More than six years have now passed since the implementation of the Trade Secrets Directive (Directive 2016/943) in 2019. The relevant Sections 26a–26j of the Unfair Competition Act (UWG) have introduced not only new provisions on the protection of trade secrets in court proceedings but also an explicit definition of what constitutes a trade secret. The most significant change: information is now only considered a trade secret if the rights holder has taken measures appropriate to the circumstances to prevent unauthorised access or other uses. We have already reported on this in our Newsletter of 18 September 2018.
In its verdict 4 Ob 195/24s, the Supreme Court has now addressed the relevant provisions for the first time. It confirms that failure to comply with confidentiality measures constitutes a serious stumbling block for the company concerned in pursuing legal action that would otherwise be possible:
Active measures are required
In the case at hand, a former employee of a financial data provider passed on customer data, contact details and fund data to a competitor with the aim of poaching customers. For months after her employment had ended, she still had access to the financial data provider's database using her old login details. She used this to promote competition on behalf of a third party. The Supreme Court has now, in accordance with the principles set out at the outset, upheld the dismissal of the application for an interim injunction seeking to prevent the competitor from using the data obtained in this way. The Supreme Court stated that the financial services provider had not put in place adequate confidentiality measures. The fact that the former employee had signed a confidentiality agreement in favour of her employer did nothing to alter the lack of technical safeguards. It is simply not enough to rely solely on legal safeguards; appropriate and effective measures must also be put in place. This finding by the Supreme Court is in line with the intention of the EU legislator. Consequently, the mere intention to maintain confidentiality, as was the case in previous practice, is no longer sufficient. Furthermore, the burden of proof regarding the implementation of adequate measures lies with the company. Appropriate documentation is therefore also essential.
Conclusion
The Supreme Court's first ruling on the subject of confidentiality measures confirms the strict approach taken by the law. It serves as an urgent wake-up call to companies to prioritise the active protection of trade secrets and to implement appropriate technical and organisational measures. A general reference to existing confidentiality agreements, on the other hand, is no longer sufficient. Which specific measures are appropriate and therefore necessary to maintain protection depends on the sector and size of the company, as well as on the sensitivity of the trade secret and the volume of know-how to be protected. Our IT/IP team will be happy to assist you in drawing up a strategy to protect your trade secrets or in reviewing existing systems.