Unfair Competition Prevention Act 2023 relating to trade secrets has been amended as follows.

1. Expansion of the presumption of use of trade secrets, etc. (expansion of Article 5bis of the Unfair Competition Prevention Act).

In principle, the burden of proof of the act of use of a trade secret trade secret is on the side of the infringer of the trade secret in question. However, in many cases, the act of use is carried out in the factory of the infringer, making it very difficult for the plaintiff, as the beneficiary, to prove the case. In addition, there is a rule of thumb that it is usual for a person who has wrongfully acquired a technical trade secret to use the trade secret in question. In light of the above, a provision was established in the 2015 amendment to shift the burden of proof of certain facts relating to the act of misappropriation of a trade secret to the infringer.

However, until the 2023 amendment, this provision was only applicable to cases where there was malicious intent or gross negligence at the time of acquisition of the trade secret that it was a trade secret, and only to acts of unfair competition listed in Article 2(1)(iv), 2(1)(v) and 2(1)(viii). In such cases, the probability of misappropriation of the trade secret was considered high.

On the other hand, the acts of unfair competition listed in Article 2(1)(vi), (vii) and (ix) were cases where there was no malicious intent or gross negligence at the time of acquisition of the trade secret, and therefore the probability of misappropriation of the trade secret was considered relatively low compared to other cases. Therefore, they have been excluded from the scope of this Article.

However, with the advance of open innovation and from the perspective of employment mobility, the presumption provision of Article 5bis will now apply even to those who originally had the right of access or were bona fide at the time of acquisition, if the maliciousness is considered to be as high as it has been in the past.

2. Civil cases of unfair competition concerning trade secrets (Articles 19-2 and 19-3 of Unfair Competition Prevention Act)

If a trade secret of a company operating in Japan is infringed, there is a provision to the effect that, in criminal cases, the act of infringement abroad can be punished. On the other hand, in civil cases, it is unclear whether the case can be tried in a Japanese court or not, depending on the case. Therefore, it has been clarified that, as long as the civil action relates to trade secrets of a company operating in Japan and having a management system in Japan, the infringement in foreign countries can also be enforced based on Japanese unfair competition.

This clarifies that small and medium-sized enterprises can also sue foreign companies in Japanese in Japanese courts. However, note that, in the case of "trade secrets used exclusively for the purpose of overseas business", the amended law will not apply, and the court will make a decision as before.

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