Interference with Trade and Business in Japan｜Unfair Competition, Tort and the Remedies Available

A customer of many years stops placing orders, and it emerges that a competitor, or a former employee, has told them something about your company that is simply untrue. Or false statements about the company appear on a message board or a review site, and a customer grows reluctant to continue for fear of being drawn into a dispute. Companies with a subsidiary or customers in Japan meet these situations regularly, and the line between vigorous competition and unlawful interference is not self-evident. What follows sets out the law of Japan.

Contents

The forms this conduct usually takes
How Japanese law characterises it
Where legitimate competition ends
Securing the evidence
The remedies available
Proving the loss, and protecting the customer relationship
In closing
How to contact us

The forms this conduct usually takes

A competitor or a former employee tells a customer that “the company is about to go under”, or that “its products infringe a patent”, and an existing trading relationship is terminated.
A third party intervenes at the final stage of negotiations and, by a false account of the facts, prevents the contract from being concluded.
A warning letter with no basis in any actual right is sent to the customers, who then draw back rather than risk involvement in litigation.
False information is posted on a message board, on social media or on a review site, and the company’s reputation suffers.

What these have in common is that the party injured is your company, while the party who changes its behaviour is the customer. The evidence therefore lies largely outside your own organisation, and that is what makes these cases difficult to run.

How Japanese law characterises it

First, as a tort. A person who intentionally or negligently infringes the rights or legally protected interests of another is liable in damages under Article 709 of the Civil Code of Japan. Interference with an existing trading relationship, or with a legitimate expectation that a contract would be concluded, can amount to a tort on that basis.

Second, as business disparagement under the Unfair Competition Prevention Act. Making known or disseminating a false statement of fact injurious to the business reputation of another with whom one stands in a competitive relationship constitutes unfair competition. The injured party may seek an injunction under Article 3 of that Act, damages under Article 4, and an order under Article 14 requiring measures necessary to restore its business reputation.

Third, as a criminal matter. Circulating a false rumour, or using deceptive means, so as to damage another’s credit or obstruct their business is an offence under Article 233 of the Penal Code of Japan (damage to credit, and obstruction of business); obstruction of business by force falls under Article 234. Both carry imprisonment for up to three years or a fine of up to 500,000 yen. Criminal proceedings, however, exist to punish, not to compensate: recovery of the loss requires separate civil proceedings.

Where legitimate competition ends

Not every act that costs a company its customers is unlawful. Stating what is true does not in principle constitute business disparagement, because the provision requires a statement of fact that is false. A patentee or trade mark owner who writes to another company’s customers about the scope of its rights is, in principle, exercising those rights legitimately and is not acting unlawfully.

The position changes where the sender knows that it has no such right, or asserts infringement without having carried out any investigation at all, and circulates that assertion widely among the other party’s customers. That goes beyond the legitimate exercise of a right and may constitute business disparagement or a tort. The Japanese courts weigh the content of the warning, the identity and number of the recipients, the extent of any investigation made beforehand, and the purpose behind the conduct.

Securing the evidence

These cases turn very largely on proving what was actually said to the customer.

Ask the customer what happened, and obtain a written statement (chinjutsusho). This is the most direct evidence available, but it engages the commercial relationship, and the timing and manner of the approach need care.
Preserve the originals of warning letters, notices, faxes and emails. Emails should be kept together with their header information.
For online material, record the URL and the date and time, and preserve it in a form that shows what was actually displayed. Posts can be deleted at any moment, so this should be done as soon as the material is found.
Put the movement in order volumes and turnover, and the transaction records for each customer affected, into chronological order at an early stage.

Where the online statement is anonymous, Japan provides a procedure for the disclosure of sender information, by which the site operator and the telecommunications carrier can be required to disclose what they hold about the poster. Communication logs are retained only for a limited period, so the matter is time-sensitive.

The remedies available

Injunction — restraining the making or dissemination of the false statements, and requiring the deletion of online postings.
Damages — in tort under Article 709 of the Civil Code, or under Article 4 of the Unfair Competition Prevention Act.
Measures to restore business reputation — under Article 14 of the Unfair Competition Prevention Act, or Article 723 of the Civil Code, the court may order a published apology or a corrective notice to the customers concerned.
Provisional disposition — where the false information continues to circulate and the loss is still growing, an application may be made under the Civil Provisional Remedies Act, in advance of the main action, to restrain the conduct or require deletion. The right to be preserved and the necessity of preservation must be shown, and a security bond deposited.
Explaining the position to the customer — placing objective material before the customer directly will sometimes stop the loss more effectively, and far more quickly, than proceedings against the wrongdoer.

Proving the loss, and protecting the customer relationship

The hardest part of these cases is quantifying the loss. A customer does not necessarily withdraw because of what the other party said, and causation is routinely contested. Lost profit is generally estimated from the movement in turnover before and after the interference, the customer’s trading record over the preceding years, and the behaviour of other customers over the same period. Article 248 of the Code of Civil Procedure of Japan provides that where loss is found to have occurred but its amount is by its nature extremely difficult to prove, the court may determine a reasonable amount.

One further point deserves emphasis. The customer is not the wrongdoer. Drawing the customer into litigation, and calling that customer to give evidence, can damage the very relationship the claim was brought to protect. Whether to press first for an injunction and deletion in order to stop the loss, or to pursue damages to the end, is a commercial judgment that should be made case by case.

In closing

In interference cases the evidence disperses with time and the customer’s recollection fades. When something appears to be wrong, the records should be secured first and the choice of remedy considered afterwards. We act for foreign companies with a subsidiary or customers in Japan, and are equally glad to work through the company’s own counsel abroad.

How to contact us

Telephone 03-6435-8418 within Japan, or +81-3-6435-8418 from overseas. Lines are open from 08:00 to 24:00 Japan time, including Saturdays, Sundays and public holidays. Enquiries are also received at any hour through the form on this site.

M&A Partners Law Office LPC　Katsuhiro Tsuchiya, Representative Attorney-at-Law (Tokyo Bar Association, Registration No. 26775)　17F Mori Trust Shiroyama Trust Tower, 4-3-1 Toranomon, Minato-ku, Tokyo, Japan

This article is a general explanation based on the laws and practice of Japan as at August 2026 (Reiwa 8). The outcome of any particular matter depends on its own facts, and no specific result is guaranteed.

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