A trade secret refers to confidential business information that provides its holder with a distinct commercial advantage because it is not commonly known or easily discoverable by competitors. This may include things like specialised processes, proprietary methods, customer databases, or technical know-how, essentially any non-public information that holds economic benefit by virtue of being kept secret. What distinguishes trade secrets from other forms of intellectual property is the requirement that reasonable efforts must be made to maintain their confidentiality.
Unlike patents or trademarks, which are protected through formal registration, trade secrets derive legal protection primarily from common law. In Lesotho, there is currently no legislation specifically governing trade secrets. As a result, their protection stems from judicial decisions over time, particularly through the application of contract and delictual principles.
To qualify for protection, three elements must be present:
- The information must be private and not readily accessible;
- It must be capable of being used in a commercial or industrial setting; and
- It must offer economic benefit to the party possessing it, when viewed objectively.
These criteria make it clear that not all confidential information qualifies as a trade secret. Only those forms of information meeting all three conditions are considered legally protectable.
Where someone misappropriates a trade secret, such as by unlawfully accessing confidential business information and using it to gain an unfair advantage, this may give rise to legal action. Under the law of delict, wrongful interference with another business’s interests can be actionable, particularly if it causes economic harm. For example, if a competitor knowingly uses stolen proprietary information to the detriment of its originator, such conduct may be seen as both dishonest and unlawful.
Courts may grant an interdict to prevent further misuse or disclosure of the information. Importantly, such relief may be granted even in the absence of proven damages, as unlawfulness alone can suffice.
Businesses also frequently rely on contractual safeguards to protect sensitive information. Two common legal tools are non-disclosure agreements (NDAs) and restraint of trade clauses. NDAs are typically used with employees or contractors to ensure that confidential information shared in the course of business is not disclosed to third parties. These agreements often extend beyond the period of employment or engagement.
Restraint of trade clauses go a step further, restricting former employees or business partners from leveraging trade secrets to compete against the original business. These provisions are enforceable where they are reasonable in scope and duration and are necessary to protect legitimate business interests.
For companies operating in Lesotho, where statutory frameworks for trade secrets are absent, taking proactive steps to secure confidential information is crucial. Clear internal policies, well-drafted contracts, and swift legal action when breaches occur are key to maintaining a competitive edge in the market.
If your organisation needs assistance in structuring legal safeguards for its trade secrets, Mayet & Associates Attorneys can help you implement effective protective measures tailored to your business.