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Kenya: An overview of the increasing push for registration and regulation of patents in emerging technology

19 July 2023
– 8 Minute Read

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Overview

  • Blockchain is a method of recording and computing information that makes it difficult for the system to be changed, hacked, or manipulated by a single user.
  • The legal position regarding patent registration for blockchain technology is constantly changing.
  • In Kenya and Africa at large, the patent registration regime presents a myriad of socio-economic benefits. The development of Kenya’s financial services and digital/ mobile wallets and mobile banking also means that recognising one’s patent invention in a blockchain or financial services system will fully protect inventors from exploitation.

Recently, we have seen a speedy evolution of emerging technology such as blockchain technology. Blockchain is a method of recording and computing information that makes it impossible or difficult for the system to be changed, hacked, or manipulated by a single user. As part of blockchain, we continue to see the emergence of a feature, Non-Fungible Tokens (NFTs), an increasingly innovative way to prove digital ownership and trade valuable collectable items[1].

Patents related to blockchain, in many ways, should be treated similarly to the routine patents filed in relation to other software and computer-related inventions. A patent is a legal right granted to an invention which is a device or process that prescribes an entirely new way of doing something, completing a task and, indeed, a novel technical solution to a problem in the field of technology. An invention is patentable if it is new, involves an inventive step, and is industrially applicable[2].

The legal position regarding patent registration is fairly settled in that a patent registration will not be granted on an invention if the said invention has been publicly used or disclosed anywhere in the world before the patent application was filed.

In Kenya and Africa, the patent registration regime presents a myriad of benefits. Patent registration and protection stimulate the growth of commerce because local companies and inventors that hold patents can attract overseas investment and develop products and equipment for export or purchase.

It has been reported that Kenyan blockchain start-up companies raised a combined $25.8 million (Sh3.5 billion) in funding, pointing to the sustained growth of the country’s cryptocurrency market despite experiencing a slowdown in the industry[3]. The development of Kenya’s financial services and digital/mobile wallets also means that recognising one’s patent invention in a blockchain or financial services system will protect inventors from exploitation. For clarity, where there is an already-known technique for minting tokens on an existing blockchain, then such an inventor will be precluded from obtaining similar patent protection over their invention on a different blockchain. Patent protection is sought where significant changes or improvements to a process exist.

Emerging case precedents and interpretation of the Kenyan IPA and the US Patent Act:  

In Kenya, and under the Industrial Property Act (No. 3 of 2001) (the IPA), an invention is patentable if it is new, involves an inventive step and is industrially applicable. It should be noted that the IPA also provides for subject matter that is excluded from patent protection[4]. Therefore, it is important for inventors to be careful when crafting patent claims and structuring their inventions to meet the eligibility threshold under the IPA.

In the U.S., Section 101 of the Patent Act states,“whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent.” Further, a blockchain invention in the U.S. must be eligible for patent protection under Section 101 of the Patent Act as interpreted by the courts after the Supreme Court’s Alice Corporation decision (2014 decision).

In the above-mentioned Alice Corporation Pty Limited v CLS Bank International case, the U.S. Supreme Court developed a two-part test for the patentability of such technological ideas and concepts, especially those that come across as abstract immediately. In this case, the patent application in dispute was a computer-implemented scheme for mitigating “settlement risk,” i.e., the risk that only one party to a financial transaction will pay what it owes using a third-party intermediary. The court had two questions to decide, namely;

  1. whether the patent claims were eligible under the Patent Act (novelty) and
  2. whether the patent claims were over a patent-ineligible abstract idea.

The first part of the two-part test is that it is necessary to determine whether or not the claim is premised on an abstract idea. In the Alice Corporation decision, the abstract idea was the idea of an intermediated settlement for financial transactions[5].

The second part of the two-part test determines whether the claim contains an “inventive concept/step” outside the abstract idea. The Supreme Court, in the Alice Corporation decision, re-defined the term to mean “an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the abstract/ineligible concept itself.” In this regard, patent claims that improve a “technological process,” or otherwise improve the computer’s functioning will be considered inventive concepts[6].

The Supreme Court found that Alice Corp.’s claims related to an abstract idea, as these claims are already part of a fundamental economic practice. The Supreme Court then determined that Alice Corp.’s claims did not include an inventive concept sufficient to ensure that the patent was more than a patent on the abstract idea. This two-part test, therefore, sets the bar high regarding patent claims over technological programmes and processes such as blockchain technology.

It should be noted that the position of patentability of blockchain inventions in Kenya is yet to be tested in a court of law, or indeed by the Kenya Industrial Property Institute (KIPI) registry and it is unclear whether KIPI would be guided by this Alice Corporation decision while examining patents on blockchain technology. In this regard, KIPI should enact clear examination guidelines to be included in the KIPI Patent Examination Guidelines to provide direction on how the examiners at KIPI should handle such applications.

A major drawback surrounding the patents for blockchain technology is that the ambiguity in the threshold for eligibility may lead to large volumes of patent litigation, which can stunt innovation and emerging technologies. Patent litigation is also costly and may take years to determine in some jurisdictions. This has the potential to render a patent application obsolete.

Another disadvantage is that it may be difficult to identify potential cases of patent infringement due to the popularity of blockchain technology, including the fact that so many tweaks and inventions are made to various blockchain systems almost hourly worldwide. Monitoring one’s patent application or registration for infringement cases may be administratively very difficult in the world of web3[7].

Alternatively, inventors can protect their patents in blockchain technology through utility models[8] (considered “light/petty patents”) in certain jurisdictions. In some countries, a utility model system protects so-called “minor inventions” through a system similar to the patent system. Utility models also address an invention’s features, functions, or processes. Such utility model registrations can cover the visual elements of blockchain technology, like user interface layouts or icons. In Kenya, however, a utility model application must have a physical form; therefore, a utility model application for blockchain may not be applicable[9]. It should be noted that this type of (utility model) protection is also available in most countries but, notably, not in the United States of America, the United Kingdom, or Canada.

Therefore, the position regarding utility model registrations in the blockchain is yet to be fully tested or settled generally. This position is, however, likely to change as the number of innovations and applications increase exponentially, and the potential of blockchain in IPRs is yet to be fully harnessed. In a nutshell, it is always vital to seek and obtain sound legal advice regarding the patent application(s) to be drafted and filed. Patent drafters and applicants should, therefore, carefully consider subject matter eligibility under the Patent Act and the IPA when drafting a new patent application on a blockchain-related invention.


[1] Mike Winkelmann sold his work ‘Everydays – The first 5000 days’  https://www.beeple-crap.com/everydays in March 2021 at an impressive $69.3million

[2] Section 22, Industrial Property Act, Kenya (No. 3 of 2001)

[3] https://www.businessdailyafrica.com/bd/markets/market-news/kenyan-blockchain-start-ups-raised-sh3-5-billion-last-year–4213586

[4] Section 21 (3) of the IPA excludes “discoveries, scientific theories and mathematical methods; schemes, rules or methods for doing business, performing purely mental acts or playing games; methods for treatment of the human or animal body by surgery or therapy, as well as diagnostic methods practiced in relation thereto, except products for use in any such methods; mere presentation of information; and public health related methods of use or uses of any molecule or other substance whatsoever used for the prevention or treatment of any disease which the Cabinet Secretary responsible for matters relating to Health may designate as a serious health hazard or as a life threatening disease”.

[5] The Supreme Court in the Alice Corporation decision did not however provide further clarity or interpretation on what constitutes an “abstract idea”, and this has therefore been left open for interpretation by judicial officers on case-by-case basis.

[6] https://www.bitlaw.com/source/cases/patent/Alice-Corp.html

[7] Web3 is often described as a series of open-source and interconnected decentralized applications powered by blockchain computing architecture https://www.forbes.com/sites/digital-assets/article/what-is-web3/?sh=59ada4a067a4

[8] In Kenya, a utility model means “any form, configuration or disposition of element of some appliance, utensil, tool, electrical and electronic circuitry, instrument, handicraft mechanism or other object or any part of the same allowing a better or different functioning, use, or manufacture of the subject matter or that gives some utility, advantage, environmental benefit, saving or technical effect not available in Kenya before and includes micro-organisms or other self-replicable material, products of genetic resources, herbal as well as nutritional formulations which give new effects”

[9] Evans Mwene Kerina vs Faulu Kenya Limited, Airtel Kenya Limited, and Safaricom Kenya Limited (Industrial Property Tribunal Case No. 71 of 2016)