The financial technology sector in Kenya is a fast growing industry with innovative start-up companies rapidly coming up with innovative products due to the favourable market for such products and high returns in this industry. For instance, in the fintech lending industry, there are the popular digital lending service providers and fintech payment solution service providers e.g., those processing online commerce transactions. Insurance technology firms such as micro insurance companies who provide services through the mobile phone are also creating intellectual property in their business operations.

Fintech investment by investment funds, banks and other investors is also continuously rising with financial technology companies being a highly sought after investment opportunity in Kenya. Fintech services are an intellectual property rich industry and this article discusses the fintech IP that may be targeted for registration by proprietors and innovators of financial technology.

It is important to secure your IP to avoid losing rights to the financial technology innovated by you. Loss of intellectual property means outright loss of commercial benefits from the fintech should someone else steal your fintech solution and register intellectual property rights in it before you. Failure to secure IP in fintech solutions that you create can lead to actual failure of your fintech company and all the income from it.

1. Patents

Registration of patents is provided for under the Kenya Industrial Property Act and requires an invention in the field of technology that is novel and provides a new use or industrial application for said invention that the fintech company has designed. It is important to file fintech patents earlier rather than later as that determines priority of ownership if another inventor comes up with a similar patentable invention around the same time as you. Patenting inventions is also useful to help commercialise your invention through licensing agreements with other users of the fintech solution. Patent infringement entitles the aggrieved proprietor to seek injunctions and damages to remedy the infringement.

2. Trademarks

Fintech companies may register trademarks to protect their brand names or logos. For instance, they may trademark the name of the fintech company itself as well as the various products and services of the company to prevent competitors trading on that name in the same industry.

3. Industrial Designs

Industrial design rights protect tangible fintech product designs; for instance, industrial design rights can protect uniquely designed innovative point of sale devices; cards; scanning devices; chips etc, that may be created by fintech companies. Industrial designs once registered confer protection for 5 years and may be renewed every fifth year by the Kenya Industrial Property Institute

4. Copyright

Copyright is created in various works including literary works. Computer programs and software are considered literary works in which copyright exists and a fintech company may consider registering such similar works. The benefit of registration is to entrench one’s right of priority to the software as well as enable licensing and transfer of the right in the copyrighted software or computer program to third parties.

Licensing of Intellectual Property by Fintech Companies

Fintech companies may commercialise their financial technology by entering into licensing agreements where they share the technology they have innovated. For instance, a payment services provider may license various businesses to use their technology and be paid a licensing fee for said use.

Employees’ contributions

Often times intellectual property is made through the innovative efforts of employees within the company and depending on the circumstances of each case as explained below, the owner of such IP may be deemed under the law to be the fintech company or the employee.

In certain instances, employment contracts contain express provision that IP is the property of the employer if developed by the employee in the course of employment. Also the Industrial Property Act has stipulations on the employer being the proprietor; nevertheless, in certain instances an employee may be entitled to equitable remuneration alongside the employer for the financial benefits derived from the said IP work and one may apply to the Kenya Industrial Property Institute to fix this remuneration where employer and employee cannot agree on a fair amount to be paid to the employee.

NDAs and Non-compete Clauses

Innovators can protect their trade secrets and intellectual property through well drafted Non-Disclosure Agreements (NDAs) when sharing such information with third parties. NDAs mandate the counterparty to keep confidential information as such and also to protect from disclosure without consent of the owner of the innovative work. This can be important for any fintech company sharing information with investors to prevent them from taking over such innovative work for their own benefit and excluding the fintech company at the same time.

Fintech companies can also require NDAs from their employees to avoid employees selling trade secrets or IP works to outsiders because the fintech company can mandate that it shall be entitled to compensation for breach of counterparty’s duties under the NDA and this will reinforce the sense of duty of employees to maintain confidentiality.

Non-compete contracts or clauses drafted as terms of one’s employment also protect intellectual property and trade secrets of work by restraining for a period, the employee from working with competitors or as competitors of the fintech company to minimize risk of loss of IP rights during the period of restraint.

The provision of general information herein does not constitute an advocate-client relationship with any reader. All information, content, and material in this article are for general informational purposes only. Readers of this article should get in touch with us/a qualified advocate to obtain legal advice with respect to any particular legal matter.