JAPAN Law and Practice Contributed by: Makoto Hattori, Rikita Karakawa, Wataru Takagishi and Taku Shibazaki, Abe, Ikubo & Katayama
does not necessarily exempt an actor from criminal liability under the UCPA.
• Nature of the information (customer or chemical lists) – these lists are easily lost among general information. Therefore, they require strict physical separation and rigorous access controls. Simply saving them on a shared server without specific restrictions often leads to a failure of secrecy management. Technical know-how (eg, chemi - cal formulae or source codes) – information that possesses high inherent value and of obvious importance (such as complex welding techniques or proprietary code) tends to be granted protection more readily, even if formal manuals are less thor- ough, provided some level of control exists. • Scale and type of business – the courts consider whether the measures were “economically reason - able” for the specific company. The standards for a major corporation with vast resources differ from those applied to SMEs. • Transaction types – in manufacturing outsourcing, where drawings are provided to third parties, “con - tractual management” (eg, NDAs and the manda - tory return/destruction of materials) is paramount. Failure to manage these contractual safeguards often results in the loss of trade secret status, regardless of the information’s technical value. 3.2 Exit Interviews While offboarding procedures are tailored to each organisation, a standard feature in Japanese business practice is the execution of a formal pledge regarding post-termination confidentiality. During this process, employers frequently require departing employees to certify the comprehensive return, erasure, or perma - nent destruction of all proprietary materials. Furthermore, some agreements include non-compete clauses, which generally restrict the employee from joining a competitor for a duration ranging from six to 24 months. Japanese employers often ask about the nature of the new position or the identity of the next employer. Nevertheless, it is well-recognised in practice that departing employees are under no legal obligation to disclose such information.
3. Preventing Trade Secret Misappropriation 3.1 Best Practices for Safeguarding Trade Secrets The “Guidelines on the Management of Trade Secrets” issued by the Ministry of Economy, Trade and Indus - try (METI) establish the baseline standards, outlining the minimum measures necessary to qualify for legal protection under the UCPA. Among the three statutory requirements – secrecy management, usefulness, and non-public status – “secrecy management” is the most critical in litiga - tion. To satisfy this, the owner’s intent to maintain secrecy must be manifested through concrete meas - ures, ensuring that employees can easily perceive the information’s confidential status (“recognisability”). Typical management measures recognised by METI and judicial precedents include the following. • Identification and marking – affixing “Confidential” stamps to paper documents or explicitly labelling electronic file names and folders as secret. • Access control – implementing password protec - tion, tiered access permissions for servers/cloud storage, and storing physical media in lockable cabinets. This also includes restricting the removal of data from the premises and maintaining access logs to monitor information flow. • Human and organisational measures – executing NDAs, establishing clear internal rules for infor - mation handling, conducting regular information security training. How and Why Best Practices Differ The required level of management is not uniform; it is assessed flexibly based on the principle of “economic rationality”, ensuring that the burden on businesses is not excessive. Factors for differentiation include the following.
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