Enforcing trade secrets in litigation poses particular challenges for the plaintiff or the party filing the motion. Central to this are the issues of the burden of proof and the presentation of evidence. In two articles, we address these specific issues from a practical perspective.
Burden of Proof for the Existence of a Trade Secret
Under Section 2 no. 1 GeschGehG, for information to be classified as a trade secret, it must not be generally known or readily accessible, and the trade secret holder must have taken reasonable confidentiality measures. These requirements provide the basis for determining the burden of proof and the presentation of evidence in proceedings under the Trade Secrets Act. The secret holder must demonstrate and prove that the information is in fact secret and that effective protective measures are in place. First, however, the secret holder must precisely describe the subject matter of the secret:
Description of the Secret
The claimant must precisely describe the subject matter of the asserted trade secret in proceedings under the GeschGehG and specifically identify its relevant characteristics. Mere general statements are not sufficient – even if the subject matter of the secret is known to both parties to the proceedings. For the plaintiff/petitioner, this already follows from the requirement for a sufficiently specific statement of claim (Section 253 (2) no. 2 of the German Code of Civil Procedure (ZPO)). However, the opposing party also has an interest in describing the (alleged or actual) secret clearly from its perspective at an early stage of the proceedings, as a lack of specificity can significantly complicate the defense. Otherwise, the opposing party risks the claimant invoking ever-new characteristics of its secret in the course of the proceedings. This can then result in the opposing party having to present a significantly more extensive defense in the proceedings than would have been necessary had the secret been defined at an early stage.
Absence of Public Knowledge
For information to be protected as a trade secret, absolute “secrecy”- in the sense that only one or two people know the information – is not required. Pursuant to Section 2 no. 1 (a) GeschGehG, it is sufficient that the information is neither generally known among the relevant circles nor readily accessible, either in its entirety or in the precise arrangement and composition of its components and is therefore of economic value. The burden of presentation and proof regarding the existence of a secret rests with the claimant. The defendant may initially counter this by simply disputing it under Section 138(4) of the German Code of Civil Procedure (ZPO). In practice, therefore, the claimant presents further facts at the outset of the proceedings to demonstrate that the information is not publicly known – that is, that it is not generally known or readily accessible. This may include, for example, the unavailability of the information in databases relevant to the field in question.
A secondary burden of presentation may fall on the defendant. This arises when the plaintiff has neither detailed knowledge of the relevant circumstances nor the ability to further investigate the matter and has exhausted all available means of obtaining information, while the defendant is aware of the essential facts and is able and reasonably expected to provide further details.
If the claimant has substantiated that their trade secret is not common knowledge, the defendant can no longer limit themselves to a simple denial based on lack of knowledge. Rather, the defendant must substantiate the circumstances from which the information is deemed to be common knowledge, for example, the group of people to whom the information is known or the channels through which it was accessible without significant obstacles. If the defendant fails to meet this secondary burden of presentation, the lack of public knowledge is deemed admitted pursuant to Section 138 (3) of the German Code of Civil Procedure (ZPO). However, the secondary burden of presentation does not give rise to a secondary burden of proof: Although the opposing party must present more specific facts, in the event of a dispute, it remains the claimant’s responsibility to provide concrete proof that the information is not public knowledge.
Reasonable Confidentiality Measures
Another key factor in determining whether information qualifies as a trade secret – and thus in determining the burden of proof – is the existence of reasonable confidentiality measures. The trade secret holder bears the burden of presentation and proof regarding the nature and scope of these measures, provided that the opposing party effectively disputes their existence.
The requirements for the adequacy of these protective measures have not yet been conclusively clarified. Excessive or absolute security is not required. In particular, an actual breach does not automatically imply that the measures were insufficient. Rather, the decisive factor is whether the holder took reasonable, efficient precautions in advance that were commensurate with the value and sensitivity of the secret. The Higher Regional Court of Stuttgart summarized this well in its “Schaumstoffsysteme” decision (Case No. 2 U 575/19). However, the Regional Labor Court of Baden-Württemberg recently conducted a very critical review of various technical protective measures (here). The confidentiality measures required in a specific case depend on the nature of the trade secret. For example, the value of the trade secret or the nature of the information may influence the type of measure required. Storing files requiring confidentiality on private, unprotected storage media, for instance, is insufficient. In such cases, access by third parties can no longer be ruled out. Paper documents must be secured against unauthorized access, if necessary, by locking them away.
For the purposes of evidence, it is generally sufficient to demonstrate the technical and organizational protective measures that have been implemented. With regard to the “need-to-know” principle, it is usually sufficient to argue that access is granted only to those employees who require the information for their work and that they have been bound by a duty of confidentiality.
Practical Tip
Problems arise when a former employee is the defendant, which is the case in numerous disputes. A review of case law shows that most acts of infringement are committed by officers or employees who “take” trade secrets with them in connection with their departure. The practical difficulty arises from the fact that these individuals are familiar with the protection strategy and its vulnerabilities and can therefore substantively dispute that measures were implemented and monitored in the manner alleged. For example, in the “Schaumstoffsysteme” case, the defendant raised extensive objections regarding the adequacy of protective measures concerning the formulas and mailing lists. In such situations, the trade secret owner may be required to describe its measures in great detail and to exercise extreme caution when preparing affidavits. It is therefore advisable not only to implement protective measures but also to carefully document their implementation and regular review.
Conclusion
The trade secret owner bears the burden of presentation and proof for classifying information as a trade secret and must clearly delineate and define its secret and demonstrate that it is not publicly known.
In practice, careful documentation of protective measures and their implementation is crucial for effective legal enforcement, particularly when former employees are involved. A detailed (and somewhat more academic) discussion of this topic can be found in an article published in the commemorative volume “125 Years of the Chamber of Patent Attorneys” (here).