Please Call Me’s Makate wants more money than all Vodacom’s YeboYethu shareholders – put together

Please Call Me’s Kenneth Makate wants between R29 billion and R63 billion from Vodacom for sharing his idea with the company when he was employed there.

On 20 November 2000, Makate proposed “Buzz” to Vodacom, a service that would allow a user without airtime to dial a phone number and make a “missed call.”

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

The proposal did not progress beyond an idea. Even skilled engineers at Vodacom could not make it work.

On 15 November 2000, a week before Makate proposed Buzz, Kahn conceived the “Please Call Me” idea. He later patented it on behalf of MTN.

MTN launched its “Call Me” service on 23 January 2001. Vodacom launched its competing service on 15 March 2001.

It was a carbon copy of the MTN service and was even identically named “Call Me”. The name was later changed to “Please Call Me”.

MTN immediately notified Vodacom that it was infringing on their patent. Vodacom informed Makate that MTN already had the service and threatened legal action for infringement.

The well-documented timeline, which includes IP and patent filings, established prior art as Vodacom had yet to publicly disclose and launch its service.

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

However, this did not stop a prolonged court battle between Makate and Vodacom for compensation for his idea.

What is striking is how much money Makate wants. Vodacom has an idea programme called Ideation, which pays up to R1 million for good ideas.

Makate, however, wants anywhere between R29 billion to R63 billion for suggesting his ‘missed call’ idea to his former employer.

When Vodacom offered him R47 million in January 2019, he laughed it off and approached the courts.

He was successful, and the latest court rulings support’s Makate’s claim to 5% and 7.5% of the total voice revenue generated by the Please Call Me product over 18 years, plus interest.

Vodacom has taken the matter to the Constitutional Court, arguing that there are constitutional grants to challenge the previous rulings.

YeboYethu shareholders want to join the case

Vodacom’s black economic empowerment share scheme, YeboYethu, has approached the Constitutional Court to become an amicus curiae in the Please Call Me case.

YeboYethu is Vodacom’s black economic empowerment (BEE) scheme with 80,685 shareholders.

YeboYethu shareholders own a 5.51% stake in Vodacom Group, through YeboYethu Investment Company, worth around R12.5 billion.

This means that Makate wants significantly more for his Buzz idea than the value of all 80,685 YeboYethu shareholders’ shares put together.

YeboYethu warned that if Vodacom was ordered to pay billions to Makate, it would have disastrous consequences for the scheme and its 80,685 black shareholders.

“It will likely be the end of the empowerment scheme, and those black individual investors will forfeit their investments and the opportunity for future earnings,” it stated.

YeboYethu said this would undermine the very basis for the existence of the black economic empowerment scheme.

“Such payment would lead to trigger events for purposes of the preference share arrangements and would commence the demise of YeboYethu and YeboYethu Investment Co,” it said.

YeboYethu also submitted that the core of the matter was what constitutes “reasonable” compensation, as per the Constitutional Court’s original 2016 ruling.

It argued that the terms imposed or construed by the SCA ruling would be contrary to public policy, given that they would lead to the collapse of an empowerment scheme.

“This cannot be construed as ‘reasonable’ in the circumstances. As such, it will be submitted that Vodacom should be granted leave to appeal and its appeal upheld,” YeboYethu stated.

“In essence, Makate should be awarded the CEO’s determination of R47 million or such appropriate amount but certainly not the amount that follows from the SCA majority judgment.”