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How Nkosana Makate won the Please Call Me case

The matter now shifts to compensation negotiations which won’t likely be staid.

The Constitutional Court’s scathing judgement which ordered Vodacom to compensate Nkosana Makate for his Please Call Me idea, in theory, brings an end to a legal case akin to a David versus Goliath battle.

The case, which was before the South Gauteng High Court, later appealed to the Supreme Court of Appeal (SCA) and now the Constitutional Court, has dragged on for nearly ten years in compensating Makate for the innovation.

However, the nub of the case was a dispute between two parties with an unequal bargaining power – typical of an underdog taking a telecommunications giant to task.

The back story on the case is important to unpack.

It all started with a love affair in 2000 when Makate’s girlfriend (now wife) was a student at the University of Fort Hare in the Eastern Cape and had no money for airtime. A long distance relationship, the lack of airtime and several communication hurdles sparked the idea for Please Call Me, a free service which enables a user without airtime to send a text to be called back.

Makate, a Vodacom trainee accountant at the time consulted his superior and mentor Lazarus Muchenje about Please Call Me, who then advised him to speak to board member and director of product development and management Philip Geissler. Makate’s discussion with Geissler led to the idea being captured in a proposal and concept document.

Negotiations then followed between Makate and Geissler that Vodacom would use the Please Call Me and put the idea on trial for commercial viability. In an oral agreement, Geissler agreed to pay Makate a 15% share of the revenues Vodacom would generate from the innovation if it was technically and financially viable.

Vodacom in 2001 went to market with Please Call Me, which was a game changer for South Africa’s fledgling telecommunications sector.

In a Vodacom internal newsletter and magazine, Makate was praised for his innovative thinking.  It read: “Vodacom has launched a new product called ‘Call Me’, thanks to Kenneth [Nkosana] Makate from our finance department. Kenneth suggested the service to the product development team, which immediately took up the idea… ‘Call Me’ has been a big success.”

Despite its success, Vodacom did not negotiate compensation with Makate. In fact, the then Vodacom CEO Alan Knott-Craig in his autobiography Second is Nothing claimed to have come up with Please Call Me when he observed two security guards from a balcony trying to call each other without having airtime. 

The initial legal dispute for Makate to be compensated began in 2008 and the South Gauteng High Court case, presided by Judge Phillip Coppin, subsequently concluded that Makate had successfully proved the remuneration agreement between him and Geissler.  The court also rejected Knott-Craig’s version of being the brains behind Please Call Me.

However, Coppin dismissed Makate’s claim on the basis that he did not prove that Geissler did have ostensible authority to bind Vodacom in an agreement for compensation.  The court also found that Makate’s claim against Vodacom had expired (a term known in legal circles as prescription documented in the archaic Prescription Act 68 of 1969), as he did not file the claim within three years of Vodacom going to market with Please Call Me. Makate appealed the ruling which was later upheld by the SCA.

Constitutional Court findings

However, at the Constitutional Court, Vodacom’s case went downhill. On Tuesday, Justice Chris Jafta did not mince his words in his majority judgement when describing Vodacom’s actions.

As Jafta puts it: “In not compensating the applicant [Makate]… Vodacom associated itself with the dishonourable conduct of its former CEO, Mr Knott-Craig and his colleague, Mr Geissler. This leaves a sour taste in the mouth. It is not the kind of conduct to be expected from an ethical corporate entity,” said Jafta.

He continued: “The service had become so popular and profitable that revenue in huge sums of money was generated, for Vodacom to smile all the way to the bank. Yet it did not compensate the applicant [Makate] even with a penny for his idea.”

Although the Constitutional Court found that it was neither necessary nor justified to interfere with the factual findings made by the South Gauteng High Court and SCA, it overturned the ruling of both courts.

On the matter of ostensible authority, Jafta found that given Geissler’s position at Vodacom, he “held the power to consider new products.”  “He [Geissler] was not only Vodacom’s front man in its dealings with third parties in relation to new products but… as the evidence suggested, he could make or break any new product.” In this regard, the court found that Vodacom had created the appearance that Geissler had the authority to enter into and reach an agreement with Makate on Vodacom’s behalf.

On prescription, Jafta said it should be interpreted in line with the Constitution. He raised Section 39 (2) of the Constitution which stipulates that any legislation must promote the spirit, purport, and objects of the Bill of Rights. 

The Prescription Act bars anyone from pursuing litigation for a claim after three years has lapsed “from the date on which the debt arose.” Jafta said “debt” must be viewed as an obligation to pay money, deliver goods, or render services.  In the case of Makate he didn’t “ask to enforce any of these obligations.” “Instead, he requested an order forcing Vodacom to commence negotiations with him for determining compensation for the profitable use of his idea.” Thus, prescription does not apply. 

Matter is still on-going

It seems like the matter will be on-going even after the court ordered Vodacom to negotiate “in good faith” with Makate to determine a “reasonable compensation” for his Please Call Me innovation.  But Justice Jafta warns: “they are not allowed to enter into those negotiations just to go through the motions. For that would not be what they have agreed to do but a charade. Both sides must enter into negotiations with serious intent to reach consensus.”  He further ordered Vodacom to commence negotiations within 30 days.

Millions if not billions of rands are at stake here. Makate believes Please Call Me has generated R70 billion for Vodacom since its inception and he wants a 15% cut.  If consensus could not be reached on compensation, then Vodacom’s CEO – Shameel Joosub — must determine the compensation amount.  Vodacom said it is still studying the judgement.

After the judgement, arguments have been raised about whether it will have a bearing on intellectual property rights in South Africa – whether innovations produced belong to the company employing you and forms part of your line of work.  Furthermore, whether being paid a salary constitutes as compensation or whether one should enter negotiations for separate revenue share once the product has been introduced to the market.

Well, the jury is still out.

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There seem to be too many stories of this kind involving Vodacom.
I remember reading in Noseweek about 8-10 years ago of a gentleman from muckleneuk pretoria who had a deal with Vodacom to introduce/distribute a device that allowed users to save and transfer contacts from one device to another device. This was during the time when it was a nightmare to move contacts from one phone to another.
Needless to say, the Vodacom CEO was reported to have “double-crossed” this gentleman who later committed suicide as a result.

Craig Knott invented ‘please call me’….please (unbelievable!)
By observing two security guards on the balcony trying to call each other without airtime! (the bigger the lie the bigger the rewards) So, having come up with the idea, why did the smart CEO allow for the company’s brochure to accredit the idea to Mr. Makate (unbelievable!) and by the way, did Craig (Am not smarter than a 5th Grader) Knutt interview the security guards over the balcony? And how did he know they did not have airtime! (defies believability). And just so I get it, did Craig check each of the guys phones to be certain they had airtime? And how did he know they were trying to call each other? People should ask their money back on his book and or sue the publisher and him for this bold faced lie. Completely dishonourable lad.

Whenever an individual is associated with something successful it seems the individual can get away with anything. Or at least, people seem to not care to verify the stories about/around the individual.

Another case is about Steve Jobs. Until I read Steve Wozniak’s book “iWoz” I had always believed that the company was started in a garage (which Wozniak said is NOT true) and that Jobs designed the first Mac (which Wozniak said is NOT true); Woz designed and made the Hardware that was to become the basis of Apple Inc. We don’t even have to talk about Jonathan Ive, in reference to Apple Inc’s designs attributed to Jobs.

Keep in mind, this book was written while Jobs was still alive (meaning he could have disputed Wozniak’s version) and Wozniak even asked Jobs for a foreword for the book to which Jobs declined or “did not have time for”.

Well done to Nkosana Makate. It’s taken a long time and his determination is to be admired. I only hope that Vodacom does not try to deny him a fair and equitable settlement.

Don’t be fooled, Vodacom is “knott” the only company which takes advantage of their position of strength knowing full well very few individuals will/do challenge them the way Nkosana Makate has.

Someone in the media please interview Knott-Craig and ask him if he REALLY invented Please Call Me. I want to hear how he defends his little “misstatement of facts”.

Since when is unethical (not nice thing ) illegal?

Since when is a “This leaves a sour taste in the mouth” cause for compensation. Yes Vodacom should have provided a meaningful reward but the plaintiffs 15% is just plain greed.

Seems the CC just makes things up to suit itself to satisfy the populist view.

The dissing of the prescription perid looks contrived. CC were imho going all out to get a favourable populist verdict.

Our much vaunted CC is worth squat. The zuma saga is a case in point. Here the CC even gave zuma a way out in stating that he (z) may have been poorly advised. What benefit have the citizens of SA got out of the CC on zuma? A few million paid back aka nothing.

What percentage would have suit you?
By the way, it was AGREED…”In an oral agreement, Geissler agreed to pay Makate a 15% share of the revenues Vodacom… ”

“Seems the CC just makes things up to suit itself to satisfy the populist view.”
What “things” are you talking about?
What is/was the “populist view” in this case?

What in your “imho” would be the right “prescription period”?

“Our much vaunted CC is worth squat.”
What worth in particular are you referring to?

About Jacob Zuma, it was stated that ignorance of the law or bad advice (something to that effect) is NOT an excuse.

The whole capitalist system is built on Gordon Gekko’s mantra of “Greed is good”. I think the guy is being lenient about the 15% thing. He should have gone for 50% straight-up. Given half the chance, any aggrieved corporate entity goes for the maximum they can get, so why not individuals?

This whole saga will end up with everyone being a loser. Nobody is going to be any richer except for the lawyers and the courts (who collected legal fees for appeals etc.)

Isn’t the remainder 85 percent, for something that you didn’t come up with, not also greed?

Oh please! Not nice is UNETHICAL – a concept you don’t seem to value. At least the court did!

Most companies in the IT industry now make it a condition of employment that any invention made whilst in their employ, belongs to them. That is why they pay you a salary to be innovative and make money for the company. In this case the claimant was an accountant and the idea had nothing to do with his employment contract. It is time for Vodacom to pay him his R10 billion and stop crying.

History tells us, David did Win against Goliath…. Vodacom must accede defeat….

I don’t see how you can quantify or prove how much money Vodacom has made out of the idea? Unless it is measured by the adverts that accompanies the please call me SMS.

Quite clearly by the amount of money that is generated by the number of “please call me” messages, which is VERY easily and readily quantifiable. Think!

i have made a few expensive mistakes in my time….but Mr Geissler might have made the most expensive mistake of all time.

It will not be an easy negotiations for Mr Makate. I have a feeling that Vodacom’s lawyers will contact MTN’s lawyers since MTN owns the Patent on the Please Call Me product. (News 24.com once had an article that a Mr Arik Kahn who was a data analyst at MTN patented the PLEASE CALL ME product in Jan 2001 then MTN was the 1st company to roll it out then 6weeks later, Vodacom rolled it out).

Now after Vodacom contacts MTNs lawyers they will agree to a royalty which they will pay MTN and Mr Kahn. They will also then offer Mr Makate a very small amount. Once he objects and goes back to court then the new court case will centre around who owns the patent. It will all come full-circle in the end. It surprises me why MTN is keeping quiet although they own the patent rights in the 1st place.

It seems that MTN will wait for Vodacom to do all the quantification work, then will step in with a claim at the end.

That’s tenacity! Congrats Mr Makate – hope Vodacom BLEEDS.

It would seem to me that Mr. Makate and his lawyers must eat this Elephant one piece at a time. First, Vodacom, and the judge told them to not enter negotiations in bad faith…they must go in there to make a serious offer. I suspect Mr. Makate and his team want 15% plus interest over that long period and court costs. Vodacom can’t come up with 5%, this is not labour negotiations with National Union Mine Workers (sweetheart union).
Then the next bit, having established ownership of the idea (its provenance) is to go after MTN and any other for first, paying for using and benefiting from the idea. Then suing them for stealing the idea and patenting it under false pretenses as theirs. For have we (the court rather) not established that Mr. Makate founded the idea (rather came up with it?) We have. So, how will MTN claim to own the patent? It is almost implausible…it will help if patent rights and intellectual property specialists can weigh in here, to expand our understanding and knowledge.

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