Trade secrets2
Preserve your unique selling propositions – protect your trade secrets!
Secrets should remain secret
Confidential information or know how that could constitute a trade secret are calculation plans, customer and supplier data, purchase prices, market analyses, business strategies, business plans, creditworthiness, personnel matters, marketing concepts, technical know-how (inventions, drawings, algorithms, prototypes, …), construction plans, manufacturing processes, etc.
Trade Secrets Act
The protection of trade secrets has been strengthened by the new Act on the Protection of Trade Secrets (GeschGehG), which came into force on April 26, 2019. Several requirements must be fulfilled so that confidential information can be qualified as a trade secret. The information or know how must be related to your business, disclosed and accessible to a limited group of people. The owner must take reasonable steps (or measures) to ensure the non-disclosure and must have a legitimate interest in keeping the information confidential.
Reasonable steps (measures) to keep the information secret.
The company must take reasonable steps (or measures) to ensure the non-disclosure of the information. They must correspond to the economic value of the trade secret for the company and the size of the company. The more important the secret and the higher the risks, the greater the effort the company must make to protect the secret.
Examples of possible measures:
• Physical or electronic access restrictions,
• Protection mechanisms included in contracts,
• Employee training,
• Confidentiality notices on documents,
• Authorization mechanisms,
• Restriction of private devices among employees,
• Control of measures.
Confidentiality clauses
Corporate secrets must be identified and assigned to employees who are directly involved with them. They must be weighted according to economic importance and appropriate access restrictions need to be in place. Companies should document any effort to protect secrets to be able to prove their effort in keeping trade secrets confidential.
This includes, in particular, an internal confidentiality policy as well as confidentiality clauses in contracts of employment. The recent case law shows that rather strict standards apply to confidentiality clauses.
Feel free to contact us if you have any questions or if you want to make sure that your trade secrets are well protected.
Trade secrets must be updated
Trade secrets must be updated. It is mandatory to review them annually and to document this. Trade secrets usually evolve with the company.
Legitimate Interest
Another important prerequisite for the confidentiality of sensitive data is the demonstration of a legitimate interest. In the absence of a legitimate interest, the document or data cannot be protected as a trade secret.
Claims for injunctive relief
This is to request from the infringing party to refrain from using your trade secret requiring you to prove the unauthorized use, etc.. We are happy to assist you on these matters.
Reverse Engineering
The new GeschGehG allows for “reverse engineering”, which means a trade secret can be obtained by observing, examining, deconstructing, or testing a product. However, a non-disclosure agreement should include a “No Reverse Engineering” clause ensuring that confidential information may not be used to create a similar product or service. We are here to explain why.
Trade Secret Protection Measures
We assist you in establishing appropriate trade secret protection measures within your company. Should there be a breach of your trade secrets, we support you in a swift and efficient enforcement of your rights – in court if necessary.
OUR SERVICES
- Determination of whether it concerns operational or trade secrets
- Implementation of appropriate secrecy protection measures
- Drafting of confidentiality clauses
- Enforcement of your rights in the event of a breach of your trade secrets
FAQs
The new Act requires that several conditions are fulfilled so that secret information or know how can qualify as trade secrets. The information or know-how must be related to the relevant business, disclosed and accessible to a limited group of people. The owner must take reasonable steps to ensure the non-disclosure and must have a legitimate interest in keeping the data confidential. The Federal Court of Justice (BGH) clarified that the secrecy of the information must be the expressed will of the business owner showing that he has sufficient economic interest in it (BGH GRUR 2003, 356 (358) – Präzisionsmeßgeräte).
The Act on the Protection of Trade Secrets refers only to “trade secrets”; however,
in German business language, you may also find the term “Betriebsgeheimnis” (business secrets).
Business secrets are company secrets of a technical nature such as:
• Technical know-how (inventions, drawings, algorithms, prototypes, …),
• construction plans,
• manufacturing processes.
Trade secrets are company secrets of a commercial nature such as:
• Calculation plans,
• order, customer and supplier data,
• purchase prices,
• market analyses,
• business strategies,
• business plans,
• creditworthiness,
• personnel matters,
• marketing concepts.
It applies to everyone and protects trade secrets from unauthorized use and disclosure.
NDA is the abbreviation for “Non-Disclosure Agreement”. Parties agree on the “non-disclosure” of confidential information or know how i.e., on keeping this shared information secret.
NDAs are usually used where information or know has been shared, for example, during a merger or as part of a research and development agreement. The NDA determines that this information or know how may only be used between the contracting parties for the purpose specified in the contract and may not be made available to third parties or the public.
For an information to qualify as a trade secret, several conditions would need to be fulfilled. The company must take reasonable steps (or measures) to ensure the non-disclosure of the information. They must correspond to the economic value of the trade secret for the company and the size of the company. The more important the secret and the higher the risks, the greater the effort the company must make to protect the secret.
Examples of possible secrecy measures are:
• Physical or electronic access restrictions,
• contractual protection mechanisms,
• employee training,
• confidentiality notices on documents,
• authorization mechanisms,
• restriction of private devices among employees,
• control of measures.
To be able to prove your legitimate interest in the keeping the information secret, it is very important to document your efforts that you have taken to protect secrets.
Confidentiality clauses in contracts of employment are qualified as confidentiality measures but are as such not sufficient to meet the requirements under the Act.
Feel free to contact us if you want to make sure that your trade secrets are well protected.
