Japan Case Law
Indirect Jurisdiction and Tort
(Supreme Court, 1st Petty Bench, 24 April 2014)
FACTS
X, a company set up in California, USA, possesses eyebrow treatment technology and information (“Technology, etc.”), which falls within trade secrets under the law of the state. In 2004, based on the agreement between X and J, a Japanese company, regarding the exclusive right to use the Technology, etc., in Japan, X disclosed the Technology, etc., to Y1 and Y2, who were employees of J, in California. Thereafter, J opened an eyebrow treatment salon in Japan.
In 2006, Y1 and Y2 established Y3, a Japanese company, which competes with J, and resigned from J. Y3 opened an eyebrow treatment salon in Japan and also opened a class to teach eyebrows treatment techniques, and Y1 and Y2 used eyebrows treatment techniques as directors of Y3. Y4 to Y6, who are former employees of J, joined Y3 and used eyebrow treatment techniques.
In 2007, X filed a proceeding against Y1 to Y6 in the United States Federal District Court, and in 2008, the court rendered a judgment (default judgment) ordering them to compensate for damages and to suspend disclosing and using the Technology, etc. on the grounds of unauthorized disclosure and use of trade secrets.
Based on the judgment, X sought an enforcement judgment regarding payment of USD1.9 million (excluding punitive damages) and the injunction in Japan. The court of first instance dismissed the application, and the appellate court also dismissed the appeal denying indirect jurisdiction on the ground that there was no proof that the United States was “the place where the damage (result) of the tort accrued”.
FINDINGS
The judge held:
The appeal is quashed and remanded.
“It is reasonable to understand that, regarding the existence of indirect jurisdiction in proceedings other than proceedings related to personnel matters, it should be judged pursuant to the provisions on the international jurisdiction stipulated by the Code of Civil Procedures of Japan and from the viewpoint of whether or not it is appropriate to approve the foreign judgment in the specific circumstances of each case.”
“It is understood that the same as “an action for a tort” in Item 9 of Article 5 of the Code of Civil Procedures, “an action for a tort” in Item 8 of Article 3-3 of the Code of Civil Procedures is not limited to an action for a tort specified by the Civil Code but includes the proceedings regarding injunction that is filed by a person whose rights or interests have been infringed or may be infringed […]. And as such proceedings for injunction can be filed by a person whose rights or interests may be infringed, it is reasonable to understand that “an action for a tort” in Item 8 of Article 3-3 of the Code of Civil Procedures includes the place where a tort may take place or the place where the rights or interests may be infringed.”
“In the case of an injunction filed by a person whose rights or interests have been infringed or may be infringed by a tort, it is not always a requirement for the right to claim that the actual damage or loss has accrued. Therefore, in order to establish that “the place where the tort took place” in Item 8 of Article 3-3 of the Code of Civil Procedures is the judgment country, even if the defendant has not conducted an action infringing the claimant’s rights or interests in the judgment country and the claimant’s rights or interests have not been actually infringed in the judgment country, it should be sufficient to prove the objective facts that the defendant may conduct an action infringing the claimant’s rights or interests in the judgment country or the claimant’s rights or interests may be infringed in the judgment country.”
SOURCE