Working Life > Company > Business Secret

Business Secret / Company Secret

Definition, Explanation

According to the Federal Constitutional Court, business and company secrets are defined as “all facts, circumstances and processes related to a company that are not publicly known but only accessible to a certain group of persons and which to not distribute the entity has a justified interest in”. For company secrets, that is mainly technical knowledge, for business secrets mercantile knowledge. The terms are often used as synonyms.

In IT, in inter-company projects in which some details have to be disclosed, contracts are common that are known as non-disclosure agreements.

The contracts are protected by criminal law §§ 203f Strafgesetzbuch and §§ 17f UWG. The crime of betrayal of secrets is punished with up to 3 years of prison.

Indications of a company secret are:

 

• The entrepreneur keeps it secret, respectively keeps it among a limited number of persons and intends to keep it secret
• It is not easily accessible to other persons

Such secrets include:

• Economic data of a company that are not to be publicized
• Technical know-how
• Recipes
• Construction plans
• Procedures of production and construction
• Processes
• Clients data
• Clients and order data
• Calculations
• Marketing concepts
• Advertizing methods
• Strategic documents
• Personnel matters, also advancement plans
• Suppliers
• Credit-worthiness

The employer may even state explicitly the intention to keep secret, or mark the respective documents accordingly or password-protect data.

The employee is usually obliged to secrecy concerning company and business secrets through the employment contract. This begins with the signing of the contract and may even remain after the employment relationship has ended, which however an additional agreement of post-contractual restraint on competition is required for.

Occupations in which you are always obliged to secrecy concerning business secrets are:

• Doctors and pharmacists
• Lawyers, solicitors, notaries, auditors, tax advisers, accountants, consultants
• Social workers and social pedagogues
• Health-, accident- or life insurance personnel
• Officeholders in public service

Facts of culpability for betrayal of business and company secrets:

• Betrayal by unauthorized notifications by employees to a third party for purposes of own benefits or the benefit of a third or for malice
• Betrayal by unauthorized acquisition
• Betrayal by unauthorized utilization or passing on of entrustet company secrets

Tips, Checklist

For employers:

• Inform your employees about their secrecy obligation concerning company and business secrets
• Get that act of information attested and add the attests to the personnel files
• Define a contractual penalty for violation, in the employment contract
• In case of violation you can demand omittance and bind the employee to damage payments or even dismiss the employee for 'exceptional reasons' or sue the employee
• Mark the documents related to the company secret or protect files with passwords
• When you suspect betrayal of secrets, you must make a criminal report

For employees:

• The notion of company secret does not prohibit your talking about your employment contract or your being dismissed
• Even if the obligation to secrecy has not been explicitly defined in the employment contract, it does still derive from the general employment-contractual duty of loyalty and the regulations of competition law
• Before you use company secrets without being authorized, get legal advice
• Be careful when you talk to others about your company/employer

Last update: 03/29/2010