GERMANY Trends and Developments Contributed by: Thomas Nägele, Simon Apel, Jonathan Drescher and Alexander Stolz, SZA Schilling, Zutt & Anschütz
In contrast, the TSA allows for claims of the trade secret owner for recall and removal of infringing products, whereby even those products which have been manufactured completely legally, but whose distribution was made possible by the unauthorised use of confidential customer lists or advertising concepts, are considered to be “infringing” . The combination of these options substantially extends the scope of protection for the trade secret owner. If now, for example, someone uses the secret-process steps or the supplier data of a competitor when manufacturing products and obtained such information unlawfully, the legal protection is not only directed against the manu - facturer, but extends to every person who is part of the downstream distribution chain – regard - less of whether this person has knowledge of the secret or whether it is embodied in the product itself. On the other hand, however, there is now a sig - nificant risk that third parties may get caught in the “undertow” of a breach of secrecy through no fault of their own, which results in substan - tial liability risks. The recall and destruction of infringing products can be particularly problem - atic because, while the manufacture and distri - bution of products often have long lead times, the required knowledge, by contrast, can be obtained quickly from a respective notification from the trade secret owner. Therefore, as soon as the trade secret owner notifies the “indirect offender” of the unlawful nature of its conduct, the latter may no longer manufacture or distrib - ute the products, to avoid a conflict with the trade secret owner. Confidentiality in Civil Proceedings Another major issue addressed by the TSA con - cerns confidentiality in civil proceedings. The
owner of a trade secret asserting claims under the TSA must demonstrate and prove that the information in question is a trade secret. There - fore, the content of the trade secret will generally be the subject of the oral proceedings. Under German law, court hearings are generally pub - lic, so that disclosure in court is, by definition, accompanied by the disclosure of the secret. In such a case, the owner of the secret would lose both the secret and the lawsuit since the trade secret lacks the required secrecy. Although the owner of a trade secret could apply for the public to be excluded from a court hear - ing under the former German law, the decision to do so was subject to the courts’ reasonable discretion – and the courts were often reluctant as the public access to court proceedings enjoys high priority under German law. The TSA has considerably mitigated this issue by providing additional instruments to exclude the public. In addition, the court may, at the request of a party and after weighing all the interests, restrict access to documents filed or presented by the parties or third parties in order to protect trade secrets. These measures do not only apply to the main hearing, but the restrictions on access may be imposed as soon as the application or reply is served and shall remain in force until the proceedings are concluded. Civil procedural law had similar deficiencies with regard to secrecy vis-à-vis the opposing party (who could not be excluded from the oral hearings). While it was possible to impose a confidentiality obligation on the opposing party (punishable by a fine), this only prohibited the disclosure of the information, but did not provide protection against the opposing party’s own use nor against negligent disclosure of the secret.
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