A Kenyan court has delivered a landmark ruling against Safaricom after finding that the telecommunications giant infringed on the intellectual property rights of two businessmen by allegedly using their “M-Teen Mobile Wallet USSD Code” concept without consent.
In the case, Lady Justice Josphine Mongare ruled in favor of Peter Nthei Muoki and Beluga Limited, who accused Safaricom of unlawfully adopting and rolling out a product strikingly similar to their innovation aimed at teenagers and young adults.
According to court documents, Peter and Beluga Limited began developing the “M-TEEN Mobile Wallet USSD Code” in October 2020. The innovation was designed to create an M-Pesa sub-wallet targeting users aged between 13–17 years and 18–24 years commonly referred to as Generation Z or digital natives while also enabling parents to monitor and control spending behavior.
The court heard that in February 2021, Peter and Beluga Limited agreed that the code would be registered under Peter’s name, with both parties retaining equal intellectual property rights. Peter subsequently secured copyright registration from the Kenya Copyright Board.
Peter told the court that Safaricom had already established the M-Pesa API platform to encourage third-party innovation connected to M-Pesa services. On March 13, 2021, he approached then-Safaricom executive Sylvia Mulinge with the concept and shared high-level insights about the M-Teen code in hopes of securing a formal meeting.
However, he said his efforts received no response, prompting him to seek assistance from M-Pesa CEO Sitoyo Lopokoiyit. According to Peter, Sitoyo initially dismissed the idea as impractical because teenagers between 13 and 17 years lacked identification cards required for account ownership, which would allegedly require approval from the Central Bank of Kenya.
Peter further testified that Sitoyo later revealed he had also been thinking about developing a similar product a statement Peter interpreted as evidence that Safaricom intended to replicate his innovation. The plaintiff later claimed he was shocked to discover Safaricom testing a product initially dubbed “Manage Child Account,” later renamed “Manage Junior Account,” under the USSD code *334#. He argued that the product closely mirrored the functionality and structure of his M-Teen concept previously shared with Safaricom executives.
Peter maintained that Safaricom’s rollout constituted a violation of his constitutional copyright protections and deprived him of major commercial opportunities. He further told the court that an independent valuation estimated the project’s financial feasibility at approximately Sh17.9 billion under the worst-case scenario, and that Safaricom’s actions denied him potential partnerships and licensing negotiations with other corporate players.
In her judgment, Justice Mongare observed that M-Pesa transaction fees are a significant revenue stream for Safaricom and that the company’s junior account product contributed to its expanding profits.
The judge noted that Safaricom argued it would be difficult to isolate profits directly linked to the disputed product because separate accounts were not maintained for the service.
However, the court rejected Safaricom’s position that only nominal damages should apply. Justice Mongare cited provisions under the Copyright Act allowing for royalties, licensing fees, and damages where copyrighted works are unlawfully exploited.
“Safaricom did not seek a license they simply took it,” the judge stated, adding that the plaintiffs had been denied the opportunity to negotiate commercially for their innovation.
The court examined Safaricom’s publicly available financial reports over a five-year period and noted that M-Pesa revenues stood at Sh82 billion in 2021 before the alleged disclosure of the idea. Revenue later rose to Sh107 billion in 2022 following the rollout of Safaricom’s junior account product, before climbing to Sh117 billion in 2023 and Sh140 billion in 2024.
Justice Mongare concluded that the dramatic revenue growth coincided with Safaricom’s development and launch of the disputed product.
Taking what she described as a “conservative approach,” the judge awarded damages equivalent to 1% of Safaricom’s M-Pesa revenue for the 2024 financial year mounting to Sh1.4 billion.
“I find that this sum is actually a negligible cost to Safaricom for using the plaintiff’s copyrighted work,” she ruled, describing the award as commercially reasonable considering the scale of Safaricom’s business operations.
In addition to the damages, the court awarded an ongoing royalty of 0.5% on past and future revenues connected to the product instead of issuing a permanent injunction. Justice Mongare concluded with a sharp warning to corporations and innovators alike.
“This is a cautionary tale for innovators and corporations alike,” she said. “For innovators, it demonstrates that even David can prevail against Goliath when evidence is properly marshaled. For corporations, it is a reminder that good ideas do not only originate in boardrooms.”
The judge further criticized Safaricom’s conduct during the proceedings, accusing the company of shifting explanations, failing to produce critical documents, and proceeding with the product rollout while litigation was ongoing conduct she said fell below the standards expected of a market leader.
