Is there specific legislation that governs trade secrets or know-how? If so, is there a legal definition for this? Either way, how are trade secrets and know-how treated by the courts?

South Africa does not have specific legislation governing trade secrets or know-how, though they can be effectively protected under South African common law.

Trade secrets can be protected if it can be established that the information has the necessary quality of confidence, and that anyone with access to the information owes its owner a duty of confidence. It is not a requirement that a given recipient enters into a non-disclosure agreement, though it is indicative of a relationship of confidence. If a recipient then discloses that information in breach of that confidence, legal action can be taken by the owner.

Parties will often enter into agreements when transferring trade secrets or know-how between each other for any purpose expressly protecting the use and handling of the information, and setting out the indemnities in respect of their loss or misuse. It is also common in such agreements to include an express reference granting the right to seek an injunction as first recourse in the event that the information is lost or misused. The courts have been willing to grant injunctions in recognition of the importance of trade secrets.

When it comes to licensing, does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?

Parties are free to contract so as to restrict the disclosure of trade secrets to third parties, and will ordinarily do so. Confidentiality provisions will typically be drafted to survive the agreement and be severable, as disclosing parties will wish to protect their trade secrets indefinitely, rather than just for the term of a given licence; any loss of confidentiality in the future will limit the capacity of the disclosing party to monetise that information going forward.
For more information, contact:

Kevin Dam
Commercial Attorney
Head: Commercial Department

Tel+27 11 324 3025