Passing trade secrets to rival firm is unforgivable behavior

As people’s work styles have become more diverse, it is no longer unusual to change jobs. People who pass confidential company information to rival companies when seeking new employment are committing a crime that betrays the trust of their former employers.

The Metropolitan Police Department has arrested Koki Tanabe, the president of Kappa Create Co., which operates the Kappa Sushi chain of conveyer-belt sushi restaurants, on suspicion of violating the Unfair Competition Prevention Law. Tanabe was an executive of Hama-Sushi Co., the operator of another conveyer-belt sushi chain that is a rival of Kappa Sushi, and allegedly took Hama-Sushi trade secrets with him when he moved to Kappa Sushi.

Tanabe is suspected of illegally obtaining data on Hama-Sushi, such as product costs and the prices at which the company bought its ingredients, in September 2020, and of sending the data by email to a Kappa Create executive after becoming an adviser to that company. Tanabe was subsequently appointed president of Kappa Create.

There would be no problem with Tanabe using the management skills he had developed up to that point. However, it would be unforgivable if he gave a rival firm confidential information that could affect sales when he joined the rival.

The MPD also has referred Kappa Create to prosecutors as a corporation. The company is suspected of sharing Tanabe’s data internally and comparing it with its own products. Isn’t there too little awareness of legal compliance? It is hoped that future investigations will reveal the entire picture of the incident.

The restaurant industry has been hit hard by the coronavirus pandemic, but conveyer-belt sushi outlets have benefited from demand for home delivery and takeout, and the market is expected to expand.

Amid intensifying competition within the industry to offer appealing products and prices, methods of attracting customers have also been called into question. Earlier this year, it was discovered that the Sushiro sushi chain continued to advertise crab and sea urchin sushi on TV and other media even though the items were unavailable at its outlets.

The excessive emphasis on winning the competition with other companies may have drawn attention away from consumers.

There has been no end to leaks of corporate secrets. Last year, a former employee of SoftBank Corp. was arrested on suspicion of taking information from the mobile phone carrier giant about its 5G communication standard before moving to another company. There has also been a notable outflow of trade secrets to foreign companies.

The number of people changing jobs rose from 2.84 million in 2011 to 3.51 million in 2019. Headhunting is also active and the labor market is expected to become more liquid in the future.

Leakage of confidential information could undermine a company’s competitiveness. The government needs to step up its measures in this regard, such as by further developing necessary legislation.

In addition, companies themselves must also take every possible step. It is vital to promote the development of internal rules, through such measures as designating sensitive data as confidential and limiting the number of employees with access to it, and having new employees and retirees sign confidentiality pledges.

(From The Yomiuri Shimbun, Oct. 6, 2022)