When the verdict came in early May 2023, Philipp Benkler treated himself to a beer. “I didn’t say to my team: Come on, let’s open a bottle of champagne!”, he recalls. Benkler, managing director of the IT company Unicon, already knew that this judgment was only a stage victory. The district court in Karlsruhe had just found Niels K., Benkler’s predecessor as Unicon’s managing director, guilty of betraying secrets. He should pay a heavy fine of 180 daily rates. The day after, however, K’s lawyer appealed. Therefore, the judgment is not yet final.
The legal dispute between Unicon and K. is also a pointer to how well the law on the protection of trade secrets works in practice. It came into force in April 2019, so far there have only been a few dozen judgments. It is important how trade secrets are defined. After all, companies can quickly incur millions in damage if one of their employees takes sensitive data with them to the competition. “The company has to define what is particularly sensitive, important or even existential to it,” explains Jan Heuer, a lawyer specializing in labor law at the Düsseldorf law firm Kliemt. A clear access concept is also needed. “The employer must ensure that certain files are only accessible to selected employees.”
At Unicon there was such a concept, with a division of the work areas into “private” and “public” and also corresponding confidentiality agreements that K. had to sign. Before he switched to competitor Igel Technology in April, K. nevertheless copied more than 50,000 files, hundreds of which were strictly confidential. He put them in the cloud of his new employer. The files included account balances and employment contracts, but also secret strategic documents on how Unicon’s future products could be implemented, but above all an overview of the company’s top 50 customers, including sales and the names of the decision-makers. That’s what K. admitted to at the hearing in May. The court sees it as proven that he used the files after his move with the aim of “poaching customers and employees from Unicon”. In fact, K. not only took files to Igel, but also ten of Unicon’s 25 employees at the time.
Managing director Philipp Benkler and his company Unicon have been in defense mode for two and a half years.
(Photo: Unicon)
A company can at least protect itself against unnoticed data being taken, says employment lawyer Heuer: “Technical and legal precautions should be taken so that suspicions can be cleared up.” In the case of Unicon, however, the intuition of Philipp Benkler, who joined the company in December 2020, was much more helpful. At this point it was already clear that Benkler would follow K. because he was going to the competition. His behavior when they met made him suspicious: “Something’s wrong,” he thought at the time, says Benkler. He instructed a computer scientist to check K’s outgoing mail. He had sent a suspiciously large amount of emails to himself and then deleted them. However, the subject lines indicated that sensitive data had to be attached to the emails.
The suspicion was followed by two house searches at K. and his new company and a year-long legal dispute because of the data taking. At the end of March of this year, the district court in Munich sentenced I K. in a civil lawsuit to pay warning costs of more than 45,000 euros to Unicon and to compensate the company for the damage that has been caused and will be caused by the use of trade secrets . Since this is a step-by-step lawsuit, Unicon and Benkler have the opportunity to quantify this damage in the next step. Because ten employees went to Igel with K., Unicon had to pay significantly more expensive freelancers and headhunters in the “fight for survival”, as Benkler calls it, in order to get new employees. With the lawyer’s fees you’re already at a million, he says. “And that’s just the hard euros that are gone.”
When it comes to further strategy, the managing director is keeping a low profile
It is likely to be much more difficult to quantify the damage caused because Unicon was only able to concentrate on retaining its existing customers for a while. The IT industry is expected to grow by ten to 20 percent each year and Unicon’s sales are in the low eight-digit range, Benkler calculates. For each year in which the company is prevented from growing, that would be a loss of one to four million euros. On top of that. “I miss that every year, too, to be able to continue growing from a higher base,” says Benkler.
Hedgehogs, on the other hand, didn’t bring K. any luck. The company parted ways with him immediately after the verdict was announced. The former head of operations also lost his job, as did the interim Igel boss, who today only serves the company as a “company advisor”. K. worked closely with both of them. When asked, Igel said: “We never used third-party business secrets.” Unicon’s lawsuits against Igel and its management have been completely dismissed and all investigations have been discontinued. Benkler sticks to it: It is only realistic that the information is “diffused” at Igel. “The damage is irreversible,” he says.
When asked whether only K. or also Igel should pay for the damage, Benkler keeps a low profile: “We are currently not ruling anything out.” It will be particularly interesting to see how the courts judge Unicon’s accusation that K. is responsible for the fact that the company has missed out on growth and whether they follow the argument that millions are at stake. Especially in connection with the Trade Secrets Act, there are even fewer judgments than for the law in general.
Unicon has overcome the crisis that followed K.’s departure. The workforce now consists of 70 employees – more than ever before. “We have become a completely different company, also with a completely different culture,” says Benkler.