Technical data

Court Finds Not Guilty in Technical Data Leakage Lawsuit – Japan Unfair Competition Prevention Law Case – Trade Secrets

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The Nagoya District Court has returned a verdict of not guilty to defendants in a trial for leaking information about the development of sensor technology. The defendants were former executives of Aichi Steel Corporation, a Japanese steelmaker affiliated with Toyota Motor Corporation. Aichi Steel had sued the former executives for violation of the Unfair Competition Prevention Act in light of the disclosure of trade secrets. Aichi Steel (Plaintiff) alleged that the Defendants disclosed the technical information regarding the equipment needed to produce sensitive magnetic sensors to an electronic component manufacturer, which is a business partner of Aichi Steel, by drawing it on a board White.

The court ruled that the information was too abstract and generalized and therefore only a combination of selected mundane methods. Thus, such a thing can be easily devised by one skilled in the art and cannot be determined as a trade secret. The defendants had asserted that the information was not trade secrets because the technical data in question was clearly common technical knowledge for a machine manufacturer and not valuable information from which to gain a competitive advantage.

Under Japan’s Unfair Competition Prevention Law, trade secrets must meet the three requirements listed below.

  1. Controlled as a secret (confidentiality)

  2. Commercially or technologically useful information (utility)

  3. Unknown to the public (not known to the public)

The prohibition includes the unlawful act of obtaining trade secrets that meet the above requirements, as well as their use or disclosure to third parties for the purpose of maliciously gaining profit.

The court did not find the third requirement (not publicly known) on the technology allegedly disclosed in this case. Therefore, the technology was not considered a trade secret and the defendants were acquitted. The court also said that Aichi Steel’s act of seeking protection for common information is expedient and the lawsuit was unreasonable. The ruling could be seen as a warning against overbroadening the interpretation of trade secrets.

According to statistics published by the National Police Agency in Japan, the number of arrests for improper acquisition of trade secrets is increasing every year. Among other things, the number of cases in which information is inappropriately disclosed by a departing employee is on the rise. In a survey conducted by the Japan Information Technology Promotion Agency in 2020 regarding the state of trade secret management, the most common cause of information leakage was “deletion by a departing employee”, which represented 36.3% of the 2,175 companies that responded to the survey. This may be the result of increased labor market mobility. As economic security to prevent leakage of advanced technologies held by enterprises gains importance, enterprises are required to take even stronger measures as well as a strict and careful interpretation of the scope of trade secrecy.

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