Sea and Maritime Court decisions highlight difficulty in proving trade secret misappropriation 

Following implementation of the Trade Secret Directive, a pattern is emerging at the Danish courts. It now seems to be largely on the plaintiff’s shoulders to prove that misappropriation of trade secrets has taken place – a burden that is quite comprehensive.

While competition and customer clauses can support a claim, recent judgments show that this is not enough to prove to the Danish courts that an employee has illegitimately accessed and used trade secrets. 

In the Sea and Maritime Court’s decisions in Revisionsfirmaet A Statsautoriseret Revisonsaktieselskab v ReVision+ Statsautoriseret Revisionsaktieselskab (BS-49378/2020-SHR) and Revisionsfirmaet A Statsautoriseret Revisonsaktieselskab v RéVision + Rådgivning og SKAT Statsautoriseret Revisionsaktieselskab (BS-6061/2022-SHR), the plaintiff claimed that several audit firms had breached the Trade Secrets Act by taking a number of its clients. 

The court found that this had not be proven. Among other things, the court emphasised that:

• some of the clients had contacted the defendant – a former employee of the plaintiff – directly;
• the plaintiff itself had written to existing clients informing them that the defendant had resigned; and
• of the clients that went with the defendant following their resignation, most had been with them prior to their employment with the plaintiff.

An interesting point was that the plaintiff and defendant had a competition and customer clause that stated: 

Even if the customer clause has been terminated, [you] are covered by the Trade Secrets Act, which prohibits the use of trade secrets, such as customer information, without consent. This means that [you] are not entitled to – either directly or indirectly – contact the company’s clients when you resign…

However, the court ruled that this was not applicable in the case. 

The contract also included a clause stating that any dispute must be brought before the Arbitration Court. For this reason, the Sea and Maritime Court refused to include this section in its decision and ruled that the remaining evidence was insufficient to prove that the former employee had misappropriated the plaintiff’s trade secrets to sell – or seek to sell – its services to customers.

In Innovative Business Software Av AlarmPeople (SH2023 BS-21360/2022-SHR), the Sea and Maritime Court had to decide whether an employee had acquired, possessed and/or passed on confidential information belonging to company A in violation of the Trade Secrets Act.

One of the key questions was whether a former employee had gained access to a confidential tender offer that was sent to company B. While the employee delegated work to others, it was documented that they had accessed the files containing the tender. After the employee was later hired by a new company, company B called the employee – who made a tender offer on the same project. 

Following the witness statements, the court found that company A had contacted the employee and stated what should be included in the tender offer; it had not been proven that the employee had prepared the tender offer using their former employer’s trade secrets. 

Further, it could not be ruled out that the employee was able to prepare the offer on the basis of the information from company A and their general experience in the field, as well as information from subcontractors. As such, the court did not find that the employee acted in violation of the Trade Secrets Act or the Marketing Act. 

Key takeaways

These cases indicate that it can be difficult to prove whether someone has obtained a trade secret. It is challenging to separate knowledge related to a trade secret and knowledge accumulated throughout one’s development and employment. 

In addition to protecting trade secrets through a series of reasonable steps, Employers must also be very aware of the correct action to take in case of a dispute over employment contracts and clauses therein, as many disputes take place through arbitration rather than in court.