JAPAN: An Introduction to Intellectual Property: Domestic

Intellectual Property in Japan 

Recent court decisions in Japan have reflected pro-patent trends:

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). Then, in the remanded case, the IP High Court found that the claimed invention was inventive due to its unexpected superior effects although in its prior final and conclusive decision, it found that there was a motivation for a POSA to reach the structure of the same invention based on prior art (2019 (gyo-ke) No. 10118).

As discussed further below, the Patent Law was reformed in April 2020 to allow a court to award higher damages and, even before the reform, the IP High Court Grand Panel granted higher damages based on the rationale of the reform in June 2019. At the same time, the court specified factors to be considered in the calculation of damages (2018 (ne) No. 10063). Further, in February 2020, the IP High Court Grand Panel held that when the characteristic part of the patented invention is only a part of the patentee's product that implements the patented invention, the marginal profit should be proportioned to its contribution to the product (2019 (ne) No. 10003).

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. In dicta, the court stated that the effect of a patent of which the term was extended by a Patent Term Extension (PTE) encompasses a product 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 (2016 (ne) No. 10046).

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

In addition to 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 was introduced by the Patent Law Amendment in May 2019 and became available in October 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 was introduced into the Patent Law in May 2019 and became available in April 2020. There are two main points to discuss. Firstly, 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, a patentee was supposed not to be allowed to seek reasonable royalties for the portion where lost profits are not available. In order to fully protect patentees, the new law allows a patentee to combine lost profits and reasonable royalties to calculate damages. Secondly, 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) is limitedly provided, (2) is electronically managed (with ID and PW) and (3) is 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 came into effect in April 2020 as well. There are five major points. Firstly, the scope of designs subject to protection was expanded. Graphic images that are not recorded or shown in articles have become eligible for design registration, and interior and exterior designs of buildings have become eligible also. Secondly, an applicant is now allowed to register a design similar to a principal design as 'Related Design' for a much longer period. Under the prior law, a 'Related Design' was able to be filed only based on the single principal design, but the new Design Act allows to file a 'Related Design' based on another 'Related Design' as another principal design within 10 years from the filing date of the first principal design. Thirdly, the design registration expired 20 years after the registration date, and it changed to 25 years after the filing date. Although the starting points are different, since the examination of a design application would never take five years (it usually only takes several months), the duration has become longer. Fourthly, a design application will be able to include multiple designs (only this one will be in effect on April 1, 2021). Finally, the scope of indirect infringement has been expanded so that more appropriate protection is provided for design patent.

The Copyright Act amendments 2020 includes (i) measures against ‘leech sites’ and measures against exploitation of copyright works, such as the expansion of the scope of the restriction of rights for unexpected appearance of copyrighted work in a photograph (effective as of October 1, 2020), (ii) the illegalisation of downloading infringing contents and strengthening protection with regard to access control (effective as of January 1, 2021), and (iii) a new certification system for program registration (effective sometime before June 2021).

Finally, 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.