JAPAN Trends and Developments Contributed by: Seiro Hatano, Rikiya Sato, Keiichiro Umino and Tomohiro Kuribayashi, TMI Associates
and if such civil litigation concerns trade secrets managed under a control system in Japan, such owners can utilise Japanese court proceedings under Japanese law. Thus, in the past, there were cases where own - ers of trade secrets were hesitant about bringing civil claims for misappropriation of trade secrets, due to: • the onerous burden of proof; • the uncertainty of the applicable law and jurisdiction; and • the risk of the amount of damages awarded being so insignificant that taking legal action would be cost-prohibitive. However, through use of the system introduced by the 2023 Amendment and the criminal pro - ceedings described below, there is now a sys - tem in place that facilitates instituting civil claims for trade secret infringement cases. Approaches Through Both Criminal and Civil Proceedings It has been pointed out that, in Japan, civil liability is the main form of protection for trade secrets, while criminal penalties are expected to play a complementary role in malicious cases. However, in recent practice, the use of criminal proceedings in relation to the misappropriation of trade secrets has not only played a comple - mentary role but has also gained importance in terms of efficient evidence collection for civil proceedings against malicious acts. Japanese civil proceedings do not offer a robust method for evidence collection (such as discov - ery) and it is particularly difficult to collect evi - dence relating to the misappropriation of trade secrets by the defendant in trade secret infringe - ment cases. As a result, in practice, there are
many cases where the plaintiff fails to prove the defendant’s misappropriation of trade secrets and decides against continuing legal proceed - ings, or loses the case. Therefore, in recent years, a rising number of cases has been observed where owners of trade secrets adopt the approach of initiating criminal proceedings first, followed by the civil proceed - ings, to utilise the evidence gathered by police and prosecutors through their compulsory pow - ers in the criminal proceedings. In the above- mentioned dispute between the Japanese steel manufacturer company and its Korean competi - tor, it is suggested that the testimony of a for - mer employee of the Korean competitor in the Korean criminal trial contributed significantly to the company’s substantial victory. The employ - ee was prosecuted in South Korea for leaking technical information of the Korean competitor to China. In the course of the trial, the employee stated that the technical information leaked to China originally belonged to the Japanese steel manufacturer company, which became impor - tant evidence of misappropriation of technical information of the Japanese company by the Korean competitor, in the Japanese company’s proceedings against such Korean competitor. Criminal Case or Civil Case? It is advisable for owners of trade secrets to apply for criminal proceedings to be held first, so that evidence collected in such criminal pro - ceedings can be applied in civil proceedings cases in which collection of evidence is com - plex and difficult. However, the following points should be noted when civil proceedings are pre - ceded by criminal proceedings. To initiate criminal proceedings, trade secret owners are first required to file a complaint to the police. Whether and when an investigation
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