What Are The Implications Of The New Trade Secrets Act (Geschäftsgeheimnisgesetz) For Companies?

Author:Ms Christine Funk and Nemanja Burgic
Profession:P+P Pollath + Partners
 
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With the entry into force of the German Trade Secrets Act, measures will become necessary for companies to appropriately protect their trade secrets in the future as well.

Key Facts

In the future, companies will have to take further technical and legal secrecy measures to protect their trade secrets. In addition to technical and organisational precautions, regulations in contracts with employees, customers and business partners may be required. The analysis and dismantling of products for the decoding of secrets (reverse engineering) has been deemed permissible in principle, but can be contractually excluded. Whistleblowers are protected when disclosing trade secrets if the disclosure is made in order to protect the public interest to uncover an illegal act or other misconduct. Furthermore, a separate EU directive for the protection of whistleblowers is expected to be adopted in the spring of 2019, which will then have to be implemented in national law. We have summarized below in more detail the most important information:

Implementation of Directive (EU) 2016/943 On 21 March 2019, the Bundestag passed the Trade Secrets Act (GeschGehG). After months of discussion and 9 months of delay, the Directive (EU) 2016/943 of the European Parliament and the Council of 8 June 2016 will be implemented into German national law. The law will come into force in the coming days following its promulgation by the Federal President. It does not contain a transitional period.

The GeschGehG aims at a stronger protection of trade secrets against unlawful obtaining as well as unlawful use and disclosure. Until now, trade secrets have only been protected fragmentally under German law, in particular under the criminal provisions of sections 17 to 19 UWG and under general rules of German civil law.

Legal Changes According to the legal definition in section 2 no. 1 of the GeschGehG, an information is only a trade secret if (i) it is confidential (not generally known or publicly accessible) and therefore of economic value to the company, (ii) there is an interest in the information being kept confidential and (iii) appropriate secrecy measures have been taken. Particularly new is the requirement to prove that appropriate secrecy measures have been taken by the company, in order to justify the legal protection. The appropriateness of the measures taken depends on the (economic) significance of the information for the company and the circumstances of the...

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