1. Preamble – Brief History of the Unfair Competition Prevention Law in Japan

The Unfair Competition Prevention Law (the "UCPL") was established in Japan in 1934, in acceding to the Paris Convention.

The original UCPL regulated acts of causing confusion relating to widely-known indications of goods, acts considered to be misleading as to the true place of origin, and acts of impairing goodwill of others, but was subsequently expanded in its scope of protection. The current UCPL extensively covers unfair competition acts as defined as follows.

  1. Causing confusion with other party's widely-known indication of goods or business
  2. Misappropriation of other party's well-known indication of goods or business
  3. Sales, etc., of counterfeit goods
  4. Trade secret infringement
  5. Providing devices for invalidating technological restriction measures embedded in digital contents
  6. Improper acquisition and misuse of domain names
  7. Misleading consumers as to quality of goods, etc.
  8. Impairing goodwill of other's business
  9. Misappropriation of trademarks by agents, etc.
  10. Commercial use of flags and official marks of foreign nations or international organizations
  11. Bribery of foreign officials

Trade secrets protection was first introduced into the UCPL in 1990, and the scope thereof has been expanded by subsequent revisions. However, in order to further strengthen the scope of protection, the UCPL 2015 as revised was enacted January 1, 2016.

Under the UCPL, a "trade secret" means technical or business information that is:

  1. useful for commercial activities such as manufacturing or marketing methods,
  2. kept secret, and
  3. not publicly known.

2. Background of Current Revision

Recently, companies have again begun to realize the importance and value of keeping certain information confidential, and understand the importance of separating intellectual property ("IP") into IP to be open and IP to be kept closed on a strategic basis, i.e. the so called "Open-Close Strategy", in order to actively utilize IP. Therefore, it is necessary to provide more effective protection for trade secrets. In the midst of such a situation, a number of trade secret leakage scandals were revealed one after another, such as a case where the technical trade secrets of a Japanese company were leaked to a non-Japanese competitor, causing huge damage to the Japanese company. These trade secret infringement cases drew special attention of the public as a serious risk of corporate information leakage.

3. Outline of Revision

The present revision generally relates to remedies from both civil and criminal aspects for stronger protection of trade secrets.

(1) Civil aspects

  1. Expansion of protection coverage

    • Restriction on assigning, importing/exporting, etc., of trade secret infringing products
  2. Upgrading of protection effectiveness

    • Reversing of the burden of proof of the infringer's wrongful use of trade secrets
    • Extension of statute of limitations, from 10 to 20 years after commencement of wrongful use

(2) Criminal aspects

  1. Expansion of punishment coverage

    • Punishment of subsequent acquirer
    • Regulation of assignment, import/export, etc., of trade secret infringing products
    • Punishment for attempted infringement of trade secrets
    • Punishment of trade secret crime outside Japan
  2. Upgrading of deterrents by strengthening penalties

    • Increase in fine for the crime of trade secret infringement
    • Heavier fine for the crime of trade secret infringement outside Japan
    • Prosecutable without a complaint from the trade secret owner
    • Discretionary confiscation and additional levy of crime proceeds

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