Chapter 1: Introduction

In recent years, the Japanese government has aggressively promoted initiatives to ensure fair supply-chain pricing and protect freelancers and independent contractors. As part of these efforts, the Japan Fair Trade Commission (JFTC), the Small and Medium Enterprise Agency (SMEA), and the Japan Patent Office (JPO) jointly published the “Draft Guidelines Concerning Abuse of Superior Bargaining Position, etc. for the Proper Transactions of Intellectual Property Rights, Know-how, and Data” (the “Draft Guidelines”).

Following the public comment period that closed on April 28 of this year, attention is now focused on how the final guidelines will be formulated and implemented. The Draft Guidelines aim to prevent buyers (typically large corporations) from forcing suppliers (including SMEs and startups) to provide intellectual property (IP), know-how, and data free of charge or at unjustifiably low prices.

Our firm frequently helps both large enterprises and startups/SMEs review IP provisions in joint R&D and outsourcing agreements. In practice, we still see many disputes involving the "misappropriation" of IP caused by imbalances in bargaining power, as well as unintended "contamination" (the mixing or leakage of technology).

In this article, as attorneys specializing in IP, competition law, and technology agreements, we analyze the significance of these Draft Guidelines under the Antimonopoly Act. We will explore the background discussions of the Working Group on Proper IP Transactions (the “WG”), the core substance of the Draft Guidelines, the government's enforcement commitment through the "IP Transaction G-Men," and the expected impact on corporate practice.

Chapter 2: Background and Transition to “Antimonopoly Act Guidelines”

1. Expansion to All Industries, Know-how, and Data

Previously, government agencies issued guidelines targeting specific sectors or business stages, such as the Guidelines for Business Collaboration with Startups and Investment in Startups  (JFTC/METI, 2022) and the Guidelines on Intellectual Property Transactions (SMEA, revised in 2026), which focused heavily on manufacturing.

The most significant feature of the new Draft Guidelines is their universal application: they apply to all industries. Furthermore, protection extends beyond registered IP (like patents) to expressly include know-how and data. This establishes a cross-sector rulebook tailored to modern business models.

2. Practical Significance as Formal Legal Guidelines

From a practical standpoint, the most critical shift is the transition from the SMEA’s previous "best-practice" recommendations to formal guidelines under the Antimonopoly Act—specifically targeting the Abuse of Superior Bargaining Position.

The older guidelines merely described ideal IP transactions and were often criticized for lacking clear legal teeth or guidance on what actually violates the law. Reorganizing these rules into formal legal norms under the Antimonopoly Act, the Subcontracting Act, and the Freelance Act significantly enhances legal predictability for businesses.

Chapter 3: Three Pillars of the Draft Guidelines and Key Practical Responses

The Draft Guidelines categorize problematic conduct into three areas: (1) Information Management, (2) Appropriate Valuation of IP, and (3) Other Conduct. Below, we highlight the key practical points for companies.

1. Management of Information (NDAs and Diversified Disclosure Requests)

The Draft Guidelines clarify that demanding information disclosure without an NDA, or imposing a one-sided NDA that exempts only the buyer from confidentiality, can constitute an Abuse of Superior Bargaining Position. Notably, the scope of flagged misconduct has expanded to include specific modern practices:

• Know-how Misappropriation via Factory Visits
  Demanding excessive information (such as machine settings or processing methods) during audits or quality assurance visits beyond what is strictly necessary. The WG emphasized that quality assurance must not be used as a pretext for unjustified, excessive disclosure.
• Unilateral Requests for Industrial Data
  Forcing suppliers to provide real-time machinery operational data free of charge, even when it has no relevance to the transaction.
• Practical Response Policies
  Companies should classify their information into three tiers: (a) disclosable without an NDA, (b) disclosable only under an NDA, and (c) strictly non-disclosable. We also recommend preserving evidence using timestamps or notarization, and restricting visitor routes and photography during factory tours.

2. Appropriate Valuation of IP (Preventing Free Demands & Diversifying Payments)

This section heavily impacts creative industries, IT, and manufacturing.

• Prohibition of Forced Free Transfers and Unpaid Work
  Forcing suppliers to assign copyrights for free or grant royalty-free licenses outside the agreed pricing is problematic. Crucially, this applies not just to final deliverables, but also to "intermediate deliverables" and unpaid work like technical guidance, Proof of Concept (PoC) testing, and prototyping.
• Non-Assertion of Moral Rights
  While standard templates often include clauses preventing authors from asserting moral rights, the WG noted this is sometimes normal commercial practice to ensure transferability. Therefore, the Draft Guidelines do not ban these clauses outright. Instead, they flag the unilateral imposition of boilerplate templates without individual negotiation or fair compensation.
• Separating IP Value and Diversifying Payment Options
  Buyers must separate the consideration for "physical deliverables (manufacturing costs, actual expenses)" from the "consideration for IP rights." Furthermore, payment structures should expand beyond flat upfront fees to include revenue-sharing (running royalties) or milestone payments. Unilaterally dictating a single payment method to suppress prices is deemed problematic.

3. Other Conduct (Joint R&D, Patent Interference, and Litigation Risks)

The Draft Guidelines address unfair practices across various transactional phases:

• Improper Rights Allocation in Joint R&D
  "Nominal" joint R&D—where a buyer merely pays part of the cost but demands sole patent ownership or joint applications without extra compensation—is prohibited. The WG explicitly stated that bearing costs does not inherently justify sole ownership; the actual creative contribution must be evaluated. This also applies to "contracted development" if the supplier's core know-how is heavily utilized.
• Interference with Patent Applications
  Demanding that suppliers report or alter patent applications for inventions they developed independently, unrelated to the transaction.
• Shifting IP Litigation Risks
  Contractual clauses that force suppliers to bear all third-party patent infringement damages (non-infringement warranties) regardless of the buyer's fault are flagged as problematic. Contracts should clearly allocate risk and cap liabilities reasonably.

Chapter 4: Attorney Perspectives: Impact and Required Action

What should legal/IP departments and corporate counsel focus on moving forward?

1. Avoiding Blind Reliance on Templates; Respecting Private Autonomy
The WG strongly warned against treating government templates as the "only correct answer." For example, rigidly separating manufacturing costs from IP value could inadvertently allow buyers to suppress overall supplier revenues as AI reduces baseline manufacturing costs. Companies must maintain flexible, case-by-case negotiations based on private autonomy and industry realities rather than applying templates blindly.

2. Reviewing Basic Agreements Involving Trading Companies
In Japanese manufacturing, trading companies often act as intermediaries. The WG noted that unfair IP assignments and liability exemptions are frequently buried deep within these intermediaries' master transaction agreements. Suppliers must thoroughly review these clauses rather than signing them routinely.

3. Phased Disclosure and Timestamps
An NDA alone is not a silver bullet. In tech negotiations, companies should adopt a "phased disclosure" approach: discuss the benefits and effects of the technology first, and only disclose the technical configurations after an NDA is signed. For unpatented know-how, utilizing electronic timestamps is highly effective for proving prior ownership and preventing data theft.

４．Utilizing Updated Contract Templates
The SMEA recently updated its template agreements (including NDAs and Joint Development Agreements) in January 2026. These updates include practical options for defining confidential information and handling pre-existing technologies. Corporate legal teams should use these updated templates as a benchmark for reviews.

Chapter 5: Enhanced Monitoring: Enforcement Commitment and "IP G-Men"

1. Monitoring Actual Enforcement Levels
Now that these are formal guidelines under the Antimonopoly Act, the legal threshold for JFTC enforcement is lower. The WG announced that authorities will periodically monitor transactions over the next one to two years and take strict action against violations. However, because proving an Abuse of Superior Bargaining Position requires highly fact-specific evidence regarding the balance of power, the practical frequency of cease-and-desist or surcharge orders remains to be seen.

2. The Multi-Layered "IP G-Men" Monitoring Network

The SMEA’s "IP Transaction G-Men" actively investigate industry practices. They operate alongside an "IP Management Support Network" comprising five key organizations: the JPO, INPIT, the Japan Patent Attorneys Association, the Japan Chamber of Commerce and Industry, and the SMEA.

This network serves as a powerful reporting channel. IP G-Men brochures now include compliance checklists, encouraging SMEs to report issues directly. Information can easily flow to regulators through routine IP consultations or G-Men interviews, creating a nationwide monitoring net. Large buyers must realize that enforcement is no longer siloed within the JFTC.

 

Chapter 6: Conclusion: Rethinking Negotiation Policies

The publication of the Draft Guidelines demands that companies fundamentally rethink their contract negotiation strategies.

A common pitfall occurs when legal departments create standard templates for efficiency, and sales teams rigidly tell counterparties that "no modifications are accepted." If business units push these templates without legal oversight, companies risk inadvertently committing an Abuse of Superior Bargaining Position. Conversely, suppliers and startups must use these official guidelines as leverage, clearly identify their core tech, and negotiate with confidence.

IP and data contract negotiations require deep legal expertise. Determining whether a "superior bargaining position" exists or whether specific terms violate the guidelines is highly complex. We strongly recommend consulting experienced counsel specializing in both IP and competition law at an early stage to review your templates and negotiation strategies.

TMI Associates remains fully committed to providing robust legal support to help companies drive open innovation and build fair, compliant transaction environments.