The Japanese legal system covers two types of intellectual property rights 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be filed within three years from the date of filing the patent application, or the patent application will be deemed withdrawn.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 14.7 months in 2022. Also, the average grant rate was 75.9% in 2022.
Domestic applicants do not need representation in order to initiate grant proceedings, but foreign applicants do.
The typical costs incurred from filing to grant are JPY1 million, comprising official fees of JPY200,000 and lawyers’ 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 lawyers’ 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. There are, however, some exceptions:
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.
It should be noted that, since a substantive examination is not required for applications for utility model registration, a utility model-owner may only exercise their utility model right against an infringer after giving a warning, and also presenting a Utility Model Technical Opinion Report for the registered utility model. This Report is an assessment of the novelty and inventive step of a registered utility model right by a JPO Examiner, based on a search of prior art documents. A request for a such Utility Model Technical Opinion Report can be made at any time after the application for a utility model has been filed.
In Japan, there is no public information listing applicable patents in relation to certain products or processes. Although there is a public database of patent information in Japan called J-PlatPat, J-PlatPat does not have any functions to search applicable patents in relation to certain products or processes.
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, or the enablement requirement. 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 initial decision of rejection before it 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 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 or a utility model owner fails to pay the annual fees by the specified deadline, they can still make a late payment by paying a surcharge in addition, and equal, to the annual fee within the six-month grace period after the expiry of the deadline.
Furthermore, if the patent-owner or the utility model-owner was unable to meet the payment deadline, they can still make an additional payment to restore the patent right or the utility model right, except in the case of a “wilful” failure to meet the payment deadline. This additional payment can be made within two months of the applicant becoming able to make the payment or within one year after the payment deadline, whichever comes first.
Both patent-owners and utility model-owners may file a request for a trial for correction with regard to correcting the description, the scope of claims or the drawings attached to the application.
The purpose of the correction is limited to the following:
The correction cannot be made beyond the scope of the matters disclosed in the description, the scope of claims or the drawings attached to the application.
Utility model-owners are allowed to make a request for correction only once, except for deletion of claims, whereas patent-owners may request a trial for correction as many times as they wish, except where the patent has been invalidated by an invalidation trial or revoked by a patent opposition. Patentees may not request a correction while a patent opposition or invalidation proceeding is pending, but may instead request a correction in the proceedings of the patent opposition or patent invalidation trial.
If the owner of a technical intellectual property right (eg, a patent) finds that a third party is infringing upon their patent, they can take one or more of the following actions:
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, their legal interest/standing directly affected by the existence of the patent right. On the other hand, in the Patent Opposition System, 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, as of the end of 2023, no such compulsory licence has ever actually been granted 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 statutory prerequisites for filing a lawsuit. However, as patent rights and registered exclusive licences become effective upon the establishment of registration with the JPO, such registration will be required when a patentee or registered exclusive licensee brings a claim for damages and/or an injunction based on that patent right or registered exclusive licence. It is, however, generally considered that such registration will not be required when a non-registered exclusive licensee brings a claim for damages based on a non-registered exclusive licence.
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. If a request for a preliminary injunction is granted, the rights-owner will usually be required to deposit a certain amount of money as security. The amount of that security will be determined by the court in consideration of the circumstances of the specific case. It should be noted that a relatively large amount of money may be required to be deposited as security.
Since a preliminary injunction substantially achieves an injunction against the other party’s conduct before the lawsuit is finalised, in a preliminary injunction case, a hearing of both the rights-owner and the other party is required, and prima facie evidence of a similar level to the proof required in the lawsuit is often required. In general, preliminary injunctions are intended to resolve disputes more quickly than litigation; however, the speed of trial is often not so different from that of litigation because of the above-mentioned need for prima facie evidence.
A potential defendant can file a request for a patent invalidation trial before the JPO and/or initiate a lawsuit for a 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 in order 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, but 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 only to intellectual property matters.
Claims for injunctions based on patent rights may be filed at any time if infringement of the patent rights exists, or a threat of infringement of the patent rights is recognised.
The claim for compensation for loss or damage by tort of patent infringement is extinguished by prescription if the right is not exercised within three years from the time when the patentee comes to know the damage and the identity of the infringer, or if the right is not exercised within 20 years from the time of the tortious act, pursuant to the provisions of the statute of limitations provided in the Civil Code of Japan, which is a general law. Please note that the above prescription period may be renewed or the expiry of prescription period may be postponed, for statutory reasons.
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 purposes of:
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. Furthermore, on 1 July 2019, the amended Patent Act introduced a procedure in which the court can determine the necessity of document production by way of in-camera procedures. The amended Patent Act also introduced a procedure that allows expert advisers to participate in such a procedure.
Moreover, by way of the 2019 amendment to the Patent Act, an inspection system was introduced on 1 October 2020, under which an inspector designated by the court will be entitled to enter into the factories, offices, etc, of a defendant and collect evidence necessary to make a decision on the existence of facts regarding the alleged infringement. However, the requirements for conducting an inspection are strictly stipulated, as follows:
A complaint must contain both parties’ names and addresses, and the 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. In general, supportive evidence – to prove both the act of infringing conduct and the relevant features of the product – is submitted together with the complaint. To identify these facts and find the relevant evidence, a patentee is expected to conduct a sufficiently detailed investigation and analysis of 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.
It is acceptable to supplement pleadings with additional arguments. 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 these 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.
Civil Code
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 purport of the litigation system (eg, the allegation of 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.
Guidelines for the Use of Intellectual Property
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.
Unfair Competition Prevention Act
Furthermore, 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 an infringement of the registered exclusive licence, seeking the same remedies as the patent-owner. In this regard, there are arguments over whether 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 nor 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.
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 the Japanese Patent Act, inventions are classified either as the invention of a product, the invention of a process, or the invention of a process for producing a product, and an act of working a patented invention is stipulated for each of these categories. Specifically, for the invention of a process, the act of using the process is stipulated as an act of working. Furthermore, for the invention of a process for producing a product, acts of using the process and acts of using, assigning, etc, exporting or importing, or offering to assign, etc, a product produced by the process are stipulated as acts of working. On the other hand, for the invention of a product, acts of producing, using, assigning, etc, exporting or importing, or offering to assign, etc, the product, are stipulated as acts of working.
There is no definite rule as to whether the infringement of a patent right in Japan can be recognised when part of the invention of a process is worked abroad. In cases where some of the steps in the invention of a process were carried out outside Japan, there is a District Court case which judged that this cannot be regarded as working the patent in Japan because the act which belongs to the technical scope of the patent is not completed in Japan; however, this court ruling is not considered to be a well-established rule generally applicable to the invention of a process in Japan.
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. The prosecution history of the application and the prior art may also be taken into consideration. Accordingly, to say that infringement of a patent right 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 to indirect infringement or infringement under the doctrine of equivalents (see 3.2 Direct and Indirect Infringement).
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 makes a claim for an injunction against a party who intends to be licensed under FRAND terms or makes a claim for damages in excess of an amount equivalent to a licence fee under FRAND terms), a defendant may assert the defence of abuse of rights.
If the defendant has practised a patented invention or made preparation for such practice at the time of the 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 their use of the patented invention was experimental and therefore beyond 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), as of the end of 2023, no such compulsory licence has ever actually been granted in Japan.
The fact that the defendant’s infringing conduct was an exercise of their 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 have passed since 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.
In addition, in litigation, experts selected by a party may prepare expert opinions, which are submitted as evidence by the party, but rarely testify in court as witnesses.
There is no separate procedure for claim construction.
A system by which the court can seek third-party opinions in lawsuits relating to patent infringement was introduced on 1 April 2022. Under this system, if a party requests it and the court finds it necessary, the court may request the public to submit documents stating public opinions on the application of the Patent Act of Japan, or any other necessary matters, after hearing the opinion of the other party. It is envisioned that this system will be used in patent infringement cases where the judgments may have significant impacts not only on an industry to which the parties belong but also on companies in other industries.
A recent case (Intellectual Property High Court, Case No 2022 (Ne) 10046) is examining whether or not the defendant’s act of creating a new system can be considered as “production”, which is one of requirements of patent infringement as set forth in Article 2(3)(i) of the Patent Act, regarding a patented invention of a system comprising a server and a plurality of terminal devices, if the server is located outside Japan. The court in this case has issued a request for third-party opinions for the first time as to whether the defendant’s act can be considered as “production” and, if so, what requirements are necessary for it to fall under the category of “production”. In response to such a request for opinions, multiple opinions have been submitted by various organisations.
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:
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:
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:
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.
There are no specifically applicable provisions with respect to trial and settlement for intellectual property rights proceedings. However, in practice, the trial will be divided into two parts. At the first stage (the stage for examination on infringement), the court’s focus is on determining whether the infringement of the intellectual property right is established. At the second stage (the stage for examination of damages), a court will assess the damages incurred by a plaintiff only after it has tentatively concluded the establishment of the infringement.
In this regard, the Intellectual Property Division of the Tokyo District Court has a trial model for patent infringement litigation. According to this trial model, it is assumed that six court hearing dates are held at the first stage (stage for examination on infringement). If courts find that there is no patent infringement, the courts will either (i) make recommendations for settlement after disclosing their opinions, or (ii) conclude oral arguments and render judgments. If courts find that there is patent infringement, the courts will either (i) make recommendations for settlement after disclosing their opinions, or (ii) proceed to the second stage (the stage for examination of damages). It is assumed that three court hearing dates are held at the second stage, and both parties make arguments and counterarguments with regard to amounts of damages. Then, the courts will either (i) conclude oral arguments and render judgments after forming final opinions on the amounts of damages, or (ii) make recommendations for settlement after disclosing their opinions.
However, as the progress of trials (including the number of court hearing dates) depends largely on the complexity of cases, trials rarely proceed as envisioned in the above trial model, and in complex cases trials are often prolonged for much longer than the trial model.
According to the statistics provided by the Intellectual Property High Court, the average time intervals from commencement to disposition in intellectual property-related civil cases in 2022 were 15.2 months (in all district courts) and 8.2 months (in all high courts).
In patent litigation, examination of fact witnesses or experts is rarely conducted. In cases of examination of witnesses, opportunities for cross-examination are provided.
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 in 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 (see 3.6 Role of Experts). The courts can also appoint and request expert advisers to assist judges with any case involving advanced, complicated or specialised technology issues.
Parties cannot influence who will judge a case, although a party can request to avoid a certain judge if they have reason to believe that said judge cannot be impartial, 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 their 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. Therefore, 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.
There have been no cases where anti-suit injunctions have been issued against litigation in Japan, and it is unclear whether Japanese courts would take into account foreign anti-suit injunctions. In addition, in Japan, there is no statutory basis for granting injunctions against litigation by patentees, and there have been no examples of Japanese courts recognising anti-suit injunctions.
Remedies Available for the Patentee
The typical remedies available for a patentee are injunctive relief and damages. As part of injunctive relief, the patentee can also demand measures necessary to prevent infringement, including disposal of the infringing goods. Lawyers’ fees 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.
In addition, where an applicant has given a warning, together with documents stating the contents of the invention claimed in the patent application, that applicant may also claim compensation equivalent to the licence fee against any person who has worked the invention as a business after the warning and before the registration of the patent. Furthermore, even without such a warning, the applicant may claim compensation against those who, while being aware that the invention relates to a patent application that has been published, have worked the invention as a business before the registration. The right to claim compensation may only be executed after the patent has been registered.
A patentee may also demand measures necessary to restore its business credibility, but this remedy is rarely used.
Enforcement of Remedies
The methods for enforcement of remedies depend on the contents of those remedies. For example, with respect to judgments ordering patent infringers to pay damages, the remedies are enforced by seizing the infringers’ properties and receiving dividends from the money obtained through auctions, etc. With regard to judgments ordering patent infringers to cease and desist from manufacturing the infringing products, if the infringers do not perform the obligations ordered in the judgment, the court in charge of enforcement will enforce the remedies by ordering the infringers to pay to the obligees certain amounts of money which are found to be reasonable for securing performance of the obligation.
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); however, such costs do not include the defendant’s legal fees or other costs incurred by the defendant in the course of the procedure. There is no right or remedy for a prevailing defendant to recover their own costs.
A prevailing defendant may seek damages arising out of the infringement litigation, including their lawyers’ fees, if the litigation itself is considered to constitute a tort on the grounds that it is found to be unreasonable (eg, if 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).
Under the laws of Japan, injunctions are enforceable pending appeal. However, in practice, when infringers file an appeal, the infringers also file a motion for suspension of compulsory execution in most cases, and such suspensions are usually granted if the motion is filed.
The above refers to judgments for injunctions of the first instances in main lawsuits. On the other hand, if right-owners request preliminary injunctions separately from (or in parallel with) the main lawsuits and the first instance courts grant the requests and issue preliminary injunction orders, it is difficult to stop enforcement of such preliminary injunction orders in practice, although there is a legal way to challenge such preliminary injunction orders (see 2.7 Interim Injunctions).
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.
As the court of second instance, the IPHC 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 and to be that party’s fault. However, the Supreme Court, as the court of final instance, only reviews the legal issues of a case.
With respect to patent infringement litigation, costs normally incurred are for:
Stamp fees and expenses for delivering documents are required in order to file a lawsuit. The amount of stamp fees is calculated according to a 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 their own lawyers’ fees. A plaintiff may seek compensation for their lawyer’s fees as part of damages, but the recovery rate is left to the court’s discretion and 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 (ADR) is not a common way to settle intellectual property cases in Japan. However, ADR such as mediation or arbitration is available, and JIPAC and IACT (see 2.4 Specialised Bodies/Organisations for the Resolution of Disputes) are the ADR organisations that provide for dispute resolution in the field of intellectual property.
Moreover, the Tokyo District Court and the Osaka District Court introduced mediation procedures for intellectual property rights matters on 1 October 2019. This procedure is designed to resolve disputes regarding intellectual property rights matters in a speedy and efficient manner by using a mediation committee made up of a judge from the special division for intellectual property matters and experts such as lawyers or patent attorneys, who orally express their opinions. In principle, the procedure is supposed to be concluded within around three hearing dates.
Patent rights may be freely assigned. However, no assignment will take effect without having been registered on the patent registry, except in cases of general succession, such as inheritance or merger. Where a patent right is jointly owned, no joint owner may assign their 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 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.
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info_general@tmi.gr.jp www.tmi.gr.jpPatent Litigation Before the Japan Intellectual Property Courts
Intellectual Property High Court Grand Panel decisions
The rulings of the Intellectual Property High Court (the “IP High Court”) have a major impact on the interpretation of intellectual property rights in Japan. In cases involving particularly important legal issues and where decisions could have a significant impact on business activities and industrial economy, the Grand Panel, which is made up of five judges of IP High Court, is formed ad hoc to render its decisions. The following Grand Panel decisions were issued in 2022 and 2023.
DWANGO Co., Ltd. v FC2, Inc. and Homepage System, Inc., Case No 2020 (Ne) 10024 (decision rendered on 26 May 2023)
The plaintiff, DWANGO, had the patent right for an invention titled “Comment Delivery System”. The issue in the case was whether the defendant FC2’s act of distributing its files from a server in the USA to user terminals in Japan, through FC2’s systems for online video delivery services with commentary (“FC2’s act”), falls under the definition of “production” in Article 2, paragraph 3, item 1 of the Patent Act.
The Grand Panel of the IP High Court first decided that the principle of territorial jurisdiction applies to the Patent Act of Japan. The Court further ruled, however, that with regard to whether or not the act of newly creating a network-type system falls under “production”, even in a case where a server which is a part of the elements constituting the system in question exists outside Japan, if the act can be considered as having been performed within the territory of Japan, by comprehensively taking into consideration factors such as the specific manner of the act, the function and role played by the elements which exist in Japan, the place where the effect of an invention can be obtained from the use of the system, and the effect of such use on the economic interests of the patentee, then the act falls under “production.”
In this case, the court considered the following circumstances:
FC2’s act was therefore regarded as taking place in the territory of Japan by the Court, so it concluded that FC2’s act falls under “production” and constituted infringement of the patent right.
In a related case of DWANGO v FC2, Case No 2018 (Ne) 10077 (decision rendered on 20 July 2022), the issue was whether the distribution of FC2’s program constituted “provision through a telecommunication line” under the Patent Act. The IP High Court held that even if a part of the working of the patented invention is formally performed outside Japan, if the act of provision can be regarded as substantially and totally performed in the territory of Japan, it constitutes “provision through a telecommunication line”.
The above cases are significant in that the Grand Panel set forth the criteria for determining whether the “production” of a network system invention can be evaluated as having taken place in Japan. Both cases have been appealed to the Supreme Court and a petition for acceptance of appeal has been filed, but the decision has not (as of February 2024) been issued. Unless the conclusion reached by the Grand Panel is changed by the Supreme Court, the criteria set in the decisions will be referred to in future practice.
FUJI MEDICAL INSTRUMENTS MFG. CO., LTD. v Family Inada Co. Ltd., Case No 2022 (Ne) 10046 (decision rendered on 20 October 2022)
I) Compensation for damages in Japan
When filing a patent infringement claim for damages, the patentee must prove the value of damages caused by the infringing act. However, because it is difficult to prove the specific extent of damages, Article 102, paragraphs 1–3 of the Patent Act provide for presumption of the damages.
Under Article 102, paragraph 2, the profit earned by the infringer is presumed to be the value of damages incurred by the patentee. However, if (i) the infringer’s production capacity or sales efforts exceed the patentee’s implementation capabilities, (ii) the patented technology is used only in part of the infringing product, or (iii) the market where the patentee’s products are sold and the market where the infringing products are sold are different, it may not be reasonable to presume that the full amount of the profits earned by the infringer represent damages of the patentee. Therefore, if the circumstances outlined above exist, the damages presumed under Article 102, paragraph 2 will be overturned. This is called the “overturning the presumption”.
Also under Article 102, paragraph 3, if the amount of damages should be an amount equivalent to the royalty that the patentee would receive for the exploitation of the patented invention, then the amount of that royalty will be presumed to be damages of the patentee.
II) Outline and significance of the case
The Grand Panel of the IP High Court first determined that in cases where the patentee had exported or sold a competing product of the same type that shares the same consumer as the infringing product in the market, the infringing act has caused a decrease in the sales of the patentee’s products, thus Article 102, paragraph 2 applies.
Where Article 102, paragraph 2 applies and if there are circumstances that overturn the presumption, the entire amount of profits earned by the infringer will not be fully considered as damages granted to the patentee. For example, if the profit earned by the infringer is determined to be JPY100 million and the overturned presumption rate is 30%, damages granted to the patentee will be JPY70 million. The issue here is whether Article 102, paragraph 3 (the amount equivalent to the royalty) applies to this overturned JPY30 million portion.
The Court stated that damages suffered by the patentee due to the infringing act can be considered to be (i) a decrease in the sales of products that the patentee could have sold if there had not been the infringing act (where Article 102, paragraph 2 applies); and (ii) profits that could have been gained due to loss of licensing opportunity, regardless of whether the patentee is actually working the patented invention or has the ability to work the patented invention (where Article 102, paragraph 3 applies). Therefore, in a case where the presumption under Article 102, paragraph 2 is partially overturned and such overturned portion can be considered to be ‘‘the portion where the patentee could have been able to grant a licence’’, Article 102, paragraph 3 applies to the overturned portion.
The Court further stated that, if the presumption is overturned due to (i) it being beyond the ability of the patentee to carry out sales, etc; or (ii) the market for the patentee’s product and the market for the infringer’s products being different, such overturned portion is considered to fall under ‘‘the portion where the patentee could have been able to grant a licence’’, thus Article 102, paragraph 3 does apply to the overturned portion. On the other hand, if the presumption is overturned due to the patented invention being practiced only in part of the infringing product, then Article 102, paragraph 3 does not apply.
This decision by the Grand Panel provides an important concept regarding the “damages” of the patent infringement.
Life sciences
In 2023, there have been several significant rulings by the IP High Court in the field of life sciences. The first case below shows the criteria for determining the support requirement with regard to a patent relating to antibody drugs, which have been attracting particular attention in the pharmaceutical industry in recent years. The second case showcases an interesting discussions regarding the patent linkage system in Japan.
Regeneron Pharmaceuticals, Inc. v Amgen, Inc., Case No 2021 (Gyo-Ke) 10093 (decision rendered on 26 January 2023)
The plaintiff, Regeneron Pharmaceuticals, Inc., had filed with the Japan Patent Office a request for a trial for invalidation of the patent owned by the defendant, Amgen Inc. The invention in question is titled “ANTIGEN BINDING PROTEIN TO PROPROTEIN CONVERTASE SUBTILISIN KEXIN TYPE 9 (PCSK9)”. The Japan Patent Office dismissed the request by the plaintiff with the opinion that the said patent was valid. Accordingly, the plaintiff filed a suit to seek rescission of such decision by the Patent Office.
Under the case brought before the IP High Court, the issue was whether the said antibody patent satisfied the support requirement. The IP High Court first presented the same framework to determine the support requirement in line with prior precedents, then rendered its decision that the said patent did not satisfy the support requirement based on the functional characteristics of the antibody patent.
The support requirement of the patent means that the invention for which the patent is sought must be stated in the detailed explanation of the invention (Article 36, paragraph 6, item 1 of the Patent Act). This is because, if an invention that is not stated in the detailed explanation were to be claimed in the scope of claims, it would create an exclusive right for an unpublished invention.
The framework to determine the satisfaction of the support requirement is:
The invention in the case is an isolated monoclonal antibody which can neutralise binding between PCSK9 and LDLR protein, because it competes for binding to PCSK9 with the 21B12 antibody (the “reference antibody”). The Japan Patent Office determined that:
However, the IP High Court reversed the decision by the Patent Office, giving the following reasoning.
This judgment is considered to be appropriate as the scope of claims in the case would result in granting exclusivity to inventions based on characteristics that are different from the functional characteristics described in the detailed explanation of the invention.
NIPRO CORPORATION v Eisai Co., Ltd., Case No 2022 (Ne) 10093 (decision rendered on 10 May 2023)
I) Patent linkage system in Japan
The patent linkage system refers to a mechanism in which the regulatory authorities take into account the infringement of patent rights related to the original drugs in the procedures for the approval of generics. The purpose of the patent linkage is to realise the stable supply of generics by considering the patent right related to the original drugs. The implementation of the system and its contents differ from country to country.
In Japan, the patent linkage system has no clear basis under the law, and it is handled as an administrative practice under the guidance of the Ministry of Health, Labour and Welfare based on two administrative notifications (both are notifications by a section chief and are thus collectively referred to as the “Two Section Chief Notifications”). The details of the practice are as follows.
In the procedure of the National Health Insurance (NHI) price listing of generic drugs, the Two Section Chief Notifications require that matters with patent-related concerns be adjusted between the parties in advance, and that listing procedures be taken only for those items that are considered to be capable of stable supply. However, this preliminary adjustment between the parties is to be made during the NHI price listing after obtaining approval for the generic, and the actual practice is that, even if discussions or adjustments between the parties are unsuccessful, the Ministry of Health, Labour and Welfare permits the NHI price listing of the generic if there is an application from a generic drug manufacturer. Also, as mentioned above, although the Ministry of Health, Labour and Welfare is responsible for determining whether the generic drug infringes the patents of the original drug, there is no mechanism in place for the Ministry of Health, Labour and Welfare to rely on any judicial judgment.
2) Rulings
The plaintiff, NIPRO CORPORATION, was a generic drug manufacturer, and it had filed an application for approval for the manufacture and sale of its generic drug.
The plaintiff asked the Court to confirm that (i) the defendants, Eisai Co., Ltd., the manufacturer and seller of the original drug, and EISAI R&D MANAGEMENT CO., LTD., the holder of the patent for the original drug, did not have the right to demand an injunction based on patent infringement with respect to the manufacture and sale of its generic drug, and (ii) that they did not have the right to claim damages. The issue was whether or not the plaintiff would have standing for a declaratory judgement in relation to Japan’s patent linkage system.
The plaintiff’ arguments were as follows:
After hearing these arguments, the IP High Court ruled that whether or not the Ministry of Health, Labour and Welfare would approve an application of the plaintiff for the manufacture and sale of a generic drug is a public law dispute between the plaintiff and the Minister of Health, Labour and Welfare, not a legal dispute between the plaintiff and the defendants, and that if the plaintiff is dissatisfied with a dispute under public law, the plaintiff should seek relief by (i) filing an action to confirm the illegality of the non-approval or (ii) filing an appeal against the government. The standing for a declaratory judgement cannot therefore be recognised in the case.
The above ruling of the IP High Court is consistent with the common understanding of the standing for a declaratory judgement. However, as the plaintiff argued, there is a question about the current practice that the Ministry of Health, Labour and Welfare determines the patent infringement, and there is no mechanism for prior co-ordination between the parties at the stage of approval or prior approval. Future discussions on the Japanese patent linkage practice is therefore expected.
Technology
The following recent decisions by the IP High Court also show important developments in the field of technology IP.
Dai Nippon Printing Co., Ltd. v Commissioner, Japan Patent Office Case No 2022 (Gyo-Ke) 10030 (decision rendered on 9 March 2023)
Under the Patent Act, anyone may file an opposition against a patent with the Japan Patent Office within six months after publication of the patent in the patent gazette. In the opposition proceedings, when the administrative judge intends to make a decision to revoke the patent, the judge must give the patentee an opportunity to submit a written opinion, and the patentee may file a request for a correction of the patent to eliminate the grounds for revocation.
In this case, a third party filed an opposition to a patent of Dai Nippon Printing (DNP) titled “LAMINATE OF POLYESTER RESIN COMPOSITION”. During the patent opposition proceedings, DNP filed a request for correction, but the Japan Patent Office refused to allow the correction and revoked the patent.
The said patent had so-called open claims, and when the case was brought before the IP High Court, the issue was whether the correction to “exclude” matters not directly disclosed in the claims or the specification or drawings (“excluded claims”) that are made in order to avoid revocation of the patent, can be considered as “reduction of the scope of claims,” which is a requirement for the correction. The Court held that the correction fell within the scope of reduction of the claims and did not introduce any new technical matter, thus the correction was valid, and reversed the revocation decision by the Japan Patent Office.
Specifically, the correction in this case was to add a provision to exclude “the laminate with a vapour-deposited film of inorganic oxide on the laminate and a gas-barrier coating film provided on the said vapour-deposited film”. However, the claims before the correction did not include the words “vapour-deposited film of inorganic oxide” or “gas-barrier coating film.” Also, there was no reference to a configuration in which something was provided “on” the laminate.
The Court found that the claims before the correction simply specified “a laminate having at least two layers,” and therefore, the patent was a so-called open claim that included a laminate consisting of a “first layer,” a “second layer,” also a “vapour-deposited film of inorganic oxide,” and a “gas barrier coating film provided on the vapour-deposited film”. Thus, the Court concluded that the correction was intended to reduce the scope of the claims.
The decision in this case will be helpful in practice as a case decision that judges that a correction of open claims excluding matters not described in the specification or drawings does not substantially introduce new technical matter.
Nanshin Co., Ltd. v Luz Com Co., Ltd. Case No 2022 (Gyo-Ke) 10140 (decision rendered on 16 November 2022)
This case was a lawsuit to seek rescission of a decision made by the Japan Patent Office (the “JPO decision”) to the effect that a request for a trial for invalidation of a patent relating to an invention titled “ELECTROFORMED TUBE MANUFACTURING METHOD AND ELECTROFORMED TUBE” was groundless. The major grounds for seeking rescission included an error in the determination on the clarity requirement.
The claim of the invention was in the form of a product-by-process claim. The Court ruled that the invention did not satisfy the clarity requirement for the following reasons:
The IP High Court has here limited the scope of the Supreme Court decision and established a standard to function in practice. This case is instructive as a specific case in which such standard was applied.
United Precision Technologies Co., Ltd. v Commissioner, Japan Patent Office Case No 2022 (Gyo-Ke) 10164 (decision rendered on 16 November 2022)
The case is a suit against a decision dismissing the request for appeal against an examiner’s decision of refusal of an invention titled “CONDUCTIVE MEMBER USING COPPER-SILVER ALLOY, CONTACT PIN, AND DEVICE”. One of the issues is the procedural violation during the determination of the inventive step by the Japan Patent Office.
The Court first determined that differences between the invention in question and the cited prior art were easily conceivable by those skilled in the art from the cited prior inventions, or only related to a design matter which those skilled in the art should have performed on the basis of the common general technical knowledge, thus it lacked the inventive step.
However, as to the issue of the procedural violation, the Court ruled that, the Japan Patent Office’s decision that determined that the invention with “Cited Invention 5” as an additional primary cited reference lacked an inventive step seemed to be reasonable, but since Cited Invention 5 is a document that had not been pointed out in advance in the examination stage or even in the appeal procedure but was pointed out for the first time in the Japan Patent Office’s decision, and the plaintiff disputed by concentrating the assertion exclusively on the point that a difference related to the material of the alloy is present in other cited document in view of the specific history of the examination procedure and the appeal procedure, it should be considered that, if Cited Document 5 were presented in the notice of reasons for refusal, the strategy of the plaintiff would have been seriously affected, and thus determination on the inventive step of the invention with Cited Document 5 as the primary cited reference should not be allowed, from the viewpoint of the plaintiff’s procedure guarantee.
This ruling suggests that if it is found that an applicant’s opportunity to defend is not substantially guaranteed, it should be considered that non-service of the notice of reasons for refusal can be found to be illegal for violation of procedures.
Recent law reforms
The 2023 Patent Act Amendments made the following reforms from the perspective of (i) strengthening the protection of brands and designs in light of diversification of business activities due to digitalisation, and (ii) developing intellectual property procedures in response to the coronavirus pandemic and digitalisation.
Strengthening the protection of trade secrets (Article 186 of the Patent Act)
The award system in Japan is that, if certain requirements are met, the Commissioner of the Japan Patent Office may grant a compulsory licence. The 2023 Patent Act Amendments made it possible to restrict the viewing of documents relating to the award system that contain trade secrets. It is now expected that documents containing trade secrets will be submitted for the award and the reasonable award judgments be made.
Reform of the public notice and service system (Article 191 of the Patent Act)
When delivering patent examination results, etc, to persons residing outside Japan, if a situation in which it is difficult to send documents persists for six months, the notification shall be published in the official gazette, etc, and documents will be deemed to have been served. Furthermore, a new system for delivery via the internet will be established.
Reform of document procedures for digitalisation, etc (Article 43 of the Patent Act)
In the procedure for claiming priority under the Paris Convention, it will now be possible to submit the priority certificate online, and it will also be acceptable to submit a copy of the certificate. Thus it is no longer necessary to submit the original document via mail, making the procedure under the Paris Convention much simpler.
Reform of the examination fee reduction/exemption system (Article 195-2, etc, of the Patent Law)
In Japan, certain small and medium-sized enterprises are exempted from fees for patent examination requests in order to encourage inventions by persons with high potential but limited financial or human resources. However, due to the fact that the system was in some cases being wrongly used, there will be restrictions on the number of applications for which fees can be reduced or exempted.
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