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Trade secrets and their protection

CMS PROTECT

Need for action: Protection of trade secrets

Technical drawings, business strategies, recipes or customer lists are essential company assets and sensitive information that often cannot be protected as intellectual property rights (trademarks, designs, patents, etc.). Therefore, it is important to protect them from unauthorised access by third parties. Otherwise, there is a risk of appropriation by third parties or unauthorised use by former employees without any possible sanctions.

Three out of four corporate executives believe that there is a need to invest more in protecting trade secrets – this is one of the key findings from a recent analysis conducted by CMS in cooperation with „The Economist Intelligence Unit“. Only half of the companies surveyed have taken active steps to restrict access to confidential information and reduce the risk of a trade secret misappropriation.

The German Trade Secrets Protection Act (“Gesetz zum Schutz von Geschäftsgeheimnissen”) provides protection for trade secrets but also establishes the prerequisite that "reasonable steps" are taken to keep the information secret – and can also be proven.

For every piece of information which should be protected, the requirement of "reasonable secrecy measures" means that a bundle of protective measures must be taken at three levels:

  • At the legal level, e.g. through
    • confidentiality agreements and clauses
    • contractual protection of IP and work results
    • consistent prosecution of trade secret infringements
  • At the organisational level, e.g. through:
    • tiered access restrictions
    • internal instructions
    • employee trainings
  • At the technical level, e.g. through:
    • IT security
    • physical access controls
    • secure disposal of documents and information

The concrete protective measures depend on the importance, type and risk of misappropriation of the individual piece of information. There is no standard solution. Trade secrets must be categorised individually for each company and a suitable concept of protection must be developed and implemented.

Need for action to avoid liability 

Companies should not only protect themselves from the loss of their own information, but also from (negligent) liability due to an unauthorised use of secrets of other companies through their own personnel. 

For example, in joint collaborations, companies often receive trade secrets of their cooperation partners. However, if the receiving company does not sufficiently ensure that these trade secrets are protected from unauthorised access by third parties, there is a risk of liability. The same applies if a company receives information and does not sufficiently check whether it concerns trade secrets of third parties which have been obtained unlawfully.

Ensuring to avoid liability is just as much a part of the organisational duties of a company’s management as ensuring the protection of the company's own trade secrets. Companies should therefore also provide for a protection concept to avoid liability.

The solution: CMS PROTECT

In order to assist companies in protecting their trade secrets and to avoid liability, CMS offers the product CMS PROTECT.

Since the German Trade Secrets Protection Act came into force in April 2019, a team of experts of CMS PROTECT has already provided extensive advice on the requirements of the Trade Secrets Protection Act and has worked with companies to develop individual protection concepts for them.

With three modules of CMS PROTECT, we develop and implement a protection concept with and for your company to ensure the protection of secrets and to avoid liability:

CMS PROTECT

The advantage of CMS PROTECT: Your company can not only select the modules flexibly and individually but can also select the individual components within the modules. In that way, our team of experts by CMS PROTECT offers your company an individually tailored consulting package for every need.

The structured approach behind CMS PROTECT allows you to keep track of implementation status and costs at all times. You also receive comprehensive documentation on the measures taken in the context of CMS PROTECT, thereby enabling you to meet your obligation to provide evidence in court in the event of an infringement. Your company is thus ideally equipped if the need arises.

If you would like to receive further information about CMS PROTECT or if you have any questions, please contact us via [email protected] or consult our team of experts of CMS PROTECT listed alongside.

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10/06/2021
Pro­tect­ing trade secrets: IT se­cur­ity and em­ploy­ee leaks re­garded as biggest...
Three out of four seni­or cor­por­ate ex­ec­ut­ives be­lieve that more needs to be in­ves­ted in pro­tect­ing trade secrets. That is one of the key find­ings of re­cent ana­lys­is by in­ter­na­tion­al law firm CMS in as­so­ci­ation...
08 June 2021
Trade secrets in Ger­many
Gen­er­al 1. Has the Dir­ect­ive (EU) 2016/943 of the European Par­lia­ment and of the Coun­cil of 8 June 2016 on the pro­tec­tion of un­dis­closed know-how and busi­ness in­form­a­tion (trade secrets) against their...
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