Trade Secret Protection Act - Need for Agreement on Contractual Penalty

Under the Trade Secret Protection Act, which came into force in 2019, the holder of a trade secret is comprehensively protected against unauthorized obtaining, unauthorized use and unauthorized disclosure of its trade secrets. Trade secrets include both technical and commercial data that are unknown on the one hand and on the other hand give their owner an advantage in his competitive position, such as manufacturing processes, prototypes, formulas and recipes, but also customer and supplier lists, company data, cost information and business strategies.

A prerequisite for the protection of a trade secret is that the entrepreneur himself takes "appropriate secrecy measures" to protect his data. In this context, non-disclosure agreements/NDAs take on additional significance and may have to be adapted to the new regulation. It has not yet been conclusively clarified whether appropriate confidentiality protection includes the agreement on a contractual penalty in the event of a breach of confidentiality. In literature, different opinions are held on this issue. The answer to the question also depends on how the information worthy of protection is to be classified in the individual case and which further organizational, personnel and technical measures are taken by the company owner to maintain confidentiality.

As long as the courts have not yet ruled on this question, it is recommended in practice to insist on the agreement on a contractual penalty, at least for sensitive information. This is the only way to prevent the objective pursued by the legislator, which is to ensure the effective protection of trade secrets, from going nowhere as a result. At the same time, the agreement on effective legal measures makes it clear to the contractual partner that such issues are taken seriously, which is usually considered a confidence-building measure.