GERMANY Law and Practice Contributed by: Thomas Nägele, Simon Apel, Jonathan Drescher and Alexander Stolz, SZA Schilling, Zutt & Anschütz
1.15 Extraterritoriality The question of whether and under which con - ditions it is possible to bring a claim under the German TSA based on misappropriation of trade secrets that take place in another country is highly controversial. When it comes to cross- border disputes, the rules of private international law – in particular, the Rome I Regulation and the Rome II Regulation – determine which law applies. This means that contracts on trade secrets (eg, licence agreements or NDAs) are governed by the Rome I Regulation with the consequence that (unless the parties explicitly made a different choice of law) the contract will be regularly governed by the law of the country where the trade secret owner has their habitual residence. In contrast, trade secret misappropriations con - stitute tortious acts and thus are governed by the Rome II Regulation. While the Rome II Regulation contains special provisions for unfair competi - tion and for infringements of intellectual property rights, there are no separate provisions for the infringement of trade secrets. This is problem - atic, because under German law, trade secret protection is seen as hybrid law that cannot be clearly assigned to either intellectual property or unfair competition law. For this reason, in Ger - man literature, different opinions are held on the applicable law, which depend on the area of law to which the respective author allocates the pro - tection of trade secrets. The first opinion understands trade secret pro - tection neither as intellectual property law nor as competition law and applies the general conflict rule of Article 4 of the Rome II Regulation. There - fore, the law of the country in which the damage occurs is applicable. This, in turn, is where the owner of the secret has its registered office or its (branch) office, or where the business or part of
the business concerned is located. Therefore, in most cases, trade secret misappropriation could be prosecuted under the German TSA. However, if there is a pre-existing relationship between the violator and the trade secret owner (such as a contract that is closely connected with the trade secret misappropriation) and if that connection is subject to the law of a different country, that law may apply to the trade secret misappropria - tion as well. The second opinion views the misappropriation of trade secrets as an act of unfair competi - tion and therefore as subject to Article 6 of the Rome II Regulation. This provision differentiates between market-related (Article 6 (1), Rome II Regulation) and bilateral (Article 6 (2), Rome II Regulation) infringements. Market-related infringements are acts that are not only direct - ed against the infringed party (the trade secret owner), but also affect third parties. With regard to trade secrets, this would primarily be the case with the distribution of infringing goods, the dis - closure of trade secrets to the general public or the use of trade secrets for marketing. Such acts of misappropriation would then be subject to the law of the state in which the products are distributed or the trade secrets are disclosed – and thus not subject to the German TSA, if the misappropriation takes place in another coun - try. In contrast, for purely bilateral breaches of competition that only affect the interests of the owner of the trade secret (in particular, unau - thorised access to the trade secret), the law of the country in which the damage occurs would be applicable. Therefore, if no third parties are affected, trade secret misappropriation could be prosecuted under the German TSA. Additionally, with regard to bilateral breaches, the information provided in relation to the first opinion (above) applies accordingly.
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