## Facts

- Taisho Pharmaceutical Co., Ltd. (Taisho), a pharmaceutical manufacturer, entered into a sales arrangement with Daikoku Co., Ltd. (Daikoku), a drug-store operator, under which Daikoku would sell Taisho’s medicines in its stores.
- In the course of their dealings, Daikoku obtained Taisho’s cost prices for Taisho products (i.e., the wholesale purchase prices paid by Daikoku).
- Daikoku conducted sales campaigns and distributed retail advertisements listing prices for various products, including Taisho’s medicines, at or below those cost prices.
- Taisho asserted that the wholesale cost prices constituted confidential business information and that Daikoku’s advertisements disclosed those prices (or made them readily inferable) to the public and competitors.
- Taisho sued Daikoku under Japan’s Unfair Competition Prevention Act (UCPA), claiming unfair competition based on alleged trade-secret disclosure/use.
- The court of first instance rejected Taisho’s claim as unfounded and dismissed the case.
- Taisho appealed to the Tokyo High Court, Fourth Intellectual Property Division.

## Issues

1. Whether Taisho’s wholesale cost prices provided to Daikoku qualified as “trade secrets” under the UCPA.
2. Whether Daikoku’s advertising of retail prices at or below Taisho’s wholesale cost constituted unlawful disclosure or use of Taisho’s trade secrets under the UCPA.
3. Whether the first-instance dismissal should be reversed on appeal.

## Decision

- The Tokyo High Court dismissed Taisho’s appeal and left the first-instance dismissal in place.
- The court concluded that Taisho had not established that the wholesale cost prices at issue met the UCPA requirements for trade-secret protection in the circumstances presented.
- Because the information was not shown to be a protected trade secret, Daikoku’s discount pricing and related advertising did not amount to unfair competition based on trade-secret misappropriation.

## Legal Principles

- To obtain relief under the UCPA’s trade-secret provisions, a claimant must prove that the information is (1) not publicly known, (2) useful for business, and (3) subject to secrecy management by the claimant.
- Information described as “confidential” in a business relationship is not automatically a statutory trade secret; the claimant must show concrete steps taken to control access and maintain secrecy.
- A retailer’s decision to set and advertise its own resale prices, even aggressively (including at or below cost), does not by itself establish a trade-secret violation absent proof that protected trade-secret information was unlawfully disclosed or used.

## Conclusion

The Tokyo High Court affirmed dismissal of Taisho’s UCPA claim, holding that Taisho failed to show its wholesale cost prices were protected trade secrets and therefore could not treat Daikoku’s below-cost advertising as trade-secret unfair competition.


Tokyo Koto Saibansho Chiteki Zaisan Dai 4-Bu [Tokyo High Court, Fourth Intellectual Property Division] September 29, 2004, Heisei 14 (Ne) no. 1413 (2004)