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The law of trade secrets will undergo some changes when Germany finally implements the EU Directive on Trade Secrets. The statute by which that directive will be implemented has not yet been formally passed, but that is expected soon.
A decision by Germany’s Federal Court of Justice from March concerns the current state of the law (as of October 2018). Trade secrets are protected in the German Unfair Competition Act against certain specified acts of misappropriation:
- Betrayal of secrets, ie, the disclosure of trade secrets to third parties by an employee during their employment;
- Industrial espionage, ie, the misappropriation of trade secrets through application of technical measures, whether by an employee or third person;
- Handling of misappropriated trade secrets; and
- Piracy of samples handed over in the course of work to be performed by a supplier.
Although these cases are contained in provisions that formally constitute criminal offences, the owner of a trade secret may assert civil claims for a cease and desist order, for damages and for an account of profits made, for example, with products in which the secrets are embodied.
General skills, or knowledge acquired in the course of employment, may fall in the category of trade secrets which the Unfair Competition Act affords protection in the abovementioned circumstances. During the period of employment, employees are not allowed to use for their own purposes or disclose secret knowledge acquired in the course of employment.
When the employment has ended, under unfair competition law, knowledge acquired by an employee in the course of employment—even trade secrets—may be used by employees in their new jobs or for their new employers if they have acquired or obtained that knowledge lawfully.
"The owner of a trade secret may assert civil claims for a cease and desist order, for damages and for an account of profits made."
For example, the employee must not have obtained or secured such knowledge through one of the technical measures mentioned above which are prohibited according to section 17, paragraph (2) of the Unfair Competition Act (such as copying or otherwise securing secret data or other technical information).
Case study
The Federal Court of Justice has held that a former employee unlawfully obtains a trade secret if the secret was contained in written materials which the employee was entitled to compile and keep on their private personal computer while they were employed, and the employee later uses these written materials after the employment has ended.
However, the same secret information that an employee keeps in their memory would be free to be used in a new job under unfair competition rules.
The decision in March concerns, inter alia, such knowledge that was acquired by a former employee in the course of their employment with their former employer. The question arose whether such knowledge that was contained in written materials, which the former employee kept after the employment had ended, could be lawfully used when it must be assumed that the employee had the experience and professional ability so that they would not have depended on the written materials but rather would be able to take that information from memory.
The court first confirmed the general rules laid out above. It said that the Court of Appeal, in the previous decision against which the plaintiff had appealed against, had not sufficiently differentiated between secret knowledge that was contained in written materials and knowledge which the employee kept in their memory.
If the former employee took those written materials, which they lawfully obtained during their employment, and used them afterwards in a new job to ‘freshen up’ their memory, they unlawfully secured the secret information and were therefore liable for misappropriation of trade secrets. It is then irrelevant whether the employee was able to develop the secret technical information on their own.
The court said that it was also irrelevant whether the employee would have been able, based on their abilities and experience, to recreate the secret information from memory if it must be assumed that they actually used the secret information as contained in the written materials.
Since the relevant trade secrets here consisted in a multiplicity of different measurements, the Federal Court did not find fault in the lower court’s reasoning that the sheer number of measurements excluded any real possibility that they could be recreated from memory. It was assumed that written materials must have been used.
Jens Künzel is a partner at Krieger Mes & Graf v. der Groeben. He can be contacted at: jens.kuenzel@krieger-mes.de
Germany jurisdiction report, Krieger Mes & Graf v. der Groeben, trade secrets, Germany federal court of justice, Unfair Competition Act, Court of Appeal
