Know-how protection and business secrets
From data theft to non-disclosure agreements.
An article from Dr. Norman Dauskardt
Intellectual property of companies is only protected by special laws in certain cases, e.g. in the case of patents, utility models, designs, trademarks and copyrights.
Apart from that, in the German legal system, freedom of imitation and copying applies in principle, but not without restrictions. In addition to the particularly protected intellectual property rights, know-how and business secrets also enjoy special legal protection. By implementing appropriate measures for know-how protection, an entrepreneur can ensure that sensitive information and valuable expertise are protected against unauthorized access or theft. We will show you below how to protect your know-how in the best possible way.
- Effective know-how protection
- What are know-how and business secrets?
- How are business secrets protected by law?
- Measures for know-how protection
- Excursus: What is a non-disclosure agreement?
- What claims exists for breaches of confidentiality obligations?
- Excursus: My employee has taken confidential information with him after termination. Is he allowed to do that?
- Our legal services in know-how protection
Effective know-how protection
Your contact person:
Lawyer
Specialist lawyer for intellectual property rights
Phone: +49 30 36 41 41 90
E-Mail: kontakt@abd-partner.de
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Dr. Norman Dauskardt:
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What are know-how and business secrets?
The terms are either deliberately openly defined or not defined by the legislator. This means that as much information as possible can be protected as business secrets, free of specific categories.
The main definition can be found in the Act on the Protection of Trade Secrets (GeschGehG). According to § 2 No. 1 GeschGehG, a business secret (or trade secret) is information that is not generally known, that is subject to reasonable confidentiality measures, and in which there is a legitimate interest in maintaining confidentiality.
Typical examples of trade secrets are recipes, construction plans, strategy documents, salary structures, customer data, purchase price lists, information on distribution networks, instructions, contract templates, meeting minutes, access data.
In principle, however, any information can be considered a trade or business secret as long as it is not generally known and is kept secret because it has an economic value and provides a competitive advantage over competitors.
How are business secrets protected by law?
The basis is the Act on the Protection of Trade Secrets (GeschGehG) - - also known as the Trade Secrets Act. According to this law, business secrets may not be unlawfully obtained, disclosed or used.
For example, the law prohibits the data theft by employees, as well as the industrial espionage or the use, dissemination and exploitation of an unlawfully obtained business secret.
However, the prerequisite for protection is always that the holder of the business secret has also taken care of the know-how protection – they must have implemented appropriate confidentiality measures (see below).
Measures for know-how protection
The German Trade Secrets Protection Act does not protect every kind of confidential information. The entrepreneur must have implemented appropriate confidentiality measures to actually keep the information secret. To put it bluntly: Anyone who handles their confidential information sloppily and thus provokes or facilitates information theft cannot claim protection under the Trade Secrets Act either.
In the event of a dispute, a court will carefully examine whether the relevant information was kept appropriately secret. There are essentially three categories of confidentiality measures:
- Technical confidentiality (IT security, safes, passwords, confidentiality markings on documents),
- Contractual confidentiality (Confidentiality agreements with employees, work instructions, NDAs with business partners),
- Administrative confidentiality (need-to-know principle: Who needs to know what? Access restrictions).
Depending on the economic importance of the information and the individual protection options of the secret holder, confidentiality measures must be implemented at one to all levels.
A good first step is the development of a secrecy protection concept. As lawyers, we have often developed these concepts together with our clients. We start with an information inventory - what information is confidential and how? How is it currently protected within the company? What can/should be better protected?
Excursus: What is a non-disclosure agreement?
Non-disclosure agreements (NDA) are an important instrument for contractually obliging employees or other business partners to keep information confidential.
A NDA is always advisable when sensitive, confidential information is shared. We recommend non-disclosure agreements in employment relationships, in joint ventures, in negotiations with investors, product manufacturers or with other suppliers and commercial customers as soon as they come into contact with trade secrets.
Drafting and negotiating NDAs is part of the standard repertoire of our legal services. It is not advisable to use forms for this purpose without review, as overly general formulations that simply prohibit the use of all shared information are often worthless because they are ineffective.
A clear designation and definition of the confidential information and the agreement of strict sanctions in the event of a breach of the non-disclosure agreement (e.g. payment of a contractual penalty) are important.
What claims exists for breaches of confidentiality obligations?
Despite all confidentiality measures, the theft of trade secrets and know-how still occurs from time to time. In such cases, the Trade Secrets Protection Act provides for various sanctions and claims against the infringer(s).
For example, under § 6 of the Trade Secrets Protection Act, the affected party can demand the cessation of the impairment and a cease and desist order for the future. In practice, this means that the breach of confidentiality must be reversed and the infringer is obligated to refrain from further impairing the secrecy (i.e. to appropriate or disclose, disseminate or use it).
Claims for removal and injunctive relief are usually enforced initially with a warning letter from a lawyer. If the infringer does not issue a cease-and-desist declaration thereafter, a court decision can be enforced (via preliminary injunction or judgment in a lawsuit).
Furthermore, the affected party can demand information about the nature and extent of the infringement and - based on this - claim damages (§ Section 8 GeschGehG, § Section 10 GeschgehG). They must then be placed in the position they would have been in without the breach of confidentiality - this may also include compensation for lost profits or payment of a reasonable fictitious license fee for the use of the secret.
Excursus: My employee has taken confidential information with him after termination. Is he allowed to do that?
As is so often the case, it depends (on the individual case).
In principle, employees are allowed to “take along” the knowledge they have gained in their job and use for their own purposes. Experiential knowledge is what you have in your head.
However, if the information constitutes protected business secrets under the Trade Secrets Protection Act, the employee may also be prevented from disseminating and using such information as know-how. The prerequisite for this is that the employee is obliged to confidentiality, either by law or by contract.
Post-contractual non-competition clauses can also play an important role. Such prohibitions, which can also apply beyond the end of an employment relationship (in return for a compensation), prohibit the obligated parties from competing for a certain period of time. They can be advisable for key employees.
Our legal services in know-how protection
We are experienced lawyers when it comes to the protection of know-how and business secrets.
We examine how you and your company protect confidential information and make suggestions for improvement. We often draw up special business secret protection concepts that can also serve as evidence in court that you have taken sufficient care to protect business secrets.
As lawyers for intellectual property rights we have extensive experience in litigation. If you or your company have been victims of:
- Betrayal of secrets
- Industrial espionage or
- Unfair competition by former employees
we will examine your legal options, issue warnings and pursue your claims in the relevant courts.
Of course,we also represent the other side: If you are accused of betraying a secret or your ex-employer tries to prevent you from competing legally, we will defend you by all means.
Take advantage of direct access to our experienced lawyers for the protection of secrets. We are happy to offer you a non-binding and free initial consultation regarding your concerns and provide legal advice to you and your company throughout Germany and Europe.
Call us now on the telephone number 030 36 41 41 90 e-mail us at kontakt@abd-partner.de or use directly our contact form!
