A former employee of SoftBank’s mobile unit has been arrested on suspicion of stealing trade secrets before joining rival Rakuten as the ecommerce group was making a push to become Japan’s fourth wireless carrier.
SoftBank Corp has accused the former employee of sharing confidential information about its 4G and 5G base station technology to help Rakuten’s foray into telecoms.
In a statement, Yoshihisa Yamada, president of Rakuten’s mobile unit, confirmed the employee had been arrested on Tuesday and said the company would fully co-operate with the police investigation.
But Rakuten Mobile said its own probe did not find that the employee had taken any 5G trade secrets. It added it had not used any of the information allegedly taken by the employee for its own business.
Competition between the two technology rivals has deepened following Rakuten’s entry last year with its own mobile network and disruptive pricing.
The growing contest has put pressure on the earnings outlook for Japan’s four carriers at a time when Prime Minister Yoshihide Suga has also been repeatedly demanding that they set lower mobile fees.
While cases alleging theft of trade secrets are not uncommon in Silicon Valley and China, such accusations between high-profile companies are unusual in Japan.
The case also underscores the vulnerability of businesses when it comes to security measures to prevent employees from leaking technology to rivals.
In its allegations, SoftBank said the stolen trade secrets would allow Rakuten to build its mobile network faster and at lower cost.
“Our trade secrets are stored on Rakuten Mobile’s corporate PC used by our former employee, and we believe there is a high possibility that Rakuten Mobile is using our trade secrets in some form,” it said.
The company said it planned to file a lawsuit against Rakuten Mobile to prevent its rival from using its knowhow and is also considering seeking damages from the former employee.
The Tokyo Metropolitan Police Department confirmed on Tuesday that it had arrested a 45-year-old man on suspicion of illegal transfer of trade secrets but did not name SoftBank or Rakuten. According to the police statement, the suspect is alleged to have accessed trade secrets on the affected company’s cloud server in December 2019 and then forwarded them to his own personal email account.
SoftBank said it became aware of the alleged theft in February last year and has since tightened its security measures.
If found guilty of violating Japan’s unfair competition prevention law, the former SoftBank employee could face a penalty of up to 10 years in prison or a fine of up to ¥20m ($192,000), or both.