More than Sh50 million is at stake if the court issues orders barring mobile phone operator Safaricom from further using the M-Shwari concept, a court heard yesterday.
Already, more than 640,000 customers have registered for M-Shwari and approximately Sh150 million has been received in deposits and over Sh50 million loaned out.
In a sworn affidavit, Safaricom though its legal counsel Brian Muthiora is apprehensive that if an injunction is granted the said customers would be adversely affected and Commercial Bank of Africa would suffer a loss of approximately Sh50 million in depositors' funds that it has put up in loans.
It also argued that it began negotiations with CBA on the M-Shwari service in February 2011 several months before Faulu approached them with its proposal.
"In fact, my client had already signed a memorandum of undertsaning with CBA on the M-Shwari concept on April 4 2012 while the non-disclosure agreement with Faulu is dated April 12 2012," he said.
"It will therefore be evident from the foregoing that Safaricom has no use for Faulu's chap chap product which the financial institution acknowledges it is already running in partnership with Airtel," he added.
Safaricom argues that the application filed by Faulu is bad in law and an abuse of court process. It claims that the high court has no proper jurisdiction to hear the case under the industrial property act and the proper forum for the determination of the issues in the suit is the Industrial property tribunal.
Faulu Kenya moved to court last week accusing Safaricom of copyright infringement. It sought orders stop Safaricom from operating M-Shwari claiming it was similar to Faulu's Kopa Chapaa service operated by Airtel Kenya since last year after securing approvals from Central Bank of Kenya.
But yesterday, Safricom argued that Faulu has no intellectual property in the invention which allows the savings and credit services on mobile phone units. It also denied that it breached Faulu's rights of ownership as alleged. "Faulu has not demonstrated that it owns any copyright or patent in this regard," he says.
Muthiora however confirmed to the court that Commercial Bank of Africa in partnership with them launched the Mshwari savings led credit product and relies on Safaricoms MPESA mobile money transfer service as the delivery channel for the acceptance of deposits by CBA and equally for loan disbursements.
But prior to M-Shwari, Safaricom claims that in May 2010,it launched M-kesho in partnership with Equity bank which is a savings and credit banking product similar to M-shwari.
The difference between the two he says is that M-kesho requires one to sign up physically for the service while M-Shwari does not though both have Safaricom's Mpesa service as the platform by which subscribers access their accounts.
He acknowledged that M-Shwari is indeed a product of CBA authorized by the Central Bank of Kenya. Safaricom has denied that Faulu developed a novel cash advance system prior to its own systems. It also denied that faulu has any intellectual property in a product similar to the M-Shwari service.
"Faulu is not responsible for the innovation which is the basis of the M-Shwari service or any upgrades," he said. Safaricom further states that it did not use Faulus proposal for an emergency credit purpose as the basis for M-Shawri and does not see any inventive step or novelty in emergency credit.
"My clients are acutely aware that using mobile technology to make financial transactions faster, cheaper and more secure facilitates the delivery of financial services in emerging markets where other financial transaction mechanisms may be considered relatively unattractive," said Muthiora.