Beware of IT audits and eDiscovery: File names and file extensions as trade secrets

In a recently published decision (BVerwG, decision of 5.3.2020, ref. 20 F 3/19), the German highest Federal Administrative Court (Bundesverwaltungsgericht - BVerwG) extended the protection of trade secrets to the external characteristics of electronic files in which trade secrets are stored. Features such as file names, file extensions, file types and file sizes are now also protected against access by unauthorized third parties. What at first glance appears to be a welcome strengthening of trade secret protection, however, presents new challenges for business practice.

After the protection of trade secrets in German law had for a long time led a shadowy existence as an appendage to the Law against Unfair Competition (UWG), it was put on its own feet by the German legislator in 2019 with the Trade Secret Law (GeschGehG) in implementation of European requirements.

Definition of the term trade secret according to the GeschGehG:

• Information which is not generally known, is not readily accessible and therefore has an economic value,
• a legitimate interest of the company possessing the information concerned in not disseminating the information, and
• taking of appropriate confidentiality measures.

Extension of the protection of trade secrets to the external characteristics of files 

   
Trade secrets are protected from access by unauthorized third parties, in the digital sector for example access to the contents of a confidential file. However, the protection also applies to circumstances from which trade secrets can only be derived indirectly. This is where the BVerwG comes in and, in the context of software law, explains the external characteristics of files in which business secrets are stored to such circumstances. Accordingly, file names, file extensions, file types and file sizes can also be protected as trade secrets from access by third parties.

Even the knowledge of file names (and the program libraries behind them) allows an expert to draw far-reaching conclusions about the know-how used. This is even more so if, for example, the programming language used can be deduced from the file extensions. This could lead to the complete disclosure of a trade secret, the more files are disclosed and the more information can be linked. In this respect, file sizes are also relevant, since in combination with file names they can provide indications of the complexity of the functionality behind a file name

Practical tip: What measures should companies take?

   
What may initially appear to be a welcome strengthening of trade secret protection in the software sector may lead to considerable consequences in business practice when dealing with trade secrets. Anyone who violates trade secrets, for example by disclosing data of a contractual partner in spite of an existing confidentiality agreement within the scope of legal claims for information, contractual license audits or by means of eDiscovery, faces claims for removal, injunction and damages and may even be liable to prosecution. In the future, companies will therefore not only have to take care to keep file contents secret, but also the external circumstances of the existence of a file. It is important to have a comprehensive and effective management of trade secrets, from the identification of information worthy of protection to secure links with adequate security measures and up-to-date confidentiality agreements, to regular training of all company employees involved who come into contact with the information.

SKW Schwarz will be happy to assist you in identifying information worthy of protection in accordance with legal definitions using our automated LegalTech tool (in cooperation with SKW@Tech GmbH), in drafting and revising confidentiality agreements in accordance with current legal requirements, but also in dealing with requests for information and audit requests from third parties, in order to protect your company from the trap of unintentionally revealing foreign secrets. We are the right partner for you when it comes to conducting inhouse training and providing training material.

You can find more information about the trade secrets in our flyer.