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JAPAN: An Introduction to Japan

Abe Ikubo & Katayama

Intellectual Property in Japan 

Clear pro-patent trends can be found in recent court decisions in Japan:

The inventive step might have become slightly easier in the chemistry/life science fields. In August 2019, the Supreme Court vacated the IP High Court’s decision which denied the unexpected superior effects of a medical use patent, holding that whether a claimed compound has unexpected superior effects should be determined by finding that a POSA would have been unable to predict such effects to be exerted by the claimed structure or that such effects exceed the effects that a POSA would have predicted based on the claimed structure (2018 (gyo-hi) No. 69).

Patentees might be able to expect higher damages. In June 2019, the IP High Court Grand Panel awarded damages ex post facto on the basis that a royalty rate determined after a court’s determination that the patent-in-suit is valid and infringed should naturally be higher than a usual rate determined at the stage where validity and infringement is not clear (2018 (gyo-ke) No. 10063).

Prior use defence might be more difficult than before. In April 2018, the IP High Court denied prior use defence (2017 (ne) No. 10090). In the case wherein the patent at issue was directed to a pharmaceutical formulation having specific water contents, the court rejected the accused infringer’s prior use argument based on its test using a sample product, finding that the current water contents of the stored sample were not necessarily the same as those of the sample upon manufacturing although the current water contents are within the claimed scope.

The scope of a patent term extension may be broader than the scope identical with the approved product. In January 2017, the IP High Court Grand Panel rendered a decision on the scope of a patent subjected to a patent term extension. Though in dicta, the court stated that the effect of a patent of which the term was extended by a PTE encompasses a product equivalent to or substantially the same as the product identified by ‘ingredients (not limited to active ingredient),’‘indication,’‘unit dosage,’ and ‘dose and administration’ specified in the marketing approval.

New legislation in intellectual property laws also show trends friendly to IP owners as follows:

In addition to Patent Term Extension (PTE) for redeeming the patent term necessary for obtaining regulatory approval, Patent Term Adjustment (PTA), supplementing the term lost for delayed prosecution, became available in December 2018. In order to obtain PTA, a patentee needs to file an application. PTA is available for the period from the date three years after the request for examination or the date five years after the filing date (whichever is later) through to the registration date subtracting the delay caused by the applicant.

Onsite inspection in a patent infringement suit has been introduced by the Patent Law Amendment in May 2019 and will become available in April 2020. It is an inspection of an alleged patent infringer to be conducted by a neutral and fair technical expert selected by a court.

A new damages rule has been introduced into the Patent Law in April 2019 and will become available by May 2020. There are two points. First, a combination of lost profits and reasonable royalties is to be allowed upon calculating damages. When a patentee’s capacity for manufacture or sales is limited, lost profits would be reduced due to the patentee’s limited capacity. In such a case, historically, a patentee was not allowed to seek reasonable royalties for the portion where lost profits are not available. In order to fully protect patentees, the new law would allow a patentee to combine lost profits and reasonable royalties to calculate damages. Second, upon determining the amount corresponding to royalty as damages, a court can consider an amount that parties would agree to on the assumption that the patent is found by the court to be valid and infringed rather than an amount that parties would agree without knowing how the court would rule on the patent’s validity or infringement.

Unfair Competition Law reform to protect data relevant to the IoT, big data and artificial intelligence came into effect in July 2019, which is to promote the use of data by providing a safer environment for data trade. Data which meets three requirements (1) limitedly provided, (2) electronically managed (with ID and PW) and (3) substantially accumulated is protected as “Data for limited provision (DLP).” Unfair Competition Law lists certain acquisitions, uses and provisions of DLP as “acts of unfair competition.”

The Design Act was reformed to make the design registration system more user-friendly, and the new rule will be in effect in April 2020 as well. There are five major points. First, the scope of designs subject to protection will be expanded. Graphic images that are not recorded or shown in articles will be eligible for design registration, and interior and exterior designs of buildings will be eligible also. Second, an applicant is allowed to register a design similar to a principal design as “Related Design” for a much longer period. Under the current law, “Related Design” can be filed only before the publication date of the design gazette containing the principal design, but it will become available within 10 years from the filing date of the principal design. Third, the design registration expires 20 years after the registration date, and it will be changed to 25 years after the filing date. Although the starting points are different, since the examination of a design application would barely take five years, the duration will become longer. Fourth, a design application will be able to include multiple designs. Finally, indirect infringement will become easier to establish; under the new rule, if a third party conducts a preparatory or supporting action that has an extremely high probability of inducing infringement of a design right of a right holder, such action is deemed to be an infringement.

A new IP mediation system is up and running. The intellectual property divisions of Tokyo District Court and Osaka District Court commenced a mediation to be conducted by one judge of the IP divisions and two IP practitioners to provide a flexible, speedy and non-public forum to solve an IP dispute by IP specialists.