What is corporate espionage?
While it conjures images of a spy stealing top secret documents, Corporate Espionage, which is also referred to as industrial espionage, economic espionage or corporate spying, is a very real offence. Corporate Espionage means the unlawful theft of intellectual property of an organisation, such as any key trade secrets, patents, business or manufacturing techniques, business processes, or even ideas or formulas. While most successful companies gather information on their rival companies, in some instances, this practice of information gathering can step over the line and be illegal.
What are examples of corporate espionage?
All of the following can be considered to be corporate espionage:
- Bugging a competitors premises or phone;
- Hacking into their computers;
- Posing as an employee in order to gain financial information;
- Using malware to attack their website;
- Trespassing to steal or access files or data.
It is important to note that much less extreme conduct can also qualify as industrial espionage, such as a disgruntled former employee being hired by a competitor, and passing on information they are not permitted to pass on.
Is Corporate Espionage illegal in South Africa?
There is a common misconception that spying on a private company is never illegal. Corporate espionage, referred to more commonly as industrial espionage in South Africa, is certainly a crime. Where a company or individual gains access to important intellectual property of a competitor, such as formulas and trade secrets, their unique strategies or new innovations, or even their client lists, they may be guilty of having committed an offence.
Can you take action against an employee for gathering information?
The short answer is yes. It was decided in the Labour Court, and upheld in the Labour Appeal Court, that an employee who refused to delete photos of the employer’s production line was fairly dismissed. The Court held that the employee’s right to privacy is not absolute, and must be balanced against an employer’s right to protect its business interests. The dismissal was fair on this basis, as well as because the employee had broken down the relationship of trust with the employer as a result of taking the photos, and refusing to delete them.
Is it illegal for an ex-employee to pass on information about the company?
If they are passing on general information which is publicly available, then the answer is no. However, if they are passing on trade secrets, secret formulas, documents, client or supplier lists or private business processes, they may be guilty of industrial espionage. Employees need to take care to observe the utmost levels of confidentiality, because even taking photos of their employer’s workplace can raise suspicions of industrial espionage.
