In contrast to many other Member States, which lack statutory protection for trade secrets, Germany does have a legal regime in place that, to a certain extent, provides protection for trade secrets.
Protection from disclosure or exploitation of trade secrets
The relevant statutory provisions are in Sections 17ff of the German Act on Unfair Competition (UWG). These provisions primarily focus on the protection of trade secrets disclosed to employees, but Section 17 UWG not only prohibits the unlawful disclosure of trade secrets but also industrial espionage and unlawful exploitation of the trade secret. Section 19 UWG prohibits offering to or inciting others to breach Section 17 UWG.
German law does not, however, set out a statutory definition of “trade secret” or “know-how”. According to the prevailing case law of German courts, trade secrets fall within the scope of Section 17 UWG if they comprise: “technical and non-technical business information concerning a certain business, which is not generally known or readily ascertainable but only known by a restricted number of persons and which is kept confidential according to the will of the person in control of the information”.
The protection afforded to trade secrets that satisfy these requirements is absolute. Even reverse engineering may be considered as unlawful disclosure, provided that the other requirements of Section 17 UWG are met. There is no general requirement for the infringed party to demonstrate that it actively protected its trade secrets.
Section 17ff UWG also provides for criminal sanctions, which has the additional advantage that it enables infringed parties to involve the prosecution authorities in order to collect evidence.
However, while Section 17 UWG makes it clear that trade secrets disclosed to employees during their employment may not be disclosed to third parties, there is uncertainty as regards the use of products that have been developed, manufactured and distributed using the trade secret, and the means available to the injured party to prevent the party using its trade secrets from placing the respective products on the market.
What remedies are available?
Where there has been infringement, the infringed party may bring claims for reduction, removal and omission under Section 8 UWG. These claims do not require culpable (i.e. negligent or intentional) behaviour (as always under German law).
Claims for omission can be enforced rapidly in Germany by way of interim injunctions. However, it is generally very difficult to prove that the trade secret was actually disclosed unlawfully.
In addition, if the other person or company has acted intentionally or negligently, the infringed party is also entitled to claims for damages. Damage claims will primarily be based on Sections 823, 826 of the Civil Code (BGB) or Section 9 UWG in connection with Section 4 No 11 UWG.
What if information has been shared voluntarily?
If trade secrets are disclosed to a third party, for example to explore potential synergies of cooperation, these trade secrets will not generally be covered by the statutory protection, so would need to be protected through contract.
Section 18 UWG prohibits the unauthorised use of models or instructions of a technical nature under German law. Beyond this, the owners of trade secrets do not enjoy any kind of exclusivity if they share the trade secrets with third parties.
Prior to exchanging sensitive know-how and trade secrets with third parties, companies in Germany are therefore well advised to enter into non-disclosure agreements.