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Revisions to Trade Secret Management Guidelines   In March 2025, the Ministry of Economy, Trade and Industry (“METI”) updated its Trade Secret Management Guidelines (“Guidelines”) to reflect current changes in technology and recent legal trends. Some of the more salient revisions are described below, but the list is not exhaustive. Please contact us if you would like more information.   Definition of Trade Secret In order for a “Trade Secret” to be protected under the Unfair Competition Prevention Act, a company needs to show that the information is technical or business information, which: is useful, kept confidential using appropriate control measures, and is not publicly known.   Key Revision Provisions Kept as Confidential Information Appropriate Control Measures: Types of Parties Previously the Guidelines did not distinguish between what constituted sufficient control measures depending on the party with access to the trade secrets. However, the recent amendments clarify what may be considered sufficient control measures based on the following types: Employees and Directors: What kind of system is in place in order for employees to be aware that the information is considered confidential and that special treatment is necessary. Business Partners: Whether confidential information was shared with a business partner after a confidentiality agreement was concluded. The absence of a confidentiality agreement does not necessarily mean that there were insufficient control measures, and evidence of other measures may still be presented. Appropriate Control Measures: Clarification of Measures for Employees and Directors The recent amendments clarify that, if it is obvious to employees that the information is important and naturally expected to be treated as confidential information, the following general measures may be considered sufficient control measures based on the following types. IDs and passwords are used to restrict access when logging into company computers, etc. Work rules, confidentiality agreements, etc. include language prohibiting disclosure of confidential information. Strictly limiting access on an employee-by-employee basis is not necessary, and broadly granting access rights to a specific department based on business necessity is considered to be sufficient limitations. Appropriate Control Measures: Generative AI With respect to Generative AI, if the following conditions exist: The information is kept and managed as a secret by one division of the company, The secret information is used learning data to train a model, and As a result of a prompt, the generative AI outputs information that contains the secret information and this generated output is made available to the same or a different division, Then, these facts alone are not sufficient to show that the confidentiality of the information has been negated. However, if the different division subsequently incorporates, distributes or otherwise provides the generated output containing the confidential information to an unspecified third party, the information would no longer be considered as “not publicly known”.   Not Publicly Known Several issues with respect to whether information is considered to be known by the public have been discussed in recent years, and METI’s perspective has been reflected in the Guidelines as follows: Information Leaked on the Dark Web The mere fact that secret information has been published on the dark web does not mean that the information is no longer considered to be “non-public”, and courts will still consider whether the information was generally known or easily accessible. Synthesizing Publicly Available Information Even if the parts of the information are considered to be publicly known or easily accessible, if the combination of such publicly known or easily accessible information is not considered to be known or easily accessible (e.g. due to the time and cost needed to acquire the information), then such information would not be considered known or easily accessible, and the information would retain its proprietary value. Reverse Engineering Whether or not the reverse engineering of a trade secret can be considered to have negated the non-public nature of the information depends on the level of difficulty for reverse engineering the information. In particular, if anyone can analyze the product and very easily reverse engineer the product, then the commercialization of the product is considered to be equivalent to disclosing the trade secret itself. However, if special skills are required and a considerable period of time is needed to reverse engineer the product, then merely making the product commercially available will not negate the non-public nature of the information.

On June 5, 2025 the House of Councilors approved an amendment to Whistleblower Protection Act (“Act”) which strengthens whistleblower protections. The amendment will be promulgated in the near future and the amendment will take effect on some date which will be within 1 year and 6 months from the date of promulgation. The following chart shows the key amendments. For more information, please feel free to contact us. Protected Persons Current Law Employees (full-time and part-time) Dispatched Workers Executive Officers Former Employees and Dispatched Workers (who have left within the last year) After Amendments Employees (full-time and part-time) Dispatched Workers Executive Officers Former Employees and Dispatched Workers (who have left within the last year) Freelance Workers and Former Freelance Workers whose contract has ended within the last year) Definition of Whistleblowing Current Law Reports of misconduct that fulfill certain requirements related to criminal acts or violations of designated laws are protected. Harassment claims are not considered whistleblowing. *Note there are a number of violations that are included and a company should confirm, which violations fall under whistleblowing. After Amendments Certain violations of this Act will also be considered whistleblowing. Identification Protections Current Law No current restrictions. After Amendments Identifying a whistleblower without a valid reason is prohibited. Disadvantageous Treatments, Dismissal & Disciplinary Action Presumptions Current Law Invalidation Dismissing employees/terminating worker dispatch agreements on the basis of the whistleblowing is invalid. Prohibition Any disadvantageous treatments* to whistleblowers on the basis of the whistle blowing are prohibited. *Disadvantageous treatment can include transfers, secondments, etc. After Amendments Invalidation Dismissals, termination of dispatch worker contracts and disciplinary actions made on the basis of the whistleblowing are invalid. Newly Added Presumption for Invalidation: Dismissals or disciplinary actions to employees which occur within one year after the whistleblowing report is made would be presumed to have been made on the basis of whistleblowing and the company would have the burden of proof to prove that the action was not done “on the basis of” the whistleblowing. Dismissals or disciplinary actions which are deemed to be made “on the basis of” are considered invalid. Whistleblowing Obstruction Current Law No current restrictions. After Amendments Unless there is a valid reason, preventing or disincentivizing someone from making a whistleblowing report, such as by demanding an individual agree to not make a report, telling an individual that he/she will be treated disadvantageously, etc. is prohibited. Criminal Sanctions for Dismissal and Disciplinary Action Current Law Currently no criminal sanctions for dismissal and disadvantageous treatment After Amendments Newly Added Criminal Sanctions* for dismissals and disciplinary action on the basis of the whistleblowing: To individuals Imprisonment of up to 6 months, or Fine of up to 300,000 JPY To companies Fine of up to 30,000,000 JPY *Note the “on the basis of” presumption does not apply to criminal cases. Applicability to Companies Current Law Large Companies (300+ Employees): Must establish internal reporting systems and designate responsible personnel. Small Companies (<300 Employees): Not legally required to establish a reporting system, but must still respond appropriately if a report is made. After Amendments No Change Designating Responsible Personnel (300+ Employees) Current Law Administrative Measures For failure to designate responsible personnel, the following administrative measures can be taken: Administrative instructions Administrative recommendations After Amendments Administrative Measures For failure to designate responsible personnel, the following administrative measures can be taken: Administrative instructions Administrative recommendations On-site inspections Administrative orders for non-compliance of administrative recommendations Criminal Sanctions (Newly Added) Fine up to 300,000　JPY can be imposed for: Noncompliance of the administrative order False Reporting/non-reporting when required Inspection refusal

The Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Employees Caring for Children or Other Family Members was amended on May 31, 2024. Some of those amendments, which are as follows, take effect on October 1, 2025. Obligation for Achieving a Flexible Working Style As of October 1, 2025, an employer will be obligated to take measures which enable applicable employees to achieve a flexible working style. Applicable employees are those employees who are raising a child between the ages of three and the start of elementary school. Under the new obligation, an employer is required to offer at least two of the following five options to applicable employees: Alternative Set Working Hours: Introduce a flextime system or other system where employees have the ability to change their arrival and departure time. Work From Home: Introduce a work from home system where the employee is permitted to work his/her prescribed working hours from home 10 or more days per month. Childcare Facilities: Establish and operate childcare facilities or provide any other similar benefits (e.g. provide a system where an employee can arrange for a babysitter and the employer bears the cost). Special Leave: Granting at least 10 days of special leave per year to support the balancing of work and child-rearing. Shortened Working Hours: Shortening the prescribed working hours to six hours. Applicable employees can then choose to use one of the options made available by the employer. With respect to work from home and special leave, employer must allow applicable employees to use these options on an hourly basis. In addition, before choosing which measures to offer, an employer must obtain an opinion from the majority union (or the employee representative if there is no majority union at a workplace). Obligation to Provide Individual Notification Under the amendments, an employer will also be obligated to individually notify employees with a child under the age of three of the details of the flexible working style systems that the employer making available to the applicable employee, and the employer must confirm which of the offered options the employee would like to utilize. Such notification must be provided by at least one month before the child’s third birthday. Working Conditions Confirmation Obligation If either of the two conditions exist: an employer is informed that an employee or the employee’s spouse is expecting a child or has recently given birth to a child, or an employee is caring for a child who is/will be turning three years of age, then, the employer has an obligation to confirm if the employee has particular desires with respect to certain working conditions that are specified by the law (e.g. working hours, work location, etc.). The employer is also required to try to accommodate the employee’s wishes in light of the company’s circumstances.

The Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Employees Caring for Children or Other Family Members was amended on May 31, 2024. On April 1, 2025, the following amendments will take effect with other amendments taking effect as of October 1, 2025. Scope of Short-term Leave for Sick/Injured Childcare Expanded Under the current law, employees are allowed to take short-term leave to care for a sick or injured child that has not yet started elementary school (e.g. when the child has the flu). The law allows for an employee to take up to 5 days off per fiscal year for this kind of leave or up to 10 days, if there are 2 or more eligible children. As of 1 April 2025, the scope of applicability will be expanded in the following ways: Eligible Children: Children who have not finished the 3rd year of elementary school Eligible Usage: The use of short-term leave has been extended to certain events that are not related to the eligible child’s sickness/injury. These events are attending a child’s entrance ceremony, graduation ceremony, or if the child’s class/school is closed due to an epidemic. Further the cases in which a labor-management agreement can be concluded to exclude certain employees from being eligible for this leave has been reduced, and now only employees whose prescribed number of working days per week is two days or less can be excluded by a labor-management agreement. Limitations on Unscheduled Work (e.g. Overtime) Expanded In certain situations where an employee cares for a child, the employee has been able to request that an employer not have the employee engage in unscheduled work such as overtime. However, the scope of eligible employees has been expanded as follows: Previously: Employees caring for a child under 3 years of age. Amended: Employees caring for a child that has not started elementary school. Employers to “Make Efforts” to Provide Work from Home in Certain Circumstances Under the recent amendments, an employer now needs to “make efforts” to provide employees taking care for a child under three years of age or employees taking care of an applicable family member who requires caregiving with the option to work from home. Companies Required to Publicly Announce Statistics on Employees Utilizing Childcare Leave Some companies are required by law to publicly announce the statistics on employees within the company utilizing childcare leave. As of 1 April 2025, the threshold for being required to make this announcement has been lowered, as follows: Previously: Employers with over 1,000 continuously employed employees. Amended: Employers with over 300 continuously employed employees. Eligibility for Short-term Leave for Caregivers Expanded Currently, an employee who cares for an applicable family member may request to take up to 5 working days of short-term leave to care for the applicable family member. However, certain employees can be excluded from being eligible for this kind of leave through a labor management agreement. Under the recent amendment, the scope of employees who can be excluded has been narrowed and only employees whose prescribed number of working days per week is two days or less can be excluded by a labor-management agreement. NEWLY ADDED: Obligation to Create a Working Environment that Minimizes Resignations from Employees Caring for Applicable Family Members An employer will now be obligated to take measures to create a working environment which minimizes employees caring for applicable family members from resigning. Examples of measures that can be taken are: providing an explanatory session to employees explaining the rules on leave for caregivers, implementing a consultation window to enable employees to discuss rules on leave for caregivers, providing information on employees who take leave for caregivers, or announcing the company’s policy on how it plans to enhance the usage of the leave for caregivers. Employers will be obligated to take at least take one of the measures above. Employer Obligations Upon Employee’s Notification of Need to Provide Caregiving If an employee notifies an employer of the fact that the employee needs to look after an applicable family member requiring caregiving, the employer will be obligated to notify the employee of the details of the rules on leave for caregivers and will be obligated to consult with the employee to confirm whether the employee would like to take the leave. In addition, an employer will be obligated to provide the details of the rules on leave for caregivers to an employee who is aged 39 to 40 years old.  

On 1 November 2024, a landmark law aimed at regulating and protecting the growing freelance workforce in Japan, officially known as the "Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators" (Freelance Law) will take effect with the goal of improving a freelancer’s working environment. Definition of Freelancers Under the Freelance Law, freelancers are defined as: Contractors, not a corporation, who do not employ any employees, and Contractors and corporations, who do not have directors other than a representative director, that also do not employ any employees. Any business operator who entrusts business to a freelancer is considered a contracting party. There are no limitations on sectors or industries, and the Freelance Law applies to all transactions in which work is outsourced to freelancers. Key Provisions Some of the key provisions to be aware of in the new law are as follows: Terms Required to Be Provided in Writing A business operator is required to indicate certain terms electronically or in writing immediately after engaging a freelancer to provide deliverables.   At least the following terms must clearly be indicated when engaging a freelancer: Scope of the deliverables Payment amounts, and Due date of any payments. Timely Payments Payments for deliverables must be made within 60 days of the contracting party’s receipt of the deliverable, unless the contract involves work that has been subcontracted to the freelancer. In the event that the agreement involves subcontracted work, the contracting party must pay the freelancer within 30 days after the contracting party has received payment from the principal client. Where the payment due date has not been set, the payment must be made no later than the date the freelancer’s service has been received. If the contract terms reflect a due date later than 60 days after the business operator has received the deliverables, this provision will be deemed invalid, and the payment will be due after 60 days elapse. Prohibition on Unfair Practices In order to prevent power imbalances that may arise in freelance transactions, contracting parties are prohibited from engaging in unfair practices, including the following: Refusing to accept completed work without there being any reason attributable to the freelancer; Arbitrarily reducing agreed-upon payment without there being any reason attributable to the freelancer; Forcing a freelancer to take back deliverables without there being any reason attributable to the freelancer; Setting an unreasonably low payment amount for the deliverables as compared with fair market value of deliverables of the same or a similar nature; Forcing freelancers to purchase goods or services designated by the contracting party, unless doing so is necessary to standardize or improve the content of the deliverables or other reasonable grounds exist. Improvements to Working Environment Conditions The Freelance Law also introduced several measures aimed at improving the overall work environment for freelancers: 30-Day Termination Notice Requirement For ongoing or continuous contracts, contracting parties must now provide 30 days’ notice before terminating an agreement (including when notice is for non-renewal), unless there are reasonable grounds for immediate termination, such as when there are reasons attributable to the freelancer. Harassment Prevention Measures Contracting parties must take proactive steps to prevent harassment against freelancers such as consulting with a freelancer who issues a complaint about sexual harassment, power harassment or any other inappropriate behavior. Flexibility for Caregivers and Parents Contracting parties must consider requests to accommodate their caregiving or parental responsibilities from freelancers who are engaged in continuous contracts, so that freelancers can balance their work with their caregiving or parental responsibilities. Penalties Breaches of the Freelance Law can lead relevant authorities including the Fair Trade Commission, the Director General of the Small and Medium Enterprise Agency, or the Ministry of Health, Labor, and Welfare to issuing recommendations, making public the contracting party’s breach, and/or issuing orders for on-site inspections. Violations may also be subject to a fine of up to 500,000 JPY, depending on the violation. Recommended Actions and Future Considerations Companies should review any freelance arrangements to ensure that they comply with the Freelance Law. Companies should also be aware that the law is scheduled to be reviewed in 3 years and amendments to the law are likely in order to address the evolving freelance landscape.