Intellectual property rights

IP protection for software

Which intellectual property rights are available to protect software, and how do you obtain those rights?

If it complies with the relevant requirements, software (or a computer program) is afforded protection in South Africa as a ‘work’ eligible for copyright under the Copyright Act 1978 (the Copyright Act).

Copyrights cannot be registered, but their protection arises automatically in law. As soon as a work comes into existence and meets the requirements set out in the Copyright Act, it is protected in terms of South African common law as a copyright work.

Copyright protects the product of an idea, or the ‘work’, rather than an idea itself and entitles the copyright holder to prevent any other person from doing, directly or indirectly, any act in relation to the relevant work that the copyright owner has the exclusive right to do or authorise.

There are a number of types of works that are eligible for copyright under the Copyright Act, including, but not limited to, literary works and computer programs. A program only constitutes a computer program in terms of the Copyright Act if it is a finished product that is capable of directing the operation of a computer to bring about an intended result. It is commonly understood that, until the time the program is capable of doing so, it constitutes a literary work. As a result, software is afforded protection under the Copyright Act.

An important consideration for copyright protection is the identity of the author. As a general rule, copyright automatically vests in the author of a work (although there are exceptions). In the case of a computer programme, the author of the computer programme is the person who exercised control over the making of the programme. Proving control is a technical exercise, generally requiring evidence from a technical expert.

In addition, to qualify for protection under the Copyright Act, the author must be an ‘eligible person’, which means either a South African citizen or an entity incorporated according to South African laws, and the work must be original and reduced to material form.

Certain forms of copyright are subject to ‘moral rights’, which belong to the author. These are rights of paternity (ie, the right to claim ownership) and integrity (ie, the right to object to any distortion, mutilation or other modification of the work). However, the 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 Patents Act 1978 expressly excludes a program for a computer from being a patentable invention in South Africa.

IP developed by employees and contractors

Who owns new intellectual property developed by an employee during the course of employment? Do the same rules apply to new intellectual property developed by contractors or consultants?

The protection of intellectual property software is only dealt with in terms of the Copyright Act. Generally, copyright automatically vests in the author of the work. One of the exceptions in the Copyright Act is in the case of an employment relationship, in which case the copyright in any work made during the course of the author’s employment under a contract of service or apprenticeship will vest in the employer. ‘Employment’ is not specifically defined in the Copyright Act, so it is generally understood to have the meaning given to it under applicable law. In this regard, the following criteria are generally taken into account:

  • the intention of the parties to conclude a contract of employment;
  • the existence of a relationship of authority (whether the employer exercises control and supervision over the employee);
  • the remuneration of the employee (including an assessment of economic dependence on the alleged employer);
  • the period of the contract of employment; and
  • the rendering of personal services by the employee. An agreement to the contrary can, however, be concluded between the employer and the employee.

 

Importantly, the above exception does not apply to independent contractors (ie, contractors or consultants). Independent contractors retain ownership of all intellectual property rights attaching to their work, unless agreed otherwise. Therefore, where an independent contractor is creating software for payment, it is important to confirm that the contract makes provision for the assignment of the copyright to the person commissioning the work, unless it can be proven that the person instructing the making of the software exercised control over the process. For the assignment to be valid, it must be in writing and must show the necessary animus to transfer and receive ownership of the copyright on both sides of the transaction.

All other forms of intellectual property (eg, patents, trade marks, know-how) do not automatically vest in the employer and must be assigned. Therefore, employment agreements (and independent contractor agreements) must include an assignment of all intellectual property rights developed in the course and scope of employment.

Joint ownership

Are there any restrictions on a joint owner of intellectual property’s right to use, license, charge or assign its right in intellectual property?

The protection of intellectual property software is only dealt with in terms of the Copyright Act. According to the Copyright Act, a ‘work of joint ownership’ means a work produced by two or more authors in which the contribution of each author is not separable from the contribution of the other author or authors. The inseparability of the authors’ contributions gives rise to joint authorship (ie, co-ownership). Co-ownership may also arise where the copyright is assigned to more than one assignee. In South African law, each co-owner obtains an indivisible share in the copyright and may not use or dispose of such share without the consent of the other co-owner.

Trade secrets

How are trade secrets protected? Are trade secrets kept confidential during court proceedings?

Confidential information

Confidential information is information that has the necessary quality of confidentiality to justify legal protection, where confidentiality is more than value or usefulness of the information. To be treated as confidential information, information must be:

  • capable of application in trade and industry;
  • secret or confidential, that is, it must be known only to certain people or be something that is not public property or public knowledge; and
  • the information must have economic value to the person trying to protect it. Whether information is confidential is a question of fact, and information may lose its confidential nature over time.

 

Legal framework

There is no specific legislation or regulation that deals directly with confidential information in South Africa. Confidential information is, accordingly, regulated under the common law. In certain instances, confidential information may be protected under the Copyright Act where the information constitutes a literary work and is reduced to writing.

 

Protections and remedies

The common law provides various mechanisms that can be used to protect confidential information, trade secrets and know-how, including:

  • contractual protection (this may either be express or implied);
  • delictual protection, comparable to tort under English law (specifically protection from unlawful competition);
  • interdict (equivalent to an injunction under English law); and
  • protection arising from a fiduciary relationship (eg, an agent, mandatory or director).

 

Most importantly, the person wishing to protect confidential information must take practical steps to keep the information confidential.

 

Trade secret

A trade secret is essentially a sub-category of confidential information in that it is a formula, practice, process, design, instrument, pattern, commercial method or compilation of information not generally known or reasonably ascertainable by others by which a business can obtain an economic advantage or competitive edge over competitors or customers. Usually, only a strategic and limited number of persons hold such information.

 

Legal framework

There is no specific legislation or regulation that deals directly with trade secrets in South Africa. Trade secrets are, accordingly, regulated under the common law.

 

Protection and remedies

The protection and remedies for trade secrets are the same as those discussed above for confidential information. The general rule is that confidential information will be disclosed during court proceedings. The exception would be that the information would not be disclosed if it falls within the ambit of legal privilege. In addition, a witness can be subpoenaed to provide confidential information. The only ground for refusing to provide documents or information in terms of a subpoena is legal privilege.

Branding

What intellectual property rights are available to protect branding and how do you obtain those rights? How can fintech businesses ensure they do not infringe existing brands?

Branding may be protected through the use of trademarks, which are regulated in terms of the Trade Marks Act 1993 (the Trade Marks Act). A trademark provides the owner thereof with the exclusive rights to use the mark. Trademarks are registerable; however, registration is not a requirement for the holder to have a remedy in the event of infringement. The registration of a trademark, nevertheless, provides a clear and enforceable right to that trademark. Accordingly, it is recommended that trademarks be registered as the remedies in respect of infringement of a registered trademark are more comprehensive and easily enforceable than those under common law in respect of an unregistered trademark.

In terms of the Trade Marks Act, a trademark can be registered if:

  • the trademark is capable of distinguishing between goods and services of one person from those of another; and
  • a mark is capable of making a distinction as it is either inherently capable of distinguishing between goods and services of one trader from another, or capable of making a distinction through prior use.

 

The Trade Marks Act excludes certain trademarks from registration, including without limitation:

  • marks that do not constitute a trademark;
  • marks that lack the general or inherent ability to make a distinction;
  • marks that exclusively comprise a sign or indication that designates various characteristics of goods or services; or
  • marks that exclusively comprise a sign or an indication that has become customary in the current language or bona fide established practices in the trade.

 

The process of registering a trademark involves making an application, which is then examined.

Examination first considers the formal requirements (ie, that the mark is distinctive and capable of registration), and second considers whether any conflict or third-party rights based on prior applications or registrations would be contravened using the trademark. The registrar may accept the application unconditionally, or the registrar may accept the application subject to conditions, amendment or modification. Conversely, the registrar may also refuse the application provisionally, or the registrar may refuse the application altogether.

If the application is accepted, the acceptance must be advertised in the Patent Journal. Any interested person may, within three months following the advertisement of the trademark application in the Patent Journal, lodge an opposition to the registration of the trademark. An opposition can be lodged on any of the grounds that the trademark is not capable of registration under the Trade Marks Act.

If the application is advertised and no objection is raised, the registrar will register the trademark and issue a certificate of registration.

Trademark registration is effective for an initial period of 10 years from the date of filing the application and, thereafter, is renewable for similar periods in perpetuity. A trademark that has lapsed may be restored upon payment of a fine or additional fee and provided that the registrar is satisfied that it is just to do so.

A trademark may be infringed in the following circumstances:

  1. the unauthorised use in the course of trade in relation to the same goods or services in respect of which the mark is registered, of an identical mark or a mark so nearly resembling the registered mark as to be likely to deceive or cause confusion;
  2. the unauthorised use in the course of trade of a mark that is identical or similar to the registered trademark, in relation to goods or services so similar to the goods or services in respect of which the mark is registered that such use has a likelihood of deception or confusion;
  3. the unauthorised use in the course of trade in relation to any goods or services of a mark that is identical or similar to the registered trademark if the registered trademark is well known in South Africa and the use of the mark is likely to take unfair advantage of, or be detrimental to, the distinctive character or repute of the well-known registered trademark, notwithstanding the absence of confusion or deception; and
  4. the unauthorised use of a trademark that constitutes, or the essential part of which constitutes, a reproduction, imitation or translation of a trademark that is entitled to protection under the Paris Convention as a well-known mark (even though not registered in South Africa), if the use is in relation to goods or services that are identical or similar or to goods or services for which the mark is well known, and the use is likely to cause deception or confusion.

 

The Trade Marks Act sets out the following defences to an infringement claim (with an exception to point (4) above):

  • any bona fide use by a person of his or her own name, the name of his or her place of business, the name of any of his or her predecessors in business, or the name of any such predecessor’s place of business;
  • the use by any person of any bona fide description or indication of the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of his or her goods or services, or the mode or time of production of the goods or the rendering of the services;
  • the bona fide use of the trademark in relation to goods or services where it is reasonable to indicate the intended purpose of those goods, including spare parts and accessories, and such services;
  • the importation into or the distribution, sale or offering for sale in South Africa of goods to which the trademark has been applied by or with the consent of the proprietor thereof;
  • the bona fide use by any person of any utilitarian features embodied in a container, shape, configuration, colour or pattern that is registered as a trademark;
  • the use of a trademark in any manner in respect of or in relation to goods to be sold or otherwise traded in, or services to be performed, in any place, or in relation to goods to be exported to any market, or in any other manner in relation to which, having regard to any conditions or limitations entered in the register, the registration does not extend; and
  • the use of any identical or confusingly or deceptively similar trademark that is registered.
Remedies for infringement of IP

What remedies are available to individuals or companies whose intellectual property rights have been infringed?

The protection of confidential information, trade secrets and know-how is almost exclusively governed by common law; hence, there are protective mechanisms that provide for common law remedies. In addition to the common law protective mechanisms that are available, legislation also provides protection of intellectual property rights.

In terms of the Copyright Act and the Trade Marks Act, the infringement of certain provisions is a criminal offence, the penalty for which is a fine or imprisonment. In addition, both the Copyright Act and the Trade Marks Act provide for civil proceedings to be instituted where intellectual property rights have been infringed, affording the following possible relief:

  • in the case of copyright:
    • damages (but only where the defendant was aware or had reasonable grounds for suspecting that copyright subsisted in the work);
    • an interdict;
    • delivery of infringing copies or plates used for making infringing copies;
    • in lieu of damages, at the option of the plaintiff, a reasonable royalty; or
    • additional damages as the court may deem fit, in certain exceptional circumstances; and
  • in the case of trademarks:
    • an interdict;
    • an order for the removal of the infringing mark from all material and where inseparable or incapable of being removed from the material, an order that all such material be delivered to the proprietor;
    • damages; or
    • in lieu of damages and at the option of the proprietor, a reasonable royalty.

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20 July 2020.