Atlas Organic Fertilizers (Pty) Ltd and Others v Pikkewyn Ghwano (Pty) Ltd and Others 1981 (2) SA 173 (T)

Atlas Organic Fertilizers (Pty) Ltd and Others v Pikkewyn Ghwano (Pty) Ltd and Others 1981 (2) SA 173 (T)

Facts

Atlas Organic Fertilizers (Pty) Ltd (Atlas) was a South African company that manufactured and sold organic fertilizers. Pikkewyn Ghwano (Pty) Ltd (Pikkewyn) was a South African company that also manufactured and sold organic fertilizers.

In 1978, Pikkewyn was formed by a group of former employees of Atlas. The new company used a number of trade secrets that it had acquired from Atlas, including the formula for Atlas's best-selling fertilizer.

Atlas sued Pikkewyn for breach of confidence and restraint of trade. Atlas claimed that Pikkewyn had breached its confidence by using its trade secrets and that it had restrained trade by competing with Atlas.

Issues

The main issues in the case were:

• Whether Pikkewyn had breached its confidence by using Atlas's trade secrets; and
• Whether Pikkewyn had restrained trade by competing with Atlas.

Reasons

The Transvaal Supreme Court held that:

• Pikkewyn had breached its confidence by using Atlas's trade secrets; and
• Pikkewyn had restrained trade by competing with Atlas.

Breach of confidence

The court held that Pikkewyn had breached its confidence by using Atlas's trade secrets. The court found that the information in question was confidential and that Pikkewyn had obtained it by virtue of its relationship with Atlas. The court also found that Pikkewyn had used the information without Atlas's consent.

Restraint of trade

The court held that Pikkewyn had restrained trade by competing with Atlas. The court found that Pikkewyn's use of Atlas's trade secrets gave it an unfair advantage over Atlas. The court also found that Pikkewyn's competition with Atlas was likely to harm Atlas's business.

Conclusion

The court granted an interdict restraining Pikkewyn from using Atlas's trade secrets and from competing with Atlas in the sale of organic fertilizers.

Summary

The case of Atlas Organic Fertilizers (Pty) Ltd and Others v Pikkewyn Ghwano (Pty) Ltd and Others 1981 (2) SA 173 (T) is a landmark case in South African law. The case is particularly important for its analysis of the following issues:

• The law of breach of confidence;
• The law of restraint of trade; and
• The application of the law of breach of confidence and restraint of trade to trade secrets.

Law of breach of confidence

The case established that the law of breach of confidence protects confidential information that has been obtained by virtue of a relationship of trust and confidence. The case also established that the law of breach of confidence protects trade secrets.

Law of restraint of trade

The case established that the law of restraint of trade prohibits unreasonable restraints on trade. The case also established that the use of trade secrets to compete with a former employer can be an unreasonable restraint on trade.

Application of the law of breach of confidence and restraint of trade to trade secrets

The case established that the law of breach of confidence and restraint of trade can be applied to trade secrets. The case also established that the courts will weigh a number of factors in determining whether the use of a trade secret is a breach of confidence or an unreasonable restraint on trade, including the nature of the information, the relationship between the parties, and the impact on the former employer's business.

Impact of the Case

The case of Atlas Organic Fertilizers (Pty) Ltd and Others v Pikkewyn Ghwano (Pty) Ltd and Others 1981 (2) SA 173 (T) has had a significant impact on the law of breach of confidence and restraint of trade in South Africa. The case has established that trade secrets are protected by the law of breach of confidence and restraint of trade. The case has also established the factors that the courts will consider in determining whether the use of a trade secret is a breach of confidence or an unreasonable restraint on trade.