JAPAN Law and Practice Contributed by: Makoto Hattori, Rikita Karakawa, Wataru Takagishi and Taku Shibazaki, Abe, Ikubo & Katayama
1.15 Extraterritoriality Articles 19-3 of the UCPA clarify that, for civil lawsuits regarding trade secrets managed in Japan by compa - nies doing business in Japan, a lawsuit can be filed in the Japanese courts and the UCPA applies, even if the infringement occurred abroad. Furthermore, Article 21, paragraph 4, Item (iii), para - graph 5, item (ⅲ), paragraph 6 and paragraph 8 of the UCPA stipulate that criminal penalties will also apply to persons who commit crimes outside Japan with respect to the trade secrets of an owner conducting business within Japan. Regarding these cases, the same requirements as those for claims involving acts committed within Japan must be satisfied. 2. Misappropriation of Trade Secrets 2.1 The Definition of Misappropriation Under the UCPA, “misappropriation” is categorised as several types of “unfair competition” (Article 2, para - graph 1). To claim misappropriation, the owner must prove that the defendant’s conduct falls under one of the following categories. Requisite Elements and Categories The UCPA distinguishes between three primary types of infringing acts – Acquisition, Use, and Disclosure. • Wrongful acquisition – these acts cover the acqui - sition of a trade secret through “wrongful methods” (theft, fraud, duress, etc) and any subsequent use or disclosure. It also extends to third parties who acquire the secret knowing (or being grossly neg - ligent in not knowing) that a wrongful acquisition was involved. • Improper disclosure/breach of trust these apply when a trade secret was initially provided by the owner (eg, to an employee or business partner), but the recipient uses or discloses it for the pur - pose of unfair competition or personal gain, or to cause harm to the owner. This also covers third parties who knowingly benefit from such “improper disclosure”.
Japan for registering source code as a copyrighted work, it is not widely utilised in practice. It is possible to exercise copyright even without registration. 1.13 Other Legal Theories In the former case, it is possible to claim compensa - tion for damages based on a violation of the obligation of confidentiality under an employment contract. In the latter case, a person who instructs an employee may be held liable for tortious interference by induc - ing or aiding the employee’s breach of their contrac - tual confidentiality obligations. Furthermore, if such a person uses the trade secret illicitly acquired through those instructions, they may also be held liable under the UCPA, provided that the requirements of Article 2, paragraph 1, Item (v) or (ⅷ) of the UCPA are satisfied. 1.14 Criminal Liability In Article 21 of the UCPA, possible penalties regarding the infringement of trade secrets are as follows: • for acquiring a trade secret through fraud or infring - ing control for the purpose of obtaining an illicit gain, imprisonment for a maximum of ten years or a maximum fine of JPY20 million, or both; and • for breach of duties in connection with the man - agement of trade secrets for the purpose of use outside Japan and obtaining an illicit gain, impris - onment for a maximum of ten years or a maximum fine of JPY30 million, or both. As stated above, if the act is committed for the pur - poses of use outside Japan, the penalties are more severe than those for ordinary misappropriation of trade secrets. Under Article 22 of the UCPA, if the employee of a company commits an act of unfair competition in con - nection with the company’s business, the company itself is subject to a maximum fine of JPY500 million on ordinary illicit acts and a maximum fine of JPY1 billion on illicit acts committed for the purpose of use outside Japan. A trade secret owner may seek criminal sanctions from investigative authorities simultaneously with making civil claims.
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