Whether it is a formula, a customer list, source code: a company’s know-how is often among its most valuable assets. It is therefore essential to understand how that value is protected by law, i.e. how trade secrets can be asserted when infringed and/or how trade secrets can be kept under secrecy obligations in any other litigation.
In this regard, a presumed lack of adequate secrecy options in the German litigation forum brought with it a Scylla and Charybdis situation for the party concerned for quite some time: losing the court case (Scylla) or potentially losing the trade secret by its introduction to said proceedings (Charybdis).
Yet, Germany has caught up: starting with the Trade Secret Act in 2019, Courts were e.g. given special rules to impose confidentiality obligations on the parties and their representatives and facilitating to exclude the public from hearings. At the start this this was limited to cases of trade secret assertion itself, but was then extended to the Patent Act (in 2021) and, rather recently (April 2025), in the general German Code of Civil Procedure (“ZPO”) — a big step!
On this basis, the Hessian Higher Labour Court (LAG Hessen) provided highly relevant guidance on the procedural and substantive threshold to obtain secrecy protection in a decision of 13 October 2025 (18 Ta 699/25).
The Facts
The defendant (employer) belongs to Deutsche Börse Group and operates the futures exchange “A”; on the technical side of things, it operates an insider trading detection system for its trading surveillance team.
The claimant (employee), employed since January 2019, had been working as a Senior Associate Vice President since July 2022. The employer dismissed him by terminating the employment relationship extraordinarily without notice for good cause on 18 December 2024, alleging that the employee had published confidential, trade-secret-protected information on the internet and had taken on an unauthorized secondary job.
The employee sued for dismissal protection before the Frankfurt Labour Court. In the course of the proceedings, the employer applied to have information relating to its surveillance method “P* M*” classified as confidential under § 273a ZPO, and sought to restrict access to relevant documents, hearings, and records. This was denied by the Frankfurt Labour Court (confirmed by the Hessian Higher Labour Court).
Procedural Threshold under § 273a ZPO — Trade Secret friendly!
§ 273a ZPO extends trade secret protection beyond dedicated trade secret disputes: it is now available in general civil — including labour court — proceedings, provided the applicant credibly demonstrates that the information in question “may” constitute a trade secret within the meaning of § 2 No. 1 of the Trade Secrets Act.
Accordingly, the classification procedure does not require full proof that a trade secret exists. Rather, credible demonstration (Glaubhaftmachung, § 294 ZPO) suffices. That is a trade secret friendly threshold — but, as this case demonstrates, not one without substance.
Identification necessary!
In the case at hand, the employer sought to have the “functionality” of its surveillance method “P* M*” classified as a trade secret. However, the court found that an abstract description of how a program functions cannot be classified as a trade secret unless the applicant either describes the program’s content specifically or at least sets out what distinguishes it from other software solutions for detecting insider trading, or which concrete program component is “new” and yields better results. The court further ruled that a method of operation may be considered confidential information only if its description enables specialists to reproduce it.
The court found that the employer’s only generic description — gathering and evaluating data from various sources, generating artificial alerts, and using AI to identify anomalies — was basically applicable to any transaction-monitoring software. That AI is used to identify anomalies was considered publicly known information and no details as to algorithms, thresholds, or other specifics of the market surveillance were provided. On this basis, the employer’s description fell well short of showing what the relevant trade secret was.
Further damaging was the employer’s timing: The court noted that the employer had offered no explanation for why it had not applied for classification before filing its substantive pleading of 2 April 2025 — by which point § 273a ZPO was already in force. The employer could have withheld potentially sensitive information until after a secrecy order had been obtained, and only then introduced it in the proceedings. The court also found that, at the time the application was made, it could not be ruled out that the measure sought would come to nothing. After all, at that point the employee had already had the opportunity to discuss the validity of the allegation of dismissal for disclosing a trade secret with third parties.
Finally, the court weighed the employer’s conduct prior to issuing the dismissal against the trade secret status. The employer, who had also applied for protection of the works council hearing in the dismissal protection proceedings, had failed to demonstrate that he had previously designated this content as requiring confidentiality and subject to special protective measures vis-à-vis the works council.
Practical Implications (… at least two!)
- Plan ahead. Where secrecy protection under § 273a ZPO is available — which it is in all civil proceedings pending or commenced on or after 1 April 2025 — one should apply for classification before disclosing sensitive information in its pleadings, not after! Even during a works council consultation procedure, information requiring confidentiality must be consistently protected, should a corresponding application be made at a later stage in court proceedings!
- Be specific. The purpose of an order under § 273a ZPO is not to classify an entire body of submissions as confidential merely because some (unspecified) part of it might touch on a trade secret. Rather, the applicant must identify the specific information it wishes to protect – very high-level, merely functional descriptions of a method may not suffice.
For further information, please contact:
Moritz Schroeder, Partner, Bird & Bird
moritz.schroeder@twobirds.com
