Cross-Border Exchange of Music Content and Trade Secrets:
A View from Japanese Private International Law
Dai Yokomizo *I.
II.

Introduction
Cross-Border Exchange of Music Content
1. International Judicial Jurisdiction
2. Applicable Law
3. Difficulties Related to Internet Music Downloads
III. Cross-Border Exchange of Trade Secrets
1. International Judicial Jurisdiction
2. Applicable Law
3. Recognition and Enforcement of Foreign Judgments
IV. Closing Remarks

I.

INTRODUCTION

Although cross-border exchanges of intellectual assets have been developing rapidly,
the actual legal situation does not seem to promote them, but rather prevents or hinders
them. The purpose of this article is to describe the legal situation of such exchanges inJapanese private international law and to identify issues which may hinder them, focusing on two different types of intellectual assets that have not been sufficiently discussed
so far, at least in Japan: music content and trade secrets.
In cases where exchanges of music content and trade secrets are conducted internationally, questions regarding private international law (conflict of laws) arise. Actually, each country has its own private international law. Legal matters regulated by privateinternational law are as follows: international judicial jurisdiction (whether a court
should try a case involving international civil disputes or not), choice of law (whichcountry’s law should apply), recognition and enforcement of foreign judgments.
In Japan, there is no specific provision prescribing international jurisdiction. Caselaw gives the following guideline: a defendant should be subject to the jurisdiction ofJapan when the conditions of the case establish internal territorial jurisdiction (or local
venue) as provided in the Code of Civil Procedure1 (the defendant’s domicile, the place*

This article is an outcome of the research project supported by Geneva International Academic Network (GIAN), “Small Grants” Programme, “The Promotion of Cross-border
Exchange of Intellectual Assets between China, Japan and Switzerland: The Case of Musicand Trade Secrets” (2007; http://www.ruig-gian.org/research/projects/project.php?ID=156,
last visited on 19 October 2009). It is also based on my presentation at the Symposium“Promotion of Cross-Border Exchange of Intellectual Assets” (8 December 2007, Tokyo),

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where the obligation is to be performed, the place where the tort occurred, the place
where the property is located, etc.), unless exceptional circumstances are found, or if atrial in a Japanese court would contradict the promotion of fairness between parties, andthe equitable and prompt administration of justice would not be served.2
As for choice of laws, a new law entitled Hô no tekiyô ni kansuru tsûsoku-hô (the Act
on the General Rules of the Application of Laws) [Tsûsoku-hô] was enacted in 2006.3
There is no specific provision stating which state’s law is applicable to copyrights andunfair competition in this new legislation, except for defamation (Article 19).4

1
2

3

4

hosted by University of Geneva, WIPO and Grant-in-Aid for Scientific Research by Monbu
Kagakushô (Scientific Research in Priority Areas: “Make Japanese Law Transparent Project”).
Minji Soshô-hô, Law No. 109 of 1996.
Supreme Court, 11 November 1997, Minshû 51, 4055; an English translation can be foundin: Japanese Annual of International Law 41 (1998) 117. New legislation regarding international jurisdiction is now being discussed by the government.
Law No. 78 of 2006; an English translation can be found in: J. BASEDOW / H. BAUM /Y. NISHITANI (eds.), Japanese and European Private International Law in Comparative Perspective (Tübingen 2008) 405-419, as well as in: Japanese Annual of International Law 50(2007) 87-98. See generally, K. TAKAHASHI, A Major Reform of Japanese Private International Law, in: Journal of Private International Law 2 (2006) 311; Y. OKUDA, Reform ofJapan’s Private International Law: Act on the General Rules of the Application of Laws, in:Yearbook of Private International Law 8 (2006) 145.
As for intellectual property, since the significance of the lex loci protectionis is still unclear
and academic opinions are divided, it was considered that a new provision would be premature. As for unfair competition, it could not be determined whether only one choice-oflaw rule based on the law of the place where the market is located would be sufficient for all
kinds of acts regarding unfair competition. See the Explanatory Note on the Proposal of
22 March 2005 (in Japanese) (http://www.moj.go.jp/PUBLIC/MINJ57/refer02.pdf, last visited
19 October 2009), 96-97.
In contrast, a new EU Regulation on the law applicable to non-contractual obligations introduced provisions with regard to unfair competition and intellectual property rights. See
Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July
2007 on the law applicable to non-contractual obligations (Rome II), OJ L 199/40.
– Article 6 (Unfair competition and acts restricting free competition):“1. The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective
interests of consumers are, or are likely to be, affected.
2. Where an act of unfair competition affects exclusively the interests of a specific competitor, Article 4 shall apply.
3. (a) The law applicable to a non-contractual obligation arising out of a restriction ofcompetition shall be the law of the country where the market is, or is likely to be, affected.
(b) When the market is, or is likely to be, affected in more than one country, the person
seeking compensation for damage who sues in the court of the domicile of the defendant,
may instead choose to base his or her claim on the law of the court seized, provided that themarket in that Member State is amongst those directly and substantially affected by the
restriction of competition out of which the non-contractual obligation on which the claim isbased arises; where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her
claim on the law of that court if the restriction of competition on which the claim against

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Lastly, foreign final judgments could be recognized and enforced pursuant to
Article 118 of the Code of Civil Procedure and Article 24 of the Code of Civil Enforcement. 5 The conditions are procedural and the effects of foreign judgments are to be
applied without any review of the case in Japanese courts.
What is unique in the field of intellectual property rights, including copyrights, is theso-called principle of territoriality and the existence of multilateral treaties. The principle of territoriality in the field of intellectual property is generally understood as follows:
the existence, transfer, effect, etc. of each country’s intellectual property rights isgoverned by that country’s law, and the effects of intellectual property rights are recognized only in the territory of that country.6 Thus, the copyrights of a work exist separately and independently in each country. In addition, as regards copyright, the Berne
Convention for the Protection of Literary and Artistic Works of 9 September 1886(“Berne Convention”) stipulates the national treatment of foreign authors or works andthe minimum standard of protection. In Japan, as well as in other countries, there is discussion as to whether Article 5 (2) of this Convention has the characteristics of a choiceof-law rule, which designates the law of the country for which protection is claimed(lex loci protectionis).7 Although three judgments of the Tokyo District Court confirmedthat this provision has such characteristics,8 other judgments did not mention this provision in the choice-of-law process and implicitly denied its choice-of-law character.9
Even so, case law is consistent in regarding lex loci protectionis as a choice-of-law rulewith regard to copyright.

5
6
7
8
9

each of these defendants relies directly and substantially affects also the market in theMember State of that court.
4. The law applicable under this Article may not be derogated from by an agreement
pursuant to Article 14.”
– Article 8 (Infringement of intellectual property rights)“1. The law applicable to a non-contractual obligation arising from an infringement of an
intellectual property right shall be the law of the country for which protection is claimed.
2. In the case of a non-contractual obligation arising from an infringement of a unitaryCommunity intellectual property right, the applicable law shall, for any question that is notgoverned by the relevant Community instrument, be the law of the country in which the actof infringement was committed.
3. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14.”
In addition, Swiss private international law also has provisions with regard to unfair competition (Art. 136) and intellectual property (Art. 110 and 122).
Minji Shikkôhô, Law No. 4 of 1979.
As regards patents, see Supreme Court, 1 July, 1997 [BBS case], Minshû 51, 2299; an English translation can be found in: Japanese Annual of International Law 41 (1998) 100.
See generally Y. NISHITANI, Intellectual Property in Japanese Private International Law, in:Japanese Annual of International Law 48 (2005) 87, 95.
Tokyo District Court, 31 May 2004, Hanrei Jihô 1935, 140; Tokyo District Court, 14 December 2007 (forthcoming); IP High Court, 24 December 2008 (forthcoming).
For example, Tokyo High Court, 30 May 2001, Hanrei Jihô 1797, 111; Tokyo High Court
28 May 2003, Hanrei Jihô 1831, 135; Tokyo District Court, 26 October 2007 (forthcoming).

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The following sections will describe, first, the private international law issues thatarise in the cross-border exchange of music content (Section II) and, second, those thatarise in the cross-border exchange of trade secrets (Section III).
II.

CROSS-BORDER EXCHANGE OF MUSIC CONTENT

Among many types of civil disputes regarding the cross-border exchange of music
content, this text will mainly mention disputes involving contracts. Problems regarding
international jurisdiction and applicable law will be mentioned successively (1 and 2).
One of the characteristics in the field of music content is the existence of a single orseveral collecting societies in each country which collect royalties for the copyrightholders. They maintain reciprocal representation agreements with affiliated foreigncollecting societies.10 According to the agreements, each rights holder who is a memberof one collecting society becomes fictively a member of another collecting society.11
One special clause authorizes one collecting party to take an infringement action in its
country against the users not authorized by another collecting society.12 This framework
will create considerable obstacles for the exchange of music content in the developmentof the Internet (3).
1.

International Judicial Jurisdiction

If a case deals with a copyright in Japan, or if the defendant has his or her domicile orprincipal office in Japan, the international jurisdiction of the Japanese courts would bepermitted, unless there are exceptional circumstances. This “exceptional circumstances”
condition might matter in a case where a collecting society brings an action against aforeign author who does not live in Japan and has little contact with Japan. In such a

10

11
12

See, for example, the case of Harry Fox Agency [HFA], one of the collecting societies in
the United States, Frequently Asked Questions: International, at
http://www.harryfox.com/public/infoFAQInternational.jsp (last visited on 10 April 2008).
See generally AMY AI DAC LAM, Comment: Internet Music Downloads: A CopyrightOwner’s Protection of Royalties in The United States and Abroad, in: Sw.U.L.Rev. 34(2004) 267, 276; A. LUCAS / H.-J. LUCAS, Traité de la propriété littéraire et artistique(2nd ed., 2001) 1013-1015; P.-Y. GAUTIER, Propriété littéraire et artistique (4th ed., 2001)
691, 694, according to which they are mandated not only to conclude contracts with users
but also to take actions in their own country for the other party’s sake. In such cases, as far
as the agreements or the articles of incorporation and the local law permit, they act for theother party with their own name. (This was confirmed by the reply to my question from a
French collecting society, SACEM. I am most grateful to Mr. Laurence Bony and
Mr. Desurmont Thierry of SACEM and Professor Philippe Gaudrat of the University ofPoitiers.)
M. JOSSELIN-GALL, Les contrats d’exploitation du droit de propriété littéraire et artistique,
Étude de droit comparé et de droit international privé (Paris 1995) 386.
JOSSELIN-GALL, ibid.

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case, the international jurisdiction of Japanese courts might be denied because the extent
of the defendant’s burden, such as the obligation to appear in court, is one of the important elements considered when examining the “exceptional circumstances” condition.13
According to a Japanese collecting society, JASRAC, in reply to our questionnaire,
there is an arbitration agreement and a jurisdiction clause in a contract between collecting societies. 14 They are also accepted as an effective defence in international civil
disputes.15 Thus, if the dispute arises out of a contract between collecting societies, theJapanese court would dismiss the case on the basis of the arbitration agreement or thejurisdiction clause.16
2.

Applicable Lawa)Contracts

Legal issues regarding contracts, such as the validity and the effect of a contract and theinterpretation of its provisions, are determined by the law applicable to the contract.17
With regard to contracts, parties can freely choose the applicable law, not only explicitly
but also implicitly.18 In the absence of the parties’ choice, the governing law is the lawof the place most closely connected with the contract.19 This is presumed to be the place

13
14

15
16

17

18
19

See, supra note 2.
There seems to be a general tendency that reciprocal representation agreements include anarbitration agreement and a jurisdiction clause, JOSSELIN-GALL, supra note 11, 387-388.
Arbitration agreements can sometimes be found in contracts between a right holder and acollecting society. For example, in the BMI (Broadcast Music Incorporated) Publisher
Agreement, there is an arbitration agreement as follows: “All disputes of any kind, nature or
description arising in connections with the terms and conditions of this agreement shall be
submitted to the American Arbitration Associations in New York...” (Art. 18). The agreement can be found in: A. KOHN / B. KOHN, Kohn On Music Licensing (Frederick 2002)
933-936. However, according to the reply from SACEM, its reciprocal representation agreements do not include any arbitration clause, whereas there is a jurisdiction clause in it.
See Supreme Court, 4 September 2001, Minshû 51, 3657; Supreme Court, Minshû 29, 1554.
According to JOSSELIN-GALL, supra note 11, 388, international relations between collecting
societies have so far been very harmonious and there has been no case where a dispute arose
between them and those agreements applied. Also, according to the reply from SACEM,
collecting societies have the common objective of protecting the creators’ interest in theworld and have the spirit of permanent and effective collaboration. That is why SACEM has
created cordial and durable relations with other foreign collecting societies. Thus, some disputes, which may sometimes occur, are most frequently resolved in settlement.
As for rules regarding the law to the contract, see generally Y. NISHITANI, Party Autonomy
and Its Restrictions by Mandatory Rules in Japanese Private International Law: Contractual
Conflicts Rules, in: Basedow/Baum/Nishitani (eds.), supra note 3, 77; Y. HAYAKAWA, New
Private International Law of Japan, General Rules on Contracts, in: Japanese Annual ofInternational Law 50 (2007) 25.
Art. 7 Tsûsoku-hô.
Art. 8(1) Tsûsoku-hô. Under the old Act, the governing law was the law of the place where
the contract was concluded, Art. 7 (2) Hôrei, Act No. 10 of 1898.

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where the party who is to affect the characteristic performance of the contract is habitually resident. 20 Thus, as regards the assignment agreement of a copyright, the mostclosely connected law would be deemed to be the law of the country where the rightholder is habitually resident.21
According to JASRAC’s reply to the questionnaire, there is neither a choice-of-law
clause in contracts between JASRAC and rights holders, nor in contracts between
JASRAC and foreign collecting societies.22 With regard to the former, in most contracts
with Japanese rights holders the court would consider that the parties implicitly intended
Japanese law to govern. The case of a contract between JASRAC and a foreign rights
holder would be somewhat problematic. With regard to the determination of which law
has the closest connection with a trust, Article 7 of the Hague Convention on the law
applicable to trusts and on their recognition, adopted on 10 January 1986, gives usefulindications, although Japan has not ratified it. According to this provision, the following
elements should be stated explicitly: the place of administration of the trust designatedby the settlor, the situs of the assets of the trust, the place of residence or business of thetrustee, the objectives of the trust and the places where they are to be fulfilled. Thus, thecontract between JASRAC and a foreign right holder would also be most closely
connected with Japanese law.23 On the other hand, as for the contract between collecting
societies,24 it seems very difficult to determine the most closely connected law because
the obligations to collect royalties are mutual and apparently there is no specific performance in this contract. 25 However, it can be divided into two contracts, each ofwhich deals with the collection service in one party’s own country.26 Also, the situation
where disputes regarding this type of contract arise is divided into two, according to thefollowing question: in which country are the obligations as the object of the dispute tobe performed? For example, if a dispute arises out of the obligation that collecting

20
21
22

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24
25
26

Art. 8 (2) Tsûsoku-hô.
If the assignee’s obligations are not monetary but the provision of services, the determination of the applicable law would be more complicated.
This seems a general tendency for the reciprocal representation agreements. See JOSSELINGALL, supra note 11, 387. According to the reply from SACEM, its reciprocal representation agreements do not include any choice-of-law clause.
Here what was written is based on the fact that the contract between JASRAC and rights
holders is considered as a trust contract. Since there are other types of contracts between
collecting societies and rights holders, the significance of Art. 7 of the Hague Convention
would be limited. One French author claims that in other countries, the court should consider that the parties tacitly chose the law of the place where the collecting party is located,based on the importance of the standard contact proposed by the collecting society; see
T. AZZI, Recherche sur la loi applicable aux droits voisins du droit d’auteur en droit international privé (Paris 2005) 391.
Reciprocal representation agreements are considered mandate contracts; see GAUTIER,
supra note 10, 694; AZZI, supra note 23, 219; JOSSELIN-GALL, supra note 11, 388.
JOSSELIN-GALL, supra note 11, 388.
JOSSELIN-GALL, supra note 11, 388.

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society X should perform in its country for collecting society Y, it is to be presumed thatthe law most closely connected with the contract is the law of the place where X is
located.27, 28b)

Assignment of Copyrights

By analogy with the case of assignment of corporeal property, courts have consistently
confirmed choice-of-law rules on the assignment of copyright that designate the law of
the country for which the protection is claimed.29 Thus, the ownership and transfer of
copyrights are governed by the lex loci protectionis, not the law applicable to the contract. 30 Accordingly, in cases where an assignment agreement is not limited to one
country’s copyright and covers the copyrights of multiple countries,31 it would be thelaw of each country that determines whether a copyright was effectively transferred.32
This would raise several legal problems discussed in the following paragraphs, since thecopyright can be transferred by oral agreement in Japan.

27

28

29
30

31

32

JOSSELIN-GALL, supra note 11, 389. See also AZZI, supra note 23, 422, which deals withthe law applicable to the license contract concluded through the reciprocal mandate andclaims as applicable law the law of the place where works are to be used.
Nordic countries adopt the extended licensing system. The collective license means that“a user who has entered into an agreement on the specific use of a certain type of work withan organisation that covers a significant proportion of the copyright holders for this type ofwork, is granted the right under law to use other works of the same type and in the sameway, even if the copyright holders of these works are not represented by the organisation”;
see Samradet for Ophavsret, Denmark’s Owners and Users of Rights are Building a Better
Future Together (29 Feb. 2008) 5, available at
http://ec.europa.eu/avpolicy/docs/other_actions/col_2008/ngo/ophavsret_en.pdf (last visitedon 15 April 2008). See also G. KARNELL, Extended Collective License Clauses and Agreements in Nordic Copyright Law, in: Columbia-VLA Journal of Law & The Arts 10 (1985)
73. The former paper explains that “foreign rights owners who are not represented receive
payment for the use of their work”. But how does the contract between collecting societies
deal with such payment? For example, does a Nordic collecting society give such payment
to JASRAC for Japanese rights holders who are not members of JASRAC? Since thecontent of the reciprocal representation agreements is not at all clear, this paper cannot
answer this question.
Supra note 9.
As regards security interests, issues like the validity and the effect of security interests
should be governed by the lex loci protectionis, while the validity of the agreement for
security interests should be governed by the law applicable to the contract. See, as regards
Chattel, Supreme Court, 15 September 1936, Hôritsu Shinbun 4033, 16.
For example, the BMI Publisher Agreement provides as follows (Art. 3): “Except as otherwise provided herein, Publisher hereby sells, assigns, and transfers to BMI, its successors or
assigns, for the term of this agreement: A. All the rights where Publisher owns or acquires
publicly to perform, and to license others to perform, anywhere in the world, any part or all
the Works” [underline added], KOHN / KOHN, supra note 14, 933.
Moreover, in some countries like Germany the intellectual property cannot be transferred.

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First, in some countries a contract or certificate in writing is required for the effective
transfer of copyright.33 If an assignment agreement between an author and a publisher
has been concluded orally, the transfer of copyright would not be effective in thosecountries.34
Second, in some countries, for subdivided rights to be transferred effectively eachright must be specified. 35 If an agreement between a collecting society and a rights
holder stipulates a transfer of subdivided rights in a comprehensive way, such a transfer
would be void in those countries.36
In order to avoid such problems, it would be appropriate to conclude an assignment
agreement in writing and specifying the subdivided rights.37, 38
3.

Difficulties Related to Internet Music Downloads

Nowadays, musical works are transmitted over the Internet by streaming or downloading. There is still no international rule or agreement stipulating which country shouldcollect royalties in a cross-border digital download, and every country has its own
collection policy. For example, while licenses granted by HFA, an American collecting
society, specify that copies of the sound recordings for digital downloads are restricted
to servers located in the United States,39 GEMA, the German collecting society, takes
the position that if a digital download is delivered to users in Germany, even if theserver origin is located abroad, Germany’s royalty rate should apply and it should
33

34

35
36

37
38

39

For example, 17 U.S.C. 204; UK Copyright Act 1988, Art. 90. One should then carefully
consider whether the law of the lex loci protectionis expressly requires the certificate inwriting as the condition of transfer, or if it requires only the validity of the contract while ingeneral a contract shall be concluded in writing in that country. As an example of the latter,
see Art. L. 131-2, paragraph 1 of the French Intellectual Property Code (“Les contrats de représentation, d’édition et de production audiovisuelle définis au présent titre doivent êtreconstatés par écrit....”).
While JASRAC hands over a trust deed in response to the offer of the contract, it is notclear whether the other party is really a rights holder in other countries, in the case where
the contract between the author and the publisher is concluded orally.
See, for example, French Intellectual Property Code, L. 131-3.
In addition, in some countries a transfer of subdivided rights from a rights holder to acollecting society is not allowed or partially limited. In that case, it is not certain that such atransfer contract would be valid under the law of those countries.
As regards contracts concluded online, one must consider the law of each relevant country
to determine if a contract concluded on a web site is considered to be in writing.
At the Symposium, which was held for this project in Tokyo on 8 December 2007(“Promotion of Cross-Border Exchange of Intellectual Assets”), it was confirmed that, inpractice, assignment agreements are concluded in writing even in Japan.
Harry Fox Agency Mechanical License for Digital Phonorecord Deliveries provides asfollows: “The authority hereunder is limited to ... the making of a copy of a sound recordingof a musical work on a computer file server located in the United States, its territories orpossessions, solely for the purpose of distributing such DPDs [digital phonorecorddeliveries].” This agreement can be found in: KOHN / KOHN, supra note 14, 1379-1381.

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collect royalties.40 Thus, in the case where a music service provider is located in the US
but the digital download was transmitted to a consumer located in Germany, theprovider would have to pay not only the HFA but also GEMA. Such a situation is clearly a great obstacle to the exchange of music content.41 Collecting societies respond tosuch difficulty by concluding agreements with affiliated foreign collecting societies toestablish which statutory rate should control and which terms should apply. But it is notclear that such agreements will benefit the copyright owners or the public.42 Private
International Law (Conflict of Laws) is not a sufficiently useful tool to respond to thisobstacle since each country has its own conflict-of-laws rules. Thus, international agreements or the harmonization of copyright laws at the global level would be necessary to
overcome this obstacle.43

III. CROSS-BORDER EXCHANGE OF TRADE SECRETS
Civil disputes regarding the cross-border exchange of trade secrets vary from case tocase.44 From the viewpoint of private international law, it may be useful to distinguish
two types of disputes: (1) cases where a non-Japanese company having its activity inforeign countries takes action against a person living in Japan or a Japanese company,on the grounds that the latter has exposed the former’s trade secrets to another party(“Case A”); and (2) the case where a Japanese company having its activity in Japan
starts an action against a person living abroad or a foreign company (“Case B”).

40

41
42
43

44

KOHN/KOHN, supra note 14, 1361. Such a position is problematic from the point of view ofthe music service provider. Since the user simply enters his or her own credit card information and then has instant access to the digital downloads and no physical address is needed,
it is not always clear where the country of destination is at the time the transmission is
made, Kohn/Kohn, supra note 14, 1361.
See Comment, supra note 10, 276-278. This problem had already occurred in cases of thesatellite diffusion of music contents, JOSSELIN-GALL, supra note 11, 391-396.
Ibid., 281.
See J. MALONEY, A Collective Rights Society for the Digital Age, in: J. Transnat’l L. &Pol’y 16 (2006) 123, in which it is claimed that a uniform method of regulating and licensing digital music is necessary for the Internet market. As for the response to this obstacle atthe EU level, see COMMISSION OF THE EUROPEAN COMMUNITIES, Communication from theCommission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions on Creative Content Online in the Single
Market (3.1.2008), SEC (2007) 1710.
The Japanese government has recently published a survey on the actual situation of the misappropriation and security control technique in Japan. See METI (Ministry of Economy,
Trade and Industry), Waga kuni ni okeru gijutsu ryûshutsu oyobi kanri no jittai ni tsuite[Survey on the actual situation of the misappropriation and security control technique inJapan], available at http://www.meti.go.jp/committee/materials/downloadfiles/g70625a05j.pdf(last visited on 16 April 2008).

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International Judicial Jurisdiction

Since the defendant can be sued in his domicile,45 there is no difficulty as regards international jurisdiction in Case A. In Case B, if the tort has occurred in Japan46 or the
obligation is to be performed in Japan,47 the Japanese court may exercise jurisdiction,
unless exceptional circumstances are found. Thus, generally speaking, if trade secrets
have been brought out of Japan or a confidentiality agreement covers Japan, the condition for a local venue might be met. However, Japanese courts have a tendency to apply
the conditions for “exceptional circumstances” in a broad and flexible manner and on acase-by-case basis;48 thus it is not easy to predict the types of cases in which international jurisdiction would be permitted.
In particular, the international jurisdiction of Japanese courts becomes uncertain in acase where concurrent litigation is pending in a foreign country.49 With regard to trade
secrets, one case deals with this problem.50
In 1984, Miyakoshi Machine Tools Co., Ltd. (“Miyakoshi”), a Japanese company
manufacturing copper foil, entered into a contract with an American company established by a former employee of Gould, Inc., another American company which also
manufactured copper foil. In this way, Miyakoshi allegedly obtained the know-how ofGould with respect to the surface treatment of copper leaf. In 1985, Gould brought anaction in the United States District Court for the Northern District of Ohio against
Miyakoshi and some other companies for damages and a restraining order under the
Racketeer Influenced and Corrupt Organizations Act (RICO), as well as other legislation. Gould alleged that they had received a trade secret, which had been misappropriated by the former employee. Then, as a countermeasure, Miyakoshi filed an action
for a negative declaration of liability against Gould in the Tokyo District Court. The
court sustained its international jurisdiction based on the fact that the negotiation andconclusion of the contract on the technology had occurred in Tokyo and that the transfer
was executed in Tokyo. The concurrent litigation in Ohio did not prevent the Japanesecourt from sustaining its international jurisdiction, because it was still considered
uncertain whether the Ohio action would result in a judgment.
Since this case, Japanese courts have had a tendency to consider concurrent foreign
litigation as one of the elements that should be examined when considering the existenceof “exceptional circumstances”. In this way, the international jurisdiction of a Japanesecourt is determined case-by-case.
45
46
47
48
49
50

Art. 4 (1) Code of Civil Procedure.
Art. 5, item 11 Code of Civil Procedure.
Art. 5, item 1 Code of Civil Procedure.
See supra note 2.
See generally M. DÔGAUCHI, Concurrent Litigations in Japan and the United States, in:Japanese Annual of International Law 37 (1994) 72.
Tokyo District Court, 30 May 1989, Hanrei Jihô 1348, 91. See DÔGAUCHI, supra note 49,
72-75.

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Applicable Law

As for applicable law, a case where an action for a restraining order or damages isbrought against the third party by a company whose trade secret has been exposed
would be characterized as a tort in Japanese private international law. For example, in
the above-mentioned case between Miyakoshi and Gould, Japanese law was applied inaccordance with the provision of the law applicable to torts. 51 52 Many academic
opinions support this characterization.53
Under the Tsûsoku-hô,54 legal relations arising from torts will usually be governedby the law of the place where the results of a tort were felt. If the occurrence of theresults in that place could not normally be predicted, the applicable law will be that ofthe place where the tortious act took place.55 If there is a place clearly more closely connected than those specified by this general rule, the law of that place governs instead.56
Also, parties are allowed to change the governing law by agreement after the claim has
arisen.57
With regards to a trade secret, although there are still different views,58 the place
where the result of the tort is felt would generally be the location of the market where
the company that obtained the secret could affect the benefits of the original owner.59

51

52
53
54

55
56
57

58

59

Art. 11 (1) of Hôrei stipulated as follows: “The creation and effect of claims arising frommanagement of affair without mandate, unjust enrichment, and unlawful acts are governedby the law of the place where the facts giving rise to the claim occur.”Tokyo District Court, 24 September 1991, Hanrei Taimuzu 709, 280; an English translation
can be found in: Japanese Annual of International Law 35 (1992) 175.
A. TAKAKUWA, Case note, in: Jurisuto 1006 (1992) 148; A. KUNITOMO, Case note, in: Jurisuto 1002 (1992) 260; Y. NOMURA, Case note, in: Shihô Hanrei Rimâkusu 1993-2, 156.
See generally T. KONO, Critical and Comparative Analysis of the Rome II Regulation on
Applicable Laws to Non-contractual Obligations and the New Private International Law inJapan – Seeking a Common Methodological Approach in Japan and Europe, in: Basedow /Baum / Nishitani (eds.), supra note 3, 221; Y. NAKANISHI, New Private International Law ofJapan, Torts, in: Japanese Annual of International Law 50 (2007) 60.
Art. 17 Tsûsoku-hô.
Art. 20 Tsûsoku-hô.
Art. 16 Tsûsoku-hô. These new rules have considerable similarities with the Swiss PIL rules
on torts (Articles 133-139). See F.-J. DANTHE, Le droit international privé suisse de laconcurrence déloyale (Genève 1998) 55.
Some writers claim that the exposure of a trade secret would directly affect the competitor’s
productivity and only indirectly affect the client and the market; thus the applicable law
should be the law of the place where the employee who has exposed the trade secret had
worked. For such an opinion and critics against it, see DANTHE, supra note (57), 66-67.
As for the discussion on the law applicable to unfair competition acts in Japan and inEurope, see D. YOKOMIZO, Teishoku-hô ni okeru fusei kyôsô no toriatsukai [International
Unfair Competition and Conflict of Laws], in: Chiteki Zaisan Hô Seisaku Gaku Kenkyû
[Intellectual Property Law and Policy Journal] 12 (2006) 185.
B. GOLDMAN, Les champs d’application territoriale des lois sur la concurrence, in: Recueildes cours de l’académie de droit international 128 (1969), 633, at 722-723.

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It would normally be predictable that the company whose trade secret has been exposed
might suffer damages in the market where it competes with the company which obtained
the secret. Thus, in Case A, as well as in Case B, the place of the market is the dominantfactor for the determination of applicable law.60, 61 Even so, there might also be cases
where the exposure of the trade secret might not necessarily lead to the damages of thevictim company in the market, since the exposure of the trade secret consists of several
stages – from the obtainment of the trade secret by an employee through to the sale ofthe trade secret and to its use by the competing company; the litigation would notalways start at the final stage. In such cases, unless the market can be specified from astream of stages, the law applicable should be determined on a case-by-case basis.
A dispute may also arise from a confidentiality agreement. For example, a contracting company may claim damages against the other party to a confidentiality agreement.62 In such cases, legal relations would be characterized as a contract, and Article 7-12 of Tsûsoku-hô would apply. If there is no applicable law chosen by the parties,
the law of the place most closely connected with the contract would apply.63 If only one
party has the obligation to keep information confidential, the place where his/her
habitual residence or the place where the establishment is located would be presumed tobe the most closely connected place. However, in cases where the obligations for confidentiality are mutual, there would be no characteristic performance in such a contract
and thus the most closely connected law must be determined on a case-by-case basis.64

60
61

62

63
64

DANTHE, supra note 57, 127.
Under Tsûsoku-hô, there is a special rule for defamation, which is generally considered as
one of the unfair competition acts. Art. 19 stipulates as follows: “Notwithstanding Article 17,
the formation and effect of claims arising from defamation against an individual or anentity shall be governed by the law of the place of such defamed person’s habitual residence(the law of the place of its principal establishment, if the defamed person is a juristic person
or other association or foundation.” One might ask whether this provision applies extensively to other types of unfair competition acts, like exposure of the trade secret. However,as mentioned above (supra note (4)), considering that it was explicitly determined in thedrafting stage not to introduce a new rule on unfair competition, the answer would be negative.
As for Japanese material law, case law is inconsistent regarding the degree of control for
confidentiality required for the protection of the trade secret by law. See E. TSUBATA, Eigyô
himitsu ni okeru himitsu kanri yôken [Reasonable Efforts to Maintain Secrecy in Trade
Secret Law], in: Chiteki Zaisan Hô Seisaku Gaku Kenkyû [Intellectual Property Law and
Policy Journal] 14 (2007) 191; T. KOJIMA, Eigyô himitsu no hogo to himitsu kanri sei[Requirement of Keeping Secrecy under Section 2 (6) of the Unfair Competition Prevention
Law (Prosthetic Tooth Case, Kyoto Dist. Ct., 1 Nov. 2001)], in: Chiteki Zaisan Hô Seisaku
Gaku Kenkyû 14 (2007) 215. It might have been an obstacle to foreign companies to transfer their trade secrets in Japan.
Art. 8 (1) Tsûsoku-hô.
As mentioned earlier, here again it would be easier to determine the governing law if it can bedivided into two contracts, each of which deals with one party’s obligation of confidentiality.

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Lastly, it should be noted that in a contract between an employer and an employee,
there is a special rule for such a contract65 according to which, in the absence of theparty’s choice, the law of the place where labour is to be carried out is the most closely
connected law.66
3.

Recognition and Enforcement of Foreign Judgments

Before the revision of the Unfair Competition Law in 2004,67 there was some doubt
about the possibility of recognizing and enforcing foreign judgments when they resulted
from litigation that was closed to the public. It was not clear whether the procedural
ordre public condition68 would be met with such litigation. After the revision and introduction of litigation closed to the public in Japan, this problem does not seem to exist
any more, although it might always occur in cases when a foreign judgment has been
made in a country where the confidentiality of litigation is much higher than in Japan.
Multiple or punitive damage awards would not be enforced in Japan, except to theextent that they are compensatory. 69 Thus, for example, the treble damages awards
under RICO in the US would not be enforced in Japan.
Lastly, foreign arbitration awards are also to be enforced in Japan.70 However, incases where the application in the arbitration proceeding involves disputes that could not
become the object of arbitration agreement according to Japanese law, the arbitration
awards are not to be enforced.71 Under Japanese law, the object of an arbitration agreement is limited to civil disputes for which the parties could take a settlement.72 Thus,
there would be no problem for the enforcement of foreign arbitration awards that deal
with civil disputes regarding trade secrets.
IV. CLOSING REMARKS
Legal issues with regard to the cross-border exchange of music content and trade secrets
have been complicated by rapid technical evolutions such as the Internet. In particular,
in cases where a tortious act takes place online, it would be difficult to determine thegoverning law. If the results of the tortious acts occur in many countries through the
65
66

67
68
69
70
71
72

Art. 12 Tsûsoku-hô.
Art. 12 (3) Tsûsoku-hô. Even when there is an applicable law chosen by the parties, if sucha law is a law other than the most closely connected law, the specific mandatory rules in themost closely connected law shall apply, provided that the employee expresses his/her will tothe employer to the effect that such mandatory rules should apply, Art. 12 (1).
Law No. 120 of 2004.
Art. 118, item 3 Code of Civil Procedure.
See Supreme Court, 11 July 1998, Minshû 51 (1998) 2573.
Art. 45 Chûsai-hô [Arbitration Act], Law No. 138 of 2003.
Art. 45 (2), item 8 Chûsai-hô,.
Art. 13 (1) Chûsai-hô.

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Internet, the burden of the courts and the parties to the dispute would be high. Article 17of the Tsûsoku-hô, which allows the parties to change the law governing torts by agreement, or Article 20, regarding a rule of displacement in cases where there is a place
more clearly connected than the places specified by other rules, might have a greaterrole in such disputes.73, 74
Also, considering the unpredictability of international jurisdiction and applicable law(at least in Japan), arbitration will play a more important role for the resolution of
disputes regarding the international exchange of music content and trade secrets in the
future.

73

74

However, even though an infringement of copyright should be characterized as tort, it is notclear whether the existence of infringement should be determined by the law applicable totort or the lex loci protectionis. If the latter governs the issue, the burden of the court anddisputing parties would not be lightened in spite of the change of the governing law of tort
by agreement.
As regards the Internet, it is still unclear whether an online agreement on international
jurisdiction is effective in Japan. As an affirmative example, see D. YOKOMIZO, Denshi
hôtorihiki ni kansuru teishoku-hô jô no shomondai [Conflict-of-Laws issues with regard to
Electronic Commerce], in: Minshô-Hô Zasshi [The Journal of Civil and Commercial Law]
124 (2004) 163, 178, note (42).

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ZUSAMMENFASSUNG
Dieser Aufsatz hat sich zum Ziel gesetzt, die rechtliche Situation bei der grenzüberschreitenden Übertragung geistigen Eigentums im japanischen IPR zu analysieren und
Probleme herauszuarbeiten, die diese behindern können. Dabei konzentriert er sich auf
zwei Arten geistigen Eigentums: Musikinhalte und Geschäftsgeheimnisse.
Bei Musikinhalten könnte im Fall der Klageerhebung einer Verwertungsgesellschaft
gegen einen ausländischen Urheber, der nicht in Japan lebt und wenig Bezug zu Japan
hat, die internationale Zuständigkeit japanischer Gerichte abgelehnt werden. Im Falleines Vertrags zwischen der Japanischen Gesellschaft für die Rechte von Autoren, Komponisten und Verlegern (JASRAC) mit einem ausländischen Rechteinhaber wäre die
engste Verbindung zu Japan. In Fällen, bei denen eine Übertragung von Rechten nicht
auf das Urheberrecht in einem Land beschränkt ist und die Urheberrechte mehrerer
Länder abdeckt, wäre es das Recht jedes einzelnen Landes, das bestimmt, ob ein
Urheberrecht wirksam übertragen wurde. Um hieraus entstehende rechtliche Probleme
zu vermeiden, wäre es angebracht, einen Übertragungsvertrag schriftlich abzuschließen
und die Rechte aufgegliedert aufzuführen. In einem Fall bei dem ein (Online-)Musikdienstanbieter in einem Land seinen Sitz hat, der digitale Download aber zu einem
Konsumenten in einem anderen Land erfolgte, müsste der Anbieter an die öffentlichen
Verwertungsgesellschaften beider Länder zahlen.
In Bezug auf Geschäftsgeheimnisse ist es schwierig zu prognostizieren, in welchen
Fällen die internationale Zuständigkeit anerkannt werden dürfte. In Fällen, in denen die
Aufdeckung eines Geschäftsgeheimnisses nicht unbedingt zu einem Schaden des Opfers
führen würde, sollte das anwendbare Recht abhängig vom Einzelfall festgelegt werden.
Auch Geheimhaltungspflichten können Anlass zu Streitigkeiten geben. Sind diese wechselseitig ausgestaltet, existiert in diesem Vertrag keine charakteristische Leistung, und
das Recht mit der engsten Verbindung muss ebenfalls abhängig von den jeweiligen Umständen im Einzelfall festgestellt werden.
(dt. Übers. durch d. Red.)