Please Call Me (PCM) inventor Nkosana Makate is expected to this time around be offered more for his Please Call Me invention, after the Supreme Court of Appeal on Tuesday ordered that cellphone giant Vodacom had to within 30 days make a new offer to Makate.
This must be based on a supplier contract with Makate of 18 years, and not five years, on which Vodacom earlier based its calculations.
Makate earlier asked for the compensation to be calculated over 20 years, but he said he would accept 18 years.
The court ordered that Vodacom chief executive Shameel Joosub’s determination of a reasonable compensation to Makate of R47 milion (based on a five year contract) – made in 2019 – be set aside.
The court further ordered that the matter be remitted back to Joosub to determine the amount of a reasonable compensation due to Makate, based on the fact that Makate had a contract with Vodacom for 18 years.
In terms of the SCA judgment, the new award due to be made by Vodacom must take into account the time value of money, calculated at an average inflation rate of 5% from March 1, 2001 to February 28, 2019.
In 2022, Judge Wendy Hughes also ordered that the matter had to be referred back to Vodacom to recalculate how much was due to Makate. She, however, gave several guidelines in her judgment which Vodacom had to bear in mind when it did its new calculations.
Vodacom subsequently turned to the SCA as it felt that its original offer of R47m was fair. It, however, also lost this round to have its offer enforced.
Makate worked for Vodacom as a trainee accountant. In 2000 he came up with a brilliant idea: a cellphone user with no airtime could send a request to another user with airtime, to call the former.
Based on this idea Vodacom developed the PCM product. It turned out to be a resounding success.
However, Vodacom refused to pay Makate anything for his idea. In 2008 he sued Vodacom in the high court, which was followed by long litigation.
In the end, Vodacom made him a R47m offer, which he refused.
Makate insisted that his invention was worth at least around R10 billion.
One of the issues before the SCA was whether Makate was entitled to a percentage of the revenue earned from PCM.
In his judgment, Judge Ashton Schippers commented that Vodacom would never have launched the PCM service unless it was financially viable.
“PCM was, by Vodacom’s own admission, a triumph and contradicts the CEO’s muted description of it as a ‘good idea’ that would ‘benefit customers’,” the judge said.
He said the CEO ignored Vodacom’s newsletter – quoted by the Constitutional Court when the matter served before it, which states: “’Call Me’ has been a big success. On the first day of operation about 140 000 customers made use of the service.”
Given the success of the PCM service – all of which would have been known to a CEO in 2001, it is extremely unlikely that the contract would have endured for five years at most. The CEO’s claim that a tenure of five years is “generous” (when he offered the R47m), does not even arise, Judge Schippers remarked.
Logic and business sense dictate that after the launch of PCM, and as it continued being offered as a free service, Vodacom would have continued to monitor the success of the PCM service, he said.
If it was not commercially viable, it would have been discontinued. In light of the obvious success of the PCM service, it would have been irrational for Vodacom to terminate it after three (or five) years, he added.
“What all of this shows is that the CEO’s determination as to the duration of the contract is unreasonable and patently inequitable,” the judge said.
There is no reason why Makate should be content with a contract for only five years, he said. “The commercial viability of PCM is a proven fact. It is common ground that Vodacom has used the PCM service for more than 20 years and continues to do so.
“Mr Makate has stated that he is willing to accept a contract duration of 18 years. That, I think, is both reasonable and fair,” the judge said.
“It follows that this issue must be remitted to the CEO for him to determine,” the judge said.
“Although Makate sought in the high court alternative relief to the effect that the total revenue of the PCM product be determined by a new referee, he could have no objection to remittal to the CEO as the issue is one of pure calculation,” the judge said.