Keep it secret, keep it safe! A lesson on how to protect your trade secrets

trade secrets
27 Jul 2023

‘Rate limit exceeded’ is what many Twitter users woke up to in early July, when its owner Elon Musk, announced that only 600 tweets were available to those who used the platform for free. Obviously disgruntled, many users started to seek alternative social media platforms to share their thoughts.

Amidst Twitter’s ongoing challenges, Meta (Previously Facebook), apparently sensing an opportunity, introduced Threads, its own micro-blogging platform.

Shortly after the launch of Threads, a letter was addressed to Mark Zuckerburg, CEO of Meta, where the company was accused of the “systematic, wilful, and unlawful misappropriation of Twitter’s trade secrets and other intellectual property.”

While the merits of the allegations are debated, companies across industries should see this dispute as a warning, and take proactive measures to safeguard their trade secrets, especially in a rapidly changing labour market. In this article, we will discuss practical steps to protect trade secrets and highlight the importance of maintaining a strong online presence.

Protecting Trade Secrets:

Trade secrets, unlike traditional intellectual property assets, are protected under the common law rather than specific legislation in South Africa. While this provides certain advantages, as trade secrets are not subject to a defined period of protection, registration fees, or formal filing processes, it does not negate the need for reasonable protection measures to be put in place. We recommend the following practices to safeguard trade secrets:

  • Limiting access to the trade secrets, including all electronic and physical version(s);
  • Having employees, or any other persons who have access to the trade secrets sign a non-disclosure agreement or confidentiality agreement, alternatively, include such provisions in their employment contract; and
  • Ensuring that any documents that contain confidential information are clearly marked “confidential”, are password protected and encrypted.

Taking Legal Action:

If your trade secrets have been misappropriated, it is imperative that immediate action be taken to prevent further exposure to them. Unlawful competition provides a legal avenue for trade secret owners to seek redress. The law of unlawful competition in South Africa is one of the many manifestations of the law of general liability (the law of delict) to compensate another for damages occasioned by a wrongful act and attributable to fault. To establish a claim of unlawful competition, the trade secret owner must provide evidence supporting the following elements:

  • It has an economic interest in the confidential information/trade secrets.
  • The trade secret is of a confidential nature;
  • The infringer had a duty to maintain the confidentially of the trade secret;
  • The infringer knowingly appropriated the information;
  • The infringer made improper use of that trade secret to obtain an unfair advantage for himself or his businesses; and
  • The trade secret owner has suffered damages.

Types of relief:

Trade secret owners are entitled to various forms of relief, namely:

  • Damages: trade secret owners must outline that the exposure of the confidential information caused a diversion of customers and thus a loss of income that would have been made by the company.
  • Royalties: this remedy is useful in instances where the trade secret owner finds it difficult to calculate the patrimonial loss suffered. The court, in lieu of damages, can order the infringing party to pay a reasonable royalty that a licensee of the trade secret would have pain in the ordinary course of business.
  • Interdict: a temporary or final interdict may be sought to restrain the use, continued use or disclosure of the misappropriated trade secret.
  • Delivery-up for the purposes of destruction: an order requesting that all versions of the trade secrets are delivered-up to the trade secret owner in order for them to be destroyed.

Conclusion:

In the realm of trade secrets, the wisdom of Gandalf echoes: “Keep it Secret. Keep it Safe.” These powerful words encapsulate the approach businesses must adopt. By limiting access, implementing strict confidentiality measures, and taking decisive legal actions, trade secrets remain preserved. This safeguards their competitive edge and minimises potential damages. Embracing a fortified online presence with robust privacy measures reinforces Gandalf’s timeless counsel even in the digital era, far removed from Middle Earth.

Article sourced from Eversheds Sutherland.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Scott Saunders

Scott Saunders is a senior associate in our Intellectual Property (“IP”) department and heads up the Anti-Counterfeiting (“AC”) team at our Melrose Arch office. Scott is a highly regarded intellectual... Read more about Scott Saunders

Gomolemo Tau

Gomolemo Tau is an associate in our Intellectual Property department at the Melrose Arch office. She graduated from the University of Witwatersrand with a Bcom Law in 2017 and a... Read more about Gomolemo Tau

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