6

Study on the Desirable Form of the Unfair Competition
Prevention Law for Protecting Intellectual Property
in a New Era

About ten years have passed since the full revision of the Unfair Competition Prevention Law in 1993.
Since the economic and industrial structures have dramatically changed over this period, it has become
necessary to review from wide perspectives whether or not the law is still adequately functioning as an impartial
competition rule among companies. In addition, there has been a demand for collecting reference information on
specific cases with regard to acts of unfair competition related to domain names, which came to be covered by thelaw with the 2001 amendment.
In light of such circumstances, this study has extracted diverse problems concerning the Unfair
Competition Prevention Law that are specific to the present day and examined the desirable form of the law for
the future; particularly, how trade secrets should be protected seeing that stronger protection would be sought forthem in the future. Furthermore, specific cases disputing domain names were summarized into a collection andwidely published as guidelines for future dispute settlement.

Ⅰ Study on the Desirable Form of
the Unfair Competition Prevention
Law for Protecting Intellectual
Property in a New Era
1

Review of the concept provision of the
Unfair Competition Prevention Law tomatch an era of information technology

The development of information technology
has given rise to the emergence of new modes ofcommercial distribution and advertising thatutilize digital networks. This raises a question ofwhether or not the Unfair Competition Prevention
Law is adequately corresponding to such progressof information technology. For example, an illicit
use of an indication, such as an act of causing
confusion with another person’s goods or business(Article 2(1)(i) of the law) or a misuse of a famous
indication (Article 2(1)(ii) of the law), should be
regulated even when such an act of infringement iscommitted through a digital network, but this point
is not quite clear in the text of the law. Thus, thisstudy has examined these matters as below.
(1) Whether or not Intangible Goods, such asa Program that is not Stored onto a
Medium, Fall under “Goods”
The Unfair Competition Prevention Law lacks
a definition provision on the concept of “goods.”
Therefore, whether or not intangible goods, such asa program that is not stored onto a medium, fallunder “goods” must be reviewed from thestandpoint of establishing and maintaining order offair trade (i.e., the purpose of the law) based on theactual conditions of the trade. In a modern society
with developed information technology, it iscommon knowledge that intangible goods can be
independently traded and that fair order must also

IIP Bulletin 2002

be secured for such trade. With regard to theconcept of “goods,” it should be examined whether
or not a definition provision should be establishedin the Unfair Competition Prevention Law so as tocover intangible goods, such as a program that is
not stored onto a medium.
(2) Whether or not Use of such an Indication
as a Trademark on the Screen of a
Personal Computer or Mobile Phone
Falls under “Use”
Unlike the Trademark Law, the “use” of an
indication under the Unfair Competition
Prevention Law is not provided on the premise of
the attachment of the indication to tangible goods,
and the modes and the nature of use are notparticularly restricted. Moreover, the court
decisions related to domain names (the Toyama
District Court decision of December 6, 2000; theTokyo District Court decision of April 24 of 2001)
have found outright that the use of a trademark on
a website falls under “use” under the Unfair
Competition Prevention Law, and these court
decisions have been supported by scholars as well.
Accordingly, it is appropriate to interpret that theuse of such an indication as a trademark on thescreen of a personal computer or mobile phonealso falls under “use” under the current Unfair
Competition Prevention Law, and there is little
need to amend the law with regard to the conceptof “use.”(3) Whether or not an Act of Providing such
Intangible Goods as a Program via
Telecommunications Lines Falls under a“Transfer” or “Delivery” of “Goods”
It is not quite clear whether or not an act ofproviding such intangible goods as a program via
telecommunication lines falls under “transfer,” so
the law should preferably be amended from the● 60 ●

viewpoint of clarifying the regulations. The need forthe law amendment and the wording to be applied
to the amendment should be considered based on
the actual conditions of the progress of information
technology and the new modes of acts of unfair
competition deriving from it.
2

Correspondence to New Modes of Use ofMarks on the Internet

This section examines the problem of how
meta-tags and keyword banner ads, which are newmodes of the use of marks on the Internet, shouldbe treated under the Trademark Law and the Unfair
Competition Prevention Law by referring to court
decisions and academic theories of the UnitedStates and Japan. As a result, there seems to be
little urgency for amending the Unfair Competition
Prevention Law at least at the present stage,
considering the current states of the use ofmeta-tags in Japan.
(1) Meta-tags
Today, there is an argument over whether or
not the act of using the names and trademarks ofrival companies as meta-tags constitutes an act oftrademark infringement or unfair competition. U.S.
court decisions on this issue include Brookfield
Communications, Inc. v. West Coast Entertainment
Corp., 174 F.3d 1036 (9th Cir. 1999) in which
infringement was found and Playboy Enterprises,
Inc. v. Wells, 279 F.3d 796, 2002 U.S.App. LEXIS
1561 (9th Cir. 2002) in which infringement wasdenied.
The main controversial points regarding
meta-tags are the issue of visibility, indication oforigin, and initial interest confusion. Visibility is arequirement for “use of a mark” under the JapaneseTrademark Law. However, it is fundamentallydifficult to determine the visibility of a meta-tag so,with regard to such new modes of use, it would be
more appropriate to directly determine whether or
not the mark causes confusion of origin.
The concept of “indication of origin” isinterpreted to be similarly applicable to both theTrademark Law and the Unfair Competition
Prevention Law. If a meta-tag identical or similar toanother person’s registered trademark functions as
an indication of origin and is used for goods(services) identical or similar to the designatedgoods (services), the use would constitutetrademark infringement.
The initial interest confusion is a confusionthat provokes the initial interest of the consumer. It
is found to be an act of infringement even if theconfusion did not result in the actual sale of thegoods (services). Aside from whether or not theconcept of “initial interest confusion” should be
included in the Trademark Law and Article 2(1)(i)of the Unfair Competition Prevention Law of Japan,
it would be better to prohibit such confusion in thecase of meta-tags.
(2) Keyword Banner Ads
A banner ad is an ad displayed on a part of a
web page. One kind of such banner ad is a keyword
banner ad, which is displayed when a search engine
user performs a keyword search that includes aword for which the advertiser has obtained theadvertising right. The problem of using the name ortrademark of a company as the keyword for a
keyword banner ad should be recognized under the
Trademark Law and the Unfair Competition
Prevention Law. Although the user cannot see theprocess by which the banner ad is displayed incorrespondence to the keyword (as is the case withmeta-tags), the banner ad should not be
immediately excluded from “use of indication of a
trademark or a product” due only to lack of visibility.
It would be adequate to examine whether the
keyword functions as an indication of origin in
respect to the banner ad.
3

Correspondence to the WIPO (WorldIntellectual Property Organization) Rule
Concerning the Protection of Marks on
the Internet

This section introduces the outline of the Joint
Recommendation Concerning the Protection ofMarks, and Other Industrial Property Rights in
Signs, on the Internet (the provisions included
therein shall be hereafter referred to as the “WIPO
Rules”) adopted by the Assembly of the Paris Unionand the General Assembly of WIPO in October oflast year. Further, this section analyzes thepotential problems related to the Japanese Unfair
Competition Prevention Law that could occur when
implementing the WIPO Rules in Japan.
(1) Distinctive Features of the WIPO Rules
The WIPO Rules were created as the standard
to be used by countries when applying theirnational trademark law or unfair competition
prevention law to the use of marks on the Internet.
The WIPO Rules can be roughly divided into
provisions on three general principles. First is thatthe use of a mark on the Internet should be treatedas “use” under the national law on marks only
when it has a “commercial effect” in that country.
Second is the requirements for the user of a markon the Internet to be exempted from liability. Thirdis certain limitations on the remedies to beprovided for cases where the commercial effectwere found and the use was found to be an act of
infringement.
(2) Result of Analysis
The provisions in the WIPO Rules concerning
the use of marks on the Internet do not necessarily
coincide in full with the conclusions derived under
the Japanese Unfair Competition Prevention Law.
Therefore, if they were to be imported into nationallaw, some legislative steps would be required. At● 61 ●IIP Bulletin 2002

least, Articles 13 to 15, which relate to injunctions,would have to be stipulated as special provisions ofArticle 3 of the Unfair Competition Prevention Law.
Meanwhile, Articles 9 to 12, which relate toexemption of the user of the mark from liability,cannot be derived from the current Japanese law
either, but no measure is required because theywould fundamentally be inapplicable as far as the
Unfair Competition Prevention Law is concerned.
Another conceivable option would be to import thewhole of WIPO Rules as a national law in order toconcretize the legal relations concerning theInternet.
4

Review of the Provisions Concerning
Compensation for Damages under the
Unfair Competition Prevention Law

It has been pointed out that in law cases under
the Unfair Competition Prevention Law it isdifficult to prove the act of infringement or theamount of damages, and it takes time to resolve thecases. Therefore, this section discusses whether or
not the Unfair Competition Prevention Law should
be amended in such a manner to facilitate theplaintiff to prove such matters to follow theamendments of other intellectual property laws inrecent years.
(1) Facilitating Proof of the Act ofInfringement(i) Establishment of a provision on obligation toclarify the relevant act in a concrete manner
Introduction of a provision on obligation toclarify the relevant act in a concrete manner isneeded to a certain extent but, at the same time, it
is likely to give rise to vexatious actions in cases
related to trade secrets. Therefore, if the provisionwere introduced, some kind of consideration would
be required for keeping the defendant’s secrets
confidential. A possible measure is to adopt asystem of not imposing the obligation to clarify therelevant act in a concrete manner when there is an“adequate reason” or a system to make thedefendant clarify the relevant act in a concretemanner while prohibiting the plaintiff to use thedisclosed information in an unfair manner (e.g., byestablishing penal provisions).
(ii) Broadening of the scope of documents subject
to the order to produce documents
Broadening of the scope of documents subject
to the order to produce documents should beconsidered along with the introduction of in camera
proceedings. However, sufficient considerationmust continue to be made on how the trade secretsof the party producing the documents should beprotected. The following specific opinions havebeen given on strengthening the protection of trade
secrets:c while ordering the production of a wide scopeof documents, it is necessary to concretize the

IIP Bulletin 2002

scope of documents that do not have to be produced,
following the practice of the litigation system in the
United States;d there should be some way to restrict access to
produced documents that include trade secrets; ande on the premise of restricting the scope of
persons who can access the documents, measures
should be taken to punish those who have accesswhen they unfairly leak the information.
(2) Facilitating Proof of the Amount of
Damages(i) Establishment of a provision on facilitating
proof of lost profits
If a provision on facilitating proof of lost profits
were to be introduced in the Unfair Competition
Prevention Law, there would be a question ofwhether or not it should be established as acomprehensive provision, similar to Article 5(1)of the Unfair Competition Prevention Law.
Nevertheless, the formula for calculating damages
is not always applicable to some types of acts under
the Unfair Competition Prevention Law, such as anact of unfair acquisition / disclosure of trade secrets(Article 2(1)(iv) to (ix)), an act of unfair acquisitionof domain names (Article 2(1)(xii)), an act of
misleading the public about the quality of goods orbusiness (Article 2(1)(xiii)), and an act of tarnish(Article 2(1)(xiv)). Accordingly, whether or not theprovision is applicable should be examined for eachtype of act when introducing the provision under
the Unfair Competition Prevention Law.
(ii) Deletion of “ordinarily” from the presumptive
provision for the amount equivalent to thelicense fee
The reason for deleting the word “ordinarily”
from Section 102(3) of the Patent Law with the1998 amendment was to rectify a situation where
the amount of license fee to be paid based on an
advance licensing agreement and the amount ofdamages to be claimed ex post against an act ofpatent infringement, which is an amount equivalent
to the license fee, are the same, which had made it
more advantageous for people to infringe thepatent than to conclude a licensing agreement. In
light of such reason for the amendment, it would
be necessary to also amend the Unfair
Competition Prevention Law in the same manner.
(iii) Establishment of a presumptive provision for
the amount of damages in the case where
damage is difficult to prove
Section 105ter of the Patent Law provides as a
special provision of Article 248 of the Code of Civil
Procedure that the court may award damages
when it is difficult to prove damages “from thenature of the relevant facts.” This provision should
also be positively introduced under the Unfair
Competition Prevention Law in order to speed up
the legal proceedings. Of the types of acts specificto the Unfair Competition Prevention Law, thisprovision would be effective for the cases of an act● 62 ●

of misleading the public about the goods orbusiness (Article 2(1)(i)), an act of misusing famous
indications (Article 2(1)(ii)), an act of unfair
acquisition of domain names (Article 2(1)(xii)) andan act of tarnishment (Article 2(1)(xiv)).
(iv) Whether or not to establish an expert opinion
system for proof of damages
Assessment of damages could be just ascomplicated and difficult in cases under the Unfair
Competition Prevention Law. In such cases, itwould be helpful for a speedy remedy of the injured
party to have an expert assess the damages incooperation with the party. Therefore, an expert
opinion system like the ones already adopted underindustrial property law or copyright law should bepositively introduced under the Unfair Competition
Prevention Law.
5

Scope of Persons Having the Right toClaim

In Japan, consumers were given the rightto seek an injunction for an unfair method of
dealings with the 2000 amendment of theAnti-Monopoly Law. In light of this, this section
studies whether or not the right to claim should
also be given to consumers under the Unfair
Competition Prevention Law and whether or nottrade associations should be given the eligibility to
become a party in a suit under the Unfair
Competition Prevention Law from the viewpointof establishing a user-friendly litigation system
for small and medium enterprises (SMEs) inparticular.
(1) Relationship with the System of Seeking
an Injunction under the Anti-Monopoly
Law
Of the acts of unfair competition listed in
Article 2(1) of the Unfair Competition Prevention
Law, an act of misleading the public about thequality of the goods or business falls under
General Designation Item 8 “an act of deceptively
inducing customers of a competitor to deal withoneself” in Article 2(9)(iii) of the Anti-Monopoly
Law. Therefore, the right to seek an injunction isrecognized for consumers. “An act of misleading
the public about the goods or business” in Article
2(1)(i) of the Unfair Competition Law and “an actof using a famous indication” in Article 2(1)(ii) of
the law are also considered to fall under General
Designation Item 8 “an act of deceptively inducing
customers of a competitor to deal with oneself.”
With the enactment of the Consumer Contracts
Law in 2001 and amendment of the Door-to-Door
Sales and Other Direct Sales Law, the scope of
consumers’ rights to claim concerning unfair trading
has already been expanded. Therefore, it is notnecessarily a requisite to give consumers the rightto seek an injunction under the Unfair Competition
Prevention Law at the present stage.

(2) Necessity in Granting Trade Associations
the Eligibility to Become a Party in a Suit
It has been pointed out that many operators(SMEs, in particular) do not have enough time andfunds to file a lawsuit themselves when theirbusiness profits have been infringed by an act of
unfair competition, and they cannot expect toresolve the case through litigation. A possible
remedy would be to give trade associations theeligibility to become a party in a suit under the
Unfair Competition Prevention Law in order tofacilitate an operator whose business profits havebeen infringed to recover its lost profits throughlegal proceedings.
As a result of the study, it has been found that
although there is a need to grant tradeassociations the eligibility to become a party in asuit in the form of a representative suit byconventional agency (establishment of a system inwhich individual operators grant their right ofaction to their respective trade associations, andthe trade associations obtain the eligibility to
become a party by authorization), there are still
many problems that need to be examined in thisrespect.
6

The Desirable Style of Specifying theActs Subject to Regulation

The Japanese Unfair Competition Prevention
Law specifies the acts subject to regulation bylisting the individual, specific acts. This restrictive
listing style has been criticized for not being
able to sufficiently deal with the diverse acts of
unfair competition. Accordingly, this section
analyzes whether or not a stipulation like ageneral provision should be introduced in the law
to that end.
(1) Past Course of Amendments of the Unfair
Competition Prevention Law
The current Unfair Competition Prevention
Law has been fully revised in 1993. With thatrevision, new types of unfair competition have been
added to the law. Combined with the types of unfair
competition related to trade secrets that wereadded in 1990 and the new types of unfair
competition that were further added after theenforcement of the current law, the types of unfair
competition have been dramatically increased in thecurrent law. By addition of such acts as c acts of
unfair competition related to trade secrets, d actsof misuse of famous indications, e acts of imitating
the shape of goods, f unfair acts concerningtechnical means of protection, and g unfair acts
concerning domain names, many acts of unfair
competition that could not be covered under theconventional Unfair Competition Prevention Law
came to be stipulated under the law.
(2) Opinions of the Industrial World
The industrial world in general has either a● 63 ●IIP Bulletin 2002

passive or negative opinion about introducing ageneral provision under the Unfair Competition
Prevention Law. One of the reasons is that the
introduction of a general provision is not an urgent
issue in industry, since companies have not found a
problem in the current law that lacks a generalprovision, and they do not have any particular needfor the general provision. Further, industry hasconcerns about the lack of foreseeability and legal
stability that could arise from the indefiniteness ofthe criteria if a general provision were to beestablished under circumstances where various
new business activities are expected to be
conducted in line with the acceleration of economic
activities. Companies recognize that particularly
malignant acts of unfair competition can be dealt
with by tort law or contract law of the Civil Code,by such administrative regulations as theAnti-Monopoly Law, or by adding or relaxing therequirements for individual types of acts of unfair
competition under the Unfair Competition
Prevention Law. In this way, companies are greatly
concerned about the risks of an injunction that ariseby the establishment of a general provision when
they consider the future scope of their businessactivities.
(3) Result of Analysis
Since acts of unfair competition cannot only be
dealt with by the Unfair Competition Prevention
Law, but also by such administrative regulations as
the Anti-Monopoly Law or by alternative methods,
there seems to be no need (urgency) to establish ageneral provision under the Unfair Competition
Prevention Law at present.

Ⅱ Study Concerning Adequate
Protection of Trade Secrets
With the 1990 amendment of the Unfair
Competition Prevention Law, such acts as an actof unfair acquisition of trade secrets were madesubject to the seeking for an injunction and claim
for damages as acts of unfair competition. After alapse of more than ten years, the economic andindustrial structures are about to go throughdynamic changes, and trade secrets are becoming
ever more important in business activities.
Because of the increased mobility of humanresources as well as the digitization and networking
of information, an even greater number ofcompanies are said to be suffering an outflow of
their trade secrets to domestic and foreigncompetitors and losing their competitiveness as aresult. Therefore, the desirable form ofprotection of trade secrets under the Unfair
Competition Prevention Law needs to be reviewed
from the perspective of adequately protecting
trade secrets. This section examines, in particular,

IIP Bulletin 2002

criminal regulations for acts of the unfair acquisitionof trade secrets under the Unfair Competition
Prevention Law.
1

Necessity to Strengthen Protection ofTrade Secrets(1) Results of a Questionnaire Survey andthe Opinions Expressed
In 2001, the Intellectual Property Policy Officeof the Ministry of Economy, Trade and Industry(METI) conducted a questionnaire survey on themember companies of the Japan Intellectual
Property Association (JIPA) and the Association ofJapanese Corporate Legal Departments with theaim of discovering the actual conditions of industry
concerning the strengthening of the protection of
trade secrets. As a result, about 80 percent(including conditional responses) of the member
companies of both associations were found tosupport the idea of protecting trade secrets withcriminal punishments. In the meantime, the Fair
Trade Committee of JIPA expressed an opinion thatthe legal protection of trade secrets should be
strengthened based on the following reasons: cdue to the progress of networking and digitizationin the economy and society, companies are facing agreater risk of their trade secrets being easily
leaked; d further strengthening of IP protection isindispensable for maintaining the competitiveness ofJapanese companies; and e new information
management risks may arise in line with theincreased mobility of employment.
(2) Study Groups
The New Growth Policy Committee of theIndustrial Structure Council 2001 discussed
strengthening the protection of trade secrets, andemphasized in its committee report the need toconsider amending the Unfair Competition
Prevention Law toward strengthening theprotection. At the same time, a Study Group on
Industrial Competitiveness and Intellectual Property
was organized as a private advisory council to
the Director-General of METI’s Economic andIndustrial Policy Bureau and the Commissioner of
the Japan Patent Office in 2001. In its meeting, thestudy group discussed the topic of strengthening
the protection of trade secrets and gained agenerally common understanding of the directionthat the protection of trade secrets should be
strengthened while giving consideration to suchaspects as further increasing the mobility of humanresources.
(3) Necessity of Introducing New Criminal
Punishments(i) Criminal acts related to trade secrets
By surveying the past criminal court actions
concerning trade secrets, criminal acts related to
trade secrets can be summarized as the table below.

● 64 ●

Subject of the act Act of unfair use/disclosure
Mode of the act or unfair acquisition(embezzlement) by aperson having the liability
to preserve in his/her duty
or in terms of trust
Object of the act
Property

Trade secret(Information)

Act of unfair acquisitionor unfair use/disclosure
by a person having noliability to preserve in
his/her duty or in terms oftrust

Act of unfair acquisition ofproperty that has been
gained by an act fallingunder an offense against
property or of information
gained or disclosed by an
unfair means

Embezzlement in conductof business
Breach of trust
Theft

Theft

Crime relating to stolen
property

Breach of trust(Case 1)
Does not easily
constitute a crime(Note)(Case 2)
Does not easily constitutea crime(Note)(Note) When an unauthorized access is involved, the act can be punished under the Unauthorized Computer Access
Law. There is also room for constitution of a “Clause 2” crime, such as fraud (Article 246(2) of the Penal Code) andextortion (Article 259(2) of the Penal Code).

(ii) Problems under the current law
The acts shown below, which fall under Cases
1 and 2 above, are not likely to be adequately
punishable under the current law. These acts would
be punishable if the unfair acts in Article 2(1)(iv) to(ix) of the Unfair Competition Prevention Law weremade subject to criminal punishments.
(Case 1)c A person other than executives and regular
employees who have a duty to keep and manage
trade secrets of the company (e.g., a third person or
an ex-employee) discloses or acquires the trade
secrets kept in the company’s computer via
telecommunication lines.
d A person other than executives and regular
employees who have a duty to keep and manage
trade secrets of the company takes away
confidential files stored in the company’s computerby saving them onto a medium (e.g., a floppy disk)
which the person has brought.
(Case 2)e After the acquisition, a third person either
acquires or discloses the information obtained byeither of the above acts.
2

Protection of Trade Secrets by Criminal
Punishments(1) Object of Protection
The “trade secret,” which is the object ofprotection, is stipulated in Article 2(4) of the Unfair
Competition Prevention Law; it is required to be
kept confidential, useful, and not publicly known.
However, whether these requirements are sufficientas the requirements for criminal punishments is aquestion. Even if the required level of confidentiality
were not so strict for civil remedies, therequirements should be quite relative and strict for
criminal penalties. If a trade secret includes “anillegal fact” (e.g., an illegal processing is conductedin the process of manufacturing a certain product inorder to significantly reduce the manufacturingcost), it should be excluded from protection as atrade secret, because “an illegal secret” does notdeserve protection.
(2) Types of Acts of Infringement
The respective types of acts of trade secretinfringement that are stipulated in Article 2(1)(iv)
to (ix) of the Unfair Competition Prevention Law
are examined from the viewpoint of what constituent
elements should be required for criminal
punishments upon introducing such punishments in
the Unfair Competition Prevention Law.
(a) Article 2(1)(iv) type (unfair acquisition)
An act of unfair acquisition of trade secrets
cannot be made a constituent element of a crime as
it is. When stipulating the constituent elements of acrime, it is necessary to directly stipulate the unfair
acquisition of trade secrets, and the wording of thelaw must be considered by taking the following
matters into account: c how to apprehend theunfair acquisition of trade secrets through theintermediary of someone else; d how to stipulate
the unfair acquisition of trade secrets without theintermediary of someone else; e whether or not
the acquisition method should be restricted in some
way regarding the unfair acquisition of trade secrets
without the intermediary of someone else; and fwhether or not the disclosure/use of unfairly
obtained trade secrets should be stipulated as
criminal acts.
(b) Article 2(1)(v) type (acquiring after unfairly
obtained trade secrets)
The act of acquiring trade secrets while
unaware that such trade secrets have been obtainedby unfair acquisition by gross negligence should be
excluded from acts subject to criminal punishment.
The act of acquiring unfairly obtained trade secrets
must be examined separately for a case where one
directly acquires trade secrets from a person who
has unfairly obtained them and a case where one
indirectly acquires trade secrets from such a person(e.g., acquiring through a person who has obtained
the trade secrets while unaware of the situation). If● 65 ●IIP Bulletin 2002

the punishments are to be limited to the casewhere the trade secrets are directly acquired from aperson who has unfairly obtained them, one of thepossible measures would be to punish the act ascomplicity in the disclosure by the person who has
unfairly obtained the trade secrets instead of
stipulating the act as an independent constituent
element. In order to cover this second acquisition
by a provision of complicity, punishments would
have to be extended to the disclosure of unfair
acquisition.
(c) Article 2(1)(vi) type (ex post use/disclosure of
unfairly obtained trade secrets in bad faith)
It is at least necessary to exclude the type ofacts conducted by gross negligence from acts
subject to punishments. With regard to the type of
ex post use/disclosure in bad faith, considerationmust be given so that the act does not constitute acrime relating to stolen property when the object
concerned is tangible property. Article 2(1)(vi) does
not apply to “an act of using or disclosing the trade
secrets conducted by a person, who has acquired
trade secrets in a dealing, within the scope
authorized by that dealing,” and this purport should
also be reflected on criminal punishments.
(d) Article 2(1)(vii) type (unfair use/disclosure)
Article 2(1)(vii) provides for an act of using or
disclosing trade secrets, by a person to whom trade
secrets have been disclosed, for the purpose ofpromoting his/her own interest or that of a third
person or inflicting damage on the other party. The
constituent elements are similar to those of abreach of trust. Existence of an explicit secrecy
obligation should be required, and the unfair
use/disclosure should only be made subject topunishment when that requirement is violated. In
addition to violation of “a legal obligation toconfidentiality,” the purpose of promoting his/her
own interest or that of a third person or inflicting
damage on the other party must also be made arequirement. Further, the unfair use/disclosure
involves the problem of what the treatment should
be for retired employees.
(e) Article 2(1)(viii) type (acquisition of unfairly
disclosed trade secrets)
Similar to the Article 2(1)(vi) type, an act ofgross negligence needs to be excluded from being
subject to criminal punishment. As in the case of ex
post acquisition of unfairly obtained trade secrets,
the point of consideration would be whether toestablish an individual penal provision or to punish
it as complicity in the unfair disclosure.
(f) Article 2(1)(ix) type (ex post use/disclosure of
unfairly disclosed trade secrets in bad faith)
Similar to the Article 2(1)(vi) type, an act bygross negligence should be excluded from being
subject to punishment. The question of whether or
not an ex post act in bad faith should be punished isalso the same as for the Article 2(1)(vi) type.

IIP Bulletin 2002

3

Infringement of
Breach of Trust

Trade

Secretsand(1) Nature of Infringement
If company secrets are infringed and theinformation is misused, the company will ultimately
suffer economic damage. Considering this point,
the past practice was to protect information having
the nature of property by penal provisions on
offenses against property. However, when considering
the specific nature of trade secrets (information)
being “non-transferable,” the conventional modesof crimes are not always applicable since the acts do
not involve “property” or “goods.” Therefore, there
are limits in the method of punishing such acts as
offenses against property, and breach of trust, inparticular, often fails to be constituted due to a lackof requirements for the offender.
(2) Demands for Introducing Criminal
Punishments
The aforementioned questionnaire survey
conducted by the METI in 2001 shows that mostcompanies support an introduction of penal
punishment for such acts of unfair acquisition as
industrial espionage. On the other hand, while
unfair acquisition by an employee or an
ex-employee occurs in a large number of cases,
companies seem to be reluctant to punish suchcases outright. The breach of trust, which becomes
an issue in the latter type of cases, is studied below
in light of individual constituent elements.
(3) Constituent Elements of the Breach ofTrust
The following are the constituent elements ofthe breach of trust: (i) an administrator of affairs;(ii) an act in violation of one’s duties; (iii) a purposeof promoting interests or inflicting damage; and (iv)property damage. Each of these elements is
examined below.
(i) Administrator of affairs
According to the wording of the law, theoffender must be “a person administrating affairs onbehalf of another.” Non-employees and ex-employees
are no longer administrating the affairs of the company,so their acts do not constitute a breach of trust.
Even employees do not fall under an administrator
of affairs if they are not authorized to access theinformation. The persons who are examined for breachof trust are those who have the access authority.
(ii) Act in violation of one’s duties
Whether or not one has violated one’s duties
mainly becomes an issue in such cases as
speculative dealings, but it is not likely to present
an issue with regard to an infringement of trade
secrets. As long as the person is an administrator of
affairs, the requirement of “performing an act inbreach of his duty” is more or less satisfied in thecase of an infringement of secrets.
(iii) Purpose of promoting interests or inflicting
damage● 66 ●

The breach of trust requires a “purpose topromote his own interest or that of a third personor to inflict damage on the principal (the otherparty).” Apart from the requirement of “property
damage,” there must be a “purpose to inflictdamage.” Meanwhile, “his own interest or that of athird person” can also be interest other than property
interest. Based on this premise, the purpose topromote interest or inflict damage would also befound for most cases of disclosure of trade secrets.
However, since there could also be such cases as an
in-house whistle blower, it is necessary to consider
cases where that idea is inapplicable as well.
(iv) Property damage
The breach of trust requires damage to theother party’s overall property; even attempted
damage is punished. Unlike an offense against
individual property that is constituted by “transfer”
of goods or interests, the criterion of the time when
the property damage occurred presents an issue. In
the case of an infringement of trade secrets, it must
be examined whether the damage is recognized at
the time when the information has been unfairly
disclosed (acquired by the other party) or recognized
at a later time. Since the actual damage arises only
when the information is actually used and causes
some obstacle to the business of the original holderof the secret in the case of trade secrets, it seems
too early to recognize a decline of economic
evaluation at the time of disclosure. Even if theconventional criterion of the evaluation from “aneconomic viewpoint” were to be adopted, the casewould have to be in a phase in which the potential
interests of the stolen information can be specificallyconceptualized in order to recognize constitution of
the breach of trust.

Ⅲ Study on Cases
Domain Names
1

Disputing

Background against Revisions Related to
Domain NamesWith the diffusion of the Internet in recent
years, domain names have come to play suchimportant functions as enhancing the credibility of acompany website and drawing consumers to thewebsite. Along with this trend, unfair acts ofacquiring a domain name identical or similar toanother person’s trademark, and conducting businessin a form that misleads and confuses consumers byusing that domain name or reselling the domainname for an unfairly high price have been
conducted frequently around the world. In order
to counter these acts, rule-making efforts havebeen made worldwide, such as WIPO’s Joint
Recommendation Concerning Provisions on theProtection of Well-known Marks and ICANN’s
Uniform Dispute Resolution Policy. Also in Japan,

the Japan Network Information Center (JPNIC)
controlling the “.jp” domain names formulated a
Domain Name Dispute Resolution Policy in July
2000, and the Japan Intellectual Property Arbitration
Center has been taking alternative dispute
resolution procedures based on this policy since
October of the same year. However, since theparties under alternative dispute resolution
procedures are able to file an action with a court,
and the legal proceedings would be based on
substantive law when a trademark owner or the like
who has no contractual relationship with theregistration agency becomes the plaintiff in court,
there was a need to improve substantive law inorder to effectively resolve disputes.
2

Revisions Related to Domain Names

In light of the above situation, the Law
Partially Amending the Unfair Competition
Prevention Law (Law No. 81) was promulgated inJune 29, 2001 and was enforced on December 25 of
the same year. The content of the amendment is asfollows. Article 2(1)(xii) was added to the Unfair
Competition Prevention Law to provide for suchacts as unfair acquisition of domain names as a typeof unfair competition. Article 2(1)(iv) was alsoestablished as a definition provision on “domainnames” and Article 5(2)(iv) was added to allow aperson to claim damages equivalent to the amountof royalty for an act falling under Article 2(1)(xii).
3

Preparation of a Collection of Cases
Disputing Domain Names

This collection of cases was prepared with theaim of introducing the decisions by Japanese andU.S. courts concerning domain names andtrademarks and the rulings by alternative dispute
resolution organizations as a reference for actually
applying the amended law. The cases have been
extracted from court decisions under the Japanese
Unfair Competition Prevention Law, rulings by theJapan Intellectual Property Arbitration Center, rulings
under the Uniform Dispute Resolution Policy, andcourt decisions under the U.S. anti-cybersquatting
law. In the end, a total of 60 cases have been
selected; they are Japanese court decisions on twocases, Japanese rulings on nine cases, overseas
rulings on 29 cases, and U.S. court decisions on 20
cases. The collection indicates the “disputed domain
name,” “organization that rendered the decision(ruling),” “applicable regulations,” “dispute number,etc.,” “date of decision (date of motion, date ofruling),” “plaintiff (movant),” “defendant (opponent),”“content of the decision (ruling),” “outline of the
dispute,” and “gist of the decision (ruling).”● 67 ●（Senior Researcher: Nobuo Kawasaki)

IIP Bulletin 2002