In a recent landmark judgment, the Supreme Court of Appeal (SCA) resolved a long-standing dispute between Kenneth Makate and Vodacom over compensation for the invention of the Please Call Me (PCM) product.
The SCA dismissed the appeal in the Gauteng Division of the Pretoria High Court, setting aside the previous order and replacing it with a new compensation award against Makate.
The dispute stems from an April 2016 Constitutional Court order that mandated negotiations between Makate and Vodacom to determine reasonable compensation for PCM inventions. .
In the event of an impasse, Vodacom's CEO was instructed to determine the appropriate amount of compensation. However, negotiations broke down and Makate challenged the CEO's decision in the High Court.
At the heart of the issue was the interpretation of the Constitutional Court's order and the CEO's power to determine remuneration.
The SCA reviewed South African and international case law and highlighted the standards of review that apply to assessment decisions.
Although the CEO's decision was not subject to the provisions of the Administrative Justice Promotion Act, a court may modify an assessment that is tainted by unfairness or inequity.
The SCA agreed with the High Court's finding that the CEO's assessment was unfair.
However, the High Court noted that it was unable to assess whether the final compensation amount was manifestly unfair.
The court found that the valuation was flawed and unfair given the length of the contract between Makate and Vodacom.
The SCA made it clear in its judgment that the compensation for the PCM invention was to continue for the duration of the contract between Makate and Vodacom, but the defendants argued that the contract period should have been 18 years.
The court concluded that the high court should have considered the fairness and reasonableness of the final judgment.
The SCA set aside the High Court's order and replaced it with a new judgment. Makate is entitled to be paid between 5% and 7.5% of the gross revenues of the PCM Products, with the time value of money calculated at 5% for each successive period. Year. This decision marks an important development in the legal landscape surrounding intellectual property rights and fair compensation.
In a separate dissent, the minority argued for the matter to be referred to the CEO for redetermination pursuant to an order of the Constitutional Court. Although they agreed with the irrationality of the CEO's decision, a minority felt that the CEO should reconsider his compensation, taking into account the time value of money over an 18-year period.
The SCA's decision highlights the complexities involved in determining fair compensation for intellectual property and emphasizes the importance of a fair outcome in such disputes. As legal disputes surrounding PCM inventions continue, this decision sets a precedent for future litigation involving innovation, compensation and contractual disputes in the South African legal landscape.
