Patentee

A patentee may file an infringement action. Even when a patentee has granted an exclusive licence to a third party, they may file an action without consent or involvement of the licensee. A co-owner of a patent may file an infringement action without consent or involvement of the other co-owners.

Exclusive Licensee

An exclusive licensee may file an infringement action and seek both injunction and damages without consent or involvement of a patentee. Registration is required for a valid exclusive licence.

Non-exclusive Licensee

Japan distinguishes a sole non-exclusive licensee (a licensor may not grant a licence to other third parties) from a usual non-exclusive licensee (a licensor may grant a licence to other third parties). A sole non-exclusive licensee may file an infringement action without consent or involvement of a patentee but can seek only damages, not an injunction. A usual non-exclusive licensee may not file an infringement action.

Standing for Invalidity Trial

A defendant may raise an invalidity defence in infringement litigation. Another option is an invalidity trial before the Japan Patent Office (JPO). A petitioner at an invalidity trial before the JPO must have some legal interests. This standing requirement is liberally construed by the court and is met if a petitioner’s future business conflicts with the patent.

Usually, suppliers, manufacturers, and local distributors/wholesalers are sued as defendants in infringement actions. It is highly unlikely that a patentee sues pharmacists, doctors, hospitals, or HRAs in Japan. Infringement and nullity proceedings do not require notification to, or involvement of, HRAs/IPOs.

Preliminary Injunctions Are Available in Japan

Preliminary injunctions are generally available in Japan, but they are almost always inter partes and not quick.

Procedures

The procedures are very similar to those of permanent injunctions. Inter partes hearings will be held every one to two months, both parties are given opportunities to file allegations and evidence several times, and it takes about six to ten months in total to determine the case as Japanese judges carefully review both infringement and validity. Typically, a patent owner can initiate a preliminary injunction procedure soon after patent registration as far as the patent owner themself is implementing the patent. Only one who has legal interest in the case can access the documents, and even such access may be prohibited upon request by a party showing that the part contains a trade secret.

Notification of Preliminary Injunction

A written demand for preliminary injunction is served on an opponent. It can be served by Express Mail Service on a foreign opponent together with an English translation, which takes only several weeks. However, some countries, including Germany and China, do not accept this type of service, and the service process takes a long time, sometimes more than a year. The following proceedings may be delayed if the service is delayed. The opponent will be given opportunities to file counter-arguments and evidence. The court carefully reviews allegations and evidence submitted by both parties.

Requirements

The requirements for preliminary injunction are not so strict for patent infringement cases, and it will be granted if an accused infringer causes substantial harm to a patent owner by infringing a valid patent. The court usually finds substantial harm as long as a patent owner is implementing the patent by themself.

Life Sciences Cases

Drug sales/manufacturing application itself does not constitute infringement in Japan. Thus, a patent owner typically must wait for a drug sales/manufacturing approval grant of infringing products for a preliminary injunctions grant.

Infringement and Validity Are Bifurcated

Usually, both infringement and validity issues are disputed and reviewed in an infringement action before the courts.

Invalidity Trial Before Japan Patent Office

An accused infringer may separately file an invalidity trial proceeding before the Japan Patent Office (JPO).

Relationship Between Litigation and Invalidity Trial

In Japan, invalidity trial proceedings before the JPO are not restricted by parallel infringement litigation. Therefore, often the same invalidity issues are disputed in these two tracks. Some court judges tend to wait for the JPO decision if it will be granted in a few months, but others do not. Both first instance infringement litigation and the JPO invalidity trial outcomes may be appealed before the Intellectual Property High Court (the “IP High Court”). Inconsistencies between these two tracks are expected to be solved by the IP High Court.

Statute of Limitations

Litigation

An injunction claim may be filed as long as the infringement of an unexpired patent continues. On the other hand, a damages claim should be filed within the earlier of:

• three years from when a patentee recognises infringement and an infringer; or
• twenty years from infringement.

Even after this period, an unjust enrichment claim can be filed if it is within the earlier of:

• five years from when a patentee recognises that the claim can be filed; and
• ten years from infringement.

Patent Office proceedings

Invalidity trial proceedings before the JPO can be filed even after patent expiration to inhibit a damages claim, which can be filed even after patent expiration within the statute of limitations explained above.

Service of Complaint/Written Demand

Litigation

A complaint should be served on the defendant in an infringement action. Usually, it is served via specifically certified mail. The service usually takes a few weeks if the defendant is a domestic entity. If the defendant is a foreign entity, the plaintiff must prepare a translation of the complaint, and the service itself takes around three months to one year depending on the country where the defendant sits. The whole timeline of litigation will be delayed if service is delayed.

Patent Office proceedings

A written demand for invalidity proceedings before the JPO also should be served on the patent owner under similar requirements. However, a foreign patent owner is supposed to designate a Japanese patent administrator under the Japanese Patent Act, and a written demand against the foreign patent owner will be served on the patent administrator.

Timeline

Litigation

Oral hearings will be held every one to two months. Each party files briefs and evidence every few months. Judgment will be granted in about 12 months (injunction only) and about 18 months (injunction and damages). When a plaintiff seeks both an injunction and damages, a court discloses its preliminary conclusion at the end of the infringement and invalidity stage, and decides whether to proceed to the damages stage.

Patent Office proceedings

Typically, both parties have one or two opportunities to file assertions and evidence before an oral hearing. After the oral hearing, typically, a preliminary conclusion will be disclosed to give the opportunity to amend claims when the JPO considers that the patent claims should be invalidated. A decision will be granted about three to four months after the oral hearing. The total procedure takes about ten months.

A patent must be granted and registered before filing an infringement lawsuit. There are no additional requirements such as validation or translation. The types of patents do not matter to the requirements for bringing an action.

Japan does not have discovery at all. There are pre-action evidence preservation procedures, but availability is significantly limited due to the strict standard. Japanese courts generally accept materials legally obtained in other jurisdictions without limitation. In fact, US discovery under 28 USC Section 1782 is sometimes used to collect evidence for Japanese infringement actions.

Search and seizure orders are not available for patent cases. A court grants a document production order under certain circumstances, but the availability and scope are substantially limited.

Recently, Japan newly established an inspection procedure which allows a court-appointed expert to inspect the manufacturing plant of an accused infringer. However, a patent owner first must show a certain level of probability of infringement to use this procedure, and the availability is limited.

Japanese courts generally accept materials legally obtained in other jurisdictions such as US discovery without limitation.

Declaratory Judgment of Patent Dispute

Currently, Japanese courts are very reluctant to grant declaratory judgments for patent disputes. Typically, a patent owner’s intent to assert a patent with knowledge of details of accused products is required to support the necessity of a declaratory judgment. Once standing is found, the plaintiff of the declaratory judgment proceeding may typically seek judgment declaring non-infringement and/or invalidity.

Declaratory Judgment in the Life Sciences Field

In the life sciences field, the IP High Court recently denied the standing of a declaratory judgment filed by a generic drug company that filed a generic drug marketing application, holding that the application alone does not support the standing of a declaratory judgment, even though a new drug applicant expressed the possibility of patent assertion once the generic drug is approved. Under this decision, it is difficult to judicially resolve the patent issues between a new drug company and a generic drug company before a marketing approval grant.

Once a generic drug is approved (and price listed), a generic drug company likely may file a declaratory judgment action to seek declarations of non-infringement and invalidity. However, often a generic drug application cannot get approval due to the substance/dosage/usage patent of a new drug applicant, and the only option for a generic drug company will be invalidity trials before the JPO under such circumstances.

The Doctrine of Equivalents (DoE) in Japan has five requirements:

• (1) the difference between a claim and an accused product is not an essential part of a patented invention;
• (2) the invention can achieve the same purpose and function even with the replacement of the difference;
• (3) a person ordinarily skilled in the art could easily conceive the replacement at the time of manufacture of the accused product;
• (4) configuration of the product was neither publicly known nor easily conceived at the time of the patent application; and
• (5) there are no special circumstances such as prosecution estoppel.

Requirement (3) is a significant difference from other jurisdictions such as the US. If a patent is granted to the replacement, it might be difficult to assert infringement under the DoE.

Requirement (4) corresponds to the Doctrine of Ensnarement or the Formstein Defence.

As to requirement (5), Japanese courts traditionally have adopted a “complete bar”, meaning that, if a patentee excluded part of a claim during a prosecution history, the DoE does not apply to the excluded part whatever the reason for the exclusion was. However, a recent lower court decision adopts a more flexible approach, so future case law will need to be watched closely.

Japan basically does not have patent linkage as to a new drug, and there is no obligation to “clear the way” ahead of a new product launch. As a result, an approved new drug might be sued for patent infringement after launch and can be excluded from the market later on.

Expert declarations often help parties persuade judges on technical issues both on infringement and validity. There are no specific requirements or procedures for evidence from experts, but the parties file written declarations instead of oral testimonies as Japanese procedures are highly focused on written evidence.

Sometimes, a party retains multiple experts, but too much focus on technical issues is usually not effective nor persuasive to the judges as most of them do not have technical backgrounds. However, it is highly important to choose a good expert trustworthy to Japanese judges.

The Japanese court separately appoints an expert who supports the judge’s understanding of technical aspects of the case from a very early stage in the proceedings.

Japan does not have specific mechanisms or procedures to submit experimental results. Any forms of experimental result report are admissible as long as the person who prepared the report signs and/or seals it. As most Japanese judges do not have technical backgrounds, too complicated or lengthy a report is not preferable, and it is helpful to attach an expert declaration explaining the meaning of the results.

Japan does not have discovery even in the post-action stages. There are document production order and inspection procedures, but their availability is limited, as explained in 1.7 Pre-action Discovery/Disclosure.

In Japan, invalidity is the most frequently asserted defence in infringement actions. Also, the consent/licence, prior use, exhaustion, and experimental use defences are available.

In the life science field, it is often asserted that an injunction is vastly against the public good, but it is highly unlikely that the court will refrain from granting an injunction based on this ground. Japan has a compulsory licence system, but it has never been granted.

Japan does not have any official framework to stay litigation due to parallel proceedings. Some court judges tend to wait for the outcome of an invalidity proceeding before the JPO if it will be granted in a few months, but others do not. It is important to know your judge. Japanese courts generally do not wait for foreign proceedings.

Even during infringement litigation, a patent owner may file an amendment demand before the JPO. A patent owner is required to file an amendment demand to raise an amendment re-defence against an invalidity defence in the infringement litigation, so it is highly important to timely file an amendment demand before the JPO. (In some circumstances, such as when a patent owner cannot file an amendment demand due to the timing limitation imposed by the Patent Act, an amendment demand is not required to raise the re-defence.) The amendment re-defence is often used and effective in infringement actions.

All patent litigation cases in Japan are decided by a panel of three judges from IP-specialised divisions. Japanese courts have divisions highly specialised in IP, but they are not specific to pharma/life sciences patent litigation.

There is little room for forum selection in Japan. Tokyo and Osaka District Courts have exclusive jurisdiction over first-instance patent-related cases. In some circumstances, patent owners may have options between these two courts, but there is no significant difference between these two courts. Tokyo District Court has more cases.

Infringement Acts

Japan does not have infringing activities specific to pharmaceutical products. Thus, just like general patent infringement, selling, making, using, exporting, importing, and offering to sell generic drugs constitutes infringement. Other acts such as a marketing approval application or grant; an application for reimbursement, pricing or listing; a submission or award of tender; or offer to supply after patent term expiry usually does not constitute infringement.

Skinny Labelling

In Japan, an invention for a new use of a known substance is allowed as a product patent. This means that a product patent can be granted for a second medical use. But the scope of such a patent is not clear. The government agency (Ministry of Health, Labour and Welfare of Japan (MHLW)) grants approval for skinny labelling generics. However, it is not clear whether and to what extent skinny labelling avoids infringement.

Parallel Importation

Generally speaking, parallel importation usually does not constitute patent infringement unless (i) there is an agreement between a patent owner (or an entity substantially identical to the patent owner) and an original buyer which excludes Japan from the sales area, and (ii) the agreement is displayed on products. Depending on the facts, this exception may apply to drugs and the parallel importation may constitute patent infringement, although there is no case law and it is not clear.

The typical data exclusivity periods in Japan are as follows:

• new substance drug – eight years;
• orphan drug – ten years;
• paediatric drug – ten years;
• new administration route – six years; and
• new indications, combinations, reclassifications – four years.

Challenges to data exclusivity is not common in Japan.

(To be more accurate, Japan does not have official data exclusivity periods. There are periods for post-grant re-evaluation of effect/efficacy and safety. The government agency, MHLW, substantially utilises these re-evaluation periods as data exclusivity periods.)

Experimental use exception applies to generics, and activities necessary for clinical trial do not constitute infringement.

Japan does not have a publicly available list of new drug patents such as the Orange Book. New drug applicants voluntarily report substance and use patents covering their new drugs to the government agency, MHLW, so MHLW has a non-public list of patents. MHLW does not grant marketing approval if a generic drug is covered by substance or use patents of new drug applicants.

Japan does not have an official patent linkage scheme but has an informal process based on rules set by notifications by the government agency, the MHLW. The process has two stages.

In the first stage, the MHLW decides if a generic drug infringes (i) substance patent, (ii) effect/efficacy patent, or (iii) use/dosage patent of new drug applicants. In determining this, the MHLW relies on the non-public list of patents voluntarily submitted by new drug applicants. If there is no patent infringement found, it proceeds to the second stage.

In the second stage, the MHLW requests the generic drug applicant to negotiate and solve problems with other patents (such as dosage form or manufacturing method patents), if any, before the drug pricing. Even if the generic drug company fails to solve the problem, it usually does not matter to the price listing.

Typically, even if there is a second medical use patent, a generic drug application can be approved but the patented use should be excluded from the indication. Sometimes it is difficult to exclude the patented use from the label, and the generic drug application will not be granted.

Unlike ANDA in the US, Japan does not have specific litigation procedure for generic drugs. Thus, typically, a new drug applicant files litigation against generics after launch.

There are no differences between small molecules and biologics in terms of infringement acts, skinny label, and parallel importation.

The data exclusivity periods of biologics are basically the same as small molecules.

There are no differences between small molecules and biologics in terms of acceptable pre-launch preparations. Experimental use defence applies to biologics, and activities necessary for clinical trial do not constitute infringement.

There are no differences between small molecules and biologics in terms of publicly available drug and patent information. New drug applicants of biologics voluntarily report substance and use patents covering their new drugs to the government agency, MHLW, so MHLW has a non-public list of patents. MHLW does not grant marketing approval if a biosimilar drug is covered by substance or use patents of new drug applicants.

Japan does not have an official patent linkage scheme. The approval process for biosimilars is unclear, just internally being handled by the government agency, MHLW. But MHLW reveals that the process is similar to the two-stage process of generic drugs.

Unlike the Biologics Price Competition and Innovation Act (BPCIA) in the US, Japan does not have specific litigation procedures (ie, patent dance) for biosimilars. Thus, typically, a new drug applicant of biologics files litigation against biosimilars after launch.

Japan has a patent term extension for a shorter period (i) from the start of clinical trials to the marketing approval grant, and (ii) from the patent registration to the marketing approval grant. The maximum extension period for a patent is five years even if it takes longer than that.

Japan adopts a flexible policy in terms of patent term extension. Not only substance patents but also other patents such as use/dosage patents can be extended. Unlike the US and many European countries, each plurality of patents that covers the same product can be extended. If a plurality of marketing approvals were granted to product(s) covered by one patent, the extension of the patent can be possible for each approval as long as the subsequent approval is not encompassed by the preceding approval.

To obtain an extension, a patentee or its licensee must be the one who was granted marketing approval.

Patent term extensions specific to paediatric drugs are not available in Japan. But Japan gives a ten-year data exclusivity period for paediatric drugs.

In order to enforce a preliminary injunction, usually, a bond to secure potential damages to be incurred by an accused infringer is required. The bond should be deposited within the term determined by the court, which is usually three to seven days from notification of the amount. In determining the amount, the court considers various factors including the monetary size of the case and the degree of proof of infringement. The amount can be huge, especially in pharmaceutical disputes. Thus, preparing for bond well before the order is necessary. A patent owner may require a return of the deposit after it wins the patent infringement litigation.

Usually, the order is enforceable upon proving the deposit of the bond. It is necessary to initiate an ex-parte enforcement procedure before the court to enforce the preliminary injunction order against patent infringement. Typically, it will be enforced by imposing a duty to pay a certain amount of money during continuing infringement. It is also possible to have the drugs retained by a bailiff.

There is no term limitation for the effect of the preliminary injunction, but the accused infringer may require a patent owner to file litigation seeking a permanent injunction; and, if the patent owner fails to do so, the preliminary injunction will be revoked.

To stay the enforcement, the accused infringer must clearly show a change of situation denying the fulfilment of preliminary injunction requirements, irreparable harm, etc, in opposition or revocation procedure. A bond is required for the stay.

Also, if the preliminary injunction order allows payment of a certain amount of deposit to lift the order, such a deposit will be a basis for revocation of the order.

Final injunctions are enforceable when they become final. Usually, it is when the final appeal before the Supreme Court is dismissed.

Final injunctions are enforced through separate enforcement procedures before the courts, but it is not so common to enforce permanent injunctions because many infringers obey the court decisions and voluntarily stop infringement. It will be enforced by imposing a duty to pay a certain amount of money during continuing infringement. Also, the disposition of product stock can be sought and enforced.

The court does not have the discretion to award damages in lieu of an injunction. An accused infringer often makes public interest arguments to avoid an injunction, but the Japanese court does not accept such an argument and grants an injunction.

Damages are presumed based on:

• marginal profit of plaintiff’s product multiplied by quantity of infringing products sold by defendant;
• marginal profit of defendant’s product multiplied by quantity sold by defendant; or
• reasonable royalty.

The first two listed are available when a plaintiff could have obtained profits but for infringement. Typically, it means that the plaintiff has competing products, but it is not strictly limited to such a situation. A plaintiff may assert more than one of these three options, and the court adopts the highest amount among these.

A defendant may rebut the presumption by proving factors such as market difference, existence of other competing products, its marketing effort, or product features other than invention.

Special Damages for Pharma

Basically, there are no special damages for pharma cases. Japan does not allow treble damages for intentional infringement. However, if the drug price dropped because of infringing generic/biosimilar products, the dropped price can be included in damages.

Interest on Damages

Interest of 3% per year from each infringing activity is payable.

Damages Examination

The court first examines infringement and validity. Then, if the court thinks the accused infringer infringes a valid patent, the court discloses a preliminary conclusion, and then proceeds to the damages examination stage.

Timing of Damages Payment

Often, the damages are preliminarily enforceable soon after the first instance court judgment. Theoretically, it must be paid soon after the rendition of the judgment, but usually the accused infringer appeals before the IP High Court and seeks pending enforcement by depositing around 80% of the damages awarded by the first instance court.

Wrongful Injunction Damages

Usually, damages for a wrongful injunction are not available because an injunction is not enforceable until the judgment becomes final.

Third Party

Theoretically, a third party may seek damages (as long as they suffer damage caused by patent infringement) through the usual civil litigation, but it is not common in Japan.

Court costs including court fees paid by a winning party are recoverable from a losing party, but they are often neglected because the amount is small.

In patent infringement lawsuits, the court may not withhold or reduce relief as a penalisation for negative conduct from the plaintiff.

Trade mark disputes in the life sciences and pharma sector are somewhat common in Japan. Just like the usual trade mark disputes, the cases are governed by the Trade Mark Act. Often, the main issue of the case is whether the trade mark causes consumer confusion about the product’s source, just like usual trade mark cases.

The government agency notified rules for generic drug naming, so trade mark disputes between brand-name and generic products are not common.

Copyright disputes are not common in the life sciences and pharma sectors in Japan. Potentially, the copyright of software (such as health tech software or drug research software) can be disputed.

Unlike the tech sector, trade secrets disputes are not so common in the life sciences and pharma sectors in Japan. However, such disputes could happen in the future because many pharma companies now develop and use AI or high-tech software for drug discovery. The Unfair Competition Prevention Act governs trade secrets disputes.

Appeal Against Preliminary Injunction

An accused infringer may file an appeal within two weeks from the service of a preliminary injunction order. The appellate court reviews the case without deference. Also, opposition and revocation procedures are available, and the preliminary injunction will be vacated if the injunctive right no longer exists due to significant situation change after the preliminary injunction order grant.

Appeal Against Permanent Injunction

A defendant may appeal within two weeks from the service of a judgment ordering a permanent injunction. A foreign defendant has an additional 30 days to appeal. The first hearing will be held within a few months from the appeal, and the judgment will be granted about six months after the appeal. The appellate court reviews the case without deference. A party who lost in the appellate court may file a final appeal before the Supreme Court although the success rate of the final appeal is as low as 1%.

A panel of three judges from the IP High Court, which has exclusive jurisdiction over patent appeal cases, hears and decides a patent litigation appeal. The court often retains a court expert who supports judges’ understanding of technical aspects of the case.

Patent litigation is governed by the Civil Procedure Code, just like normal civil litigation. However, the court usually expects more professional litigation activities from both parties, and delayed submission of arguments and evidence might be more strictly evaluated than usual civil cases and can be dismissed.

A custom suspension to prevent the import of infringing products is available. A panel appointed by Japan Customs reviews the case, but they often wait for a court decision, especially in a complex case. Thus, the effectiveness of the custom suspension is often limited for a pharma patent owner. However, it is often effective for suspension based on a trade mark.

The JPO provides a procedure called “hantei” in which a panel of three examiners decides whether a product falls within the technical scope of a patent claim. However, this is not binding on the court, so its impact is very limited.

ADR in the life sciences and pharma sectors is not common at all in Japan so far. Many patent owners choose litigation over mediation or arbitration, trusting formal court procedures. Recently, Tokyo and Osaka District Courts started providing arbitration services for IP-related disputes, but they are directed to simple cases and are not suitable for complex patent infringement disputes.

Japan has not experienced antitrust cases regarding “pay for delay” or “reverse payment”. However, depending on the facts of each case, “pay-for-delay” or “reverse payment” might violate Japan’s Anti-Monopoly Act.