A Preliminary Introduction to Trade Secrets in Germany

Protecting trade secrets is a core factor in the success of German businesses. In today’s global competitive landscape, where information is power, possessing unique business know-how is not only an advantage, but also a determining factor in the survival of a business. These business secrets, from unique manufacturing formulas, optimized manufacturing processes to innovative business strategies, are all valuable intangible assets, the result of continuous research, development and innovation. The successful protection of these assets not only helps German businesses maintain a sustainable competitive position in the international market, but also contributes to the development of the German economy, which is famous for innovation. Viet An Law would like to guide customers on how to protect trade secrets in Germany through the article below.

Preliminary Definition of Trade Secrets in Germany

In the past, German law allowed anyone who wanted to protect trade secret information to arbitrarily declare it a trade secret. Even if there is no clear evidence, as long as the information is confidential and related to the company’s business, it is protected by law.

However, under the new law, in order to be protected by law, businesses must prove that they have taken specific measures to keep that information confidential. These measures must be clear and recognizable from the outside.

This poses two major challenges for businesses. First, they need to clearly identify what information is confidential and needs to be protected. Second, they must choose the appropriate security measures for each type of information. Each type of information will require different security measures.

To do this, businesses should make a list of confidential information and determine the level of security required for each type of information. This is similar to cataloging personal data processing activities under the GDPR. Although not required, making this list will help businesses have clear evidence in the event of a dispute.

Information that needs to be kept confidential may include: customer information, finances, manufacturing formulas, product design, software source code, etc. Businesses also need to clearly identify who in the company has access to this information

Preliminary Measures for the Protection of Trade Secrets in Germany

After identifying the information that needs to be secured, businesses need to take appropriate protective measures in accordance with German law. These measures can be divided into three main groups:

• Organizational measures:
  • Clear assignment of responsibilities: Each individual will have specific responsibilities in protecting confidential information.
  • Mark confidential information: Information that needs to be secured must be clearly marked or noted for people to be aware of.
  • Employee training: Organize training courses to raise employee awareness of the importance of protecting trade secrets.
  • Build a reporting process: Make it easy for employees to report security breaches without fear of punishment.
• Technical Measures:
  • Information system security: Apply technical measures to protect computer systems and networks from unauthorized intrusion.
  • Data encryption: Encrypt sensitive data to prevent unauthorized access.
  • Restrict access: Give access only to those who really need it.
• Legal measures:
  • Sign confidentiality contracts: Sign confidentiality contracts with employees and partners to bind them on information security obligations.
  • Protection of intellectual property rights: Registration of protection of inventions and business know-how to affirm legal ownership.
  • Prevent unfair competitive behavior: Behaviors such as reverse engineering can be restricted through contractual agreements.

Choosing the right security measures depends on many factors such as: the nature and value of the information, the scope of the people who are accessed, and the working environment. Therefore, businesses need to carefully evaluate each specific case to make an appropriate decision.

A Preliminary Look at How to Regularly Evaluate Trade Secret Protections in Germany

To ensure the effective protection of business secrets, enterprises should:

• Building a business secret management system: This system helps to clearly define the responsibilities of each department and individual in protecting confidential information and ensure the implementation of protective measures consistently.
• Detailed documentation: A complete record of confidential information and the safeguards in place will be important evidence in the event of a dispute.
• Regular updates: Protections should be reviewed and adjusted periodically to match the actual situation and new threats.

In case of violation of business secrets, enterprises shall have the right to

• Request for cessation of violations: Forcing violators to stop infringing upon trade secrets.
• Claim for damages: Claim compensation for damages caused by violations.
• Request for destruction of evidence: Forcing the violator to destroy documents and products containing confidential information.