Trade secret
requires sufficient
Secrecy.
Trade secret
requires sufficient
Secrecy.
from
What confidentiality measures are required to protect trade secrets under the Trade Secrets Act? The Hamm Higher Regional Court has commented on this.
What is it all about?
A manufacturer of machines and vehicles for the construction, conversion, measurement and maintenance of tracks and overhead lines took action against a competitor. The latter also offered machines, products and services in the field of track maintenance.
In the past, the managing directors and co-partners of the competitor were two former executives of the manufacturer. The competitor sold a machine that was similar to the manufacturer’s machine. The competitor developed this machine in cooperation with a third-party company. It was undisputed between the parties that plans of some components were sent by the manufacturer to the authorized signatory, plant manager and department manager of the third-party company.
The manufacturer claimed that the competitor had copied the device it had developed. The managing directors of the competitor and its shareholders had planned to found a competing company while they were still working for the manufacturer.
To this end, they illegally copied and took large quantities of confidential development documents subject to the strictest secrecy. The documents obtained in this way also included the design drawings for the main components of the device at issue.
The lower court (Münster Regional Court) dismissed both the manufacturer’s action for injunctive relief under the GeschGehG and the competitor’s counterclaim.
OLG: Confidentiality measures required
The Higher Regional Court of Hamm(judgment of 15.09.2020, file number 4 U 177/19) also denied the manufacturer’s claim for injunctive relief against the competitor under the GeschGehG in the appeal instance.
First of all, when asserting claims under the Trade Secrets Act , it is important that a trade secret within the meaning of the Trade Secrets Act actually exists. A trade secret in this sense is information,
- which is not generally known or readily accessible, either as a whole or in the precise arrangement and composition of its components, to persons in the circles that normally deal with this type of information, and is therefore of commercial value, and
- which is the subject of confidentiality measures appropriate to the circumstances by the legitimate holder, and
- for which there is a legitimate interest in confidentiality.
The court found that in the present case, no confidentiality measures within the meaning of the GeschGehG had been taken that were appropriate under the circumstances. According to the court, appropriateness is a flexible and open criterion that follows the idea of proportionality.
The judges pointed out that appropriateness is determined by the specific circumstances of the individual case. Among other things, the nature and economic value of the secret is of particular importance.
Secrecy measures were not appropriate
The court made it clear that a high level of security precautions was appropriate to protect the trade secrets contained in the manufacturer’s plans.
The manufacturer had also provided extensive information on the security measures taken (e.g. IT security guidelines, confidentiality agreements with licensees). However, it was known that drawings of some components had been sent in the past by the manufacturer to the authorized signatory, plant manager and department head of the third-party company involved in the development.
In the court’s view, this was undoubtedly a very clear indication that confidentiality measures may have been inadequate. Furthermore, it was established that it was undisputed that drawings of the various components were freely accessible on several occasions without confidentiality measures. The blanket assertion that confidentiality measures had been agreed with licensees and that there was no indication that these had not been complied with was not sufficiently specific with regard to these incidents.
Against this background, the court came to the conclusion that the safety precautions taken did not meet the requirements and had been circumvented several times in the past without the manufacturer reacting appropriately.
Conclusion
A prerequisite for the protection of information under the GeschGehG is that appropriate confidentiality measures are taken to protect this information. Companies are well advised to think about an appropriate protection concept and take clear and verifiable measures. Otherwise, there is a risk of losing the protection of trade secrets, which can sometimes have considerable negative economic consequences.
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