Patent litigation in Practice Series: Spotlight on Germany: Trade secret protection in German patent infringement proceedings

In times of globalisation and digitalisation, trade secrets are an important economic asset. Trade secrets and their protection are therefore of paramount importance. For a long time, there was no comprehensive regulation of the protection of trade secrets under civil law in Germany. Therefore, when legal proceedings in Germany involved trade secrets, there was always the dilemma: either lose the case or lose your trade secret. There were indeed provisions that regulated the protection of trade secrets from the public or third parties (such as Sec. 172 No. 2 and Sec. 174 (3) of the German Code on Court Constitution). However, German law did not provide any provisions for the protection of trade secrets against an opposing party in litigation. 

German Trade Secret Act

The German legislator recognised this fact when implementing Directive (EU) 2016/943 (“Trade Secrets Directive”) and created a formalised procedure as well as a system for bringing claims in the event of the violation of trade secrets. The legislator emphasised the need to protect trade secrets during proceedings and the particular importance of corresponding procedural regulations. In April 2019, the German Trade Secret Act (“GTSA”) came into force. 

Relevant provisions of the GTSA in patent litigation 

• Sec. 16 allows the court, at the request of a party, to classify all or part of the information in dispute as confidential, which must then be treated confidentially by the parties involved. 
  
• Sec. 17 provides for sanctions in the event of a breach of the confidentiality obligation. 
•  Under Sec. 18, the confidentiality obligations continue to apply even after the conclusion of the court proceedings.
• Under Sec 19 further judicial restrictions, such as limiting the number of persons who have access (i) to the information classified as confidential and/or (ii) to the hearing, or the exclusion of the public, can be ordered.
• Sec. 20 contains some procedural provisions for measures pursuant to Sec. 16-19 GTSA.

Procedural protection of trade secrets in patent litigation

The legislator recognised relatively quickly that the procedural provisions of the GTSA can also be expedient, if not necessary, beyond proceedings under the GTSA. In August 2021, the Second Act on the Simplification and Modernisation of Patent Law came into force which introduced Sec. 145a German Patent Act (“GPA”). Under this provision, Sec. 16-20 GTSA are to be applied in patent litigation. The procedural protection of trade secrets was therefore expressly declared applicable in the GPA.

The applicability of Sec. 16-20 GTSA in patent litigation is to be welcomed, as there is also a special need for procedural protection of trade secrets in patent litigation. Further, information relevant to patent litigation often also involves trade secrets within the meaning of Sec. 2 no. 1 GTSA. For example, it may be necessary to disclose trade secrets in court to substantiate a claim or in defence. A further area of application is the determination of FRAND licence conditions (e.g., the disclosure of license agreements for substantiating comparable license rates in patent infringement proceedings concerning standard-essential patents could be facilitated and accelerated). Another example is the calculation of damages caused by patent infringement. 

First experiences

In the first few years after Sec. 145a GPA came into force, the German courts actively applied the provisions on the protection of trade secrets in patent proceedings. However, it has also become apparent that Sec. 16-20 GTSA contain some ambiguities and offer room for interpretation by the courts, which has sometimes led to conflicting views.

One example is whether Sec. 16-20 GTSA apply to information that a defendant must disclose to the claimant under the claims for information and rendering account at the stage of enforcement of a judgment in preparation of enforcement of the damages claim. Some German courts answer this in the affirmative, while other courts reject the applicability of Sections 16-20 GTSA in these cases.

Another controversial question is how many persons should be part of the confidentiality club? Under Sec. 19 (1) sentence 3 GTSA, at least one natural person from each party and their counsel or other representatives must be granted access. This leads to the question as to which persons can be categorised as “other representatives”. Are patent attorneys “other representatives”? What about U.S. attorneys of a party involved in parallel U.S. proceedings in which U.S. patents from the same patent family as the patent in suit in the German proceedings are litigated? We hope that such questions will be gradually clarified by the German courts in the near future. 

Key takeaways

Since August 2021, Sec. 145a GPA (in conjunction with Sec. 16-20 GTSA) has provided the parties with a helpful (and urgently needed) instrument to effectively ensure the protection of trade secrets in patent litigation in Germany. This applies not only to licence agreements in SEP cases, where the parties often have an increased interest in confidentiality, but also, for example, to information that is crucial for the substantiation of a claim or for the defence against an allegation of patent infringement.

The first decisions already indicate that the various courts dealing with patent litigation in Germany apply the provisions on confidentiality protection differently. Depending on the facts of the case, the choice of a particular venue can therefore be a decisive first step for the claimant who wishes to protect his trade secrets and could influence the course of a patent infringement action in Germany. We will continue to monitor and report on further developments in German case law in this important area.