The new Act on the Protection of Business Secrets (GeschGehG) - need for action to protect your business secrets
In 2016, the EU directive 2016/943 on the protection of confidential know-how and confidential business information ("the Directive") came into force. The deadline for its implementation expired on June 9, 2018. On March 21, 2019, the German legislator was considerably late in adopting the Act on the Protection of Business Secrets (GeschGehG) which now enters into force on April 26, 2019. What consequences will the implementation of the directive have for German companies?
For the first time, the new law regulates the protection of business secrets in a consistent framework. The implementation of the directive in Germany largely secures an already existing situation. In particular, business secrets are - as before - not qualified as subjective rights. Nevertheless, the implementation in the GeschGehG will significantly broaden the previously guaranteed protection of business secrets.
The draft of the GeschGehG, in accordance with the Directive, contains a substantial change: the definition of a business secret. Fort the first time, business secrets are legally defined in GeschGehG.
Until now, there was no consistent use of terminology in German law. According to German jurisdiction, information was considered a business secret if it was not obvious, if it was related to a company, if there was a legitimate economic interest in confidentiality and if the will to confidentiality was manifested to the public, whereby the latter condition of the "will to confidentiality" was given decisive importance. Ultimately, the courts assumed a business secret whenever a will to confidentiality could be presented.
The GeschGehG now contains a legal definition of a business secret: A business secret is an information which (a) is not, either in its entirety or in the precise arrangement and composition of its components, generally known or readily accessible and therefore of commercial value to the persons in the circles who normally deal with this type of information, (b) is subject to appropriate confidentiality measures by its lawful owner under the given circumstances, and (c) has a legitimate interest in confidentiality.
The new definition of a business secret will result in a substantial change of the previous legal situation, namely a move away from the subjective characteristic "will to confidentiality" to the objective characteristic "appropriate confidentiality measure". The purely objective element of the appropriate confidentiality measure thus represents an essential novelty which clearly exceeds the previous requirements. Anyone wishing to protect his business secrets must therefore prove from now on that he has taken confidentiality measures.
The implementation of the directive will in future confront businesses with the issue of which "appropriate confidentiality measures" can be taken. In practice, we first recommend identifying any information in which there is an interest in confidentiality and classifying it according to the degree of confidentiality required. Appropriate organisational, technical and legal confidentiality measures should then be taken. As a possible - if not even the most relevant - condidentiality measure, effective confidentiality clauses and agreements will from now on gain importance as requirement for the existence of a business secret in order to benefit from the protection afforded by GeschGehG.
We are happy to advise you ont the implementation of appropriate confidentiality measures.