In Japan, money lending operations are subject to certain licensing requirements. That said, it is generally understood that a registration under the Money Lending Business Act is not required to purchase existing receivables. Thus, it may be easier for non-Japanese financial institutions to acquire receivables as opposed to making loans using funds from their own accounts. However, a recent Osaka District Court judgment suggests that this may not always be the case.
Financial institutions that have no operations in Japan can readily acquire loans made to Japanese borrowers by purchasing the receivables relating to such loans. A number of requirements and considerations must be taken into account when transferring loan receivables, including with regard to novation, money lending operations, registered money lenders, perfection and the upcoming amendments to the Civil Code.
The newly introduced fair disclosure rule enacted under Japan's securities laws and regulation regime is most often considered to apply to issuers of listed shares. However, based on the clear wording of the rule, it is also applicable to issuers whose only listed securities are bonds. Although the majority of bonds issued in the Japanese market are unlisted, there is a market dedicated to listed bonds in Japan: the Tokyo Pro-Bond Market.
The recent amendments to the Financial Instruments and Exchange Act introduced the fair disclosure rule, preventing listed issuers from making selective disclosure of their material information in order to ensure market fairness and transparency. This rule differs to the insider trading rule, which was introduced in 1989 with a similar aim of ensuring fairness and transparency by prohibiting parties with knowledge of undisclosed material facts regarding listed issuers from trading the securities of such issuers.
A recent Tokyo District Court decision was reported to be the first to hold an underwriter liable to investors that purchased shares in a company based on material misstatements in the financial information contained in the statutory disclosure document for a public offering in Japan. However, the Tokyo High Court overturned the district court decision in this regard and concluded that the lead manager was not liable to investors.
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the fair disclosure rule in Japan. Subsequently, in October 2017 the Financial Services Agency (FSA) published draft legislation (comprising an implementing order and an ordinance) and guidelines for public comment, followed by final legislation in December 2017. The FSA has now published new guidelines and opinions on the public comments that it received.
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the so-called 'fair disclosure' rule in Japan. The amendments address recent cases of selective disclosure of material information by issuers to sell-side analysts and investors' requests to introduce similar fair disclosure rules to those of other jurisdictions. The Financial Services Agency recently published a draft implementing order, ordinance and guidelines for public comment.
The Japan Fair Trade Commission (JFTC) has been noticeably vocal regarding its intention to keep a close eye on e-commerce. It has already targeted a handful of tech giants and its longstanding image of being a mature but subdued authority does not appear to apply to its role in the digital economy. If anything, the JFTC seems to be striving to be the frontrunner in this regard, ahead of other Asian authorities.
Abuse of a superior bargaining position is a unique category of anti-competitive conduct under the Anti-monopoly Act, and the Japan Fair Trade Commission (JFTC) is increasingly stepping up its enforcement of this type of infringement. As the JFTC has also recently extended its investigation reach to include foreign companies, foreign companies which operate in Japan should remain aware of its enforcement in this regard.
In recent years, there has been a selection of work-style reforms in Japan, as well as a general move away from lifetime employment and a welcoming of more diversified ways of working, such as self-employment. In this context, the Japan Fair Trade Commission recently published its Report of Study Group on Human Resource and Competition Policy. The report covers three substantive topics: concerted practices, unilateral conducts and undesirable activities.
In 2017 the Japan Fair Trade Commission Competition Policy Research Centre published a report on competition issues surrounding Big Data. While the report did not presume that an oligopoly of digitalised businesses constituted a problem, it recognised that rapid advances in machine learning and data accumulation could boost the power of existing dominant players exponentially and limit opportunities for new market entrants.
Over the past two years, the Japan Fair Trade Commission (JFTC) has significantly amended its guidelines concerning distribution systems, giving particular consideration to the EU Commission's 2010 guidelines on vertical restraints. Although no cases have occurred in which the JFTC has had to decide on the legality of a particular selective distribution system, given that the number of traditional cartel cases is declining, it is likely to shift its focus to this area and follow in the footsteps of the EU Commission.
The National Diet recently enacted a bill relating to work style reform, which has amended the Labour Standards Act, the Industrial Safety and Health Act and relevant laws. Most amendments will come into effect on 1 April 2019. The amended Labour Standards Act stipulates that the upper limit for overtime will be, in principle, 45 hours a month and 360 hours a year. However, there are exceptions for certain business sectors.
One of the controversial issues regarding Japan's so-called 'lifetime employment system' is whether and to what extent employers can impose different working conditions (eg, salaries, bonuses and allowances) when they rehire employees who were once non-fixed-term employees as fixed-term employees. The Supreme Court recently handed down a significant decision addressing this issue.
Article 20 of the Labour Contract Act prohibits the imposition of unreasonable employment conditions on fixed-term employees in order to ensure their fair treatment. In light of two recent Supreme Court decisions on this matter, Japanese employers with both fixed-term and permanent employees should carefully review whether differences in the individual employment conditions of each type of employee are not unreasonable.
An amendment to the Labour Contracts Act states that if an employee with a fixed-term employment contract has been continuously employed by the same employer for more than five years, the employee will have the right to convert his or her fixed-term employment contract to an indefinite term employment contract. As the amendment applies only to employment contracts that commenced on or after April 1 2013, a significant number of employees became eligible to exercise this right on April 1 2018.
In September 2017 the Ministry of Health, Labour and Welfare issued the Outline of the Act for Revising Related Acts for the Promotion of Work Style Reform. Once the National Diet passes the bill in 2018 and the revised Labour Standards Act takes effect at a later date, companies will be required to implement a new scheme to manage working hours which is substantially different from the existing scheme. As such, the proposed amendment will continue to garner significant attention going forward.
Collecting, analysing, combining and processing large amounts of information is critical to the development of the information industry, as exemplified by the Internet of Things, Big Data analytics and artificial intelligence. However, since information often includes copyrighted works, its use can constitute copyright infringement even where there is no harm to the copyright owner. To resolve these problems, acts amending the Copyright Act and the Unfair Competition Prevention Act were recently enacted.
In a recent case, Red Bull AG claimed that a trademark registered by Korean company Bullsone Co, Ltd should be invalidated due to the likelihood of confusion as to the source of the designated goods. A notable point in this case was the difference in position taken by the Japan Patent Office Trial and Appeal Board and the IP High Court with regard to the relevant trademarks and the evidence to be considered when determining the well-known status of the cited mark.
A Japanese company recently claimed that a Chinese company's trademark should be invalidated due to its similarity with the plaintiff's trademarks and the likelihood of confusion as to the source of the designated goods. Although the Japanese Patent Office Trial and Appeal Board rejected the plaintiff's claims, the IP High Court overturned this decision. The conclusive factor in the case was the way in which the similarity of marks should be assessed when they are intended to be stitched on certain goods.
The Tokyo District Court recently rendered its judgment in a patent infringement case regarding fintech-related technologies. This case has been widely reported on in Japan because both parties are major venture businesses and leaders in the Japanese fintech market. This case is also notable as the defendant's cloud-based accounting system involved machine-learning technologies and disputes of this nature are expected to increase.
The registrant in a recent case registered the trademark FRANCK MIURA in Japanese katakana and Chinese characters with regard to its lookalikes of Franck Muller's well-known luxury watches. However, while the watch designs resembled each other in their entirety, the design similarities were not at issue in this case. Rather, the case centred on the similarity of, and the likelihood of confusion between, the trademark and three prior FRANCK MULLER marks.