Fintech in South Africa has undergone significant growth over
the last three years or so.
The majority of fintech start-ups provide payments and money
transfer services, with the rest of the market roughly divided
between trading, investment and crowdfunding; blockchain and
Bitcoin; and lending, financing and retail banking services.
While there is no specific fintech regulation, contrary to
popular belief, a number of Fintech activities are, or soon will
be, regulated. For instance, a number of provisions regulating
anti-money laundering already apply to fintech businesses, as do
cyber security and data privacy laws.
As regards IP, many believe that it can be onerous to legally
protect fintech inventions, such as apps and other software-related
inventions. However, this isn’t necessarily true, and there are
a number of IP tools, such as patent protection, copyright and
trade mark registrations, that can help protect your fintech ideas
and prevent future legal battles.
Patents: novelty is key
Patents protect new inventions and typically give the owner the
right to exclude others from making, selling, using, or importing
the invention without the authorisation of the owner. The invention
does not need to be a physical object – you can also obtain
patent protection for a method or process.
The most important element of patenting an invention is novelty
– an invention must be new. This is true for any type of
invention (not only fintech innovations). If you have a potentially
patentable invention, it must be kept secret until a patent
application has actually been filed. This means that the invention
must also not yet have been disclosed to the public by the inventor
or anyone else. If you have to disclose the invention prior to
filing, be sure to have a confidentiality or non-disclosure
agreement in place.
In addition to novelty, there is the “inventive step”
requirement, also known as non-obviousness. The distinguishing
feature of your invention, or the “newness”, must be a
step forward and not be obvious to someone skilled in that
In terms of apps and software-related inventions, it is
important to note that certain types of inventions are simply not
patentable, even if they can be seen as new and inventive. In many
countries, including South Africa, this includes computer programs
and business methods as such. The words
“as such” are very important here. This essentially means
that if your invention falls solely within an excluded area, for
example, if the inventive part of your invention lies only in the
new software you have developed, it will not be patentable. But if
your invention includes one or more inventive technical features
that go beyond the excluded area, it may be patentable.
For example, if your invention is used to implement a new mobile
banking security process that solves a technical problem
encountered when using existing systems, or if your invention
improves the efficiency of a mobile banking system, it may well be
In many countries, software must produce a so-called
“technical effect” in order to be patentable and must be
more than a mere abstract idea. Examples of a technical effect may
that be the invention reduces memory requirements, speeds-up
processing, results in enhanced control over something physical, or
improves signal reception or decoding. If you are taking a known
business process and simply implementing it by way of an app, your
invention would not typically be patentable.
The laws and regulations governing the patentability of apps and
software-related technologies differ from country to country and
can be an important factor in determining an international
protection strategy if you intend trading outside of your home
Copyright: who is the owner?
The second element which can be important to secure protection
for new technology in the fintech space is copyright.
Copyright is one of the more abstract forms of IP rights as
there is usually no formal registration process and it comes about
automatically upon the creation of a new work, regardless of its
inventiveness or novelty.
Copyright legislation in many countries specifically mentions
the protection of “computer programs”, which essentially
refers to protection of the source and/or object code in a software
invention or app.
Ownership rules around copyright are critical and specific
exclusions and formalities apply to software type inventions. The
ownership may, for instance, vest in different people or entities
depending on whether the creator is under a contract of employment
or acting as a consultant.
In South Africa, the general rule is that the author of a
copyrighted work is the first copyright owner. According to the
definition section of the Copyright Act, 1978, the
“author” of a computer program is the person who
exercises control over the making of the computer program. However,
if a computer program is created in the course of the author’s
employment, the author’s employer owns the copyright. Clearly,
this can be rather technical and the rules and application may
differ slightly from jurisdiction to jurisdiction.
The existence, ownership and commercialisation of copyright is
generally dealt with under specific IP agreements. It is therefore
extremely important to make sure that software development
agreements clearly deal with all relevant IP aspects, particularly
the ownership and assignment of copyright.
Trade marks: protecting your brand
Trade marks also have an important role to play in the
protection of fintech products and platforms – think high
profile brands like MPESA, BANK ZERO, JUMO, YOCO, LUNO, MONZO,
MONESE, STARLING BANK, CLEO and CURVE. In an increasingly crowded
marketplace, a brand or trade mark plays a critical role in
distinguishing one service offering from another. Logos or icons
become instantly recognisable on phones, websites and other
platforms and are important in attracting consumer attention as
well as growing the reputation of the product offering. The value
of the brand often outgrows the value of the underlying technology,
which can be transient in the fintech space.
Words, logos (static and non-static) and sounds can all
conceivably be used as trade marks and be registered. Given that
the device screen is the window to the product, this interface must
receive particular attention both from a design and trade mark
registration perspective. The purpose of registering a trade mark,
often a company’s most valuable asset, is to obtain a monopoly
in it and to assist with the enforcement of the rights in the trade
ENSafrica has deep multidisciplinary expertise in the fintech
space, not only in terms of IP advice, registration and
enforcement, but also with various other nuances in this specialist
field including finance and technology. We are ideally situated to
guide you through this (in many cases) unchartered territory,
including navigating the complex regulatory environment in
cross-border matters that require innovative solutions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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