Trade Secrets in Employment Relationships in Germany

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Carsten Domke LL.M. CMS Hasche Sigle 2. uses or communicates to anyone without authorization a trade or industrial secret which he has acquired or otherwise obtained or secured without authorization through a communication as described in subsection 1 or through an act of his own or of another person under paragraph 1. (3) The attempt shall be punishable. (4) In particularly serious cases, a prison sentence not exceeding five years or a fine shall be imposed. A particularly serious case shall be generally deemed to exist if the perpetrator 1. acts commercially, 2. knows at the time of communication that the secret is to be used in a foreign country, or 3. if he himself makes use of it in a foreign country as described in subsection (2), paragraph 2. (5) The offense shall be prosecuted only upon application unless the prosecuting authority deems official intervention necessary owing to particular public interest in prosecution. (6) Section 5, No. 7 of the Criminal Code shall apply analogously. Simple acquisition of knowledge, alone, goes unpunished. Long-term retention of secrets by way of memory goes unpunished as well. Section 17(2) No. 2 of the Unfair Competition Act provides sanctions for trading in secrets. In the interest of a comprehensive protection of trade secrets, the elements of offense under §17 of the Unfair Competition Act are supplemented by the provisions contained in §18 and §19 of the Unfair Competition Act. Section 18 of the Unfair Competition Act protects the knowledge of a company set out in models or instructions of a technical nature against abuse of trust in business relationships. This does not have to refer to trade secrets in the narrower sense. Section 18 of the Unfair Competition Act serves, in particular, to protect technical knowledge that is made available to other companies within the framework of knowhow agreements or subsequently failed contract negotiations. Section 19 of the Unfair Competition Act provides criminal law protection for industrial secrets already prior to their violation in that the attempt to induce another to violate §17 or §18 or the offer to commit such violation can result in a penalty. If the prerequisites of §17 of the Unfair Competition Act are met, the elements of betrayal of confidence by abusing rights under §266(1), second alternative, of the Criminal Code are often also met if the offender had a duty to safeguard the assets of L:\JOBS\42179 ABA LEL\42179_Book vol 1\WIP files\Papers\125_Domke.doc 6
Carsten Domke LL.M. CMS Hasche Sigle the damaged company. This is always true with regard to members of the board and executive employees, as well as all employees who have a say in events in the company. What is necessary is that such a person has a fundamental duty of care with regard to the financial interests of the company. An employee is always in breach of his duty to safeguard assets if he communicates an industrial secret that has been confided in him or makes use of it for himself or for others. According to §202a of the Criminal Code (data espionage), it is also a criminal offense for a person to obtain data for himself or another, without authorization, that was specially protected against unauthorized access and that was stored in such a way that it was not directly perceivable or was being transmitted. This can include secret trade and business data. The penalty can be imprisonment not exceeding three years or a fine. Under §203 and §204 of the Criminal Code (violation of private secrets), trade secrets are expressly included in the protected secrets confided in specified professionals, such as officeholders. They are protected there against disclosure and exploitation even without the subjective prerequisites set out in §17 of the Unfair Competition Act being met. An offender faces imprisonment not exceeding one year under §203 of the Criminal Code and not exceeding two years under §204 of the Criminal Code or a fine. If one of the provisions of criminal law has been violated, sanctions imposed during employment can be based on such violation. VI. Punitive Provisions Under Labor Law, Corporate Law and Commercial Law There are explicit provisions under commercial law, particularly corporate law, for the protection of trade secrets, such as §90 of the Commercial Code, according to which commercial agents may not exploit trade secrets confided in them, §79 and §120 of the German Works Constitution Act, according to which members and substitute members of works councils may not exploit trade secrets of which they gain knowledge through their membership, or §404 of the German Stock Corporation Act (Aktiengesetz), according to which members of management boards or supervisory boards may not disclose trade secrets to third parties. The different provisions all have a uniform structure. The elements of the offenses include the acts of revealing secrets that offenders gained knowledge of as officeholders of a company and exploiting them without authorization. Revealing a secret means any communication of it to a third party. The attempt to do so is not a criminal offense. The penalty is imprisonment not exceeding one year or a fine. Aggravated offenses are cases in which an offender acts in return for payment or with the intent of enriching himself or others or of harming another party (§404(1), second sentence, of the Stock Corporation Act, §333 of the Commercial Code, §120(3), first sentence of the Works Constitution Act. However, these provisions have not gained any particular importance in practice to date because their restriction to a group of offenders, the necessity of filing charges L:\JOBS\42179 ABA LEL\42179_Book vol 1\WIP files\Papers\125_Domke.doc 7
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