Springboarding A Business: Unlawful Competition, Not Entrepreneurship

Dispro Tech SA (Pty) Ltd v Soot Science (Pty) Ltd

This judgment is a powerful reminder that building a business on the back of a former employer's investment, relationships and intellectual property is not entrepreneurship, it is unlawful competition.

Background

Dispro Tech is a private company providing specialised emission gas testing services in the mining industry related to the measurement and analysis of diesel particulate matter (“DPM”) produced by diesel engines. It was the first company of its kind in South Africa. The methodology was invented and developed by its sole shareholder, Mr Deon Du Preez, and the company had secured exclusive distribution rights in Africa for specialised German equipment supplied by a company called Saxon.

To optimise that equipment, Dispro Tech developed custom software that enabled communication with the Saxon hardware, achieved only after significant investment of resources and technical expertise.

Facts

Two senior employees had full access to Dispro Tech's business model, client base and proprietary software. One was employed as a Technician Supervisor from August 2020 and the other joined as a Senior Engine and Data Analysis Specialist in January 2023. Both had signed the agreement with Saxon on behalf of Dispro Tech and had undergone training in Germany at the company's expense.

In March 2025, things took a turn when one of the employees was suspended after concerns arose that he was attempting to use the company as a "springboard". An investigation uncovered a document on his laptop titled "Dispro 2 O Budget", a budget for a new company that included the purchase of Saxon equipment. When confronted, both employees denied any intention to start a competing business.The suspension was lifted.

However, on 15 May 2025, the third respondent emailed himself a copy of Dispro Tech's unique software. Both employees resigned on 2 June 2025 and departed on 27 June 2025. Just eleven days later, Soot Science (the first respondent) was incorporated.

By August 2025, the former employees were already presenting an emission test demonstration at Impala Platinum alongside Dispro Tech's own presentation. They had also contacted Valterra Platinum, another of Dispro Tech's clients, delivering a proposal for emission gas testing under Soot Science's banner. A comparison of Soot Science's proposal with Dispro Tech's revealed that the similarities were, in the court's words, "abundantly clear".

Findings

The court found that the respondents had "springboarded" Soot Science into existence using Dispro Tech's confidential information, proprietary software, and client relationships.

Several findings stood out:

• The court held that it was "virtually impossible" for the respondents to have developed their own independent software within a matter of weeks. The "ineluctable deduction" was that Soot Science came to possess Dispro Tech's software because the employee in question had emailed it to himself.
• The respondents had purchased Saxon equipment in direct breach of the exclusive distribution agreement that they themselves had signed on behalf of Dispro Tech.
• They had approached Dispro Tech's mining clients to poach business.

The court confirmed that springboarding entails "not starting at the beginning at developing a technique, process, piece of equipment or product, but using as a starting point the fruits of someone else's labour".

Critically, the court noted that this doctrine can apply even where the information copied is not confidential, if the copying itself is regarded as unlawful.

The respondents were ordered to return all confidential information, physical and electronic, and to delete all copies from their devices. They were also restrained from unlawfully competing with Dispro Tech for eighteen months from the date of judgment. Costs were awarded on a punitive attorney-and-client scale.

Key lessons

1. Fiduciary duties may not expire at the exit interview. Even without a formal restraint of trade clause, employees in positions of trust owe fiduciary duties to their employers, which may extend beyond the termination of employment. If you had access to confidential information, client lists, and proprietary systems, you cannot simply walk out the door and replicate the business. The court made clear that this is "not simply a case of restraint of trade, it is more".
2. A written restraint is helpful, but not always necessary. One of the respondents had no written employment contract at all. The court nonetheless found that fiduciary duties and confidentiality obligations arose from the nature of his role and the access he enjoyed. That said, a well-drafted restraint of trade would have made this case significantly more straightforward (and less expensive) for Dispro Tech.

1. The digital trail matters. The employee emailed the software to himself on 15 May 2025, the "Dispro 2 O Budget" document saved in October 2024, and the timeline of resignation, incorporation and client approach painted a picture the court found impossible to ignore. If you are a departing employee, assume that your digital footprint will be examined. If you are an employer, ensure you have systems in place to monitor and preserve that trail.
2. Springboard doctrine is alive and well. South African courts will intervene where a competitor has been launched on the back of another's investment, even in the absence of a formal restraint. The court's willingness to grant an eighteen-month interdict and punitive costs sends a clear signal.

The springboard doctrine does not prohibit a former employee from using general skills; it prohibits the misuse of confidential information, proprietary assets and client relationships to leapfrog the competitive process. 

Better to build your own launchpad than to borrow someone else's.