A company's intellectual property is only protected by special legislation in certain cases, e.g. in the case of patents, utility models, designs, trademarks and copyright.
Otherwise, in our legal system the general principle of freedom to imitate and copy applies, but not without limit. In addition to specially protected intellectual property rights, know-how and business and trade secrets also enjoy special statutory protection. By implementing adequate measures for know-how protection, a company can ensure that sensitive information and valuable expertise are protected against unauthorised access or theft. Below we show you how to best protect your know-how.
- Effective know-how protection
- What are know-how and business and trade secrets?
- How are trade secrets protected by law?
- Measures for know-how protection
- Excursus: What is a confidentiality agreement?
- What claims exist in the event of breaches of confidentiality obligations?
- Excursus: My employee took confidential information with them after termination. Are they allowed to do that?
- Our legal services in know-how protection
What are know-how and business and trade secrets?
The terms are either intentionally defined broadly by the legislator or not defined at all. This allows as many types of information as possible to qualify as protected trade secrets, free from specific categories.
The key definition is found in the Act on the Protection of Trade Secrets (GeschGehG). Under § 2 no. 1 GeschGehG, a trade secret is information that is not generally known, that is subject to adequate secrecy measures, and in which there is a legitimate interest in maintaining secrecy.
Typical examples of trade secrets are recipes, blueprints, strategy papers, salary structures, customer data, purchase price lists, information about distribution networks, instructions, contract templates, meeting minutes, and access credentials.
In principle, however, any information can qualify as a business and trade secret, as long as it is not generally known and is kept secret because it has economic value and provides a competitive advantage over competitors.
How are trade secrets protected by law?
The basis is the Act on the Protection of Trade Secrets (GeschGehG) – also known as the Trade Secrets Act. Under this Act, a trade secret must not be unlawfully obtained, disclosed or used.
The Act prohibits, for example, data theft or data misappropriation by employees, as well as industrial espionage or the use, dissemination and exploitation of a trade secret that has been unlawfully obtained.
A prerequisite for protection is always that the secret holder has also taken care of know-how protection – they must have taken adequate secrecy measures (see below).
Measures for know-how protection
The GeschGehG does not protect every piece of information that is somehow confidential. The company must have taken adequate secrecy measures to actually keep the information secret. To put it bluntly: anyone who handles their confidential information carelessly and thereby provokes or facilitates information theft cannot invoke the Trade Secrets Act.
In the event of a dispute, a court will carefully examine whether the information in question was adequately kept secret. In essence, there are three categories of secrecy measures:
- Technical secrecy (IT security, safes, passwords, confidentiality markings on documents),
- Contractual secrecy (confidentiality agreements with employees, workplace instructions, NDAs with business partners),
- Administrative secrecy (need-to-know principle: who needs to know what? Access restrictions).
Depending on the economic importance of the information and the individual protection options available to the secret holder, secrecy measures must be implemented on one or all levels.
A good first step is the development of a secrecy protection concept. As attorneys, we have already drawn up such concepts together with our clients on many occasions. We begin with an information inventory – Which information is how confidential? How is it currently protected within the company? What could/should be better protected?
Excursus: What is a confidentiality agreement?
Confidentiality agreements (also: NDA = non-disclosure agreement) are an important instrument for contractually obliging employees or other business partners to maintain the secrecy of information.
An NDA is always advisable when sensitive, confidential information is shared. We recommend confidentiality agreements in employment relationships, in joint ventures, when negotiating with investors, with product manufacturers, with other suppliers or with commercial customers, as soon as they come into contact with trade secrets.
The drafting and negotiation of NDAs is part of our standard legal service repertoire. You should not use templates for this without review, as overly broad formulations that simply prohibit the use of all shared information are frequently worthless because they are unenforceable.
What is important is a precise identification and definition of the confidential information and the agreement of sharp sanctions in the event of a breach of the confidentiality agreement (e.g. payment of a contractual penalty).
What claims exist in the event of breaches of confidentiality obligations?
Despite all secrecy measures, theft of trade secrets and know-how occurs repeatedly. In such cases, the Act on the Protection of Trade Secrets (GeschGehG) provides for various sanctions and claims against the infringer or infringers.
The affected party may, for example, under § 6 GeschGehG demand the elimination of the infringement and an injunction against future use. In practice, this means: the breach of trade secret protection must be remedied and the infringer is obliged not to infringe the secret again in the future (i.e. not to appropriate, disclose, disseminate or use it).
Elimination and injunction are typically enforced first by means of a cease-and-desist notice from an attorney. If the infringer subsequently fails to provide a cease-and-desist undertaking, a court decision can be compelled (by way of a preliminary injunction or by judgment in litigation).
The affected party can also demand disclosure of the nature and extent of the infringement and – building on this – damages (§ 8 GeschGehG, § 10 GeschGehG). They are then to be placed in the position they would have been in without the breach of trade secret protection – this can also include compensation for lost profits or payment of a reasonable notional licence fee for the use of the secret.
Excursus: My employee took confidential information with them after termination. Are they allowed to do that?
As so often: it depends (on the individual case).
In principle, an employee may "take with them" the experiential knowledge they have accumulated at work and use it themselves. Experiential knowledge is what one has in one's head.
However, if information constitutes protected trade secrets within the meaning of the Trade Secrets Act, the employee may also be prevented from disseminating and using the corresponding information as experiential knowledge. The prerequisite is that they are obliged to maintain confidentiality, either by law or contractually.
Post-contractual non-competition clauses can also play an important role. Such clauses, which can apply beyond the end of an employment relationship (of course, only against payment of a so-called compensatory payment), prohibit the obligated party from competing for a certain period of time. They can certainly be advisable for key employees.
Our legal services in know-how protection
We are experienced attorneys when it comes to the protection of know-how and business and trade secrets.
We examine how you and your company protect confidential information and make suggestions for improvement. We frequently create special trade secret protection concepts for this purpose, which can also serve before courts as evidence that you have taken sufficient care of trade secret protection.
As attorneys for intellectual property law, we are very experienced in litigation. Should you or your company have become:
- a victim of breach of secrecy,
- industrial espionage, or
- unfair competition by former employees,
we will examine your legal options, issue cease-and-desist notices and also enforce your claims before the competent courts.
We naturally also act for the other side: if you are accused of breach of secrecy or your former employer is trying to prevent you from engaging in permitted competition, we will defend you with all available means.
Take advantage of direct contact with our experienced attorneys for trade secret protection. We are happy to offer you a no-obligation and free initial consultation about your matter and advise you and your company in Berlin, nationwide and across Europe.
Call us now on 030 36 41 41 90, write to us at kontakt@abd-partner.de or use our contact form directly!
