The new Section 273a of the Code of Civil Procedure – Protection of Trade Secrets in Civil Proceedings

Encouraging prospects for holders of trade secrets: From 1 April 2025, the new Section 273a of the Code of Civil Procedure (ZPO) will come into effect, with which comprehensive protection of trade secrets can be achieved in all civil law disputes before local, regional and higher regional courts, as well as the Federal Court of Justice.

Comprehensive protection of trade secrets

From 1 April 2025, Section 273a of the Code of Civil Procedure will allow holders of trade secrets to have information in a legal dispute classified by the court as confidential in accordance with Sections 16 to 20 of the Trade Secrets Act (GeschGehG). This classification requires a party's application. The prerequisite for the classification is that the respective information can be a trade secret), which must be demonstrated to the satisfaction of the court. The classification is based on a discretionary decision by the court. The classification by the court results in comprehensive protection of the information classified as confidential and (potential) trade secrets:

• Parties, legal representatives, witnesses and other participants must keep this information confidential and must not use or disclose it outside of the legal proceedings.
• If the court file is accessed by third parties, the information must be redacted.
• It is possible to restrict access to a certain number of reliable persons and to exclude the public from the oral hearing.

Obligations resulting from this continue to exist even after the conclusion of the proceedings. In the event of violations of the obligations, the court can impose a fine of up to EUR 100,000.00 or imprisonment for up to six months.

Why is the new Section 273a of the Code of Civil Procedure necessary?

A new provision for the protection of trade secrets in civil proceedings? This indicates a regulatory gap. One might wonder whether trade secrets were previously not or insufficiently protected in civil proceedings. The answer is: Under the current legal situation, the protection of trade secrets in the vast majority of civil proceedings is inadequate.

For example, courts have so far had the option of excluding the public (Sections172 no. 2, 173 (2) GVG) and obliging persons present to confidentiality (Section 174 (3) GVG). Until now, further protection of trade secrets has only been possible in trade secret disputes. A trade secret dispute is usually (only) based on the obtaining, use or disclosure of trade secrets. It requires that claims are asserted on the basis of the Trade Secrets Act. This affects at most a small proportion of all civil law disputes.

It follows that in all other civil law disputes that do not involve the infringement of trade secrets, but which nevertheless play a decisive role in the enforcement or defence of rights, procedural law has so far not offered sufficient protection for trade secret holders. The consequences of this – long-known – gap in protection are highlighted in refreshing and unfortunately rare clarity in the explanatory memorandum to the new Section 273a of the Code of Civil Procedure:

In case of doubt, those affected must decide whether to protect their trade secret, deliberately omit to provide corresponding information in the statement of claim and thus possibly lose the lawsuit due to preclusion, or whether they increase their chances of success in court proceedings but disclose their trade secret.
(BT-Drucksache 20/8649, p. 32)

Practical note

The new Section 273a of the Code of Civil Procedure enables the parties to securely disclose trade secrets in civil law disputes.

Parties should therefore regularly assess whether a request to classify information as confidential is necessary. Such an application is not only necessary for the purpose of protecting the trade secret in the respective legal dispute. Rather, trade secret holdersmust keep in mind that information is only protected as a trade secret pursuant to Section 2 No. 1 of the Trade Secrets Act if the holder takes appropriate confidentiality measures. For this purpose, it will also be important whether the holder attempts to protect its trade secrets in legal disputes by means of an application under Section 273a of the Code of Civil Procedure. Thus, there is no duty to apply under Section 273a of the Code of Civil Procedure. In self-interest, it is usually required in one's own favour in order not to lose the protection status of the trade secret.

In the case of an application under Section 273a of the Code of Civil Procedure, the party is also required to mark corresponding statements/documents that are to be classified as confidential (Section 20 (4) of the Trade Secrets Act), which is in any case strongly advised under the applicable trade secret law.

The timing of the application is also of decisive importance for successful confidentiality. Only a timely application can prevent trade secrets from being disclosed as a result of service by the court or from lawyer to lawyer before they have been classified as confidential.

Conclusion and outlook

The extension of the protection of trade secrets to all civil law disputes is an important step for the effective legal protection and protection of trade secrets.

It remains to be seen to what extent the parties will actually make use of Section 273a of the Code of Civil Procedure and whether the practical application of Section 273a of the Code of Civil Procedure by the courts really leads to effective protection of trade secrets.

Despite the opportunities offered by Section 273a of the Code of Civil Procedure, the trade secret holder must carefully consider whether to introduce a trade secret into the legal dispute. This is because if the holder submits the application and it is rejected, the trade secret introduced is largely – possibly even vis-à-vis a competitor on the other side –unprotected.

In addition, a certain contradiction in the legal concept cannot be ignored. It lies in the fact that Section 273a of the Code of Civil Procedure now leaves the important decisions on classification as confidential, which in many federal states were previously reserved for a few selected special chambers at the regional courts, to all panels of judges. With Section 15 para. 3 Trade Secrets Act, the legislature had opened up the possibility for the federal states to assign trade secret disputes to certain regional courts in order to centralise judicial expertise in this important special area at selected courts (BT-Drucksache 19/4724, p. 35). In the federal state North Rhine-Westphalia, for example, only special chambers at the regional courts of Bochum, Düsseldorf and Cologne are responsible for this matter in the first instance. Now, Section 273a of the Code of Civil Procedure will lead to all judicial panels of judges, such as all local and regional courts, dealing with trade secret law. This may undermine the special character of trade secret law. The classification under Section 273a of the Code of Civil Procedure requires a careful examination of whether the conditions of a trade secret under Section 2 No. 1 of the Trade Secrets Act may be met. It remains to be seen whether the parties will be willing to have such an important decision made by a possibly less experienced judge/chamber in trade secret law.