The Intellectual Property Review: Japan
Forms of intellectual property protection
In Japan, the most common types of intellectual property rights are patent rights, utility model rights, design rights, trademark rights and copyrights.
Patent is one of the most important forms of protection available. Japan is a signatory to the Patent Cooperation Treaty and the Paris Convention for the Protection of Industrial Property.
Utility models are different from patents, most notably in that utility model registrations are granted without any examination by a patent examiner in the substance of the invention, such as the novelty of the claimed invention. Exclusivity for a utility model is 10 years from the date of the application. Utility models are substantially less frequently used.
A design right will attach to a registered design. A design right is valid for 25 years from the date of the application, if it is granted to an application filed on or after 1 April 2020. For those design rights that arose from an application filed between 1 April 2007 and 31 March 2020, the rights expire 20 years from the date of the application.
The owner of a registered trademark will be granted a trademark right pertaining to the registered trademark. Unlike in some other jurisdictions, Japan does not recognise a trademark right that is established solely through use in commerce without registration. An unregistered trademark is protected only if it is famous or well known under laws of unfair competition.
A copyright is confered to the author of a work, which is defined as 'a creatively produced expression of thoughts or sentiments that falls within the literary, academic, artistic or musical domain'.2 Under Japanese copyright law, a computer program is a copyrightable work. A database is copyrightable when it 'by reason of the selection or systematic construction of information contained therein, constitutes a creation'.3 There is no separate intellectual property right protecting databases that do not meet this condition.
Trade secrets are another important form of intellectual property. Misappropriation of a trade secret is a tortious act and the party that misappropriates a trade secret is civilly and criminally liable under the Unfair Competition Act.
Other forms of intellectual property rights, although less frequently used, include a layout-design exploitation right, which will be granted with respect to a registered layout design of a semiconductor integrated circuit, and the breeder's right regarding a registered plant variety.
Regulatory exclusivity for pharmaceuticals is implemented through a drug re-examination system. A holder of a marketing approval of a pharmaceutical must undergo a post-market re-examination before the expiry of the re-examination period. The re-examination period depends on the type of exclusivity, and is generally four to 10 years. During the re-examination period, a holder of a market approval is granted data exclusivity.
The primary source for patent law is the Patent Act, which recently underwent several amendments.
The most recent amendments, which took effect on 1 April 2020, include amendments to estimations of damages, intended to ensure that patent owners are awarded sufficient damages. First, the amendments entitle a patent owner royalty damages for the number of infringing products that exceed the capacity of the patent owner. Under Article 102, Paragraph 1 of the Patent Act, a patent owner is entitled to damages in the amount of the per-unit profit of the patent owner's product, multiplied by the number of infringing products sold, to the extent not exceeding the patent owner's capacity to sell. Under the amended act, a patent owner is entitled to a royalty for the number of products that exceed the patent owner's capacity, which therefore is not subject to the aforementioned presumption. Second, the amendments make explicit that in determining a reasonable royalty, a court can use a hypothetical royalty that would have been agreed upon by the parties after it had been determined that the patent had been infringed.
Another amendment, which takes effect on 1 October 2021, creates a new method of collecting evidence, namely inspection by a neutral inspector. Upon petition of a party, a court can appoint a neutral inspector to inspect the documents, devices or other materials in possession of the other party, typically infringing equipment and facilities installed at the defendant's plant, and to submit the inspection report to the court. An inspection order can be issued only when certain conditions are met, including sufficient grounds to suspect that the patent is infringed, and that other means are unavailable to the petitioner.
In Japan, an invention is defined as 'a highly advanced creation of technical ideas utilising the laws of nature'.4
Biological materials, including nucleic acids such as genes, recombinant proteins, antibodies, fused cells, dedifferentiated cells, transformants, microorganisms, animals and plants, are eligible for patent protection, if other requirements of the patentability have been met.
Computer software is a patent-eligible subject matter. The Examination Handbook for Patent and Utility Model in Japan explains that patent eligibility is examined in two steps. First, an examiner will examine whether the claimed invention is the 'creation of a technical idea utilising a law of nature', without looking further into specific issues that may be involved in software inventions. Software that controls an apparatus 'based on a structure, system component, composition, action, function, nature, property, operation, etc.', 'to realise operations according to the purpose of an apparatus' or 'integrated control of a whole system comprising multiple related apparatuses' satisfies the requirement of the 'creation of a technical idea utilising a law of nature'. Second, if the examiner cannot determine whether the first step has been met, it will determine the patent eligibility based on whether 'information processing by the software is concretely realised by using hardware resources'.5
Japanese patent law does not define a business method patent. A business method if claimed as software or system can be patentable. In the decision of 17 October 2018, case No. Hei 29 (gyo-ke) 10232, the Intellectual Property High Court overruled the decision of the trial board of the Japan Patent Office, concluding that an invention of a system for serving steaks to customers is patentable, reasoning that the invention contains not only the procedures of serving steaks by humans, but also apparatus such as cards, scales and seals, by which it prevents a steak for a customer from being mistakenly served to another customer and resolves the issue.
Methods for treating patients with drugs or medical procedures are regarded as having no industrial use and are not patent eligible.
Enforcement of rights
i Possible venues for enforcement
A patent enforcement action is adjudicated by a court. The Tokyo and Osaka District Courts have exclusive jurisdiction to hear patent infringement cases as courts of first instance. Depending on the place of business of the defendant or the plaintiff, and the place where the infringement has occurred, the plaintiff must sue the defendant in one of the two courts.
A preliminary injunction will be heard in a separate preliminary proceeding (see Section VI below for details).
A border measure is decided in an administrative proceeding before a competent customs office (see Section VI below for further details).
ii Requirements for jurisdiction and venue
iii Obtaining relevant evidence of infringement and discovery
In Japan, no US-style discovery is available. A document request must identify the document, the content of the document and the matters to be proved by the document.
There are several special procedural rules under the Patent Act that aim to help patentees obtain evidence. First, a defendant must plead with specificity to deny the patent owner's claim that his or her article or process infringe. It means that a defendant cannot simply deny the assertion of infringement, but must identify what elements of the patent are not satisfied by the defendant's product, and how. Second, a court may order a defendant to submit documents that are necessary for the plaintiff to prove the infringement, or to calculate the damages caused by the infringement. To determine whether the defendant has a justifiable reason for not submitting the document sought, the court may review the document in camera.
iv Trial decision-maker
At a district court, a case is heard by a panel of three judges. Patent cases are always assigned to a division specialised in adjudicating matters involving intellectual property, and the judges are familiar with patents and patent law.
A panel can be assisted by a court researcher, who is a full-time official of a court and either a secondee from the Japan Patent Office or a qualified patent attorney. Part-time experts who have knowledge in highly technical areas such as biotechnology, semi-conductors and information technology, such as professors, research scientists and patent attorneys, may be assigned on a case-by-case basis to assist the court in the technical aspects of the case.
All trials are bench trials. No jury trial is available.
v Structure of the trial
A court will bifurcate the case into the issues of infringement and damages. A court will first let the parties brief the issue of infringement, including any invalidity defences. If the court determines that the patent is infringed, the court will let the parties brief their arguments and present evidence about damages.
The action will commence with a plaintiff serving a complaint. The defendant will service an answer. At the first hearing, the complaint and answer will be pled. It will then usually be the defendant's turn to submit a brief detailing the arguments and defences. Typically, an exchange of the plaintiff's reply and the defendant's sur-reply will follow, before a technical explanation session is held. A technical explanation session is an opportunity for the parties to present the case orally to the panel. The parties may use demonstrative evidence during the session.
A court, after considering evidence and the parties' argument, discloses its preliminary impression to the parties to close the infringement issues and, if the parties wish, to help the parties settle the case based on the impression disclosed by the panel.
The case is largely, if not entirely, proved by documentary evidence, such as prior art references, diagrams and photos of the infringing products, expert reports, and books and records. Live testimony of a witness is rarely taken.
Article 70 of the Patent Act provides that 'the technical scope of a patented invention must be determined based upon the statements in the claims attached to the written application' and 'the meanings of terms used in the claims are to be interpreted in consideration of the statements in the description and drawings attached to the written application'.
A term in the specification must be used consistently and in an ordinary meaning given to the term, but the applicant can define the meaning of a term in the specification.
Prosecution history will be considered, and prosecution history estoppel may apply.
A patent is literally infringed if an infringing product fulfils all elements of the claim. Under the doctrine of equivalents, a device or process is equivalent to the claimed invention, if all of the following five requirements are met:
- the element that does not fall within the literal scope of the element is not an essential part of the invention;
- the same objective is achieved and the same effect is obtained even if that element is replaced with the element of the defendant's product;
- such replacement was easily conceivable by a person of ordinary skill in the art;
- the device or process was not identical to, or easily conceivable from, a prior art invention at the time of the application of the patent; and
- the device or process was not intentionally excluded from the scope of the claim.
Invalidity defences commonly raised by a defendant are lacks of novelty, inventive step (i.e., non-obviousness), enablement, support in specifications and clarity.
An invention is not novel when it was (1) publicly known, (2) publicly worked, or (3) described in a distributed publication or made available for public use over telecommunication lines, each either in Japan or in a foreign country prior to the filing of the patent application.6 Also, a patent will not be granted for an invention that is identical to an invention or device described in the description, patent claims or drawings of another prior patent application, even if the gazette for such another patent application has been made available to the public after the application of the first patent.
An invention is obvious when a person of ordinary skill in the art of the invention would have easily been able to make that invention from prior art. Whether a person of ordinary skill in the art can easily make the patented invention from the referenced invention will be determined by the court based on the totality of the circumstances, including the relevance of the technical fields of the referenced invention and the patented invention, commonality of the issue, or the functions, effects and suggestions in the prior art article. Selection of an optimal material from the known materials or optimisation of parameters will not make the invention non-obvious from the referenced invention. An invention disclosed in a prior art reference, except for numerical limitations, is not patentable unless:
- an advantageous effect within that numerical range is not disclosed in the prior art reference;
- the effect is different from, or significantly superior to, the effect of the referenced invention; and
- the effect was not foreseeable.
Licence defences include contract licence and statutory licence. One of the most important statutory licences is a prior-use right. A person will be granted a non-exclusive right to a patent if, at the time the application of the patent was filed:
- the identical invention was already made by the licensee; and
- the licensee had engaged, or had prepared to engage in business in Japan that involves the invention.
The invention of the licensee must be completed for the prior-use right to attach. The scope of the licence is limited to the extent of the invention and the business being engaged or prepared by the licensee.
A patent right does not extend to the defendant's act conducted for experimental or research purposes.7 Trials conducted by a generic manufacturer during the life of a patent of a brand manufacturer for the purpose of obtaining a market approval of a generic drug after the expiry of the patent qualifies as conduct 'for experimental or research purposes'.
Although not expressly provided in the Patent Act, courts have applied the doctrine of exhaustion. With regard to international exhaustion, the doctrine applies unless under some exceptional circumstances. The Supreme Court held in its Decision of 1 July 1997, case No. hei 7 (o) 1998, that once the patented article has been sold by a patentee or anyone who is deemed as substantially identical to the patentee in a foreign country, the patentee cannot enforce his or her patent right in Japan against a subsequent buyer of the patented article, unless it is clearly shown on the patented article that Japan is excluded from the territories in which the goods may be sold or used.
viii Time to first-level decision
The time for a district court to render a final judgment in a patent infringement case is approximately 12 to 14 months.
Damages are awarded to the patent owner whose patent right is infringed by the defendant. Several presumptions are available to the patent owner under Article 102 of the Patent Act. First, the per-unit profit of the patent owner, multiplied by the number of the infringing products sold, can be awarded to the patent owner as damages. Second, profits the infringer received for his or her infringing act are presumed to be the harm suffered by the patent owner. Third, a patent owner is entitled to a royalty.
No punitive damages are available in Japan.
A patent infringement is a tortious act, for which reasonable attorneys' fees can be awarded to the patent owner as damages.
Injunctive relief is available. There is no requirement that monetary damages are insufficient for the court to grant injunctive relief. So long as the patent is infringed and so long as the court determines that a future infringement is likely, the court will issue injunctive relief if sought by the patent owner.
If a patent owner wishes to seek a preliminary injunction, he or he should do so by commencing a separate preliminary proceeding. A preliminary injunction will be granted on condition that the patent owner obtains bond for the benefit of the defendant. A respondent will be given an opportunity to be heard, and it will take slightly less time than the full proceeding, but still enough time for the court to issue a preliminary injunction.
x Appellate review
An appeal to a judgment of a district court will be heard exclusively by the Intellectual Property High Court. Usually, a panel of three judges will hear the case. In exceptional cases, however, the court can hear the case with a panel of five judges if it determines that such treatment is warranted owing to the importance of the matter involved.
The Intellectual Property High Court will decide both factual and substantive legal issues without deferring to the district court's finding of facts and application of law.
The parties can introduce new evidence and new arguments in the appellate proceeding, but the court can dismiss any argument or evidence not submitted in time owing to a wilful act or gross negligence of the party if the court determines it would delay the conclusion of the proceeding.
xi Alternatives to litigation
A defendant can challenge the validity of the patent through a patent invalidation trial, which is an administrative proceeding before the Japan Patent Office. Administrative judges of the Japan Patent Office will hear the case. Appeals to a decision will be heard by the Intellectual Property High Court.
A defendant does not have to commence a patent invalidation trial to challenge the validity of the patent. Instead, an invalidity defence is available to the defendant in a patent infringement action before a district court. A patent is not enforceable when it should have been invalidated through a patent invalidation trial.
Moreover, a defendant of a patent infringement action can raise an invalidity defence in a court proceeding and concurrently challenge the validity in a patent invalidation trial proceeding, although such a dual-track strategy is less popular among defendants. In this case, the validity of the patent will be reviewed by the court and the Japan Patent Office in parallel. A court can, but does not have to, stay the court proceeding until the resolution of the invalidation trial. Appeals to the district court judgment and the decision of the panel of the Japan Patent Office will both be heard by the Intellectual Property High Court, where any discrepancy between the decisions of a district court and a panel of the Japan Patent Office will be resolved.
In addition, anyone can file an objection to the issuance of a patent with the Japan Patent Office within six months of its issuance. The claims that are challenged by the objection will be reviewed by the Japan Patent Office based on the grounds and evidence submitted by the objector, but the panel has the power to examine evidence and review the patents on grounds that were not be proffered by the objector. A patent owner will have an opportunity to submit the patent owner's statement and request amendments to the claims. An appeal will be heard by the Intellectual Property High Court.
Another important forum is a border measure at a customs office. A patent owner can file a petition with a customs office. A petitioner must file with the petition a document evidencing the infringement, such as an opinion of a counsel, and an explanation of how to identify infringing products. Once a petition has been filed, an interested party known to the customs office, such as the importer of the allegedly infringing products, will be notified and afforded an opportunity to submit a statement. If disputed by an interested party, the customs office will appoint a panel of experts to which the issue of infringement, including invalidity and other defences of the interested party, is referred. The parties will have an opportunity to present their case in front of the panel, and the panel will issue an expert opinion, which will be respected by the customs office. This proceeding is designed to be an express proceeding, and the final determination will be made as soon as approximately three months after the petition has been filed.
Tokyo and Osaka District Courts accommodate a mediation for disputes involving intellectual property. The panel of one district judge specialised in intellectual property and two attorneys or patent attorneys will mediate the case.
Trends and outlook
The Patent Act is expected to be amended further in 2021. A bill for the amendments is being prepared by the Cabinet and is expected to be voted on in the current session of the Diet. The proposed amendments will:
- allow a court to call for the public to submit amicus curiae briefs in a patent infringement proceeding;
- allow a patentee to recover his or her patent that has otherwise expired for a non-payment of annuity; and
- allow a patentee to amend or abandon his or her patent without consent of a licence of the patent.
1 Nobuto Shirane is a partner at Anderson Mori & Tomotsune.
2 Article 2, Paragraph 1, item 1 of the Copyright Act.
3 Article 12-2, Paragraph 1 of the Copyright Act.
4 Article 2, Paragraph 1 of the Patent Act.
5 See Annex B, Chapter 1 (Computer Software-Related Inventions) of the Examination Handbook for Patent and Utility Model in Japan.
6 Article 29, Paragraph 1 of the Patent Act.
7 Article 69, Paragraph 1 of the Patent Act.