A highly-contested and expensive case between Nkosana Makate and Vodacom has resulted in bad precedence in the field of company law on the issue of ostensible authority.

‘But the case is even worse in the field of intellectual property (IP) law, and presumably also distorts employment law on the issue of the fiduciary duties of the employee to the employer.’

So says Associate Professor Malebakeng Forere, from Wits University’s School of Law.

‘There is no doubt that the work concerned (the “Please call me” service) is an intellectual creation of Makate. Despite being an IP subject matter, the case has been decided solely as a contractual dispute, turning a blind eye to the underlying ownership of the “Please call me” product. Our courts have warned against deciding IP issues based on other disciplines of the law, yet this caution was ignored in the “Please call me” case.’

In her analysis on the Daily Maverick site, Forere questions whether the Copyright Act or Patents Act vest ownership of the work in the employee (who can in turn assign it to the employer upon payment of a royalty).

She says our IP law statutes require that for works that were created during the course of the employment – and if such inventions/works benefit the employer – ownership vests in the employer unless varied by agreement.

Forere says two presumptions have to be rebutted.

The first is whether the ‘Please call me’ product was created during the course of employment. Here, the onus vests on the employer. Forere says whether the ‘Please call me’ product was made as part of executing one’s task as prescribed in the job description in the contract of employment is irrelevant – ‘what matters is that the product was made while Makate was employed by Vodacom and that the product benefits the employer because it falls exactly within the same functional description of the employer’.

Forere says had this case been argued as an IP matter, Vodacom could have easily discharged this onus.

The second presumption, she says, is that despite the work being created during the course of employment, there was nonetheless an agreement between Makate and Vodacom to share the proceeds. Here, the onus is placed on the employee.

Makate indicated that there was an agreement, which he concluded with Vodacom as a businessman – as an independent service provider while still employed by Vodacom. Forere says this is worrying because employees cannot conclude agreements with employers – it creates conflict of interest.

‘Our courts demand that there must be a legally binding agreement, not just some vague understanding,’ she says, adding Vodacom is about to lose billions resulting from the improper application of the law.

‘While one feels that Makate deserves some form of reward, the law needs to be applied properly, and where the current law shows gaps as it does to the extent that it makes no difference between inventive and non-inventive employees and it does not provide guidance regarding assignments of works created by non-inventive employees, the legislature must be given space to fill the gaps.’

Full analysis on the Daily Maverick site