Trade secrets

A new law on the protection of business secrets against illegal purchase as well as illegal use and disclosure implements (EU) Directive 2016/943 within national law.

According to this reasoning, trade secrets include “manufacturing processes, customer and supplier lists, cost information, business strategies, corporate data, market analyses, prototypes, formulas and recipes”. The term therefore incorporates virtually all technical and commercial information.

Such non-evident information related to the company was almost “automatically” protected according to current law. The necessary economic interest and required will to retain secrecy were accepted by the courts in nearly all cases. The owner of the secret did not have to furnish proof of the prerequisites of protection of secrecy. On the contrary, the injuring party had to prove that the prerequisites of protection of secrecy did not exist.

Here, the new law implements a blatant turnaround. Only “information which is the subject matter of confidentiality measures appropriate in the circumstances” is protected as a secret.

These confidentiality measures are the objective prerequisite for secrecy protection and must be proven by the owner of the secret information in cases of contention. The measures must relate concretely to the respective secret and depend on the type of the business secret in detail as well as the specific circumstances of use. This means that blanket confidentiality agreements can no longer be viewed as sufficient. However, not each individual item of information must be marked. Rather, confidentiality measures can also be taken for certain information categories. However, these categories may not be formulated too broadly and too generally, because laws require evaluation of the reasonableness and a duty to reasonable confidentiality measures. This new legal situation requires the checking of existing confidentiality agreements with employees and business partners.

Extended liability for producers is also new. If business secrecy in a company has been illegally violated by an employee or an agent, the entrepreneur is held liable, independent of his own culpability. Furthermore, an entrepreneur is held liable if he obtains a business secret via a third person and at the point in time of gaining this knowledge, its use or disclosure knows or negligently does not know that this person has obtained, used or disclosed the business secret in an improper manner.

It is also new that so-called “reverse engineering” is now expressly permissible. According to German law to-date, product analysis was not permissible if connected with considerable expenses. This is now no longer valid in the future. On principle, analysis is permissible without restrictions. It is only possible to rule-out reverse engineering as not permissible within a relationship to direct contractual partners.

The new law gives rise to numerous questions, which will have to be clarified by jurisprudence. It is likely that the courts will be guided by American jurisprudence which has already been familiar with this system for longer.