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Kenya: IP Bimonthly Digest – February 2023

24 February 2023
– 19 Minute Read

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Snapshot of our practice

Our IP & Technology practice, which includes a vibrant Telecommunications practice, has been busy advising on a range of IP, privacy, technology, telecommunications, fintech, crypto and payment matters. We also continue to assist entities that are data controllers and data processors with registration with the Office of the Data Protection Commissioner (ODPC). Critically, we are currently assisting Intellectual Property Rights (IPR) owners in complying with the Anti-Counterfeit Authority (ACA) mandatory recordal requirement of their registered IPRs. Please access our articles here and here to understand more about the ACA recordal requirement.

We also participated in the Data Privacy Conference 2023 organised by the ODPC from 24 to 27 January 2023 to celebrate Data Privacy Day. An interesting takeaway from the conference was the clear strategic direction the ODPC intends to take over the coming years. That is: (i) going forward, the ODPC plans to ramp up its enforcement activities with respect to the compliance obligations under the Data Protection Act, 2019 (DPA)  and its corresponding regulations; (ii) the ODPC intends to publish a Guidance Note on Data Sharing across government agencies to ensure the lawful sharing of personal data among public sector entities, and (iii) the ODPC will also publish a list of jurisdictions which it deems to have adequate protection of personal data to guide international data transfers from Kenya. As part of  Data Privacy Day, we published articles highlighting data protection developments in Kenya, accessible here and here.

As Generative Artificial Intelligence (AI) products gain popularity globally, there are questions as to how these products will interact with intellectual property law. In this digest, we discuss the impact of Generative AI products such as ChatGPT on copyright and outline the emerging copyright infringement cases arising from the use of Generative AI. Additionally, we will publish a thought leadership article highlighting legal concerns associated with Generative AI programs like ChatGPT as business organisations seek to incorporate this technology in their operations. Please keep an eye out for the article.

For assistance on any IP, Technology, Anti Counterfeits, Data Protection and Telecoms matter, please contact John Syekei or any of your contacts in the IP & Technology practice.


Updates from regulatory bodies

Office of the Data Protection Commissioner (ODPC)

ODPC issues its first fine and ruling

On 21 December 2022, the ODPC imposed its first fine against Oppo Kenya in line with its mandate under the Data Protection Act 2019 (DPA). The ODPC issued the penalty notice after Oppo Kenya failed to comply with an enforcement notice issued to it on 3 November 2022. The enforcement notice was in relation to a complaint to the effect that Oppo Kenya had infringed on the privacy of the complainant by using their photo on the company’s Instagram account without the complainant’s consent. Oppo Kenya failed to take steps to remedy the breach and was therefore ordered to pay a penalty of KES 5,000,000 (USD 39, 996) for the breach of personal data.

Shortly after, in January 2023, the ODPC made one of its first determinations under the DPA in the case of Allen Waiyaki Gichuhi & Another v Florence Mathenge & Another. According to the complaint, the claimants alleged that two of their former employees leaked personal and sensitive data to third parties without their consent. In its judgement, the ODPC affirmed that it has jurisdiction to hear and determine complaints that are properly filed and related to issues within the Act. Ultimately, the matter was dismissed as the claimants failed to adduce sufficient evidence to support their claim.

Bowmans comments: The DPA empowers the ODPC to conduct investigations and impose administrative sanctions, such as issuing penalties and enforcement notices. The recent enforcement actions taken by the ODPC indicate that it is actively pursuing entities’ compliance. In light of this, data processors and controllers should ensure that they take the necessary measures to comply with the DPA and its regulations. This includes ensuring that data subjects’ rights are upheld and registering with the ODPC as a data controller or data processor. Additionally, companies should review their current data processing activities and processes and ensure that their systems comply with the current data protection regime. For any assistance with respect to compliance with the DPA, please contact John Syekei, Ariana Issaias, and Daniel Mwathe or your relationship partner at Bowmans Kenya if you would like to discuss this further.

To access the press release concerning the penalty notice against OPPO, click here.

To access the decision by the ODPC, click, here.

Communication Authority of Kenya (CAK)

CAK invites public comments on the Proposed Framework for Emerging Technologies Regulatory Sandbox

On 24 January 2023, the Communications Authority of Kenya (CAK) published a proposed framework for establishing an Emerging Technologies Regulatory Sandbox (the Sandbox). The CAK is interested in developing the Sandbox to nurture and support innovation by exploring the application of innovative regulatory solutions. Additionally, the Sandbox will translate to more opportunities for open collaboration, innovation, economic growth, and better lives for citizens. The action by the CAK aligns with the global trend of regulators embracing the concept of regulatory sandboxes as a means of providing a dynamic, evidence-based regulatory environment to test new services, products and emerging technologies that do not easily fit in the current regulatory framework.

Bowmans comments: Through the proposed framework, the CAK intends to create an enabling environment for firms to test new services, products and emerging technologies that do not easily fit into the traditionally regulated sectors. Notably, the framework authorises participants of the sandbox to undertake projects relating to the Internet of Things (IoT), artificial intelligence (AI) and Over-The-Top (OTT) services as a means of developing regulation that embraces these emerging technologies. This is anticipated to reduce the regulatory uncertainty associated with the governance of innovative start-ups. In this regard, the sandbox is expected to reduce the time taken between the conception of a product and its introduction to the market. It is also intended to encourage investments by providing a clearer regulatory landscape to investors who may be cautious of regulatory risks. Comments on the proposed framework were to be submitted by 03 February 2023. We will continue to follow these developments and provide updates as we receive them.

To access the proposal, click here.

Source: Communication Authority of Kenya (24 January 2023).


Developments in the intellectual property arena

Copyright

Launch of AI chatbots such as ChatGPT and Bard

Artificial intelligence (AI) company, OpenAI recently launched an AI chatbot known as ChatGPT for free public testing. The chatbot has been trained using large amounts of data, including books, articles, and other written material, to generate detailed responses to queries in a conversational manner. Moreover, on 06 February 2023, Google announced its intention to launch a similar chatbot service named Bard for its search engine.

The increased interest in AI chatbots such as ChatGPT has raised various concerns. In the realm of data protection law, there is apprehension that using publicly available data to train AI chatbots breaches data privacy. This is because chatbots use the data of individuals without their consent. AI chatbots have also been criticised for the risks they pose to children and other vulnerable groups, as the platforms could be used to facilitate hate speech, incite violence, or distribute harmful content.

With respect to intellectual property law, the content generated by the chatbots raises questions as to whether an AI chatbot can be considered the “author” of the content it produces for the purposes of copyright law. Additionally, there has been increased debate on whether the content produced by the AI chatbot infringes on the copyright of human authors as it is trained using publicly available works. ChatGPT is currently being used in various ways, including generating content for websites and answering customer inquiries.

Bowmans comments: Artificial intelligence tools such as AI chatbots are becoming increasingly popular across the globe. The increased popularity has sparked discussion on whether the chatbots’ content qualifies for copyright protection and whether the training of AI chatbots infringes on the copyright of third parties. As products such as AI chatbots continue to be introduced into the market, there will be a need to amend or update existing intellectual property laws to address these issues and ensure the lawful use of AI, especially in the creative economy. We are working on a thought leadership article that discusses the effect of ChatGPT on intellectual property; please be on the lookout for the publication.

To read more about the ChatGPT, click here.

To read more about the launch of Bard, click here.

Source: Reuters (05 December 2022 and 07 February 2023).

Lawsuits accuse AI content creators of misusing copyrighted work

A group of visual artists have sued artificial intelligence companies Stability AI Limited (Stability), Midjourney Incorporated (Midjourney), and DeviantArt Incorporated (DeviantArt) in the US District Court for the Northern District of California for copyright infringement. According to the class action suit, Stability’s Artificial Intelligence (AI) software copies billions of copyrighted images to enable Midjourney and DeviantArt’s AI systems to create images in those artists’ styles without the artist’s permission and any offerings of compensation. The artists claim that the works later created by the AI are derivatives of the original work of creators and are sold on the internet, which siphons the commissions from the artists themselves.

Bowmans comments: Generative Artificial Intelligence (AI) refers to using algorithms to produce content, including texts, audio, images or code. As highlighted in our discussion above, the implications of generative AI such as ChatGPT on copyright are an emerging issue in copyright law, especially where copyrighted works are used to train the algorithms to generate content. This is because the training of AI systems often involves the reproduction of existing work in its entirety without the copyright owner’s consent. Programmers of these algorithms argue that replicating existing works constitutes fair use/dealing. However, creators have argued that the replication infringes on their copyright as the algorithms continue to copy their styles, even after training, to produce similar works. These varying perspectives have manifested into increased copyright infringement cases similar to the highlighted class action suit. The courts are expected to provide guidance on how copyright law will apply to generative AI as its use gains popularity. We will continue to follow these developments and provide updates as we receive them.

To read the class action suit, click here.

To read more, click here.

Source: Reuters (17 January 2023).

Trademarks

The General Court of the European Union decides on the specificity of goods and services

In the case of Hasco TM sp. Z o.o. sp.k v EUIPOthe polish company Hasco TM sp. Z o.o. sp.k (Hasco) sought to rely on its polish trade mark registration for the mark NATURKAPS to invalidate a European Union Trade Mark Registration for NATURCAPS in the name of Esi Srl. Hasco had registered the NATURKAPS mark in class 5 under pharmaceutical products, while the allegedly infringing mark covered a variety of goods in Class 5, including dietary and nutritional supplements.

In response, Esi Srl requested Hasco to demonstrate the use of the NATURKAPS trademark for pharmaceutical products. However, Hasco’s proof of use established that the mark was used in relation to food supplements and not pharmaceutical products for which the mark was registered. In turn, Hasco argued that the Nice Classification at the time of registration did not include the provision for food supplements under Class 5, which justified their registration of the goods and services under pharmaceutical products.

In its determination, the General Court of the European Union (General Court) established that dietetic substances adapted for medical use’ formed part of the Nice Classification when Hasco’s application was filed and would be an appropriate class to register food supplements. Further, the General Court maintained that Hasco had failed to provide proof of genuine use of its NATURKAPS mark for the goods for which that mark was registered. To this end, Hasco’s NATURKAPS registration could not serve as a valid basis for the invalidation of the NATURCAPS EUTM. Hasco’s claim against Esi Srl was therefore dismissed.

Bowmans comments: The decision of the General Court serves as a reminder to trade mark applicants to be careful in selecting the class(es) of goods and services during registration of their marks. This is because the actual use of the goods and services must correspond to the use for which the trade mark was registered. Failure to do so may expose the trademarks to the risk of cancellation for non-use or render the trade marks unenforceable against third parties.

To read the decision, click here.

To read more, click here.

Source: International Trademark Association (18 January 2023).

Patents

U.S. Supreme Court asks for the opinion of the Solicitor General on the Apple and Caltech patent dispute

The U.S. Supreme Court has requested the Solicitor General for their opinion on the bid by Apple Inc. (Apple) and Broadcom Inc. (Broadcom) to revive their challenges in respect of patents owned by the California Institute of Technology (Caltech). In 2016, Caltech instituted a suit against Apple and Broadcom, alleging that the Broadcom chips used in Apple’s mobile devices infringed upon its IP rights to Wi-Fi developments. Ultimately, Caltech was awarded USD 1.1 billion in damages by the Trial Court. However, the figure was later annulled by the US Court of Appeal. Apple and Broadcom are seeking to revive the dispute on the grounds that the Trial Court and the Appellate Court erroneously denied them from arguing the invalidity of Caltech’s patents based on the statutory estoppel doctrine. According to the Trial and Appellate Court, Apple and Broadcom could not challenge the validity of the patent registrations due to their unsuccessful inter partes review (IPR) against the same patents. In its petition to the U.S Supreme Court, Apple and Broadcom are asking the U.S. Supreme Court to resolve what invalidity grounds may be properly asserted by an unsuccessful Patent Trial and Appeal Board (PTAB) petitioner against the same patent in district court litigation.

Bowmans comments: Inter partes review (IPR) refers to the process of challenging the validity of a patent registered with the US Patent Office in the Patent Trial and Appeal Board (PTAB). The IPR estoppel doctrine bars a petitioner from asserting in a district court any grounds raised or that ‘reasonably could have been raised’ during inter partes review. The district courts have been divided in their interpretation of the term ‘reasonably could have’. If the request for revival is permitted, the interpretation of the scope of IPR estoppel by the Supreme Court may restrict the opportunities available to parties for challenging patent validity post IPR.

To read more, click here.

Source: Reuters (18 January 2023).

Trade secrets

President Biden Signs the Protecting American Intellectual Property Act of 2022

On 05 January 2023, President Biden signed the Protecting American Intellectual Property Act of 2022 (the Act). The Act requires the President to report annually to Congress identifying any “foreign persons” who are found to have engaged in significant theft of trade secrets of U.S. persons. The Act also requires the President to sanction those entities and individuals by imposing at least 5 of the sanctions available to the President under existing laws. The President also has the discretion to impose the most onerous of sanctions, including property-blocking sanctions, export-import prohibitions, the prohibition of loans from U.S. and international financial institutions, procurement sanctions, and the prohibition of banking transactions.

Bowmans Comments: The Act introduces a new medium of IP protection designed to address the theft of trade secrets belonging to American nationals and companies. In accordance with the Act, the President will have the discretion to determine that the theft of trade secrets has occurred and impose sanctions after notifying Congress. Ultimately, the Act is intended to mitigate concerns by U.S Companies about foreign theft and encourage commercial due diligence among foreign companies. However, the Act has been criticised for its broad definition of the term ‘trade secrets’ and its failure to define terms such as ‘significant threat’ in relation to the theft of trade secrets.

To access the Act, click here

To read more, click here

Source: Mondaq (13 January 2023)


Technology, Media and Telecommunications

Kenya

eCitizen Digital Payments Platform Announced for All Government Services

The Kenyan government has launched the Digital Payments Platform, enabling Kenyans to pay for all government services via digital means. The service is based on the e-citizen platform. It has been integrated with all available electronic payment platforms in Kenya, including mobile money services such as M-PESA, T-Kash, and Airtel Money.

Bowmans comments: The launch of the Digital Payments Platform aligns with the government’s strategy to migrate all government services to digital platforms. Governments across the globe are increasingly adopting cashless payment systems to increase convenience, mobilise domestic revenue and improve efficiency in service delivery. The initiative by the government should be accompanied by measures to bridge the digital divide and increase connectivity throughout the country. 

To access the Gazette Notice (Gazette Notice 16008), click here.

To read more, click here.

Source: The Star (31 December 2022).

Africa

ICASA publishes draft radio frequency spectrum regulations

The Independent Communications Authority of South Africa (ICASA) published a notice of its intention to amend the Radio Frequency Spectrum Regulations of 2015. The amendments include an updated list of radio apparatus whose use or possession will not require a radio frequency spectrum licence. Interested persons were to submit their written representations no later than 30 January 2023.

Bowmans comments: According to the draft regulations, the amendments are necessary to keep the provisions of the regulations in line with the current existing technologies and revolutionise the electronic communications sector. Additionally, the reforms are expected to increase Wi-Fi availability and uptake, enable faster data communications between devices and improve efficiency. We will continue to follow these developments and provide updates as we receive them.

To access the amendments, click here.

Source: ICASA (15 December 2022)

Global

NY Becomes first State with electronics right to repair law

The Governor of New York has signed the Digital Fair Repair Act (the Act) into law, making New York the first state in America to guarantee consumers’ right to repair. The legislation requires original equipment manufacturers (OEMs) to provide independent repair shops and consumers with diagnostic and repair information for electronic equipment on fair and reasonable terms. The Act will take effect on 01 July 2023 and will apply to digital electronic equipment that is manufactured, sold or used in New York after the effective date of the Act. The Act is expected to protect consumers from anticompetitive efforts to limit repair.

Bowmans comments: The right of consumers to repair their own devices is receiving growing interest across the globe as regulators opt to adopt mechanisms that will protect consumers from the monopolistic practices of digital electronics manufacturers, who restrict access to repair manuals and replacement parts. In accordance with global practice, the Digital Fair Repair Act requires manufacturers to make non-trade secret diagnostic and repair information available for sale to consumers and independent repair providers. Even though Kenya’s Consumer Protection Act provides for the repair of motor vehicles and other goods and largely regulates how the costs for such repairs are arrived at, it does not provide for a consumer’s right to repair in the manner envisaged under the Digital Fair Repair Act.

To access the Digital Fair Repair Act, click here.

To read more, click here.

Source: Bloomberg Law (29 December 2022)


Cryptos, AI, Blockchain +

Kenya considers the regulation of cryptocurrency

The financial services regulators in Kenya, including the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA), the Insurance Regulatory Authority, the Retirements Benefits Authority and the Sacco Societies Regulatory Authority, have recommended the formation of a technical committee that will create laws to regulate digital assets and businesses in the sector. The CBK has affirmed that the Joint Financial Sector Regulations Forum (JFSRF) has agreed to consider the National Treasury and Economic Planning recommendation to form a working group to advise the Treasury on crypto regulations.

Bowmans comments: Kenya currently lacks a regulatory regime for virtual currencies. The government has been cautious of the adoption of crypto, as was seen in 2015 when the CBK and the CMA issued warnings to the public against dealings in cryptocurrencies and crypto assets. Nevertheless, Kenya has recently taken steps to regulate certain aspects of crypto transactions in the country through the introduction of the Capital Markets (Amendment) Bill 2022, which proposes the taxation of crypto and digital currency transactions. The move by the JFSRF is encouraging as it demonstrates a willingness by the financial services regulatory bodies to bring cryptocurrency within their regulatory ambit. A comprehensive oversight framework on cryptocurrency will tend to attract more investors, protect consumers, and encourage more Kenyans to deal in cryptocurrency.

To read the press release, click here.

To read more, click here.

Source: Business Daily (16 December 2022).

South African Self-Regulatory body mandates risk warnings in crypto ads

On 23 January 2023, the South African Advertising Regulatory Board issued new guidelines on crypto advertising. Under the new guidelines, crypto advertisements in South Africa are required to expressly and clearly state that investing in crypto assets may result in capital loss as the value is variable and can fluctuate. The Board is also seeking to tighten the rules for social media influencers who promote crypto. Accordingly, social media influencers and ambassadors are required to only share factual information rather than offer advice on trading or promising guaranteed returns.

Bowmans comments: According to the Chain Analysis Report 2022, Africa contains some of the most well-developed cryptocurrency markets; however, many countries are yet to regulate the crypto markets. The guidelines issued by the South African Advertising Regulatory Board aim to protect consumers from the risks associated with trading in cryptocurrency. This is a reflection of the global regulatory focus on digital assets as many countries are moving towards cryptocurrency regulation, especially after the collapse of the FTX crypto exchange. A global approach to the regulation would be appropriate, considering the cross-border nature of crypto-asset transactions.

To read more, click here.

Source: Advertising Regulatory Board (23 January 2023).