Technical Systems (Pty) Ltd and Another v RTS Industries and Others

The case has a long history dating back to 2014. The First Applicant (Technical Systems) manufactures flat wire used to produce augers for conveying poultry feed. The manufacturing process involves multiple steps and was confidential to Technical Systems. The Fourth Respondent, Mr Kurtz, a former employee of Technical Systems, took technical drawings and gave them to the First Respondent (RTS), his new employer. RTS used those drawings to manufacture flat wire and auger in competition with Technical Systems. In 2015, after discovery revealed the theft, the Respondents abandoned their defence and agreed to a court order (the 2015 Order) which interdicted them from manufacturing flat wire or auger for three years and prohibited them from using the Applicants' confidential information or copyright. The 2015 Order included a mechanism (paragraph 24) allowing the Respondents to resume manufacturing after three years only if they could demonstrate through an expert inspection process that any new production facility did not infringe the Applicants' rights. In 2019, the Respondents commenced manufacturing without completing the paragraph 24 process, leading to contempt proceedings and the 2020 Order by Mangcu-Lockwood AJ which interdicting them pending completion of the process. The parties' experts inspected the Respondents' production facility but disagreed fundamentally on whether it infringed the Applicants' rights. The joint expert report dated 23 November 2021 showed irreconcilable views. The Applicants sought a court determination of the dispute. Shortly before the hearing in November 2023, the Respondents claimed they had abandoned their intention to use the inspected production facility and were redesigning it, arguing the application was therefore moot.

• Whether paragraph 24 of the 2015 Order is interlocutory and can be varied by the court.
• Whether the court should vary paragraph 24.5 in light of the Respondents' claimed abandonment of the inspected production facility.
• Whether the Respondents' professed intention not to use the inspected production facility renders the application moot.
• Whether the dispute between the experts should be resolved by referral to oral evidence separately or joined to the pending 2020 Action.
• What the appropriate procedure is for resolving the experts' disagreement under paragraph 24.5 of the 2015 Order.
• Who should bear the costs and on what scale.

1. All supplementary affidavits admitted with no costs order on the interlocutory application. 2. The dispute between experts Broekhuizen and Bowles referred to oral evidence on a semi-urgent basis as envisaged in paragraph 24.5 of the 2015 Order. 3. Detailed procedural directions set out for discovery, witness statements, and expert evidence. 4. The parties may agree to departures from the procedure, and the hearing court may amend procedures as necessary. 5. The Respondents ordered to pay 50% of the Applicants' costs on the ordinary scale.

Paragraph 24.5 of the 2015 Order is interlocutory and can be varied on good cause shown. However, the court will decline to vary such an order where the party seeking variation has a history of dishonest and contemptuous conduct and cannot be trusted not to take advantage of any lingering uncertainty — particularly where that party refuses to give an undertaking or agree to an interdict that would adequately protect the other party's rights. The mere 'intention' not to use an inspected production facility, without more, is insufficient to persuade a court to depart from an agreed procedural mechanism for determining lawfulness, especially where the party has previously acted in bad faith.

The court observed that, absent the Respondents' history of dishonest and contemptuous conduct, it would likely have decided that no purpose would be served by pursuing the paragraph 24.5 process for the inspected production facility, as it would be an abuse of process. The court noted that the Applicants' primary legal interests are protected by paragraph 25, and that there is no obvious legal advantage to the Applicants in having a judicial determination on a production line the Respondents will not use — provided the Respondents can be trusted. The court also indicated that the Respondents could avoid the expense of the paragraph 24.5 process by simply granting an unequivocal undertaking not to use the inspected production line and agreeing to it being made an order of court. On the respondents' proposed alternative procedure, the court remarked that it is not for the Applicants' expert to tell the Respondents how to avoid infringing their rights; it is for the Respondents to present a complete production line and for the experts or the Court to determine its lawfulness.

This case illustrates the approach of South African courts to the variation of interlocutory orders, particularly in the context of intellectual property disputes and agreed court orders. It confirms that courts have the power to vary procedural orders but will exercise restraint, especially where a party's dishonest history undermines trust. The judgment also provides guidance on the enforcement of agreed mechanisms for determining IP infringement and emphasises that a party's mere stated intention is insufficient to render a dispute moot where past conduct raises reasonable suspicion. It reinforces the principle that it is not for rights-holders to advise infringers on how to avoid infringement.