VZCZCXYZ0000
PP RUEHWEB

DE RUEHKO #0037/01 0072258
ZNR UUUUU ZZH
P 072258Z JAN 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 9876
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY

UNCLAS TOKYO 000037 
 
SIPDIS 
 
DEPT FOR EAP/J 
USDOC FOR 4410/ITA/MAC/OJ/ROTH 
JUSTICE FOR ANTI-TRUST DIVISION CHEMTOB 
DEPT PASS USTR FOR BEEMAN AND HOLLOWAY 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV JA
SUBJECT: METI SOLICITING PUBLIC COMMENTS ON STRENGTHENING TRADE 
SECRET PROTECTIONS 
 
¶1.  Summary and Action Request:  The Ministry of Economy, Trade and 
Industry (METI) is soliciting public comments on the contents of a 
recent draft report from its Industrial Structure Council's 
Intellectual Property Subcommittee.  Among other measures, this 
report recommends stronger efforts to protect Japan's trade secrets 
during criminal prosecution of infringement of such secrets.  A copy 
of the Japanese language version of the report has been emailed to 
EAP/J, as well as to Michael Beeman and Eric Holloway at USTR's 
Japan Office.  Embassy requests any USG comments on the report be 
transmitted sufficiently in advance of the Ministry's deadline for 
comments of 5:00 PM (Tokyo time) Friday, January 30, 2009 to allow 
for translation and appropriate formatting.  End Summary and Action 
Request. 
 
¶2.  In its most recent recommendations under the bilateral 
Regulatory Reform Initiative (RRI) Cross-Sectoral Working Group, the 
USG urged Japan to "introduce a new procedure that will ensure that 
the content of a trade secret will not become open to the public in 
a criminal trial for trade secret theft."  During the December 2008 
RRI meetings, METI informed the U.S. delegation the Ministry's 
Industrial Structure Council was studying the issue and a draft 
report was imminent.  The Ministry released the report, prepared by 
the Council's Intellectual Property Policy Working Group 
Subcommittee on Technical Information Protection, December 27, 2008 
and is now soliciting public comments on the contents. 
 
¶3.  The bulk of the Sub-committee's thirteen-page report, entitled 
"Possible Courses of Action on the Review of Criminal Prosecution of 
Trade Secret Theft", highlights the need to strengthen Japan's laws 
against trade secret theft, whether directly or via long-distance 
means such as the Internet.  The report noted when the GOJ 
recognized the crime of trade secret infringement in 2003 by 
amending Article 21 of the Unfair Competition Prevention Law, the 
government intentionally set the legal pre-requisites for the crime 
very cautiously, as the concept was new to Japan's criminal code. 
Since that time, however, companies that are victims of trade secret 
theft have become increasingly reticent or hesitant to report the 
crime for fear their secrets could be revealed in court proceedings. 
 The report concludes that amidst the global business environment, 
"failure to improve the current situation regarding criminal 
prosecution of theft of trade secrets could lead to the stagnation 
of domestic industry and deterioration of the international 
competitiveness of domestic companies." 
 
¶4.  As to the specific measures to prosecute trade secret theft and 
protect trade secrets during the court proceedings, the report 
notes, "the legal system that protects trade secrets held by 
companies should be built upon acknowledgement of the important role 
of trade secrets in modern society, and after due consideration of 
their proprietary nature, regulations and laws need to be 
sufficiently effective in such situations."  Based on such 
considerations, "new legal measures to prevent trade secrets from 
becoming public during criminal court process should be considered 
as expeditiously as practicable". 
 
¶5.  The Sub-committee's report acknowledges Article 82 of the 
Japanese Constitution guarantees defendants the right to open trial. 
 Nevertheless, the subcommittee finds, "it is undeniable that the 
interests of the victims of trade secret theft may be undermined if 
the contents of relevant trade secrets become public during the 
court process.  Under current criminal court procedures there are no 
special measures to prevent relevant trade secrets being revealed 
during the trial process.  Therefore, at present, owners of trade 
secrets have no choice but to depend on the ingenuity of 
prosecutors, the presiding judge's control of litigation, and 
utilization of existing procedures to protect their rights." 
 
¶6.  While such measures could be effective in some cases, the report 
also points out that "in the current situation it is not possible to 
fully assuage the uneasiness and uncertainty of having to depend on 
the cooperation and understanding of those involved in managing 
court cases" and "there are limitations to the use of control of 
litigation under existing procedures."  The Subcommittee therefore 
discussed such tangible proposal as: (1) allowing judges to decide 
to eliminate oral presentation for issues concerning the content of 
trade secret; (2) allowing examination of witnesses outside the 
trial date in the case where the relevant trade secret may be 
revealed; and (3) establishing rules to clarify specific 
requirements to limit publicity of a trial, defined under the main 
clause of the Paragraph 2, Article 82 of the Constitution.  "A study 
of legal measures to protect trade secrets during criminal court 
process concerning the crime of infringement of trade secret is 
necessary, from the perspective of the protection of trade secrets 
that could be deemed to be extremely valuable, with due 
consideration to the need for publicity of a trial, while ensuring 
not to disrupt the facilitated court process.  Therefore, the 
 
Ministry of Justice (MOJ) and METI should jointly consider the 
tangible concept, and aim to compile a concrete final draft as 
expeditiously as practicable", the report concludes. 
 
¶7.  In addition to measures related to court proceedings, the draft 
report also recommends the GOJ consider other measures to strengthen 
criminal prosecution of trade secret theft, including: (1) 
strengthening penalties for the theft of trade secrets by 
encroaching the management systems established by the trade secret 
owners; (2) modification of the legal requirement for determining 
the crime of trade secret infringement from the current legal basis 
of "using the secrets for the purpose of unfair competition" to 
"using the secrets for the propose of providing benefits for the 
infringer directly, or for the benefit of a third party outside the 
company, or for the purpose of causing damage to the company"; (3) 
criminalizing certain types of trade secret theft, such as "illegal 
obtaining of trade secrets by those responsible for the management 
of those secrets, for dishonest purposes, in contravention of their 
specific management responsibilities"; and (4) separate 
criminalization of the use or disclosure of trade secrets that are 
obtained illegally. 
 
SCHIEFFER