Recently, the much-awaited judgment in the case of Makate v Vodacom (Pty) Limited [2014] ZAGPJHC was delivered by the South African High Court in Johannesburg. The case revolves around the “Please Call Me” (PCM) service whereby Vodacom allowed its subscribers to send FREE messages to anyone on all South African networks, asking them to call you. The idea behind this nifty service come from a former Vodacom trainee accountant Nkosana Makate who went to court seeking compensation from the telecommunications giant for the idea. In November 2000, the ex-employee had reduced his idea into writing i.e. a memorandum which he presented to his immediate superior, Lazarus Muchenje, for advice on how to go about selling the idea to Vodacom. At the time he thought his idea would have have immediate tangible benefit for Vodacom subscribers but it would also have a massive benefit for Vodacom. Muchenje referred Makate to the then head of product development at Vodacom, Philip Geissler. Thus the thrust of Makate’s case was to enforce against Vodacom an oral agreement in terms of which the Vodacom (which was ostensibly represented by Geissler, as Makate claims) would take and test the idea and if it was successful, pay Makate an amount to be negotiated between by both parties, but which represented a share of the revenue generated by the product that was to be developed based on the idea.
The court, in its judgment, was prepared to accept an agreement with Geissler on the terms alleged by Makate had been concluded. However, the court ultimately held that Vodacom was not bound by the agreement entered into by Geissler since Makate had not shown that Vodacom made any representations as to Geissler’s authority to represent Vodacom in conclude the agreement or, even if it had, that the representations were such that Makate should reasonably have acted upon them. The court also found that Makate’s claim was time barred i.e. the debt claimed by Makate had prescribed in terms of the South African Prescription Act.
This blogpost considers several intellectual property (IP) issues related to this case and possible lessons for Kenyans who come up with creative and innovative ideas within the course of employment.
In the course of the Makate case, the court accepted expert witness testimony stating that Makate’s PCM “idea (and more particularly the business part) was novel and patentable”. Like Kenya’s patent law, the South African Patent Act 57 of 1978 states that only inventions can be patented. The meaning of invention in section 25(1) of the South African Act expressly excludes discoveries and presentations of information. With regard to novelty, both the South African and Kenyan patent law embrace the notion of absolute novelty therefore PCM (assuming it fell within the definition of an invention) would deemed to be new if it did not form part of the state of art immediately before November 2001 anywhere in the world. It is important to note that in addition to the novelty requirement, the requirements of inventive step and utility must be met for an invention to be patentable. However Vodacom does not appear to have contested the testimony of Makate’s expert witness that the PCM idea was “novel and patentable”.
The Makate case also illustrates the limits of copyright protection, in that it protects form and not function. Although it was not in dispute that Makate had expressed his idea in written form i.e. the memorandum, the protection of Makate’s idea only extends to its expression as a literary work. Be it as it may, Vodacom publicly acknowledged Makate as the orginator of the idea expressed in the latter’s literary work in a staff email set in February 2001 and later in Vodacom’s internal newsletter published in March 2001. These public attributions ostensibly addresses any moral rights issues under copyright law that would have been raised by Makate.
Finally, an important issue that cuts across both intellectual property and employment laws relates to the expression “in the course of employment”. In the case before us, Makate was a trainee accountant at Vodacom who develops a business idea in a technical field which falls well outside the scope of his employment. The question arises: if Makate had managed to develop PCM as a product and tested it with Vodacom’s main rival, MTN, could Vodacom claim ownership of the PCM product since it was made in the course of Makate’s employment at Vodacom?
Can Employees Make Money from Ideas Given to Employers: High Court Decision in Makate v. Vodacom South Africa
