Trade secrets in Germany

  1. General
    1. 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 unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?
    2. 2. Are there any other applicable sources of law related to trade secrets?
    3. 3. How are trade secrets defined? 
    4. 4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?
  2. Dealings in and ownership of Trade Secrets
    1. 1. Are trade secrets transferable and/or licensable?
    2. 2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?
    3. 3. Is co-ownership of trade secrets permitted?
  3. Enforcement of Trade Secrets
    1. 1. What actions constitute infringement of trade secrets?
    2. 2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?
    3. 3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?
    4. 4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?
    5. 5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?
    6. 6. Are any interim or final measures and remedies available through ex parte hearings?
    7. 7. How is financial compensation to the trade secrets holder calculated?
    8. 8. What is the limitation period for claims relating to misappropriation of trade secrets?
    9. 9. When does the limitation period begin to run?
    10. 10. Are there any circumstances that interrupt or suspend the limitation period?
    11. 11. Are mechanisms available to preserve confidentiality of trade secrets in the course of legal proceedings?
    12. 12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?
    13. 13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?
    14. 14. Are separate legal proceedings required for such measures?
  4. Employee / employer liability
    1. 1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?
    2. 2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

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 unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?

Yes, the Directive is implemented through the new law for the protection of business secrets (Gesetz zum Schutz von Geschäftsgeheimnissen/GeschGehG) of 18 April 2019 (BGBl. I p. 466). The protection of trade secrets was previously regulated in the now repealed Sections 17-19 of the Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb/UWG).

As a consequence of the fragmentary framework before the implementation, protection can also be derived from Sections 280 (1), 241 (2) for contractual claims for damages as well as tortious claims according to 823 and 826 of the German Civil Code (BGB). Regarding criminal law, Sections 201 to 206 of the German Criminal Code (StGB) make the violation of the personal sphere of life and secrecy punishable.

3. How are trade secrets defined? 

According to Section 2 no. 2 GeschGehG, a ‘trade secret’ is an information which:

  1. is not, either as a whole or in the precise configuration and assembly of its constituent parts, generally known or readily accessible to persons in the circles that normally handle this type of information and therefore has commercial value;
  2. is subject to, in view of the circumstances, appropriate confidentiality measures by its rightful owner; and
  3. there is a legitimate interest in confidentiality.

4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?

There are no further requirements apart from those listed above. The relevant national legal provision corresponds almost literally to the text in Article 2 (1) sub c of the Directive, which stipulates that only information "subject to appropriate confidentiality measures appropriate to the circumstances by the person who has lawful control over the information" suffice to qualify as a trade secret. Therefore, reasonable steps must be taken in order to identify and protect trade secrets. The GeschGehG, however, does not specify the relevant measures.

Dealings in and ownership of Trade Secrets

1. Are trade secrets transferable and/or licensable?

Yes. Against the background of the definition in Section 2 no. 2, a licensee may also be the holder, meaning a natural or legal person who exercises legal control over the trade secret.

2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?

No.

3. Is co-ownership of trade secrets permitted?

Yes, several persons can be classified as owners. The person concerned must have legitimate control over the trade secret. A person who acquires a license to a trade secret and thereby has the right to learn, use or disclose it also has legal control over the trade secret.

Enforcement of Trade Secrets

1. What actions constitute infringement of trade secrets?

According to Section 4 GeschGehG, the following actions constitute an infringement of trade secrets:

  1. A trade secret may not be obtained by:
    1. unauthorised access to, unauthorised appropriation or unauthorised copying of documents, objects, materials, substances or electronic files that are under the lawful control of the holder of the trade secret and contain the trade secret or from which the trade secret can be derived, or
    2. any other conduct that, in the circumstances, does not comply with the principle of good faith, having regard to honest market practice.
  2. A trade secret may not be used or disclosed by someone who:
    1. Obtained the trade secret by an own act according to paragraph 1 -
      1. number 1; or
      2. number 2
    2. violates an obligation to limit the use of the trade secret; or
    3. violates an obligation not to disclose the trade secret.
  3. A trade secret may not be obtained, used or disclosed by anyone who has obtained the trade secret through another person and who, at the time of obtaining, using or disclosing it, knows or ought to know that the other person has used or disclosed the trade secret contrary to paragraph 2. This applies in particular if the use consists of the production, offering, placing on the market or import, export or storage for these purposes of infringing products.

2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?

Acc. to Sec. 8 GeschGehG, the holder of a trade secret may request from the infringer information on the following:

  1. the name and address of the producers, suppliers and other previous owners of the infringing products, as well as of the commercial customers and sales outlets for which they were intended;
  2. the quantity of infringing products manufactured, ordered, delivered or received and the purchase prices;
  3. the documents, items, materials, substances or electronic files in the possession or property of the infringer, which contain or embody the trade secret; and
  4. the person from whom they have obtained the trade secret and to whom they have disclosed it.

3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?

The trade secret holder is entitled to claim for cease and desist (Sec. 6 GeschGehG), for special measures, such as destruction, recall, etc. (Sec. 7 GeschGehG) and for information and compensation (Sec. 8 GeschGehG).

At the request of the trade secret holder, the court can order by way of an interim injunction a cease and desist of the use or disclosure of the trade secret as well as a seizure of the documents, items, materials, substances or electronic files in the possession or property of the infringer that contain or embody the trade secret. The aim of the injunctive relief is to prevent a renewed (injunctive relief) or a first-time (preventive injunctive relief) infringement.

In addition, a court decision taken on the merits (main proceedings) can order the following:

  1. destruction or release of the documents, items, materials, substances or electronic files in the possession or property of the infringer that contain or embody the trade secret;
  2. recall of the infringing product;
  3. permanent removal of the infringing products from the distribution channels;
  4. destruction of the infringing products; or
  5. withdrawal of the infringing products from the market, if the protection of a trade secret is not affected.

Finally, the holder of the trade secret is entitled to information claims in accordance with Section 8 GeschGehG.

4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?

The preliminary injunction is only a temporary measure, so that the holder of a trade secret is in principle obliged to bring the action on the merits of the case in order to definitively protect his rights. There is no need for legal recourse in this regard if the defendant recognises the preliminary injunction as a final provision equivalent to a legally binding main action title in terms of validity and effect (i.e. if he submits the final declaration).

Following Sec. 926 Code of Civil Procedure (ZPO), if the main action is not pending, the court responsible for the seizure is to order, upon corresponding application being made and without holding a hearing for oral argument, that the party having obtained the interim injunction is to bring main proceedings in the courts within a period to be determined (i.e. at least two weeks).

Should this order not be complied with and a corresponding application be made, the seizure is to be set aside in a final judgment.

5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?

Yes, the infringer must then invoke the right to compensation under Section 11 GeschGehG, which provides that an infringer who has acted neither intentionally nor negligently may, in order to avert the claims under Sections 6 or 7, compensate the owner of the trade secret in money if the infringer would suffer a disproportionately large disadvantage by the fulfilment of the claims and if the compensation in money appears to be appropriate.

(2) The amount of the monetary compensation will be based on the sum that would be appropriate in the event of a contractual grant of the right of use. It may not exceed the amount corresponding to compensation within the meaning of sentence 1 above for the length of time during which the holder of the trade secret is entitled to injunctive relief.

In light of the character of Sec. 11 as an exception, it must be assumed that in case of doubt there is a lack of appropriateness.

6. Are any interim or final measures and remedies available through ex parte hearings?

The court may, at its discretion, decide without an oral hearing, entirely without a hearing or after an oral procedure.

As a rule, an oral hearing as well as a hearing of the infringer will be out of the question if the application for cease and desist is combined with an application for seizure. Otherwise, the warning risks the infringement being obscured. If such a case is credibly demonstrated and legally clear, there is usually no reason to hear the defendant beforehand, particularly in view of the possibility of a claim for damages under Sec. 945 ZPO.

7. How is financial compensation to the trade secrets holder calculated?

With the triple damage calculation, the injured party can choose between three variants of how to quantify the compensable damage: he can demand compensation for the actual damage incurred, demand the return of the profit made by the infringer or calculate the damage on the basis of an appropriate remuneration, which the infringer would have had to pay if he had obtained consent to obtain, use or disclose the trade secret. In contrast to concrete damages, the licence analogy and the publication of the infringer's profit are manifestations of the objective calculation of damages.

8. What is the limitation period for claims relating to misappropriation of trade secrets?

The GeschGehG does not contain any special regulation on the statute of limitations. The shortened limitation period of Sec. 11 of the Unfair Competition Act is not applicable. Rather, the claims are subject to the regular limitation period of three years pursuant Sec. 195, 199 BGB. However, a special statute of limitations in Sec. 13 provides that the infringer is under special circumstances obliged to surrender acquired goods even after the limitation of the claim for damages. This claim becomes statute-barred six years after it arises.

9. When does the limitation period begin to run?

The standard limitation period commences at the end of the year in which the claim arose and the obligee obtains knowledge of the circumstances giving rise to the claim and of the identity of the obligor or would have obtained such knowledge if he had not shown gross negligence.

10. Are there any circumstances that interrupt or suspend the limitation period?

Yes, the general rules of the BGB (Sec. 203-209) apply.

Yes. In Sec. 16-20, which are based on Article 9 of the Directive, the law regulates the secrecy of trade secrets as far as they are introduced into the legal proceedings.

One consequence is that all persons involved, including those in the administration of justice and those who have access to the documents, must keep the information classified as confidential and may not use or disclose it outside of judicial proceedings. The trade secrets requiring secrecy must be rendered unrecognisable in the event of inspection of the files by third parties. The need for secrecy does not prevent the exploitation in other judicial proceedings.

The owner of a trade secret himself is not restricted in its use and disclosure by the order.

12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?

Yes, in particular, the laws lists in Sec. 5 GeschGehG

  1. the exercise of freedom of expression and information, including respect for the freedom and plurality of the media;
  2. to disclose any illegal activity or professional or other misconduct, where the obtaining, use or disclosure would be likely to protect the general public interest;
  3. in the context of disclosure by employees to the employees' representatives, if this is necessary to enable the employees' representatives to carry out their duties.

As shown by the formulation “in particular” in Sec. 5 GeschGehG, this list is not exhaustive. Other legitimate interests may include fundamental rights positions that conflict with the protection of business secrets.

13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?

Yes, acc. to Sec. 14 GeschGehG, the assertion of claims under this Act will be inadmissible if it is abusive in the light of all the circumstances. In the event of an abusive assertion, the defendant may demand compensation for the expenses necessary for his legal defence. Further claims for compensation remain unaffected.

In this case, the infringer may demand the expenses necessary for his legal defence from the holder of the trade secret. The further claims include, for example, claims under unfair competition law due to a deliberate obstruction (Section 3 I UWG, Section 4 No. 4 UWG, Section 9 UWG) or claims in tort (Sections 823 et seq. BGB).

Employee / employer liability

1. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?

Yes, see above. However, it remains uncertain whether this exception will in practice be accorded the significance it was met during controversial discussions in the legislative process. Commentators highlight that confidential information about the unlawful conduct of an undertaking does not in itself enjoy protection for lack of a legitimate interest. For example, if the employee of a company discloses that his employer was involved in a price cartel, there is no protected trade secret. If, on the other hand, he discloses a confidential list of customers who have purchased products at prices that are excessive due to the cartel, then this may constitute a protected trade secret and it must be checked whether the disclosure of customer data is covered by Section 5 No. 2.

2. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?

Yes, according to Sec. 12, the claims from Sec. 6 (defence claims), Sec. 7 (special measures) and Sec. 8 (information and compensation) are also justified against the owner of the company if the infringer is an employee or representative of this company. However, the special provision in p. 2 applies, which limits the liability of the entrepreneur.


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Portrait of Gordian N. Hasselblatt
Prof. Dr. Gordian N. Hasselblatt, LL.M. (McGeorge School of Law, Sacramento/CA)
Partner
Cologne
Portrait of Adrian Zarm
Adrian Zarm, LL.M., MGlobL (University of Sydney)
Senior Associate
Cologne