The Importance of Having a Valid Patent

On 23 August, two award-winning IT developers, Thandile Jwambi and Tatolo Kutumane, reinstituted legal proceedings against Nedbank this time in the High Court in Johannesburg for allegedly infringing their patented card blocking system known as “ Instablock”. Instablock is a system that allows a customer to cancel his bank cards remotely from several different platforms, including the cardholder’s own, or someone else’s, smartphone, tablet or at an ATM.

The two IT developers initially instituted legal proceedings against Nedbank in the Court of the Commissioner of Patents in Pretoria. They had to withdraw the initial summons due to a technicality in that they had failed to appoint a patent attorney to represent them in the matter. This is a formal requirement.

In the new action, they are relying on the discretion of the court to give a reasonable damages order and are seeking to interdict Nedbank from using their system. Nedbank initially counterclaimed for revoking the patent on the grounds that the invention in question is not new in terms of Section 25(1) of the Patents Act. Nedbank has not withdrawn its counterclaim, stating that it has no choice but to continue claiming for revocation because the two developers are determined to continue with the infringement case.

The two developers allege that they, on two separate occasions had presented and introduced their invention to Nedbank officials and that each time Nedbank’s officials were interested to obtain more details on the working of the invention and confirmed that Nedbank at the time did not have this kind of technology. The first occasion was at My Business Expo 2015, held at the International Convention Centre, Cape Town, to promote aspiring entrepreneurs. Business proposals were adjudicated by board members of Nedbank. The second occasion occurred in October 2015 when the two developers entered into a LaunchLab competition, which was sponsored by Nedbank. The developers were selected as the winners of the competition. Waseem Hassim, one of the judges of the competition and an employee of Nedbank showed interest in their invention, promising a meeting to discuss potential business arrangements that never happened. The two developers became suspicious about Nedbank’s intention when they were forced to take LaunchLab to the small claims court to secure their prize money, after having publically stated that they would use the prize money to complete the provisional patent application which had been filed in 2015. They saw this non-payment as an attempt to frustrate them from obtaining a patent.

Mr. Hassim, at the time of the competition, represented to the developers that he was an executive of Nedbank, that he was mandated to search for talent to be used by Nedbank and that he was interested to present the invention to the relevant persons at Nedbank’s head office. Mr. Hassim allegedly offered them a position of employment at Nedbank, they however refused, stating that they were only interested in obtaining a royalty for their invention. The two developers stated that at the time they had made a full disclosure to Hassim about the invention. Nedbank later made a statement saying that Mr. Hassim did not have the authority to make these offers.

This case highlights some of the benefits and issues faced when obtaining a patent for an invention. It is extremely important to obtain patent protection for an invention in the jurisdictional area where protection is sought. The effect of a patent is to give the patentee a negative right to exclude all others from making, using, exercising, disposing of, offering to dispose of, or importing the invention for the life span of the patent. This gives the patentee a monopoly in the invention, to enjoy the whole profit and advantages accruing by reason of the invention. Therefore if the two developers succeed in proving that they have a valid patent they will be entitled to some form of compensation or relief.

It is, however, important to understand that having a patent may not necessarily give you the protection that you want. For example, the invention might not have been patentable at the time of filing. In South Africa no examination on the merits is conducted by the Patent Office to determine patentability. If the procedural final requirements are met, a patent will be granted even if the invention does not satisfy the substantive requirements of novelty and inventiveness. Such a patent can be attacked any time on the ground that it was not patentable at the time of filing. Often however these searches are not exhaustive as it is not really possible to look at every single prior art document to determine whether the invention is patentable. These searches can however be seen as a safeguard and a good indication of patentability, but they are not one hundred percent conclusive. If Nedbank succeeds in its revocation claim, it means that the two developers will not be able to claim for the interdict nor get a reasonable damages order.

Willem Styrdom – Candidate Attorney
willem@mrf.co.za

Monty Rademeyer – Partner
monty@mrf.co.za