JAPAN Law and Practice Contributed by: Miki Goto, Ryo Murakami and Akihito Ishii, Anderson Mori & Tomotsune
points described in 2.1 The Definition of Misap - propriation if the trade secrets were unlawfully obtained by the new employee, or the fifth and sixth bullet points in 2.1 The Definition of Mis - appropriation if the trade secrets were lawfully obtained but unlawfully disclosed. 5. Trade Secret Litigation 5.1 Prerequisites to Filing a Lawsuit There is no special procedure required before bringing a litigation based on infringement of trade secrets, and the plaintiff may file its com - plaint immediately to the court. 5.2 Limitations Period In general, the right to seek damages arising from general tort extinguishes: • if the right is not exercised within three years after the claimant becomes aware of the damage and the tortfeasor; or • upon passing of 20 years from the time of the tortious act. The right to seek contractual remedies extin - guishes: • five years after the claimant becomes aware that the right is exercisable; or • ten years after the right becomes exercisable. For continuous misappropriation, under the rules of general tort, the loss or damage is understood to realise every day. Therefore, even if more than three years passed from the knowing of the damage and the tortfeasor, the damaged party may still bring a claim for its damages incurred during the most recent three years.
similar work at other employers, in the context of non-competition agreements. This finding suggests that universal knowledge and skill can be distinguished from trade secrets, which are required to be controllable and non-accessible from outside the owner. The doctrine of inevitable disclosure is not established in the Japanese courts. Rather, the courts tend to find that any non-competition agreement between the employee and employer that exceeds the scope of reasonable restriction shall be invalid because it violates the freedom of an individual to choose its profession, which is a fundamental right recognised in the consti - tution, and thus against the public order. The reasonableness of the restriction is decided by considering various elements such as the scope of restriction (the term of duration and territorial limitation), the interest of the former employer, the position of the former employee and the provision of compensation. In general, non- competition agreements setting forth a term that endures longer than two years after departure are likely to be found invalid. 4.2 New Employees It would be prudent for the new employer to con - firm with the candidate employee that no trade secrets or other confidential information of the former employer should be brought into or dis - closed to the new employer, and that employ - ment by the new employer will not violate any obligation that the candidate employee owes to its former employer, including any non-compe - tition obligations. It is also advisable to obtain a covenant from the new employee to this end. The new employer should be mindful not to know - ingly or with gross negligence allow the disclo - sure of trade secrets of the former employer by its new employees, as this may cause the new employer to fall under the second or third bullet
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