JAPAN: An Introduction to Intellectual Property: Domestic

The stagnation of social activities caused by COVID-19 has ended and IP in Japan is undergoing several important developments in the context of technological advances and the diversification of legal disputes.

Intellectual Property Related to Artificial Intelligence

Japan has a business-friendly policy that promotes both the development and use of AI. For the fiscal year of 2024, the government has requested a budget of JPY1,640 billion in relation to AI – nearly half of which is to promote the development of AI and nearly half of which is to promote the use of AI. This attitude is also reflected in Japan’s IP policy.

As regards patents, the Japan Patent Office (JPO) increased the number of examiners in charge of AI-related technologies from 13 to 38 in October 2023, with one examiner assigned to every division to cover all technical fields. The JPO has also added ten examples of AI-related inventions to the Patent Examination Handbook in January 2019, explaining how the enablement requirement, support requirement and inventive step are examined for AI-related inventions. It is expected that further examples will be added by March 2024.

In terms of copyright, the 2018 amendment to the Copyright Law clarified that the use of copyrighted works for machine learning – whether commercial or non-commercial – is generally permitted without any permission of the copyright holders. In June 2023, the Agency for Cultural Affairs published its view on copyright infringement by AI-generated works and on the copyright protection for AI-generated works. More detailed guidelines are expected to be published in the near future.

Japan is also involved in the developments of international rules on generative AI, given that Japan chaired the G7 Hiroshima Summit in 2023. Japan is promoting the Hiroshima AI Process Comprehensive Policy Framework agreed by the G7 leaders, in addition to the international guidance principles and code of conducts published in the framework.

Amendment of the Unfair Competition Prevention Act

In 2023, the Japanese Diet passed legislation amending the Unfair Competition Prevention Act (UCPA). The amendments are related to extraterritorial applications of the UCPA and will come into effect on 1 January 2024.

Strengthening and expanding punishment against bribery of foreign (non-Japanese) public officials

In order to implement the OECD Anti-Bribery Convention in a more appropriate manner at a higher level, the statutory penalties for individuals and companies have been increased for bribery of foreign public officials. Specifically, after the amendment, the maximum fine and imprisonment for individuals are a fine of not more than JPY30 million and/or imprisonment for not more than ten years, and the maximum fine for companies is not more than JPY1 billion.

Prior to the amendment, the UCPA criminalised briberies of foreign public officials committed outside Japan by Japanese nationals only. In contrast, following the amendment, the UCPA has criminalised briberies of foreign public officials committed outside Japan by anyone (ie, not just Japanese nationals).

Clarification of procedures in cases of international trade secret infringement

Before the amendment, it was unclear whether Japanese courts would be granted international jurisdiction or whether the UCPA would be chosen as the governing law in cases where a trade secret of a company operating in Japan is infringed overseas. Following the amendment, if all the following requirements are satisfied, Japanese courts will be granted international jurisdiction and the UCPA will apply to cases in which:

 - the trade secret at issue is held by one engaged in business in Japan;

 - the trade secret is kept in Japan; and

 - the trade secret is not exclusively used for business outside Japan.

Amendment of the Design Act 

In 2023, the Design Act was amended to relax the requirement for applying exception to lack of novelty. Article 4(2) of the Design Act provides for an exception to lack of novelty in cases where a created design has become publicly known prior to the filing date as a result of an act of the creator (Article 4(2)). In order to seek the application of Article 4(2), an applicant is required to submit to the JPO some documents pursuant to Article 4(3) – in particular, a document proving the fact that the publicly known design is a design to which Article 4(2) may be applicable (“proving document”) within 30 days from the filing date.

Under the current Design Act, in case where a creator has disclosed a design multiple times, it is construed, in principle, that the procedure stipulated in Article 4(3) should be carried out for each of all the disclosing acts. However, it is quite difficult for most of applicants to grasp all the disclosing acts. Under the above-mentioned revision in which the requirement stipulated in Article 4(3) was relaxed, in cases where a creator has disclosed a design multiple times, as long as the applicant proves the fact by the proving document that the design published as a result of the earliest disclosing act is a design to which Article 4(2) may be applicable, the applicant does not need to carry out the same procedure for the rest of the disclosing act(s). This revised Article 4(3) will come into effect on 1 January 2024.

New Japan IP High Court Grand Panel Decision Regarding Territorial Principal Issue

On 26 May 2023, the Japan IP High Court Grand Panel rendered a new judgment in a case between Dwango Co Ltd and FC2 Inc (US company), wherein the territorial principal of patent law is at issue (Case No 2022 (Ne) 10046) (the “New Grand Panel Case”). (Please refer to https://www.ip.courts.go.jp/eng/hanrei/g_panel/index.html)

In 2022, in a separate case between the same parties wherein the territorial principle was also at issue with the same background facts, the IP High Court rendered a first-ever decision allowing patent enforcement against infringing acts partially committed outside Japan. In such case, the patent at issue was related to an invention of a “computer program” for displaying comments on a video being played on a screen (Case No 2018 (Ne) 10077).

On the other hand, the patent at issue in the New Grand Panel Case is related to an invention of a “computer system” for delivering comments to be displayed on a video played on a screen, specifically claiming a “server” as a component of the computer system. In this case, the issue was whether an accused infringement action – a product of such a computer system – was conducted in Japan.

In the first instance, the Tokyo District Court dismissed the plaintiff’s claims because the defendant’s servers existed outside of Japan (Case No 2019 (Wa) 25152). However, the IP High Court Grand Panel found that the defendant’s action was substantially conducted in Japan and allowed the exercise of the patent against the defendant.

The IP High Court Grand Panel stated that, even where a “server” as a component of the computer system is outside Japan, an accused infringement action (a product of a computer system) can be found to have been substantially conducted in Japan if consideration is given to the following factors: 

 - specific elements of the action;

 - a function/role performed by those elements existing in Japan; 

 - a place where the effect of the action occurs; and

 - an influence on the patentee’s economic profits by the action and the like.

In conclusion, based upon the consideration of the above-mentioned factors, the IP High Court Grand Panel found that the accused infringement action was substantially conducted in Japan.