The protection of trade secrets in civil proceedings is possible only to a very limited extent. The “Act to strengthen the courts in commercial disputes” is intended to provide a solution, at least for certain economically significant proceedings.
It is not only in proceedings involving a breach of trade secrets that one or both parties often have a need to protect trade secrets. Even a “normal” civil dispute may require the disclosure of internal business information: In a legal dispute over distribution contracts, it may be necessary to name suppliers or other sources of supply; in a damages lawsuit, a precise calculation is required to demonstrate lost profits. Until now, the protection of this information within the context of litigation has been inadequately regulated. An amendment to the German Code of Civil Procedure (ZPO) is intended to provide a solution by declaring the confidentiality provisions of Sections 16-20 of the German Act on the Protection of Trade Secret (GeschGehG) applicable to certain types of commercial disputes as well.
Confidentiality provisions of Sections 16-20 GeschGehG
In proceedings concerning the infringement of trade secrets, the legislature has recognized the dilemma that plaintiffs regularly face: If they fail to demonstrate to the court in a comprehensible manner which information constitutes the trade secret, they will lose the case. If, on the other hand, the plaintiff provides detailed information, there is a risk that the opposing party will, through the proceedings, obtain information that it does not yet possess.
To resolve this problem and make it easier for the owner to enforce their claims, Sections 16-20 GeschGehG provide that the court may impose extensive confidentiality measures. First, the court may classify certain information as requiring confidentiality (Section 16 (1) GeschGehG). In addition, it is possible to restrict access to certain documents and to the oral hearing to a limited number of persons (Section 19 (1), (2) GeschGehG). A violation of such a confidentiality order is punishable by a fine of up to 100,000 euros or detention (Section 17 GeschGehG). The confidentiality order applies not only to the respective parties but also to witnesses, experts, and attorneys. The entire order remains in effect even after the conclusion of the proceedings and ends only when the existence of a trade secret is definitively denied or the relevant information becomes generally known (Section 18 GeschGehG).
Protection in civil proceedings and new regulations
Currently, the imposition of confidentiality obligations in civil proceedings is possible only under Section 174 (3) of the Courts Constitution Act (GVG). However, this order applies only to oral proceedings and does not provide protection for documents and information submitted when a complaint is filed. Furthermore, Section 174 (3) GVG prohibits only the disclosure of confidential information, not its use by the recipient. Overall, the protection is therefore very limited.
The “Act to strengthen the courts in commercial disputes” is intended to comprehensively strengthen the state courts and, above all, make them more attractive in comparison to private arbitration tribunals. To this end, the bill provides for the establishment of additional chambers and senates and the use of English as the language of the court. Furthermore, special senates for commercial matters with a value in dispute exceeding 2 million euros are to be established at the Higher Regional Courts (Section 119 (4), (5) GVG-E).
At least in these large-scale proceedings, information may in the future be classified as subject to confidentiality upon the request of a party. Pursuant to Section 510 (5) ZPO-E, the only requirement is that the relevant information may constitute a trade secret within the meaning of Section 2 no. 1 GeschGehG. This corresponds to the provision in Section 16 (1) GeschGehG. Since Section 510 (5) ZPO-E declares Sections 16-20 GeschGehG to be applicable in their entirety, a prima facie case is likely to suffice to establish the existence of a trade secret (Section 20 (3) GeschGehG). If these requirements are met, the court may order all of the measures described above to ensure the confidentiality of the information.
In addition, Section 510 (6) of the Draft Civil Procedure Code (ZPO-E) clarifies that, in proceedings conducted in camera, the court’s judgments shall be published only in excerpts that do not allow any inferences to be drawn regarding the details of the proceedings or the identity of the parties.
The draft bill with explanatory memorandum can be found here.
Outlook
The proposal is, in principle, very welcome, even though the provisions of Sections 16-20 GeschGehG declared to be applicable still raise a number of questions. In any case, improving the protection of trade secrets in civil proceedings is urgently needed. The biggest drawback of the draft is that the new regulation applies only to a limited, specialized area of significant commercial disputes. It would be important to introduce a corresponding regulation for all civil proceedings.