MTN, Standard Bank face legal battle

Candice Jones
By Candice Jones, ITWeb online telecoms editor
Johannesburg, 12 Apr 2010

Two of SA's largest companies, MTN and Standard Bank, face legal action for possible patent infringement with the joint-venture application Mobile Money.

In what may become a new David and Goliath saga, small business, 3MFuture Africa, has filed legal action against the two businesses, and will press for a claim for between half a million to a billion rand, depending on the outcome of the action.

Head of 3MFuture, Wolfram Reiners, says the companies have been using its patented technology in the Mobile Money venture, which has seen significant take-up in several African countries, the highest being in Ghana.

Reiners says that in early 2001, Standard Bank enlisted the company to produce a payment system that would allow secured credit card transactions. The technology itself, however, was only granted the patent in 2003.

After several discussions, with several departments, Reiners says Standard Bank requested a full proposal for the technology. “After we sent the proposal, we didn't hear from them again.”

He says before the discussions with Standard Bank, he had been in discussions with another of SA's big four banks, Absa, more specifically with then Absa group executive director, Santi Botha.

Botha subsequently took up the same position with MTN.

MTN and Standard Bank later entered into a partnership and released the Mobile Money product in 2005. Reiners says after heavy investigation with patent lawyers, 3MFuture confirmed the patent had likely been infringed and decided to take the matter to court.

“First we have called for an interdict on the use of the technology, and then we will have an enquiry into the infringement. From there we may claim on royalties, depending on how many customers are using the product and how much profit the companies have made from it,” he notes.

He says the legal action has taken some time to put together, and that is why the lawsuit will only take place five years after the product was first launched. “It took time to establish whether there was an infringement. Also MTN and Standard Bank are large corporations with large amounts of money, and they will fight this with all they have. We had to be prepared for a vigorous case,” he adds.

MTN and Standard Bank have confirmed they have been called to court. “MTN can confirm that we have received a summons from the said party. The matter is receiving due consideration,” says Theko Mabona, MTN group senior legal counsel.