Court ruling ends one of SA’s biggest copyright cases

After a seven-year legal battle, the Western Cape High Court has ruled in favour of Technical Systems, declaring the company’s former employee was guilty of copyright infringement and unlawful competition.

Technical Systems is a leading SA exporter of poultry feed conveyors, supplying about 40% to 50% of the world market.

The manufacturer took former employee Christiaan Kurtz to court after he allegedly stole more than 1,000 copyright-protected engineering drawings and used the intellectual property to replicate the company’s production plant.

The court is still in the process of quantifying the net damages Kurtz will be held responsible for, but the company estimates that his actions have cost it R180m in profit before tax. This makes it arguably the biggest copyright case in SA history.

According to Theuns Kuhn, founder and director of Technical Systems, Kurtz formed a “criminal syndicate” to hack into company emails for nine years, before using the stolen intellectual property to unlawfully compete with his former employer for a decade-and-a-half.

Evidence and witness testimonies indicated Kurtz went as far as to approach Technical Systems’ clients to offer their products at a more competitive price.

In his judgment, judge Mark Sher said the company had already refined its products and begun exporting around the world before Kurtz’s employment from 2001 to 2009.

“The processes which the plaintiff uses to make its feed chain are the result of more than 20 years plus of experimentation and the expenditure of considerable skill, effort and money,” Sher said. “There is no indication that Kurtz played any material role in this process of refinement and development.”

The ruling follows on from similar litigation in 2014, when Technical Systems accused Kurtz of replicating a specific machinery component. The court ruled in the manufacturer’s favour at the time, prohibiting Kurtz from continuing production.

“They cynically set about establishing a feed chain production plant which replicates the plaintiff’s,” said the court, “utilising the plaintiff’s credential information and trade secrets and breaching its copyright. Thus, from about 2015-16 onwards, the defendants have been competing unlawfully with the plaintiff in producing feed chains. Their conduct was brazen and egregious.”

Since 2014, Kuhn estimates that the company paid over R40m in legal fees and lost at least R90m due to Kurtz’s unlawful sales. Being forced to lower prices due to the unlawful competition also cost roughly R120m in bottom-line losses.

So far, the court has ordered the seizure of all documents, digital media, devices and storage drives with information pertaining to the case, as well as all financial records that help establish the quantity of the damages. Kurtz was ordered to pay the legal costs.

“Justice is served,” said Kuhn. “After so many years of tension and uncertainty among us, my family and staff can now sit back and relax again. I am extremely grateful to our staff, witnesses, our legal team, judge Sher, the Western Cape judiciary and court, and all parties involved.” 

websterj@businesslive.co.za