii.          The work must be in a tangible form including digital form for example VCD, CD, DVD, books, and Music cassettes.

iv.          A duly completed application form, fully filled, must be witnessed by a commissioner for oaths and accompanied by the required fees.
On receipt of the application, the office may, after making such enquiry as it may deem fit; enter the particulars of the work in a Copyright Register. The Copyright Office will then issue a certificate of registration within 7 days from the date of registration after a registration fee of Ksh. 1000 has been deposited in the Copyright Accounts.

A trade secret is any formula, pattern, compound, device, process, tool, or mechanism that is not generally known or discoverable by others, is maintained in secrecy by its owner, and gives its owner a competitive advantage because it is kept secret.

Many features of software, such as source code and the ideas and concepts reflected in it, recipes, and formulas can be protected as trade secrets.

This protection lasts as long as the protected element retains its trade secret status. Trade secrets are not subject to infringement as with patents and copyrights, but are subject to theft.

Their legal status as a protectable intellectual property right will be upheld if the owner(s) can prove the trade secret was not generally known and reasonable steps were taken to preserve its secrecy.

 Trademarks do not protect technology, but the names or symbols used to distinguish a product in the marketplace.

According to Kenya Industrial Property Institute (KIPI) trade mark may consist of one or more distinctive works, letters, numbers, drawings or pictures, logos, monograms, signatures, colors or combination of colors etc. The sign may consist also of combinations of any of the said elements.

A trade mark can be a word, a symbol, a design, or a combination of these, used to distinguish the goods or services of one person or organization from those of others in the market place (International Trade mark Association, 2012). The Trade marks Act (Cap 506) describes a mark as a distinguishing guise, slogan, device, brand, heading, label, ticket, name, signature, word, letter or numeral or any combination thereof whether rendered in two-dimensional or three-dimensional form.

A trade mark provides protection to the owner of the mark by ensuring the exclusive right to use it to identify goods or services, or to authorize another to use it in return for payment.

Frequently Asked Questions

1. Is technology patentable or not?  

Patentability of Technology depends on what an inventor hopes to claim, The technology in question has to have an effect on the technological environment.

2. Processes involved in IP in technology and how long it takes?

The life span for each type of IP in technology varies. Patents are valid for a maximum period of 20 years, provided the owner pays annuities (renewals) every year.

Copyrights on the other hand have a lease of a maximum period of 50 years. Industrial designs last for 15 years while utility models remain viable for 10 years.

Trademarks and service marks are effective for a period of 10 years from the date of registration. However, they can be renewed for additional decades in perpetuity. They can exist as long as you keep renewing them every 10 years.

Some trademarks e.g. Pepsi, Coca Cola are more than 100 years old. The Copyright Act protects certain classes or categories of works.

The following works are eligible for copyright, if they are original.

i.          Literary works e.g. books and written composition novels.

ii.          Musical works e.g. songs.

iii.          Artistic works e.g. paintings and drawings.

iv.          Cinematograph films e.g. programme carrying signal that has been transmitted by satellite.

v.          Sound recordings.

vi.          Broadcasts e.g. broadcasting of films or music.

vii.          Published editions e.g. first print by whatever process.

viii.          *Computer programmes (software)

For a work to be eligible for copyright protection, it must be written down and recorded to material form. This means that software source code needs to be documented and filed.

It is worth noting that if the piece of software is on a compact Disc, the Disc bearing the software is patentable but the software ought to be copyrighted. Technology related inventions also require a yearly sustainability plan in order to ‘keep them relevant’.

Such sustainability plan entails paying an annual subscription fee to KIPI or the copyright board so as to keep the documentation of the patent and copyright relevant.

What are the challenges in the IP eco-system?

The challenges in this environment can be viewed from both the regulator and general citizenry.

Challenges faced by KIPI are as follows;

There is a lack of relevant data in businesses in Kenya. Consequently, conducting an IP audit is time-consuming due to the fact that few companies have a specialized office dealing with the company’s IP matters.

It is even more difficult to conduct a valuation because of lack of specific data on invention costs, advertising costs per IP and other necessary information.

Further, there is a lack of IP valuation and management organizations in Kenya.

There is also too much secrecy about IP in Kenya. Accordingly, comparable data is lacking where needed. In addition, inadequate enforcement of IP laws is a key challenge.

The Anti-Counterfeit Agency is yet to establish its presence countrywide.

The IP asset is not recognized as collateral for purposes of obtaining finances. This is due to various reasons. The financial institutions have not yet recognized it as an asset that can be used as a powerful tool and the owners of IP have also not recognized it as an asset that can be offered to the financial institutions as collateral. More importantly, the law is deficient in that it does not provide for the creation of charges on Intellectual Property or registration of an interest in the register other than an assignment or license.

The lack of a deliberate intellectual property strategy and policy in Kenya is also inhibitive, although the 2010 Constitution is very IP-friendly KIPI requires a period of 18 months to process the eligibility of a patent before it becomes viable. This time frame is viewed to be too long by many inventors and subsequently has labeled the entity as being ineffective and full of cumbersome processes. Additionally, the citizenry is slowly accepting the intangibility nature of Intellectual Property in Kenya, especially in tech related inventions.

KIPI still continue to face other challenges that include: Small number of patents applied .This challenge relates to the small number of patents applied and issued in Kenya (KIPI Annual Reports between 2002-2010). Only 419 patent applications had been granted by 2010.

This may be attributed to the amount of fees charged by KIPI, which are considered to be rather high for tech startups, most of whom are bootstrapping.

The other reason is due to the lack of data on IP in IT rights that may lead to creating knowledge and awareness as a form of research and development for the tech startups. Dissemination of patent information the dissemination of patent–related software rights information in Kenya is still an issue of concern.

The absence of a patent information policy at KIPI is also a challenge, hindering effective management of patent information in Kenya.

 Challenges faced by the tech startups

High cost for filing for a patent

Long application processes

Incompetent staff -The issue of skills and competencies of the staff charged with the responsibility of managing IP information at the Kenya Industrial Property Office has also impacted negatively on the management and use of patent information in the country. Although institutions such as KIPI have a number of professionals, quite often their deployment and allocation of responsibilities tends to be poor and dis-organized.

Registry staffs who are directly responsible for filing and managing patent records lack the necessary skills and competencies in records and information management which are key to proper maintenance and care of these records, including patent records.

Finding up to date information there is a lack of relevant data in businesses in Kenya

CONCLUSION

A report published by KNBS (Economic Survey 2013) had the following findings on trade in services; According to the report the amount paid for services provided by non-residents to Kenyan firms increased from Ksh 29,387 Million in 2009 to Ksh 29,766 Million in 2010 then Ksh 39,754 Million in 2011 representing overall growth of 35.3 %.

The huge jump between 2010 and 2011 was attributed to significant growth in amount paid for services provided in CONSTRUCTION SERVICES and IT SECTORS. Amount paid by firms in construction sector more than doubled from Ksh 1,359 Million in 2010 to Ksh 4483 Million in 2011 while that of telecommunication, computer and information services grew by 36% from Ksh 18,878 Million in 2010 to Ksh 25,778 in 2011.

Further to that expenditures on charges for intellectual property rendered to resident by non-residents increased from  Ksh 2.41 Million to 2.29 Million (2009-2011) while incomes from intellectual property charged by residents to non-residents was NIL.

Given the tremendous rise in innovation in the IT sector and number of rising I-Hubs in Kenya who is the main beneficiary? The sector rose by 36% second only to construction for the same period showing the sector has un-tapped potential to change the balance of trade.

It is time for Kenyan government and African governments together with tech-prenuers to wake up smell the coffee and bring homeostasis.