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What to do when your rival steals your trade secrets or business ideas

by , 26 November 2013
Unlawful competition is any unlawful act aimed at harming or gaining a competitive advantage over a business rival. This includes a situation where your business rival steals your trade secrets. Read on to find out what the law says about this...

The Labour Law for Managers Loose Leaf Service says that virtually every business will have a store of valuable information built up over time that it wishes to keep confidential because it would suffer serious harm if the information were to fall into a competitor's hands.

These 'trade secrets' can take many forms, but will often include the following:

  • Customer lists and trade connections
  • Know-how, including production and marketing methods and technical processes
  • Price lists
  • Tender prices
  • Credit records
  • Records of business meetings and conversations
  • Computer software
  • Designs and sketches

The big question is:

Will the law protect you if a rival acquires your confidential information?

The short answer is 'yes'.

The Loose Leaf Service explains that even without a restraint agreement, your business is entitled to legal protection and not only against former employees.

Misappropriating another's confidential information is similar to theft and is a recognised form of unlawful competition when the information is used to gain a competitive advantage.

If your trade secrets have somehow fallen into the hands of a competitor, you may seek the protection of the courts, in the form of either an interdict, or damages, or both, in appropriate cases.

Here's how to win your case if a rival has acquired your trade secrets

If you want to succeed in your claim, you'll have to prove the following:

1. You have an interest in the information, either as owner or lawful possessor of the information

2. The information is of a confidential nature. To be truly confidential, it must pass this test:

  • It must be commercially useful (capable of application in trade or industry)
  • It must be known only to a restricted number of people
  • It must be of economic value to you

3. Your competitor must have appropriated the information knowing it's confidential and it belongs to you.

4. The competitor has improperly possessed or made use of the information, whether as a 'springboard' or otherwise.

5. You have suffered financial harm as a result of the misappropriation (if you're claiming damages).

Knowing what to do when your rival steals your trade secrets or business ideas will help ensure you act lawfully to protect your business.

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