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Vodacom 'surprised' by 'Please Call Me' ruling

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 17 May 2016
Vodacom CEO Shameel Joosub says the 'Please Call Me' matter "is being dealt with as a priority".
Vodacom CEO Shameel Joosub says the 'Please Call Me' matter "is being dealt with as a priority".

Vodacom was surprised by the 'Please Call Me' ruling handed down by the Constitutional Court last month.

Speaking to ITWeb, after the group's financial year-end results presentation in Johannesburg yesterday, Vodacom CEO Shameel Joosub said negotiations with Kenneth Nkosana Makate "should start anytime now" to determine compensation for the 'Please Call Me' idea.

"The Constitutional Court overturned the decisions of both the Supreme Court and High Court, so yes, we were surprised. But I think the important thing is to move forward. We will abide by the Constitutional Court ruling and we have put a team in place to negotiate with Mr Makate to try to find a reasonable outcome."

On 26 April, SA's highest court ruled in favour of the former Vodacom employee, finally ending a legal saga that has been dragging on since 2008.

The Constitutional Court ordered Vodacom to start negotiations "in good faith" with Makate within 30 days of the judgement, to determine "a reasonable compensation payable to him" for coming up with the lucrative idea.

"It is regrettable that we have ended up in this situation. For our part, we are committed to a swift resolution in line with the ruling of the Constitutional Court."

Joosub says Vodacom has already initiated a process for negotiating a reasonable compensation for Makate and the matter "is being dealt with as a priority".

However, Vodacom CFO Till Streichert says the company cannot yet determine the amount payable to Makate and has not so far made a provision for the cost.

He notes the operator regards the compensation matter as a "contingent liability" in terms of its financials, but both parties need to negotiate in good faith to arrive at a reasonable settlement.

"At this stage, we cannot determine what this amount is going to be and we equally cannot pre-judge the outcome of the process," Streichert told analysts and media during the group's financial year-end results presentation.

15-year battle

The 'Please Call Me' matter goes as far back as 2000 when Makate, then a trainee accountant at Vodacom, said he first came up with the idea. At the time, he was in a long-distance relationship with his girlfriend, now his wife, and he said the concept arose because he was sometimes not sure whether she was out of airtime, or just didn't want to talk to him.

He took the idea, of a way to send a request asking someone to call you even if you were out of airtime, to Vodacom's then director of product development and management, Philip Geissler.

"The applicant and Mr Geissler negotiated and agreed that Vodacom would use the applicant's idea to develop a new product which would be put on trial for commercial viability. If the product was successful, then the applicant would be paid a share in the revenue generated by it," the Constitutional Court ruling reads.

"Although the applicant had indicated he wanted 15% of the revenue, the parties deferred their negotiations on the amount to be paid to the applicant for a later date. However, they agreed that in the event of them failing to agree on the amount, Vodacom's chief executive officer would determine the amount."

The ruling also stated "it is common cause that this product has generated revenue amounting to billions of rands".

After subsequently leaving Vodacom and receiving no compensation for the idea, Makate began his legal battle in 2008. In July 2014, the South Gauteng High Court found Makate had proven the existence of a contract. However, the High Court ruled Vodacom was not bound by that contract because Geissler did not have authority to enter into any such agreement on the company's behalf.

The High Court and the Supreme Court of Appeal also later turned down Makate's application to appeal the decision. However, the Constitutional Court in September 2015 heard Makate's appeal in this regard and on 26 April 2016 set aside the High Court's previous decision and replaced it with an order that Vodacom negotiate with Makate in terms of compensation.

The Constitutional Court ruled Vodacom was bound by the agreement concluded by Makate and Geissler.

Former Vodacom CEO Alan Knott-Craig previously claimed he invented the concept himself while watching two security guards trying to communicate via missed calls.

"Despite the product being a success, Vodacom did not negotiate compensation for the use of the applicant's idea. Instead, as the High Court later held, Messrs Knott-Craig, Vodacom's CEO, and Geissler created a false narrative pertaining to the origin of the idea on which the 'Please Call Me' product was based," the Constitutional Court ruling reads.

"They dishonestly credited Mr Knott-Craig with the idea and this lie was perpetuated in the latter's autobiography."

The court also pointed out the fact that Makate was the inventor of the idea was also acknowledged in a number of Vodacom newsletters around the time and in e-mails sent to employees commending him for the idea.

Joosub says he thinks it is important to note that in resolving this matter, "Vodacom will be guided by our values of encouraging innovation among all of our employees".

"Our success and evolution as a technology firm is built on the constant energy and enthusiasm and great ideas of our employees and our partners. Vodacom respects the Constitutional Court ruling and we will start discussions with Mr Makate to agree to reasonable compensation," he says.

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