Confidentiality measures and their impact on (future) claims for damages:

Check out the latest amendment auf the Austrian Act against Unfair Competition of 20 July 2022

In Austria, an amendment to the rules on damages in the event of a breach of trade secrets came into force on 20 July 2022 with the "Second Modernisation Directive Implementation Act (MoRUG II)". As a result, Austria has now also complied with the requirements of Art. 14 (2) sentence 1 of the Trade Secrets Directive (EU) 2016/943, according to which lost profits and non-material damage should also be compensated.

As a result of this amendment, claims for non-material damages and lost profits in the event of infringement of trade secrets are now expressly provided for by law. This largely corresponds to the previous practice in Austria, emphasising, the explicit definition of a catalogue of "special circumstances" that must be considered by the court in individual cases within the framework of "equity" provided for by law as a criterion for deciding on compensation for non-material damages.

Non-material damages in the case of infringement of trade secrets can occur at the interfaces with personal rights as information from a person's private life can take on a commercial character if the secret circumstance influences that person's business activities. For example, in the case of company leaders ("company patriarchs"), circumstances from private life may have business repercussions for the company (cf. Alexander, WRP, 2022, H 1, I). The Trade Secrets Directive is based on a very broad understanding of the commercial or economic value of information (which may also be "negative" for the company).

According to the explanations of the Austrian legislator, judicial equity is to be applied in the case of non-material damage, both when deciding whether this damage exists at all (on the merits) and when deciding on the amount of a claim for damages. In the most recent amendment to the UWG, the legislator expressly lists the following as criteria for the award of non-material damages:

"the value of the trade secret, the measures taken to protect the trade secret, the conduct of the infringer in acquiring, using or disclosing the trade secret, and the consequences of the unlawful use or disclosure of the trade secret that go beyond economic factors".

In practice, this clarification by the Austrian legislator means that, in addition to the requirement to document the value of trade secrets, it is above all necessary to take appropriate measures to protect trade secrets, which must be documented and presented to the court in the event of a dispute. In this context, it is important to have a good "show-case" of measures taken to be able to proceed against third parties with claims for damages due to the infringement of trade secrets in addition to asserting claims for injunctive relief (by means of a preliminary injunction).

It should be noted that the setting and documentation of appropriate secrecy measures is a fundamental requirement for the existence or non-existence of trade secrets. The specific reference made by the Austrian legislator in the explanatory notes to the most recent Austrian amendment to the Act against Unfair Competition (UWG) now underlines this importance of appropriate confidentiality measures also for claims for damages.

Martin Prohaska-Marchried and Wolfgang Kapek regularly represent companies in Austria in enforcing and defending trade secret claims and are authors of the handbook "Know-How-Schutz kompakt" published by Austrian Standards.