Ray Mahlaka
4 minute read
26 Jan 2017
3:45 pm

Vodacom is still committed to Please Call Me compensation

Ray Mahlaka

However, the company rejects revenue share as the only basis to determine compensation for inventor Nkosana Makate.

Telecommunications giant Vodacom is still prepared to negotiate with Please Call Me inventor Nkosana Makate on whether to compensate him a share of revenue that the service has generated.

This emerged from Vodacom’s affidavit filed on Tuesday in response to Makate’s latest application at the Constitutional Court, which seeks clarity on last years’ groundbreaking order that compelled the company to enter into in good faith compensation negotiations with him.

A fresh battle is heading to the Constitutional Court again, as compensation negotiations between Makate and Vodacom have deadlocked.  Makate has accused Vodacom of trying to renege on its obligation to pay him for the Please Call Me invention.

Vodacom’s chief legal and regulatory officer Nkateko Nyoka in court papers says the company has “at all times” acted in good faith and sought to keep Makate at the negotiating table.

“Vodacom had hoped that by acting in this manner, negotiations would commence and lead to a settlement in which both Vodacom and Mr Makate would agree to an appropriate amount or a model for determining reasonable compensation…,” says Nyoka.

Correspondence for compensation negotiations to begin between Vodacom and Makate’s attorneys Stemela & Lubbe Attorneys began two weeks after the Constitutional Court’s ruling in April last year, which was scathing of Vodacom’s refusal to credit Makate for the Please Call Me invention.

Vodacom’s negotiating team included its chief human resources officer Matimba Mbungela, chief financial officer Dr Till Streichert and an expert from Germany, who specialises in compensation for employee innovations.

After several meetings between both parties that initially began in September last year, talks have since stalled as Makate claims that Vodacom challenged the interpretation of reasonable compensation and delays in the company producing its records to determine the revenue that the innovation generated since its launch in 2001. Read more here.

Vodacom’s position

The company argues that it’s open to considering other compensation methodologies to arrive at a reasonable compensation amount as opposed to Makate’s demand for a share of Please Call Me revenue.

It also argues that Makate’s interpretation of the Constitutional Court’s order is incorrect. “There’s nothing in the wording of the order which stipulates, or even suggests, that Vodacom is obliged to pay Mr Makate a share in the revenue, or that the precise share in the revenue is to be determined by the negotiations or, if necessary, by Vodacom’s CEO,” Nyoka says in court papers.

Vodacom opposes the application on the basis that the Constitutional Court’s order is “clear and unambiguous” when it comes to Makate’s compensation and that the court has no jurisdiction to revisit or amend its final order delivered in April. On the latter, what Makate seeks through the application “would offend against the principle of finality in litigation.”

Makate’s application might harm the prospects of achieving an agreement for a reasonable compensation, Nyoka argues.

Makate wants 15% of the revenue generated by Please Call Me since its inception, which he estimates to be in millions. He invented Please Call Me in 2000 while working as the company’s trainee accountant. What followed was a nearly 16-year long dispute for Makate to be compensated for the invention, which allows a cell phone user without airtime to send a free message requesting to be called back.

Please Call Me was a game changer for South Africa’s then fledgeling telecommunications sector, as it would increase traffic to mobile operators.

Vodacom says it’s difficult to determine the revenue generated as the invention was never treated in its income statement as a revenue generated product. However, costs associated with Please Call Me were treated with Vodacom’s other associated costs incurred for running other services.

It also says it’s unclear which calls were induced by a Please Call Me message and which were not – making it difficult to determine what does and doesn’t qualify as revenue generated by the invention.

Vodacom is open to Makate’s team accessing its records and systems provided it agrees that: the company is satisfied with the identity and pedigree of Makate’s expert, its records will be protected for competitive reasons and strict confidentiality measures are in place when it comes to Vodacom’s subscribers.

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