Intellectual Property

Responding to the misuse of trade secrets by a competitor

A company's technical materials or customer information have reached a competitor, and there is reason to suspect that they are being used in that competitor's products or sales activities. What is in issue in this situation is less the fact that the information reached the competitor than whether it can be said to have actually been used or disclosed there, and against whom, and under which category of conduct, a claim is to be brought. Use cannot necessarily be established from similarity alone, and the other side will offer explanations such as that it developed the product independently, that it assembled the information from publicly available sources, or that it acquired the information without knowing the circumstances. This legal guide sets out how use can be checked, how to work out who a claim should be brought against, injunctive relief and damages, the handling of evidence in provisional disposition proceedings and litigation, and the position where criminal proceedings run in parallel.

Preserving records once it emerges that a departing employee has taken information, examining the three requirements for a trade secret, dealing with the former employee personally, and questions of non-competition clauses and the poaching of staff, are covered in the guide on where a departing employee is suspected of taking information. Where little time has passed since the removal of information came to light, that guide is the place to start. This guide is concerned with the stage after that, and with what is claimed, and how, against the company that received the information. Poaching or competition that does not involve the use of information, and employment measures such as disciplinary action or dismissal of current employees, are covered on the labor and employment disputes page for companies.

Last updated: September 18, 2026

What to check first

The content, version and scope of the information concerned, and the materials by which it can be identified

Changes appearing in the competitor's products, manufacturing methods or sales activities, and when they appeared

The route by which the information is thought to have reached the competitor, and any circumstances the other side may assert as its authority

The scope of the records already secured, such as records of removal, transmission logs and access histories

The order of priority among the outcomes sought: stopping the use, destruction of materials, recovery of loss, and measures to prevent recurrence

How we can helpOrganizing the materials needed to examine whether the information has been used / Considering whether the information is a trade secret and how it is protected under the contract / Working out against whom, and under which category, a claim is brought / Drafting a notice and negotiations / Claims for injunctive relief, destruction of materials and damages / Handling provisional disposition proceedings and litigation / Criminal proceedings running in parallel

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Contents

1. How to check whether the information has been used
2. Against whom, and under which category, a claim is brought
3. Injunctive relief, destruction of materials, damages, and negotiations
4. Provisional disposition proceedings, litigation, and the handling of evidence
5. Where criminal proceedings are considered in parallel
6. How we assist
Key legislation and official sources
Frequently asked questions

1. How to check whether the information has been used

One option is to define the information that a claim will concern by its content, version and scope, rather than relying on file names alone. The reason is that being able to identify the subject matter is a precondition for a later claim for injunctive relief or an application for a protective order.

The relationship between the competitor's products, manufacturing methods and sales activities on the one hand, and the information concerned on the other, provides material for examining whether a trade secret has been used. Similarity alone, however, does not establish use.

On this point, the Unfair Competition Prevention Act contains provisions under which use is presumed in certain cases. Where there has been a wrongful acquisition or similar conduct in relation to a technical secret concerning a production method or other information specified by Cabinet Order, and the person who committed that conduct then carries out production or other conduct specified in that Act, the production or other conduct is presumed to have been carried out as wrongful use. A similar presumption applies where a person to whom a technical secret was shown, for the purpose of wrongful gain or a similar purpose, breaches the duties owed in managing the secret and wrongfully takes it by embezzling it, by making a copy of it, or by failing to erase entries or records that should have been erased while pretending that they had been erased, and then carries out production or other conduct. A further presumption of the same kind applies where a person who, after acquiring the information, comes to know or fails through gross negligence to know that an act of wrongful acquisition or wrongful disclosure was involved, holds a medium or other item specified by law and carries out production or other conduct.

The reach of this presumption is limited, however. The technical secrets covered are confined to those concerning production methods and other information specified by Cabinet Order, and the Cabinet Order specifies, in addition to production methods, methods of evaluating or analyzing information, other than those falling within production methods. Production and other conduct here means the production of goods resulting from the use of the technical secret, together with conduct specified by Cabinet Order. Whether the presumption applies is decided by reference to the content of the information, and it does not apply to business information that is not a production method or similar. It is not accurate to read the provision as meaning that use is presumed as soon as information has been taken.

The provisions on this presumption were revised by the 2023 amendment, and transitional provisions restrict their application to acquisition, wrongful taking, holding and similar conduct that occurred before the amending Act came into force. The current presumption does not apply as a matter of course merely because production or other conduct is still continuing, so the timing of each act is checked separately.

The requirements for this presumption of use and the requirements for the statutory exemption discussed below are examined as separate questions. Where use or disclosure falls within the exemption, the presumption does not apply to it either.

Where the solicitation of customers or a switch of suppliers is in issue, the examination compares the range of customers approached with the information that was taken, whether the content of the proposals overlaps with the company's own, and the timing. That said, the fact that a customer changed supplier, or that an employee moved to a competitor, does not by itself establish that the information was used.

2. Against whom, and under which category, a claim is brought

The Unfair Competition Prevention Act divides conduct concerning trade secrets into several categories. Deciding who a claim should be brought against requires working out which person falls within which category.

Acquiring a trade secret by theft, fraud, duress or other wrongful means, and using or disclosing the trade secret so acquired. Disclosure here includes showing the secret to a particular person while keeping it secret from others.

Use or disclosure of a trade secret by a person to whom the holder of the trade secret showed it, for the purpose of obtaining a wrongful gain or of causing damage to the holder. Using information shown to an employee during employment after that employee has left can fall within this category.

Acquiring a trade secret while knowing, or without knowing owing to gross negligence, that an act of wrongful acquisition was involved, and using or disclosing it; and acquisition, use or disclosure where the person has the same knowledge, or the same gross negligence, as to the disclosure being an act of wrongful disclosure or as to such an act having been involved. An act of wrongful disclosure of a trade secret here covers not only disclosure for the purpose of wrongful gain or of causing damage, but also disclosure in breach of a legal duty to maintain secrecy. It does not follow that the new employer cannot be held liable unless the individual's purpose of wrongful gain or of causing damage can be proved.

Transferring, exporting or importing goods produced through the wrongful use of a technical trade secret, and similar conduct. Conduct by a person who, at the time of taking transfer of the goods, did not know of the circumstances and was not grossly negligent in not knowing is excluded.

Separately from the categories that turn on what was known at the time of acquisition, the Act also covers using or disclosing a trade secret after coming to know, or failing through gross negligence to know, that an act of wrongful acquisition or wrongful disclosure was involved. What the other side does after receiving a warning is mainly relevant here. Where, however, the statutory exemption for acquisition through a transaction is made out, use or disclosure within the scope of the authority acquired is examined separately.

Where a claim is brought against a competitor, the question is whether that company's own conduct falls within one of the categories above. Vicarious liability as an employer, or liability as a joint tortfeasor, may also be in issue. Even where the information concerned is found not to be a trade secret, there may be room to consider a claim based on a confidentiality agreement or on other terms agreed in the course of business.

3. Injunctive relief, destruction of materials, damages, and negotiations

A person whose business interests are infringed, or are at risk of infringement, by unfair competition is entitled to claim that the infringement be stopped or prevented. In making that claim, the person may also claim the destruction of the goods that constituted the infringing act, including goods produced by the infringing act, the removal of equipment used for the infringing act, and other measures necessary to stop or prevent the infringement. Where destruction of products made through wrongful use is sought, the words covering goods produced by the infringing act are what matters.

As to damages, a person who intentionally or negligently engages in unfair competition and thereby infringes the business interests of another is liable to compensate the loss so caused. However, loss caused by the use of a trade secret after the right to claim injunctive relief has been extinguished by the passage of the periods described below is also excluded from liability in damages under the Unfair Competition Prevention Act. Whether a claim can be brought on another basis, such as a confidentiality agreement, is examined separately, by reference to that basis and its own time limits.

Several provisions assist with proving the amount of loss: one presumes the amount of the profit the infringer has gained from the infringing act to be the amount of the loss, and another allows the amount equivalent to the money that should be received for the use of the trade secret to be claimed as the amount of the loss. There is also a provision under which the amount of loss is calculated from the quantity of goods transferred, or services provided, by the infringer, together with the profit per unit of the claimant's own goods. That said, a presumption can be rebutted by evidence to the contrary, and a claim for an amount equivalent to a license fee is limited to the conduct it covers. The calculation based on quantity is also subject to adjustment for the claimant's own capacity to sell or provide the goods or services, and for circumstances in which it could not have sold them. Which of these to build the claim around is considered in light of the category of the other side's conduct and the materials available.

Where a negotiated resolution is the aim, one option is to identify the information concerned and then to set out in concrete terms the measures sought, such as stopping use, returning or deleting materials, and prohibiting disclosure to third parties. Where return or deletion is sought, the records needed to show how the information was acquired, forwarded and used should not be lost, so the necessary records are secured and the scope, method and verification of any deletion are considered together with that.

4. Provisional disposition proceedings, litigation, and the handling of evidence

A provisional disposition is a Japanese court procedure for interim relief pending a decision on the merits. It is granted on a prima facie showing rather than on full proof, and the merits are decided later in the main proceedings. On an application for a provisional remedy order, the applicant must set out the right or legal relationship to be preserved and the necessity of preservation, and make a prima facie showing of each. An order provisionally determining the status of a party may be issued where it is necessary in order to avoid substantial loss or imminent danger to the applicant in relation to a disputed legal relationship. For such an order, however, a date for oral argument, or for a hearing at which the other party can attend, is as a general rule required, and security may be required as well. The requirements for the exception, where the application is to be filed, the materials for the prima facie showing, and the preparation of security are checked together.

In litigation concerning the infringement of business interests by unfair competition, the court may, on the application of a party, order a party to produce documents or electronic records necessary for proving the infringing act or for calculating the loss. This does not apply where there are legitimate grounds for refusing to produce them. Materials held by a person who is not a party to the proceedings are dealt with under the procedures of the Code of Civil Procedure, whose own requirements are checked separately.

Because the company must disclose its own trade secret in the course of making its case, steps are also needed to keep that secret from spreading beyond the proceedings. Where a prima facie showing has been made of the grounds laid down by law, the court may, on application, order a party or another person concerned not to use the trade secret for purposes other than the conduct of the proceedings and not to disclose it to anyone other than those named in the order. In addition, where a prima facie showing is made that a trade secret held by a party is set out or recorded in the case record, the court may, on the application of that party, limit the persons who may request inspection of that part of the record to the parties. The first of these restricts use and disclosure; the second restricts inspection of the record by third parties. They are separate mechanisms. This is not a system under which proceedings can be conducted without any disclosure to the other side at all. For materials filed electronically, the company checks not only the restriction of inspection but also whether measures are needed for the secure management of records containing trade secrets.

There are limits to the persons a protective order can reach. Where, by the time of the application, a party or another person concerned had already acquired or held the trade secret by means other than reading the briefs or examining the evidence, that person falls outside the order. A protective order therefore cannot be used to stop the business use of a trade secret by a person who had already acquired or held it outside the proceedings. Against such a person, injunctive relief or a provisional disposition is what falls to be considered. For counsel and others who learn of the information for the first time through the proceedings, the requirements for an order are examined by separating the persons covered from the information covered.

Where acquisition or use abroad is in issue, the jurisdiction of the Japanese courts and the applicable law are examined as separate questions. Depending on the company's business and information management arrangements in Japan, and on the category of conduct, special provisions on the infringement of trade secrets may apply.

5. Where criminal proceedings are considered in parallel

The Unfair Competition Prevention Act lays down penal provisions for the infringement of trade secrets. Acquiring a trade secret by an act of deception or an act that violates the management of the secret, for the purpose of obtaining a wrongful gain or of causing damage to the holder of the trade secret, is subject to punishment.

A person to whom a trade secret was shown by its holder is also subject to punishment where, for the same purposes, that person breaches the duties owed in managing the trade secret and wrongfully takes it by any of the following means: embezzling a medium on which the trade secret is recorded or another item in which the trade secret is embodied; making a copy of such a medium or item; or failing to erase entries or records that should have been erased while pretending that they had been erased. The offense is not made out simply because a copy was made: the person's position, the purpose, the breach of duty and the means are each examined. Beyond acquisition and wrongful taking, the use or disclosure of a trade secret is also subject to punishment where the requirements laid down by law are met.

Conduct amounting to unfair competition in civil terms is not the same as the commission of an offense. The position of the person concerned, how the information was acquired, the purpose, and the timing of any use or disclosure are examined against the requirements applicable in each context. A person harmed by an offense is entitled to file a criminal complaint. Where criminal proceedings are considered alongside civil proceedings, care is needed to keep the assertions made and the materials filed consistent across the two.

6. How we assist

We examine separately whether the information concerned is a trade secret under the Unfair Competition Prevention Act and whether it is protected under a contract

We organize the materials needed to examine whether the information has been used, and work with technical experts where necessary

We set out the person against whom a claim is to be brought, the information concerned and the measures sought, prepare the letter of demand, and develop the approach to negotiations

Where provisional disposition proceedings, litigation and criminal proceedings are considered in parallel, we work to keep the assertions and the materials filed in each procedure consistent

After the matter is resolved, we review secrecy management measures, confidentiality agreements and the handling of information on departure as measures to prevent recurrence

Key legislation and official sources

English translations of legislation are provided for reference. The Japanese texts are authoritative.

Where it appears	Legislation	Source type
Requirements for trade secrets; the categories of unfair competition concerning trade secrets; the meaning of disclosure; goods produced through wrongful use; the exemption for acquisition through a transaction	Unfair Competition Prevention Act（不正競争防止法）	Japanese legislation
Presumption of use following wrongful acquisition, wrongful taking or holding; penal provisions for the infringement of trade secrets	Unfair Competition Prevention Act（不正競争防止法）	Japanese legislation
Injunctive relief, destruction of goods and removal of equipment; damages; presumption of the amount of loss; amount equivalent to a license fee; calculation based on quantity; extinguishment of the right to claim injunctive relief	Unfair Competition Prevention Act（不正競争防止法）	Japanese legislation
Orders to produce documents and electronic records; protective orders; restriction of persons who may inspect the case record; special provisions on the infringement of trade secrets	Unfair Competition Prevention Act（不正競争防止法）	Japanese legislation
Information specified by Cabinet Order for the presumption of use, and the scope of production and other conduct	Order for Enforcement of the Unfair Competition Prevention Act（不正競争防止法施行令）	Japanese legislation
Production of documents held by non-parties; court proceedings for the preservation of evidence; inspection of the case record	Code of Civil Procedure（民事訴訟法）	Japanese legislation
Provisional remedy orders, the prima facie showing required, orders provisionally determining a party's status, hearing dates and security	Civil Provisional Remedies Act（民事保全法）	Japanese legislation
Vicarious liability of an employer; joint tortfeasors; postponement of the expiry and renewal of the prescription period	Civil Code（民法）	Japanese legislation
Filing a criminal complaint	Code of Criminal Procedure（刑事訴訟法）	Japanese legislation

Legal information reviewed: 2026-09-18

Frequently asked questions

It appears the information was passed to a single competitor. Does that amount to "disclosure"?

Disclosure under the Unfair Competition Prevention Act includes showing the secret to a particular person while keeping it secret from others. It is not confined to cases where the information has been made public.

The competitor says it "did not know the circumstances". Is a claim difficult?

Where a person acquires a trade secret through a transaction and, at the time of acquisition, does not know that the disclosure is an act of wrongful disclosure, or that an act of wrongful acquisition or wrongful disclosure was involved, and is not grossly negligent in not knowing, a statutory exemption applies to use or disclosure within the scope of the authority acquired through that transaction. Because this exemption covers the categories of unfair competition concerning the wrongful acquisition and wrongful disclosure of trade secrets, so long as its requirements are met the exemption for use or disclosure within the scope of that authority is not understood to be lost merely because the person learned of the circumstances after acquisition.

Where the other side relies on this exemption, however, the claimant checks three points individually: whether the acquisition can be said to have been made through a transaction; whether the person was without knowledge and without gross negligence at the time of acquisition; and how far the authority acquired through that transaction extends. If any of these is not established, the requirements of the categories turning on knowledge at the time of acquisition, and of those turning on knowledge gained afterwards, fall to be examined. The starting point is not to take the other side's account as given, but to check how the materials came to be handed over and what it is that the other side asserts as its authority.

We do not know how to prove the amount of our loss.

Where damages are claimed from a person who has intentionally or negligently infringed business interests by unfair competition, and that person is gaining a profit from the infringing act, the amount of that profit is presumed to be the amount of the loss. It is also possible to claim, as the amount of the loss, an amount equivalent to the money that should be received for the use of the trade secret. There is a further method of calculation based on the quantity of goods transferred or services provided. All of these are provisions intended to ease the burden of proof, and which one to build the claim around depends on the facts that can be established. A presumption can be rebutted by evidence to the contrary, and a claim for an amount equivalent to a license fee is limited to the conduct it covers. The other side's conduct and the conditions for applying each provision are examined separately.

Time has passed since the information was taken. Is it too late to bring a claim?

The Unfair Competition Prevention Act deals separately with two situations affecting the right to claim injunctive relief against the use of a trade secret. The first is where the person carrying out the conduct continues it and the right is not exercised for three years from the time the claimant became aware of the infringement of its business interests, or the risk of it, and of the person carrying out the conduct. The second is where twenty years have passed from the time the conduct began. The condition of continuation attaches to the first of these. The date the information was taken, the date use began, and the date the claimant became aware of the infringement and of the person responsible are each checked separately. Loss caused by the use of a trade secret after this right to claim injunctive relief has been extinguished cannot be claimed as damages under the Unfair Competition Prevention Act either. The limitation period for a claim for damages in respect of earlier conduct is examined separately. In each case the question is not decided by the passage of time alone: the postponement of the expiry of the prescription period, the renewal of the prescription period, whether prescription is invoked, and any transitional provisions applying to older matters are all checked as well. Because timing affects how a claim is put together, it is worth taking legal advice at an early stage.

Can we secure materials held by the other side before litigation?

Where the court finds that there are circumstances such that the evidence will be difficult to use unless it is examined in advance, it may examine the evidence on application. This is not, however, a mechanism for searching broadly through the other side's materials. The evidence concerned, and the need for it to be examined in advance, have to be set out in concrete terms. Where the application is to be filed also differs depending on whether proceedings have already been commenced.

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