Kenneth Makate wanted up to R126 billion from Vodacom

Court papers revealed that Kenneth Nkosana Makate wanted up to R126 billion from Vodacom for suggesting an idea similar to the Please Call Me service.

The story started on 20 November 2000, when Makate proposed “Buzz” to Vodacom. The proposal was for a service allowing users without airtime to make a “missed call”.

Makate’s proposal was not technically possible since a call could only mature to a ringing state if the user had credit.

Consequently, the proposal did not progress beyond an idea. Even skilled engineers at Vodacom could not reduce it to practice.

Shortly before Makate’s proposal, Ari Kahn, who worked at MTN at the time, conceived the Please Call Me idea.

Kahn briefed attorneys on 16 November 2000 to prepare a patent application for filing for a ‘Call Me’ service.

After MTN successfully filed for IP protection on 22 January 2001, it launched its “Call Me” service on 23 January 2001.

Seven weeks later, on 15 March 2001, Vodacom launched a carbon copy of the MTN service, which was even identically named “Call Me.”

MTN immediately notified Vodacom that it was infringing on their patent. Vodacom changed the name to “Please Call Me” as part of the legal wranglings.

Vodacom also informed Makate that MTN already had the service and threatened legal action for infringement.

In 2019, Vodacom admitted that Please Call Me was invented and subsequently patented by MTN before Makate came up with the idea.

Kahn highlighted that Vodacom would have launched Please Call Me whether Makate came up with the Buzz idea or not.

He said Makate was not the originator of Please Call Me, adding that the courts never once ruled he invented the service.

As such, Kahn believes Makate should get no more than one cent for his Buzz idea. “Makate is literally entitled to a ‘penny for his thought’,” Kahn said.

Makate’s battle with Vodacom

Makate believed he deserved compensation from Vodacom for his Buzz idea, as it was promised to him by the former product development head, Philip Geissler.

He started legal proceedings in 2008, claiming compensation for a business idea that led to the development of the Please Call Me service.

In April 2016, the Constitutional Court of South Africa ordered the parties to negotiate in good faith and agree on a reasonable compensation amount.

Negotiations failed. Following the Constitutional Court order, Vodacom CEO Shameel Joosub offered Makate R47 million on 9 January 2019. Makate rejected this offer.

He brought an application to the High Court for judicial review against the CEO’s determination and award.

In 2022, the High Court set aside the CEO’s determination. Vodacom appealed against the judgment.

However, the Supreme Court of Appeal supported the High Court ruling and entitled Makate to a minimum compensation amount of R29 billion.

“The impact of the Supreme Court judgment, should it be upheld, would be vast and wide-ranging on both Vodacom South Africa and Vodacom Group,” the company said.

“It would negatively impact our employees, shareholders and Vodacom’s contribution to public finances.”

“It would also impact our network investment, coverage, and social programmes,” Vodacom added.

On 27 February 2024, Vodacom applied for leave to appeal the SCA’s judgment and order to the Constitutional Court.

In August 2024, Vodacom announced that the Constitutional Court would hear its application for leave to appeal.

This hearing was in tandem with its appeal against the recent Supreme Court of Appeal judgment.

Kenneth Makate wants up to R126 billion from Vodacom

Court documents revealed that Makate claimed compensation of between R29 billion and R126 billion for handing his Buzz idea to Vodacom in November 2022.

Vodacom said Makate’s proposal for compensation was a revenue share model looking backwards after 18 years.

Vodacom argued that Makate is not entitled to compensation for his idea as long as it provides a Please Call Me service.

According to the High Court and SCA rulings, Vodacom is ordered to pay Makate somewhere between R29 billion and R55 billion.

To put these figures into perspective, the court believes it is fair for Makate to be given enough money to buy Telkom, Cell C, and Rain and have cash to spare.

Therefore, the court believes that handing Vodacom an idea that could not be implemented is worth more than most large telecommunications companies in South Africa.

Simply put, the ruling is ludicrous. Kahn highlighted, “You cannot invent an idea, which is all he proposed.”

Makate did nothing more than propose an idea. He did not build anything, offer a service, or commercialise Please Call Me.

Vodacom’s Ideation programme allows employees to pitch their ideas to the company. The best ideas receive compensation of up to R1 million.

This means that if his idea was workable, Makate would have received R1 million in normal circumstances.