"Mother of all lists" - On the risk of first infringement and repetition pursuant to Sec. 6 German Trade Secrets Act

#trade secrets, #trade secrets directive (EU) 2016/943, #risk of repetition, #injunctive relief

The right to removal and injunctive relief pursuant to Sec. 6 German Trade Secrets Act (GeschGehG) (cf. also Art. 10 of the Trade Secrets Directive for preliminary injunction proceedings and Art. 12 of Trade Secrets Directive for main proceedings) has been repeatedly subject to court decisions in the past. Basically, the unauthorized acquisition, use, and disclosure of another's trade secrets indicates a risk of repetition and gives rise to a claim for injunctive relief pursuant to Sec. 6 sentence 1 2^nd alternative GeschGehG. In addition, the right to injunctive relief also exists if such an infringement is imminent for the first time (so-called risk of first infringement, Sec. 6 sentence 2 GeschGehG). Generally, the aforementioned risk of repetition can only be eliminated by the infringer if he provides the trade secret holder with a cease-and-desist declaration with a penalty clause. This was again confirmed by the Higher Labor Court (LAG) Hamm in its decision of June 23, 2021 (10 SaGa 9/21). The court held that (1) the unauthorized acquisition of another's trade secrets indicates a risk of repetition, (2) this risk can generally only be eliminated by providing a cease-and-desist declaration with a penalty clause, unless (3) the specific circumstances of the case make the provision of such declaration obsolete.

The underlying facts of the case and its reasoning can be summarized as follows:

Facts

The plaintiff is a supplier of processing equipment. The defendant was employed by the company as "Global Sales Director". After the defendant had terminated his employment contract, he sent himself three e-mails from his work e-mail account to his private e-mail account - while he was still employed by the plaintiff. Each of these emails contained trade secrets of the plaintiff, including an Excel file "180503_mutter_aller_listen.xlsx" with market analysis data. The defendant also informed the plaintiff that his new employer will be a competitor of the plaintiff. After the plaintiff had released the defendant from his duties, he sought injunctive relief concerning the acquisition, use and/or disclosure of the files. In the meantime, the defendant had provided the plaintiff with an affidavit  that all files were deleted and would not be disclosed to any third parties. However, the defendant did not provide the plaintiff with a cease-and-desist declaration.

Legal reasoning

The LAG Hamm confirmed the opinion of the lower court (Local Labor Court Detmold, decision of May 5, 2021 - 2 Ga 1/21) that the risk of repetition can only be eliminated by providing a cease-and-desist declaration with a penalty clause. In particular, a risk of repetition is not eliminated simply because a recurrence of similar circumstances is not to be expected due to changed facts. In the specific case, a risk of repetition was in fact excluded because a renewed acquisition of the trade secrets was ruled out due to the fact that the defendant had been released from his duties in the meantime. The defendant had no (more) access to the files. The court held that even if the defendant had made copies of the files, it could not be assumed that the files could be "acquired" again within the meaning of Sec. 4 (1) GeschGehG, because their (renewed) reproduction would constitute an unauthorized "use" within the meaning of Sec. 4 (2) GeschGehG.

However, since the defendant had not provided the plaintiff with a cease-and-desist declaration, he could not eliminate the risk of repetition with regard to the use or disclosure of the trade secrets, the court found. It held that the defendant had not overcome the hurdles of the case law, according to which the danger of repetition does not exist in exceptional cases. His statement in the affidavit that he had deleted all files and had not previously disclosed them does not satisfy the requirements for rebuttal. The court argued that the deletion alleged by the defendant does not mean that the trade secrets are no longer in his possession in another form. Rather, the obvious motive for sending the files to the private e-mail account was their intended use. Finally, the defendant had already been in contact with a competitor where he would be working in the future. In this respect, the statements of the defendant are thus to be regarded as purely self-serving protections.

Practical advice

The decision of the LAG Hamm is remarkable in two respects. On the one hand, the LAG Hamm rejects a renewed "acquisition" of the trade secrets with systematic reference to the further alternative of unauthorized "use". These systematic considerations, however, neither follow from the grounds of the law nor from the trade secrets directive.  On the other hand, the LAG Hamm adheres to the principle that a risk of repetition can generally only be eliminated by the provision of a cease-and-desist declaration with penalty clause. According to the LAG Hamm, an affidavit that the trade secrets have been deleted or an assurance that they will not be disclosed to third parties is not sufficient. This leads to a parallelism with competition law, which generally requires the provision of a cease-and-desist declaration with a penalty clause.