Vodacom and Please Call Me inventor Nkosana Makate are no closer to reaching an agreement over compensation almost two years after a Constitutional Court ruling that Makate must be paid.
Talks between the cellphone giant and Makate have apparently run into overtime because the parties are battling to agree. The matter has now been referred to Vodacom CEO Shameel Joosub for arbitration.
Vodacom said: "Discussions between the parties are ongoing and are in accordance with the steps outlined in the Constitutional Court order."
Makate was only willing to confirm a deadlock. "I can confirm that we are currently seized with the process that is before the CEO." He said negotiations had deadlocked in December.
Neither Makate nor Vodacom responded to questions about the amount of compensation that had been offered. But sources close to the matter said among the reasons for the stalled talks was an offer Vodacom had tabled which was far less than Makate's legal costs, estimated to run into tens of millions of rands.
This put him no closer to the calculations of compensation that Makate and a team of experts he hired to assist in negotiations had arrived at. In 2015 they concluded that about R70-billion in revenue had been generated from Please Call Me and Makate was entitled to between R6-billion and R10-billion in compensation.
The calculation was based on Makate's testimony in court that he had requested 15% of Please Call Me revenue when he entered into a verbal agreement for compensation after giving Vodacom his idea for the SMS service in 2000.
The Constitutional Court upheld this agreement on April 26 2016. It directed Vodacom to enter into negotiations with Makate to determine, in good faith, a reasonable amount of compensation payable to him in terms of the agreement. There was also a clause that enables Vodacom's CEO to arbitrate should talks deadlock.
Jaco Hamman, a partner at Hahn & Hahn Attorneys, said on Thursday that the ruling had clarified the enforceability of an agreement to negotiate in good faith more than an employee's right to claim compensation for an invention offered to an employer.
Negotiations between Makate and Vodacom first deadlocked in December 2016 and early last year Makate sought a declaratory order on the interpretation of the judgment.
But the court dismissed the application on the basis that the judgment was clear.
In court, Makate asserted that Vodacom had the means to calculate revenue generated from Please Call Me.
Another former employee claimed in a supporting affidavit that there were records proving that Vodacom was able to calculate the revenue. Responding last year, the company said it had never treated the service as a revenue generator on its income statement.
Vodacom launched the Please Call Me product in 2001. This was after Makate - then a trainee accountant - approached his superiors with the idea the previous year. At the time, the then head of product development, Philip Geissler, made a verbal agreement to compensate Makate if the idea was feasible and developed further.
When it launched the product, Vodacom gave credit to Makate in an internal newsletter. But it reneged on the promise to pay him for the idea, sparking a legal battle that has dragged on for well over a decade...