Germany is not only known as one of the best countries for
enjoying beer and bratwurst, but it is also known as a country with
some of the strictest data privacy laws on the planet. Within this
environment, should companies doing business in Germany even
consider using cloud services for trade secrets? They should!
Because of the increased risks of hacking, ensuring IT security
is becoming more and more challenging. Small to medium-sized
companies in particular are finding it increasingly difficult to
keep their IT security up-to-date. However, if companies do choose
to use cloud services, they should carefully review the service
provider contracts and technical and organizational security
offered to avoid losing legal protection for their trade
What are trade secrets and how are they protected?
Trade secrets in Germany aren't protected by a specific law;
in fact, trade secrets in Germany do not necessarily enjoy
protection as intellectual property. Instead, they enjoy protection
through a variety of different civil and criminal laws against
Facts, circumstances, and processes qualify as trade secrets
if they are related to a particular
if they are known only to a limited
group of people (and are therefore not public or easily accessible
by the public); and
if the business has an apparent will
and legitimate interest in keeping the information secret.
What are the major risks when storing/processing trade secrets
in the cloud?
The above definition of trade secrets makes it challenging to
store or process trade secrets in a cloud. A company risks losing
trade secret protection when making such secrets accessible to an
unknown number of people, for example when access to the trade
secrets in the cloud isn't sufficiently limited.
How can those risks be averted?
A few rules of thumb make it more likely that a company using
cloud technology can maintain its trade secrets. For example,
Companies must ensure they know who
they are giving their data to and that the data is secure.
They need to thoroughly check the
provider's IT security (e.g., ask for third-party audit
certifications on current state of the art IT security and
emergency management procedures). In particular, access management
must be carefully reviewed.
The service provider must make clear
contractual commitments that no customer data will be comingled
with other customer data.
Companies should try to limit the
jurisdictions in which the servers are located and the number of
sub-processors. Doing so enhances oversight and potential legal
redress in case of breach of contract.
They should use sufficient
contractual and technical measures, including by clearly outlining
confidentiality obligations, substantial liabilities for comingling
data, encryption at the time of transit and at rest, and an
effective and irreversible data deletion mechanism used by the
cloud service provider.
To sum it up: Storing and processing trade
secrets in a cloud in Germany is certainly a tricky undertaking
since it always entails the risk that cyber-attacks or data theft
lead to the disclosure of trade secrets. To prevent this, it is
crucial to that a company choose its cloud provider wisely,
implement appropriate contractual and technical measures, and
encrypt its trade secrets to ensure their confidentiality.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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