The Düsseldorf Regional Labour Court (Landesarbeitsgericht Düsseldorf) dealt in an appeal with which information can be trade secrets and how these trade secrets can be adequately protected (or not) within the meaning of section 1 lit. b) of the Act on the Protection of Trade Secrets (GeschGehG).
What was it about?
The defendant was a sales representative of the plaintiff. The employment contract contained provisions on the duty of confidentiality. According to these, the defendant was to keep secret all matters and processes which became known to him or her in the course of his or her work, but also other factual and personal circumstances in the company which do not belong to the formal business and trade secrets. Finally, the defendant was to return all official documents (e.g. records, interview documents) at the plaintiff's request at any time, at the latest on the last working day.
After the end of the employment relationship, the defendant concluded an employment contract with one of the plaintiff's clients to work as a product manager.
Problem customer lists
There was a dispute between the plaintiff and the defendant as to whether and to what extent the defendant used the plaintiff's lists of customers, quantities of products purchased and prices paid as well as the defendant's personal records to target customers in the context of his new employment.
After the Düsseldorf Labour Court dismissed an urgent application by the plaintiff, the Düsseldorf Regional Labour Court, on the plaintiff's appeal, prohibited the defendant from exploiting and/or having exploited and/or using and/or having used and/or having used privately made notes on customers, contact persons as well as their contact information and/or turnover in business dealings for the purpose of competition.
In addition to various procedural issues which led to the partial dismissal of the appeal, the Düsseldorf Regional Labour Court dealt with the following points:
Can client lists and personal records be trade secrets?
According to Section No. 1 lit. b) GeschGehG, a trade secret is information which is not generally known or readily accessible, either as a whole or in the precise arrangement and composition of its components, to persons in the circles which normally handle this type of information and which is therefore of economic value.
If customer lists contain the data of customers with whom a business relationship already exists and who are therefore also possible future customers of the products offered, they generally represent a considerable value for the company concerned, the secrecy of which is usually highly valued by the business owner. A trade secret does not need to have a specific asset value; it is sufficient that it can have a negative effect if competitors gain knowledge of the data. In the present case, these conditions were met in the case of the plaintiff's list and personal records.
However, with regard to customer lists, the Düsseldorf Regional Labour Court emphasised that these would not contain a trade secret if it was merely an address list that could be compiled at any time without great effort from generally accessible sources.
When is information a trade secret?
According to the Düsseldorf Regional Labour Court, the plaintiff did not keep his own list sufficiently secret. However, what is required is not optimal, but only adequate protection. One possible protective measure can be contractual secrecy clauses in the employment contract. The Düsseldorf Regional Labour Court classified the present confidentiality clause as insufficient. It lacks any reference to the concept of a trade secret in the sense of the GeschGehG. It mentions all matters and processes which become known to the defendant in the course of his work. Moreover, the provision is too broad, because it even explicitly covers what is not a business secret.
What are appropriate confidentiality measures?
The plaintiff could possibly have protected his interest in secrecy by demanding his list from the defendant. However, the plaintiff did not do this. In doing so, the plaintiff did not document a real interest in secrecy and thus did not take adequate protective measures.
For the defendant's personal records, the contractual obligation to return them would in principle have been sufficient as an appropriate protective measure. However, the plaintiff did not know about the defendant's personal records until the trial before the Labour Court. In that case, no further protective measures beyond the contractual obligation to return them could be demanded from him. The plaintiff was not legally obliged to demand a completeness list of the returned records on his own initiative without any clues.
The Düsseldorf Regional Labour Court found that the defendant was obliged under the employment contract to return personal records. Furthermore, the defendant also no longer had any interest in his personal records. For this reason, the defendant violated the prohibition of action in section 4 GeschGehG.
What must entrepreneurs do to adequately protect their trade secrets?
In short, it is imperative that you take adequate protective measures!
Active protection
1. first of all, you must bear in mind the special significance of the feature of adequate protection measures: Through this characteristic, the law indicates that only the person who actively protects the secret information enjoys the protection of the legal system. Anyone who does not make any efforts to protect information or merely trusts that the secret information will not be discovered and will remain hidden does not enjoy protection by the legal system!
The more valuable the information - the stronger the protection must be
2. which protective measure is appropriate depends strongly on the individual case as well as on the following factors:
- Value of the trade secret and its development costs
- Nature of the information
- Importance for the company
- Size of the company
- Usual confidentiality measures in the company
- Type of labelling of the information
- Agreed arrangements with employees and business partners
It can certainly be said that the more valuable the information, the stronger the safeguards must be. The case scenarios are numerous and correspondingly complex. It is advisable to have protective measures accompanied by a lawyer at an early stage.
What must be regulated in the employment contract?
3 With regard to employment contract provisions, the Düsseldorf Regional Labour Court provides at least limited "sailing guidance".
Precisely naming the secrets
Generalities such as in the present case are by no means sufficient. Depending on the employee's field of application, you would have to describe as specifically as possible in the confidentiality clause what you understand by a trade secret. With regard to customer lists, you would certainly have to state that in addition to names and addresses, these also contain product types and quantities sold as well as prices and similar information. For example, if software products are involved, one should describe the products in question by name and a keyword-like function.
In any case, you must avoid diluting the concrete protection measures by saying that all other information that has become known should also be protected. This could make it unclear what should actually be a trade secret and what should not.
Document which secrets the employee knows
4. if you become aware of personal records of employees, you should document this. In this case, you must also demand the release of these personal records. If you do not do this, you will most likely lose the protection of secrecy with regard to these personal records.
Reclaim information
5. take seriously and exercise your right to return information to your employees. If, for whatever reason, you do not ask for information back, you risk the protection of secrecy regarding that information.
Source: LAG Düsseldorf, judgement of 03.06.2020, ref. 12 SaGa 4/20
Previous instances: ArbG Düsseldorf, judgement of 23.01.2020, ref. no. 12 Ga 5/20
We are happy to provide advice in the entire field of intellectual property law.
GoldbergUllrich Lawyers 2020
Julius Oberste-Dommes LL.M. (Information Law)
Lawyer and specialist in information technology law
