JAPAN Trends and Developments Contributed by: Seiro Hatano, Rikiya Sato, Keiichiro Umino and Tomohiro Kuribayashi, TMI Associates
infringement from fear that the court will deny the existence of confidentiality, which clearly indicates that sufficient or appropriate security management has not been implemented. There are relatively few court cases that find trade secret infringement, and this may give the impression that the courts are still very strict in their consideration of the applicable stand - ards for establishing trade secret infringement. It should be noted, however, that many trade secret litigations are resolved by settlement, and this also applies to trade secret infringe - ment cases. In particular, if the court finds trade secret infringement, the court often encourages the plaintiff and defendant to settle the case to avoid such trade secret being disclosed to the public in a judgment. In light of this, the fact of many court judgments denying the confidentiality threshold having been met is less to do with the Japanese courts’ strict determination of this issue (as it may at first appear) and ultimately more about the protection of trade secrets. In the authors’ experience, such matters are highly dependent on the presiding judge’s views, with some adopting a broad inter - pretation of applicable standards, leading to the required confidentiality being found to exist. Misappropriation of Trade Secrets Further, in addition to the confidentiality issue, misappropriation of trade secrets is often con - tested in practice. There are no adequate proce - dures for compelling the disclosure of evidence held by the other party, as is the case in the US discovery system. As misappropriation of trade secrets typically occurs internally within a company and in confidence, identifying such instances and collecting evidence is not easy. Although certain measures are available – such as evidence preservation procedures under the
Civil Procedure Code and the UCPA, providing a shifting of the burden of proof (as described below) – in many cases, they do not work well for collection of sufficient evidence and for proving the misappropriation of trade secrets. In practice, therefore, it is often necessary to allege a range of facts that may be available – such as the other party’s unusually shorter product development period, or the similarity between the developed and already existing products – in order for the court to infer the mis - appropriation of trade secrets. Therefore, when litigating trade secret infringement in Japan, it is necessary to bear in mind the difficulty of gather - ing such evidence on the use of trade secrets. Trends in Criminal Cases Under Japanese law, there are two approaches against the misappropriation of trade secrets, as in many other jurisdictions: • civil injunctive and damages remedies; and • criminal prosecution. In Japan, criminal penalties for trade secret infringements were introduced in 2003 with the amendment of the UCPA. The criminalisation of trade secret infringements has been actively pursued since a trade secret infringement case between a major Japanese steel manufacturer and a major Korean steel manufacturer, about ten years ago. In 2012, the Japanese steel man - ufacturer filed a lawsuit against its competitor Korean company for damages for the unauthor - ised acquisition of technical information on cer - tain new and innovative products. The lawsuit settled in 2015 with a substantial victory for the plaintiff, with the defendant paying a settlement of approximately JPY30 billion to the plaintiff.
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