This material was first presented at the 1997 APEC Intellectual Property
Law Seminar held in Tokyo in February, 1997. Since then it serves as text
for Dr. Kondo's lecture on patent infringement litigation in Japan, which
he regularly gives at the APEC Intellectual Property Law Seminar.
Introduction
Overview
Case Studies
(Patent)
(Trademark)
Until recently, Japanese companies were more anxious to obtain patents
than to enforce the patents that they had already obtained. In a sense,
patents were a symbol of their achievement, but not a business weapon.
However, this has been changed. Now, it is not rare that a Japanese big
company sues another Japanese company alleging patent infringement by that
competitor.
In the past, the Japanese market was expanding more rapidly than each company
expanded. Hence, more efforts were made to catch up with the market expansion.
However, because of the slowdown of the economy, competitors are forced
to share the limited market. This naturally requires that each company
should keep others from entering the market of its own products. If the
products are covered by one or more patents that the company has, the patents
are a good weapon to drive out competitors from its market.
Another important weapon in the limited market is trademarks. Each company
should develop goodwill in the market, and the developed goodwill must
be tied to a good trademark. However, free riders may obtain undue profit
by taking advantage of the goodwill associated with the trademark. Theyusually use a trademark that is confusingly similar to a famous trademark,
if not exactly the same.
Considering the above-mentioned aspect, this article will give an overview
of intellectual property infringement litigation in Japan focusing on patent
and trademark infringement. Then, three cases will be reviewed to show
how typical issues are argued and decided in patent infringement cases
and trademark infringement cases.
1. Consulting an Attorney
When the owner of an intellectual property right has reasonably concluded
that a competitor is likely infringing its right, the first thing it should
do is to consult an attorney. However, since resolution of disputes involving
intellectual property requires certain expertise, selection of the attorney
is important.
In this regard, patent attorneys must be distinguished from attorneys-at-law.
Unlike U.S. patent attorneys, Japanese patent attorneys are not admitted
to the bar. Although there is an exception, they are not permitted to represent
their clients before the court. Nor are they permitted to represent their
clients in negotiations to resolve legal disputes, even outside the courts.
On the other hand, attorneys-at-law are basically litigators. They are
experts in litigation. However, it is rare that they have technical or
scientific background. Moreover, few of them actually have experience in
patent infringement litigation.
Under the circumstances, we have two groups of experts for intellectual
property infringement litigation. One consists of patent attorneys who
are very active in assisting attorneys-at-law in litigation. They have
some insight to how patent claims are interpreted by the courts. This is
very important because the courts quite often interpret patent claims differently
from the Patent Office.
The other group consists of attorneys-at-law who are active in representing
their clients in patent infringement cases. Although they are not usually
expected to have technical or scientific background, they know how technical
issues should be tied to legal issues. In addition, the very fact that
they do not have technical or scientific background is sometimes an advantage.
Since the judges do not have technical or scientific background either,
it is important to formulate arguments that are understandable to laymen.
In this regard, attorneys without any technical background may play the
role of litmus paper; that is, what they do not understand would not be
understood by the judges.
2. Warning Letters
Under Japanese law, it is not usually required to send a warning letter to enforce an intellectual property right. The only exception is when one would like to preserve a certain preliminary right based on a patent application before a patent issues from that application.
However, it is quite customary that a warning letter is sent from the owner of an intellectual property right to an accused infringer before litigation actually commences. This may have two reasons.
One is just to show politeness. In Japan, it might be considered unfair or even rude that one sues another without giving the opponent a chance to resolve the matter without recourse to litigation.
The other reason is more practical. If a warning letter is sent from an
experienced litigator specializing in intellectual property law, it will
show the preparedness of the sending party. Hence, it will have a good
chance of success to force the receiving party to settle the dispute through
compromise. This approach is especially effective when the right owner
does not actually wish to compel the competitor to get out of the market,
but it is prepared to grant a license.
1. Preparation and Filing of the Complaint
It should first be noted that Japanese court practice requires greater effort on the plaintiff's part than the United States practice. The plaintiff is required to provide in the complaint detailed statements regarding the grounds of his allegation. In a patent infringement suit, such statements usually include an analysis of the patent specification, an analysis of the claims and an analysis of the accused product, and further show the correspondence between elements recited in the claims and those found in the accused product.
In order to meet this requirement, attorneys usually discuss the subject invention (including the prior art and the accused product) in detail with their client before drafting the complaint.
For filing a complaint, approximately five-thousandths of the economic value of the case must be paid to the court as filing fee. This only applies to a principal lawsuit, but it does not apply to a provisional injunction case, where only a nominal fee is required for initiating the proceedings.
The economic value of the case is the total of the amount of the damages
to be collected and the amount of the profits to be obtained by the plaintiff
through an injunction. The latter is usually calculated by the plaintiff's
attorney according to guidelines given by the court. The guideline to be
followed for a patent case at the Tokyo District Court is as follows:
I = S ~ R ~ Y ~ F,
where I:value of the injunction,
S:amount of annual sales to be enjoined
R:profit rate or royalty rate
Y:remaining term of the patent
F:reduction factor, usually 1/8 at the Tokyo District Court
2. Jurisdiction/Venue
Under Japanese law, district courts have the jurisdiction to rule in both criminal and civil cases in respect of patent infringement. Generally, an action shall be filed at the district court which is located in the place where the defendant is domiciled. In the case where the defendant is not domiciled in Japan, or the domicile is unknown, the forum shall be determined by his residence. Depending on the ground of the litigation and the reliefs to be sought, however, the plaintiff's domicile may be also a sufficient contact for jurisdiction.
The total number of district courts is fifty. Each prefecture in Japan has at least one district court. However, the New Code of Civil Procedure, which became effective as of January 1, 1998, allows a holder of patent rights, utility model rights, circuit related rights or copyrights for computer programs to file an infringement action with the Tokyo or Osaka District Court. The Tokyo District Court will have an overlapped jurisdiction with other district courts located in the eastern area of Japan, while the Osaka District Court will cover the western area.
3. Provisional Injunction
In addition to permanent injunction to be granted after regular proceedings of a civil lawsuit, provisional injunction is also available in Japan. Provisional injunction proceedings against patent and trademark infringements should be taken, in principle, at the district court which would have jurisdiction over the principal lawsuit seeking permanent injunction. Where an action seeking monetary relief is already pending before the district court, provisional injunction proceedings may take place before the same court.
Decisions by the court given after regular proceedings of a civil lawsuit are highly dependable because examinations are made deliberately based upon reliable evidence and without haste. As explained later, however, it takes three or four years just to get the decision of the court of first instance. If this decision is appealed, of course even more time is required.
In contrast, provisional proceedings are less formal and more intensive in order to reach an early conclusion of the matter, including a court-assisted settlement. Therefore, the filing of a petition for provisional (or preliminary) injunction is often preferred. Although theoretically it is preliminary, it often leads the parties to a final settlement of the dispute. Hearings for preliminary injunction are more frequently held and less formal than those for regular civil cases. Therefore, the decision is sometimes given within a year from the filing with less than ten hearings.
When the court decides to grant an injunction, since the decision is preliminary, the petitioner is required to make a security deposit sufficient to cover the damages that may be incurred by the accused infringer if the injunction be found to be erroneous. The amount of the deposit is determined by the judge at his discretion after considering various factors, including the petitioner's probability of success in the final decision of the case. The deposited security money is to be returned to the plaintiff when the defendant has exhausted or waived all measures to have the provisional injunction reversed, for example, when a permanent injunction is granted and becomes final.
4. Attorney Fees
In Japan, the most typical fee arrangement is on an initial/success fee basis. The initial fee is usually determined as a certain percentage of the claimed amount and the value of injunction, and the success fee is usually determined as a certain percentage of the collected amount and the value of injunction. To determine these fees, the most difficult part is how to value the injunction. Hence, it is often the case that the client and the attorney agree on an certain amount.
Another way of fee arrangement is on an hourly basis. The average hourly rate for an experienced attorney is around thirty-five to forty thousand yen, and it takes one or two hundred hours to prepare and file a complaint or a petition for preliminary injunction. Preparing for a hearing, whether a formal hearing or a preliminary hearing, requires twenty to forty hours. Therefore, assuming that fifteen hearings are held, the total attorney fees would be 14,000,000 yen to 32,000,000 yen. Of course, these figures are only a rough estimate and would depend on the complexity of the case.
1. Hearings and Briefs
Once the complaint is filed, the court schedules the first hearing, which is usually held within two or three months after the filing. Then, the court serves the complaint upon and requests the defendant to file an answer to the complaint about a week or ten days prior to the first hearing.
Subsequent hearings are usually held at two or three-month intervals over a period of two to three years. For each hearing, either spontaneously or upon the request of the presiding judge, either or both of the parties usually submit a brief rebutting the opponent's allegations.
2. Evidence, Witnesses and Experts
The parties are allowed to submit exhibits, such as a sample of the accused product or the written opinion of an expert. Furthermore, witnesses may be examined at a hearing to support their allegations contained in the briefs. The court may issue a summons to examine a witness. Court orders compelling the opponent or a third party to produce documents are also available under certain conditions. The recent amendment of the Civil Procedure Code has expanded such availability.
3. Court-Assisted Settlement
Under Japanese law, the judge may recommend settlement at any time that he/she considers it appropriate. In many cases, when the judge has obtained a certain impression as to the merits of the case, he/she often suggests settlement even when the case still needs continuation of proceedings for him/her to render a judgment based on formally presented evidence.
If the parties accept the recommendation of the judge, a settlement conference is usually held in the courthouse to discuss the terms and conditions of the settlement. When the parties agree on the terms and conditions of the settlement, they will be recorded in an official court record and will have the same effect as a final judgment rendered by the court. This kind of settlement is usually called "court-assisted settlement," which is probably comparable to the consent decree in the U.S.
If the attempt to reach a settlement fails, the judge resumes the oral argument hearings.
1. First Instance
When the presiding judge considers that the case is ready for decision, he declares the conclusion of the hearing procedure and schedules the date for pronouncement of the judgment, which is usually given two or three months after the conclusion of the hearing procedure.
No official statistics are available in Japan regarding the average time for the first instance of an infringement action for a trademark or a patent. However, an estimate can be made based on a number of reported cases. For a patent case, three years should be probably a good estimate, while one and a half years should be the estimate for a trademark case. These estimates are consistent with a recent report published by the Supreme Court, which gave a summary of intellectual property cases filed or decided in 1994. The actual time depends on the complexity of each case, usually ranging from one to five years for a patent case and one to two years for a trademark case. Some extraordinarily complex patent cases may take ten years or more.
2. Appeals to a High Court
In civil proceedings, appeals to a High Court from first instance judgments are always available in Japan although the appeal must be lodged within a certain period of time. Review by an appellate court is de novo. However, the time before the appeal jurisdiction is usually much shorter than that in the court of first instance, generally ranging from one to three years for a patent case, and about one year for a trademark case.
3. Appeals to the Supreme Court
Judgments by High Courts are appealable to the Supreme Court. However, review by the Supreme Court is limited to legal questions, but does not cover factual issues. Hence, the appelant must state a question of law in an appeal brief to be submitted to the Supreme Court.
1. Invalidation of a Patent
Under Japanese law, the court does not have the jurisdiction to assess the validity of a patent, while it does have the power to rule on the infringement of a patent. In contrast, the Patent Office has the jurisdiction to assess the validity of a patent, while it cannot rule on an infringement case. This means that invalidity of the patent in suit would not be a formal defense in an infringement case. Therefore, when the alleged infringer would like to raise the question of validity in an infringement case before a district court, it is usually advisable to initiate invalidation proceedings before the Board of Appeals of the Patent Office. It would give the court measures to avoid a situation where a court must enforce a patent which would later be invalidated.
If the validity of the patent in a suit is seriously questioned, the court would narrowly interpret its claims to avoid an unreasonable result. In addition, when there is a serious question of validity, but no narrow interpretation of the claims would avoid enforcement of a substantially invalid patent, the court may stay the proceedings of the suit during the pendency of the invalidation proceedings. Hence, there has been no case in which a patent right which is materially null has been enforced by a court.
2. Appeals from a Patent Office Decision
The losing party in the invalidation proceedings before the Appeal Board of the Patent Office may lodge an appeal from the decision by the Board, seeking its revocation. Since the Tokyo High Court has the exclusive jurisdiction over this kind of appeal, the appeal notice must be filed with it.
Once an appeal is lodged, the Court appoints a judge to preside preliminary conferences, which are usually held several times at intervals of about two months. When the judge is convinced that the argument by the plaintiff and the rebuttal by the defendant have been sufficiently presented for a decision to be made by a panel of three judges, he/she declares conclusion of the preliminary proceedings, and the case is formally presented to the panel of three judges in a courtroom. The judgment of the Court is usually rendered in two or three months from the formal presentation of the case. The judgment either dismisses the complaint or revokes the decision by the Board of Appeals of the Patent Office. When the Patent Office decision is revoked, the case is automatically remanded to the Board of Appeals.
1. Background
The Plaintiff was the patentee of a patent granted for an invention directed to t-PA. During its prosecution, the Japanese patent examiner allowed the application with some broad claims which did not include any sequence listing, but which were defined in terms of the function and other properties of t-PA. However, he later rejected the application on the ground that the claims were not sufficiently specific. After the appeal procedure at the Patent Office a patent was granted with claims which the applicant restricted to a single specific sequence found in the application in order to avoid the examiner's reason for rejection.
Attempting to stop the defendant from making and selling t-PA products, the plaintiff sued it at the Osaka District Court alleging patent infringement. However, the plaintiff was not successful at the first instance. The reason was that one amino acid was different from the one specified in the claims. At position 245 of the claimed sequence, valine (Val) was specified in the claims, but it was replaced by methionine (Met) in the accused product.
The plaintiff appealed to the Osaka High Court against the judgement of the Osaka District Court.
2. Issues
The issues before the Osaka High Court are as follows:
(1) whether the accused product was equivalent to the claimed t-PA;
(2) what kind of factors must be considered to find a patent infringement under the doctrine of equivalents;
(3) whether independent development of the accused product should be considered as defense against application of the doctrine of equivalents; and
(4) whether the prosecution history of the patent in suit should preclude the plaintiff from alleging infringement under the doctrine of equivalents.
3. The Court's Opinion
The Osaka High Court found infringement by the defendant applying the doctrine of equivalents for the first time in a case involving a chemical or biotechnology patent. As to the factors to be considered, the Court followed the standard that had been at least theoretically accepted over years in Japan. The factors considered by the Court were as follows:
(1) whether the claimed invention and the accused product solve the same
problems and share the same technical idea;
(2) whether no significant effects arise from differences between the claimed invention and the accused product; and
(3) whether replacing the element or feature recited in the claim, but missing in the accused product, with the element existing in the accused product was possible and easy for a skilled person in the art based on the state of the art as of the filing date.
On the other hand, the Court stated that independent development would not per se serve as defense against application of the doctrine of equivalents, pointing out that the question of infringement is not related to good or bad faith of the infringer. However, the Court recognized that lack of independent development would serve as circumferential evidence to find infringement under the doctrine of equivalents.
Finally, the Court declined to apply the prosecution history estoppel to this case, finding that amendment of the claims had been made to comply with the requirements of specificity, but not those of novelty and non-obviousness.
1. Background
The plaintiff was in the business of selling hair treatment agents including hair tonic. It was the owner of the following registered trademark:
The defendant was also in the same business of selling hair treatment agents.
It used on the products it sold the following mark:
The plaintiff sued the defendant seeking injunction against use of the defendant's mark. However, the court of first instance, which was the Tokyo District Court, dismissed the claim on the ground that the defendant's mark was not similar to the registered trademark. This judgment was affirmed by the Tokyo High Court.
The plaintiff appealed to the Supreme Court. As the ground for the appeal, it alleged that the standard applied by the lower courts in reaching the conclusion that the two marks were not similar was wrong, and the lower courts committed a legal error that should be corrected by the Supreme Court.
2. Issues
Obviously, the issue before the Supreme Court was how the marks should be compared to each other.
In this regard, it is usual that a court considering similarity of trademarks compare them on three aspects; that is, appearance, pronunciation and concept. The lower courts compared the marks separately on these aspects and concluded that they are similar on none of them.
3. The Court's Opinion
The Supreme Court reversed the High Court's judgment and remanded the case to the Tokyo High Court. In its opinion, the Supreme Court pointed out that two marks could be similar in a specific situation of business even though they were not similar when each one of the afore-mentioned three aspects was considered separately. Therefore, synthetical observation is required in determining whether two marks are similar in a trademark infringement case, according to the Supreme Court's opinion.
1. Background
The plaintiff was the owner of a registered trademark "UNDER THE SUN" for goods including, inter alia, phonorecords. The defendant was a record manufacturer publishing a CD album entitled "UNDER THE SUN." Seeking injunction against the defendant's use of the album title, the plaintiff sued the defendant.
2. Issues
There was no dispute as to the fact that the two marks were substantially the same. However, the defendant denied infringement alleging that it did not use the phrase "UNDER THE SUN" as trademark, but it used it as the title of the album, which should be comparable to the title of a book.
3. The Court's Opinion
The Tokyo District Court dismissed the plaintiff's claim accepting the argument by the defendant.
Under the Trademark Law of Japan, use of a mark or a symbol would not be
considered as use of a trademark if it is used to designate the content,
quality, etc. of the item to which the mark is fixed. In this case, the
Tokyo District Court took the view that an album was similar to a compilation
work. Hence, it further observed that the name of the album would be the
same even if it should be recorded in a different medium such as a cassette
tape. This observation led the court to conclude that "UNDER THE SUN" was
not the trademark of the CD, but it was the name of the album itself. Therefore,
according to the court, the use of the phrase on the CD was to designate
its content, and it was not subject to the plaintiff's trademark right.
