The Unfair Competition Prevention Act (UCPA) is the primary statute for the protection of trade secrets in Japan.

Under the Civil Code of Japan, only claims for damages are permitted as a remedy for torts, and claims for injunctive relief are not recognised. As a specialised legal framework supplementing Japan’s Civil Code, the UCPA grants the right to seek an injunction in addition to the right to claim damages in connection with acts of unfair competition.

Acts infringing upon trade secrets may constitute a breach of contract (non-performance of obligations) under the Civil Code, for example, as violation of a Non-Disclosure Agreement (NDA).

In Article 2, paragraph 6 of the UCPA, a “Trade Secret” is defined as “technical or business information useful for business activities, such as manufacturing or marketing methods, that is kept secret, and is not publicly known”.

Specifically, for technical or business information to be protected as a trade secret under the UCPA, the following three requirements must be satisfied.

• Secret Management – the information must be managed as a secret. A company must implement economically reasonable measures according to the specific circumstances, to the extent that its intent to manage the information as secret is clear to employees and business partners. Specific methods are provided in 1.5. Reasonable Measures.
• Usefulness – the information must be technical or business information useful for business activities. Information must be used or utilised in business activities, or useful for saving costs or improving management efficiency. Generally, most information is deemed to satisfy the requirement of Usefulness unless it lacks a legitimate interest deserving of legal protection, such as information contrary to public policy (eg, records of tax evasion or bribery).
• Non-Public Nature – the information must not be publicly known or easily obtainable. Specifically, it must not be available to the general public outside the control of the trade secret holder, such as being described in publications available through reasonable efforts.

Article 2, paragraph 6 of the UCPA describes a trade secret as “technical or business information useful for business activities, such as manufacturing or marketing methods”.

Major types of information recognised as trade secrets in Japanese judicial precedents is as follows:

• customer information (including customer names, addresses and sales data);
• supplier information and supplier details;
• product blueprints and manufacturing methods; and
• programme source code.

Injunctions

Article 3, paragraph 1 of the UCPA provides for injunctive relief, as follows.

“A person whose business interests have been infringed on or are likely to be infringed on through unfair competition may make a claim to suspend or prevent that infringement against the person that infringed or is likely to infringe on those business interests”.

To be granted an injunction, it must be established that an “Unfair Competition”, as defined in Article 2, paragraph 1 of the UCPA has occurred or is likely to occur. Specifically, the act must fall under any unfair competition related to trade secrets specified in Article 2, paragraph 1, Items (iv) through (x).

Damages

Article 4 of the UCPA provides for claims for damages, as follows.

“A person that intentionally or negligently infringes on the business interests of another person through unfair competition is liable to compensate loss or damage resulting therefrom; provided, however, that this Article does not apply to loss or damage resulting from the act of using trade secrets or shared data with limited access after the rights prescribed in Article 15 have extinguished pursuant to the same Article”.

In this case also, it is necessary that unfair competition as defined in Article 2, paragraph 1 of the UCPA has occurred or is likely to occur; in addition, it is necessary to allege and prove “intent or negligence” and “occurrence of damages”.

As stated in 1.2 What Is Protectable as a Trade Secret, in order for certain information to receive protection as a trade secret, it is necessary to satisfy the requirement of Secret Management. Whether the requirement of Secret Management is satisfied is determined by comprehensively considering various circumstances, such as the nature of the information, the form of its possession, and the size of the company holding the information, from the perspective of whether reasonable secret management measures were implemented.

The following are specific examples of measures required to satisfy the requirement of Secret Management.

• Paper Media – physically segregating confidential documents from general information, storing them in a locked location and applying a confidentiality label (eg, “Confidential“ or “Secret”).
• Electronic Media – labelling storage media (USB drives, CD-Rs) as “Confidential”, adding “Confidential” notations to electronic data headers, and implementing access restrictions to the storage locations of such media. On the other hand, if the information is accessible to any employee, there is a high probability that the requirement of Secret Management will be deemed not satisfied. The Ministry of Economy, Trade and Industry (METI) has formulated the “Trade Secret Management Guidelines”, which set forth the minimum standards required to receive protection as a trade secret under the UCPA. This guideline is useful when considering measures to protect trade secrets.

As stated in 1.2 What Is Protectable as a Trade Secret, in order for certain information to receive protection as a trade secret, the requirement of Secret Management must be satisfied. As stated in 1.5 Reasonable Measures, limiting the scope of employees who can access information is a key practice for satisfying the requirement of Secret Management. If information is disclosed without restriction to employees who have no need to access it, the requirement of Secret Management may be denied on the grounds that it is not being appropriately managed as a secret within the company.

Independent Development

If a third party other than the holder of a trade secret independently develops similar information, the requirement of trade secret is still satisfied as long as the third party also manages it as a secret. However, if the third party makes the information public, it loses its Non-Public Nature and ceases to be a trade secret.

Reverse Engineering

Whether information obtained through reverse engineering constitutes a trade secret depends on the difficulty of the reverse engineering. If obtaining the information requires significant expense and long-term analysis by experts, the requirement of Non-Public Nature is satisfied, even if it is physically possible to obtain the information through reverse engineering.

There is no protection specifically limited to trade secrets concerning computer software or AI. However, the UCPA provides protection for “Shared Data with Limited Access” as a protection distinct from trade secrets in order to protect big data used in AI, etc. The definition of “Shared Data with Limited Access” is provided in Article 2, paragraph 7 of the UCPA. One of the purposes of this is to promote data utilisation for AI even if big data does not qualify as a trade secret.

Protection as a trade secret continues indefinitely as long as the requirements in 1.2 What Is Protectable as a Trade Secret are satisfied; there is no fixed term. However, if the information is made public, it fails the requirement of Non-Public Nature and becomes impossible to receive protection as a trade secret. Even if the disclosure is accidental, it may fail the requirement of Non-Public Nature.

If the disclosure of information is made only to a third party who is under an obligation of confidentiality, the requirement of Non-Public Nature is satisfied, so protection as a trade secret can be received.

A trade secret owner has the right to license it to others. Licensing a trade secret does not, in itself, mean that the requirements for trade secret are no longer satisfied. However, if a trade secret is licensed to a third party without imposing an obligation of confidentiality, it means the information has been disclosed to the third party, and it will no longer satisfy the requirement of Non-Public Nature. In this case, the information can no longer receive protection as a trade secret. When licensing trade secrets to a third party, it is essential to ensure that the third party is bound by confidentiality obligations and that strict secret management measures are enforced.

While, for example, the Patent Act and the Trademark Act aim to protect intellectual property by granting exclusive rights to the object, the UCPA aims to protect it by regulating acts of unfair competition regarding trade secrets. Additionally, they differ in certain aspects, as follows.

• A patent is granted in exchange for the disclosure of an invention, whereas, in contrast, trade secrets require confidentiality.
• Unlike patents or trademarks, no registration is required for trade secrets.
• Unlike copyrights, patents, or trademarks, any kind of information can be protected as a trade secret as long as the requirements set down in 1.2 What Is Protectable as a Trade Secret are satisfied.
• The requirement of Non-Public Nature for trade secrets does not necessarily coincide with the interpretation of “publicly known inventions” under the Patent Act. Under the Patent Act, an invention may be considered publicly known even if only specific persons possess the information, provided they are under no confidentiality obligation. In contrast, for trade secrets, the requirement for Non-Public Nature may still be satisfied as long as those specific persons effectively maintain secrecy.

Even if information qualifies as a trade secret, it may also be protected under other intellectual property laws, provided it meets their respective requirements. For example, among the examples described in 1.3 Examples of Trade Secrets, programme source code may be protected as a copyrighted work under the Copyright Act; therefore, if such code is illegally obtained and reproduced, it is possible to claim compensation for damages under both the Copyright Act and the UCPA. Note that while there is a system in Japan for registering source code as a copyrighted work, it is not widely utilised in practice. It is possible to exercise copyright even without registration.

In the former case, it is possible to claim compensation for damages based on a violation of the obligation of confidentiality under an employment contract.

In the latter case, a person who instructs an employee may be held liable for tortious interference by inducing or aiding the employee’s breach of their contractual confidentiality obligations. Furthermore, if such a person uses the trade secret illicitly acquired through those instructions, they may also be held liable under the UCPA, provided that the requirements of Article 2, paragraph 1, Item (v) or (ⅷ) of the UCPA are satisfied.

In Article 21 of the UCPA, possible penalties regarding the infringement of trade secrets are as follows:

• for acquiring a trade secret through fraud or infringing control for the purpose of obtaining an illicit gain, imprisonment for a maximum of ten years or a maximum fine of JPY20 million, or both; and
• for breach of duties in connection with the management of trade secrets for the purpose of use outside Japan and obtaining an illicit gain, imprisonment for a maximum of ten years or a maximum fine of JPY30 million, or both.

As stated above, if the act is committed for the purposes of use outside Japan, the penalties are more severe than those for ordinary misappropriation of trade secrets.

Under Article 22 of the UCPA, if the employee of a company commits an act of unfair competition in connection with the company’s business, the company itself is subject to a maximum fine of JPY500 million on ordinary illicit acts and a maximum fine of JPY1 billion on illicit acts committed for the purpose of use outside Japan.

A trade secret owner may seek criminal sanctions from investigative authorities simultaneously with making civil claims.

Articles 19-3 of the UCPA clarify that, for civil lawsuits regarding trade secrets managed in Japan by companies doing business in Japan, a lawsuit can be filed in the Japanese courts and the UCPA applies, even if the infringement occurred abroad.

Furthermore, Article 21, paragraph 4, Item (iii), paragraph 5, item (ⅲ), paragraph 6 and paragraph 8 of the UCPA stipulate that criminal penalties will also apply to persons who commit crimes outside Japan with respect to the trade secrets of an owner conducting business within Japan.

Regarding these cases, the same requirements as those for claims involving acts committed within Japan must be satisfied.

Under the UCPA, “misappropriation” is categorised as several types of “unfair competition” (Article 2, paragraph 1). To claim misappropriation, the owner must prove that the defendant’s conduct falls under one of the following categories.

Requisite Elements and Categories

The UCPA distinguishes between three primary types of infringing acts – Acquisition, Use, and Disclosure.

• Wrongful acquisition – these acts cover the acquisition of a trade secret through “wrongful methods” (theft, fraud, duress, etc) and any subsequent use or disclosure. It also extends to third parties who acquire the secret knowing (or being grossly negligent in not knowing) that a wrongful acquisition was involved.
• Improper disclosure/breach of trust – these apply when a trade secret was initially provided by the owner (eg, to an employee or business partner), but the recipient uses or discloses it for the purpose of unfair competition or personal gain, or to cause harm to the owner. This also covers third parties who knowingly benefit from such “improper disclosure”.
• Transactions of infringing goods – this covers the act of assigning, exporting, or importing products produced through the unauthorised use of a technical trade secret.

Actual Use vs. Unauthorised Access (Acquisition)

The owner does not necessarily have to show that the trade secret was actually used. Under the UCPA, the act of acquisition (gaining access) by wrongful means is an independent grounds for a claim.

• If the defendant has acquired the secret through theft or other wrongful methods, the owner can seek an injunction or damages based on that acquisition alone, even before the defendant begins using the information in their business operations.
• However, for breach of trust, the focus is on the misuse or disclosure of information that was originally accessed legally.

Requirement of Unlawful Means

The necessity of proving “unlawful means” depends on how the defendant initially gained access.

• For “wrongful acquisition” – yes, the owner must show that the access was gained through a “wrongful method” such as theft, fraud, or duress.
• For “improper disclosure” – no, the initial access itself may have been lawful (eg, disclosed by the owner under a contract).

Under Japanese labour law principles, employees owe an ancillary duty of loyalty as an implicit part of their employment contract. This obligation dictates that, even in the absence of explicit confidentiality clauses in the contract or work rules, an employee is duty-bound to refrain from actions that unjustifiably prejudice the employer’s interests during their tenure.

The scope of protection and the threshold for establishing a violation differ between the UCPA and contractual theories as follows.

• Breadth of protected information – the UCPA provides protection only to information that satisfies the “three-fold test” (secrecy management, usefulness, and non-publicity), while the confidentiality obligations inherent in an employment contract can extend to a broader range of information. Even if certain data, such as information with insufficient secrecy management or internal sensitive matters that lack “commercial usefulness”, fails to meet the statutory criteria, it could still be protected under the contract.

• Standards for breach – while the UCPA emphasises the subjective requirement of “intent to obtain illicit gain or cause damage”, a contractual breach (non-performance of obligation) can be established on broader grounds. Liability for breach of contract may be affirmed simply by proving that the employee intentionally or negligently leaked or utilised the information, potentially offering a more flexible path for employers to seek remedies.

Although the UCPA does not contain provisions exclusively tailored to joint ventures, the general framework for trade secret protection applies. Specifically, if a trade secret is disclosed within a joint venture, any unauthorised use or disclosure for illicit gain or to harm the partner would be captured under the “improper disclosure” category. In Japanese practice, parties primarily safeguard their interests by executing Joint Venture Agreements (JVAs) or NDAs that explicitly delineate ownership, permitted usage, and obligations upon the venture’s dissolution.

While “industrial espionage” is not a technical legal term in Japan, such behaviour is primarily prosecuted under the UCPA. Recent updates to the legislative commentary have clarified the application of criminal and civil liability as follows.

• Broad interpretation of “illicit gain” – the requisite subjective element – the “purpose of acquiring an illicit gain or causing damage to the owner” – is broadly interpreted. It explicitly includes cases where the actor intends to benefit a third party, such as a competitor or even a foreign government or its affiliates.
• Extraterritorial disclosure and foreign laws – compliance with a foreign government’s data request does not necessarily exempt an actor from criminal liability under the UCPA.

The “Guidelines on the Management of Trade Secrets” issued by the Ministry of Economy, Trade and Industry (METI) establish the baseline standards, outlining the minimum measures necessary to qualify for legal protection under the UCPA.

Among the three statutory requirements – secrecy management, usefulness, and non-public status – “secrecy management” is the most critical in litigation. To satisfy this, the owner’s intent to maintain secrecy must be manifested through concrete measures, ensuring that employees can easily perceive the information’s confidential status (“recognisability”).

Typical management measures recognised by METI and judicial precedents include the following.

• Identification and marking – affixing “Confidential” stamps to paper documents or explicitly labelling electronic file names and folders as secret.
• Access control – implementing password protection, tiered access permissions for servers/cloud storage, and storing physical media in lockable cabinets. This also includes restricting the removal of data from the premises and maintaining access logs to monitor information flow.
• Human and organisational measures – executing NDAs, establishing clear internal rules for information handling, conducting regular information security training.

How and Why Best Practices Differ

The required level of management is not uniform; it is assessed flexibly based on the principle of “economic rationality”, ensuring that the burden on businesses is not excessive. Factors for differentiation include the following.

• Nature of the information (customer or chemical lists) – these lists are easily lost among general information. Therefore, they require strict physical separation and rigorous access controls. Simply saving them on a shared server without specific restrictions often leads to a failure of secrecy management. Technical know-how (eg, chemical formulae or source codes) – information that possesses high inherent value and of obvious importance (such as complex welding techniques or proprietary code) tends to be granted protection more readily, even if formal manuals are less thorough, provided some level of control exists.
• Scale and type of business – the courts consider whether the measures were “economically reasonable” for the specific company. The standards for a major corporation with vast resources differ from those applied to SMEs.
• Transaction types – in manufacturing outsourcing, where drawings are provided to third parties, “contractual management” (eg, NDAs and the mandatory return/destruction of materials) is paramount. Failure to manage these contractual safeguards often results in the loss of trade secret status, regardless of the information’s technical value.

While offboarding procedures are tailored to each organisation, a standard feature in Japanese business practice is the execution of a formal pledge regarding post-termination confidentiality. During this process, employers frequently require departing employees to certify the comprehensive return, erasure, or permanent destruction of all proprietary materials.

Furthermore, some agreements include non-compete clauses, which generally restrict the employee from joining a competitor for a duration ranging from six to 24 months.

Japanese employers often ask about the nature of the new position or the identity of the next employer. Nevertheless, it is well-recognised in practice that departing employees are under no legal obligation to disclose such information.

Whether information is protected under the UCPA depends primarily on whether it satisfies the three statutory requirements (secrecy management, usefulness, and non-public status). If the owner’s secrecy management is found to be inadequate, the information is typically treated as part of the employee’s general knowledge and skills rather than a protectable corporate asset.

The doctrine of “inevitable disclosure” is not recognised in Japan. Grounded in the constitutional freedom to choose one’s occupation, the courts require evidence of actual or highly probable misappropriation rather than mere role similarity.

To mitigate misappropriation risks, Japanese employers adopt a proactive compliance framework across the recruitment and onboarding stages.

Pre-hiring best practices include verifying the candidate’s existing non-compete and confidentiality obligations to determine appropriate placement and avoid future disputes. Interviewers should verbally caution candidates to distinguish their general expertise from former employer’s proprietary secrets, explicitly instructing them not to disclose or provide such information.

During onboarding, new hires should execute a written pledge certifying that they have not retained or imported any materials – including documents or digital media such as USB drives – from former employers. This provides essential evidence to rebut claims of “gross negligence” under the UCPA; in Japan, a company can be held liable if it fails to exercise due care in preventing the use of misappropriated secrets brought in by the new employer. Strategically, companies may assign hires to roles distinct from their previous work for a set period. Ongoing training for hiring departments is also essential to ensure that these do not inadvertently solicit protected information; this is supported by strict policies prohibiting the use of personal devices for business tasks.

In this jurisdiction, there are no mandatory prerequisites or formal preliminary steps that a plaintiff must fulfil before initiating a civil lawsuit for trade secret misappropriation. A trade secret owner who believes their rights have been infringed is entitled to file a lawsuit immediately with the competent court upon discovering the alleged misappropriation. While it is common for parties to send a cease-and-desist letter or engage in pre-litigation negotiations to seek an early resolution, such actions are not legal requirements for the commencement of judicial proceedings.

Statutes of Limitation for Injunctive Relief

Under the Unfair Competition Prevention Act (UCPA), the right to seek an injunction against the continuous unauthorised use of trade secrets is subject to two distinct limitation periods. A short-term limitation period of three years applies from the moment the trade secret holder becomes aware of both the infringement and the identity of the infringer. Additionally, a long-term limitation period bars such claims 20 years after the commencement of the infringing act, an extension from the previous ten-year limit following the 2015 legal amendments. These specific statutory periods target the ongoing act of “use”, whereas one-time infractions such as “acquisition” or “disclosure” are governed by general tort law.

Damages and Overlapping Legal Theories

Claims for damages resulting from trade secret misappropriation are subject to both the Civil Code and the UCPA. Under general tort law (Civil Code Article 724), the right to claim damages expires three years after the victim discovers the damage and the perpetrator, or 20 years after the tortious act occurred. Furthermore, the UCPA stipulates that a plaintiff cannot seek damages for unauthorised use that occurs after the right to an injunction for that specific secret has already lapsed. In instances where the three-year tort limitation has expired, claimants may still have the option to pursue a claim for unjust enrichment, which features a longer ten-year prescriptive period commencing from the time the right became exercisable, namely, the time the defendant gained the benefit through the unauthorised use.

Criminal Prosecution Period

In addition to civil remedies, trade secret misappropriation may be subject to criminal penalties under the UCPA. The statute of limitations for initiating a criminal prosecution for such offenses is fixed at seven years, commencing from the time the illegal act was completed.

To initiate a trade secret lawsuit, a plaintiff must file a complaint with the competent court and pay a filing fee based on the total amount of the claim. Once the court completes a formal review of the complaint, it serves the complaint to the defendant, marking the official commencement of the lawsuit. While there is no legal requirement to present evidence at the time of filing, plaintiffs may strategically choose to submit substantial evidence early in the process. This approach can help the court establish a clear understanding of the case's merits from the outset.

General jurisdiction for trade secret claims is typically based on the defendant’s place of residence or the location of a legal entity’s principal office. Because trade secret infringement is categorised as a tort, plaintiffs may also initiate proceedings in the court governing the place where the infringing act occurred or where the resulting damage was sustained. Parties are also permitted to determine the court of first instance through a written agreement on jurisdiction.

Regarding international disputes, Article 19-2 of the UCPA clarifies that Japanese courts can hear cases involving misappropriation that occurs outside of Japan. This applies as long as the trade secrets are managed within Japan and used for business activities in the country. This provision ensures legal protection against cross-border infringement for businesses operating in Japan.

Specialised intellectual property (IP) divisions are established within the Tokyo District Court and the Osaka District Court to handle IP litigation including trade secret litigation and preliminary injunction cases thereof. For these disputes, these courts share concurrent jurisdiction with other regional district courts, allowing plaintiffs to choose between a specialised or a general court, depending on the venue rules. The specialised divisions at these courts possess significant expertise in managing the complex technical and legal issues specific to trade secrets. Furthermore, the Intellectual Property High Court serves as a specialised appellate court dedicated to handling IP-related appeals, including those involving trade secret disputes.

The standard of proof in trade secret litigation is a “high degree of probability”. This standard requires the judge to reach a firm brief regarding the truth, placing it below the “beyond reasonable doubt” standard used in criminal cases but above the “preponderance of evidence” standard.

Consistent with the initiation process described in 5.3 Initiating a Lawsuit, there is no rigid legal standard requiring a plaintiff to process conclusive evidence at the time of filing. Instead, the plaintiff must eventually establish the facts as highly probable through the course of the proceedings in order to prevail. It is important to note that certain types of evidence, particularly those relating to the calculation of damages, are often not presented at the initial stage but are introduced later as the trial progresses.

In practice, direct evidence of misappropriation is often within the defendant’s control, making it difficult for plaintiffs to obtain. To address this, the UCPA (Article 5-2) provides a legal presumption of unauthorised use for technical secrets under specific conditions, which effectively assists the plaintiff's burden of proof. Additionally, plaintiffs can use various judicial mechanisms after filing to access evidence held by the opponent. Specific mechanisms for the physical seizure or preservation of evidence are discussed in detail in 5.6 Seizure Mechanisms and 5.7 Obtaining Information and Evidence.

Courts require the specific identification of the trade secret during the pleading stage to ensure the claim is actionable. Vague assertions such as “general know-how” are typically deemed insufficient and may lead to the dismissal of the claim. Plaintiffs must define the secret with enough particularity to distinguish it from publicly known information and to allow the court to assess the scope of the alleged infringement. Regarding the specificity of the claim, there is no statutory “heightened particularity” standard applicable to trade secret claims.

Under the Code of Civil Procedure (Articles 234 to 242), a mechanism known as the “preservation of evidence” allows a party to secure evidence before it is lost or tampered with. A judge, rather than a private party or police officer, carries out the preservation by visiting the location where the evidence is held. While this procedure is technically available for trade secret litigation, it is less frequently used compared to other areas such as software copyright infringement. Courts are often cautious about granting these motions due to significant concerns regarding the potential for accidental leaks or misappropriation of trade secrets during the preservation process itself.

Unlike criminal procedures, these civil mechanisms do not provide for the physical seizure of products or evidence through the use of force. Instead, the court often request the parties to disclose evidence voluntarily. While a party may physically refuse to comply with such an order, the law provides a strategic deterrent against such non-cooperation. If a defendant refuses to disclose the evidence without a justifiable reason, the court may consider this refusal as a significant factor when evaluating the facts in subsequent proceedings.

A plaintiff can file a motion for the preservation of evidence either before or after the commencement of a lawsuit, though it is most commonly pursued beforehand. To succeed, the applicant must provide prima facie evidence (somei) showing that it would be impossible or extremely difficult to examine the evidence if they were to wait for the standard litigation process. The court typically conducts these proceedings without prior notice to the defendant to ensure the element of surprise and prevent the disposal of evidence.

Once the court issues an order, the judge examines the relevant documents or objects at the site and records the findings in an official protocol. This protocol then serves as formal evidence in the subsequent trial regarding the alleged misappropriation. It is important to note that the law does not allow for an appeal against a court’s decision to grant an order for the preservation of evidence.

Outside formal litigation, plaintiffs can gather evidence by investigating internal records or seeking voluntary information from relevant third parties. Attorneys may also utilise inquiries through the local bar association to request specific information from various public or private organisations.

Furthermore, there is a growing trend of utilising evidence gathered by law enforcement agencies through their compulsory criminal investigations. Since trade secret misappropriation frequently results in criminal prosecution under the UCPA, police and prosecutors can secure critical evidence using search and seizure powers that are unavailable to parties in civil litigation. Civil plaintiffs increasingly seek to access these criminal case records to bolster their claims, providing a vital source of evidence that would be otherwise difficult to obtain through independent efforts.

Once a lawsuit is pending, the UCPA provides several mechanisms for obtaining evidence with judicial assistance. Under Article 6, if a defendant denies the plaintiff’s specific allegations of infringement, they are obliged to clarify the actual aspects of their own conduct. This prevents defendants from relying on vague denials and helps the court identify the true nature of the disputed activities.

Furthermore, the court can issue document production orders to compel the disclosure of materials essential to proving misappropriation. To balance the need for evidence with the protection of confidentiality, the court may conduct “in-camera” proceedings where the judge alone reviews the documents to determine their necessity.

While a specialised expert inspection system exists under Japanese patent law, this mechanism is currently not available for trade secret litigation.

Protective Orders and Confidentiality Agreements

To protect sensitive information during proceedings, the court may issue a protective order under Article 10 of the UCPA. This order prohibits parties, their representatives, and others from using the trade secret for purposes other than the litigation or disclosing it to unauthorised individuals. Violating such an order carries criminal penalties. In addition to formal orders, parties often enter into private confidentiality agreements under the guidance of the court to manage the exchange of sensitive data.

Restricting Access to Case Records

Under Article 92 of the Code of Civil Procedure, parties can request that the court restrict third-party access to case records if they contain trade secrets. This mechanism ensures that the general public or competitors cannot inspect or copy confidential documents filed with the court. Furthermore, as mentioned above, the UCPA allows for “in-camera” proceedings where the judge alone reviews certain documents to determine if their disclosure is necessary for the case. This allows the court to evaluate the evidence without exposing the secret to the opposing party or the public.

Closed Trial Proceedings

While trials are generally public, Article 13 of the UCPA provides a specific exception for trade secret cases. If a court unanimously determines that disclosing a trade secret in open court would significantly harm a party’s business activities, it may order the oral arguments to be closed to the public. This serves as a vital safeguard for maintaining the commercial value of the secret while still ensuring a fair judicial process.

Challenging the Status of Trade Secrets

Defendants often argue that the contested information fails to meet the three statutory requirements for protection under the UCPA: secrecy management, utility, and non-public nature. A common defence is to demonstrate that secrecy management was inadequate, such as by showing that access controls were insufficient or that employees could not objectively identify the information as confidential. Additionally, a defendant may claim that the information was already in the public domain or was so vaguely defined by the plaintiff that it does not qualify for legal protection.

Denial of Misappropriation and Subjective Intent

A defendant may also deny the act of misappropriation by proving that they developed the information independently or acquired it through legitimate, non-infringing channels. In cases where specific intent is required, defendants can argue the absence of an “intent to gain unfair profit or cause harm” or a lack of knowledge regarding any prior wrongful disclosure. Proving that the acquisition occurred in good faith without gross negligence is a critical defence against claims involving third-party disclosures.

Japanese civil procedure does not recognise a summary judgment system similar to the one found in the US. Instead, the court typically moves toward a final decision by organising issues and examining evidence through a series of hearings. While parties cannot seek a summary disposition via a motion, the court frequently encourages settlement once the primary legal and factual points have been clarified. During this process, judges often share their preliminary views on the merits of the case to facilitate a voluntary resolution between the parties.

In complex litigation, the court may issue an interlocutory judgment to resolve a specific element of the dispute, such as the existence of an infringement, before determining the amount of damages. This phased approach allows the court to focus on the liability of the defendant first, which can significantly streamline the overall proceedings. If the court determines that no trade secret misappropriation occurred during this initial phase, it will then proceed to issue a final judgment dismissing the claim. This mechanism provides a structured way to address critical disputes without requiring an immediate decision on all aspects of the litigation. However, in practice, the issuance of an interlocutory judgment remains relatively rare in trade secret litigation.

The primary costs of trade secret litigation in Japan basically consist of court filing fees and attorney fees. As noted in 5.3 Initiating a Lawsuit, the filing fee is calculated based on the total amount of the claim and must be paid when the complaint is filed. While each party generally bears its own attorney fees, a successful plaintiff may recover a portion of these costs – typically around 10% of the awarded damages – as part of the final judgment in tort-based cases.

Regarding fee structures, success-based or contingency fee arrangements are legally permitted and used in various types of disputes. However, they are not yet considered standard practice specifically within the field of trade secret litigation due to the complexity and length of these proceedings.

Litigation financing is not prohibited by Japanese law and has been gradually gaining traction within the legal market. Despite this growth, it remains relatively uncommon for trade secret disputes at this stage. Most litigants continue to fund their legal actions through their own resources, although third-party funding is an available option for those looking to manage the financial risks of protracted litigation.

Trade secret trials in Japan are decided exclusively by professional judges, as the Japanese civil justice system does not utilise a jury system for civil litigation. Judges act as the sole finders of fact, and are responsible for all legal determinations regarding the case.

The Structure of Proceedings

Trade secret trials in Japan proceed through a combination of written preparatory pleadings and oral arguments conducted during court sessions. While legal and factual arguments are primarily developed through these documents, the court conducts witness examinations to determine the facts of the case. These examinations allow judges to hear testimony directly from witnesses regarding the specific issues identified during the earlier stages of the litigation.

Public and Private Phases

The trial process is generally divided into an issue-management phase and a fact-finding phase. While oral arguments and witness examinations are principally held in open court, the process of organising issues and evidence is typically conducted through private preparatory proceedings. This allows the parties and the court to refine the focus of the dispute before the formal examination of witnesses begins.

Typical Duration

A trade secret lawsuit in the court of first instance generally takes between one and two years to reach a conclusion. The complexity of identifying the specific trade secret and proving the act of misappropriation often contributes to this timeline. Once the court has completed its examination of the evidence and witnesses, it will issue a final judgment based on the gathered facts and legal arguments.

Expert testimony and opinions are permitted in Japanese trade secret litigation through several distinct forms. These include appraisals by court-appointed experts (kanteinin), the submission of expert opinion reports by the parties, and oral testimony from expert witnesses. While reports submitted directly by parties are treated as private documentary evidence, court-appointed appraisals serve as a more formal evidentiary mechanism for the judge.

The process for using court-appointed experts involves a party filing a motion that specifies the facts to be proven and the technical matters to be appraised. Under Article 8 of the UCPA, the court may order an appraisal for matters necessary to calculate damages, and parties are legally obligated to explain relevant details to the appraiser. This ensures that the court has access to accurate technical or financial data when determining the impact of trade secret misappropriation.

There are no specific statutory guidelines that dictate which issues may be the subject of expert testimony, allowing for flexibility based on the technical complexity of each case. The costs associated with engaging experts vary significantly depending on the scope and depth of the analysis required.

Preliminary injunctions are available under the Civil Provisional Remedies Act. To obtain relief, a claimant must provide a prima facie showing: (i) a valid right to an injunction under the UCPA; and (ii) “necessity”, such as imminent danger or substantial detriment. Courts almost always require the claimant to post a bond to compensate the defendant if the injunction is later found to be unjustified.

The extent of the bond is determined case-by-case on the basis of the defendant’s potential losses and the strength of the claimant’s case; while often starting at several million yen, it can escalate significantly for high-stakes disputes.

The UCPA provides three primary measures for calculating damages, as follows.

• Lost profits – calculated as the infringer’s sales volume multiplied by the der’s profit per unit. Following the 2023 amendments, this applies to all trade secrets and extends to services. Crucially, for the portion of the infringer’s sales that exceeds the owner’s production capacity, the owner can now claim a royalty-equivalent amount (Article 5(1)(ii)).
• Infringer’s profits – the infringer’s profits are presumed to be the amount of the owner’s loss.
• Reasonable royalties – the owner can claim an amount equivalent to a licensing fee. The 2023 amendments explicitly clarify that courts may consider a higher royalty rate that would likely be determined if negotiated under the premise that an infringement had occurred.

Punitive damages are not available in Japan.

Under the UCPA, a trade secret owner whose business interests are prejudiced – or are at risk of being prejudiced – by misappropriation can seek a permanent injunction.

Scope of Relief and Ancillary Measures (Recall/Disposal)

While the UCPA does not provide for a government-mandated recall of infringing products, Article 3, paragraph 2 empowers claimants to seek ancillary measures, as follows.

• Disposal of infringing items – the court can order the destruction of products resulting from misappropriation or the media (such as USB drives or digital files) containing the secrets.
• Removal of facilities – claimants may seek the removal of equipment used to commit infringement.

Restrictions on Subsequent Employment

Injunctive relief under the UCPA typically targets specific infringing acts rather than an individual’s general right to work. Therefore, a court will not issue an order broadly barring an employee’s subsequent employment solely because that employee possesses trade secrets. However, restrictions may be enforced based on contractual non-compete agreements, provided they are consistent with public policy. To be valid, such restrictions must be reasonable in terms of:

• purpose – protecting a legitimate business interest;
• scope – reasonable duration, geographic area, and job description; and
• compensation – presence of adequate consideration for the restriction; precedents exist where courts have enjoined former employees from soliciting specific clients or engaging in specific competing roles for a limited period (eg, two years).

Limitations on Duration

Under Article 15 of the UCPA, the right to a permanent injunction is subject to a statute of limitations that expires either three years after the claimant becomes aware of the infringement and the infringer’s identity, or 20 years after the infringing act commences.

Reasonable attorney fees are recoverable in Japan as a component of tort-based damages under the Civil Code and the UCPA. In practice, the amount awarded is not based on the actual fees paid by the plaintiff; instead, it is typically standardised at approximately 10% of the principal damages proven in court.

Unlike jurisdictions that apply a “loser pays” rule for actual legal costs, Japanese courts award these fees as part of the compensation for the harm caused by the infringement.

Statutory court costs (eg, filing fees and postage) are generally borne by the losing party, excluding attorneys’ fees. To recover these costs, however, a successful litigant must file a separate motion after the judgment becomes final to determine the specific amount. In practice, this process is rarely pursued. Since the recoverable amounts are typically minimal compared to the overall legal expenditure and the effort required for the additional proceeding, many litigants choose not to seek them.

Trade secret disputes are heard by a District Court in the first instance. Either party – claimant or respondent – may appeal to the High Court that holds jurisdiction over the trial court. Once an appeal is filed, the appellant is typically required to submit a detailed Statement of Grounds for Appeal within 50 days. The average duration for an appeal in the High Court is six months.

Parties are entitled to a final appeal to the Supreme Court by right in cases involving a constitutional violation or specific material procedural flaws enumerated by law.

The High Court employs a “continuation” (zokushin) system, performing a de novo review of both facts and law. While parties may introduce new evidence, the court can dismiss untimely submissions resulting from intent or gross negligence that cause undue delay. Consequently, diligent presentation during the first instance is vital to “preserve” issues for effective appeal.

In contrast, the Supreme Court is strictly a court of law, bound by the High Court’s factual findings and permitting no new evidence or factual challenges.

Victims of trade secret misappropriation can initiate criminal proceedings by filing a formal complaint under the Code of Criminal Procedure.

To bolster enforcement, Trade Secret Protection Officers are now stationed at prefectural police headquarters. Early consultation and ongoing cooperation with these specialised units are vital for effective investigations.

In Japan, while litigation is the standard, several ADR mechanisms offer efficient alternatives for trade secret disputes.

• Civil Mediation & Arbitration – general civil mediation is available for a low cost, while arbitration (eg, JCAA) is used primarily in international contexts.
• IP Mediation (Chizai Chotei) – launched in 2019 at the Tokyo and Osaka District Courts, this specialised system is gaining traction. It features a panel of three – a judge and two IP experts (lawyers or patent attorneys) – who provide a non-binding evaluation of the case within a few sessions. It is highly valued for providing a fast, expert-led resolution to complex technical disputes while maintaining strict confidentiality through closed proceedings that protect sensitive proprietary information, unlike traditional public trials.