The Cabinet of Japan recently approved the Bill on the Partial revision of the Prevention of Unfair Competition Law and other Laws (hereinafter referred to as the "Bill"), which amends the Prevention of Unfair Competition Law (hereinafter referred to as the "UCP Law") and other intellectual property laws in Japan. These revisions reflect the Japanese government's efforts to modernize Japanese law and adapt to the evolving IP related needs of multinational corporations.

The major changes resulting from these amendments include:

Strengthen intellectual property protection by expanding the types of trademarks and Copyrights that can be registered, in line with the diversification and digitization of business, and strengthen the fight against data breaches and infringements in the digital space;

Developing IP processes in response to the COVID-19 pandemic and growing digital needs by allowing the use of online service processes and online submission of IP applications;

Support the growth of international business by imposing harsher penalties for bribing foreign officials and clarifying procedures for international trade secret infringement cases.

Strengthen protection of intellectual property rights

UCP Act: The Bill expands the scope of the UCP Act to cover digital counterfeit products, allowing entities to seek court orders to prohibit the online distribution of such counterfeit products. Therefore, if someone engages in the sale of counterfeit products in the digital space, the rights owner can apply for an injunction. The revised UCP Law also recognizes the emerging services of providing big data to third parties and the need to protect such data by expanding the right of data owners to seek injunctions and other remedies in the event of a data breach. Previously, the UCP Act provided similar protections for big data, but only if the data was not kept confidential.

In addition, the revised UCP Law also increases the penalties for unfair competition. Traditionally, an aggrieved entity can claim only for lost profits or reasonable royalties, namely: (1) profits that the aggrieved entity would have made by exploiting the demand for the disputed product in the absence of unfair conduct, based on the aggrieved entity's manufacturing and marketing capabilities; (2) the equivalent amount of profits generated by the infringer through unfair competitive activities; Or (3) a reasonable usage fee. Under the new amendment, in addition to the loss of profits described in (1), the injured entity may seek royalties on profits made by the infringer from the use of demand for the product in addition to the injured entity's manufacturing and marketing capabilities.

Trademarks Act: The Act also expands the types of trademarks that can be registered, allowing individuals who conduct business in their own name to use that name as a trademark, and allowing those name trademarks to be registered without the consent of others in certain circumstances. In addition, while the Trademark Law continues to prohibit the registration of marks similar to those already registered, the revised Trademark Law allows the registration of similar marks if there is no risk of confusion about the origin of the product and the prior trademark owner consents to the registration. The Act also amends the UCP Act so that the act of registering a corresponding trademark is not considered an anti-competitive act.

Improve digital intellectual property procedures

In response to the COVID-19 pandemic, the relevant contents of the Bill revised the intellectual property procedures to modernize and digitize Japan's intellectual property service system. For example, the Bill amends the Patent and Trademark Laws to allow the submission of copies of proofs of concept, simplified to proofs of practice if such proofs exist in digital format. In addition, in order to better accommodate those who are engaged in international business, the revised Trademark Law allows a one-time payment for the international registration of trademark applications.

International business development

Recognizing the need for stronger and clearer regulations for international businesses, the Bill amends the UCP Act to better enforce the OECD Anti-Bribery Convention by increasing statutory penalties for individuals who violate bribery provisions. In addition, the amendment also provides for penalties for foreign employees of Japanese companies who commit bribery overseas. The two penalties also extend the scope of penalties to companies. The Bill further amends the UCP Act to provide that even if a Japanese company's trade secrets are infringed overseas, it can file a lawsuit in a Japanese court that applies Japan's antitrust law.

Although the Cabinet approved the Bill in March 2023, the bill will next be submitted to the National Assembly for consideration and approval, and will be implemented after its passage in June 2023.