Vodacom Please Call Me case back in court — idea-man wants billions
The Supreme Court of Appeal is hearing arguments in the latest round of the “Please Call Me” battle between Vodacom and Kenneth Nkosana Makate.
The hearing in the Bloemfontein court kicked off at 10:00 on Tuesday, and is scheduled to conclude at 14:00.
Judgement is expected to be reserved and delivered a few months after the hearing, provided there are no postponements.
Vodacom’s appeal is the latest in a winding legal journey from the High Court to the Constitutional Court, then back to the High Court and Supreme Court.
Makate sent his first letter of demand in 2007 and launched legal action against Vodacom in 2008. He and Vodacom have been embroiled in a legal battle for over 15 years.
Judge Wendy Hughes ruled in April last year that Vodacom could appeal her order against the R47 million the company had offered Makate in compensation.
Hughes had originally ruled that Vodacom CEO Shameel Joosub used the wrong model to determine the compensation and ordered that he recalculate it.
This was after the Constitutional Court had ordered Vodacom and Makate to negotiate in good faith to determine a fair amount to pay for the idea.
It also ordered that if the negotiations deadlock — which they did — Vodacom’s CEO would act as the tie-breaker and must come up with a “reasonable compensation” amount.
Vodacom explained that Joosub considered four different models that could have been used to determine Makate’s compensation. These models yielded the following figures:
- R51.5 million
- R21.8 million
- R42.2 million
- R38.1 million
The R47 million offer is the average of the two most favourable outcomes for Makate — rounded up to R47 million.
However, Makate has claimed that he is entitled to anything from 5% to 15% of the revenue Vodacom generated from Please Call Me, which has been reported as anything from R9 billion to R110 billion.
To put that in context, Vodacom’s entire market cap is just under R250 billion, and it spends around R1 billion per year just on batteries to keep its network online during load-shedding.
Shameel Joosub, Vodacom CEO
Who’s Idea Is It Anyway?
According to internal Vodacom emails, Makate pitched his idea to “buzz” someone else’s phone without airtime to a superior on 21 November 2000. He was working as a Vodacom finance manager at the time.
His idea was ultimately developed into Please Call Me, which launched on the Vodacom network in January 2001. Crucially, a manager promised him compensation despite not being authorized to.
There is some dispute about this timeline, as MTN says it was first to market with its “Call Me” product on 23 January 2001.
It claims Vodacom launched a carbon copy of its service on 15 March 2001, also naming it “Call Me”. Vodacom only changed the name to “Please Call Me” later.
Call Me patent holder Ari Kahn said he came up with the idea in November 2000 and briefed attorneys to prepare a patent application for filing.
The patent was filed on 22 January 2001, and MTN launched its product a day later.
When Vodacom launched its product, MTN immediately notified Vodacom that it infringed on its Call Me patent, which had been filed a few weeks earlier.
While there were a few heated exchanges between the two companies, MTN curiously decided not to enforce its patent rights.
A source told MyBroadband that during these heated exchanges, one of Vodacom’s principal investors at the time, The Rembrandt Group (through VenFin), jumped in.
The Rembrandt Group, which was founded and run by the Rupert family, had the same legal counsel as MTN — Spoor and Fisher.
The powerful Rembrandt Group used its influence to convince MTN and Spoor and Fisher to drop the case.
When MyBroadband asked MTN about this, it said it didn’t want to get into a protracted patent fight at the time.
“Patent law is extremely complex, and MTN was not inclined to enter into a drawn-out litigation on this service that aimed to keep South Africans in contact,” a spokesperson told MyBroadband.
Spoor and Fisher said they could not comment substantively on the matter.
Despite Makate’s legal action, Vodacom refused to admit that MTN was actually the original inventor of the Please Call Me idea until 2019 — after the Constitutional Court ruling.
Therefore, this argument was never presented for the court to consider.
MyBroadband asked Vodacom for comment, but the company indicated it couldn’t say much until after the judgement was delivered.
“Vodacom confirms that its appeal — on the Please Call Me dispute against the judgment and order of Justice Wendy Hughes in the North Gauteng High Court — is due to be heard in the Supreme Court of Appeal (SCA) in Bloemfontein today,” it stated.
“Vodacom awaits the SCA’s decision in this regard.”
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