Last week, I introduced the requirement for Kenyan employers to put in place policies to protect both themselves and employees who innovate solutions using technology. The 2001 Industrial Property Act (IPA) recognizes that an employee, whose ordinary course of employment does not specifically require creation of technological solutions, can be recognized as a “technovator” and should be recognized as such. Take for instance, a large supermarket chain. A till cashier called John is playing around with an artificial intelligence coding tool in his spare time at night and designs a solution that can review the stocks and determine where revenue leakage is happening due to delayed pricing updates on the shelves.

John chats with the supermarket’s branch manager during a tea break and asks to show him the concept. The manager is quite excited and asks John to test it on their current stock records. The results are amazing. If rolled out, there is potential to increase revenues by at least 5%. The manager immediately asks the head office to help them put the concept through a pilot stage. After three months of piloting, the software is viewed as a resounding success and is now being considered for implementation across the organization’s sixty branches.

John sees the significant potential of his solution and drops an email to his manager asking if he can receive some form of recognition for the technovation. His manager doesn’t respond, despite two further email nudges. Not known to be the one waiting for the coming of a savior in 2000 years, John talks to his lawyer friend, who suggests that he should apply for a patent for the solution, package the solution and sell it to other retail chains. He registers the patent and begins to shop around for other buyers.

A March 2024 landmark ruling issued by the Industrial Property Tribunal in the appeal by Kenya Revenue Authority versus Samson Ngengi Njuguna sets a good tone for setting internal policies on technovation. Section 97 of the IPA provides for a positive duty to act by an employer within three months of the employee’s request. The employer can either issue a technovation certificate or notify the employee of its refusal and provide reasons for the refusal. The Tribunal stated in its ruling: “The Appellant appears to have concentrated more on improving and working towards the adoption and implementation of the solution without first securing the intellectual property rights in the proposed solution. This was strategically the wrong approach because improving and testing the proposed solution before securing it comes with the inherent danger of exposure/disclosure to other people who might invariably copy and adopt the solution for their own use to the detriment of both the employee and the enterprise. It is thus always recommended to secure the intellectual property in the proposed solution at the point where research and development reveals a possible solution, then work on improving and testing it once it is secure.”

While finding fault with the employer for not issuing a technovation certificate within the three-month statutory timeframe, the Tribunal also guided employers on the need to secure the intellectual property once an organization begins giving legs to an employee-generated innovation through proof of concept testing. They said: “From our reading of the law; the question whether a proposed solution satisfies the requirements of Part XIV of the Act to entitle an employee to the grant of a technovation certificate is not dependent on whether the enterprise will ultimately use the proposed solution or the proposed solution is complete and immediately implementable. It is enough that what is proposed by the employee is a solution to a specific problem in the field of the industry and relates to the activities of the enterprise, had not been used or actively considered for use by the enterprise and the duties of the employee do not comprise the making or proposing technovations and, if they do, the degree of creative contribution inherent in the technovation exceeds that of which is normally required of an employee having the said duties.”

John’s manager was quite likely unaware of the law requiring that a technovation certificate be issued to John within three months of his request. The implications are now quite dire as John has registered a patent for his innovation and can require the organization to pay him to use the software before they even think of rolling it out to all their branches. Secondly, John can also sell the software in the open market thereby removing the exclusive and financially competitive benefits that it stands to give to the organization. So what have other organizations done to ensure the John situation doesn’t happen to them? More on that next week.

 

X: @carolmusyoka

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