New German law on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (Neues Gesetz zum Schutz von Geschäftsgeheimnissen, GeschGehG)

Since April 2018, the draft legislative act on the protection of trade secrets (GeschGehG) created to transfer the so-called EU Know-How Directive (EU 2016/943) into national legislation, has been present. Since the transfer of the Directive had not been completed in due time by June 9, 2018 in Germany, the existing national regulations are to be read in the light of the Directive, until the GeschGehG will come into force. Except for some occasional deviations, particularly regarding the right of access and the company owner’s liability, the GeschGehG draft legislative act is actually guided by the EU Directive, so the following explanations are largely applicable to all other Member States.

Trade secrets as a subject matter of protection

Trade secrets including know-how and confidential business information are by law defined as secret business information of economic value for their owner and as being an object of appropriate measures of secrecy.

Which amendments does the GeschGehG provide?

The most relevant amendment is that, in future, trade secrets will only be protected, if appropriate measures of secrecy have been taken. Above all, the significance of the trade secret determines, whether the implemented measures are sufficient. Especially companies, whose business is based on the secrecy of certain information, are therefore required to check or have themselves checked, whether they are in need of taking relevant action.

Until recently, there has been legal uncertainty as to how far the steps of the so-called “Reverse Engineering”, i. e. the retrogression of products in order to gain information on their production, are admissible. In future, “Reverse Engineering” for products offered to the public will basically be admissible. In contrast, by implementing the corresponding contract clauses products made available for only one or multiple contracting parties can and should be secured against disclosure of trade secrets by “Reverse Engineering”.

As for the legal consequences, the unlawful withdrawal and use of trade secrets will be treated as equal to infringements of the classic intellectual property rights such as patents, designs or utility models, thus the legal consequences will significantly be expanded. The harmed trade secret owner can always request for omittance as well as for information and compensation in case of negligent or intentional acts. Providing wrong or no information will also result in liability for damages. In addition, the already existing penal provisions will be kept to a large extent.