The German Act on the Protection of Trade Secrets (Geschäftsgeheimnisgesetz – GeschGehG) entered into force on April 26, 2019. It implements Directive (EU) 2016/943 (Trade Secrets Directive). As stipulated in the Directive, the GeschGehG inter alia provides for specific procedural measures to prevent the disclosure of trade secrets during the course of legal proceedings. The classification of certain information as confidential (Sec. 16 (1) GeschGehG) prohibits the parties to disputes concerning trade secrets and any other person participating in such disputes to use and disclose the information in question, and all participants are ordered, with the threat of penalties, to keep the information confidential (Sec. 16 (2) GeschGehG). The right of third parties to inspect the court files pursuant to Sec. 299 (2) of the German Code of Civil Procedure (Zivilprozessordnung – ZPO) is restricted. Sec. 19 (1) GeschGehG allows for a complete exclusion of third parties and for a restriction to certain people of a party who may receive knowledge of the proceedings’ content and course. Finally, according to Sect. 19 (1) GeschGehG, the court has a broad discretion to order further specific measures that it considers necessary for achieving the purpose of the non-disclosure of the information in question.
As the protection of trade secrets can be relevant in various procedural constellations, it is very important to clarify the scope of Sec. 16 et seqq. GeschGehG.
The procedural non-disclosure measures are supposed to be admissible in “trade secret disputes” only. According to the legal definition in Sec. 16 (1) GeschGehG, trade secret disputes are actions in which claims under the GeschGehG are asserted. This definition poses many questions. We will address the following questions:
• Does Sec. 16 (1) GeschGehG require a principal action?
• Does “claims under the GeschGehG” only refer to the tortious claims laid down in the GeschGehG itself?
• Can judicial non-disclosure measures only be ordered in proceedings before the civil courts?
• Can only parties to the proceedings request the classification of a piece of information as confidential, or are other participants also entitled to do so?
Sec. 16 et seqq. GeschGehG have to be interpreted in the light of the Directive and its intentions. The limits of an interpretation in conformity with an EU directive are the same as with a judicial interpretation of the law. If the wording, genesis, overall context and purpose of the law allow multiple interpretations of which at least one is consistent with constitutional or rather EU law, an interpretation that is consistent with EU law is appropriate. However, the interpretation in conformity with an EU directive must not contradict the recognizable intent of the national legislature. The content of a national provision that is clear in its wording, system and meaning cannot be turned into its opposite by way of interpretation.
There is no support for a restriction to principle actions in the sense of Sec. 253 ZPO in the wording of Art. 9 of the Directive. On the contrary, it follows from (i) recital (26) of the Directive, which mentions the goal of creating quick, effective, and preliminary protective measures, (ii) from the preliminary and preventative measures required by Art. 10 of the Directive, and (iii) from the systematic position of Art. 9 “before the parenthesis” in the “General Provisions” of Chapter III of the Directive that non-disclosure orders are also available in interim proceedings. The wording of Sec. 16 (1) GeschGehG does also not imply a restriction to principal actions.
The mention of “actions” serves to define the term “trade secret dispute”. It includes all proceedings connected with a relevant dispute, including preliminary injunction and enforcement proceedings. This also becomes apparent when looking at the parallel provisions regarding the special protection rights. The term “action” is used to define “patent disputes” in Sec. 143 (1) of the German Patents Act (Patentgesetz – PatG), “trademark disputes” in Sec. 140 (1) of the German Trademark Act (Markengesetz – MarkenG), and “design disputes” in Sec. 52 (1) of the German Design Act (Designgesetz – DesignG). It is generally accepted that the term “action” must be interpreted broadly in this context. At the very least, however, an analogous application of Sec. 16 GeschGehG to these types of proceedings should be endorsed. The mention of “actions” serves to define the term “trade secret dispute”. It includes all proceedings connected with a relevant dispute, including preliminary injunction and enforcement proceedings. This also becomes apparent when looking at the parallel provisions regarding the special protection rights. The term “action” is used to define “patent disputes” in Sec. 143 (1) of the German Patents Act (Patentgesetz – PatG), “trademark disputes” in Sec. 140 (1) of the German Trademark Act (Markengesetz – MarkenG), and “design disputes” in Sec. 52 (1) of the German Design Act (Designgesetz – DesignG). It is generally accepted that the term “action” must be interpreted broadly in this context. At the very least, however, an analogous application of Sec. 16 GeschGehG to these types of proceedings should be endorsed.
According to Art. 6 (1) and recitals (6) and (10) of the Directive, the Directive strives to align civil remedies for infringements of trade secrets in the member states. The Directive does not contain a limitation to the assertion of specific claims under a particular law or act. Art. 9 of the Directive does especially not indicate that the protection of trade secrets shall only be possible in proceedings in which measures under Art. 6 or sections 2 and 3 of Chapter III of the Directive, which have mostly been codified in the GeschGehG, are pursued.
However, because of its clear wording, it is difficult to interpret Sec. 16 (1) GeschGehG in conformity with the Directive in this regard. One could argue that both claims under the GeschGehG as well as more general rights conferred by the GeschGehG, such as the ownership of a trade secret, fall under Sec. 16 (1) GeschGehG. An interpretation according to which protective measures may be ordered in proceedings in which rights resulting from the GeschGehG are pursued or defended would be in line with the Directive. This would also include claims other than the tortious claims codified in the GeschGehG, such as claims for the preservation of evidence pursuant to Sec. 809, 810 of the German Civil Code (Bürgerliches Gesetzbuch – BGB), or contractual claims such as claims under confidentiality agreements, license agreements or the like. Therefore, in conformity with the Directive, “claims under this act” (i.e. the GeschGehG) in Sec. 16 (1) GeschGehG means all claims and rights regarding a trade secret within the meaning of Sec. 2 no. 1 GeschGehG.
Since German courts can also be competent to decide disputes in which the substantive trade secrets law of another member state is applicable, claims under the national trade secrets provisions of other member states are covered as well, insofar as these claims would also exist under the GeschGehG. In view of the harmonization intended by the Directive, trade secrets protected under the national legal provisions of other member states generally also fall under the term “trade secret” as defined in Sec. 2 no. 1 GeschGehG.
According to Art. 9 (1) of the Directive, non-disclosure orders are supposed to be possible in legal proceedings relating to a trade secret infringement of any kind. The wording of Art. 9 (1) of the Directive should be interpreted autonomously and in view of the trade secret holder’s need for protection and the Directive’s goal to strengthen the protection of trade secrets. Therefore, the interpretation of the wording “proceedings relating to…” in Art. 9 (1) of the Directive must go beyond the narrower meaning of “matter in dispute” according to German law on civil procedure. Non-disclosure orders must thus also be available if the protection from the unlawful acquisition, use or disclosure of a trade secret concerns only a partial or sub-aspect of the proceedings.
Besides, Art. 9 of the Directive does not require that an infringement has already happened. Accordingly, Art. 10 of the Directive provides for preventative measures prior to a (possibly first time) infringement. For this reason, the scope of Art. 9 of the Directive should also cover cases in which a party to the proceedings first encounters the risk of an unlawful use or disclosure of a trade secret due to the proceedings themselves, for example if a party’s defense requires the disclosure of a trade secret, even though initially, the proceedings did not concern a trade secret.
When interpreted broadly, the wording of Sec. 16 (1) GeschGehG complies with the Directive’s requirements. According to the wording of Sec. 16 (1) GeschGehG, a “trade secret dispute” requires that “claims under the GeschGehG” are being asserted. However, this is also the case if the prevention of a threatened disclosure of a trade secret is sought; this follows from Sec. 6 clause 2 GeschGehG. Such a risk of disclosure can also occur if the owner of the trade secret is not the claimant/applicant. A defendant who owns a trade secret might, for example, be forced to disclose his trade secret in the course of legal proceedings in order to prevent losing the proceedings. This is because in German civil proceedings, defendants have to substantiate their pleadings, or be-cause of the so-called “secondary burden of proof”; if the defendant does not comply with these procedural obligations, the claimant’s allegations are deemed conceded, Sec. 138 (3) ZPO, so that the defendant might lose the proceedings.
The wording of Sec. 16 (1) GeschGehG only complies with the stipulations of the Directive if its interpretation leads to the result that it is irrelevant for the non-disclosure order whether the claims concerning trade secrets are actively asserted or asserted in other ways, for example as an objection. The claims also do not need to be asserted by means of an action for performance. It is sufficient if the owner of the trade secret uses the procedural means available to him in order to protect his trade secret. This includes declaratory actions or interim declaratory actions. We will discuss the admissibility of (interim) declaratory actions in a separate article.
The fact that recitals (6) and (10) and Art. 6 (1) of the Directive stress civil law protection of trade secrets does not necessarily speak for a restriction of Art. 9 of the Directive to civil proceedings within the meaning of the German legal understanding. Rather, the Directive should intend to protect civil legal positions regardless of whether they are the subject of civil disputes or other proceedings, as long as the proceedings concern the infringement of a trade secret, at least if the proceedings also serve to protect the civil legal position of the owner of the secret. Art. 9 of the Directive stipulates an effective protection of trade secrets, not only in civil proceedings, but in all proceedings and jurisdictions.
In addition, Art. 9 of the Directive does not provide for a restriction to court proceedings within the German meaning. Even though Art. 9 (1) of the Directive speaks of “legal proceedings”, i.e. court proceedings, the term has to be interpreted autonomously. According to the case law of the ECJ on the term “court” within the meaning of Art. 267 TFEU, it must be an independent body on a legal basis with permanent and mandatory jurisdiction, that reaches its potentially binding decisions by applying legal norms and based on constitutional principles. The decisive factor for qualifying as a “court” is that the body in question may be called upon to give a ruling in proceedings intended to arrive at a decision of a judicial nature. However, this does not include criminal authorities such as the public prosecutor’s office.
Sec. 16 GeschGehG is also not limited to civil proceedings. Rather, Sec. 15 (1) GeschGehG implies that an assertion of claims shall not only be possible before the ordinary courts. Therefore, proceedings before labor courts or courts of other jurisdictions are not excluded.
An assertion of civil law claims under the GeschGehG outside of civil courts is, for ex-ample, possible in criminal adhesion proceedings pursuant to Sec. 403 et seqq. of the German Code of Criminal Procedure (Strafprozessordnung – StPO). However, the re-lation between Sec. 403 StPO, which is a rule of jurisdiction, and Sec. 15 GeschGehG is still unclear. Moreover, administrative courts might apply Sec. 16 GeschGehG. Sec. 1 (2) GeschGehG does not oppose this. Sec. 1 (2) GeschGehG does not exclude the assertion of civil trade secrets in a public law context, but only establishes the priority of public law provisions regarding the non-disclosure, acquisition, use, and disclosure of trade secrets. This priority only takes effect insofar as public law provisions are actually relevant and applicable in the case in question, which might first have to be clarified in proceedings before an administrative court in the individual case.
Administrative proceedings such as patent opposition proceedings pursuant to Sec. 59 et seqq. PatG or a trademark opposition proceedings pursuant to Sec. 42 MarkenG before the German Patent and Trademark Office come closer to adversarial civil proceedings before a court within the meaning of the case law of the ECJ than administrative proceedings before other administrative agencies. However, with its reference to legal actions, Sec. 16 (1) GeschGehG draws a line that one would cross by extending the provision’s scope to extrajudicial proceedings. Another question – which we cannot answer here – is whether the Directive has a direct effect with regard to such proceedings so that non-disclosure orders must also be possible outside of court proceedings in the German legal understanding.
In extrajudicial proceedings such as criminal investigation proceedings or administrative opposition proceedings before governmental authorities that are not covered by the term “court” within the meaning of EU law, Sec. 16 GeschGehG is inapplicable and Art. 9 of the Directive cannot have direct effect.
Finally, the Directive does not limit non-disclosure orders to the protection of parties in the proceedings. Rather, Art. 9 (1) of the Directive entitles an “interested party” to apply for the classification of a trade secret as confidential. As the parties to the proceedings will certainly be interested in keeping their trade secrets confidential anyway, the term “interested party” should be interpreted wider so that it covers anyone who has a legitimate interest in the issue of a non-disclosure order. This especially includes third parties who have reason to assume that the proceedings could result in a disclosure of their trade secrets. Only the specific non-disclosure measures mentioned in Art. 9 (2) of the Directive are supposed to be ordered only upon request by a party to the proceedings; the interests of third parties are to be taken into account when deciding on such non-disclosure measures.
According to Sec. 16 (1) GeschGehG, any party to a dispute concerning trade secrets may request a non-disclosure order. It is unclear whether this refers to the formal term of “party” of the ZPO, i.e. only to such persons which desire legal protection in a trade secret dispute or against which this is being desired. Sec. 19 (1) no. 1 GeschGehG could speak against this; according to this provision, documents presented or submitted by third parties can and should be kept from access by certain people as well. The orders under Sec. 16 et seqq. GeschGehG thus also serve to protect the secrets of participants which are not formal parties to the legal dispute. This also follows from Sec. 19 (1) clause 2 GeschGehG, according to which the right of the (other) participants to a legal hearing should be taken into account when deciding on whether to limit access to submitted or presented documents or to the oral hearing to a certain number of trusted persons. Therefore, there are no objections against an interpretation of Sec. 16 (1) GeschGehG in conformity with the Directive, according to which third parties are also generally entitled to request the order of non-disclosure measures.
However, a third party is not entitled to request orders under Sec. 16 GeschGehG in constellations in which the main parties have not made the protection of trade secrets subject of the proceedings, because they have no interest in the protection of trade secrets. Such cases are no trade secret disputes. A third party who is worried about the protection of its trade secret cannot turn the dispute into a trade secret dispute by requesting orders under Sec. 16 et seqq. GeschGehG. Such an interpretation would not be consistent with the wording and system of Sec. 16 et seqq. GeschGehG.
In conformity with the Directive, the term “trade secret dispute” in Sec. 16 GeschGehG has to be interpreted broadly. It is not limited to principal actions, but includes all proceedings in connection with a trade secret dispute, including proceedings for interim re-lief and enforcement proceedings. “Claims” within the meaning of Sec. 16 (1) GeschGehG are not only the tortious claims explicitly mentioned in the GeschGehG, but all claims and rights relating to a trade secret, even if they are asserted as an objection or by means of a (positive or negative) declaratory action. If there is a trade secret dispute, other participants such as interveners can also request the order of procedural non-disclosure measures under Sec. 16 et seqq. GeschGehG.