Trade secret laws and regulations in Austria

Yes, Austria has implemented the Trade Secrets Directive by introducing new provisions in the Unfair Competition Act (§§ 26 a – j Gesetz gegen den unlauteren Wettbewerb, “UWG”).

Austria’s Criminal Code sanctions the unlawful spying of trade secrets. Further, the Unfair Competition Code sanctions employees with criminal charges who disclose trade secrets, which they got to know during their time of employment, to others for purposes of competition. There are no further sources of law specifically relating to the protection of trade secrets in Austria. 

According to § 26 b Unfair Competition Act, which follows the definition of Article 2 of the Trade Secrets Directive, a ‘trade secret’ means information, which meets all of the following requirements:

1. it is secret, because it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
2. it has commercial value because it is secret;
3. it has been subject to reasonable steps under the circumstances, by the person lawfully in power of disposal of the information, to keep it secret.

Other than fulfilling the legal requirements to qualify as a trade secret, no further measures or protections need to be put in place for the information to benefit from protection as a trade secret.

Yes, trade secrets are transferable and/or licensable.

No.

Yes, co-ownership of trade secrets is permitted in Austria.

Generally, ownership of a trade secret is connected to the power of disposal (“Verfügungsgewalt”) over a trade secret. Since trade secrets can be transferred and/or licensed, and there is no provision prohibiting co-ownership of trade secrets, co-ownership is possible.

According to § 26c Unfair Competition Act, which generally adheres to Article 4 of the Trade Secrets Directive, the following actions constitute an infringement of trade secrets:

1. The acquisition of a trade secret is considered unlawful whenever carried out by unauthorised access to, unauthorised appropriation of or unauthorised copying of any documents, objects, materials, substances or electronic files, which are lawfully under the power of disposal of the trade secret holder, and which contain the trade secret or from which the trade secret can be deduced. Further any other conduct which, under the circumstances, is considered contrary to honest commercial practices.
2. The use or disclosure of a trade secret is unlawful whenever carried out by a person who acquired the trade secret unlawfully, or breached a confidentiality agreement or any other duty not to disclose the trade secret, or breached another contractual or any other duty to limit the use of the trade secret.

The acquisition, use or disclosure of a trade secret will also be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully.

The court can issue a preliminary order to gather and/or preserve evidence of an alleged infringement of trade secrets (§ 26i Unfair Competition Act).

At the request of the trade secret holder, the court can order by way of an interim injunction any of the following provisional and precautionary measures against the alleged infringer:

• the cessation of or, as the case may be, the prohibition of the use or disclosure of the trade secret on a provisional basis;
• the prohibition of the production, offering, placing on the market or use of infringing goods, or the importation, export or storage of infringing goods for those purposes;
• the seizure or delivery up of the suspected infringing goods, including imported goods, so as to prevent their entry into, or circulation on, the market (§ 26i par 1 Unfair Competition Act).

Further, a court decision taken on the merits can order the cessation of or the prohibition of the use or disclosure of the trade secret; removal; payment of appropriate remuneration; in case of fault payment of damages including lost profits; rendering of accounts if necessary; right of information; publication of judgement (§ 26e-g, §16, §25 Unfair Competition Act).

The law does not provide a specific period. The court issuing the interim injunction will set a certain period during which the applicant must bring proceedings for a substantive decision on the merits of the claim.

At the request of the person liable, the competent court may order pecuniary compensation to be paid to the injured party instead of ordering the cessation of or the prohibition of the use or disclosure of the trade secret and removal, if all the following conditions are met:

1. the person concerned only becomes aware, after the start of use or disclosure, of facts on the basis of which he knew or should have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully;
2. execution of the measures in question would cause that person disproportionate harm; and
3. pecuniary compensation to the injured party appears reasonably satisfactory (§ 26e par 3 Unfair Competition Act).

This compensation is limited to the amount of a potential license fee that would have been payable if the person concerned had requested permission to use the trade secret in question for the period for which the use of the trade secret could have been prohibited. Compensation may not be claimed retroactively for the period during which the use was lawful.

It is in theory possible to obtain an ex parte interim injunction, but such injunctions are extremely rare and unlikely to be granted in trade secret proceedings. Oral hearings always require the participation of the other party, but in interim proceedings it is possible for the judge to hear witnesses for informative purposes without either of the parties being present.

Generally, the trade secret holder can either demand appropriate remuneration or damages in case of fault by the infringer.

When calculating the appropriate remuneration, the amount of a potential license fee that would have been payable if the person concerned had requested permission to use the trade secret will be considered (§ 26e par 2 Unfair Competition Act).

Damages are calculated either by considering the trade secret holder’s actual damage incurred or the loss of his profits (§ 26e par 1 and § 16 Unfair Competition Act). The scope of compensation includes both material and immaterial damages. In addition, the unfair profits made by the infringer, which result from the unlawful use of the trade secrets can be demanded.

When calculating damages, "all relevant factors" must be taken into account, such as the negative economic consequences, including the loss of profit of the injured party, any unfair profits made by the infringer, and the moral prejudice caused to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret. Where appropriate, damages may also be determined in the form of a lump sum, which will at least correspond to the fee or remuneration that the infringer would have had to pay if he had obtained a licence.

The limitation period for claims relating to misappropriation of trade secrets is three years after becoming aware of the damage and the liable party (§ 263 par 4 Unfair Competition Act). In any case, the maximum duration of the limitation period is six years.

The limitation period starts to run when the trade secret holder becomes aware of the damage and the liable party.

There are no specific circumstances relating to the misappropriation of trade secrets that interrupt or suspend the limitation period. Hence, the general rules according to §§ 1494 subs Civil Code apply.

Yes.

As a first measure, it is allowed to disclose the information, which the holder claims to be a trade secret, only to the extent necessary to make plausible the existence of a trade secret and its violation. Hence, it is not necessary to disclose the trade secret in all its detail when initiating the proceedings (§ 26h par 1 Unfair Competition Act).

Further, the court will, upon request or ex officio, take measures to ensure that the alleged infringer and third parties do not receive knowledge of the trade secret beyond what they already know. Such measures may include the disclosure of the alleged trade secret only to an expert appointed by the court. The appointed expert will be instructed to submit to the court a summary that does not contain confidential information about the trade secret. All files that contain the trade secret will then be excluded from the right of inspection of the file (§ 26h par 2 Unfair Competition Act).

The court may upon substantiated request order the disclosure of the alleged trade secret in the proceedings, if its knowledge is necessary for fair proceedings or to enforce legitimate interests of the requesting party.

All persons who obtain knowledge of the (alleged) trade secret as a result of participation in the proceedings will keep the information confidential, even after conclusion of the proceedings (§ 26h par 3, 4 Unfair Competition Act).

The law expressly states the right to freedom of expression and information as a particular legitimate interest that may be invoked as an exception to the measures, procedures and remedies for trade secrets protection (§ 26d Unfair Competition Act). However, the law also protects all “legitimate interests recognised by Union or national law”. Hence, the disclosure of a trade secret in criminal proceedings would be protected, if for example disclosure in court is necessary for the legal defence to ensure the fair trial of the accused.

Separate legal proceedings based on the general principles of civil law (especially torts) are required where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith.

See answer to question 13 above.

There are several means of protection for an employer to avoid misuse of trade secrets by her its workforce. For example, the employer can restrict the activities of the employee during and after the end of the employment relationship by agreeing upon (also post-contractual) competition clauses or can achieve the protection of confidential information by agreeing upon contractual confidentiality obligations. 

From an employment law perspective, particularly the following confidentiality measures apply: 

1. Contractual confidentiality obligations both for the term of the employment and after termination of the employment relationship;
2. Agreements on ownership of the creations of the employees;
3. Contractual prohibition of competition during the term of employment (beyond the legally required minimum);
4. Contractual notice periods (beyond the legally required minimum);
5. Post-contractual competition clause, as well as non-solicitation clauses;
6. Data protection agreements;
7. Technical means, so that employees only have access to those documents they really need to work with. These technical means should be very well documented (i.e. with access protocols) and should also be well observed (i.e. investigations should be conducted in case of a breach).

Such contractual measures can be part of the employment contract or agreed upon in additional agreements. A contractual penalty may also be agreed upon for breaches of confidentiality obligations as well as non-compete covenants.
 

Yes, this results from the employee's obligation not to harm the employer. Accordingly, employees are obliged to show reasonable consideration for the employer's business interests and to protect trade secrets. This also includes that employees may not disclose or otherwise use for external purposes any company documents or confidential data without the employer's consent. These obligations also apply to agency workers in relation to the temporary agency work. 

In addition to any (post-contractual) confidentiality, non-compete and non-solicitation obligations and respective contractual penalty clauses, employers may consider the following during the term of the employment:

• Issuing explicit instructions about the obligation to keep trade secrets confidential;,
• Using protective provisions to prohibit the private use of e-mails and internet;,
• Prohibitingon  of the storing of data on private end devices or sending company data to private email inboxes;, 
• Giving iInstructioons on compliance with IT security requirements and the use of company communication tools;,
• Implementing rules of conduct, particularly in sensitive areas (e.g. no photography/filming), or on physically entering certain areas;.
• In addition,Conducting regular trainings should to raise awareness in the workforce about the importance of protecting trade secrets and confidential information.

After termination of the employment, employers may further consider: 

• Documenting the return of all electronic devices to the employer;
• Signing of a new document reminding the employee of his contractual and statutory obligations to keep trade secrets and other confidential information secret.

Yes. Revealing misconduct, wrongdoing or illegal activities by the trade- secret holder, provided that the respondent acted for the purpose of protecting the general public interests (i.e. is a whistleblowers)., and The disclosure by employees to their representatives as part of the legitimate exercise by those representatives of their functions, provided that such disclosure was necessary for that exercise, may be invoked as an exception to the measures, procedures and remedies for trade secrets protection (§ 26d Unfair Competition Act). An example would be the submission of evidence by employees or their representatives in the context of a dismissal challenge if it the evidence contains secret information.

The remedies under statutory law for the protection of trade secrets may be available both against the unlawfully acting (former) employee and against the new employer of a former employee.

It is paramount to have an NDA in place with a clear provision on the scope, remedies, and term of the NDA. The parties should clearly define what is to be considered a trade secret and confidential information, and even more importantly what rights each party has in the case of misappropriation and/or unlawful usage. Hence, the pParties may hence determine the liability for such a breach (i.e. establish contractual penalties). This is advisable since practice shows that proving the extent of damages is very difficult. Furthermore, it is advisable that the term of the NDA goes beyond the term of the business relationship. 

The parties may prefer to arrange detailed agreements on the exchange of trade secrets in a separate NDA. However, the NDA may also be part of the 'main agreement' setting out the particular rights and obligations regarding the cooperation of the parties. 

More often than not parties are not aware of the existence of legislation, which may help them with the protection of their trade secrets. The law is a tool, but it is left to the parties to make use of it. Parties could, for example, describe in- depth what they consider to be a trade secret and can also stipulate that they regard something to have commercial value, which actually may – in practice – have limited commercial value. 

Parties generally do look at the protection of confidential data and the consequences of a breach, but forget to stipulate what parties should do when harm is already done. The main goal of the parties is to maintain the secrecy ofprotect a trade secret. When a trade secret is revealed, however, the parties should have a contingency plan in place to limit the negative consequences as much as possible.

One of the first questions a party must ask is whether the chosen law offers sufficient protection of trade secrets, both from a substantive and procedural law perspective. The protection of trade secrets within the European Union was harmoniszed according to Directive (EU) 2016/943.; Hhowever, third countries may not offer such extensive protection. 

It is, therefore, important to address this aspect by choosing the law of a country, which offers adequate protection for trade secrets, but also the procedural means to mitigate the consequences of a possible misappropriation and/or unlawful use of trade secrets.

Austrian law generally allows to for the include inclusion and enforcement of a penalty for a breach of contract (see § 1336 Austrian Civil Code). The agreed-upon contractual penalty is on the one hand intended to induce the debtor to fulfill the contract and on the other handalso to simplify compensation by payment of a lump sum for claims for damages.

It is advisable to include such a clause in a contract since it is difficult proving damages as a result of misappropriation and/or unlawful use of trade secrets. Thus, the advantage of including such a clause is that the extent of damage does not need to be provend. Moreover, careful drafting could also imply that, if there is damage exceeding the stipulated fine, such damage can also be claimed.

However, the party owing the contractual penalty may request the court to reduce the stipulated fine. The most important mitigation criterion is the amount of the damage actually incurred. The right of reducing a contractual penalty may not be excluded in a contract.