Supreme Court Decision on December 3, 2008 (2008(A) No. 582)

[Point]

The accused had " the purpose of wrongful gain " under Article 21, paragraph 1, item 3 of the Unfair Competition Prevention Act.

[Keywords]

Article 21, paragraph 1, item 3 of the Unfair Competition Prevention Act

Leakage of Trade Secrets

Purpose of wrongful gain

Section 1  Facts

The accused, an ex-employee of Nissan Motor, was criminally prosecuted for accessing the company's server and duplicating files, including confidential information of automobile product planning, etc. on his personal hard disk by using a PC loaned by Nissan Motor just before the accused resigned from the company and transferred jobs to another company in the same industry.

This case is a ruling of the Supreme Court of Japan.

The main issue is whether the accused had “the purpose of wrongful gain" under Article 21, paragraph 1, item 3 of the Unfair Competition Prevention Act.

Section 2  Reasons

“As stated above, just before the accused resigned from his place of employment and transferred jobs to another company in the same industry, the accused duplicated the data files …, which are the Trade Secrets of his place of employment, on his personal hard disk. The duplication was not made for the purpose of performing the business of his place of employment, and there were no circumstances that suggests any other legitimate purpose. According to the above facts, it can be reasonably inferred that the duplication was intended to be used after resignation for the accused himself or for a third party other than his employer of his place of employment before the resignation, such as his new employer, etc. Therefore, the accused had “the purpose of wrongful gain" under Article 21, paragraph 1, item 3 of the Unfair Competition Prevention Act.”

Section 3  Analysis

This case is a ruling of the Supreme Court which held that the ex-Nissan Motor employee (the accused) had “the purpose of wrongful gain" under Article 21, paragraph 1, item 3 of the Unfair Competition Prevention Act.”.

The term " wrongful gain" encompasses any economic and non-economic benefit, and the term "the purpose of wrongful gain" encompasses not only the purpose of conducting a competition-related business, but also the purpose of obtaining unjust enrichment in a manner that is broadly contrary to good faith and public policy.

In this case, the ex-employee claimed "In order to have “the purpose of wrongful gain" under Article 21, paragraph 1, item 3 of the Act, there must be a highly punishable purpose in addition to the absence of a legitimate purpose or circumstance. A vague purpose such as directly or indirectly referring to information at a new job does not fall under “the purpose of wrongful gain". The ex-employee argued that he did not have “the purpose of wrongful gain".

However, as stated in the Reasons, and in the case where the ex-employee obtained the Trade Secrets of his employer just before the ex-employee resigned from the employer and transferred jobs to another company in the same industry, the Supreme Court set out a framework that if the accused could not prove circumstances suggesting a legitimate purpose for obtaining Trade Secrets, it could be inferred that the accused had "the purpose of wrongful gain”.

Since it is usually not easy to prove a subjective requirement such as "the purpose of wrongful gain", the above framework is helpful and practical in order to prove “the purpose of wrongful gain”. In addition, this judgement can be considered to be a fact specific decision only applicable to a fact pattern that the accused obtained the trade secrets of his employer just before the accused resigned from the employer and moved to another company in the same industry. However, for example, in a case where a person obtains trade secrets during a period when the person did not have any need to obtain the trade secrets of his employer long before the person resigned from his employer, the above framework could be applied.