Mogale City local municipality is likely to face a massive lawsuit for allegedly stealing IT software from a service provider they fired 22 months ago. Photo: Stoyan Nenov

Johannesburg - Mogale City local municipality is likely to face a massive lawsuit for allegedly stealing IT software from a service provider they “fired 22 months ago”.

Initially, the municipality tried to approach the North Gauteng High Court in Pretoria asking it to rule that the IT software produced by BIQ actually belonged to them.

The Star understands that lawyers of the municipality wrote a letter on October 23, 2012 to Quill Associates, owners of BIQ, indicating that the municipality would seek an interdict preventing BIQ from entering the municipal building.

In that letter, the municipality claimed the software belonged to it.

The municipality served Quill notice requesting a final interdict in January last year.

In the interdict, they also requested that the court declare the municipality owners of BIQ.

The company’s owner, Danie van Heerden, told The Star their lawyers had prepared answering affidavits, but Mogale municipality chose not to continue with the case.

He said his firm insisted that the matter should go on trial and a hearing took place in May.

On June 19, the court ruled in Quill’s favour and allowed it to remove its software from the municipality.

Detailing his reasons in his judgment, Acting Judge LI Vorster said the court application was founded on the essential allegation that the Mogale City local municipality was the owner of the ERP System or BIQ system.

Judge Vorster said Mogale City’s case in their founding affidavit was that it acquired the BIQ system from the West Rand district municipality under Mpho Nawa.

Mogale City is part of the district municipality along with Westonaria and Randfontein local municipality.

“It is common cause that Quill Associates sold to the district municipality a computer and computer system for the purpose of conducting the business of that council, and that the system was delivered and implemented by the district.

“The contract to that founding affidavit specifically stated in clause 9 thereof that all intellectual property rights, including patent, trade mark, copyright and trade secret rights in and to the system and associated documentation and all copies thereof will remain the property of Quill Associates.

“Clause 7.1 of that agreement provided that Quill Associates granted the district municipality a non-exclusive, irrevocable, personal and non-transferable licence for the system which entitled the district to:

* Use the system on the computer.

* Make and retain only one copy of the system in machine-readable form for back-up purpose.

* Use the system documentation in support of the needs of the district as regards the system.

In his ruling, Judge Vorster said it was clear the system was sold by Quill Associates to the district as a computer program system to which the district acquired the right to use it, subject to the payment of licence fees and payment of the support and maintenance obligations.

“But the ownership and propriety rights of the program remained Quill Associates and that the district was not, in terms of the contract, entitled to alienate the system to anybody else.”

Judge Vorster said there was no substance to Mogale City’s claim that the district had set aside R3.5 million for it to implement the BIQ system.

“The fatal fallacy in Mogale City’s case is that it assumes that the funding awarded to it by the district in respect of the implementation of the BIQ system vested it with ownership.”

Judge Vorster also dismissed Mogale’s application for leave to appeal. The municipality has now petitioned the Supreme Court of Appeal in Bloemfontein to reverse the ruling.

On Sunday, Van Heerden said the municipality was still refusing to allow him to remove his system. He said he planned to file a lawsuit against the municipality after their appeal application.

Van Heerden was likely to sue for more than R15m, plus interest at 15.5 percent.

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The Star