The Trade Secrets Act (GeschGehG), which came into force on April 26, 2019, is based on the EU Directive for the protection of confidential know-how and business information. It marks a significant improvement in the protection of trade secrets in Germany, which were previously primarily regulated under criminal law as “betrayal of trade and business secrets.”
Key Aspects of the GeschGehG
- Strengthening the Rights of Secret Holders: The law strengthens the claims of holders against potential violators of their trade secrets.
- Requirement for Appropriate Confidentiality Measures: A key innovation is the need for “appropriate confidentiality measures” to protect know-how as a trade secret.
- Definition of a Trade Secret: A trade secret is information that is not generally known or readily accessible, has economic value, is protected by appropriate measures, and has a legitimate interest in being kept secret.
Challenges and Practical Implementation
- Uncertainties in the Definition of Appropriate Measures: There is no clear list of measures that companies must take to protect their information as trade secrets.
- Criteria for Assessing Appropriateness: These include the type of secret, its use, value, the nature of the information, company size, and existing confidentiality measures.
- Various Protective Measures: Companies can implement organizational, technical, and legal measures, including access restrictions, contractual provisions, and non-disclosure agreements.
- Need for Regular Review: Companies must regularly review and adjust their protective measures to safeguard their intellectual capital.
- Burden of Proof on the Secret Holder: The holder must be able to prove the measures taken in the event of a legal violation.
New Developments and Outlook
- Permission for Reverse Engineering: Another important change is the permission for reverse engineering according to § 3 Abs. 1 Nr. 2 GeschGehG, which allows a trade secret to be obtained by observing, examining, deconstructing, or testing a product. Previously, this was only allowed if any expert could derive the trade secret without significant time, labor, and cost. Therefore, it is important to keep “reverse engineering” in mind, especially in confidentiality agreements, and to consider it appropriately.
- Further Development of Jurisprudence: As the GeschGehG is relatively new, further clarifications by the jurisprudence are expected.
To the point
Companies should continuously inform themselves about developments in the area of the GeschGehG and take and document appropriate confidentiality measures to effectively protect their trade secrets. We are happy to assist you in this regard.
