Some Case Studies: LEGENDS OF HACCHO-BORI / "They Will Go After You!"

Importance of the List of Clients
Any business needs clients. This is why, when an employee leaves his company to start his own business in the same trade, an easy thing to do is to take out the list of clients, call those clients from his former job and tell them, "Hey, I started my own company, and, I will offer you better prices than my former employer." This is very advantageous for him because he knows not only the names of clients, but also the costs of goods and services.

Betrayal!
One day, four top managers of a temporary staffing company visited our office. There are a number of large and small companies that provide temporary staffing services. To be competitive and differentiate themselves, they specialized in staffing service for a particular industry sector, where they had been successfully increasing sales. ?But recently, several executives had left the company and started their own business in the same trade and promoted themselves by targeting their former clients. Anyone should be free to change his or her job. ? Yet, for the president of this temporary staffing company, he felt he had taken his employees by the hand and taught them step-by-step until they became fully qualified for their jobs. So when one of the executives left his company to start his own company, taking several top executives with him and, to make matters worse, wooing his company's clients, the president felt like blowing his top! Now that a key person had left his company, not only was his company's management left with a hole, but also sales were declining. No wonder he was so disgusted and resentful.

Unfair Competition
The act of illicitly obtaining trade secrets is prohibited by the Unfair Competition Prevention Act. The types of trade secret cases that our patent office normally handles are those related to technologies, and we don't cover trade secrets such as a list of clients. ?Nevertheless, sometimes people consult us with such problems, because, for many years, I have researched and gathered judicial precedents and actual cases in the United States to publish several books on trade secrets, and when the Unfair Competition Prevention Act was amended, I was appointed as a member of the subcommittee of Industrial Structure Council in order to prepare the amendment.

The four managers said they wanted to explore their rights under the law before actually hiring a lawyer to sue the ex-employees. So, I explained to them what would be acceptable and what would be illegal in terms of using the list of clients by citing a few specific cases. Every time I explained to the managers about each case, they said: "That case is exactly the same as what they did to us 乧 It's absolutely outrageous! 乧 Let's sue them! 乧 We have to teach them a lesson."

They Have To Be Punished
After this, the president and the other managers had flushed faces and were all fired up. They must have been infuriated, or maybe even a little bit jealous! Compared with other industries, it seems to be easier to create one's own business in this sector. In the manufacturing industry, for example, one would need a large amount of capital to start a business, in order to buy land, build a factory or purchase machines, materials, etc. In contrast, a temporary staffing service does not need those kinds of assets. That is why, once an employee has taken a few years to learn the ropes, he can start his own business by using the list of clients (in reality, it should not be so simple). ?For the president, punishing their former employee was important to the future of the company because he needed to set an example to the employees who were still with them.

A Suggestion While They Were Fired Up
While the executives were busy clamoring among themselves, I remained silent and kept listening to them. ?Then, one question came to my mind. How did their company start? So, I asked them, "By the way, how did your company start? You started your company from nothing?" Suddenly, everyone stopped talking.

They came to their senses and fell into silence. Next, they sank into their chairs. All of a sudden, they lost their momentum. Why? It was because they were former executives in another temporary staffing service company. There, they had learned the ropes and then agreed to leave the company to start a new business in the same industrial sector. They also snatched the clients of their former employer. They did exactly the same thing as what their employees did to them in the current case.

What Would Happen If They Sued Their Former Employees?
Knowing that, what would happen if they sued the person who left the company with the list of clients? I am sure that the person will rebut saying, "You did the same thing. If you accuse me of stealing your trade secrets, you are also thieves! Shall I tell everyone the truth?" They did not know what to do with their fists held high. They completely lost their momentum and went back with their heads down.

Our mission involves asking clients all sorts of things including what they don't want to say in order to prevent unnecessary disputes. I feel that this is also an important duty.

Some Case Studies: LEGENDS OF HACCHO-BORI