Gugulethu entrepreneurs issue new summons against Nedbank

Two Gugulethu-based entrepreneurs who accused Nedbank of stealing their patented card blocking invention have issued a new summons against the bank in the Johannesburg High Court.

Read: Gugulethu entrepreneurs claim Nedbank stole their patented card blocking system

In the latest summons, Thandile Jwambi and Tatolo Kutumane are asking the court to interdict Nedbank from using its invention. They claim Nedbank is in breach of an agreement that was part oral, part tacit and part implied.

In their court papers they say Nedbank stole their invention after they introduced it to Nedbank and others at two IT events in 2015 – the first at My Business Expo, and the second at LaunchLab. At both these events Nedbank representatives who sat as judges requested technical information from the entrepreneurs about their invention, and allegedly expressed interest in acquiring the product.

‘Stunned’

Jwambi and Kutumane provided the information requested but say they were then stunned to find that Nedbank, without authorisation, started offering its customers their card blocking system, or an adapted version of it.

Nedbank denies it has infringed any commercial rights relating to the “alleged invention” or underlying technology. “The bank at no time has entered into any commercial arrangement or created a reasonable expectation that any commercial arrangement would be established. Accordingly, Nedbank remains of the view that no compensation is due to the claimants by Nedbank,” it says in a statement.

Jwambi says bank representatives admitted on several occasions that Nedbank did not have this technology and was keen to acquire it. On one occasion, a bank representative asked the two entrepreneurs if they would work for the bank. Jwambi says they declined the offer as they wanted to negotiate a royalty agreement with the bank. They made it clear to the Nedbank representative at both events that they would only allow the use of their invention after conclusion of a licensing agreement that would include the payment of a royalty.

Privileged insight

Jwambi explains that the software behind the system is not terribly complicated and could be replicated by a reasonably experienced computer programmer once they  studied the ‘wireframe’ and documents the pair handed to the two Nedbank representatives.

“It was however non-existent before we came up with the idea. That is what we feel has been stolen from us.”

The card blocking system, called Instablock, allows customers to cancel their cards remotely across multiple platforms, such as smartphones, tablets and ATMs.

Royalty determination

The entrepreneurs also want the court to set up an inquiry to determine what constitutes a reasonable royalty for the use of the system that the bank should pay. Alternatively, they want the court to instruct Nedbank to commence good faith negotiations with them in line with the agreements previously made by its representatives at the My Business Expo and LaunchLab events.

They claim their invention was a world first in allowing bank customers to cancel their cards where they suspect fraud is taking place. Cards can also be blocked using someone else’s phone.

In June the entrepreneurs, backed by the SA Litigation Funding Company (Salfco), sued Nedbank in the Court of the Commissioner of Patents in Pretoria, asking for damages of R280 million.

They later withdrew their summons in the Pretoria patent court for technical reasons (they were not represented by a patent attorney, which is a requirement in this court).

Nedbank subsequently applied to the same patent court to have the Instablock patent, which was originally registered by Adams & Adams patent attorneys, revoked on the grounds that the claimed inventions were not new and were therefore not patentable. The bank also says the scope of the patent is overly broad.

The entrepreneurs are defending that case while simultaneously pursuing their high court ‘reasonable royalty’ application.

Bank will fight

In a reply to the summons in the latter case, the bank says: “The fresh summons follows the withdrawal of the patent infringement summons issued in the Patent Court. The factual matrix in dispute in both matters remains the same. Nedbank Group reiterates its previous stance that the bank has not at any stage infringed on the commercial rights of the claimants relating to their alleged invention or underlying technology.

“The bank at no time has entered into any commercial arrangement or created a reasonable expectation that any commercial arrangement would be established. Accordingly, Nedbank remains of the view that no compensation is due to the claimants by Nedbank.

“Nedbank is proceeding with its application for the revocation of the patent in the Patent Court as the claimants persist that they are the creators of the alleged invention. The revocation proceedings are based on the patented inventions not being novel (new) and/or the scope of the patent being overly broad.”

The bank says that at the time Jwambi and Kutumane presented their idea to the LaunchLab “many local and international technology providers and financial institutions, including Nedbank, had already considered, developed and/or implemented a card blocking mechanism for clients”.

It adds: “At that time, neither the idea of blocking and unblocking cards by customers nor the mechanism proposed by the claimants for such blocking and unblocking was new technology.

“Nedbank’s products and services both pre-date and differ technically and functionally from the inventions of the claimants.

In the interest of transparency, Nedbank previously disclosed a list of 18 prior publications detailing the functionality of [risk avoidance systems] to the claimants.

“LaunchLab is an independent initiative of Innovus Technology Transfer (Pty) Limited, the industry interaction and innovation company of Stellenbosch University. Nedbank is an arm’s length corporate sponsor, together with other organisations, of LaunchLab and some of its activities.

“Nedbank denies making any settlement offer at any time and particularly denies offering R1 million during any engagement with the claimants or their legal advisors.”

Source: moneyweb.co.za