With the GeschGehG, the legislature has created new options for maintaining the confidentiality of information during court proceedings. In practice, however, the provisions of Sections 16 et seqq. of the GeschGehG raise a number of questions. Analyzing these issues is complicated by the fact that most confidentiality orders are not published because they contain information that must remain confidential. In a rather rare scenario, the Federal Court of Justice (BGH) has now ruled on the admissibility of appeals filed by legal representatives against such an order (Decision of November 18, 2021, Case No. I ZB 86/20).
Background
With Sections 16-20 GeschGehG, the legislature aims to comply with the requirements of the Trade Secrets Directive and ensure the protection of trade secrets in court proceedings (see here for future application in civil proceedings). In short, these provisions allow the court to classify certain information as requiring confidentiality (Section 16 GeschGehG) and to restrict access to certain information and to the oral hearing to specifically named individuals (Section 19 GeschGehG). A violation of the confidentiality order – but not a violation of the access restriction – is punishable by a fine of up to 100,000 euros or detention Section 17 GeschGehG).
However, what sounds good in theory and in the legislative rationale presents significant pitfalls in practice for those involved, including the legal representatives. When a confidentiality order is served, it raises quite a few questions for all parties involved.
The underlying case
We make no secret of the fact that, as legal counsel, we were involved in the underlying case and were ourselves affected by the confidentiality order, which has intensified our legal engagement with these issues. However, this does not alter the fact that, from a practical perspective – particularly that of legal counsel – the regulations are poorly thought out. What happened?
In proceedings that have been ongoing for many years concerning the alleged infringement of trade secrets, the Higher Regional Court of Koblenz issued an order pursuant to Sections 16 and 19 GeschGehG at the plaintiff’s request. The fact that the order was issued without a prior hearing of the defendant – even though the relevant information had been the subject of the proceedings for 15 years – was the lesser oddity.
The Higher Regional Court of Koblenz declined to clarify one issue and was unable to resolve another because the legal difficulty was caused by the legislature: What obligations does the confidentiality order impose, and who is actually entitled to which legal remedies?
What obligations result from the order pursuant to Sections 16 and 19 GeschGehG?
Under Section 16 (2) GeschGehG, in the event of a confidentiality order, “the parties, their legal representatives, witnesses, experts, other representatives, and all other persons involved in trade secret disputes or who have access to documents in such proceedings” must “treat this information as confidential,” unless they received it outside the proceedings. Pursuant to Section 17 GeschGehG, this order is enforceable by an administrative fine of up to 100,000 euros or administrative detention. The Higher Regional Court of Koblenz had also – correctly – formulated its order in this manner.
Although it was a bit strange – after 15 years of litigation – that our client now had to treat the information sent to her as confidential, it was still understandable. What made this situation unique for us, however, was that we as a law firm (or each individual attorney?) were now also subject to the threat of an administrative fine. That’s not exactly an everyday occurrence – at least not yet.
First of all, we asked ourselves what obligations actually arise from the order. The fact that every attorney and every law firm is obligated to prevent the negligent disclosure of client information already follows from Section 43a of the Federal Lawyers’ Act (BRAO). Of course, we also have a firewall, require confidentiality agreements from interns and legal trainees, and we lock the doors at night. But is that enough? Does maintaining the confidentiality of trade secrets require more than these measures? Do the files have to be stored in a safe? What about collaboration on a case within the firm? Do we need to implement “Chinese walls”?
Given that the order imposes substantial sanctions (detention for contempt of court!), it is, in our view, somewhat unclear. Even after the Federal Court of Justice (BGH) decision, there is still a need for clarification here.
Appeals against the confidentiality order
Another point is even more intriguing: Pursuant to Section 20 (5), sentence 4 GeschGehG, an appeal against the confidentiality order may only be filed together with the appeal in the main proceedings. In our view, this implies – or implied – that only the parties to the proceedings have the right to appeal the confidentiality order. This (quite obvious) interpretation also corresponds to the view expressed in the legal literature (Kalbfus, in: Harte-Bavendamm/Ohly/Kalbfus, GeschGehG, Section 20, note 41; Schönknecht, in: Keller/Schönknecht/Glinke, Business Secrets Protection Act, Section 20, note 44). But is it tenable?
The situation is particularly delicate for attorneys involved in a trade secret case: If the aforementioned view is correct and an appeal can be filed without exception only in conjunction with the appeal in the main proceedings, the attorneys involved would be under the threat of disciplinary sanctions without having a (separate) remedy against that threat. Without delving into constitutional details: This cannot be the case.
We have therefore filed an “appeal” against the decision of the Higher Regional Court of Koblenz (of course, aware of the doubtful admissibility) and the Senate has referred the matter to the Federal Court of Justice.
Clarification from the Federal Court of Justice – but still no solution
The Federal Court of Justice has now resolved a (small) part of the problem: In its decision of November 18, 2021 (I ZB 86/20, available here), the First Civil Senate clarifies that legal representatives are also entitled to an appeal against the confidentiality order.
The provision in Section 20 (5), sentence 4 GeschGehG does not impose any restriction on the group of persons entitled to appeal. Given the wording of the law and the prevailing views in legal scholarship, this was somewhat surprising but certainly welcome.
We initially thought that the Federal Court of Justice (BGH) therefore also held that, as a matter of course, any legal representative threatened with a coercive measure must be entitled to an appeal against the order. Unfortunately, however, the clarification is not quite so clear-cut: as the BGH adds, the appeal is admissible only if the party itself files an appeal in the main proceedings. As long as this is not the case, the legal representative’s appeal is inadmissible. In its reasoning, the First Civil Senate explains, among other things, that if the court were to proceed otherwise, it would have to familiarize itself with the case file once again. With all due respect to procedural economy and protecting the courts from overload—opinions may differ as to whether the BGH’s reasoning is correct. In any case, as the party subject to the threat of disciplinary measures, we were not convinced by it.
The Federal Court of Justice cites yet another reason: If legal counsel were allowed to challenge the order even before filing an appeal on the merits, they would be in a better position than the parties, even though the parties are typically competitors and are therefore more heavily burdened by the confidentiality order. This argument is also unconvincing – the balancing of interests should be exactly the opposite: because the parties are generally competitors and could potentially exploit the information in question, there is in this respect a special need for protection. The balance of interests is clearly different for legal representatives: In most cases, attorneys are unlikely to possess the (technical) skills required to utilize the information relevant to the proceedings – in any event, we certainly cannot use our clients’ opponents’ highly complex construction plans to build a garage addition. This fundamentally different interest also justifies a different avenue of legal protection.
The central difficulty lies in para. 18 of the order: According to the Federal Court of Justice (BGH), the question of “which legal remedy is available to the legal representatives if an appeal is not filed in the main proceedings and/or can no longer be filed” “does not require a decision in the present case.”
But this is precisely the crux of the matter: The confidentiality order remains in effect even after the proceedings have ended (Section 18, sentence 1, GeschGehG). Thus, if an appeal against a decision is not filed or the proceedings otherwise come to an end, the legal representatives are potentially subject to the pressure of the coercive measure for an indefinite period. However, they are precisely not (any longer) entitled to an appeal, since an appeal in the main proceedings can no longer be filed.
At the very least, this appears to present a serious conflict with the right to a fair trial, even if the Federal Court of Justice (BGH) wishes to take a different view in para. 20 of its decision. At this point, the Senate notes that, under the Constitution, there must be only a single opportunity to obtain a judicial decision. This is indeed consistent with the established case law of the Federal Constitutional Court (BVerfG). The question, however, is when and how the legal representatives are to file such an appeal after the conclusion of the main proceedings: Can the legal representatives, after the conclusion of the proceedings, file a motion for amendment pursuant to Section 20 (2), sentence 2 GeschGehG? The very fact that this sentence refers solely to a hearing of “the parties” – and specifically not of all affected parties – already argues against this.
However, if this option does not exist, then there is no other legal remedy against the confidentiality order – and, above all, one that is independent of the actions of the other affected parties. There is therefore a need for clarification here and, in our view, for corrective action.