GERMANY LAW AND PRACTICE Contributed by: Daniel Möritz, Jan Bonhage, Hendrik Bockenheimer, Carl-Philipp Eberlein, Markus Ernst, Matthias Rothkopf, Christoph Wilken and Alexander Rang, Hengeler Mueller
existing employment relationships nor any of the rights and duties under existing collective bargaining or works council agreements. No specific employees’ or employee representatives’ co-determination rights (beyond information rights) exist. This generally also applies to other types of investment transactions. Asset Deal By contrast, an asset deal will often trigger a so- called transfer of undertakings. As a consequence, all employment contracts allocated to the transfer - ring (part of a) business would transfer automatically to the acquiring entity by operation of law, together with all the rights and obligations under existing indi - vidual employment, collective bargaining and works council agreements. Each employee may object to the transfer of employment within one month upon receipt of a letter describing in detail the transaction and its consequences for the employees. In this event, the contract of employment remains with the seller but may – in principle – be terminated. Transfer of Undertakings Although a transfer of undertakings is not, as such, subject to any co-determination rights of the works council (beyond information obligations), any opera - tional change associated with the transfer of under - takings (eg, the splitting of a business or other signifi - cant reorganisation), results in the right of the seller’s works council to negotiate a compromise of interests and social plan. This may impact the timing and costs associated with the implementation of the operational change and, thus, the transaction. 11. Intellectual Property and Data Protection 11.1 Intellectual Property Considerations for Approval of FDI IP held by the German target company is a relevant aspect in the FDI screening process – see 1.2 Regu- latory Framework for FDI . Recent amendments have added mandatory FDI filing and clearance require - ments for hi-tech areas, including semiconductors, robotics, AI, and quantum technologies (see 7.1 Applicable Regulator and Process Overview ). The German government has also been increasingly apply -
ing Germany’s and the EU’s digital and technological sovereignty as substantive screening considerations. A broadening of the FDI regime for IP licensing deals is under discussion. 11.2 Intellectual Property Protections The protection of innovation and creative works has a strong tradition in Germany. Germany’s judiciary is known for its efficiency in deciding IP disputes. Unitary Patent System Germany takes part in the new European unitary pat - ent system. The system permits the newly established Unitary Patent Court (UPC) to grant injunctive relief from European patents. The four German local divi - sions of the UPC are the leading local divisions of the UPC system. The new system presents patent owners and potential infringers with certain options and stra - tegic choices. Enterprises in which patent portfolios play a crucial role should assess their options to avoid unwanted consequences and costs. Stronger Trade Secret Protection With New Requirements Based on a unifying EU Directive, Germany’s protec - tion of trade secrets has been strengthened through a dedicated law. Trade secret protection and trade secret licensing have increasingly become a focal point of legal reviews in the context of investments. While the new law provides for additional legal pro - tection, the identification of relevant trade secrets remains a crucial practical pre-condition for effective trade secret protection and for an appropriate assess - ment of trade secret-related risks in M&A transactions. Participation of Inventors, Content Creators, Software Developers, and AI With regard to inventors, content creators (such as journalists, designers or videographers) and software developers, German law provides differentiated rules. • Although a contractual assignment or licence is required to obtain the rights to an invention made by a contractor, transfers of inventions made by employees in the course of their employment are governed by statutory law. The German Law on Employee Inventions ( Arbeitnehmererfindungsge - setz , or ArbnErfG) requires that employee inven -
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