Trade Secrets 2020

Last Updated April 28, 2020

Kenya

Law and Practice

Authors



Mohammed Muigai LLP was founded in 1988 and has grown to become a leading law firm in Kenya, with seven partners, 16 associates and a dedicated team of support staff offering expert legal advice to corporate entities, banks, insurance and financial institutions, governments and private clients. It provides specialised legal advisory services and handles high-level dispute resolution (through both litigation and alternative dispute resolution mechanisms) and complex and high-value conveyancing and commercial transactions. The firm has a keen understanding of the legal, commercial and regulatory environment in Kenya. Among other areas, it has substantial expertise in property law and conveyancing, commercial law and litigation, public procurement, corporate and financial services, corporate restructurings, M&A, employment law, intellectual property, insurance and tax matters. Members have varied educational and professional backgrounds, with exposure to Kenyan and other legal systems helping the firm to find innovative solutions for client challenges.

The protection of trade secrets in Kenya is governed by common law and equity in the form of judicial decisions, of which there are few.

Although there is no single statute that governs the protection of trade secrets, several alternative statutes are invoked to protect trade secrets, including the following:

  • the Constitution of Kenya – Article 31 recognises the right to privacy;
  • the Contracts in Restraint of Trade Act (Cap.24), which allows an employer to restrict an employee from working for other similar employers, but only to the extent that the court finds reasonable;
  • the Law of Contract Act (Cap.23), which grants parties the freedom to contract, and to draw up clauses on the protection of trade secrets;
  • the Computer Misuse and Cybercrimes Act, 2018, which is used to protect trade secrets embedded in computer systems; and
  • international laws on trade secrets, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), are applicable by virtue of Articles 2(5) and 2(6) of the Constitution of Kenya.

These statutes are utilised at both the national level and the local level. In the circumstances, there has not been a conflict in governing laws over trade secrets.

A trade secret is recognised as follows:

  • any information that is a secret or is kept a secret, and is not readily available to persons within the circles that would find the undisclosed information important for their trade;
  • any information that has commercial value; and
  • where reasonable steps have been taken consistently to keep the information undisclosed or a secret.

Any information that meets these thresholds is capable of being protected as a trade secret, with the most common example being information relating to the composition of a commercial product or the method used in delivery of a service – ie, manufacturing processes, distribution methods, advertising strategies, research, algorithms, formulas and codes, recipes, etc.

There have been few trade secret cases instituted in Kenya, and even fewer that have been found to amount to trade secrets, including the following:

  • confidential information in the relationship between the employer and employee has been held to be trade secret, as established in the case of Leland Salano v Intercontinental Hotel [2013]; and
  • manuals of a company have been held to be a trade secret, as held in the case of East African Breweries Limited v Castle Breweries Limited (unreported).

Through case law, the courts have established the following elements necessary for trade secret protection:

  • information that is a secret or is kept a secret and is not readily available to persons within the circles that would find the undisclosed information important for their trade;
  • information that has commercial value; and
  • information that a party has taken reasonable steps to consistently keep undisclosed or a secret.

Statutes and legislation such as the Constitution of Kenya 2010, the Contracts in Restraint of Trade Act (Cap.24), the Law of Contract Act (Cap.23), the Computer Misuse and Cybercrimes Act 2018 and international agreements such as TRIPS are commonly used to supplement the above criteria.

A trade secret owner is mandatorily required to establish that it took reasonable measures to protect its trade secret. The courts determine what is reasonable within the circumstances of each case.

In the case of Credit Reference Bureau Holdings Limited v Steven Kunyiha [2017] eKLR, the court determined “Whereas it would not be right to allow practices that unfairly and unduly open up one's business secrets and market edge to its rivals, it would on the other hand not be right to encourage a practice where in order to survive the competition, such business shackles its employees from obtaining employment with its competitors. In the digital age, there are in place business processes which can minimise the risk of an employee accessing or inappropriately using employers' trade secrets once out of such employment. Experience and expertise garnered from working for a particular employer cannot be reasonably restrained without stunting such employee's career. In order to be enforceable such restraint must seek to restrain the use of only that which is uniquely that employer’s secret and not knowledge and skill which can be acquired by learning, experience or development in technology.”

The disclosure of a trade secret to employees affects the protection afforded to the employer of the trade secret once the employee has left the employment of the employer.

In the case of Leland Salano v Intercontinental Hotel (2013), the court held that once the employee has left employment, there is less onerous obligation to demand that the employee honours confidential information that may have been acquired during employment.

However, where the employee and employer have entered into an agreement whose provisions survive the employee leaving the employment of the employer, then the employer's protection of trade secret remains. The issue that arises is that usually such agreements have a validity period, beyond which the employee has no further obligations to the employer and within which period the employer is expected to have taken measures to mitigate the employee's further access to the trade secret and the trade secret getting exposed in general.

Independent discovery and reverse engineering circumvent trade secret protections.

A trade secret owner has no recourse against a party that independently discovered or reverse engineered the trade secret. There is no agreement between such parties as to the trade secret, nor confidentiality thereto. As such, a party that fairly and honestly independently invents or reverse engineers a trade secret without access to the trade secret information cannot be stopped from using the information so discovered.

The Computer Misuses and Cybercrimes Act 2018 specifically protects trade secrets embedded in computer systems.

Unlike other statutes used to protect trade secrets, the Computer Misuses and Cybercrimes Act 2018 makes trade secrets misappropriation a criminal offence, punishable by imprisonment and/or a penalty.

Generally, there are no statutory limitations to a trade secret. However, the duration of a trade secret protection is dependent on the following:

  • the mechanism adopted by the Trade Secret owner to protect the trade secret – for example, where a trade secret owner discloses the trade secret information to its employees or potential investors under a confidentiality/non-compete agreement, then the trade secret will be protected for the duration of that agreement. This is also referred to as controlled disclosure where a limited number of people know the trade secret; and
  • where no agreement has been entered into, the court shall consider equity in determining the length of a reasonable period of protection for the trade secrets on a case-by-case basis.

Disclosure of a trade secret reduces the protection afforded to a trade secret because it is the voluntary divulgence of secret information that can no longer be deemed a secret and therefore no longer warrants protection.

Where a trade secret is accidentally disclosed, the owner of the trade secret loses the protections afforded thereto in the same manner as a trade secret that is independently discovered or reverse engineered. The trade secret owner will have no recourse.

Trade secret owners may mitigate the duration of trade secret protection by patenting the trade secret where it meets the requirements of a patent, thereby limiting the number of people who know and have access to the trade secret.

There is no legal framework in Kenya that governs the use and protection of trade secrets. As such,  trade secret owner has no rights with respect to licensing.

However, under common law and the laws of equity, a party may still license their trade secret. Licensing will not affect the existence of a trade secret as it will continue to be a secret between the contracting parties and the burden will be on both parties to ensure maintenance of secrecy.

The owner will ideally incorporate confidentially and non-compete provisions in the Licence Agreement. The owner will also consider the following in protection of the trade secret through licensing:

  • the mechanisms and procedures that should be adopted in divulging the trade secret;
  • restrictions on the recipients of the trade secret and the use by the recipients of the trade secret;
  • the duration the recipients may have access to the trade secret; and
  • the cost/price of accessing the trade secret.

Kenya has established a legal framework that governs the use and protection of other forms of intellectual property, but does not yet make provision for trade secrets. A trade secret is not deemed to be intellectual property within the current definitions.

Trade secret protections differ from intellectual property protections in the following manner:

  • trade secrets can only be protected through contract;
  • trade secrets are not limited as to the subject matter they can protect;
  • trade secrets can be protected without identifying the inventor of the trade secret;
  • the protection afforded to trade secrets is as wide as the provisions envisaged in the contract;
  • trade secrets are immediately protected upon execution of the contract;
  • trade secrets do not need to be registered in order to be protected;
  • trade secret protection does not require compliance with formalities such as government regulations or costs or public disclosure in order to be protected; and
  • trade secrets are not limited as to time, so long as they are not revealed.

A claimant may assert trade secret rights in combination with other types of intellectual property rights.

For example, a claimant may have valuable know-how on how to exploit a patented invention. In such a scenario, the claimant can claim for breach of the know-how, which would be protected by trade secret, and for breach of the patented invention.

A claimant may institute proceedings that relate to trade secrets other than trade secret misappropriation.

For example, an employee is duty-bound to uphold the confidentiality of their employer. If an employee steals a trade secret – whether disclosed to them or not – and uses it for their own gain or discloses it to a third party, the trade secret owner may institute proceedings against the employer for breach of fiduciary duty.

A trade secrets owner may also institute proceedings against a future employer who coerces a former employee of the trade secrets owner into disclosing the trade secret.

Case law has established trade secret misappropriation to be the unlawful access to trade secret information, the acquisition of trade secrets known to be unlawfully obtained, the use and disclosure of a trade secret that is known to have been unlawfully obtained, or the use and disclosure of trade secrets in breach of a confidentiality agreement.

The trade secret owner needs to prove any one of the foregoing circumstances but does need not necessarily need to prove all of them.

A claimant may institute a trade secret misappropriation claim against its employee; there is no distinction between misappropriation by an employee and misappropriation by a third party.

An employee is duty bound to uphold the confidentiality of their employe, including trade secrets. However, the courts have established that there is a less onerous obligation to demand that the employee honours confidential information that may have been acquired during employment once said employee leaves the employment of the employer.

The jurisdiction does not provide for a legal framework that governs the use and protections of trade secrets. However, obligations between joint ventures with respect to trade secrets are recognised in conformity with the parties’ agreement thereto.

In establishing a joint venture, it is prudent for the parties to consider and make provisions on the following issues as regards trade secrets: 

  • identifying the trade secret, with specificity;
  • confirming the creator of the trade secret, or what each party contributed to the establishment of the trade secret if it was a joint effort;
  • the obligation of each party to ensure the non-disclosure of the trade secret; and
  • what is to happen to the trade secret upon the breakdown of the joint venture.

The more detailed a joint venture agreement is on trade secrets, the greater enforcement the court is able to afford a party.

Kenya does not provide a legal framework that governs the use and protections of trade secrets. However, the Computer Misuse and Cybercrimes Act, 2018 criminalises electronic industrial espionage with a penalty of time in prison or a fine, while the penal code criminalises physical industrial espionage in the form of theft, burglary and/or trespass.

Industrial espionage in respect of trade secrets will ordinarily be instituted and determined in accordance with common law and the laws of equity. In a claim of industrial espionage with respect to trade secrets, the claimant will especially be entitled to aggravated damages if the claim is successful.

Trade secrets will usually be in the possession of the owner, or shared with persons or entities with whom the owner has a contractual relationship. It will therefore be important to include a clause in the contractthat:

  • identifies the work which is agreed by both parties to be a trade secret;
  • limits the disclosure of such information; and
  • sets out the consequences of disclosing the trade secrets.

In the case of an employment relationship, the courts have held that it is important for the trade secret owner to mark the information which is confidential or a trade secret. This can be done, for example, by inscribing the words "strictly confidential" on a document or file.

Some employers in Kenya conduct exit interviews for departing employees. The process is usually voluntary, and it may be tailored to suit the parties’ needs. An exit interview may seek to discover information from the employee on the employer’s operations and how these operations may be improved.

Obligations on confidentiality cannot be imposed at the exit interview stage, and should have been included in the original contract which has been terminated. However, the courts in Kenya have held that the confidentiality duty of the employee only exists until their employment is terminated – for example, in the case of Leland I. Salano v International Hotel, the courts held that once the employee has left employment, there is a less onerous obligation to demand that the employee honours confidential information that may have been acquired during employment.

The employer may inquire on the nature of the new position which the employee will take up, but the employee is under no obligation to give this information.

There is a distinction in Kenya between protectable trade secrets and an employee’s general knowledge and skill. For example, in the case of Credit Reference Bureau Limited Holdings v Steven Kunyiha [2017] eKLR, the court held that a restraint must be limited to the use of only that which is the employer’s secret in order to be enforeceable, and should not extend to knowledge and skill that can be acquired by learning, experience or development in technology.

The doctrine of "inevitable disclosure" is recognised in Kenya. In Leland I. Salano v International hotel, the court held that, so long as the employee does not intentionally rummage through the files looking for protectable trade secrets, there will be no breach of confidentiality if the information relates to documents which he came across in the ordinary course of his duties.

An employer can minimise the likelihood of being subjected to a trade secret misappropriation claim by having a prospective employee confirm that their previous employment contract did not have a trade secret or confidentiality clause. The employer may also contact the former employer of the prospective employee and inquire on any residual obligation concerning trade secrets the employee may have.

The potential employer may include an indemnity clause in an employment agreement, which provides that the employee would indemnify the employer for any liability or damages they are exposed to as a result of the employee revealing a former employer’s trade secrets.

There is no special procedure for filing a lawsuit that concerns trade secrets; the preliminary steps will be the same as those of an ordinary civil suit. The aggrieved party will issue a demand to the offending party seeking either for them to cease and desist from using the trade secrets or for them to admit that they have used or benefited from the aggrieved party’s trade secret.

A claim for the unlawful disclosure, use or theft of a trade secret can be made either in contract or in equity, depending on the relationship between the parties. In either case, the Limitation of Actions Act will be used to gauge the applicable limitation period. The limitation period will be six years in cases of contract, and three years in cases of tort.

The claim will usually accrue when the trade secret was stolen, disclosed or used. However, in cases where such theft, disclosure or use was concealed from the aggrieved party by reason of fraud or mistake, the action can accrue when the aggrieved party discovered the breach.

A trade secret lawsuit will be initiated in the same manner as an ordinary civil suit. The owner of the trade secret will file a plaint setting out the particulars of their claim and their prayers. There is no special process for trade secret lawsuits.

There are no courts that specialise in hearing trade secret claims. The court where the suit is brought will depend on which damages a party is seeking. If the damages are below KES20 million (approximately USD200,000), the claim will made in the Magistrates Courts. If the claim is above this amount, it will be presented in the High Court of Kenya. The High Court is divided into specialised divisions – a trade secret claim made to the High Court will be filed in the Commercial and Tax Division of the High Court.

A trade secret claim is a civil claim in Kenya. It was held in Kanyungu Njogu v Daniel Kimani Maingi [2000] eKLR that a civil case will be decided on a balance of probabilities. The court will analyse the evidence presented by the two parties, and decide which of the two claims is more probable than the other.

An owner of a trade secret cannot therefore only allege facts "on information and belief" – there must be tangible evidence that their trade secret claim is justified. However, there is no heightened particularity standard applicable to trade secret claims.

A mechanism for discovery is available for parties in civil cases in Kenya, and this mechanism may be used in trade secret claims. How this mechanism is used will depend on the type of evidence the owner of the trade secrets seeks from the other party:

  • If the evidence is testimonial, the owner of the trade secret may file in court and serve interrogatories on the other party, which will be required to answer them.
  • If the evidence is documentary, the owner of the trade secret may apply to the court for leave to inspect documents held by the other party, for documents to be produced, or for documents that had been given to the other party to be provided.

Under the Civil Procedure Rules, the court has the power to strike out pleadings filed in court or to award costs if a party does not comply with orders on the answering of interrogatories or the production of documents.

The general rule provided by the Constitution of Kenya is that disputes in court should be resolved in a fair and public hearing. However, if a party believes that the details of their case, such as trade secrets, should remain confidential, they may apply to the court to invoke its inherent powers to make such orders as may be necessary for the ends of justice to be met. It is therefore possible, if the court is persuaded, to have a fact-gathering process in a trade secret suit conducted on a confidential basis. This will prevent third parties from accessing confidential information disclosed in the trade secret suit.

A common defence is that the information alleged to be a trade secret is not confidential. A defendant may also claim that they had the consent of the trade secret owner to use or share the information. Where it is uncertain if the plaintiff is the owner of the trade secret or has the consent of the owner to bring the claim, a defendant may challenge their locus standi.

In an employment relationship, the Employment and Labour Relations Court has been hesitant to extend the duty to keep information confidential beyond the contractual period of the contract.

There are several steps a defendant who is faced with a trade secret claim should take before filing their defence to such a claim, as follows:

  • If the relationship between the parties was governed by an agreement with an arbitration clause, the defendant should apply to the court to have the matter stayed and referred to arbitration. See 10 Alternative Dispute Resolution.
  • Any challenge on the jurisdiction of the court or on the locus standi of the plaintiff should be raised at the onset, in the form of a Notice of Preliminary Objection.
  • Parties in Kenya are bound by their pleadings. A defendant should therefore plead all the defences that are applicable to their set of facts, in their statement of defence.

There are instances where a trade secret claim may be disposed of without going to trial. Such a motion will include preliminary objections on points of law, applications to strike out a suit for offending mandatory provisions of law, or motions seeking interlocutory judgment where a defence has not been filed or has been filed but does not raise triable issues.

The costs of litigating a trade secret suit are difficult to estimate. They will depend on various factors, such as the quantum of damages sought from the other party, the number of interlocutory applications made in the matter, the complexity of the suit and the time it takes for the suit to be heard and determined.

The court has the discretion to award costs but, in most cases, it is the losing party who will be responsible for both their costs and those of the other party.

Section 46 of the Advocates Act prohibits contingency litigation. Parliament is yet to enact a statute or authorise regulations to prevent third parties from funding litigation costs of a party in a court matter. There are also no restrictions in Kenyan law on the funding arrangements a party to a suit may have with third parties.

Kenya does not have a jury system. As such, all matters including trade secret matters are determined by a judge. In the circumstances, claimants and respondents do not have a say in who decides their claim.

Trade secret claims are conducted in the same manner as civil suits. An aggrieved party will institute a claim before the High Court through a plaint, and file its supporting documents and witness statements. In turn, the defendant will file its defence and supporting documents and witness statements. Once all the appropriate pleadings are on recordm the matter will progress to hearing before a single judge.

During the hearing on the matter, the parties are at liberty to adduce both documentary evidence and witness testimony evidence based on the pleadings each party has on record. The parties are also at liberty to strictly rely on documentary evidence, if they so choose, and not call any witnesses to testify.

Since Kenya has an adversarial system, the parties are required to present arguments. This may be done either in the form of oral and written submissions, or strictly written submissions. The courts will ordinarily grant parties the opportunity to choose how they would prefer to present their arguments.

It is difficult to determine how long a trade secret matter would take from institution to completion because the progression of the trial is dependent on variables, such as:

  • the time taken by parties to file all pleadings;
  • the complexity of the matter;
  • the evidence to be adduced; and
  • the court’s diary – ie, the dates available for hearing the matter.

Expert witness testimony is allowed in trade secret matters.

The party seeking to rely on the expert witness testimony will write to the expert requesting a report on the subject matter, and forward the appropriate documentation, if any, to the expert to consider. The expert will prepare a report, which will be filed in court as evidence together with the expert’s witness statement on the report. The expert’s report and witness statement will be served upon the other party prior in order to grant them the opportunity to counter the expert’s report and witness statement, if at all, or to simply prepare for cross-examination.

The use of expert witness testimony is subject to the provisions of the Evidence Act (Cap 80). An expert may assist the court in forming an opinion upon a point of foreign law, science, art, identity, genuineness of handwriting or finger or other impressions, customs and rights, the usages and tenets of any association, body of men or family, the constitution and government or any religious or charitable foundation, the meaning of words or terms used in particular districts or by particular classes of people and the relationship between parties.

The cost of an expert witness is dependent on the witnesses, and is usually determined between the expert and the party seeking to reply on the expert testimony.

Preliminary injunctive orders are available in trade secret matters prior to determination of the suit. A party seeking preliminary injunctive orders will need to prove that:

  • they have a prima facie case with a probability of success;
  • the applicant will suffer irreparable injury that cannot be adequately compensated by damages; and
  • on a balance of convenience, that it is convenient to grant the applicant injunctive orders.

There is no requirement for an applicant seeking a preliminary injunctive order to post a bond.

In Kenya there are no limitations on the duration of a permanent injunction – once a permanent injunction is issued, it continues to subsist always.

A claimant in a trade secrets suit may plead and receive the following:

  • Special Damages – in order to receive special damages, the claimant would need to specifically quantify its loss or part of its loss. This may also include expenses incurred by the claimant as a result of the respondent's actions, and expenses incurred by the claimant in mitigating its loss. This may be done, for example, through the production of receipts.
  • General Damages – general damages is loss that cannot be specifically quantified. As such, the claimant would need to prove as far as possible the damage, injury, loss or suffering it has endured and may continue to endure as a result of the respondent's actions. This may be done, for example, through the production of past earnings, current earnings, estimated future earnings, loss of business, profit or market share.
  • Punitive Damages – these damages are usually issued at the discretion of the court and are intended to punish the respondent and deter similar conduct. The claimant would need to prove that the respondent's conduct was malicious, oppressive and high handed, such that it offends the court's sense of decency.
  • Aggravated Damages – these are generally awarded where the accused has by its conduct subjected the claimant to humiliating and malicious circumstances. In respect of trade secrets, aggravated damages would be issued where the claimant proves industrial espionage.

A successful respondent may seek any of the foregoing damages if pleaded in a counterclaim or a separate suit.

Permanent injunctive relief is available as a remedy in a trade secrets claim. There is no limitation as to the duration of a permanent injunction – once a permanent injunction is issued, it continues to subsist always.

There is no prohibition against a claimant seeking final orders that the accused product be recalled by the appropriate government entity. The issuance of such an order will depend on the circumstances of the case and the discretion of the court.

A party may seek orders limiting an employee’s subsequent employment in order to protect the claimant's trade secret. However, the courts exercise the issuance of such orders sparingly, and are reluctant to limit the rights and liberties of employees without merit. Accordingly, the claimant would need to prove compelling reasons as to why such an order should be granted – ie, the employee is privy to the employer's trade secret, and the employer and employee entered into a non-compete agreement or an agreement as to confidentiality, or an agreement pursuant to the provisions of the Contracts in Restraint of Trade Act (Cap.24)

Even still, the claimant would need to specify the limitation as to future employment sought – ie, the claimant cannot receive a blanket prohibition of future employment because this would infringe on the employee's rights and liberties; the claimant would need to specify that the employee is prohibited from seeking employment at KFC, for example, because it is a direct competitor of the employer and produces a similar good or product. The claimant would further need to specify the limitation period – the court will not issue an indefinite period of prohibition against the employee as this may again infringe on the employee's rights and liberties.

The issuance of such a relief is dependent on the circumstances of the case, the evidence before the court and, ultimately, the court's discretion.

In a trade secrets case, the claimant may apply to the court for an order to seize the accused products. This application will ideally take the form of an Anton Piller application, and can be issued to the claimant on an ex parte basis. The order can be issued to the claimant before final judgment of the substantive case.

In order to obtain an order for seizure, the claimant would need to prove the following:

  • that there is an extremely strong prima facie case against the respondent;
  • that the damage – potential or actual – to the applicant is very serious; and
  • that there is clear evidence that the respondent has in their possession relevant documents or things. and that there is a real possibility that they may destroy such material before an inter partes application can be made.

In Kenya a party can only recover a portion of the attorney’s fees.

A party will plead for costs in the suit, which shall be determined by the court at the conclusion of proceedings. Costs include the costs of litigation and portions of the attorney’s fee; the remainder of the attorney’s fees is settled between the attorney and the client.

A successful party can recover the costs of litigation. These costs in part incorporate attorney fees.

The court has discretion to award costs but in most cases the losing party incurs the costs of the suit. The party who has been awarded costs will file a party-and-party bill of costs detailing the instruction fees, filing fees and other expenses incurred in the matter. The Advocates Remuneration Order provides a scale of fees that are payable. The losing party is at liberty to challenge the filed bill of costs. Once the bill of costs is in order, the Deputy Registrar will then assess the bill of costs and tax it. The losing party is then obligated to pay the costs as assessed.

An appeal is available to both the claimant and the respondent. A party may appeal a ruling or a judgment of the Court.

A party has 14 days from the date of the decision to file a Notice of Appeal. The party shall simultaneously apply for certified copies of the court proceedings and the decision being appealed. Once the proceedings and decisions are ready, a party has 60 days to prepare a memorandum of appeal and a record of appeal, which is essentially the grounds of appeal, together with a record of all documents files in the lower court. The file is then placed before the Deputy Registrar to give directions as to the timelines for filing a response to the appeal and written submissions of each party. Once all the pleadings are on record, a hearing date is allocated to the parties. This procedure is the same for all appeals.

It is difficult to specify how long an appeal may take, as several variables have to be taken into account, such as:

  • the complexity of the matter;
  • the time taken by parties to file on the requisite pleadings and documentation;
  • the institution of applications that need be determined before the substantive matter; and
  • the court's diary and the availability of the bench to hear the matter.

A court hearing a first appeal may consider issues of both fact and law. A court hearing a second or third appeal may only consider issues of law.

A party may apply to review a judgment or ruling of the court where there is a discovery of new evidence that was not within the party’s knowledge, an error apparent on the face of the record or any other sufficient reason. A party must, however, choose between a review of the decision or an appeal against the decision.

All issues raised in the court of first instance are eligible for appeal. An issue can only be waived from determination prior to an appeal by the consent of both parties.

A court sitting on appeal will hear live arguments from all counsels but will not hear live evidence/testimony at this stage. Matters on appeal are predominately determined based on pleadings and documentary evidence already on record.

Kenya does not have a specific legal framework on trade secrets, which are determined through common law and equity. As such, Kenya does not impose criminal penalties on trade secret misappropriation. However, the Computer Misuse and Cybercrimes Act, 2018 criminalises electronic industrial espionage, with a penalty of time in prison or a fine.

Trade secret disputes may be resolved through mediation or arbitration in Kenya.

The matter may be referred to mediation by the court (ie, court-annexed mediation), in which case the mediation is free, although the parties are still required to pay the costs of litigation for instituting the suit and the measures taken thus far.

As an alternative, the parties may appoint either a mediator or arbitrator pursuant to an agreement, or by consent. The costs of the mediator or arbitrator are determined by the mediator or arbitrator themselves. However, in most instances the mediator or arbitrator will be a member of an institution such as the Chartered Institute of Arbitrators, which places a cap on fees depending on the value of the claim.

The duration of a mediation or arbitration is difficult to specify. A mediation is ordinarily much faster and can ideally be completed within two months at the latest, because mediation only requires parties to file case summaries and then have discussions towards a potential resolution.

Arbitration takes slightly longer than mediation but is shorter than litigation. In arbitration, the parties need to file pleadings in a similar manner to litigation, but with more flexible rules. The parties will have documentary as well as witness evidence. The length of arbitration will be dependent on the time taken by parties to file all their requisite pleadings, the complexity of the matter, the evidence to be adduced and the availability of all the parties.

The advantages of using ADR in Kenya for a trade secrets claim are as follows:

  • parties are able to choose the mediator or arbitrator of their choice, and are thereby able to select a person with expertise in trade secrets who will best understand the matter and arrive at an informed determination;
  • mediation and arbitration are much faster processes than litigation, and much cheaper;
  • mediation and arbitration proceedings are private and confidential amongst the parties, which is beneficial in a trade secrets claim as the essence of the proceedings would ensure the non-publicity of the trade secret itself. The parties can also agree in writing that the proceedings and the final award will remain confidential;
  • mediation and arbitration promote the participation of the parties themselves, which is useful in trade secrets as the parties are able to explain their perspectives first hand; and
  • mediation and arbitration foster co-operation between the parties and there is a greater likelihood of preserving a business relationship between the parties. This is useful in a trade secrets claim as, more often than not, the parties are rivals so such co-operation may enable them to reach some form of middle ground, whereas in litigation parties would have taken hard-line positions.

The disadvantages of using ADR in Kenya for a trade secrets claim are as follows:

  • mediation does not guarantee a solution; and
  • there is a limit to the orders that an arbitrator can issue – arbitrators cannot issue orders compelling one party to do something or refrain from doing something (eg, injunctive relief), so will be unable to restrict the respondent from further using the trade secret, for example.

The parties cannot obtain interim orders from the arbitral tribunal because the tribunal does not have the power to issue such orders. However, the parties are able to seek interim orders from the court pending the hearing and determination of the arbitral proceedings.

Mohammed Muigai LLP

MM Chambers
4th Floor, K-Rep Centre
Wood Avenue, Off Lenana Road
Kilimani
P.O Box 61323-00200
Nairobi
Kenya

+254-20-2397401

info@mohammedmuigai.com www.mohammedmuigai.com
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Law and Practice

Authors



Mohammed Muigai LLP was founded in 1988 and has grown to become a leading law firm in Kenya, with seven partners, 16 associates and a dedicated team of support staff offering expert legal advice to corporate entities, banks, insurance and financial institutions, governments and private clients. It provides specialised legal advisory services and handles high-level dispute resolution (through both litigation and alternative dispute resolution mechanisms) and complex and high-value conveyancing and commercial transactions. The firm has a keen understanding of the legal, commercial and regulatory environment in Kenya. Among other areas, it has substantial expertise in property law and conveyancing, commercial law and litigation, public procurement, corporate and financial services, corporate restructurings, M&A, employment law, intellectual property, insurance and tax matters. Members have varied educational and professional backgrounds, with exposure to Kenyan and other legal systems helping the firm to find innovative solutions for client challenges.

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