Know how to protect your Know-How

A company’s intrinsic expertise, ingenuity and savoir-faire are what makes it unique, marketable, and ultimately successful. When combined, these somewhat tenuous qualities, form part of the company’s intellectual property. How then does a company protect them in order to gain and maintain a competitive advantage?

Almost anything that a company uniquely does or creates is considered proprietary information. The way a company manages and protects its proprietary information may entitle such information to further protection as either ‘confidential information’, ‘know how’ or ‘trade secrets’. These terms can be defined as follows:

  • Confidential information encompasses private internal proprietary information which is relevant to a business’s operations that cannot be learned from other sources.
  • Trade secrets constitute confidential information that provide a business with an undisclosed competitive edge – think KFC’s 11 herbs and spices, Google’s search engine algorithms or MacDonald’s Big Mac sauce.
  • Know-how is usually acquired through experience, and can include technical skills, including information, knowledge and techniques gained from working at the company, and can include confidential or proprietary information.

To safeguard these valuable assets, businesses must be proactive in identifying, protecting, and enforcing their know-how and trade secrets.

Identifying Know-How and Trade Secrets

The first step in securing know-how and trade secrets is to identify them. Businesses should first undertake an internal audit of their key personnel, processes, technology, and proprietary information to determine what makes up their proprietary/confidential information, know-how and trade secrets.

These unique attributes might consist of client databases, software systems, marketing plans, recipes or any other private information that offers them an advantage over competitors. This invaluable information should be earmarked and documented as being either confidential information, know-how, or trade secrets, ensuring safety from copycats encroaching on distinctive and specific fields of practice.

Businesses should also take steps to ensure that both employees and stakeholders are educated about the value of protecting such information and knowing how to distinguish between secret and proprietary knowledge. Sensitive information must be classified and documented clearly as part of this process.

Protecting Know-How and Trade Secrets

Once identified, companies should implement measures to protect their know-how and trade secrets from unauthorized access, use, or disclosure. Some strategies to consider could include:

  1. Confidentiality Agreements: Requiring that anybody who has access to proprietary business information, including employees, contractors, and partners, sign confidentiality agreements. Such agreements obligate individuals to maintain the confidentiality of the information they have access to both during and even after their association with the company has ended.
  1. Non-Disclosure Agreements (NDAs): When disclosing confidential information to third parties, have them sign NDAs to obligate them to keep it private.
  2. Limit Access: Only those who need to know should have access to confidential information. To prevent unwanted access, make use of strong access controls, such as encryption and password protection.
  3. Physical Security: If the know-how involves tangible assets (think recipe in a safe), make sure these are stored safely and that only those who have authorisation are allowed access.
  4. Cybersecurity: Strengthening cybersecurity measures to guard against data breaches and cyberattacks. Security audits should be carried out to identify weaknesses and software should be updated regularly.

Enforcing Know-How and Trade Secrets

Even with the best safety precautions in place, breaches of confidential information can and do unfortunately happen.

It is essential for businesses to respond quickly in these situations to preserve their intellectual property rights and know-how. Enforcement options include:

  1. Assessing the Breach: Launch internal investigations to ascertain the scope of the breach, identify the responsible party, and estimate the possible damage.
  2. Record-keeping: Ensure that all records pertaining to the breach are properly documented and kept. This supporting evidence will be essential in taking legal action and demonstrating the validity of the know-how or trade secret.
  3. Legal Action: Consult with intellectual property lawyers to investigate legal options, such as considering alternative dispute resolution processes, or instituting urgent legal proceedings if the breach is material and justifies taking legal action, for example.

Conclusion

Protecting company know-how and trade secrets is essential for companies looking to gain and maintain a competitive advantage in their respective industries. Companies can only protect their intellectual property and keep their position as market leaders by recognising their important and distinct intellectual property assets. The consistent implementation of relevant safeguards and taking immediate appropriate legal action against perpetrators will ensure that precious and unique skills and know-how are safeguarded effectively for businesses to flourish freely.

Moral of the Story

Authors of copyright protectable works retain certain rights despite not being the owners of such copyright

By Daniëlle van Deventer

The issue of relinquishing copyright ownership in an original piece of writing, an artwork or a musical composition is a complex and delicate issue. Fortunately, South African law provides some guidelines as to what is morally fair for authors or creators of such works.

The author of a work is typically the first owner of the copyright in a work subject to certain exceptions. These exceptions include for instance where a work was made during the course and scope of an employee’s employment (employer = copyright owner), where certain limited works are commissioned by another person or where the ownership of the copyright is transferred by way of agreement.

Copyright vests automatically in certain works (e.g., literary, artistic or musical works, cinematograph films, computer programmes etc.) provided such work is original and has been reduced to material form. Further requirements are more fully set out in the Copyright Act of 1978 (the Act). The Act provides for i.e., the type of works that are copyright protectable, who would be the owner of such copyright and ascribes certain exclusive rights to the owner of the copyright in a work in South Africa.

In essence copyright grants the copyright owner the exclusive right to do or to authorise the doing of certain acts (adaptation, reproduction, publication, performance…) in relation to a work of copyright or to transfer such rights. Copyright can be transferred from one owner to another by way of either formal assignment or testamentary disposition. Such transfer must be in writing and signed by the copyright owner to be valid. Should the author of a work not be the owner of the copyright in that work the author legally has no say in the execution of the exclusive rights or subsequent transfer of such rights.

This does seem unfair. However, the Act does provide a consolation prize to authors of works in the form of what is called the author’s ‘moral rights’. Section 20 of the Act provides for two distinct types of moral rights being:

  1. Paternity rights:

Paternity rights, although a somewhat antiquated term, provides that notwithstanding the transfer of the copyright in a literary, musical or artistic work, in a cinematograph film or in a computer program, the author retains the right to claim authorship of the work. I.e. the right to put his/her/their name to a work.

  1. Integrity rights:

Whereas under integrity rights the author of a work retains the right to object to any distortion, mutilation or other modification of the work where such action is or would be prejudicial to the honour or reputation of the author.

This integrity right is subject to the proviso that:

  • an author who authorizes the use of his work in a cinematograph film or a television broadcast; or
  • an author of a computer program or a work associated with a computer program

may not prevent or object to modifications that are absolutely necessary on technical grounds or for the purpose of commercial exploitation of the work. The type of work and modifications required would thus have to be considered on a case-by-case basis to determine what modifications would prove to be absolutely necessary in such instances.

Any infringement of the author’s paternity or integrity rights would be treated as an infringement of copyright in terms of the Act. The author would then be deemed to be the owner of the copyright in the work and would have the same remedies available for relief. These remedies could include an interdict, damages, or in lieu of damages a reasonable royalty. Caselaw on this is however little to none. The enforcement of moral rights is not likely to be met with any substantial monetary reward but is rather there to ensure that authors or artists retain the right to claim recognition for their works as created.

Accordingly, as I’ve written this piece during the course and scope of my employment with Adams & Adams, Adams & Adams would be the owner of the copyright in this literary work despite me being the author. That said, I still have the right to claim that my name appears with this article (see above) (my paternity right) and for it not to be ripped apart (my integrity right). Thus legally and morally fair and square.