SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

3 December 2018

STATUS

Immediate

Pexmart CC V H. Mocke Construction (Pty) Ltd [2018] ZASCA 175

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

The Supreme Court of Appeal (the SCA) today dismissed with costs the appeal by the
appellants, upholding a decision by the Gauteng Division of the High Court, Pretoria, that they
had unlawfully made use of the confidential information and trade secrets of the respondents
in relation to a plastic pipe-lining process employed in the mining industry to limit corrosion
within steel pipes.

In 2009, after conducting business through his own plastic pipe construction company and
thereafter being employed by two other companies that were involved in the plastic lining of
steel pipes, Mr Mocke, the second respondent, registered H. Mocke Construction (Pty) Ltd,
the first respondent. He did this in order to solicit the business of a gold mining company in
relation to a pipelining project. According to Mr Mocke he had always harboured the ambition
to revolutionise the pipe-lining industry by rehabilitating old pipes through placing a plastic
liner inside the steel pipe that would make it last for another 30 years. In this regard, Mr
Mocke began discussions with Mr Don Gish, an American, who owned Polymeric Pipe
Technology
Corporation
(Polymeric)
which
owned
what
is
described
as
the
Polymeric/Sureline Process (the Process) for plastic-lining steel pipes. The process used a
specialised deformer machine invented by Mr Gish. The latter sold Mr Mocke the exclusive
and irrevocable licence to the Process. In turn, Mr Mocke, with Mr Gish’s consent, permitted
Mocke Construction use of the intellectual property rights that flowed from the licence.

During February 2011, before the Process was refined, Mr Henn was offered and accepted
employment with Mocke Construction. He became involved with the gold mining project
referred to above, which had prompted Mr Mocke to search for and find an effective pipe-
lining method. By that time Mr Henn and Mr Mocke had been friends for a number of years.
During October 2013, Mr Henn’s services with Mocke Construction were terminated. Mr
Henn, almost immediately thereafter, took up employment with Pexmart CC, the first
appellant. Mr Mocke and Mocke Construction contended that the appellants then became
their competitors in the pipe-lining industry through the alleged unlawful actions of Mr Henn.

During the second half of 2014, Mr Mocke became aware that the gold-mining company
referred to earlier was in advanced negotiations with the first appellant, for the completion of
the plastic pipe-lining project, in respect of which the existing contractor had defaulted.
According to Mr Mocke the tender by Pexmart CC was based on the use of the Process. The
gold-mining company had opted to use Pexmart CC because its tender was cheaper. Mr
Mocke and Mocke Construction were adamant that it was clear that the appellants had

reverse-engineered the Polymeric deforming machine and intended to market their services
competitively, utilising Mr Mocke’s trade secrets, intellectual property and licensed
technology. The appellants refused to accede to the respondents’ demand to cease using the
deforming machine, intellectual property and licensed technology, which the latter insisted
they were employing unlawfully.

The SCA held that the reasoning and conclusion of the court below in relation to whether the
processes adopted by the appellants were dissimilar to those employed by the respondents,
could not be faulted. It held further that Mr Henn’s failure to testify was another factor that
counted against the appellants, not only on the first aspect, but also in respect of the
remaining issues presented for adjudication as he was at the centre of the dispute.

The SCA concluded that in determining whether there was protectable confidential
information in respect of the process, its machine, intellectual property, techniques and on-
site training, technology and the know-how associated therewith, the court below was correct
in having regard to the claims made by Mr Mocke. Mr Mocke and Mr Gish’s evidence on the
confidential information and trade secrets developed over years and many hours of practical
application referred to in extensive detail were, essentially, uncontroverted. The details of the
Process were not within the public domain and were known only to those with whom Mr Gish
and Mr Mocke chose to work, including their employees. It is clear that the information had
economic value to Mr Gish and his licensees. The SCA stated further that this was not a case
about reverse engineering it was about whether unlawful use was made by the appellants of
the respondents’ confidential information and trade secrets. It answered that question in the
affirmative and dismissed the appeal.