Japan protects trade secrets through the Unfair Competition Prevention Act rather than through employment contracts alone. The statutory definition has three parts, and all three must be met. The information must be managed as secret, which in practice means the employer took steps that made it clear to employees which information was confidential. It must be useful, whether technical or commercial. And it must not be publicly known. Of the three, secret management is where most claims fail: courts look for access controls, markings, confidentiality rules and pledges, not just an assertion that the material was sensitive.
The civil remedies are an injunction, including destruction of copied material, and damages, with presumptions that help the claimant prove loss. The criminal offence of trade secret infringement carries up to ten years' imprisonment, a fine of up to 20 million yen, or both, for an individual, with the fine rising to 30 million yen where the secret is used or disclosed overseas. A company whose employee commits the offence in its business can be fined up to 500 million yen, or 1 billion yen in overseas cases. Penalties were raised substantially in 2015 after several high-profile cases of technology leaking to foreign competitors.
Most real cases involve departing employees: a salesperson who downloads the customer list before joining a competitor, or an engineer who takes design files. Prosecutions of such employees have become more common.
What it means for a foreign employer
- Protection depends on your own controls. Mark confidential material, restrict access, and set out confidentiality duties in the work rules and in a signed pledge. A global policy in English that local staff never read is weak evidence.
- Plan the exit, not just the hire. Remind departing employees of their duties, recover devices, and check unusual downloads in the final weeks.
- Vet what senior hires bring. A candidate who arrives with a former employer's files exposes you as well as them, and the corporate fines are large. Make it clear at offer stage that you want none of it.
- It works where non-competes do not. Courts enforce post-employment non-competes narrowly, so information controls are often the stronger protection.
Sources
- Unfair Competition Prevention Act, Article 2(6) (definition), Articles 3 and 4 (injunctions and damages), Articles 21 and 22 (criminal penalties), as amended in 2015 and as worded since the penal reform in force 1 June 2025.
- Ministry of Economy, Trade and Industry, Trade Secret Management Guidelines.