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Safaricom stole our idea to roll out M-Shwari, Faulu Kenya says.

Posted In Mobile, Technology - By admin on Tuesday, December 11th, 2012 With No Comments »

A financial institution has moved to court to stop Safaricom from operating a recently launched saving and lending service, saying the mobile service provider copied its idea.

Faulu Kenya, a deposit-taking microfinance company, on Tuesday filed a case in court where it wants Safaricom stopped from using M-Shwari service owing to alleged copyright infringement and breach of agreement.

M-Shwari was launched last month in partnership with Commercial Bank of Africa (CBA). The new product is a value-add on to Safaricom’s money transfer service, M-Pesa, allowing users to save and borrow money (from Sh100 to Sh20,000) from CBA.

The author

However, Faulu claims that it was the author of M-Shwari idea, which it has now implemented with Airtel Kenya as Kopa Chapaa mobile loan services.

Faulu wants the court to issue a temporary injunction stopping the mobile telephone firm from offering the service. The case marks a low-point for the two companies that partnered for trials on M-Pesa, which remains one of the world most successful money transfer service.

The High Court, however, declined to issue interim orders before Safaricom presents its side of the story. Mr Justice Jonathan Havelock certified the suit as urgent and directed Faulu Kenya to serve Safaricom with the court papers for both sides to be heard next Tuesday.

Developed in 2011

Faulu Kenya claims that it developed a cash advance service in 2011. The service would be operated on the mobile telephony platform and customers would be able to apply for, receive and make payments through a mobile telephone network.

It states that it is already using the product in partnership with Airtel under the brand name Kopa Chapaa cash advance services, which it says has already been approved by the Central Bank of Kenya.

The company also alleges that it had proposed to Safaricom to enter into a partnership with it to offer the service through M-Pesa and presented to it a concept paper with details of the proposed service.

The two firms also signed a non-disclosure agreement that restrained either party from disclosing information on the proposed service to a third party or using the information to gain competitive advantage over the other, according to Faulu Kenya’s suit.

The micro-finance company accuses Safaricom of breaching the non-disclosure agreement and contravening its trade secrets and copyright by offering M-Shwari.

Minor modifications

It claims that Safaricom only made minor modifications to the concept shared with it and launched it as M-Shwari.

“It is imperative that this matter is of extreme urgency as the defendant has already launched M-Shwari product and is currently engaged in extensive marketing sensitisation of the product,” said the lawyer for Faulu Kenya, Mr Moses Muchoki.

The microfinance company wants the court to issue a permanent injunction stopping Safaricom from offering M-Shwari. It is also seeking award of general damages.

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