Tokyo District Court Rules Login Credentials Are Not Trade Secrets

Tokyo District Court Rules Login Credentials Are Not Trade Secrets

[Tokyo District Court, October 28, 2020 (No.14136 (Wa) of 2019) – A case seeking compensation for damage]

Summary of judgment

Auction website logins and passwords themselves are not trade secrets, as they do not constitute useful information for commercial activities.

1. The Case

Defendant A and Defendant B were employees of the plaintiff, a company that sells used trucks, etc. First Defendant B resigned as plaintiff, then Defendant A resigned. While Defendant A was employed by Plaintiff, Defendant B asked Defendant A to submit Plaintiff’s username and password (the “Logins”) for a used car auction website (the “Auction Website”) to Defendant B.

Plaintiff asserts that the aforementioned conduct of the defendants constitutes acts of unfair competition (acquisition, use and disclosure of plaintiff’s trade secrets) prohibited by the Unfair Competition Prevention Act, and also violates the obligation of confidentiality under the employment contracts between the defendants and the Plaintiff, and demanded compensation for damages. This article discusses whether the identifiers manipulated by the defendants constitute trade secrets.

2. Judgment

The court concludes that the identifiers do not fall within the claimant’s trade secrets because they lack utility and secrecy management, as follows:

Logins are required to participate in the auction website, and by logging into the auction website, it is possible to find out the market prices of used cars for sale. The information of the identifiers themselves are only a string of letters and numbers etc. and cannot be considered useful information for commercial activities. Further, what may be obtained by using the identifiers is information that may be obtained by any member of the auction website, and not information that is a trade secret held by the applicant.

Even if the identifiers were useful, it would be difficult to conclude that the plaintiff’s employees would perceive the identifiers to be trade secrets, because plaintiff’s employees who needed access to the auction website for their work could freely use credentials.

3. Review

The main reason for the court to deny the usefulness of the identifiers appears to be that the information that can be obtained when logging into the auction website using the identifiers is only sales market price information. of used cars, and not the commercial information of the applicant itself. Since market price information from used car sales is not a trade secret of the plaintiff, the Court appears to have avoided judging the nature of the trade secret that may be known by logging. Therefore, it seems that the Court had no choice but to consider the identity documents themselves as the subject of the judgment.

If the plaintiff could have seen unpublished information registered by the plaintiff by logging into the auction website, the plaintiff’s business information itself could have been the subject of the judgment.

In addition, the court also states that even if the credentials were found to be useful, the management of the secrecy of the credentials would be denied from the perspective of access restriction and recognition of the secrecy by the employees. When a company operates a system that provides access to information it considers secret, it is important to consider a management approach that pays sufficient attention to access restrictions and recognition of secrecy by employees.