OF&A :: Unlawful Competition

Unlawful Competition

UNLAWFUL COMPETITION

OF&A is increasingly being approached by specialist attorneys on behalf of their clients, and by clients directly, who fear that their copyrighted material has been stolen. Such stolen material can be information stored on computer disks, client lists, lists of suppliers, drawings or plans. Typically a rogue employee will take such information and sell it or use it to start his own business, which may result in the employer suffering substantial damages.

Employers are faced with the difficult and often impossible task of proving that the employee is indeed in possession of the material. Usually as soon as the culprit gets wind of any possible legal action, the evidence is either removed or destroyed.

The South African legal system has, however, invoked what has become known as the Anton Pillar Order. This enables an employer to retrieve such information or documentation, which will then be used in evidence at a later date in order to prove unlawful conduct and the resultant damage to the employer. The advantage of this process is that, unlike the usual process, the culprit need not be notified of the impending order against him. This affords the employer the major benefit of "surprise". Because the culprit receives no prior warning, he cannot take any evasive action until it is too late.

Rand Supreme Court at the time of Winnie Mandela's trail

The name Anton Pillar and the nature of the order itself, comes from a case in the United Kingdom, Anton Pillar KG vs. Manufacturing Process Limited, in which relief was afforded to the party bringing the application. The Plaintiff's case was based on evidence given to them by two of the Defendants' employees. The Defendants were the Plaintiff's agents in the United Kingdom for the sale of sophisticated electrical components. The employees' evidence indicated that the Defendants were negotiating with various foreign firms, with a view to supplying them with confidential information and drawings, in which the Plaintiff had copyright. The court came to the Plaintiff's assistance and ordered a search for the necessary evidence to support the damages claim against the Defendants.

As described in the case above, if an employee is suspected of this kind of unlawful conduct, the employer is usually concerned that if he was to approach the employee directly and ask for the return of the material, or even if he were to follow the usual procedure and launch a court application by giving the employee notice, the employee would have the opportunity to dispose of the relevant material. It is for this reason that OF&A is approached to gather sufficient, admissible evidence discreetly. This OF&A service enables the client's attorney to lodge a successful application for the Anton Pillar Order to be granted. Following the precedent in the United Kingdom, the South African court recognise the problem and will grant the Anton Pillar Order without the employer having to notify the employee of his intention to proceed. The application is therefore brought 'in secret' and this is, in essence, what gives the applicant the 'element of surprise' advantage. The order permits the employer to go to the premises where he suspects the material is being kept. He must be accompanied by an attorney and the sheriff of the court. The material found is retained as evidence by the applicant in the subsequent court action launched against the perpetrator. This order entitles the employer (in this example) to invade the prima facie constitutional rights of the employee to privacy and property, and is therefore considered to be a drastic measure. As such, it is granted by our courts with circumspection and only on proof of good cause. The order cannot be acquired easily, and there are specific requirements, which must be met before a court will grant such an order.

The applicant will have to prove the following in order to obtain the order:

-	that he has a cause of action or has suffered damages, for which he is entitled to claim in law and which he intends to pursue against the offender

-	that the offending party has in his possession (specific and specified) documents or objects that constitute vital evidence in substantiation of the applicant's claim

-	that there is real and well-founded apprehension that the evidence may be hidden or destroyed or in some manner be spirited away, by the time the case comes to trial

Whilst emphasis in this article has been placed on the evidence that an employer might require to prove damages against an ex-employee, this type of order is also available to any other person who believes that evidence is likely to be destroyed or spirited away. For example, if a person was maltreated or tortured in custody by the use of electrical devices, he may, upon his release, ask the court for an Anton Pillar Order. The equipment of torture will then be uplifted and retained as evidence in a trial in which he claims damages against the police.

If properly implemented, this order can be extremely beneficial and helpful to people who are aware that unlawful conduct is being committed, and wish to rectify such injustice and protect their rights. However, people to whom this order would be available are usually unaware of its existence.

Keep this information in mind in case of the unfortunate event of finding yourself on the damaging end of such behaviour. This will ensure that no time will be wasted between the discovery of the unlawful conduct and consulting with your attorneys. This will give the offender that nasty legal surprise that he deserves!

Case Study 1

In a recent case, a senior director of a water treatment company suddenly rendered his resignation for no apparent reason. It was established that he spent a lot of time at the company after hours, including the night before he resigned. Suspicions were aroused when various incidences involving the director did not add up. A confidential customer list had also disappeared. OF&A was called in to investigate the director's activities, as there was no doubt that he could cause severe damage to the company's operation by indulging in acts of unlawful competition. This could be done by making use of the company's intellectual property and formulas.

The OF&A team quickly picked up positive evidence that the subject was indeed contacting his previous employer's clients and offering them similar products at a discounted price. OF&A also established that the subject regularly visited his daughter's house with prospective clients. Sufficient evidence was gathered and submitted with affidavits from the OF&A investigators, to convince a judge of the Supreme Court to issue an Anton Pillar Order. As expected, all of the client's intellectual property, formulas and customer lists were found at the daughter's house and seized. OF&A's client was saved from suffering substantial damage to his business.

Case Study 2

A large mining equipment manufacturing company employed OF&A to investigate rumours of a potentially damaging situation. A former employee was supplying their mining customers with spare parts for the equipment bought from OF&A's client. These spare parts were made exclusively for the specific equipment and were extremely expensive. However, the employee was able to supply these parts at a discounted price. This caused substantial losses to OF&A's client. The client could not understand how the ex-employee was obtaining these parts. OF&A gathered sufficient evidence which proved that the ex-employee has subcontracted the engineering and machining of these spare parts to another engineering company. The other company manufactured the spare parts from drawings supplied by the ex-employee. OF&A obtained one of these specification drawings which had been left at the engineering company with an order. It was then established that the drawing was an exact replica of OF&A's client's drawings of that specific part. All of the client's copyright markings had been erased and replaced by the ex-employee's own markings.

Once again, OF&A gathered sufficient evidence for the client's attorneys to apply for an urgent Anton Pillar Order. A search was conducted at the ex-employee's business premises, but unfortunately no evidence was uncovered. However, further investigations indicated that the ex-employee was storing the microfiche containing these original drawings in the boot of his car, as well as all of the client's intellectual property and copyright drawings. It transpired that he had stolen the microfiche over a period of time whilst employed by the company. OF&A's client was saved millions of Rands.

Case Study 3

OF&A was called in when three employees left the employ of one of OF&A's clients within one month of each other. Suspicion was aroused when the client's order book began to decrease. OF&A was called in to investigate the situation as the ex-employees were subject to restraintive contracts. It was established that a Close Corporation (CC) was incorporated whilst the employees were still in the employ of OF&A's client. As expected, the members of this CC were the three ex-employees, and the company's nature of business was the same as that of the client. Bank accounts in the name of the CC were positively linked to the three employees. OF&A's team conclusively proved that the ex-employees were in possession of the client's computer software programs, customer lists and some of the company's marketing letters.

An urgent application for an Anton Pillar Order was submitted to the High Court. Within a few hours a search was conducted at the residence of one of the ex-employees, from which they were operating their new business. A substantial amount of the client's property was found on the premises and seized. An interdict to stop them breaching their restraint agreements followed almost immediately. OF&A's successful investigation prevented the client's business from suffering serious losses.