JAPAN Trends and Developments Contributed by: Seiro Hatano, Rikiya Sato, Keiichiro Umino and Tomohiro Kuribayashi, TMI Associates
Overview In recent years, trade secret infringement cas - es in Japan have become larger in scale, more international and more complex. Security risks have also increased due to the expanding inter - nationalisation of business, mobility of employ - ment and digitalisation. Criminal cases relating to trade secret infringement have also been increasing, meaning that investigative authori - ties are more active than ever. In light of these circumstances, several amend - ments to the Unfair Competition Prevention Act (UCPA), which provides protection for trade secrets, have been enacted to strengthen such protection, and to facilitate and encour - age enforcement actions against trade secret infringement cases in both criminal and civil proceedings – though there remain some diffi - culties and limitations in seeking protection of trade secrets in Japan. Trade Secret Infringement in Litigation Trade secrets are protected under the UCPA as well as under confidentiality obligations by contract. Due to certain benefits provided under the UCPA in relation to the burden of proof or calculation of damages, claims under the UCPA are more common in practice against the mis - appropriation of a trade secret. In order to bring a civil claim under the UCPA, the plaintiff must first establish that the information qualifies as “trade secret” as provided under the UCPA – ie,
Confidentiality Requirement In order to meet the confidentiality requirement, the information at issue must be appropriately controlled as confidential information. There is no clear threshold for the level of control, and it is determined by the courts on a case-by-case basis taking into account the various factual cir - cumstances, including the nature of the business or information. In recent court decisions, confi - dentiality is generally considered as requiring that the information be controlled as a secret, to the extent that it is recognisable as confidential information, such as by way of access control for the information and confidentiality obligations. The significance of the commercial value as con - fidential information has also been taken into account in recent court decisions, as it renders the information more recognisable as confiden - tial information. Nevertheless, the determination of confidentiality is largely at the discretion of the presiding judge, as there are no detailed cri - teria for establishing confidentiality. Therefore, establishing whether or not confidentiality man - agement exists is comprehensively based on the content and trends of the respective court cases. Trends in Court Decisions on Confidentiality Requirements In the past, courts tended to strictly apply the confidentiality requirement and quite often denied the protection of trade secrets. However, it is to be noted that confidentiality has become more easily recognised in recent years, though there is still a significant number of cases in which the existence of sufficient confidential - ity was denied. For those who have not been particularly focused on security management, establishing confidentiality could be a chal - lenging requirement. Some companies may be reluctant to file litigations against trade secret
the information must be: • controlled as a secret; • useful for business; and • unknown to the public.
Among the requirements for trade secrets, the confidentiality requirement is often a particularly significant issue in practice.
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