Background
D&X Co., Ltd. sued Y, a former employee, alleging that Y’s handling of customer information breached a confidentiality agreement and constituted unfair competition under Article 2(1)(vii) of Japan’s Unfair Competition Prevention Act. The company sought ¥33,993,050 in partial damages under Article 415(1) of the Civil Code or Article 4 of the Unfair Competition Prevention Act, plus interest at 3% annually from September 9, 2024.
The Tokyo District Court dismissed the claim. It found that D&X had neither implemented sufficient measures to keep the customer information secret nor clearly communicated to employees that the information was confidential. The information therefore did not qualify as a trade secret that was “managed as secret.” D&X appealed.
The Court’s Holding
The Intellectual Property High Court dismissed the appeal and affirmed the judgment for Y. Adopting the district court’s reasoning with minor corrections, it held that D&X had not sufficiently protected the customer information or clearly manifested an intention to manage it as confidential.
D&X argued that it controlled membership in groups within an application, restricted access by inviting selected employees to a customer-information calendar, managed viewing and editing as the calendar’s owner, and required employees to record information under uniform rules. The court held that these circumstances did not alter the conclusion that the statutory secrecy-management requirement was unsatisfied. D&X was ordered to bear the appellate costs.
Key Takeaways
- Customer information does not qualify as a trade secret merely because it is stored in an application with group, invitation, and calendar controls.
- A claimant must show both adequate confidentiality measures and a clear communication to employees that the information is to be treated as secret.
- Because D&X failed to establish secrecy management, its contract and unfair-competition damages claims remained dismissed.
Why It Matters
The decision emphasizes that technical access features and standardized information-management practices are not necessarily enough to establish that information is “managed as secret” under Japanese trade-secret law. Businesses should pair access controls with policies and communications that unmistakably identify protected information and prescribe confidential treatment.