MTN accused of stealing intellectual property

Category: WTO Sub-category: Intellectual-Property
Document type: news

MTN accused of stealing IPAn entrepreneur is accusing MTN of stealing his intellectual property after MTN invited parties to send proposals for a travel-booking product he has been working on with MTN since 2010.

MTN Traveller was launched amid fanfare at Inanda Club in Sandton in November 2010, with Jabu Mabuza, then chairman of Tourism SA, making a keynote speech. The product was originally pitched to MTN by MobiRes in May 2010 and a non-disclosure and confidentiality agreement was subsequently signed between the parties.

The application provided an online booking and payment engine for accommodation, car rental and airline tickets and was hailed by MTN as a "South African and world's first that is going to change the face of hospitality bookings".

Now, more than two years later, MTN has invited parties to submit proposals for MTN Travel Solution after it has "identified a new business opportunity that will offer mass and emerging markets as well as smartphone internet enabled customers with an e-ticketing solution".

In the proposal, sent out on March 18, MTN said it is looking for a supplier for the booking and reservation system, which will allow users to reserve and purchase a ticket for transport and accommodation services in South Africa on their cellphones.

Fraser Gregg, MD of MobiRes, which demonstrated MTN Traveller to journalists and dignitaries at the November 2010 launch, said MTN's current actions "most certainly infringe and contravene the non-disclosure agreement and most certainly infringe on MobiRes's intellectual property".

"We introduced, conceptualised, designed and developed a mobile travel solution and took it to MTN as a possible partnership. MTN did not, as per the tender e-mail, identify a new e-ticketing business opportunity," said Mr Gregg.

While MobiRes has appointed lawyers to deal with the matter, "we realise that the huge disparity in the parties' financial resources will prejudice our legal battle to protect our rights", he said.

MTN said it invited bidders as MobiRes was given "ample time" to showcase a commercially ready product after the MTN Traveller pilot was launched, but it failed to deliver as agreed.

Following the January 2012 launch with an expanded range of travel partners and a more comprehensive marketing strategy, which resulted in several hundred bookings, MTN requested that MTN Traveller be taken offline under the pretext that it would be relaunched within four weeks as a full commercial MTN product aimed at high-end consumers.

In a letter to MTN Traveller service providers, MTN asserted its commitment to and faith in the success of the programme.

The commercial relaunch did not happen, apparently because of budget constraints at MTN, a claim it denies.

Correspondence between the parties over two years shows delays in agreeing on financial terms and conditions and putting final agreements in place.

Fusi Mokoena, general manager: commercial legal at MTN SA, said MTN has not used any of MobiRes's intellectual property in the request for proposals that was issued on March 18.

"MobiRes was engaged for a period of two years, after which period MobiRes has not delivered any product that we could deem ready to market and/or for commercial use.

"Surely MTN cannot be expected to be bogged down in that relationship. MTN believes there are similar solutions in the market and there are other players in the market, therefore MTN is entitled to invite other players to showcase products that respond to customer needs.

"MobiRes has been given ample time by MTN to showcase the product after the pilot, and to date MTN has not been afforded an opportunity to even see a demonstration of such a product," Mr Mokoena said.

From correspondence between the parties seen by Business Times, it is clear that MobiRes did not want to provide MTN with demonstrations of MTN Traveller Agent, a separate product aimed at emerging marketplaces, before MTN had signed letters of intent and made some financial commitments concerning both products.

In turn, MTN sought detailed cost breakdowns and demonstrations before finalising agreements.

"We had not received commercial agreements from MTN after eight months of ongoing promises. We agreed to expose more of our intellectual property [IP] once a letter of intent at least was supplied by MTN to protect our concept and the related IP.

To say they never saw a working pilot is ridiculous as they were actively involved in its activation," Mr Gregg said.

All existing development specification documents were handed over to MTN in January after it was proposed at a meeting that MTN buy the IP from MobiRes, Mr Gregg said.

* This article was first published in Sunday Times: Business Times