A Fresh Look at Japanese Trade Secret Protection

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Executive Summary of an article written by
Wakako Inaba and Gino Cheng, Winston & Strawn

There is no specialized trade secret statute in Japan, but trade secrets are afforded both civil and criminal protection under the broader Unfair Competition Prevention Act. The act has been amended to address issues of big data and protect against the circumvention of copy control.

Under the Unfair Competition Prevention Act, a trade secret is “a production method, sales method, or any technical or operational information useful for business activities that is controlled as a secret and is not publicly known.” Similar to many other jurisdictions, this definition contains three basic requirements: (1) economic value, (2) maintenance of confidentiality and (3) non-public nature. The presence of the second element is subject to the most debate and where companies often find themselves vulnerable.

A person or entity whose business interests have been, or are likely to be, injured by unfair competition may seek injunctive relief under the act. The owner may seek compensatory damages. Measures include plaintiff’s lost profits, the defendant’s profits or actual losses. The court may also order the infringer to take necessary actions to restore the plaintiff’s business reputation. Any person who commits trade secret misappropriation in the manner prescribed in the act faces imprisonment for up to 10 years, a fine of as much as 20 million yen, or both. Overseas infringement is implicated even where the effect is felt domestically but the underlying acts occurred abroad. Such “foreign” activity is subject to heavier, criminal penalties.

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