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FAQs - Trade Secret

FAQs - Trade Secret

Trade secrets may provide business values, as long as being kept confidentially, but once leaked out, their values would be lost. For instance, leaks of technical know-how decreases the technical, thereof business competitiveness, and leaks of the client's or trading partner's confidential information could cause the company to lose its credit and adversely affect the business.
If you try to obtain a patent, the technical content will be disclosed about 18 months after your application. Therefore, you may consider confidential management of your technology as trade secrets, when your technology is not easy to prove the infringement by others and you really do not want to disclose it. Thus, a carefully considered combination of technology patenting and concealing will broaden the scope of company's intellectual property strategies, and consequently lead to an increase of the business competitiveness.
Since trade secrets can be protected without registration for an unlimited period of time, the confidential management of trade secrets may be attractive for SMEs. The Unfair Competition Prevention Act of Japan regulates trade secret infringement. The following FAQs would be helpful for you to protect your trade secrets in Japan.

Trade Secrets in Japan: FAQs

The following three conditions are required for the information to be recognized as a trade secret.

It is useful for business activities, such as manufacturing or marketing methods.
It is kept secret.
It is not publicly known.

The followings are representative acts that are regulated by the Unfair Competition Prevention Act.

The act of acquiring a trade secret by theft, fraud, duress or other wrongful means or the act of using or disclosing a trade secret through an act of wrongful acquisition;
The act of acquiring a trade secret with the knowledge, or with gross negligence in not knowing, that there has been an intervening act of wrongful acquisition, or the act of using or disclosing a trade secret so acquired;
The act of using or disclosing an acquired trade secret after having learned, or having been grossly negligent in not learning, subsequent to its acquisition, that there has been an intervening act of wrongful acquisition;
The act of using or disclosing a trade secret that has been disclosed by the business operator that owns said trade secret for the purpose of acquiring a wrongful gain, or causing injury to such owner;

For more information, you are recommended to see Article 2 of the Unfair Competition Prevention Act.

There are 5 appropriate measures to avoid leaking trade secrets. First, you restrain from accessing trade secrets, such as a management of access authority. Second, you restrain from bringing trade secrets outside, such as a prohibition against the use of USB memory. Third, you construct the environment of your company to find leaking trade secrets, such as an installation of surveillance camera and a monitor of PC log. Forth, you take measures to let your employee understand trade secrets, such as a sign of “trade secret” and the non-disclosure agreement. Fifth, you build a relationship of trust with your employee.

Unfair Competition Prevention Act provides both civil and criminal remedies. Civil remedies include an injunction and a compensation for loss or damages. Criminal remedies include an imprisonment and a fine.

Unfair Competition Prevention Act was revised in 2018 in order to protect “the restricted-offer data”. The law defines following information as the restricted-offer data;

- Be provided to specific persons on a regular basis.
- Be accumulated in a reasonable amount by electronic or magnetic means.
- Be managed by electronic or magnetic means.