One of the key changes introduced by the German Act on the Protection of Trade Secrets (GeschGehG) is the legal definition of a trade secret in Section 2 no. 1 GeschGehG. Section 2 no. 1 b) GeschGehG stipulates that only information that is subject to “appropriate confidentiality measures” constitutes a trade secret. A recent decision by the Higher Regional Court of Düsseldorf helps clarify the interpretation of this term:
The case at hand: A CAD drawing taken from the premises
The dispute before the Higher Regional Court of Düsseldorf stems from a classic scenario: The plaintiff is a mechanical engineering company that, among other things, manufactures and sells centrifuges. The defendant’s managing director was a long-time employee of the plaintiff and, in that capacity, had access to, among other things, CAD design drawings. The defendant’s managing director apparently took one of these design drawings with him.
Insofar as the decision clarifies that the technical specifications contained in a design drawing generally constitute a trade secret, at least in their entirety, this is consistent with earlier case law regarding Section 17 of the Unfair Competition Act (UWG) (old version) (Federal Court of Justice (BGH), judgment of March 22, 2018 – I ZR 118/16 – Hollow Fiber Membrane Spinning Plant II).
Higher Regional Court: Requirements for appropriate confidentiality measures
However, the Higher Regional Court’s remarks on the contractual, organizational, and technical precautions the plaintiff took to ensure the protection of its trade secrets are both interesting and relevant to practice. Specifically, the company implemented the following measures:
- Restricted access to the buildings, with entry permitted only after registration via an intercom system
- Entering into confidentiality agreements with employees, which also included an obligation to return company documents, data storage media, and any copies
- Entering into confidentiality agreements with business partners and suppliers; access to individual computers only through the use of a personalized username and password, as well as restricting access rights with different authorization levels (need-to-know)
- Securing the IT infrastructure with a firewall and a secure VPN connection
- Comprehensive measures for company-owned smartphones (installation of software and apps only with the administrator’s approval; configuration of a SIM card lock and a screen password; and the option for remote wipe in the event of smartphone loss)
- Restriction of access rights to the particularly relevant CAD system to employees of the design department
- Legal disclaimer and notice of a reproduction ban on individual CAD design drawings
The Higher Regional Court (OLG) expressly deemed these confidentiality measures, taken as a whole, to be suitable and appropriate. It was also deemed harmless that individual CAD drawings were provided to other employees upon request, as long as this was necessary on a case-by-case basis for specific business activities.
However, the Higher Regional Court clarifies that the disclosure of the drawings (only) causes short-term economic disadvantages, particularly in the form of financial losses resulting from the actions of a competitor. In contrast, the disclosure of the drawings does not pose a risk of lasting damage or even a threat to the company’s existence, given that the centrifuges consist of additional technical modules. Given the significance of the specific trade secrets, the measures are deemed appropriate. Optimal, insurmountable protection is not required (Düsseldorf Higher Regional Court, Judgment of March 11, 2021, 15 U 6/20).
Assessment of the Requirements
The Higher Regional Court’s decision is both welcome and practical. It clarifies that the requirement under Section 2 no.1 b) GeschGehG is met through a normal level of effort, which is readily reasonable even for any medium-sized company. This is true not least because – as the Higher Regional Court correctly emphasizes – the protection of trade secrets does not require optimal protection. The measures must simply be “reasonable” – no more and no less.
It should be noted, however, that the Higher Regional Court apparently had to rule on the protection of “normal” trade secrets. The case involved design drawings whose disclosure would be problematic but not catastrophic for the company. If companies – particularly in the high-tech sector – possess trade secrets on which the very existence of the company actually depends, the measures described are likely no longer sufficient. Standard protection is no longer “adequate” for extremely valuable secrets.
Conclusion
The ruling by the Higher Regional Court of Düsseldorf provides a practical overview of trade secret protection. However, these measures are insufficient for exceptionally important know-how. In such cases, stricter protective measures must be implemented.
A detailed and now frequently cited overview of the topic can also be found in the article in GRUR 2019, 352.
Those who wish to view the problem from a perspective beyond the legal realm may also visit the vault where Coca-Cola’s secret formula is stored for inspiration.