What does “Please Call Me” mean for your organisation? The “Please Call Me” case (Makate v Vodacom) brought the issue of who owns employee-created intellectual property sharply to the fore. This ‘David v Goliath’ saga, which lead to a legal battle all the way to the Constitutional Court, highlighted a number of key issues:
- Do you own your employees’ ideas especially those that could become commercially successful?
- If you don’t, are you still able to commercialise them?
- What are your policies around ownership, protection and commercialization of your intellectual property?
- Who is responsible for innovation in your business and does it matter?
- What processes do you have to encourage and incentivize ‘bottom-up’ idea creation from anywhere within your business? And are your employees’ aware of these processes?
How can we help?
- Conduct an intellectual property audit to understand what your intellectual property assets are
- Review and advise on your employment and intellectual property assignment agreements
- Review and advise on your policies regarding ownership and commercialization of your business’ intellectual property
- Advise on and draft appropriate clauses to your employment and commercialization agreements with your employees
- Advise on policies and processes to put in place to ensure identification and disclosure of ideas from wherever within your organisation
- Provide training to your employees and senior management to raise awareness of these policies and processes
- Advise on appropriate employee incentive schemes to encourage the disclosure of ideas and to incentivize and retain innovative employees
If you are interested, please complete the form on the right or enquire now. We will contact you to find out more about your requirements and give you a quote.
Key take-aways from the “Please call me” decision
Can you commercialize your employees’ ideas even if you do not own them?
Yes, provided you have an agreement with the employee whose idea you want to commercialize. In the Makate v Vodacom case the Constitutional Court found that Vodacom and Makate had entered into an agreement to develop a product incorporating the “Please call me” idea. The fact that the parties deferred their negotiations regarding the amount to be paid to Makate to a later date, did not mean they had not entered into a valid and binding agreement.
Would Vodacom have known of “Please call me” had Makate not stepped forward and disclosed the idea?
Unlikely. It was serendipitous that Makate decided to bring the idea to his mentor’s attention and, then on the basis of his advice, to the Product Development Director’s attention. He could quite easily have left Vodacom or agreed to one of Vodacom’s competitors using his idea. To think that Vodacom could have, unknowingly, lost a very lucrative innovation and handed the revenue generated by “Please call me” amounting to billions of rands to a competitor is spine chilling.
It would appear from the facts of the case that Vodacom’s employees (certainly those outside of the product development function) were not encouraged to, or aware that they could, bring their ideas to the Product Development Director or that they may have had an entitlement to some reasonable compensation depending on the financial success of any new product incorporating their idea.
What processes do you have in your organisation to incentivize employees to disclose and also to manage their expectations regarding the commercialization of their ideas for potentially lucrative new products or services?
Ideas for innovative products and services can come from anywhere in an organisation. Employees, in whatever capacity they are employed, can be and are reliable sources of new idea generation and these ideas, however fledgling, can, if nurtured and developed, as “Please call me” clearly demonstrates, become highly lucrative new product and service lines.
To ensure ‘bottom-up’ idea generation from all corners of a business, organisations should not only encourage and assign, as is often times the case, new product development to the ‘R&D’ function but should also promote a ‘business-wide’ idea generation and incentivisation policy which should incorporate a well-defined process aimed at receiving ideas and exploring their commercial viability, whatever and wherever the source of the idea.
Organisations should also refrain from adopting too “heavy-handed” an approach regarding ownership of new product ideas whether via incorporating onerous terms in their employees’ employment contracts, or by refusing innovative employees, such as Makate, a fair and reasonable compensation for a commercially successful idea. Such an approach can and will only disincentive employees from sharing their ideas and may indeed lead to their leaving their employment to start their own business in competition with their former employer or, worse still, selling or licensing their ideas to a competitor. Employers keen to discover new sources of competitive advantage should look to balance the need for new idea generation and retention of innovative employees with the need to own and monopolise the commercialization of their intellectual property.