Patent Litigation 2019 Comparisons

Last Updated June 20, 2019

Contributed By TMI Associates

Law and Practice

Authors



TMI Associates has, since its establishment, had intellectual property as an integral part of its practice. The firm now has extensive experience and expertise in the area, including in patents and trade marks. The team is made up of lawyers and patent/trade mark attorneys, as well as patent/trade mark paralegals, and acts for clients across a wide variety of businesses and technologies all around the globe. The team handles all aspects of intellectual property law, including patent/trade mark prosecution, trials before the Japan Patent Office, infringement litigation, IP due diligence, and import suspension applications at Customs.

There are two types of intellectual property rights that the Japanese legal system covers in relation to the protection of inventions: patent rights and utility model rights. Both systems are based on statutory laws, namely the Patent Act and the Utility Model Act.

Patents

The Patent Act employs a substantive examination principle for the patent grant procedure. To obtain a patent right for an invention, a patent application must first be filed with the Japan Patent Office (JPO). A request for examination must also be filed within three years from the date of filing the patent application, or the patent application will be deemed withdrawn.

An examination will be carried out by an examiner of the JPO, who will decide whether the patent application fulfils all the requirements prescribed by the Patent Act.

If the examiner finds any reason for rejection, a notice of reason for rejection will be issued. An applicant who has received a notice of reason for rejection will be given the opportunity to file a written argument and/or an amendment in response to that rejection.

If the examiner finds no reason for rejection in the patent application or finds that the rejection has been overcome, they will issue a decision to grant a patent for the patent application. A patent will be granted once the applicant pays the registration fees for the first three years.

Utility Models

In contrast to patent applications, the Utility Model Act does not require a substantive examination for applications for utility model registration, ie, for all applications that have passed formal examinations, the utility model right will automatically be registered without going through a substantive examination. The registration fees for the first three years must be paid at the time of filing the utility model application.

Patents

According to statistics issued by the JPO, the average period from filing a request for examination to issuing a final decision (either a decision to grant or a decision to reject) was 14.1 months in 2017. Also, the average grant rate was 75.8% in 2016, the highest among the five IP offices (IP5).

Domestic inventors (or domestic entities or individuals who have received the right to obtain a patent or a utility model registration from the inventors) do not need representation in order to initiate grant proceedings. However, foreign inventors (or domestic entities or individuals who have obtained the right to obtain a patent from the inventors) do need representation in order to initiate grant proceedings.

The typical costs incurred from filing to grant are JPY1 million, comprising official fees of JPY200,000 and lawyer fees of JPY800,000. The official fees vary depending on the number of claims. Also, additional fees for translating certain documents, eg, the specification and notice of reason for rejection, may be incurred, where necessary.

Utility Models

The typical costs incurred from filing to grant are JPY200,000, comprising official fees of JPY20,000 and lawyer fees of JPY180,000. The official fees vary depending on the number of claims. Also, additional fees for translating certain documents, eg, the specification, may be incurred, where necessary.

Patents

The term of a patent right is 20 years from the date of filing the patent application. As an exception, the term may be extended by up to five years on request if the invention is unable to be used due to the time spent obtaining an approval or any other dispositions under a law intended to ensure safety, as prescribed by a Cabinet Ordinance.

Utility models

The term of a utility model right is ten years from the date of filing the utility model application. A utility model application or right may be converted to a patent application within three years from the date of filing the utility model application.

Both patent-owners and utility model-owners have the right to an injunction, the right to claim damages and the right to claim for unjust enrichment. Also, patent-owners and utility model-owners are under an obligation to pay annual renewal fees in order to maintain their rights.

There is no further protection for technical intellectual property rights after their maximum term has lapsed.

Anyone may file a third-party observation at any time after the filing of a patent application or an application for utility model registration, even after a patent or a utility model right has been granted. Third-party observations may include not only prior art information or a submitter’s comments regarding the novelty or inventive step of the claimed inventions but also other information or comments regarding other requirements, such as the addition of new matter, the support requirement, the enablement requirement, etc. Third-party observations may be filed on an anonymous basis.

Patents

An applicant may file an appeal with the JPO against a decision of rejection issued by a JPO examiner. The patent application will then be examined by a board of three appeal examiners to determine whether the decision to reject was appropriate. The applicant is allowed to make amendments to the scope of claims, specification or drawings at the time of filing an appeal against the decision of rejection. If those amendments are made, the application will first be re-examined by the examiner who issued the decision of rejection before the application is transferred to a board of appeal examiners.

If the initial examiner finds that the amended application has been improved to the extent that it may be approved, a decision to grant will be issued without the application being transferred to a board of appeal examiners. However, if the initial examiner still believes that the application should be rejected, the application will be transferred to the appeal stage and will be examined by a board of appeal examiners.

Utility Models

No remedy is available or applicable for utility model applications because the Utility Model Act does not require a substantive examination for the granting of a utility model right.

If a patent-owner fails to pay the annual fees by the specified deadline, the patent-owner may still make a late payment by paying , a surcharge in addition to and equal to the annual fee within the six-month grace period after the expiry of the deadline.

Furthermore, if there is a justifiable reason the patent-owner could not make the payment deadline, the patent-owner may make the payment within two months from the date on which such reasons ceased to exist but, in any event, no later than one year following the expiry of the deadline for the late payment.

If the owner of a technical intellectual property right (eg, a patent) finds that a third party is infringing upon his or her patent, he or she can take one or more of the following actions:

  • commence a regular patent infringement suit with a district court;
  • file a petition for preliminary injunction with a district court;
  • file an import suspension application with the Customs Office; and/or
  • use alternative dispute resolution proceedings, such as mediation or arbitration, if the other party agrees to it.

Only an interested person may file a request for a trial for patent invalidation. The term 'interested person' means a person who has or potentially will have his or her legal interest/standing directly affected by the existence of the patent right. The Patent Opposition System came into force on 1 April 2015. Any person (not limited to interested persons) may file an opposition to a patent within six months of the publication date of the Gazette containing the patent. The Japanese Patent Act also provides for three types of non-exclusive licence granted by the JPO Commissioner’s award (eg, compulsory licences). However, these compulsory licences have never actually been exercised in Japan.

The Tokyo District Court and the Osaka District Court have exclusive jurisdiction over litigation relating to patent rights and utility model rights in the first instance. In which court a plaintiff should file a lawsuit depends on the defendant’s corporate address and the location of the infringing activity. The Japanese Intellectual Property High Court (IPHC) has exclusive jurisdiction over appeals from district court decisions. The IPHC is a special branch of the Tokyo High Court. Parties may appeal decisions of the IPHC to the Supreme Court.

The Japan Intellectual Property Arbitration Center (JIPAC) provides alternative dispute resolution services such as mediation or arbitration in the field of intellectual property. In addition, the International Arbitration Center in Tokyo (IACT), an international arbitration organisation that is expected to provide disputes resolution services, commenced operation in September 2018.

There are no prerequisites to filing a lawsuit.

In Japan, a party may choose at their own discretion whether to have legal representation. However, in practice, it is common for lawyers to represent parties in intellectual property matters. Patent lawyers can also represent parties for certain intellectual property cases under certain conditions.

Preliminary injunctions are available in cases where such injunctions are necessary for a rights-owner to avoid any substantial detriment or imminent danger with respect to the rights in dispute.

A potential defendant can file a request for a patent invalidation trial before the JPO and/or initiate a lawsuit for declaratory judgment to confirm the absence of the right to demand an injunction, etc. There is no need for a potential opponent to lodge a protective brief to take these actions. It should be noted that a potential opponent is not entitled to require the owner to post a bond under the Civil Preservation Act; however, a court usually orders the owner to deposit a certain amount as a security when issuing an interim injunction order.

There are no special limitations applicable to intellectual property matters.

Although there is no discovery procedure in Japan, the Patent Act provides that a court can order a party to produce documents upon the other party’s request for the purpose of proving infringement activities or calculating damages. However, this will not apply where the accused infringer possessing the documents has reasonable grounds to refuse to produce them.

When the court finds it necessary to determine whether there are reasonable grounds, it may demand that the person with the documents present them for review in camera). Also, the amended Patent Act, effective 1 July 2019, introduces a procedure in which the court can determine the necessity of document production by way of in-camera procedures. The amended Patent Act also introduces a procedure that allows expert advisers to participate in the such a procedure.

A complaint must contain both parties’ names, addresses and a plaintiff’s lawyer’s name and address, if appointed, the gist of the demand and the grounds for the demand. In particular, each accused product and act of infringing conduct must be specified in detail and the relevant features of the product must be described and compared with each element of a claim. To identify these facts, a patentee is expected to conduct a sufficiently detailed investigation and analysis on a case prior to initiating a lawsuit.

There are no special provisions for lawsuits in intellectual property proceedings that differ from those for non-intellectual property proceedings.

Supplementing pleadings with additional arguments is acceptable. A court examines the case through periodic hearing procedures (generally once a month) and each party is allowed to add its legal/factual arguments or evidence in the course of those procedures. The plaintiff may even expand or amend the claim or statement of claim until oral arguments are concluded. However, the courts may limit such additional arguments or evidence if it considers that they would substantially delay court proceedings.

The legal system does not allow for representative or collective actions for intellectual property rights proceedings, although if the subject matter of the suits is common to two or more persons or is based on the same factual or statutory cause, these persons may sue or be sued as co-parties.

As an abuse of rights is prohibited under the Civil Code, the same will apply to the execution of patent rights, and therefore, where the execution of such rights is abusive, that execution will be restricted.

For example, the act of filing a lawsuit may cause tort liability where such litigation is found to be significantly unreasonable in light of the legal system; eg, the allegation of the infringement is entirely baseless and the owner of the intellectual property right is fully aware of the lack of legal grounds. In addition, based on judicial precedents, a patent right-holder who has made a declaration of fair, reasonable and non-discriminatory (FRAND) terms will not be permitted to claim for an injunction or for licence fees against a party who intends to be licensed under FRAND terms beyond those terms, as this will fall under an abuse of rights.

In addition, the Japan Fair Trade Commission (JFTC) has stipulated that its Guidelines for the Use of Intellectual Property (IP Guidelines) under the Antimonopoly Act clearly show the principles of the use of intellectual property rights, including patent rights, under the Act. In January 2016, the JFTC partially amended the IP Guidelines and supplemented descriptions related to the Standard Essential Patent under the Antimonopoly Act. If a patent-right has been exercised in a manner that violates these Guidelines, there is a possibility that the act will be considered a violation of the Antimonopoly Act.

Further, if the owner of the intellectual property right makes or disseminates a false allegation of infringement of that intellectual property right, that act could constitute an act of unfair competition under the Unfair Competition Prevention Act and the owner of the intellectual property right may be subject to a claim for injunction and/or damages.

A patent-owner and an alleged infringer are usually the necessary parties to patent infringement litigation. A registered exclusive licensee is entitled to file an action without the patent-owner, based on infringement of the registered exclusive licence seeking the same remedies as the patent-owner. In this regard, there are arguments over whether or not non-registered exclusive licensees or non-exclusive licensees can initiate an action for infringement. With respect to injunctions, it is generally considered that neither a non-registered exclusive licensee or a non-exclusive licensee is entitled to claim for an injunction, whereas in the case of a claim for damages, a non-registered exclusive licensee may make such a claim, although a non-exclusive licensee is not permitted to claim for damages.

For a direct infringement to be constituted, the product in question needs to satisfy all of the component features of a patented invention, if any one of the constituent features is not satisfied, a direct infringement has not been constituted.

However, even if the product does not satisfy all of the component features, the following cases will constitute indirect infringement, thus constituting patent right infringement:

  • an act of the accused infringer producing, for instance, a product to be used exclusively for making a product of a patented invention, or a product to be used exclusively for the use of a patented invention;
  • an act of the accused infringer producing a patented invention or a product to be used exclusively for the use of a process of a patented invention (excluding those widely distributed within Japan) and is indispensable for that invention’s resolution of the problem, knowing that the invention is a patented invention and that the product is used for the working of that invention; and
  • an act of the accused infringer possessing for assignment, etc, or exporting a product of a patented product or a product that is produced by using a process of a patented invention.

In any of these instances, where direct infringement or indirect infringement is constituted, a patentee may claim for injunctions and damages against an infringer. In a claim for damages, provisions such as those on the presumption of the amount of damage or those on the presumption of negligence may be applied.

In principle, the scope for protection of a patent right, eg the technical scope of a patented invention, is determined based upon the statements in the scope of claims. In addition, the meaning of each term used in the scope of claims is interpreted in conjunction with the statements in the description and drawings. Moreover, the process during the examination of the application and the prior art may also be taken into consideration. Accordingly, to say that a patent rights' infringement has taken place in principle, the subject product must satisfy all of the constituent features of the patented invention. However, even if the product does not satisfy all of the constituent features of the patented invention, there may be a case that amounts indirect infringement or infringement under the doctrine of equivalents.

If a patent-right has been exercised in an abusive manner (for example, when a patent-right holder who has made a declaration of FRAND subsequently claims for an injunction against a party who intends to be licensed under FRAND terms), a defendant may assert the defence of abuse of rights.

If the defendant has practised a patented invention or made his or her preparation for such a practice at the time of filing of the patent application, the defendant can claim 'prior use' as a defence.

If the patentee, when filing an application, makes assertions that exclude the technology that is to be included in the technical scope of a patented invention (based on the common meaning of the term being used), it is common for the technical scope of the patented invention to be construed in a limited manner as a result.

Where the products in question were being assigned from a patentee or person who has legitimate rights, no patent infringement will be admitted, as the patent right will have been exhausted.

In addition, the defendant may claim that his or her use of the patented invention was experimental and therefore such conduct is out of the scope of the patent right.

Even though the Patent Act provides for three types of non-exclusive licences granted by the JPO Commissioner (eg, compulsory licences), these compulsory licences have never actually been exercised in Japan.

The fact that the defendant’s infringing conduct was an exercise of his or her own patent right cannot be used as a defence against the patentee’s claim of infringement.

As to the statute of limitations, the patentee cannot claim damages for an infringement if more than three years has passed from the date on which the patentee became aware of an infringement and the identity of the infringer who caused the damage. There is an overall limit of 20 years from the act of infringement.

Experts who get involved in patent litigation are mainly judicial research officials and expert advisers.

Judicial research officials are full-time court employees who conduct examinations on technical matters necessary for judicial decisions and report to a judge. It is mostly JPO employees or patent lawyers who are appointed as judicial research officials.

Expert advisers are part-time employees, appointed by the courts, who get involved in proceedings to arrange issues and evidence; to examine evidence; and to enter into a settlement in the court proceedings. Expert advisers are usually involved in proceedings to arrange issues and evidence (preparatory proceedings, etc) and to make oral explanations on technical matters. In patent litigation, in order to have a proper understanding of technical issues, expert advisers are often involved and conduct technical explanation sessions in preparatory proceedings. It is common for an expert in the technical field to which a patented invention belongs (usually a university professor or patent lawyer) to be appointed as an expert adviser.

There is no separate procedure for claim construction.

Patents

There are two procedures available for seeking the revocation/cancellation of a patent, namely an opposition or an invalidation trial before the JPO.

An opposition may be filed by anyone within six months from the issue date of a patent Gazette, based on the following grounds:

  • violation of requirements for patentability, such as novelty, inventive step, double patenting, etc;
  • addition of new matter;
  • violation of description requirements; or
  • violation of a treaty.

An interested party may file an invalidation trial at any time after a patent has been granted, even if it has expired, based on the following grounds:

  • violation of requirements for patentability, such as novelty, inventive step, double patenting, etc;
  • addition of new matter;
  • violation of description requirements;
  • violation of a treaty;
  • the patent having been granted on a patent application filed by a person who is not the inventor and who has not succeeded to the right to obtain a patent for the invention; or
  • the correction of the description, scope of claim or drawings attached to the application for the patent having been obtained in violation of the provisions under the Patent Act.

Utility models

There is only one procedure for the revocation/cancellation of a utility model registration, which is an invalidation trial before the JPO.

An interested party may file an invalidation trial at any time after a utility model has been granted, even after the utility model has expired, based on the following grounds:

  • violation of requirements for registration as a utility model, such as novelty, inventive step, double patenting, etc;
  • addition of new matter;
  • violation of description requirements;
  • violation of a treaty;
  • the utility model having been granted on a utility model application filed by a person who is not the inventor and has not succeeded to the right to obtain a utility model for the invention; or
  • the correction of the description, scope of claims or drawings attached to the application for the utility model having been obtained in violation of the provisions under the Utility Model Act.

An opposition or an invalidation trial for a patent or a utility model registration may be filed for each individual claim.

Amendments ('corrections' in opposition or invalidation proceedings under the Patent Act or the Utility Model Act) may be filed in opposition or invalidation proceedings.

In opposition proceedings, a patent-owner may file amendments in the period for responding to a notice of cancellation issued by the board of trial examiners who examined the request for opposition.

In invalidation trial proceedings, the owner of a patent- or utility model-right may file amendments in the period for filing an answer in response to a request for an invalidation trial. The owner may also file amendments in the period for responding to a notice of reasons for invalidation or an advance notice of appeal decision, both issued by the board of trial examiners who examined the request for invalidation trial.

In patent or utility model infringement litigation heard before the courts, both infringement and invalidation issues may be heard together because the defendant may challenge the validity of a patent or utility model registration as a defence before a court. The courts examine both infringement and validity together, and render a decision based on the examination of infringement and/or validity.

With respect to trial and settlement for intellectual property rights proceedings, there are no specifically applicable provisions. However, in practice, the trial will be divided into two parts. The court’s first focus is on determining whether the infringement of the intellectual property right is established. Then, only after a court tentatively concludes the establishment of the infringement will it assess the damages incurred by a plaintiff.

A case is determined solely by a legal judge. The Japanese legal system has neither technical judges nor jury trials for intellectual property cases.

In the Tokyo District Court and the Osaka District Court, there are special divisions for intellectual property matters (four divisions at the Tokyo District Court and two divisions at the Osaka District Court) where judges who are experienced in intellectual property matters hear and decide cases. The judges in these courts and the IPHC do not necessarily have technical backgrounds. The courts retain judicial research officials who have a technical background to help judges understand any technology issues involved in a case. The courts can also appoint and request expert advisers to assist judges with a case where advanced, complicated or specialised technology issues are involved.

Parties cannot influence who will judge a case, although a party can request to avoid a certain judge if he or she has reason to believe that the judge cannot be impartial. This could be due to a particular relationship with the other party, eg, being a relative of one party).

A judge usually takes the initiative on settlement negotiations unless the parties clearly refuse to settle a case. In no event will a defendant be obliged to settle a case. Generally, courts prefer settlements rather than judgments to resolve cases. A judge may disclose or imply his or her unofficial, tentative opinion on a case to the parties in order to facilitate settlement negotiations. A judge will cease settlement negotiations if one party decides and requests to receive a court decision rather than a settlement.

Even if there are any pending parallel revocation or infringement proceedings, the current proceedings will not normally be stayed and the courts will separately and independently make a judgment for a case. The courts can even dismiss a claim for infringement on the ground that the patent is invalid, without the need for a revocation proceeding. Thus it is possible for a conflict between two cases on the same subject matter to exist. However, in practice, the High Court, as the court of second instance, will make consistent judgments so that any contradiction in the first instance will be resolved.

The remedies available for a patentee are injunctive relief and damages. As part of injunctive relief, the patentee can also seek disposal of the infringing goods. The lawyer’s fee can be recovered as part of the damages, although the recovery thereof is very limited (in practice around 10% of the total amount of actual damages admitted by the courts). A patentee can only seek compensatory damages. Claims for enhanced damages, such as punitive damages, are not eligible even in cases of wilful infringement. The Patent Act provides for certain presumptions of the damages that are to be calculated, based on the profit from the infringement or the assumed royalties. A judge has the discretion to determine the appropriate remedies or amount of damages, provided that the discretion is only applied within the amount of the claim made by a plaintiff.

If a defendant prevails, the courts can order the plaintiff to pay court costs (eg, transportation fees to attend court hearings, expenses for delivering documents and daily allowances for witnesses), provided, however, that the court costs do not include the defendant’s lawyer fees or other costs incurred by the defendant in the course of the procedure. There is no right of or remedy for a prevailing defendant to recover his or her own costs.

A prevailing defendant may seek damages arising out of the infringement litigation, including lawyer fees, if the litigation itself is considered to constitute a tort on the grounds that it is found to be significantly unreasonable in light of the purport of the litigation system; eg, an allegation of patent infringement is entirely baseless and the patentee is fully aware of the lack of legal grounds. However, the courts rarely accept such a claim.

There are no different remedies for different types of technical intellectual property.

To stop the execution of an injunction granted at first instance, an infringer will, upon filing an appeal, have to file a petition to seek a ruling on the suspension of compulsory execution. Here, the infringer will need to provide a security deposit (to be returned after litigation).

Generally, there are no special provisions concerning the appellate procedure for patent litigation. Note, however, that the IPHC has exclusive jurisdiction over appeals from decisions made by the Tokyo District Court and the Osaka District Court on patent litigations. A court normally consists of three judges, but if the case includes an important issue of law, five judges may sit to consider the matter and deliver their opinion.

The IPHC, as the court of second instance, reviews not only issues of law but also the facts from the proceedings in district courts in the first instance. The IPHC may also conduct factual findings of its own. A party may submit additional legal arguments, facts or evidence to the appeal court, unless such an additional claim is considered to be causing delay to the procedure due to that party’s fault. However, the Supreme Court, as the court of third instance, only reviews the legal issues of a case.

With respect to patent infringement litigation, costs normally incurred are for investigating a product or method; conducting searches for prior art references; sending warning letters; and for preparing for litigation.

Stamp fees and expenses for delivering documents are required to file a lawsuit. The amount of stamp fees is calculated according to the formula prepared by the court based on the value of the subject matter of the suit.

In general, court costs (such as stamp fees, expenses for delivering documents and daily allowances for witnesses) are borne by the losing party, provided, however, that the proportion of the responsibility for the court costs is left to the court’s discretion and that the courts may allocate the responsibility of court costs to the prevailing party in proportion to the part of their claim that is not accepted by the courts.

It should be noted that court costs do not include lawyers’ fees and thus, generally speaking, each party must bear his or her own lawyer’s fee. A plaintiff may seek compensation for his or her lawyer’s fees as part of damages, but the recovery rate is left to the court’s discretion and it is usually quite limited, even if the plaintiff wins the case (in practice around 10% of the total amount of actual damages admitted by the courts).

Alternative dispute resolution is not a common way to settle intellectual property cases in Japan. However, alternative dispute resolution such as mediation or arbitration is available and JIPAC and IACT are the alternative dispute resolution organisations that provide for dispute resolution in the field of intellectual property disputes.

Patent rights may be freely assigned. However, except in cases of general succession, such as inheritance or merger, no assignment will take effect without having been registered on the patent registry. Where a patent-right is jointly owned, no joint owner may assign his or her share without the consent of all the other joint owners. Neither an agreement in writing nor an approval from the JPO is necessary for conducting an assignment.

Assignment of a patent-right comes into effect by being registered on the patent registry. In the case of a general succession, such as through inheritance or merger, the assignment comes into effect without being registered, but the registration is made by providing notification of that assignment.

In terms of licensing patent rights, there are licences granted merely by an agreement between the parties (non-registered licences) and licences granted upon registration at the JPO (registered as exclusive licences), in addition to an agreement between the parties. As for the former type of licence there are no particular restrictions regarding formalities, such as the existence of a written agreement or notification to the JPO, etc. However, the latter type of licence requires registration at the JPO in order for it to enter into force. It should be noted that if a registered exclusive licence is granted, the scope of rights subject to that grant may not be executed by other parties, even by the patent-right holder.

As the grant of a registered exclusive licence requires registration at the JPO in order for it to come into force, it is necessary to make an application to the JPO setting forth the content of the licence agreed by both parties, and to receive registration thereof. The granting of a non-registered licence comes into force merely by way of the execution of an agreement between the parties. Thus, generally, a licence of this kind is granted by preparing a licence agreement, as well as orally, or even implicitly.

TMI Associates

23rd Floor, Roppongi Hills Mori Tower
6-10-1 Roppongi
Minato-ku
Tokyo
Japan
106-6123

+81 03 6438 5511

+81 3 6438 5522

info_general@tmi.gr.jp www.tmi.gr.jp
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Law and Practice

Authors



TMI Associates has, since its establishment, had intellectual property as an integral part of its practice. The firm now has extensive experience and expertise in the area, including in patents and trade marks. The team is made up of lawyers and patent/trade mark attorneys, as well as patent/trade mark paralegals, and acts for clients across a wide variety of businesses and technologies all around the globe. The team handles all aspects of intellectual property law, including patent/trade mark prosecution, trials before the Japan Patent Office, infringement litigation, IP due diligence, and import suspension applications at Customs.

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