The New Trade Secrets Act

The New Trade Secrets Act

The knowledge that companies accumulate over time is valuable – and can often even turn out to be a truly essential asset. That makes it something that needs to be protected. Depending on the goals a company pursues and the knowledge involved, either patent protection or protection as a trade secret may make more or less sense.

The legislator recently created new requirements for the protection of trade secrets, and in April 2019 the German law on the protection of trade secrets (GeschGehG), based on the Directive (EU) 2016/943, came into force.

Dr. Reinhard Fischer is attorny-at-law at COHAUSZ & FLORACK.

He represents national and international clients in all areas of intellectual property rights as well as in the areas of IT law, employee invention law, copyright and media law.

He supports companies in judicial and extrajudicial disputes, in the drafting and negotiation of contracts and in all other legal matters.

Trade secrets are particularly attractive for technical processes

Especially in technical (manufacturing) processes, protection as a trade secret can have advantages over patent protection. The knowledge can often be kept in-house. If, on the other hand, the innovation lies in the improvement of product properties, these are difficult to keep secret once the product has been launched on the market. Since reverse engineering under the GeschGehG is clearly no longer a violation of trade secrets, limited protection of trade secrets also applies in cases where the product’s properties are not plain for all to see.

The new law on the protection of trade secrets

The new law on the protection of trade secrets (GeschGehG) enables companies to take action against those who illegally access or exploit their know-how. However, the GeschGehG does not offer “absolute” protection for trade secrets. This is an essential difference to patents. Therefore, companies cannot take action against others who lawfully acquire and use their secret technical knowledge.

What is a “trade secret” under the new law?

A trade secret can be any information that meets the following four criteria:

a)

It must be confidential.

b)

It must be of economic value.

c)

It must be protected by reasonable confidentiality measures.

d)

There must be a legitimate interest in keeping it confidential.

In addition to technical inventions, all other information that has economic value (e.g. construction plans, algorithms, recipes, customer lists, business plans, advertising strategies and raw data) can therefore also be considered.

Information is considered confidential if it is not generally known and not readily accessible, i.e. if, for example, only persons who are obliged to maintain secrecy know about it. If third parties can only obtain information with greater effort and expense, it is also considered confidential.

What are reasonable confidentiality measures?

According to the new law, reasonable confidentiality measures are necessary not only to prevent disclosure of the trade secret, but also to obtain legal protection for this information at all. If the owner does not take these measures, he loses the confidentiality protection. Unfortunately, the GeschGehG does not provide a concrete answer to the question of what is “reasonable”. Here one will have to wait for future jurisdiction. However, companies are already well advised to at least identify their essential trade secrets and to take confidentiality measures. The following types of measures can be considered to protect a trade secret from unauthorized access:

Information is marked as “confidential”.

Contractual agreements on confidentiality obligations with all persons (employees, service providers, business partners) to whom the trade secret is made accessible, whereby the agreements should not be too general.

Restrictions on the number of persons holding confidential information and on access to information.

Technical protective measures.

If the legal requirements are met, the protection of an innovation as a trade secret can be a cost-effective alternative to patent protection that is even valid for an unlimited period of time.

Cohausz & Florack (C&F) is a law firm founded in 1954 comprising 27 patent attorneys and attorneys-at-law as well as about 110 employees with offices in Duesseldorf and Munich. The multidisciplinary law firm supports its clients in all matters relating to IP and unfair competition. This includes the drafting and filing, administration and licensing of extensive IP portfolios, searches for third-party IP and the associated Freedom-to-Operate expert opinions as well as cooperation agreements.

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Martina Große Bley

At Management Circle, I lead the content marketing team. Amongst others, I manage and oversee the IP Service World blog. I am also responsible for the topics soft skills, project management and trademarks on the Management Circle blog. I am delighted to inform you about current topics, trends and creative ideas. I look forward to hearing from you!

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