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What Is the Unfair Competition Prevention Act? Purpose, Relationship with IP Rights, and Key Types of Unfair Practices Explained

In today’s business world, creating a fair competitive environment is essential for sustainable economic growth. To maintain this order, Japan has established the Unfair Competition Prevention Act. In this article, we explain the purpose of the Act, its connection to intellectual property law, and the main categories of unfair practices in clear, practical terms.

Purpose of the Unfair Competition Prevention Act
The Unfair Competition Prevention Act (Act No. 47 of 1993) aims to ensure fair competition among businesses and the proper implementation of international agreements. Ultimately, its goal is to contribute to the sound development of the national economy.

This law protects both private interests—allowing companies to safely use their technologies and brands—and public interests by maintaining a fair competitive environment. It also serves as a legal framework for implementing international treaties such as the Paris Convention, TRIPS Agreement, and Trademark Law Treaty within Japan.

In addition to civil remedies like injunctions and damages, the Act imposes criminal penalties for certain acts, creating a strong deterrent against violations.

The Act as Part of Intellectual Property Law
The Unfair Competition Prevention Act is considered part of Japan’s intellectual property law. While patent and trademark laws grant rights to protect inventions and brands, this Act focuses on prohibiting unfair acts rather than granting rights.

For example, using a mark similar to a well-known trademark to cause confusion can be deemed unfair competition—even if no registered rights exist—provided certain conditions are met. In this way, the Act complements existing IP systems and plays a critical role in practice.

Main Types of Unfair Competition
The Act defines various unfair practices, but the following five categories are particularly relevant to industrial property rights:

1. Acts Causing Confusion with Well-Known Indications (Article 2(1)(i))
Using another company’s well-known product name or logo to mislead consumers into confusing products. Protection applies even if the indication is only regionally recognized. Actual confusion is not required—risk of confusion is enough, and intentional acts may lead to criminal penalties.

2. Misappropriation of Famous Indications (Article 2(1)(ii))
Using a nationally famous brand or character name without permission, even without causing confusion. For example, using “Mario Kart” or “Peter Rabbit” in your advertising or trademarks is prohibited. This rule strongly protects reputation and prevents unfair exploitation.

3. Offering Imitations of Another’s Product Configuration (Article 2(1)(iii))
Selling products that closely imitate another’s product design, including shape, color, pattern, and even internal structure. Common or functionally necessary shapes are excluded. Products copied more than three years ago or handled without knowledge of imitation are exempt from liability.

4. Misappropriation of Trade Secrets (Article 2(1)(iv)–)
Acquiring, using, or disclosing trade secrets such as designs, know-how, or customer lists through theft or fraud. To qualify as a trade secret, information must meet three conditions: (1) managed as secret, (2) useful for business, and (3) not publicly known. Violations carry civil and criminal liability.

5. Unauthorized Acquisition of Limited Access Data (Article 2(1)(x)–)
A newer concept addressing the digital era. “Limited access data” refers to business or technical information provided to specific parties and stored electronically, such as data in password-protected membership databases. Unauthorized acquisition, use, or disclosure constitutes unfair competition.

Why the Act Matters for Businesses
The Unfair Competition Prevention Act is vital for protecting a company’s brand, technology, and confidential information from unauthorized use or imitation. Unlike registration-based systems like patents or trademarks, this law directly regulates unfair acts, offering flexible protection even without formal registration.

Determining whether the Act applies requires careful legal analysis and review of past case law. Proactive risk management is essential to avoid infringing others’ rights.

If your company faces challenges related to unfair competition or needs preventive advice, SKIP is here to help. Our team provides expert guidance to safeguard your business and intellectual property. Contact us today for professional support.