## Facts

- Kabushiki Kaisha Touei (Touei) manufactured and sold aluminum “light and ventilation” window/rain shutters in Japan.
- Kabushiki Kaisha Yume Kobo (Yume Kobo) operated as a seller of Touei’s shutters.
- Touei experienced problems with its parts manufacturer, and Yume Kobo offered to take on manufacturing of the shutters.
- Diri Sangyo Yugen Kaisha (Diri) agreed to supply Yume Kobo with certain component parts needed for production.
- Touei, Yume Kobo, and Diri entered into an agreement that included a confidentiality clause concerning information related to manufacture and components.
- Yume Kobo later defaulted on payments for parts, and Touei and Diri canceled the agreement.
- After the cancellation, Yume Kobo and a related company, Kabushiki Kaisha Alumi Kobo (Alumi Kobo), began selling shutters that Touei claimed were identical in structure to Touei’s shutters (marketed by defendants as “Secure Guard”).
- Touei sued, alleging defendants had obtained and used Touei’s and Diri’s confidential manufacturing information (including detailed drawings and dimensional information) in violation of Japan’s Unfair Competition Prevention Act (UCPL), and sought an injunction and damages.
- The Tokyo District Court found unfair competition based on trade secret misuse, granted an injunction against manufacture and sale of the competing shutters, and awarded damages (using a statutory presumption).
- Yume Kobo and Alumi Kobo appealed to the Intellectual Property High Court.

## Issues

1. Did Yume Kobo receive disclosure of specific manufacturing-related information for Touei’s shutters from Touei and/or Diri?
2. Did the asserted information (including drawings and dimensional data) qualify as a “trade secret” under UCPL Article 2(6), including requirements of secret management, business usefulness, and non-public status?
3. If so, did defendants unfairly acquire and/or use that trade secret within the meaning of UCPL Article 2(1)(4) or Article 2(1)(7)?
4. Was Touei entitled to injunctive relief and damages (including any statutory presumption of damages) based on the alleged UCPL violations?

## Decision

- The Intellectual Property High Court revoked the portions of the district court judgment unfavorable to Yume Kobo and Alumi Kobo and dismissed Touei’s claims to that extent.
- The court held Touei failed to establish that the asserted drawings and related information met the UCPL definition of a trade secret because they lacked the required non-public character.
- The court reasoned that the shutter’s structure and precise dimensions could be readily reproduced from the marketed product itself by using general technical means (such as ordinary measurement tools), meaning the information was effectively obtainable through reverse engineering.
- Because the information was not a statutory “trade secret,” defendants’ conduct did not fall within UCPL Article 2(1)(4) or Article 2(1)(7), and Touei was not entitled to an injunction or damages on that theory.
- Litigation costs for both the first and second instances were assessed against Touei.

## Legal Principles

- A plaintiff must prove that the claimed information is a “trade secret” under UCPL Article 2(6), including: (1) management as a secret, (2) usefulness in business, and (3) non-public status.
- The “non-public” requirement is not satisfied where the information can be easily recreated from products available on the market using common technical methods (including ordinary reverse engineering through measurement and observation).
- Detailed and precise drawings may still fail trade secret status if they contain information that is readily obtainable from the product itself by standard tools and techniques.
- A confidentiality clause in a commercial agreement does not by itself establish UCPL trade secret protection; statutory elements—especially non-public status—must still be proven.
- Without a qualifying trade secret, there is no unfair competition under UCPL Article 2(1)(4) (unfair acquisition, etc.) or Article 2(1)(7) (unfair use for improper gain or to cause harm), and remedies such as injunctions and damages (including presumed damages methods) are unavailable.

## Conclusion

The IP High Court reversed the district court’s injunction and damages award because Touei did not prove the asserted shutter drawings and manufacturing information were UCPL trade secrets: the information could be reproduced from the publicly sold shutters by ordinary measurement and observation, so it lacked the non-public status required for trade secret protection, defeating Touei’s UCPL unfair-competition claims.


Chiteki Zaison Koto Saibansho Dai 4-Bu [Intellectual Property High Court, Fourth Division] July 21, 2011, Haisei 23 (Ne) no. 10023 (2011)