In two very extensive decisions, the Higher Regional Courts of Stuttgart and Hamm – as far as can be determined – became the first higher courts to rule on the question of when appropriate protective measures within the meaning of Section 2 no. 1 of the German Act on the Protection of Trade Secret (GeschGehG) must or had to be in place. However, the Senates reached opposing conclusions:
Hamm Higher Regional Court: Retroactive application of the GeschGehG (?)
The proceedings before the Hamm Higher Regional Court concerned the use of the plaintiff’s design drawings by former employees. Some design drawings had been disclosed to the plaintiff’s customers at an unspecified time between 2012 and 2018. Furthermore, it was undisputed that the confidentiality measures asserted by the plaintiff had been circumvented on multiple occasions in the past. In its decision, the court appears to assume that the lack of adequate confidentiality measures during the period up to the end of 2012 precludes the classification of the design drawings as trade secrets and denies a claim for injunctive relief (Hamm Higher Regional Court, Judgment of September 15, 2020, Case No. 4 U 177/90 – Stopfaggregate = WRP 2021, 223–238).
Higher Regional Court of Stuttgart: No retroactive application of the GeschGehG
In contrast, the Higher Regional Court of Stuttgart expressly clarifies that, with regard to the requirement for appropriate confidentiality measures within the meaning Section 2 no. 1 GeschGehG, only the period following the entry into force of the new regulations is to be considered. Prior to the entry into force of the GeschGehG (April 26, 2019), the trade secret owner acquired a right to injunctive relief against an infringer without any further conditions, which cannot be revoked by the new statutory provisions. This would constitute impermissible retroactive application (Higher Regional Court of Stuttgart, judgment of November 19, 2020, Case No. 2 U 575/19, paras. 242/243).
Implications for practice: No protective measures required prior to 2019
This issue has enormous practical significance: If one follows the view of the OLG Stuttgart, when asserting claims for injunctive relief against infringers who unlawfully obtained a trade secret prior to April 2019, the trade secret owner need only prove that it took protective measures for the period following the law’s entry into force. Otherwise, the significantly less stringent requirements of Section 17 of the Unfair Competition Act (UWG) (old version), under which the intent to keep the secret confidential was presumed, apply. If, on the other hand, the view of the Higher Regional Court of Hamm prevails, appropriate protective measures would also have to be proven for the period prior to April 2019. This is likely to pose very significant difficulties for a number of secret holders, as the need for protective measures did not yet exist, at least in parts of the small and medium-sized business sector. An appeal has been filed against the decision of the Higher Regional Court of Hamm (I ZR 186/20), so clarification may come in the near future.
Another question remains open: In the case it decided, the Higher Regional Court of Stuttgart did not have to address whether a different assessment might apply to the period between the expiration of the implementation deadline (June 9, 2018) and the date the law took effect (April 26, 2019). Whether the holder of the trade secret can also invoke the principle of protection of legitimate expectations despite the expiration of the implementation deadline, due to the failure to implement the law at the national level, appears at least doubtful.