Trade secrets²

Calculation plans, order, 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 and much more are sensitive data that can be considered business or trade secrets.

The new law for the protection of trade secrets (Trade Secrets Act, German: Geschäftsgheimnisgesetz – GeschGehG), which came into force on April 26, 2019, strengthens the protection of trade secrets. An important innovation is that “reasonable confidentiality measures” must be taken so that business and trade secrets can actually enjoy the protection provided for under this law.

The criterion for the appropriateness of a non-disclosure measure is, among other things, the economic importance of the trade secret for the company. The more important the secret, the stricter the requirements for the measures taken to ensure secrecy. In addition, the size of the company and the type of identification of the information to be kept secret can be relevant.

Among other things, physical or electronic access restrictions, contractual protection mechanisms and employee training, confidentiality notices on documents, authorization mechanisms, restrictions on employees’ private devices, control of measures are conceivable.

Company secrets must be identified and assigned to the employees who are directly involved with the secrets. They must be weighted according to economic importance and appropriate access restrictions must be set up. Companies should document any efforts to protect secrets to be able to prove their interest in confidentiality. In particular, this includes an internal company secret protection policy and confidentiality clauses in employment contracts, even if employees are already sworn to secrecy due to the current employment relationship. Jurisdiction, which is still young, shows that confidentiality clauses are subject to rather strict standards, so that caution is required when wording them.

Up-to-dateness is a prerequisite for effective management of trade secrets. An annual, documented review is mandatory as trade secrets evolve with the company and are not static.

Another important basic requirement for keeping sensitive data secret is proof of a legitimate interest. Not every document or data can be protected as a trade secret.

For an injunctive relief for unauthorized use of trade secrets, companies must demonstrate not only the unauthorized use, but also the related risk of recurrence.

According to the new German Trade Secrets Act (GeschGehG), permission for “reverse engineering” is expressly permitted, according to which a trade secret can be obtained by observing, examining, dismantling, or testing a product. However, “reverse engineering” can and should be contractually excluded in a non-disclosure agreement.

We support you in setting up suitable security measures in your company. If your trade secrets are violated, we support you in enforcing your rights quickly and efficiently, if necessary, in court.

Feel free to contact us if you have any questions or want to be sure that your trade secrets are well protected.