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Kenya: Technology, Telecoms, and IP Digest – May 2023

9 May 2023
– 9 Minute Read

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MINISTRY OF INFORMATION, COMMUNICATIONS AND THE DIGITAL ECONOMY (ICT)

ICT CS Eliud Owalo said during the 2023 Digital Summit held this past February that Digital Economy is a critical game changer for Kenya. He announced that the Kenya Kwanza government through the ICT Ministry, plans to implement the Kenya National Digital Masterplan 2022–32, which has five key pillars aimed to drive the digital transformation agenda. The pillars are digital infrastructure, digital services and data management, digital skills, digital entrepreneurship and effective alignment to policy, legal and regulatory frameworks. The Ministry has initiated some of the plans such as digitization and automation of government services such as the lands registry.

COMMUNICATION AUTHORITY OF KENYA (CA)

CA has enacted the Frequency Transfer Guidelines as part of its attempts to weed out cartels that have established a speculative black market for frequency spectrum assets and improve channel safety. Previously, there was no formal structure in place to govern spectrum transfer among users which led to a few operators collecting massive holdings of the spectrum. This was generally done through frequency transfers in company mergers, in which ownership of one firm’s assets, including telecom licenses, is passed to another. As a result, hoarding and frequency conjecture became common. This was notably obvious in the few, yet highly sought-after frequencies used for FM broadcasting and introducing new technologies. Additionally, the Authority was typically notified following the transfer, and the new license holders were frequently unaware of their rights and obligations under the licenses. The new guidelines are in place to address these concerns.

Intellectual Property

The High Court of Kenya declined to temporarily stop Multichoice Kenya Ltd from airing a film on its platforms, pending the determination of a petition filed by a Kenyan claiming infringement of his works. Mr Justin Macharia, the director of Film Factory Ltd said Multichoice Kenya infringed on his works in a film titled “Baba Twins”. He said the film was being aired by the entertainment company including in its internet streaming platform known as “Showmax”, to the entire world. He claimed that he wrote an email while working as an employee of Multichoice on January 22, 2018, expressing the idea of the film written by his producer. It was his submission that there is the subsistence of copyright emanating from a reading of Section 22(3) of the Copyright Act in the sense that what he sent to Multichoice was a “literary work”. Mr Macharia told the court that if not stopped, Multichoice will make money while he stands to suffer a loss of potential revenue that could have been gained from the production, airing and release of the film.

According to a policy published in March, The US Copyright Office will consider an AI-generated work copyrightable if a human can prove they put a meaningful amount of creative effort into the final content. The Copyright Office held that in each case, what matters is the extent to which the human had creative control over the work’s expression and “actually formed” the traditional elements of authorship. When an AI technology determines the expressive elements of its output, the generated material is not the product of human authorship. As a result, that material is not protected by copyright and must be disclaimed in a registration application.

The US Supreme Court Justices considered the international reach of U.S trademark law when presiding over the case Abitron Austria GmbH v. Hetronic International, Inc. The issue presented was whether and to what extent the federal trademark statute, known as the Lanham Act, applies to infringing conduct that takes place outside the United States. At first, the bench seemed most likely to adopt the Biden administration’s middle tack. The Lanham Act only applies to foreign uses of trademarks that are likely to cause consumer confusion in the United States. However,  in the final decision in late March, Hetronic, a U.S. company, won a jury verdict of $90 million against Arbitron, a group of German and Austrian companies, for infringement that occurred almost exclusively in Europe.

Mauritius joins the Patent Cooperation Treaty. As of March 2023, international patents will be protected in Mauritius, following the country’s accession to the Patent Cooperation Treaty (PCT), with the system scheduled to come into effect from 15 March 2023. The PCT was introduced in 2003 and protects the patents filed by parties in contracting states across the world, as it allows innovators to file a single patent application which applies to all acceding nations. Mauritius becomes the 157th contracting state.

EU Council insists on trade secret protection in the semi-final text of the Data Act. The 5th compromise version of the Data Act has been distributed, including the potential of denying data-sharing requests if they threaten serious economic harm. The Data Act is a landmark piece of law that governs how industrial data is transferred, accessed, and shared. The Act requires that users of connected devices have the right to access the data they contribute to the generation of, or delegate that right to a third party that may use the data to build a new service. This raises concerns that such a data-sharing requirement would disclose trade secrets and sensitive business information.

Technology, Media, and Telecommunications

Saccos to invest Sh800m in a joint ICT platform. In response to rising fraud, the Co-operative Alliance of Kenya (CAK) has created anSh800 million technological platform to protect the safety of depositors’ cash in savings and credit cooperative organizations (Sacco). The Co-op Tech platform, which is controlled by the cooperative lobby, will manage the security of depositors’ cash via a shared platform that will be utilized by all saccos in their everyday operations. Co-operative Cabinet Secretary Simon Chelugui, who launched the platform on Thursday, said it was long overdue because the idea had been conceived a long time ago.

Competition Authority starts probe on banks for dollar price fixing. The Competition Authority of Kenya (CAK) is investigating several undisclosed banks for allegedly fixing foreign exchange trades, adding a fresh twist to the crisis that has seen lenders run out of dollars on some days. The antitrust authority says “investigations are ongoing” into the possible manipulation and collusion over the dollar exchange rate, exposing bankers to fines and up to five years in jail if convicted. Sources familiar with the probe reckon the CAK is pursuing allegations that some dealers at the banks used electronic chat rooms and instant messaging to coordinate their trading activities when giving quotes to customers who buy or sell currencies. This mirrors the heightened probe of global banks years ago in Europe, Asia, the United States and South Africa over allegations of price-rigging in currency markets.

On 8 March 2023, the UK government introduced the second draft of its UK data protection reform legislation, the Data Protection and Digital Information Bill (No.2) superseding the original Bill, which the government first introduced last summer. The proposal aims to update and simplify the UK’s data protection framework and give organizations greater flexibility when approaching privacy compliance. Key areas of this proposal include; revising the definition of personal data to be determined on a threshold of “reasonableness”; additional identified legitimate interests; widening the purpose limitations; ability to refuse “vexatious or excessive” data subject requests; simplifying cookie banners; additional examples of when cookies could be considered strictly necessary; Data Protection and Impact Assessments and Record of Processing Activities only required with “high-risk processing” and; clarity over which processing will be considered “research”.

Crypto, AI, Blockchain+

The European Union’s Markets in Crypto Assets Regulation, known as MiCA, will be the topic of an April 18 discussion in the European Parliament, heralding the final formal agreement of the landmark law that will bring a crypto licensing regime across the bloc. MiCA aims to establish harmonized rules for crypto-assets at the EU level, thereby providing legal certainty for crypto-assets not covered by existing EU legislation. By enhancing the protection of consumers and investors as well as financial stability, the regulation promotes innovation and the use of crypto assets. The regulation identifies and covers three types of crypto-assets, namely asset-referenced tokens (ART), electronic money tokens (EMT), and other crypto-assets not covered by existing EU law. The legislation would regulate the issuance and trading of crypto assets as well as the management of the underlying assets, where applicable, with additional regulatory rules aimed at ‘significant’ ART and EMT.

EU’s Artificial Intelligence Act and the need to return to a risk-based approach. The EU’s AI Proposal, one of the first of its kind at first followed a risk-based and relatively light-touched approach. The proposal created stringent requirements for AI systems classified as high-risk, and a more limited set of (transparency) requirements for AI applications with a lower risk. The commission intended to present “a balanced and proportionate approach limited to the minimum necessary requirements to address the risks linked to AI without unduly constraining technological development.” Since then, while moving through the complicated EU legislative process, the drafting has been marred by lengthy negotiations in the Council of the European Union, a record number of amendments and ongoing debates in the European Parliament. These have pushed the proposal away from its original objectives.

A Kenyan Member of Parliament is reported to be proposing a new Capital Markets 2023 (Amendment) Bill. Abraham Kipsang Kirwa, who was also behind the Capital Markets 2022 (Amendment) Bill, seeks to bring blockchain, crypto, and digital currencies under the jurisdiction of Kenya’s Capital Markets Authority (CMA), the regulatory body that grants companies and enterprises permission to operate in Kenya’s capital markets. The proposed bill aims to introduce new terms, require licenses for those trading in digital currencies, and tax liabilities and disclosures for cryptocurrency holders. Please note that the bill is yet to be formally introduced to Parliament and we will keep you updated with any new developments.