Trade secrets and their protection

Need for action: Protection of trade secrets

Technical drawings, business strategies, recipes or customer lists are essential company assets and sensitive information that often cannot be protected as intellectual property rights (trademarks, designs, patents, etc.). Therefore, it is important to protect them from unauthorised access by third parties. Otherwise, there is a risk of appropriation by third parties or unauthorised use by former employees without any possible sanctions. It is also important to protect trade secrets when analysing large amounts of data and when using artificial intelligence.

Three out of four corporate executives believe that there is a need to invest more in protecting trade secrets – this is one of the key findings from an analysis conducted by CMS in cooperation with "The Economist Intelligence Unit". Only half of the companies surveyed have taken active steps to restrict access to confidential information and reduce the risk of a trade secret misappropriation.

The German Trade Secrets Act ("Gesetz zum Schutz von Geschäftsgeheimnissen") provides protection for trade secrets but also establishes the prerequisite that "reasonable steps" are taken to keep the information secret – and can also be proven.

For every piece of information which should be protected, the requirement of "reasonable secrecy measures" means that a bundle of protective measures must be taken at three levels:

• At the legal level, e.g. through
  • confidentiality agreements and clauses
  • contractual protection of IP and work results
  • consistent prosecution of trade secret infringements
• At the organisational level, e.g. through:
  • tiered access restrictions
  • internal instructions
  • employee trainings
• At the technical level, e.g. through:
  • IT security
  • physical access controls
  • secure disposal of documents and information

The concrete protective measures depend on the importance, type and risk of misappropriation of the individual piece of information. There is no standard solution. Trade secrets must be categorised individually for each company and a suitable concept of protection must be developed and implemented.

Need for action to avoid liability 

Companies should not only protect themselves from the loss of their own information, but also from (negligent) liability due to unauthorised use of secrets of other companies by their own personnel. 

For example, in joint collaborations, companies often receive trade secrets of their cooperation partners. However, if the receiving company does not sufficiently ensure that these trade secrets are protected from unauthorised access by third parties, there is a risk of liability. The same applies if a company receives information and does not sufficiently check whether it concerns trade secrets of third parties which have been obtained unlawfully.

Avoiding liability is just as much a part of the organisational duties of a company’s management as ensuring the protection of the company's own trade secrets. Companies should therefore also provide for a protection concept to avoid liability.

The solution: CMS PROTECT

In order to assist companies in protecting their trade secrets and to avoid liability, CMS offers the product CMS PROTECT.

Since the German Trade Secrets Act came into force in April 2019, our team of experts behind CMS PROTECT has been already providing extensive advice on the requirements of the Trade Secrets Act and has worked with companies to develop individual protection concepts for them.

With the three modules of CMS PROTECT, we develop and implement a protection concept with and for your company to ensure the protection of secrets and to avoid liability:

The advantage of CMS PROTECT: Not only can your company select the modules flexibly and individually, you can also select the individual components within the modules. With CMS PROTECT our team of experts offers your company an individually tailored consulting package for every need.

The structured approach behind CMS PROTECT allows you to keep track of implementation status and costs at all times. You also receive comprehensive documentation on the measures taken in the context of CMS PROTECT, thereby enabling you to meet your obligation to provide evidence in court in the event of an infringement. Your company is thus ideally equipped if the need arises.

If you would like further information about CMS PROTECT if you have any questions, please contact us via cms-protect@cms-hs.com to consult our team of CMS PROTECT experts.