April 15, 2002
RESEARCH PAPER On
THE GENERAL INTELLECTUAL PROPERTY RIGHTS RESEARCH
Prepared for the four-month study-cum-research fellowship
Organized by The World Intellectual Property Organization And The Japan Government In The Framework of the Japan Funds-in-Trust To be Conducted in Tokyo From January 15 to May 16, 2002
Prepared by Mr. Op Rady, Fellow from the Kingdom of Cambodia
The Japan Patent Office (JPO) The Asia-Pacific Industrial Center (APIC) The Japan Institute of Invention and Innovation (JIII)
ACKNOWLEDGEMENT First of all, on behalf of the Cambodia government and myself, I would like to extend my sincere appreciation to the World Intellectual Property Organization (WIPO) and the government of Japan, especially, the Japan Patent Office (JPO), the Japan Institute of Invention and Innovation (JIII), and the Asia-Pacific Industrial Property Center (APIC) in organizing and sponsoring the four-month study-cum-research fellowship in Tokyo, Japan in the framework of the Japan Funds-in-Trust. It is a great honor and pleasure for me to be selected and invited here to attend the long-term research fellowship. Please permit me express my deepest gratitude to Mr. Kozo Oikawa, the Commissioner of the Japan Patent Office, Mr. Fumitake Yoshida, the Vice Chairman, president of the Japan Institute of Invention and Innovation and Mr. Shingo Tsuji, the Director General of the Asia-Pacific Industrial Center and their all kind colleagues for their valuable time and energy in taking care and providing me significant advice, support, technical assistance, inputs and inspiration of my fruitful research plan, and for the warm hospitality extended toward me. I also would like to acknowledge the incredibly generous donation of resource materials by the JPO, APIC and the other organizations that immeasurably facilitated the research process of this subject. I would like to express my deepest appreciation to Excellency Cham Prasidh, the Minister of Commerce, the Kingdom of Cambodia for nominating me for this valuable long-term fellowship. Mr. Ly Phanna, the Director of Intellectual Property Division for recognizing my capabilities and recommending me to be selected by the World Intellectual Property Organization. I hope that the knowledge, which I obtained from this research, will be used to upgrade my present working conditions and future career. I have the confidence to introduce changes in dissemination of the knowledge I acquired here in Tokyo to improve the quality of life of Cambodian people. Even though I leave Japan on May 16, 2002 I will bring all the good memories of the great history of Japan and warm and kindness of Japanese people to Cambodia and I hope these memories will be with me forever.
TABLE OF CONTENTS THE GENERAL INTELLECTUAL PROPERTY RIGHTS RESEARCH Page 1.
Chapter I
Introduction to Intellectual Property Rights
01
2.
Chapter II
Administration of Intellectual Property Rights
06
1. Patent Administrative Procedure
06
2. Administrative Procedure under PCT System
11
3. Administrative Procedure under Information
15
Technology Development
3.
Chapter III
4. Dissemination IPR to the Public
19
Impact of the Intellectual Property System in Economic
21
and Technological Development 1. Facilitating Technological Development in the
21
2. National Scale 3. Expansion of Technological Transfer and Foreign
22
Direct Investment in the International Scale 4.
Chapter IV
Enforcement
24
a. Practitioners
24
b. Patent Dispute and Countermeasures
29
c. Trademark and Settlement
48
d. Policies and How to Take Actions
61
against Counterfeits Goods 5.
Chapter V
Litigation and Appeal Examination System
68
6.
Chapter VI
Conclusion
89
PREFACE Cambodia was a member of the World Intellectual Property Organization on July 25, 1995 and became a contracting party of Paris Convention on September 22, 1998. The Trade Relations and Intellectual Property Rights Protection Agreement between Cambodia and United States of America was signed on October 04, 1996. The ASEAN Framework Agreement on Intellectual Property Cooperation signed on April 30, 1999. The Royal Government of Cambodia has initiated many efforts to restore people awareness, administrative implementation and enforcement for strictly strengthened intellectual property rights protection, expecting thereby to contribute to the part of Cambodia economic development in long-term by encouraging foreign direct investment, promoting the transfer of state of art technologies, continuing to cultivate innovative expansion of literature and artistic work, creating confidence among local R& D and facilitating the integration of Cambodia economy into regional and global economies. The intellectual property rights have become one of the hot topics of national interests prior to the accession of Cambodia to the WTO. Therefore Cambodia would face many challenges in absorbing these new concepts, due to lacking of human resources, in place infrastructure and available related legislative bills. The three laws, trademark, patent and copyright will be ratified at the end of year 2002. For Cambodia in this moment, applying with the international standard of intellectual property rights is the major constraint, therefore this research plan plays as a crucial role in transferring intellectual property culture from developed countries, Japan to Cambodia. The important objectives of this research plan may be broadly summarized in six chapters where are focused on the definitions of various types of IPR in Japan, the administration of intellectual property rights, the impact of IP system in the economic and technological development and the enforcement. Through this broad research study, I would like to achieve the following specific concepts. 1. To grasp the definitions of different types of intellectual property rights. 2. To scan the administrative procedure under PCT system and information technology at JPO, and suggest IP office in Cambodia for new comprehensive
system in order for further consideration and improvements 3. To understand what advantages and effects of strengthened intellectual property protection in the fields of economic and technology development. 4. To cover the enforcement system thereby they may manage proactive countermeasures and cut down the IP disputes, especially what kind of policies and measures to be taken in order to combat counterfeit goods in Japan. 5. To understand the mechanism of litigation and appeal system of IP disputes in Japan through these I will propose to courts in Cambodia to take into consideration. 6. To summarize the intellectual property rights through this study.
I believe that this research paper will be drawn to the light of administrative procedure and enforcement where I could not insert all concepts from my study here and also I could not avoid any random mistakes, time is limited.
I am very happy to look forward to any further constructive criticism.
RESERCH STUDY METHODOLOGY I paid a courtesy visit to Mr. Kozo Oikawa, the Commissioner of the Japan Patent Office, Mr. Shingo Tsuji, the Director General of the Asia-Pacific Industrial Center with the recommendations and advices and I also held meetings with senior officials of the JPO and APIC regarding my research plan. During my research study, many trainings were held at APIC and other related organizations while I had the opportunity to participate in training courses on the Use of Information Technology in Industrial Property Administration from January 21 to February 01, 2002, the Industrial Property Rights-the Expert Course for IP Practitioner from February 06 to 26, 2002 and the Industrial Property Administration from February 25 to March 08, 2002 at APIC and visit other related organizations such as the Japan Patent Office (International Affairs Division, Patent Examination Division, Trademark Examination Division, National Center for Industrial Property Information, Appeal Division and Appeal Board), the Japan Patent Information Organization, the Industrial Property Cooperation Center, Patent Attorney’s Office, Fujimura Patent Agency, TOSHIBA Corporation, Contours of School children’s invention and invention exhibitions. I rarely have the opportunity to take part in the second “ International Patent Appeal Examination Symposium was held at the Akasaka Prince Hotel on March 7-8, 2002, in Tokyo where excellent speakers from Japan, United States of America, South Korea, and China. I conducted face-to-face interviews with the senior officials of the JPO who are in charge of international application, appeal examination and enforcement and also I visited the hearing process at Appeal Board in order to obtain real life activities for this study. The above-mentioned activities matched with the excellent IP experts to whom I availed of those opportunities to hear different viewpoints and launch many questions in IP field. Also it was a real personal experience for me to understand how training delivery is done under high-tech equipments. The APIC library has been equipped with huge collections of 4000 books from various IP fields, journals, magazines, international publications and training, seminar, meeting,
symposium and conference materials. As WIPO-fellow has been permitted to access to this library freely.
TERM OF THE RESEARCH STUDY This research study was sharply carried out within the four months, the limited time period therefore it was difficult to understand deeply in certain subject matters. I have to measure my preparation only to the Japanese patent law. This preparation also grasps to provide the important aspects of definitions, administrative procedure under PCT system and information technology development, public awareness, impact of IP system to economic and technology development and enforcement under the Japanese patent law. Especially this research paper prepared to what Cambodia needs at present and the other related matters were not discussed in this paper since the emphasis of the paper mainly refers to the real life activities in Japan. The time is very limited so it is not possible to scan all the details in this paper. This research paper was prepared and submitted on April 15, 2002. The evaluation meeting will be held on April 19, 2002. And at last, the closing ceremony will be held on April 22, 2002 at the Japan Patent Office.
CHAPTER I INTRODUCTION TO INTELLECTUAL PROPERTY RIGHTS The 21st century, major developments are being focused on knowledge and information technology. In other words, we have been confronting with era of intelligence where knowledge and information technology will be perceived as important and strategic factors in the development of society. Many experts said that manpower, capital and land are three fundamental factors of producing useful products for society. Recently, however, human creative knowledge has transformed itself into a new factor of making profit and to be treated as one of the major determinants of national wealth and competitiveness. As a result, human creative knowledge to be effectively protected is only by intellectual property system becoming a major national and international concern.
Basic Concepts of Intellectual Property Rights Intellectual property, this expression is used to refer to all works (creations or products) created by the human knowledge (mind). In order to understand the expression “ Intellectual Property “ I will divide it into parts: 1.
Property In general, property is referred to human wealth is lawfully used by its legal owner
as he wishes and also legally used by others with his authorization. It may be referred to three types of property: a.
Movable property Such as vehicle, radio or furniture are movable properties. In some legal systems
provided for legal owner can exclusively use these items because owner has the exclusive right and others can use these items with his authorization. b. Immovable property It is referred to real property; land and every thing permanently fixed on or into land such as land, house, or tree is immovable property. 1
c.
Intellectual property It is referred to the creation of human mind (intellect) is protected by intellectual
property system. 2.
Intellectual Property In general, intellectual property was categorized into two branches:
a.
Industrial Property It protects inventions in result from new solutions to technical problems to be
solved in intangible embodiment (rather than a physical object) by research and development. b. Copyright It protects literary and artistic works as well as creations in the field of neighboring rights.
The Meiji Restoration Induces Calls for the Patent System Japan changed dramatically as a result of the Meiji Restoration, and commerce and industry also enjoyed an influx of the new ideas, including the concept of the patent. Mr. Yukichi Fukuzawa, founder Keio University took an inspection trip to Europe in 1861 and was surprised by the latest technologies. Young Fukuzawa learned of the existence of the patent system and realized the need to diffuse it. In western countries, inventors could earn a great profit from their inventions, as they were granted patents and protected for a fixed period of time. As a result, people strove to create and improve technologies, contributing to their countries` development. The existence of patent was a fundamental factor in the development of the western countries. In his book, “Seiyo Jijo” (the State of affairs in the West), Mr. Fukuzawa explained patents in the following manner: “New inventions brought into the world obviously bring great benefit to the public. 2
Therefore, the government extends exclusive rights to the inventor for the profits gained from that invention for a certain fixed period as stipulated by national law, thereby providing incentives to people. This is called a patent”1. The intellectual property system protects the rights of creators of a broad range of intellectual creations for a fixed period. Various laws have been established to promote the protection of intellectual property, which is important to both the protection of individuals’ rights and industrial development. Inventions, which are new creative technologies and ideas, are protected under the Patent Law. Small inventions such as improvements of daily commodities or small contrivances, which are not as advanced as inventions but useful nonetheless, enjoy protection as devices under Utility Model Law. Industrial designs are protected under Design Law and Trademarks of brands, etc. are protected under the Trademark Law. These four laws are collectively called Industrial Property Laws. They are intended to promote industrial development and administered by the Japan Patent Office. In addition, musical, artistic and literary works are protected under the Copyright Law, which aims to promote cultural development. Other laws on intellectual property include the Unfair Competition Prevention Law for protecting business-related items including trade secrets. From time to time, in order to make a difference between industrial property and copyright focused on conditions of inventions and literary and artistic works, both of them were divided in more details as following definitions: Definitions under Japanese Intellectual Property Laws •
Patent Law (1) “Invention” means the highly advanced creation of technical ideas by which a law of nature is utilized. (2) “Patented invention,” means an invention for which a patent has been granted. (3) “Working” of an invention, means the following acts:
1
Mr. Yukichi Fukusawa, (1835-1901), A Meiji era thinker and educator and founder of Keio University.
He authored “Seiyo Jijo” (The State of affaires in the West) and worked to introduce western culture to Japan.
3
(i) In case of an invention of a product, acts of manufacturing, using, assigning, leasing, importing or offering for assignment or lease (including displaying for the purpose of assignment or lease) of, the product; (ii) In the case of an invention of a process, acts of using the process; (iii) In the case of an invention of a process of manufacturing a product, acts of using, assigning, leasing, importing or offering for assignment or lease of, the product manufactured by the process, in addition to the acts mentioned in the preceding paragraph. •
Utility Model Law (1) “Device” means the creation of technical ideas by which a law of nature is utilized. (2) “Registered utility model” means a device for which a utility model registration has been effected. (3) “Working” of a device, means acts of manufacturing, using, assigning, leasing, importing or offering for assignment or lease (including displaying for the purpose of assignment or lease) of, articles embodying the device.
•
Design Law (1) “Design” means a shape, pattern or color or any combination thereof in an article (including part of an article), which produces an aesthetic impression on the sense of sight. (2) “Registered design,” means a design for which a design registration has been effected. (3) “Working” of a design means any act of manufacturing, using, assigning, leasing, importing or offering for assignment or lease (including display for the purpose of assignment or lease) of articles to which the design has been applied.
•
Trademark Law (1) “Trademark” means characters, figures, signs, three-dimensional shapes or a combination thereof, or any combination thereof and color (2) “Registered trademark” means a trademark for which a trademark 4
registration has been effected. •
Copyright Law (Some elements quoted from definition of copyright law) (i)
“Work” means a production in which thoughts or sentiments are expressed in a creative way and which falls within the literary, scientific, artistic or musical domain;
(ii)
“Author” means a person who creates work;
(iii)
“Performance” means the acting on stage, dancing, musical playing, singing, delivering, declaiming or performing in other ways of a work, and includes similar acts not involving the performance of a work, which have the nature of public entertainment;
(iii)
“Performer” means actors, dancers, musicians, singers and other person who give a performance as well as those who conduct or direct a performance;
(iv)
“Phonogram” means fixations of sounds on phonographic discs, recording-tapes and other material forms, excluding those intended for use exclusively with images;
(v)
“Producers of phonograms” mean those who first fix the sounds contained in phonograms;
(vi)
“Commercial phonograms” mean copies of phonograms made for commercial purposes;
(viibis) “Public transmission” means the transmission of radio communication or wire-telecommunication intended for direct reception by the public, excluding the transmission (other than that of program works) by wire-telecommunication installations one part of which is located on the same premises where the other part is located or, if the premises are occupied by two or more persons, both parts of which are located within the area therein occupied by one person; (vii)
“Broadcasting” means the public transmission of radio communication intended for simultaneous reception by the public of the transmission having the same contents;
(viii)
“Broadcasting organization” means those who engage in broadcasting business; 5
• Protected rights The author of a work or inventor of invention is the person who created it. The author or inventor has the exclusive right to use the protected work or protected invention as he wishes and may prevent others from using it without his authorization.
CHAPTER II ADMINISTRATION OF INTELLECTUAL PROPERTY RIGHTS In Japan, right of industrial property is established by filing an application with the Japan Patent Office through various steps and industrial right is granted after passing many steps. An applicant who has no domicile or residence in Japan (or a business establishment in the case of a legal entity) shall file an application through a representative who has domicile or residence in Japan where the communication is facilitated. All documents must be written in Japanese except for: (1) A power of attorney, a nationality certificate or any other certificate written in foreign language may be submitted in the original language and must be accompanied by Japanese translation. (2) Since July 01, 1995, specification, drawings and abstracts of patent application may be submitted in English provided that a Japanese translation must be submitted within two months of filing date. The application may set up his/her own deposit account at JPO. In this case, the applicant must have previously paid enough money in revenue stamps or by money transfer through a bank. When necessary, the fee is automatically withdrawn from the applicant’s deposit account. Japanese law system provides: 1.
Patent Administrative Procedure (1) The first to file principle 6
(2) Publication of unexamined application (3) Request for examination (4) Filing an opposition after a patent has been granted. 1.1 Publication of Unexamined Application For an inventor to have his or her invention protected by a patent, it is needed to file a patent application with the JPO without delay because first-to-file system is given the right to applicant who first coming. After the formality is conducted and assignment of the international patent classification, the contents of the application filed with the JPO are published as a publication unexamined application. 1.2 Request for Examination The request for examination system is used in Japan, substantive examination is conducted at the request of examination from applicant. The request for examination must be filed within three years from the filing date (was enforced from October 2001) and the request may be filed simultaneously with the application was filed and parties other than the application may also request examination. Upon request for examination of the applicant or others, a substantive examination is started. If the examiner discovers in the application reasons to deny it, the examiner informs the application as to the reasons why the application was denied, thereby provides the applicant with the chance to defend or amend the application. If there is no reason to deny the application, or if the reason for denial has been amended, the examiner issues a decision that a patent right is to be granted and published in the Official Gazette in order to verify by the public. While the examiner decides that a patent is granted, it means that the right has also been established at this stage. 1.3 Opposition The previous system in Japan called pre-grant system whereby opposition may be filed before a patent is granted and after January 01, 1996 system called post-grant system whereby opposition may be filed after a patent is granted. The post-grant opposition system is to ensure that patents are granted in a timely manner. 1.4 Outline of Post-grant Opposition System 7
(1) Any party may raise an opposition (during a trial to invalidate a patent, only interested party may request a trial to invalidate a patent). (2) An opposition may be filed up to 6 months after the issuance of the patent has been made public or a request for a trial to invalidate a patent can be filed at any time after a patent has been granted. (3) In Japan, opposition must be on the ground of: (1) the claimed invention is not novelty; (2) the claimed invention does not involve an inventive step; (3) the description is not sufficient; etc. (4) Multiple oppositions, if raised, may be consolidated. (5) The patentee who does not satisfy with the decision to revoke a patent may file a lawsuit with the Tokyo High Court, On the other hand, an opponent awarded a decision to maintain the patent is not given a chance to take action. Instead, an interested party may request a separate trial to invalidate a patent. (6) Others • Opposition may be raised claim by claim. • During the proceedings, correction to the patent may be made. • The appeal examiners may look into, on their own initiative, other reasons to revoke the patent. • A tribunal of appeal examiners conducts the procedures. 1.5 Accelerated Examination System An application claiming an invention exploited by applicant or licensee (now or within 6 months). An application for which a corresponding application has been filed with a foreign patent office. In 1986, The JPO introduced accelerated examination for applications for exploited inventions to dispose of these applications promptly. This system is intended to minimize the adverse effects that could result from delay in examination, by accelerating the examination of such applications for exploited inventions at the request of applicant. •
Outline of Accelerated Examination Procedure
(1) Application eligible for accelerated examination shall satisfy the following conditions: 8
- An invention claimed in the application is exploited by an applicant or a licensee (including exploitation within 6 months from the date of submission of the “Statement of Circumstances regarding Accelerated Examination”); - The request for examination has already been made; and - Examination by an examiner has not yet begun. (2) Criteria for Accelerated Examination Procedure - The applicant must submit, after filing a request for examination, the “Statement of Circumstances regarding Accelerated Examination”, which shows the status of exploitation, search of prior art and comparative description. - The JPO screens applications for which a “Statement of Circumstance regarding Accelerated Examination”, has been filed to determine whether or not an accelerated examination should be conducted. - The examiner must promptly start an examination to ensure a speedy conclusion, including disposing of oppositions. 1.6 Appeals and Trial System Although the examiner makes all of his efforts to carry out a careful examination, the examiner’s notice of refusal is not always satisfied the applicant. In these situations, the applicant may request an appeal. In addition, anyone who wishes to contest the validity of a right may request a trial to invalidate a patent. Such appeal and trial procedures are conducted in JPO. Appeal or trial procedures are conducted by tribunal usually composed of an appeal examiner-in-chief and two appeal examiners, and the decision is made by majority rule. If the party is still not satisfied with the decision, the party may appeal a case at the Tokyo High Court, and finally may seek the decision of the Supreme Court. The appeal and trial system is closely related to the judicial system. There are three main types of appeal and trial of patent system: •
Appeal against the issuance of refusal When the applicant is not satisfied with the issuance of a refusal, the applicant may request an appeal to review whether the reason for refusal is reasonable.
•
Trial to invalidate a patent Any interested party who doubts the validity of a patent may request a trial to invalidate the patent. The trial has inter-partes procedures. During a trial to 9
invalidate a patent, the patentee can correct the specification or drawing. This eliminates the need to request trial for correction. •
Trial for Correction The trial for correction is intended to protect inventions by providing the patentee with an opportunity to make a correction within a range which does not cause unexpected damage to a third party after a patent has been registered.
1.7 Examination, Appeals and Trials Supporting Technology in the “Era of Intelligence” 1.
Revision of Examination Guidelines
(1) Examination Guidelines for Description Requirements of Specifications, Novelty, Inventive Step Revision of the examination guidelines was carried out in their entirety for the appropriate execution of examination coping with diverse forms of inventions and technological progress, taking recent trends in cases into consideration. (2) Examination Guidelines for Computer Software-related Inventions Revision of the examination guidelines for computer software-related inventions was carried out in order to cop with increasing concerns regarding inventions relating to new business methods utilizing general use computers and the changes in distribution forms of computer programs, taking international harmonization of the practice into consideration. This was released in December 2000. 2.
New Accelerated Examination and Accelerate Appeal Examination New accelerate examination and accelerated appeal examination for patents
started in July 2000 in order to respond more appropriately to the needs for accelerated acquisition of rights by applicants with the purpose of creative technical development of the applicants, accelerated utilization of research and development results, and to support global economic activities. The details of these changes and Examination Guidelines are also other important part have administrative procedure can be accessed the JPO website URL: http://www.jpo.go.jp 10
2.
Administrative Procedure under PCT System
2.1 History of the PCT In order to solve some problem involving the traditional system, in September 1966 the Executive Committee of the Paris Union for Protection of Industrial Property invited BIRPI (the predecessor of WIPO) to undertake an urgent study to reduce duplication for both applicants and national patent offices. In 1967, a draft of an international treaty was prepared by BIRPI and presented to a committee of Experts. Subsequently, a number of meetings prepared revised drafts and a Diplomatic Conference held in Washington in June 1970 adopted a treaty called Patent Cooperation Treaty. The Patent cooperation was established on January 24, 1978 and become operational on June 01, 1978, starting with 18 contracting states. As of December 31, 2001, the PCT has 115 contracting states, a significant increase that is indicative of interest there is in implementing the treaty. The filing of international applications under PCT commenced on June 01, 1978. At the end of 1999, 489,365 international applications had been received by the International Bureau of WIPO. More than 74,000 international applications were received in 1999, replacing over 5,829,200 national filings. Referring to PCT statistic of WIPO shows that, the 103,947 international applications received in year 2001 had the effect of 6,432,093 national applications, and of 326,757 regional applications which would be equivalent to 4,639,800 applications for patent protection in the member States of the regional patent systems, that is, a notional equivalent effect, in total, of 11,071,893 national applications. These brief indications of the progress of the PCT merely demonstrate the certainty that many more countries, developing as well as developed, will become party to the PCT in the years ahead and that its use, evidenced by the number of applications filed, will continue to increase significantly. 2.2 What is the PCT The PCT is an agreement for international cooperation in the field of patents. This agreement is not to grant international patent rights but it is largely a treaty for 11
rationalization and cooperation by facilitating in patent filings, searching, and examination of patent applications and dissemination of the technical information contained therein. The task of and responsibility for granting patents still remains exclusively in hands of national patent offices of, or acting for, the countries where protection is sought “ designated offices”. The PCT does not compete with but, in fact, complements the Paris Convention. Indeed, it is a special agreement under the Paris Convention open only to states, which are also party to Paris Convention. 2.3 Principle Objectives of the PCT The principal objective of the PCT is to simplify and to render more effective and more economical, in the interests of the users of the patent system and the offices, which have responsibility for administering it, the previously established means of applying in several countries for patent protection invention. Before the introduction of the PCT system, virtually the only means by which protection of an invention could be obtained in several countries was to file a separate application in each country; these application, each being dealt with in isolation, involved repetition of the work of filing and examination in each country. To achieve its objective, the PCT: - established an international system which enables the filing with a single patent office “the receiving office” of a single application “the international application” in one language having effect in each of the countries party to the PCT which the applicant names “designates” in his application; - provides for the formal examination of the international application by a single patent office, the receiving office; - subjects each international application to an international search which results in a report citing the relevant prior art (mainly published patent document relating to previous inventions) which may have to be taken into account in deciding whether the invention is patentable; that report is made available first to the applicant and is later published; - provides for centralized international publication of international applications with the related international search reports, as well as their communication to the designated offices; and - provides the option of an international preliminary examination of the international application which submits a report containing an opinion as to whether the claimed 12
invention meets certain international criteria for patentability to the offices that have to decide whether or not to grant a patent, and to the applicant. Here is the PCT Flowchart
13
National Filing
Applicant
National Application
National Patent Office
PCT filing Agent/Representative International Application under Patent Cooperation Treaty (PCT)
International Phase
claiming priority under Paris Convention
PCT request Form
Receiving Office (RO)
International Search
World Intellectual Property Organization （WIPO） International Bureau （ＩＢ）
International Search Report (ISR)
International Publication by WIPO/IB International Preliminary Examination (option)
30 months from the international filing date or, if priority claimed, the priority date
International Preliminary Examination Report (IPER)
National Phase
Entry to National Phase Submission of Translation
Those reports may be referred in the substantive examination in designated States
Japanese Translation If required, national fee Designated Office (DO)
Front Page of PCT International Publication
Substantive Examination
Patent Granted
14
International Search Report
International Preliminary Examination Report
The procedure describes in the above flowchart where is illustrated by two timelines which are shown and explained as follows: It is commonly called the “international phase” of PCT procedure, whereas one speaks of the “national phase” to describe the last part of the patent granting procedure which is the task of the designated offices, that is, the national offices of, or acting for, the countries which have been designated in the international application. In PCT terminology, a reference to “national” office, “national” phase and “national” fees includes the reference to the procedure before a regional patent office. Even in the most developed countries, patent offices have been struggling for years with heavy workloads leading to delays and with questions of how best to allocate resources so as to ensure that the patent system yields the greatest return from the available manpower. Under the PCT system, by the time the international application reaches the national offices, it has already been examined as to form by the receiving office, searched by the International Searching Authority and possibly examined by an International Preliminary Examining Authority, thus providing the national patent offices with the important benefit of reducing their work loads since they have the benefit of these international phase centralized procedures and thus need not duplicate those efforts. Furthermore, the main objectives of the PCT are to facilitate and access by industries and other interested sectors to technical information related to inventions and to assist developing countries in gaining access to technology. 3.
Administrative Procedure under Information Technology Development
3.1 Background to Establishment of Paperless System Project The paperless project started in the first half of the 1980s. During that period, reflecting the increase in research and development investment and the increasing importance of intellectual property rights in corporate strategy, the number of applications for patents and utility models was rapidly increasing. For companies and investors developing patent-based businesses, quick response by IP offices is strongly desired in order to protect the technology expressed in their applications. In short, the faster IP offices respond, the bigger the chance of success for such companies and investors. There were various problems in terms of document administration. The JPO was 15
forced to decentralize offices due to the aging and cramped nature of many government buildings in that period. It also had extreme difficulty in moving the increasing number of application documents and securing the space to store publications. Inefficient administration resulting from the huge paper inflow and amount of stored paper was therefore a significant issue. In patent examination, prior art documents used to be searched by manually screening filed paper documents. However, if paper publications are merely filed in a simple manner, the number of documents to be searched increases over the years. Also, since two or more examiners cannot use a file at the same time, it was difficult to concentrate examiners in technical fields in which the number of applications to be examined was increasing. This caused problems in terms of the efficiency of paper file manual searches. 3.2 Actual State of Paperless System (1) Online Communication An advantage of the paperless system is its online communication capability. The application and dispatch systems are mainly based on the system which enabled the world’s first electronic applications, and its operation enables electronic databased online communication for almost all documents sent between application and JPO. Inspection and request systems enable people to inspect and request application documents and registers from home or the office. (2) Formality Examination and Substantive Examination (Automatic Formality Check, Parallel Processing) The JPO conducts prior art searches for substantive examination using various search tools for internal electronic data on domestic and foreign official gazettes and commercial databases. A typical example of such document search systems in the F-term system. Under this system, search keys are specified according to technical features and assigned to documents classified according to technical them. Therefore searches can be narrowed down by the logical specification of multiple terms. (3) Drafting and Electronic Approval The peripheral examination assistance system displays application documents 16
on the examiners` terminal screens and helps them drafting administrative measures, for example, notices of rejection and decisions to grant a patent. Notifications of measures drafted by examiners are sent via the internal LAN to the terminal of a person with approval authority, and the approved notifications are dispatched to applicants online. (4) Official Gazette System and Patent Information Service As a benefit of the paperless system, the JPO provides a variety of the patent information through various means such as the publication of official gazette on CD-ROM. Moreover, the IPDL provides about 47 million official gazette items and related information via the Internet free of charge. 3.3 Effect by Paperless System Project (1) Contribution to Prompt and Precise Examination The JPO has digitized almost all the industrial property information it had accumulated the 100 years since its foundation for use in the examination of complicated and sophisticated patent applications. The JPO also achieved the main goal of the paperless project of a shorter examination period through electronically processing 2 million procedures a year between the JPO and applicants. (2) Effective Internal Administrative Procedure Formality checks are automatically conducted for all applications. If applicants fulfill all formality requirements, the formality check is automatically completed and the applications will move on to substantive examination. If there is a possibility that applications do not fulfill the requirements, they will be subjected to visual check by formality examiners. If the unsatisfied requirement is minor or negligible, the formality check is completed by ex officio correction. If there is a greater problem, the formality examiners draft an order by computer and send it immediately to the applicants. Since electronic database operations brought about the parallel processing of various operations, such as formality examination, substantive examination and classification assignment, it becomes possible to drastically shorten the conventionally required working period. In particular, since electronic operation enables concurrent access from two or more divisions to electronic data of 17
applications stored in original files as well as the operational processing thereof, the flow of electronic documents differs from that of paper documents, allowing for a shorter pendency period. It is fair to say that the paperless system has greatly contributed to increasing user friendliness. Since applicants can carry out various procedures online using personal computers at their office or at home, there is no need to go to JPO or a post office. Application in paper form may still be filed, but the ratio of on-line applications has rapidly been increasing in the past 10 years. As a matter of fact, 97% of the about 400,000 patent application filed annually are filed on-line. 3.4 Upgrading of Information Provision Services Industrial property information means not only the latest technical information but also information on scope of rights. Therefore the active use of such information is extremely important in terms of corporate strategy, investment in R&D, technical development and commercialization. (1) Dissemination of IP Information The JPO has started of publication, (patent, utility model) since January 1993 and (design, trademark and appeal decisions) since January 2000 and gazette has been published from paper to CD-ROM. Moreover, IPDL services promote the use of industrial property information for the purpose of gaining understanding of competitors` application trends and R &D trends and preventing dual investment and unnecessary disputes over the designing and naming of products. (2) Promotion
of
International
Collaboration
and
Support
for
Computerization in Developing Countries Corporate activities in developing countries are noticeably becoming more global, causing an increase in international applications for industrial property rights. Based on such circumstances, the JPO has been supporting the modernization of administrative procedures in developing countries to make sure that rights are granted efficiently and transparently. This is done through the dispatch of experts, the acceptance of trainees and the provision of equipment. Developing countries, particularly ASEAN member countries, have recently asked the JPO to support infrastructure building towards computerization of procedures for industrial property rights. The JPO has extended cooperation in this regard. 18
4.
Dissemination of IPR to the Public
4.1 Implementation of Local Explanatory Meetings on Industrial Property Rights and Industrial Seminars With the goal of attaining an era of intellectual creation in 21st century it is essential to deepen awareness and recognition of the functions of the industrial property rights system as well as the importance of protection and commercialization of industrial property rights. In Japan, Explanatory meetings corresponding to attendee level beginners, businessmen, or those regarding the latest news on the amendment of laws, etc, are held nationwide with the purpose of improving the patent literacy of entire population. Explanatory meetings for beginners regarding the industrial property rights system and administrative are held in 47 prefectures of Japan. The explanatory meetings for businessmen, such as operational standards for examinations of patents and utility models, international application systems, IPC, amendment of laws, including the latest revision
of relevant systems etc., are held in major cities throughout Japan to respond
to requests for appropriate protection of industrial property rights and promote their commercialization (about 20,000 participants in 1999). The university and national research institute seminars are held to explain patenting of research results as well application procedures to researchers. The medium and small venture enterprises seminars are held to explain strategic commercialization methods of patent and patent licenses to managers of SMEs and venture enterprises as well as those in charge of technological development. The specialist training seminars are held for managerial and technical consultants as well as intellectual property dealers. Respectively, 35, 33, and 6 seminars were held in year 1999, with about 3,300 participants. 4.2 Support of Intellectual Property Education The 21st century, Japan continues to promote a “patent mind” throughout the country. This “patent mind” can be effectively cultivated through educating the young generation. The JPO has developed support measures for intellectual property rights education including the development of various teaching materials to promote education and knowledge of the intellectual property rights system, and distributes these materials free of charge to educational facilities such as elementary, junior and senior high 19
schools throughout Japan. (1) Distribution of Supplementary Reading Materials on Industrial Property Rights Supplementary reading materials for elementary school students recording the endeavors of inventors, as well as materials for junior high school students regarding the status of the intellectual property rights system in Japan, along with the roles of the patent system, which has contributed to industrial development, have been prepared. They are distributed free of charge throughout Japan to elementary and junior high schools that have requested them. 620,000 texts were distributed in 1999. (2) Distribution of Industrial Property Rights Standard Textbooks Standard textbook on patents and trademarks explaining such items as why invention need patents, the draft of application papers including patent specifications, as well as various procedures to obtain rights, have been prepared for the high school students. They are distributed free of charge to such educational institutes as
technical high schools, commercial high schools, and departments of
law and economics at universities. Two hundreds textbooks were distributed in year 1999. (3) Distribution of Industrial Property Rights Multi-media Materials CD-ROM software materials as well as a cartoon video have been prepared. Using CD-ROM software material, patents for personal belongings, as well as the patent storied of inventors can be learned audio-visually. With the cartoon video, the cycle of technology disclosure by patent application to the securing of R& D funds as well as problems caused by counterfeits can be easily learned by children. As of June 2000, they were distributed free of charge throughout the Japan to about 5,000 elementary schools that requested the material. (4) Various Promotional Activities Explanatory meetings for instructors or model class observation tours for the effective utilization of various teaching materials in the classroom are held throughout Japan. 4.3 Anti-counterfeiting Programs As part of the Japanese pro-patent policy, the JPO is making efforts, mainly in 20
Asian countries, to strengthen measures against losses caused by counterfeiting, with the aim of securing global protection of the intellectual property right of Japanese enterprises. Starting with the establishment of an Anti-counterfeiting Help Desk in March 1998, the JPO has strengthened its links with enforcement authorities such as customs and the police, made efforts for improvement of local enforcement systems of Asian countries, collected local information on counterfeiting and provided it to Japanese enterprises, and create manuals on measures against counterfeiting. Major activities in year 2000 are shown as follows: (1) Consultation Consultation in Japan, anti-counterfeiting Help Desk, is approximately 300 cases. Consultation overseas through JETRO is approximately 60 cases. (2) Public Relation Distribution of the “Fabricateur” booklet is to raise awareness among general consumers. (3) Provision of Information In Japan seminars were held in Tokyo, Osaka, Nagoya, Niigata, and Takamatsu and 24 seminars were held overseas in 10 countries with approx. 2000 participants. Homepage: manuals on measures against counterfeiting and guide to customs and police consultation desks.
CHAPTER III IMPACT OF THE INTELLECTUAL PROPERTY SYSTEM IN THE ECONOMIC AND TECHNOLOGY DEVELOPMENT It is said that intellectual property system is very broad concepts thereby I will talk about the economic and technological implications of intellectual property in the national scale and the international scale. 1.
Facilitation of Technological Development in the National Scale The main function of intellectual property system is the protection of a vast scope 21
of human creativity, from inventions, literary and artistic works to signs, devices, utility models and designs, which will be granted an exclusive right, exclusive economic exploitation, of intellectual property creation, which will contribute to the facilitations of research and development through encouragement of inventive activities and effectively improve related technological status by disseminating specific technology registered before the intellectual property office. From the above viewpoints, a few people from least developing countries often said that a consequence of intellectual property protection is the inefficiency in allocation of resources, deriving from monopoly effect, for example in Japan while the Patent Law was enacted on April 18,1885 some people released the opinion that the creation of patent system would harm the nation interest by preventing Japanese from copying foreign technologies. In addition to this others said that poor countries have to copy intellectual property creations, such as computer program, book, or technology and selling it in a low price for the poor having an opportunity to use. They said that this is a part of human resource and economic development. However, the deepest studies of many countries, including Japan, United States of America, and European community show that insufficient intellectual property protection for inventive activities would lead to illegal piracy, imitation, infringement, and free ride of others` intellectual property rights. Moreover, it is a credibly accepted aspect that sufficient intellectual property protection has been an effective leading instrument in encouraging technology development forward, for instance the introduction of Japanese patent system on April 18, 1885 inspired many inventors, and many inventions were increased sharply including Mr. Sakichi Toyoda, who received a patent for his invention of a wooden manual weaving loom. He expanded his business based on this invention, eventually leading to the establishment of the world-famous automobile manufacturer, Toyota Motor Corporation today. 2.
Expansion of Technological Transfer and Foreign Direct Investment in the International Scale Starting internationally from international aspect, intellectual property protection is
recognized to guarantee the exclusive exploitation of intellectual property creation for a foreign or multi-national corporation in a related country and also treated as the method to control the unauthorized use thereof.
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In the aspects of economic and technological effects of intellectual property protection, there is a considerable opposition aspect between developed countries, the technology suppliers, and developing countries and least developing countries, the technology demanders. Many developing and least developing countries recognize that strengthened intellectual property protection will result in weakened technology transfer and increased royalty charge, depended on the understanding that foreign intellectual property owners would likely focus on their attention to strengthening the protection of their intellectual creation without any effort to expand technology transfer. Developed countries extremely recognize that strengthened intellectual property will encourage them to facilitate foreign direct investment as well as technology transfer. Any the other words, least developing countries have no enough capital to invest on the highly advanced technology, it costs a lot of money. For example after the accession of Japan to Paris Convention, Japan established and amended a system of modern intellectual property laws in compliance with international standards while many foreign applications were filed in Japan and a significant increase in private sector inflows of foreign technology and capital along with government led to introduction of various foreign technologies. Imported technologies became the foundation upon which Japanese industry was built, The first joint venture corporation is between Nippon Electric Company Limited Partnership and Western Electric Company
in 1899 (present NEC corporation), and those to adopt them gained
international competitiveness until now. In conclusion of the above different aspects based on macro-economy, I firmly recognize that we cannot expect technology transfer and economic development without the appropriate protection of intellectual property rights. Moreover, it is necessary for us to understand that strengthened intellectual property protection, commercialization and enforcement in national level encourage research development, investment, and technological development of local industries, especially it maintains goodwill and national reputation. By the same token, the transfer of state of art technology can be expanded by strictly strengthened intellectual property protection.
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CHAPTER IV ENFORCEMENT a. Practitioners 1.
Brief History Patent attorney system in Japan was established on July 01, 1899, which was the
same year as Japan joined the Paris Convention. In 1899, there were 138 registrants for patent attorneys. From the starting patent attorney system, patent attorneys have provided legal profession which have been expanded to the services of providing expert opinions, statutory statement assistances before the court for infringement suits since 1922, and representing clients in appeals before the court against trial decisions rendered by the Patent Office since 1948 and the services of representation for clients in connection with international applications through the Patent Cooperation Treaty or Madrid Protocol. The services have also been expanded to counseling for patent management and strategies especially reflecting the increase of interest industrial property rights among enterprises. The organization for patent attorneys was established in 1915 named Japan Patent Attorneys Association (JPAA). JPAA has initiated its opinions to Patent Office regarding the improvements of industrial property system, its operation and management. JPAA has actively been promoting various activities, such as holding trainings on intellectual property related to international treaties, domestic and international laws and regulations of the intellectual property and advanced technologies as well as sponsoring conferences and meetings for the purpose of international information exchanges. JPAA publishes the “JPAA journal” monthly for every member and also publishes the “patent” monthly edition and “the patent attorney” as quarterly publications for members and the general public. Members of JPAA seminar number over 4,300 at present. 2.
Outline the Patent Attorney System Patent attorneys have played an important role in intermediary care of industrial
matters pertaining legal and technical problems between applicants for trademarks, patents, utility models, and industrial designs and Patent Office. In order to keep in touch with international trends of the world business, Japanese patent attorney system has been amended for several times which it can contribute to strengthening of IP 24
protection effectively. The role of patent attorney has been expended gradually in compliance with the changes of various aspects of business environments resulting from technological development under the pressure of globalization. For example advanced technologies increase the value of related patents in many aspects of business; multi-national companies face difficulties in enforcing their IP rights on global scale. Under these circumstances, the need for negotiation or litigation has increased remarkable. Handling IP matters is in many ways different from other areas of law, so there is a need to understand IP related matters which requires not only legal expertise but also technical background or actual business, namely patent attorneys becoming involved in matters other than prosecution at the Patent Office such as negotiation, litigation, and other IP related business transactions, on current practical basis. The patent attorney system has been originally intended to help smooth prosecution at Patent Office. The New Law was added some provisions in order to authorize patent attorneys to play more active role in several aspects of protection and utilization of IP rights and the new law is also to contribute to the materialization of the (creation cycle of intellectual property) by means of provision of IP specialist to industry. 3. The Japan Patent Attorney Association (JPAA) JPAA was established officially by the Ordinance of Professional of Patent Attorney’s Registration in 1922 under the old law. JPAA is the only official organization of Japan that provides the right to be as patent attorneys. Any person, who wishes to be a patent attorney, first must be a member of the JPAA, so enrollment must be mandatory by law. In the light of importance of the protection of intellectual property rights, purpose of the law is to maintain the qualification and esteem of practitioners in the field of enforcement thereby provide the public with a guarantee of the quality of legal services on intellectual property. In this sense, only qualified persons are permitted to practice as patent attorneys (referred to article 76). Also the law is not to permit an unqualified person to undertake certain businesses (referring to article 75). Regarding (art. 79 & 81) any person who violates these articles constitutes a criminal offense. 4.
Role of the JPAA The JPAA has played a very important role in promoting as well as developing the
patent attorneys system. One of important roles is to guide and supervise patent 25
attorneys on behalf of the Minister and thereby maintain the quality of patent attorneys as specialists in industrial property rights. Under the new law, JPAA provides patent attorneys with a special legal training (mandatory for all attorneys) regarding unfair competition prevention and copyright. 5.
Intellectual Property Arbitration Center In April 1998, the Japan Industrial Property Arbitration Center has established by
the JPAA and the Japan Federation of Bar Association (JFBA). This center is owned and run jointly by JPAA and JFBA. The arbitrators are usually constituted by three members including both of patent attorney and attorney at law who are selected by from an appreciable number of candidates registered at the center. Any person being subjected to any IP rights dispute can consult with the center in order to seek resolution quickly, economically and in secret. 6.
Business of Patent Attorney As mentioned six elements above, rather than this I will focus on enforcement
where practitioners play an important role in the field of intellectual property rights. The IP infringement has been in creasing in recently years, under the new law, business of patent attorneys were extended in order to meet the current business demands. Further, the issue of whether patent attorney shall be empowered to represent their clients in court regarding an infringement action will be discussed by Diet in future. (1) Prosecution of Patent Attorneys before Patent Office The most countries including Japan, industrial property rights are generated through registration thereof before the Patent Office, and the scope of the IP rights is based on the description in the documents while filing for registration. Therefore, correct and efficient prosecution of patent attorney is very important to help their clients. In this sense, representation before the Patent of Office is still one of the most important business of patent attorneys. (2) Before the Court • Represent as Litigator The law permitted patent attorneys to represent client in an administrative action against a decision of appellate trial. An administrative action in this instance refers to lawsuits against decisions by the trail examiners. The 26
jurisdictional power is only given to the Tokyo High Court. In this action, a patent attorney can act as a representative alone. Patent attorney are authorized to represent client at the Supreme Court. •
As a Supporter The representation of patent attorney in court for other than administrative action, a patent attorney cannot represents client as his or her advocate. Only attorney-at-law is entitled to represent the client on such occasions. However, considering the special nature of IP protection, sometime a patent attorney is requested to appear with an attorney-at-law in order to support the attorney-at-law. Practically speaking, a patent attorney plays an important role in advising his or her expertise on IP rights to the court regardless of his or her qualification. Under the new law, a patent attorney cannot only make statements before the court, but can also conduct interrogations in the court. And also under the new law, Appearance before the court in connection with circuit layouts and unfair competition is added.
•
Representation in an Infringement Action At present, a patent attorney is not entitled to represent a client in an infringement action in court. However, there has been a strong demand for patent attorneys to represent clients even in non-administrative action. Thus, there is a possibility that patent attorneys might be allowed to represent clients in the court regarding an infringement action.
(3)
Representation at Customs In compliance with the TRIPS Agreement, Japan has strict measures to stop
importation of goods infringing third parties` IP Rights (Customs Tariff Law), though representation at Customs used to be limited to an attorney-at-law. However, since the procedure of customs seizure involves issues pertaining to whether imported goods infringe third parties` IP rights, a representative of an IP rights holder must necessarily provide Customs with the type of technical opinion that a patent attorney would usually be familiar with. Therefore, the new law permits a patent attorney to be involved in certain procedures at Custom to stop illegal importation of products infringing IP rights. (4)
Representation at a Specified Bargaining Group for Arbitration 27
Representation at a specified bargaining group for ADR (Alternative Dispute Resolution) used to be permitted for only an attorney-at-law. However, considering the specialty of IP matters, and with the increase in number of disputes regarding IP related matters, it have been decided that patent attorneys become involved in the process of ADR. In order to meet such demands, the new law includes a sub section authorizing patent attorneys to represent a party at a specified bargaining group for arbitration pertaining to IP rights (except copyright) (5)
At the Phase of Utilization of IP Related Rights Although a paten attorney’s business was originally confined to representation
at the JPO there have been many peripheral businesses requiring professional representation. For example, registration of transfer of patent right or license at the JPO are legally included in the patent attorney’s business, though negotiation for such agreements was not clearly defined as the business of patent attorneys, and some questions were raised as to whether patent attorneys were legally authorized to conduct such businesses on behalf of their clients regardless of the demands of business. In order to meet this demand, the new Law has clarified that patent attorneys are authorized to work as an agent on behalf of their clients for license/ assignment agreements regarding such IP rights, copyright is included among businesses. (6) Patent Attorney’s Responsibility 1.
Duty to Avoid Conflict Patent attorney bears a duty not to represent both adversary parties in any
manner. 2.
Duty to Keep Secret (Attorney-client Privilege)
•
Duty to Keep Secret (and not to appropriate secret) In the light of the secret nature of IP rights, article 30 establishes a patent
attorneys duty not to reveal secrets (even after his or her retirement). If a patent attorney should reveal a secret, he or she would face a criminal sanction (article 80). Under the new law, the duty expands to employees of patent attorneys in order to thoroughly protect such secret (article 77). The same penalty would be applied to employees of the patent attorney who revealed 28
secrets obtained in the course of business (article 80). •
Attorney-Client Privilege A patent attorney may enjoy the privilege of refusing testimony about
secrets obtained in the course of business with his or her clients (article 197 of the Civil Code Procedure, article 149 of the Criminal Code Procedures) in order to secure business. 3.
Duty to Take Training Course Under the new law, a patent attorney has to participate in specially
designed legal classes in order to guarantee that he or she increases or at least maintains the quality of his or her job performance. 4.
Miscellaneous
(1) Incorporation of Patent Business Establishment of a patent corporation body becomes possible under the new law. Under the old law, a patent attorney was not permitted to establish a corporation body legally as a style of his or her law firm regardless of the size of the firm. However, there has been strong demand for law firms in the field of IP related fields that could provide clients with wide range of IP related services (need for one stop service). The new law fulfills this need by providing article 37 “As provided for in this Chapter, two or more patent attorneys may jointly create a patent corporate body”. (2) To have more than two offices becomes possible The new law gives a right to patent attorneys or corporation bodies to have more than two offices in Japan or any where in the world.
b. Patent Disputes and Countermeasures 1.
Patent Dispute A patent dispute is a confrontation between the owner of a patent right claiming its
exclusive right and its counterpart alleged to be using and infringing on the patent right in question. This is a typical infringement action. 29
Relief from Patent Infringement (1) Relief under Civil Code Where his right is infringed or to be infringed on, the owner of a patent right can, like in case of a violation of assets and rights in general, take an action (patent infringement action), demanding a court order for the suspension of the infringement (right to demand injunction), the remuneration of damages (right to demand damages), the return of unfair profits (right to demand the return of unfair profits) and the recovery of business credit if damaged (right to demand the recovery of lost business credit). •
Warning It is common for the owner of a patent right, if his right is infringed upon, to serve a
demand letter warning to the infringer. To ensure its delivery to its addressee, the demand letter is sent with its contents proved (a kind of registered mail) in many cases. It warns, for example: “Your act is an infringement on our patent and should be suspended immediately. If the act is continued, legal action will be taken.” A warning served by the owner of a patent right has no legally binding affect. However, such a warning in many cases leads to a settlement without taking any action actually. This settlement may even include the signing of a licensing agreement. When an alleged infringer continues his act of infringement despite a warning, the act after the warning is considered an act of infringement in bad faith. In such a case, a refutation that the infringement is not intentional or resulting from negligence cannot be admitted. In an action where the return of unfair profits and the payment of damages are demanded, it is possible for the owner of patent right to demand the larger amount of damages comparing with the case of an infringement in bona fide. A warning will be further discussed in (Chapter V, point 3) dealing with patent litigation in Japan as below. •
Preservation of Evidence
30
In case where evidence may become difficult to use if it is not taken before hand, the owner of a patent right can file a demand for the preservation of evidence in a court (Sections 234 to 242 of the Civil Proceeding Law). A procedure for the preservation of evidence can be taken at any time before and after an action is taken. The actual preservation of evidence is an investigation into the place of production of infringing products, search of documents, etc. and questioning of witnesses. Now, you should pay attention to the preservation of evidence. This legal procedure has no compulsory power to force the submission of documents and an investigation. Therefore, an alleged infringer can refuse the taking of evidence. What is more important, this is quite different from a discovery for a civil proceeding in the United States of America. (2) Relief under Criminal Code In case of an intentional infringement, the owner of a patent right can seek a criminal charge on the infringer through a complaint. With respect to an act of infringement on a patent right, the Patent Law in its section 196(1) stipulates, “Any person who has infringed a patent right or an exclusive license shall be liable to imprisonment with labor not exceeding five years or to a fine not exceeding 5,000,000 yen”. To establish an offense of patent infringement, an act of infringement with the infringer receiving a warning, among other things, should be proved as an intentional act (Section 235 of the Criminal Proceedings Law). The owner of a patent right should file a complaint within six months from the date when he came to know the infringer. According to a precedent, the “date when he came to know the infringer” is the date when an act of infringement terminated. I have prepared legal relieves for the owner of a patent when it is infringed on. Losing the patent infringement lawsuit, the defeated company is often forced to go bankrupt. In this sense, counter-measures against patent infringement lawsuits and similar disputes are quite important issues for corporate management.
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2.
Countermeasures against Patent Disputes Corporate Intellectual Property Department should play, a role of leading actor to
take counter measures against the adversary, when the patent lawsuit occurs. The counter measures cover the variety of their routine jobs, to establish and develop the patent strategy and to implement it. 2.1 Routinely-Handled Matters should be Processed with Particular Consideration Given to Occurrence of Patent Disputes Before dealing with items concerning this subject, I would like to raise points of caution in general. In the Intellectual Property Department, we have lots of opportunities to collect all kinds of information relating to an action and prepare documents. We should pay much attention to this preparation. A discovery is voluntarily conducted by a party to an action except in case where a specific opposition is raised against it. The procedure often requires a long period of time and lots of expense cost far more than a trial itself, they said that a discovery is composed of the following five procedures: 1) Deposition: to collect prior attestation through verbal or written questioning 2) Interrogatories: to make an opponent respond in writing 3) Production of documents and things - To collect documents and things in general 4) Physical and mental examination - To inspect an opponent or people under his control 5) Requests for admission - To seek an opponent’s admission While it has unfavorable effects resulting from its abuse, a discovery has the following favorable aspects. First, sharing of information can avoid unnecessary debates, leading to a compromise in some cases. Second, a method of presenting evidence at a trial is simplified, making it possible to quickly establish evidence. Third, an action that is otherwise not possible because of expected difficulties in proving can now be taken. 32
Fourth, costly aspect of a discovery (verbal evidence taking in particular) may force the other party to come to a compromise settlement. Fifth, discovery, usually dealing with items that cannot be used as evidence, may collect evidence, available as testimony and witness. The preparation of documents is directly related to “the Production of documents and things” in the discovery. Reference material produced by the attorney-at law to prepare for a trial can avoid its disclosure to the other side as the work product and if a protective order is granted, also no need to disclose. According to the precedents, communications between a client and its lawyer is free from discovery as attorney-client privilege. However, other materials, as far as they are considered relevant to a trial, all materials should be disclosed to the other side. Any expression which can be read to suggest the slightest impression of infringement should be avoided from notes, such as internal circular and notices. The use of slightest expression hinting a possible infringement has a risk of it being used by the adversary at the trial to demand triple damages as demanded in the case of infringement in bad faith. 2.1.1 Grasp of Research and Development Trends and Commercialization Trends The following are cases that may result from inadequate daily management of patent information. 1) Patent information is not analyzed or has not been updated. 2) A decision on the start of a business development is made by the top management with its evaluation by internal lawyers only. 3) An evaluation is made by single outside lawyer only. A judgment if made to the effect that a settlement can be made with a reasonable amount of damages agreed in case of 2) and 3) except for 1) is completely wrong and may lead to suffer great damage in a patent dispute. There are no perfect measures to completely avoid a patent dispute. It is possible to keep in rough grasp both research and business development trends of competitors by keeping an eye on activities of competitors in fields relating to the field of one’s own
33
products and technologies. As its responsibility, Intellectual Property Department should routinely execute surveillance activities. 2.1.2 Grasp of Status through Follow-up Search of Patent Applications on Issues and Measures Adequate in Timing To ensure the safety of business operations under patent strategy, patent applications, if found obstructing their development, should be closely followed to fully grasp their latest situation (pending application, a request for examination and the issuance of a first notification of reason for refusal), including an amendment to their claims. According to the result of such surveillance, the possibility of an opposition, a trial for the invalidation of a patent if granted and a license, including a cross-license needs to be studied. This is part of patent strategy. 2.1.3 Evaluation of Patent on Issue by Patent Attorney, Measures to Prevent Infringement and Confirmation of Safety of Business Operations The Intellectual Property Department is to have, as part of patent strategy, patents on issue evaluated by plural experts and serve as a pilot to prevent a patent dispute. When a local company or a joint venture is established to develop overseas business operations, an overseas plant is constructed, technology is licensed out, and products are exported as part of the basic strategy, a patent search should be carefully conducted to confirm the absence of obstacle patents in the countries and regions where these business advances are planned. 2.1.4 Preparation of Specification to Win Over Patent Lawsuit First, requiring utmost caution is the elimination of gaps in claims of a specification. For this purpose, the domestic priority claim system should be fully utilized with an invention claimed in multiple forms. Before filing a patent application, it is desirable to conduct brain-storming sessions not only with researchers but marketing personnel, people in charge of product designing, sales and business development plan, and Intellectual Property Department personnel in charge of information and applications.
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Second, considering that a patent dispute is contested over claims of a patent specification, it is important for us to sufficiently describe constituent elements of the right. Third, although claiming a wide range of rights as compared with prior art is risky, a claim with many definitive conditions included only to obtain a patent is weak as a right limited in a technical scope. From experts` experience, knowing that there could be a special patent invention which is not far from prior well-known technology but still has its inventive step recognized and appreciated in the market. Such a patent granted on technology for a product resolving problems in the market and improved in use is persistent as a right. Even in case where well-known technology is detected, efforts by a patent people should not be given up from the start and measures should be taken to seek a patent right. Fourth, earlier patent applications in a related field are typical of prior art. With consideration to these, a cluster of patent applications should be filed, covering candidates of chemical compounds (medical and agricultural chemicals or other chemical substances) of computer chemistry displayed on the screen of a computer terminal for the purpose of research by researchers. Fifth, as many embodiments as possible should be included in a specification, including the best ones. Sixth, the numerical limitation described in claims should be defined in three steps. In the first step, values are limited in a wide range. In the second step, values in a wide range are further limited. In the third step, the best mode in a range defined in the second step is described. If the best mode defined in the third step is not included and a third party limiting to the best mode obtains a patent, a gap is created in the claims by a later-filed patent application. Even if a patent is granted in such a case, the best mode cannot be used without obtaining a license.
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Seventh, when a patent application is filed with respect to technology as a result of research and development, efforts should be made to include competitive technologies and substitute technologies. The Eastman Kodak vs. Polaroid patent dispute had been settled after 15 years old long run lawsuit. This litigation has taught us various lessons. One of them is Polaroid’s victory of their patent strategy. Besides its own technology, Polaroid had filed patent applications with respect to substitute technology which it believed Eastman Kodak may have used to circumvent a possibly conflicting patent. This is considered to have caused Eastman Kodak to lose the case. Filing of a patent application for a method to produce chemical compounds for medical use, patent applications were exploited wherever possible to cover substitute production methods, in addition to the method resulting from research and development, which helped to lead negotiations on a patent dispute at my advantage. Apart from what I have just raised, there may be found better resolutions if knowledge and experience are gathered together from various experts in their respective fields. 2.2 Technological Scope of Patent Right and Determination of Infringement The determination of an infringement is made, depending on a specification and drawings of a patent application as an expression of a final intention by an inventor, particularly a technological scope determined by claims of the specifications, and comparison with technology in question or a product resulting therefrom. As for the determination of an infringement, there are various views. I am going to prepare the general standards for the determination of an infringement with respect to basic standards and concrete standards. The former are standards commonly recognized and the latter are concrete standards based on the former. 1) Basic Standards 1.
Principle of Scope of Claims An invention described claims should serve as a criterion to determine the
scope of technology. 2.
Principle of Consideration to Detailed Explanation
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To interpret the meaning of claims for a patent, a detailed explanation of an invention should be given consideration (together with accompanying drawings, if necessary). This principle is a common criterion internationally recognized (Section 69(1) of the European Patent Treaty).
3.
Principle of Consideration to Transition of Patent Application To clearly grasp the meaning of claims for a patent, the transition of a patent
application from its filing to the grant of a patent, including an intention indicated by its applicant and a view indicated by the Patent Office should be given consideration. This principle is necessary to make a fair and careful determination. An exemplary application of this principle in the United States is called the principle of File Wrapper Estoppels with many precedents existing. 4.
Theory of Consideration to Prior Art To clearly understand the meaning of claims for a patent, the level of
technology at the time of the filing of a patent application concerned (known fact) should be given consideration. 5.
Theory of Intentional Exclusion (Intentional Limitation) If patent applicants intentionally exclude some items from the scope of the
claims then the items do not belong to the technological scope of the patent invention concerned. 2) Concrete Criteria The following are concrete criteria based on basic criteria which are convenient for study of concrete matters. 1.
Criteria Concerning Limitation on Interpretation An invention is not allowed to be interpreted wider in technological scope than
actually made by an inventor. The scope of an invention, in principle, is determined only based on a specification and drawings as originally filed and, in particularly exceptional cases (where an invention is not clear from an original patent application), based on 37
arguments and other application-related documents filed by the applicant in a process from the filing of a patent application to the grant of a patent. 2.
Criteria Concerning Effects of Invention
2.1. Theory with Significance Attached to Effects (1) In case where technical matters included in claims for a patent are specifically described with respect to their effects in the detailed explanation of the invention and other application-related documents (statement of arguments), the technical matters which should be considered essential to constitute an invention do not belong to the scope of technology if not included. 2.2. Theory with Significant Attached to Effects (2) Technical effects, which cannot be actually achieved though considered formally included in claims for a patent from their description in the claims, do not belong to the scope of technology. 2.3. Theory with Significant Attached to Effects (3) Effects theoretically not completely absent but considered practically unavailable from the constitution of an invention and its effects do not belong to the scope of technology. 2.4. Theory with Significance Attached to Effects (4) Purposes or effects identical to a patent invention do not belong to the scope of technology simply as they are. 2.5. The Scope of Technology should not be Interpreted, Excluding matters concerning effects described in claims for a patent as far as their description is substitutive for that of constituent elements. 3.
Criteria Concerning Lack of Constituent Elements A plurality of constituent elements described in claims for a patent do not
constitute the scope of technology any of them is missing, however the others may satisfy their requirements.
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However, this does not apply to constituent elements with parts omitted, constituting an incomplete or equivalent invention, are subject to the doctrine of incomplete use of invention or the doctrine of equivalent. 4.
Criteria Concerning Invention Unclear in Contents In case there is a patent invention which contents are unclear, any patent
involved in a dispute or contested in a trial which correspond thereto does not belong to its scope of technology. 5. Criteria Concerning Embodiments 5.1. Principle of No Binding of Embodiment Whether embodiments are described in claims for a patent or not, a scope of technology should not be claimed with respect to embodiments described in the detailed explanation of the invention or drawings. 5.2. Exception Embodiment-Based Theory A scope of technology should be strictly claimed with respect to an embodiment in the following cases. Exception 1: Where the description of an invention in a claim, partially or wholly abstract or functional, is not considered to indicate a solution. Exception 2: Where not all constituent elements are described in a claim for a patent. Exception 3: Where the scope of an invention described in a claim for a patent is wider than the scope of an invention described in the detailed explanation of the invention. Exception 4: Where all or part of constituent elements described in a claim for a patent are nothing more than known facts or in a similar case. Exception 5: Where all of constituent elements described in a claim for a patent are constituent elements of a prior patent application.
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Exception 6: Where part of the scope of a claim for a patent other than an invention described as an embodiment is incomplete to constitute an invention when judged under the level of technology prevailing at the time of the filing of a patent application. Exception 7: Where part of the scope of a claim for a patent other than an invention described as an embodiment does not realize specific effects described in the specification 5.3. Theory for Protection of Generic Concept An invention described in a claim for a patent is not allowed to be interpreted to constitute a scope of technology only as an embodiment. 6.
Criteria Concerning Inventive Step What can be easily conceived from a patent invention does not belong to the
scope of technology. However, this does not apply where an invention includes the technological concept of an earlier invention. (Dependent Invention) 7.
Criteria Concerning Dependent Invention The technological scope of the dependent invention belongs to that of the
counterpart invention. 8.
Criteria Concerning Equivalent Invention An invention described in a claim for patent which is literally equivalent
belongs to the scope of technology. 8.1. Theoretical Structure of Doctrine of Equivalents (Common Interpretation - Supplementary Interpretation) Judging from the purpose of the Patent Law, it is natural to protect an. invention as a concept which is equivalent beyond the literal interpretation of description in a claim for a patent. A claim is interpreted in a supplementary manner seeking the real meaning of description in a claim for a patent. 8.2. Scope of Equivalent
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Technology with part of its constituent elements replaced by other elements, which is equivalent to a patent invention in purpose, function and effect and can be replaced and, furthermore, can be easily conceived by an ordinary person from the description of the patent invention, is equivalent to the patent invention. 8.3. Doctrine of Equivalents in the United States - Leading Case Graver Tank Case (1950) It has been ruled: “In a case where a substantially same result is obtained by executing an same function in an same way, the owner of a patent right can take an action against the manufacturer of a product in contest under the doctrine of equivalents.” 8.4. Warner Jenkinson vs. Hilton Davis Decision Recognizing Doctrine of Equivalents In case where an action is filed against an alleged infringement, a judgment on the application of the doctrine of equivalents should be made based on an expert opinion from an American lawyer. On March 3, 1997, the Supreme Court handed down a decision on the Warner Jenkinson vs. Hilton Davis case based on the doctrine of equivalents. As the first of its kind made after the Graver Tank case (1950), the decision drew attention. In its decision, the Supreme Court made the following points clear. 1) The doctrine of equivalent is maintained in a limited form. 2) The doctrine of equivalent is not contrary to legal regulations and must apply with respect to each of constituent elements (element by element basis) not the whole of an invention. 3) The file wrapper estoppel blocking the application of the doctrine of equivalent is expanded. A claim serves both to define and to disclose an invention. In case where the scope of a claim is reduced by an amendment, the burden of its proof falls on the applicant. Where its reason is not clear, it is assumed that an amendment has been made as required to maintain the patentability of an invention. If the reason for an amendment is found not to maintain patentability, such an assumption is dismissed and the application of the doctrine of equivalent is admitted. 2.3 Action Preventive Measures from the Legal Viewpoint
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The following are factors that are liable to, directly or indirectly, cause a patent infringement action. (1) Handling of a joint research after its completion is not made in an orderly manner with the handling of a patent right as its result and know-how left pending. (2) Matters concerning the maintenance of secret information, including know-how, are left unattended after the termination of a license agreement. (3) Part of information disclosed before the unsuccessful conclusion of negotiations on a tie-up or license agreement is left unattended. (4) Where licensed technology shifts into the different scope of technology when it is put into making, a licensor and a licensee do not reach agreement on modifying the payment of fees earlier agreed on. To avoid a dispute from developing later over difference in opinions, unresolved issues and difference in interpretation should be resolved as early as possible. 2.4 Permanent Countermeasures Planning the Patent strategy and its Implementation. Their needs to be an established patent strategy, based on which items of action are to be worked out and implemented. The purpose of these measures is to counter an action not to lose an action. The following may be added. 1) Acquisition of As Many As Possible Patent Rights and Formation of Patent Network or Patent Cluster With respect to strategically important technical fields and major products, a patent network or a patent cluster should be established to protect them and ensure legal safety for the implementation of a business development plan. A surveillance needs to be maintained on the patent situations of competitors such as related patents in order to keep such a patent network or a patent cluster invincible. 2) Confirmation of the safety of corporate management should be confirmed through a search on patent situations and expert opinions by external patent attorneys-at law 42
with respect to the determination of an infringement. Regularly or at any time when required to ensure safety for the development of a business development plan, patent situations relating to technology to be put into the making of products should be searched, analyzed expert opinions should be obtained from a plurality of outside patent attorneys. Depending on the results of the expert opinions, the acquisition of a license may be required. Not to be afraid the cost for the expert opinion. That is the necessary expense to maintain the legal safety of the management. 3) Selection of Outside Expert It is desirable to secure a plurality of experts specializing in primary technological fields at home and abroad through cooperation with R & D. Department. These experts should be persons who could be candidates for witnesses at a court once a lawsuit arises. 4) Maintenance of Attorneys-at Law Ready for Lawsuit It is desirable to secure a plurality of patent attorneys at home and abroad, who could be available as litigation lawyers or witnesses or provide consultations in the event of a lawsuit. In this case, lawyers who could be candidates for litigation attorneys, should not be entrusted to provide expert opinions. Considering that experts are to be called in as witnesses, such an arrangement may adversely affect their role as litigation lawyers. It is desirable to secure a number of lawyers and experts to provide for agent candidates and expert candidates. This is because a request for service may be refused due to conflicting interests. As for American lawyers, it should be noted that two types of lawyers are available. One of them is a prosecution lawyer specializing in application procedures (corresponding to a patent attorney in Japan) and the other is a litigation lawyer specializing in lawsuits. 2.5 Measures after Development of Dispute (Including Reaction to Demand letters) 1) Reaction When Demand Letter is received There is a view that a demand letter if received can be left unattended. 43
However, this is an extremely dangerous response. As to the handling of a demand letter. Prestone Moore, an American lawyer wrote as described below (Warning against Act of Infringement - Strategy and Effective Response by Preston Moore, Translated by Jinzo Fujino). 1)-1 First Evaluation of Received Demand Letter (1) Explore intention of the senders’ warning Examine whether the adversary intends to suspend the manufacturing and sales of a product or to offer a license. (2) Keep a discovery procedure in mind At the assumption that a warning leads to a suit, make it inevitable for the adversary to provide documents through a discovery procedure, pay caution to expressions in documents. For example, avoid any description assuming infringement. (3) Immediately employ attorney-at law Select attorney-at law from a list of lawyers and experts secured to be a litigation lawyer or witness and confirm his intention to serve as a litigation lawyer or witness in the case. Reaction to a warning, including a response, you should consult with the selected lawyer. It may be advisable to select experts through consultations with the selected lawyer. (4) Request expert opinion Request the said experts to provide expert opinions on the relationship of one’s own patent and the adversary’s patent and the determination of an infringement between them. (5) Conduct a search on the financial state of the adversary Conduct a search on the financial state of the adversary to determine whether the adversary is financially prepared to take action at its expense. For this search, databases are available, such as LEXIS. (6) Conduct a search on the reputation of the adversary and the past records of its involvement in dispute in order to find weak points of the adversary’s patent and record of trial losses. (7) Prepare and search documents at an instruction by the lawyer selected as litigation lawyer, utilizing attorney-client privilege.
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1)-2 Decide on a Countermeasure from the Management based on the Expert Opinions issued by Attorney-at Law. (1) Choose between whether to negotiate a license with the adversary or whether to file a counter-action against the lawsuit filed by the adversary. (2) In either case, inspect the file wrapper of the adversary and closely study its contents. Carefully study documents processed in intermediate procedures between the applicant and the examiner to check if there has been any defect in the process of the patent application from its filing to the grant of a patent. As a result, it may be possible to greatly reduce the scope of claims and block the expansion of the other side’s arguments, including the doctrine of equivalents. This makes it possible to develop licensing negotiations advantageously and provides a basis for a counter-action. (3) Effective Use of Attorney-Client Privilege Documents communicated with a lawyer and documents and materials for reference internally prepared at an instruction by the lawyer can be protected under attorney-client privilege and work product privilege, respectively, when so indicated on the documents and materials for reference. On this, no consultations with the other side are required.
1)-3 Total Reliance on Lawsuit and its Negotiations through Attorney-at-Law (1) Leave everything, from a response to a compromise settlement and license acquisition with the lawyer selected as an agent to negotiate with the adversary through the other side’s lawyer, etc. In order to prevent the adversary from suddenly taking an action, Preston Moore suggested that an agreement be reached between the two parties on an action- freezing period (90 days, for example) not allowing either party to take an action. (2) Selection of Lawyer to Be Litigation Attorney at Law in Trial The first action required to be taken when an action is filed is to select the best lawyer as possible, selecting one from a list of candidate lawyers prepared beforehand to match the situation. Confirmation that the selected lawyer is prepared to accept a request for service should be immediately determined. (3) Adoption, Confirmation and Communication of Litigation Policy 45
Involvement of top management is necessary to decide whether to fight against an action filed by the other side to the very end or not. If such a decision is made, related internal sections and departments should be informed. (4) Establishment of Internal Cooperative Set-Up A lawsuit is an issue risking the whole of a management organization. A lawsuit is not only a problem involving the Intellectual Property Department and Legal Department. To cope with a lawsuit as an issue affecting the whole of a corporate organization, all Sections and Departments from Management, Planning and Sales Sections and Departments of the Head Office to R & D Departments such as a research laboratory and Manufacturing Sections and Departments, including plants need to understand the implications of the problem and establish a whole-company cooperative set-up. (5) Absolute Reliance on Lawyer As Litigation Attorney-at Law Place absolute reliance on the lawyer in the case, irrespective of his nationality. It is out of question to negotiation a compromise with the adversary without consultation with the litigation lawyer. The lawyer, in turn, should keep contact with his client to update his information on the state of the corporate organization, views of the top management and expectations toward the on-going case at any time as required. A report should be acquired on the status of the on-going situation from the lawyer. (6) Close Contact, Liaison and Consultations with Attorney-at Law Any problems and questions arising from the on-going case should be immediately released to the lawyer to get his answer. The most significant issue of concern on the part of the client is a prospect of an on-going suit, which may change as time passes. At least twice a year or at any time when a major change takes place, the lawyer should be called in to report on the prospect of the trial to the top management. Directly exchanging views with the top management, the lawyer can deepen his client’s reliance on him. (7) Stationing of Local Staffers in Charge of Liaison regarding the Lawsuit. If a trail is going on in the United States, for example, enlist a graduate of an American law school qualified as a lawyer in the United States (the place of business of a lawyer acting as a litigation attorney) to keep close communication, liaison and consultation with the litigation lawyers. 46
(8) Scheduling of Lawsuit Procedure and Confirmation of Its Timing and Prospect A civil case changes its situation every time when a procedure is executed. Procedures in the United States, in particular, are largely different from those in Japan. It is necessary to fully grasp steps and their timings for such procedures through consultations with a lawyer, such as the timing of the start of hearings and their prospects. (9) Explanation of Lawsuit Situation to Top Management and Confirmation of Prospect A lawsuit, costing an enormous amount of money, is an important issue from the management viewpoint. Every explanation of trial-related information received from a lawyer should be reported to the top management to get its understanding. As explained earlier, the lawyer should be called in at least twice a year to report on prospects of the on-going trial directly to the top management. This helps deepen relationship of trust between a lawyer and his client. 10) Taking into consideration to reduce lawsuit expenses. (10)-1 Reduction of Expenses for Translation It is extremely important to reduce expenses for translation which account for major part of trial-related expenses. For this purpose, verbally explain to your lawyer about the contents of materials for reference and confirm the necessity of their translation. Translation should be limited to the minimum possible level. (10)-2 Confirmation of Contents of Invoices Closely check invoices from the office of the lawyer with records. (11) Comprehensive study of Foreign Civil Procedures and its Measures to deal with There are many things to learn about foreign civil procedure system, such as their differences from the Japanese system. Though a Japanese lawyer with experience with foreign laws at a law school, study as required to match the situation of an on-going case. Coping with the case with knowledge gained by this is extremely advantageous. (12) Timing of Compromise Negotiations A dispute settlement should be sought through negotiations whose timing is set through consultations with the litigation lawyer. By the time the deposition is 47
complete though the discovery process, both sides would have understood their respective weak and strong points and gained a rough idea of the prospects of a trial. This is the good timing to start compromise negotiations. 3.
Conclusion of Dispute, Compromise or Decision The patent suit should not go to the final stage of the decision. As explained earlier, a lawsuit is a development of patent strategy. Filing the
counter-action against the action taken by the adversary is a matter of strategy which results in a waste of time and money. It is the most efficient means to direct negotiations with the other side upon full consultations with the lawyer or bring the trial to a compromise settlement. *
Epilogue Means to cope with a patent dispute are to ensure the legal safety of corporate
operations rather than to work out and implement patent strategy. When a patent suit is filed because of the needs for corporate operations under patent strategy, it should be developed at one stage to guide corporate operations to their advantage. Against an action taken by the other side, keep an offensive stand and take countermeasures, seek a compromise at a timing judged best under the economy of a lawsuit and try to minimize your losses.
c.
Trademark Disputes and their Settlement
1.
Various Trademark Disputes
1) Since a trademark right registered under the Trademark Law has a proprietary value, very often becomes a cause of various disputes. A trademark right is a right, which comes into effect after an applicant has paid the prescribed registration fee with respect to a trademark application on which an examiner’s decision of registration is based. As a corporation or an individual obtaining a trademark right does business, using the trademark, the prestige of the trademark increases. Thus, a trademark takes on an increased aspect of a proprietary right with an exclusive right guaranteed under the Trademark Law. 2) Because a trademark right is a proprietary right, it becomes a source of a dispute 48
over who succeeds the trademark when its holder dies. The successor of a trademark at a famous confectionery could be a great issue equal to whether who succeeds the confectionery itself. Opening a confectionery under a different brand without using the trademark which has achieved high prestige through its long business is equal to starting a completely new confectionery from scratch. The business foundation of an established trademark can be used, as its founder has built it up. 3) A trademark right is an important commercial means. It is not unusual therefore for a third party to obtain a trademark right from another party to operate a business. This is a trademark license. A trademark license is not a source of a dispute as long as the relationship between its licensor and licensee is good. Although the owner of a trademark right grants a third party its right, a dispute may arise between a licensor and a licensee in a case where, for example, the user of a licensed trademarks fails to pay a royalty fee, doesn’t make a required report on its use or doesn’t attain the volume of sales expected by the holder of the licensed trademark. 4)
A third party may, to gain profit, use a trademark identical with or similar to a well
established trademark without obtaining the consent from the owner of a trademark right. This is an infringement on a trademark right. Unlike cases of trademark license, trademark infringement is the usage of a brand identical with or similar to a brand of the owner of a trademark right without the latter’s consent. The Trademark Law gives the owner of a trademark right the right to demand its suspension and seek damages compensation. Apart from this, a trademark infringement, because it disturbs the market order and impairs the interests of the consumer, constitutes criminal punishment. 5) Principle of Trademark Independence (Territoriality of Trademark Right) The principle of trademark independence also called the principle of territoriality is a trademark independence from one country to another where it is registered. This principle provides a basis for the Paris Convention after its revision on June 2, 1934. Therefore, it is apparent that the parallel importation of authentic goods can constitutes an infringement on a trademark if it is directly applied to it. 6) Doctrine of International Exhaustion The doctrine of international exhaustion is a theory under which once goods are put in distribution, their patent exhausts with its purpose achieved and its effects no longer remaining. Adopting this theory, the Tokyo High Court in its decision in the Tokyo BBS 49
case ruled that it is adequate to judge that in case where a patentee, etc. legally distributes its patented products, the patent has achieved its purpose and exhausted its effects with respect to these distributed products.” The Supreme Court in its conclusion upheld the lower court’s decision. Not unconditionally adopting the doctrine of exhaustion, the Supreme Court’s decision was different from the original ruling in that the patentee can reserve a right when putting its products in distribution. Is the above doctrine of international exhaustion equally applicable to both a patent and a trademark? Concerning this question, there are various views. Strong among them is a view that different in function from a patent, a trademark does not exhaust because a trademark remains functioning as far as goods bearing it remain in distribution. This is because the major reason for the protection of a trademark is to protect the owner who has built up the trademark and facilitate consumers to recognize the quality of products guaranteed by the trademark. The legality of the parallel importation of goods relating to industrial property has been argued commonly based on the principle of patent or trademark independence (principle of territoriality) and international exhaustion. However, the theory of trademark functions is inherent to trademarks. 7) Authentic Goods What are authentic goods? Authentic goods are goods of the owner of a trademark right not including counterfeit goods. In the case of foodstuffs, however, goods of the same company or the same group of companies are not precisely identical in quality. For example, instant coffee “Nescafe” may taste different from one directed at the Japanese market may task different from the one directed at the U.S. market. This same can be said of Coca Cola. The reason why what ought to be the same goods taste different from one country to another is a variety given to them to match the tastes of people. Generally, such goods are considered the same. 8) A trademark is a system to protect the company which uses it and also has the purpose of protecting the benefit of users. Especially, famous trademarks, which everyone knows such as brand names including “Coca-Cola” and “Sony”, have stronger distinctive features compared with less-known brand names. The Trademark Law has stronger protection for famous trademarks. When a person files a mark identical or similar to a famous trademark in case of other designated goods and services for which the registered owner of a trademark right does not file an application, a trademark registration is rejected on the grounds of “possibility for occurring confusion over the 50
source of goods and services”. If such a trademark were registered by mistake, it would be a subject for opposition as well as trial for invalidation. 9) Trademark becomes Common Name When a third party uses a famous indication without any authorization for a long time, it loses its strong distinctive feature and its exclusive right cannot be claimed. This phenomenon is called “dilution”. In the United States, there is the Anti-Dilution Act to prevent an act which causes dilution or a free ride on the famous indication. A right holder needs to make efforts to prevent dilution caused by a free ride. For example, a right holder needs to have a strong attitude; “Nestlé”, for example, does not permit the use of similar trademarks of its trademark “Nestlé”, but their demand was rejected. Therefore, they filed a suit against appeal/trial decision. 10) Protection of Unregistered Trademark (1) Is not an unregistered trademark protected? The question now is whether legal protection can extend to a trademark not registered. Such a trademark is not entitled to protection under the Trademark Law. However, this does not mean that a trademark not registered is not protected at all. The following will be a discussion on the protection of an unregistered trademark. In Japan, a trademark, if not registered but well known in a certain part of the country, can be protected as a well-known trademark under the Unfair Competition Prevention Law. Granted protection under the Unfair Competition Prevention Law are trademarks but also the names and trade names of other parties, containers of goods, other indications of goods, marks, indications of business, etc. While the Trademark Law’s purpose is to only protect registered trademarks, the Unfair Competition Prevention Law’s purpose is to protect indications not registered, including trademarks. According to the prevailing view, the Unfair Competition Prevention Law’s purpose is to protect such indications, irrespective of their registration. As the Unfair Competition Prevention Law does not specify “unregistered or not registered,” it seems correct not to interpret the law in a limited way as it is generally interpreted. A registered trademark which is fully protected under the Trademark Law does not need duplicated protection under the Unfair Competition Prevention Law. To protect unregistered trademarks or indications, the Unfair Competition Prevention Law is indispensable. Next will be a discussion of the Unfair Competition Prevention Law. This was adopted in 1934 to legally prepare Japan to become a party to the Paris Convention as amended in Paris. For a long time since its adoption until recently, it had been a compact law (composed of only six 51
sections) with minimum possible revisions made to it in order to comply with revisions to the Paris Convention. In 1990, the law was revised to a great extent to incorporate the protection of trade secrets. Another large amendment was made into law in 1993 to comply with the TRIPS Agreement further expanding its contents. Now an industrial country, Japan must strive to prevent acts of unfair competition. The Unfair Competition Prevention Law therefore needs to be further strengthened in contents to make the principles of fair competition settling in society. The purpose of the Unfair Competition Prevention Law is to protect the interests of competitors on the prerequisite condition of fair competition. As a prerequisite for its application, there needs to be “a danger of business interests being impaired by unfair competition by another party”. This is different from the application of the Trademark Law which needs a registered trademark as a prerequisite. The Trademark Law and the Unfair Competition Prevention Law are something like two wheels of a tandem which are in complementary relationship. The latter applies not only to trademarks but also to a variety of “indications of business” with the scope of its protection extending over a wider area. (2) Protection of Famous Marks and Indications Another important aspect of the Unfair Competition Prevention Law I have to touch on here is a revision made to the law in 1995 to incorporate provisions setting forth the protection of famous marks and indications. In case of a well-known indication, its use by an unauthorized person needs to cause a false recognition and confusion in order to be subject to the application of the Unfair Competition Prevention Law as explained in 2) above. In contrast to this, the use of a famous indication is immediately judged as an act of unfair competition irrespective of its possibilities to cause false recognition and confusion. Before the revision, when there was still only a provision specifically dealing with a well-known indication, a court first had to study an indication, regardless of famous it was, with respect to its possibility to cause a false recognition and confusion and then judge whether its use constitutes a violation of the Unfair Competition Prevention Law. The revision was designed to strengthen the protection of famous indications, separately dealing with them among well-known indications. Before the revision, however, there had been a slow but gradual move to expand the interpretation of the law to give famous indications wider protection. In that sense, the revision is thought to confirm and reinforced court precedents. 11) Title of Copyright Work and Trademark Right Let’s assume that a person entitled a copyright work “A” and another person named 52
a different copyright work “A” Is it possible for the first person who used the title “A” to demand the other person to stop using his title “A?” This is a problem has been increasing recently, in the field of software programs. This kind of problem arises in case where a person who has developed software program which turns out to sell well wishes to monopolize it. In such a case, he entitles his software program and files and applies for a trademark application to have the title registered. If a trademark right is obtained, the title is granted an exclusive right, which prevents other people from using the same title for their software programs without authorization. Naming is important not only for software programs but for any goods. Selecting or working out a good name and having it registered is one of many corporate strategic measures. In particular, it is reasonable that as software programs sales increase so does the names of the software programs. 12) Title of Book Among the titles of copyright works, the title of a book is given special treatment in the examination of a trademark application. With respect to the indication of quality which is one of the reasons for non-registration under the Section 3(1)(iii) of the Trademark Law, the “Guidelines for Trademark Examination” issued by the Patent Office listed the following criteria. (1) The title of a book is judged to indicate the quality of a good in case where it. directly indicates specific contents. (2) The name of a regular publication such as a newspaper, magazine, etc., is considered, in principle, as distinctive. Thus, magazines and newspapers flooding the market with various names fixed to them have their titles registered as trademarks through respective trademark applications. Against this, the titles of books are not granted any trademark rights belonging to specific persons. Many years ago in Japan, the title of a book used to be granted a trademark right and thus protected. However, an incident changing this occurred when a period of 30 years (not 50 years then) elapsed after a famous novelist, Soseki Natsume, died and copyrights to his works were extinguished. His family filed a trademark application to obtain an exclusive right to his works. If it was granted, copyright works would gain virtually never-extinguishing rights. Faced with this situation, the Patent Office was forced to set forth guidelines on the handling of the titles of written works. 13) Viewpoint from Unfair Competition Prevention Law Because of their very basis, the titles of books, even if identical with each other, 53
cannot be a source of dispute as far as they are different in their contents. It is problematic if A writes a book under a title “Outline of Trademark Law,” and B is not allowed to write his book under the same title. Such a situation cannot be allowed to happen. However, this is not the same with a book uniquely entitled. A unique book title has strong characters. Such a unique book title, if allowed to be used by other people as it is, can constitute an infringement on personality belonging to the unique book title. It also may achieve a sales increase through the borrowing of the unique book title, an act prohibited under the Unfair Competition Prevention Law. In such a case, the use of an identical book title needs to be prohibited from a viewpoint of the Unfair Competition Prevention Law even if there is no problem under the Trademark Law. Under the German Trademark Law enforced on January 1, 1995, titles of copyright works are protected from this viewpoint like registered trademarks. The German Trademark Law, unique in this aspect and having no parallel in any other countries, is considered a clever choice. This way of thinking is expected to spread in Japan in the future, establishing various court precedents. Next let’s look at a case, which did not involve a trademark right but involved a violation of the Unfair Competition Prevention Law. broadcasting company, created a game program in which the participants select one of two questions in order to start a conversation both answers however are undesirable. The game was entitled “Ultimate Selection” and sold 200,000 copies of a book published under the same title. Later, Y published books entitled “Ultimate, Great Selection,” “Game of Ultimate Selection” and “Super-Ultimate Selection.” X sought a provisional disposal to prohibit the sales of Y’s books which, using the well-known indication, were causing confusion with X’s book. The court ruled that the title “Ultimate Selection” through a program broadcasted by X had settled in society as a common name and “Ultimate Selection” was not considered well known as the program’s sub-title. It also said that “Ultimate Selection” indicating only the contents of the book lacked in a function to indicate its source. Thus, the court dismissed X’s demand for a court injunction. As clear from the above case, the court in its decision pointed to the “source identifying function,” an element that is taken into account under the Trademark Law. 14) Use and Non-Use of Registered Trademark It is widely known that the Trademark system exists for the use of trademarks. The acquisition of a trademark if registered but not used does not mean anything. The Trademark Law is built on the assumption that trademarks are used, with its Section 3 stipulating that a trademark is registered with respect to its use for designated goods or services. This is common throughout the world. Except for a few countries, including 54
the United States, where one is obligated to prove the use of a trademark prior to a trademark application filed with respect to it under the principle of prior use, the principle of first- to-file has been adopted in many countries. A trademark application is granted a registration if there is an intention to use the trademark in the future, but there are trademarks which, though having been registered, are left unused. In fact, there are a great number of registered trademarks not in use. There are many reasons for the non-use of registered trademark. To obtain stock trademarks, for example, a company may file trademark applications with respect to trademarks other than trademarks which actually need to be used. Apart from reasons for their non-use, registered trademarks not in use cause serious problems, including the refusal of a trademark application with respect to a trademark really needed for use. As a measure to counter this problem, anyone is allowed to demand a trial for the cancellation of a registered trademark which has not been used continuously for three years or longer. However, the utilization of this system is a time- consuming process. If a favorable decision is obtained, a trademark application still needs to be filed to obtain a trademark registration. Thus, the present system is inconvenient. In practice, a party who wishes to use a registered trademark not in use contacts the owner of a trademark right and purchases its right through negotiations. However this is not a welcomed practice. Under the Trademark Law taking effect from April 1, 1997, the qualification for a party to demand a trial for the cancellation of a trademark not in use has been abolished. Also a last-minute use within a period of three years prior to the registration of the filing of a trial to prevent its cancellation is no longer permitted. However these revisions alone were not sufficient enough, excluding the “right to demand transfer of a trademark” (as prescribed in the Paris Convention). 15) Exercise of Right by Owner of a Trademark Right not in Use Trademarks not in use have been discussed up until now from an offensive standpoint. Now let’s look at a case where a court injunction or damages are demanded by the owner of a trademark right not in use. As for a demand for damages, a defendant can be exempt from the application of the illegal act provision of the Civil Code (Section 709 of the Civil Code) and the damage estimation provision in Section 38(1) of the Trademark Law if its argument is admitted by a court that the use of a trademark not in use has not caused any damage to its holder because the trademark is not being used. The defendant, however, may not be exempt from a payment equivalent to a royalty fee for its use of the trademark. Because a trademark right is a right officially recognized, its holder cannot be completely prevented from exercising his right against a person who uses the trademark without his consent. There is a view that an act by the owner of 55
a trademark right to demand a court injunction against the use of the trademark by other parties while he does not use it himself is an abuse of the right, which cannot be admitted As a counter-measure, the defendant in such a case can demand a “trial for the cancellation of a trademark for non-use reason” and the suspension of trial proceedings until its conclusion. However, it is right to assume that the owner of a trademark right, before filing the suit, may have established a “fact of its use,” a requirement for the trial for the cancellation of the trademark. A judgment on the use or non-use of a trademark through procedures conducted at the Patent Office, including a trial for the cancellation of a trademark, tends to be perfunctory. To win a substantial judgment matching a real business situation only, a court trial is considered adequate. 16) Internet and Trademark (1) Source of Problem Especially in the United States new issues have been arising over a question of whether names, logo marks, etc. indicated on the Internet is the use of trademarks. If they are judged to be the use of trademarks, the indication of another party’s trademark on the Internet can constitute an infringement on trademarks. An indication on the Internet is divided into a domain name and indications on a home page. In Japan, there was also a case where the major credit and lease company “JACCS Co., Ltd.” demanded an injunction against a company selling and leasing prefabricated toilet, “Nihonkai Pact K.K.” for the reason that the registration of their address and indication of “Welcome to JACCS Home Page” on their home page constitutes an unfair competition act (reported in Asahi Shimbun, dated February 8, 1999). This has not been brought before the court yet. There is, however, many such cases concerning registration of unauthorized domain names. (2) Domain Name and Trademark A domain name is an identification to access and use a home page on the Internet, which is allocated and registered by the Network Solutions, Inc. (NSI) in the United States and the Japan Network Information Center (JPNIC) in Japan in order of applications. In Japan, domain names are registered in order of their applications without examination. However famous, many companies have failed to have their desired domain names registered. As a voice has been rising to call for some rules to be set on the registration of domain names, the World Intellectual Property Organization 56
has been working on making rules since 1997, and it finalized the dispute resolution rules around April 1999 and announced them. On the other hand, an international organization called ICANN (Internet Corporation for Assigned Names and numbers) which controls IP addresses was established in October 1998, and it approved “Uniform domain name dispute resolution policy” and “Uniform domain name dispute resolution proceeding” at ICANN Board on October 24 1999. These agree with the above-mentioned intention of WIPO and they provide that the party involved owns trademark right. Meanwhile in US. “Internet Hijacking Registration Prevention Law”, proposed by Senator Hatch and others, signed into law by President Bill Clinton on November 1999. This law has the content of the above-mentioned uniform rules provided by ICANN, with additional provisions on the protection of name rights. Considering internet’s nature as a means of international communications, Japan should also adopt a registration rule by localizing ICANN`s rules. Setting aside the registration of a domain name, I would like to deal with the nature of its use on the Internet. For its user, a domain name is nothing more than a kind of address indicated on a screen by an Internet browser software program. As the use of a trademark under Section 2(3) of the Trademark Law means an act associated with goods or services, the indication of a domain name does not constitute the use of a trademark. As far as a domain name is concerned, the establishment of rules for its registration is the only issue. (3) Indication on Home Page Different from the use of a domain name indicated by an Internet browser, the use of a name, a logo, etc. for advertisement and recruit purposes on a home page constitutes the use of a trademark. Therefore, a third party’s act of this kind without a consent from the owner of a trademark right constitutes an infringement on the trademark right. (4) Link On home pages of companies A and B, it is possible to link the home page of company A to the home page of company B. An Internet user’s accessing a home page linked to another home page showing a trademark does not constitute an infringement on the trademark since the trademark is indicated by the holder of the linked home page.
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(5) Internationalization More serious is the international spread of the Internet. Because the Internet can be accessed from anywhere in the world, important is an issue where the use of a trademark is based, either in a country where a home page is transmitted or in a country where a home page is received. If a server is located in Japan and a home page is transmitted from there with its contents directed at overseas Internet users, the use of a trademark on the home page may be considered as a use in countries where it is directed at. To discuss the territoriality of a trademark, what needs to be determined first is whether the use of the Internet belongs, either in a transmitting country or in a receiving country. This is still an issue that remains to be resolved. 17) Unfair Indication (1) Regulations on Indication The protection of indications, including trademarks, is provided under the Trademark Law and the Unfair Competition Prevention Law. These laws, however, are not designed to directly protect consumers. There are some countries, including Switzerland, where consumers are given a right of action under their respective Unfair Competition Prevention Law. Now, such revision of the Unfair Competition Prevention Law is being discussed in Japan, to give consumers and /or consumers’ groups a right of action. Under the current system in Japan, indications are regulated not by means of a right of action against unfair indications but by means of an administrative relief under the Unfair Prizes and Unfair Indications Prevention Law which comes under the jurisdiction of the Fair Trade Commission. This law was enforced on August 15, 1962. What directly led to the enforcement of the law is a case involving the sales of false canned beef in 1960. Canned horsemeat falsely indicated as beef was sold, cheating consumers. This brings up a famous old Chinese proverb meaning “selling dog meat as mutton.” That false indication is the same a signboard saying “mutton” to sell dog meat. Although its appearance and substance are different, false and unfair indication still finds its place in this society today. Thus, the law was created as an administrative law to protect the interests of general consumers. Before the enforcement of this law, unfair indications had been regulated under the Unfair Competition Prevention Law with “acts of unfair competition” individually specified. The Unfair Prizes and Unfair Indications Prevention Law was enacted to regulate unfair indications more effectively. Consumers can be unpleasant with and suffer damage from fruit juice containing natural juice as 58
only 10 percent of its contents against its label saying “natural fruit juice” or a totally false indication of a “10 minutes’ walk from the station” versus a “10 minutes’ drive.” Under this law, an unfair indication is prohibited with the Fair Trade Commission issuing an order of elimination, a failure to follow which is subject to criminal punishment. (2) “Unfair Indication” as Defined in the Unfair Prizes and Unfair Indications Prevention Law The scope of an indication under the Unfair Prizes and Unfair Indications Prevention Law is wider than that interpreted under the Trademark Law. To make indications “unfair,” there are three factors as described below. 1.
First Factor With respect to goods or services (transport, accommodation, food, etc.),
a)
an indication is likely to cause consumers to think a product or a service bearing it extremely superior to its actual in quality and other contents, or
b) an indication is liable to cause consumers to think a product or a service extremely superior to its counterpart of a competitive product. As in the above example, the false indication of “horse meat” as beef naturally leads consumers to think of “beef” is far better than “horse meat.” The indication of a “natural sweetener” versus “saccharin, the indication of a traveled distance as 1,000 kilometers against 100,000 kilometers and the indication of “almost brand new” in the sale of a second-hand automobile are unfair indications subject to the law. These are indications that not only deceive consumers but also put those using them at an advantage over those who don’t. The expression “extremely superior” here means to accommodate a slight exaggeration as indications are ways of business. For example, an advertisement saying that “this product made of plastic resin is no way inferior to its real wooden counterpart” does not pose any problem at all. This is because a consumer can select either of them, comparing a plastic product and a real wooden product. Such a selection, including believing in or not believing in the advertisement lies on the responsibility of a consumer. Prohibited by the Unfair. Prizes and Unfair Indications Prevention Law is a deceitful business practice like a signboard indicating “mutton” and selling “dog meat.” 2.
Second Factor An unfair allurement of customers. Inhibited is an unfair indication alluring customers, such as “1,000 yen only” to sit
beside a lady at a club, bar or another place of evening entertainment. Normally this 59
type of entertainment is very expensive. Such an indication of malignant nature misleads customers to think that for only 1,000 they can enjoy the presence of a lady at this establishment. In many of cases where the first factor is applicable, the second factor is applicable too. 3.
Third Factor An indication which damages fair competition.
This factor is a natural part of the Unfair Prizes and Unfair Indications Prevention Law which belongs to the family of the Unfair Competition Prevention Law. In most of cases where the first and second factors are applicable, the third factor is already covered. As unfair indications have become increasingly sophisticated with new ways being invented all the time, the Fair Trade Commission has adopted its guidelines and operational standard based on investigations by consumers’ groups and overseas precedents. In many cases, false indications sit on the border between false indications and fair indications. The operational standard has been adopted to deal with such a case as the boundary between false indications and fair indications varies from one field to another. Repeated claims involving exaggerated advertisements include “Ultra Cheap,” “Half Price” and a sales slogan offering 10,000-yen goods at half price for 5,000-yen. If such goods have been produced with an intention to sell them at 5,000-yen, the indication of a price of 10,000 is only imaginary and false and, therefore, deceitful. To determine the price or goods for 10,000-yen. We can use several criteria, such as market price and prices of other goods at the same shop. There are also many cases of surprising and attractive labels, such as “cost shattering price” and “close shop price,” when they are really not. Meanwhile, caution is required on the part of the consumer to avoid being deceived by false labels. It must be added that there are active administrative efforts being made to establish and maintain fair market practices. Referring to some points above and (Examination Guideline can be accessed the JPO homepage) for further concepts, the trademark owner may face with infringement cases at any time. If trademark right is infringed, the owner of trademark right may take action or settle the dispute (please read as preparation in point d. and in Chapter V as below).
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d. Policies and How to Take Actions against Counterfeit Goods Counterfeits are referred to as goods which fraudulently infringe the rights relating to genuine goods legally endorsed by laws such industrial property laws and copyright law. Moreover, they are referred to as counterfeits which result from the copying of another’s person intellectual creation or the unauthorized use of another person’s reputation. Among intellectual property rights, trademark rights and design rights are most often infringed: records of seizures by customs show that trademark infringements make up the overwhelmingly majority of cases, followed by design rights and copyrights. The number arrests by police are much the same for cases of trademark and copyright infringement. In countries that manufacture counterfeits there have been roughly 30% of discovered cases of imitation, which were subsequently resolved. What is important in coping with imitation is: 1. Acquisition of rights 2. Discovery of manufacturing and sale routes and 3. Understand of local system. The most important of these is acquisition of rights. There is no enforcement without rights. From time to time, the counterfeit goods have been flowed into Japan by multiple routes. The government of Japan has made an effort to draft regulatory legislations and given power to related organizations in order to crack down counterfeit goods: 1.
Regulatory Legislations for Prevention of IP Infringement “Counterfeit Goods”
(1) Trademark Law Infringement is defined as “use without the title of other’s person registered trademark or a trademark similar thereto with respect to the designated goods or goods similar thereto (section 25, section 37 paragraph 1), and performing certain preparatory acts which can be easily connected directly to such use (article 37 paragraph 2-6)”. Well-known trademarks are fully protected under Japanese laws regardless of its registration status within Japan. (2) Design Law 61
The infringement of a design right is to define as “commercialｌｙ working, without the title, the registered design of other person or designs similar thereto”. In addition, acts of manufacturing, assigning, leasing, displaying for the purpose of assigning or lease, or importing, in the course of trade, of items to be used exclusively for the manufacture of articles related to the registered design or designs similar thereto.” Preparatory acts of the design right) are deem to be an infringement of the design right (article 38). (3) Patent Law and Utility Model Law The infringement of a patent or utility model right is defined as “the commercial working of an invention (or device) belonging to the technical scope of another person’s patented invention (or registered utility model) without the right“ (section 68 of Patent Law, section 16 of the Utility Mode Law). (4) Copyright Law The infringement of a copyright is referred to as “use without title of another person’s copyrighted work”. In addition, “the act of importing, for the purpose of distribution within Japan, articles produced by acts which would have infringed a copyright if the articles had been produced in Japan at the time that they are imported” (article 113, paragraph 1, sub-paragraph 1), “acts of knowingly distributing, or holding for the purpose of distribution, articles which were produced by the act of infringement of a copyright, (article 113, paragraph 1, sub-paragraph 2), and the act of using, in course of trade, a copy made by an act which infringed the copyright of a computer program work (provided, however, that this shall apply only when the fact of infringement was known at the time of obtaining the right to use the copy)” (article 113, paragraph 2). (5) Unfair Competition Prevention Law Types of acts illegal under the provisions of the Unfair Competition Prevention Law are as follows: (1) Acts of causing confusion by using an indication of goods which is identical with or similar to another person’s well known indication of goods (indication of source of goods or a business entity, such as trade name, a trademark, or a vessel or a package of goods) Article 2, paragraph 1, sub paragraph 1). (2) Acts of using an indication, which is identical with or similar to another person’s famous indication of goods. (Article 2, paragraph 1, Sub paragraph 2) 62
(3) Acts of assigning, etc. goods which copy the form or appearance of another person’s goods limited to 3 years from the first selling date) (article 2, paragraph 1, Sub-paragraph 10). (4) Act of causing misunderstanding in connection with services (article 2, paragraph 1, sub-paragraph 10).
2.
Border Measures and Relevant Laws Border Measures against Counterfeits (1) Import Regulations - The Customs Tariff Law - The customs Law (2) Export Regulations - Export Trade Control Ordinance -The Export and Import Trading Law
3.
Liability of Infringer An infringer of an intellectual property right may be held liable by the holder of the
right under both civil and criminal law. Liability of a person who has dealt in counterfeits (1) Civil liability - Right to require an injunction - Right demand compensation for damages - Right to demand repayment of unfair profits - Right to demand measures for recovery of reputation (2) Criminal liability - Penalties Imprisonment with hard labor or fine. 4.
Conventions Related to Anti-Counterfeit Goods The Berne Convention for the protection of literary and artistic works consist of a
few provisions concerning enforcement of right, but the evolution of new national and 63
international enforcement standards has been dramatic in recent years, due to two principal factors. The first the galloping advances in the technological means for creation and use (authorized and unauthorized) of protected material, and in particular, digital technology, which makes it possible to transmit and make perfect copies of any “information” existing in digital form, including works protected by copyright, any where in the world. The second factor is the increasing economic importance of the movement of goods and services protected by intellectual property rights in the realm of international trade; simply put, trade in product embodying intellectual property rights now a blooming, worldwide business. The Paris Convention for the protection of industrial property. However, the Paris Convention is not sufficient to check the trade in counterfeits. The recently concluded TRIPS Agreement, which contains the detailed provisions on the enforcement of rights, is ample evidence of this new link between intellectual property and trade. 5.
Form of Enforcement Forms of enforcement, which may be taken by the holder of the intellectual
property rights, are as follows: (1) The offenses of infringement of a copyright are subject to prosecution upon complaint, but penalties in a trademark right and under the Unfair Competition Prevention Law do not require any complaint or accusation in order for prosecution to begin. In fact, in either case, an investigation progresses upon an injured person’s complaint to the investigation authority. (2) Civil Procedures The owner of the rights for economic injury suffered from the infringement, usually in the form of monetary damages, and create an effective deterrent to further infringement, often in the Civil procedures ordinarily consist of demands for injunction, demands for compensation for damages, demands for repayment of unfair profits and demands for measures for recovery of reputation to be taken. (3) Criminal Sanctions These are intended to punish those who willfully commit acts of piracy of intellectual property rights on a commercial scale, and, as in the case of civil remedies, to deter further infringement. The purpose of punishment is served by imposition of substantial fines, and by sentences of imprisonment consistent with the level of 64
penalties applied for crimes of corresponding seriousness, particularly in cases of repeat offenses. The purpose of deterrence is served by orders for the seizure, forfeiture and destruction of fringing goods, as well as the materials and implements the predominant use of which has been to commit the offense (4) Preservative Procedures or Provisional Measures There are two purposes: First, to prevent infringements from occurring, particularly to prevent the entry of infringing goods into the channels of commerce, including entry imported goods after clearance by customs; and second, to preserve relevant evidence in regard to an alleged infringement. Thus judicial authorities may have authority to order that provisional measures be carried out without advance notice to the alleged infringer. In this way, the alleged infringer is prevented from relocating the suspected infringing materials to avoid detection. Second the most common provisional measure is a search of the premises of
the alleged infringer and seizure of suspected infringing goods, the
equipment used to manufacture them, and all relevant documents and other records of the alleged infringing business activities and “provisional disposition demanding status” refers to the dispositions of suspending infringing acts until a court decision is given. (5) Measures to be Taken at the Border These are different from the enforcement measures described so far, in that they involve action by customs authorities rather than by judicial authorities. Border measures allow the owner of right to apply to custom authorities to suspend the release into circulation of goods, which are suspected of infringing industrial property rights and copyright. The purpose of the suspension into circulation is to provide the owner of rights a reasonable time to commence judicial proceedings against the suspected infringer, without the risk that the alleged infringing goods will disappear into circulation following custom clearance. The owner of rights must generally satisfy the customs authorities that there is prima facie evidence of infringement, must provide a detailed description of the goods so that they may be recognized, and must provide a security to indemnify the importer, the owner of goods, and the custom authorities in case the goods turn out to be non-infringing. The final category of enforcement provisions, which has achieved greater importance in the advent of digital technology, includes measures, remedies and sanction against abuses in respect of technical means. In certain cases, the only practical means of 65
preventing copying is through so-called “copy-protection” or “copy management” systems, which contain technical devices that either prevent entirely the making of copies or make the quality of the copies so poor that they are unable. Technical devices are also use to prevent the reception of encrypted commercial television programs except with use of decoders. However, it is technically possible to manufacture devices by mean of which copy protection and copy management systems, as well as encryption systems, may be circumvented. The theory behind provisions against abuse of such device is that their manufacture, importation and distribution should be considered infringements of copyright to be sanctioned in ways similar to other violations 6.
Anti-counterfeiting Activities and Policies in Japan The Japan Patent Office is the only office to administer the intellectual system in
Japan therefore the JPO has no enforcement power. The JPO, however, collaborates with enforcement authorities such as customs, national police agency and court in Japan in order to held materialize a prompt and effective control on infringement of industrial property rights namely: answers to queries relating to infringements of industrial property rights from the customs or national police agency; dispatch of technical advisors to the courts; and dispatch of lecturers to customs official training programs. Moreover, the JPO holds seminars relating to appropriate measures against counterfeiting in Japan. At these seminars, experts in the field of anti-counterfeiting, such as lawyers and enforcement officials, give participating enterprises detailed information on effective countermeasure. On March 2, 1998, the JPO established a Help Desk on Counterfeit in order to receive inquiries and give advice about industrial infringements, and help right holder to enforce their rights. The JPO is also addressing the counterfeit problems overseas where counterfeit goods of Japanese companies are produced and distributed in most cases, especially in Asia. In addition, the Help Desk gives advice regarding prompt injunction against counterfeit goods through close contact with Japanese enforcement authorities such as customs; promotes the expedited examination of patent, trademark and design applications filed with the JPO; provides information on foreign IPR enforcement systems and anti-counterfeiting measures; provides information on contact points in foreign economies and provides information on law firms in foreign economies. Intellectual property enforcement will not be succeed, if it is still lacking of public awareness on counterfeiting goods. In this sense, the JPO aims to prevent the 66
distribution of counterfeit goods, it is necessary to raise the level of consumers` awareness of the importance of industrial property protection. Especially, the JPO has made 120,000copies of pamphlets, which explains the current situation of counterfeiting goods distribution
and adverse effects on consumers, which are been distributing
through police station and university shops. On the other hand, the JPO has been widely making open to the public the collected information over the Internet and it also makes available manuals on measures against counterfeiting, the results of various surveys, and contact points at the customs and national police agency The JPO has been conducting various surveys on counterfeiting. These surveys are aimed at grasping the actual situation of damages caused by counterfeits and at studying possible measures to more effectively enforce intellectual property rights. The results of these surveys are available in seminars and through Internet. The JPO has amended patent law, design law and trademark law in 1998 in order to improve the enforcement in four fields: 1/ Facilitated damages-proving procedure. 2/ Consideration of specific circumstances in calculating the amount of damages. 3/ Tougher criminal penalties on corporations and 4/ abolition of the requirement of complaint for initiating a prosecution against an infringement of a patent, utility model, or design right. And 1999 amendment, Japanese enforcement system was improved in four fields: 1. Facilitated
procedure
to
prove
infringement.
2.
Introduction
of
the
damage-calculation- expert-witness. 3. Simplification of the process to prove the amount of damages. 4.
Active utilization of the Advisory Service provided by the JPO on the
technical scope of IPR. The JPO has established information exchange channels with the KIPO, SIPO and DIP regarding information of IPR enforcement. In other words, the JPO has been holding seminars and training courses for enforcement authorities in Asian region with the aim at securing practical and effective enforcement measures. It has two policies for cooperation in the field of human resource development: 1. Enforcement Seminar for Developing Countries Held in Asian Region 67
The JPO held the seminars for 159 officials of 15 countries engaged in the field of IPR enforcement in Korea and Singapore with the view to fostering necessary human resources for effective enforcement. 2. Enforcement Course under the WIPO Japan Funds-in-Trust The JPO held the training courses as part of WIPO/ Japan-Fund-in-Trust activities for officials of industrial property and enforcement related offices in Asian region for the purpose of instruction related to industrial property laws and enforcement.
CHAPTER V LITIGATION AND APPEAL EXAMINATION I.
Patent Litigation in Japan
1.
Introduction Dispute often begins with an unexpected warning letter from an unknown party.
They may also arise from broken licensing agreements as well as failed negotiations. In Japan, a warning letter is not required to begin litigation. The patentee is allowed to presume that someone has infringed its patent willfully or negligently (Patent Law, Section 103), while under civil law willfulness or negligence has to be proven to obtain damages as a matter of general principle. The alleged infringer has burden of proof and has to prove that it used due care not to infringe the patent, for example, by having carried out a comprehensive patent search. Despite such provisions, the patentee normally sends
a letter to a potential infringer because it is considered prudent to have
negotiations before going to court. Moreover, a warning letter makes it practically impossible for the
infringer to prove the lack of willfulness or negligence, upon
continued use of the patented subject matter. The sender of the warning letter may sometimes not be a patentee. A registered exclusive licensee is entitled to start a patent infringement lawsuit and send you a warning letter (see Patent Law section 100, example), while non-exclusive licensee is 68
normally not allowed to initiate such legal action. Given this understanding, the term patentee will be used for both patentee and registered exclusive licensee in this report. 2.
The Aim of the Patentee Upon the determination of patent infringement, actions taken by the patentee will
depend on his overall business goals. He may ask you to enter into licensing negotiations, pay money for past infringement or both. You may be simply asked to stop the infringement so that he can enjoy the monopoly in the market (Patent Law, Section 68). In order to force you to come to the table for negotiation to achieve such goals, the patentee has the option of beginning a lawsuit to back up his position. He basically has two categories of available remedies: injunction orders and damages awards. The patentee may ask the court to order the infringer to stop such infringing acts as manufacture, use and sale of infringing products (Patent Law, Section 2(3)). This calls an injunction order. Moreover, he can also obtain a court order forcing the infringer to discard or destroy infringing products or facilities used for committing the infringement (Patent Law, Section 100). Remedies against the infringement are needed on an urgent basis; the patentee can obtain a preliminary injunction order prior to more formal court proceedings. The preliminary injunction can be obtained with prima-facie case of infringement and prima-facie evidence of irreparable harm together with a showing of need for quick remedies. The second category is to search damages awards. The patentee can ask for recovery of damages or restitution of unjust enrichment caused by the infringement in the terms of monetary compensation (Patent Law, Section 105). Also, the patentee may have certain remedies resulting from harm to business or personal reputation caused by infringement (Patent Law, Section 100). 3.
Taking the first Actions in Response to the Warning Letter The first step in response to a warning letter is to check the current validity of the
patent. The patent may lapse before the end of its term, which is 20 years from the actual filing date in Japan, for example, by a failure to make annuity payments. Also, patents related to pharmaceuticals and agricultural chemicals may have extended terms. There may be a recorded exclusive licensee, in which case the patentee may not be the rightful party to start such litigation. These basic facts have to be reviewed and confirmed at the Japan Patent Office. 69
Secondly, a copy of the file history of the patent in question should be obtained for analysis. The exchange of office actions and response between the examiner and the applicant often provide valuable clues for determining the scope of protection available under the patent. Thirdly, it is often useful to determine if the Japanese patent has corresponding patents or applications in other countries. If there are such applications or patent, copies of all prior art references cited should, at minimum, be obtained. The Japanese patent may have been granted simply because the Japanese examiner was unable to find a very pertinent prior art reference. Normally, in order to respond to the warning letter, the above step should be sufficient. If the existence of more pertinent prior art references is suspected, it is, however, necessary to conduct a prior art search of patent and utility model publications in Japan and in the other countries. It is also possible to search through academic and non-academic journals and magazines. A variety of databases are available for such searches as an extremely useful tool. In some cases, it may be necessary to go to places likes museums to locate non-documentary evidence of public use prior to the patent filing date. Based on the content of the prosecution history and the result of your investigations, grounds of invalidity of the patent a basis for restrictive interpretation of the patent claims should be sought. For example, if a newly discovered prior art reference anticipates the patented invention or discloses the same invention, the patent may be invalid. If another reference is found which does not eliminate the novelty of the patented claims entirely, but clearly covers allegedly infringing product or method, it is likely that the court adopts a narrow interpretation of the patented claims to reject the allegation of the patent infringement. For the purpose of patent invalidating a patent, you have to go directly to the Japan Patent Office, as opposed to a court as in many countries. The Japanese court generally does not have authority to find a patent invalid unless the case is on appeal from a Patent Office decision. Furthermore, if the patentee is overly aggressive and send, for example, letters to many of your clients and business partners warning of your patent infringement, such actions by the patentee may harm your business. If the accusations are unfounded, you 70
can consider suing the patentee under the Unfair Competition Prevention Law (Section 2(1)(xi) of UCPL) for recovery of damages and injunction orders to force him to stop such action. 4.
Interpretation of Patent Claims In order to determine whether there is an infringement or not, it is necessary to first
compare the patented claims and your product or method. It is very important to note that this judgment has to be made based on the claims. There may be definitions of some terms used in the claims located in the body of the specification or the claims in and of them may not be clear, then it may be necessary to refer to the text of the patent. However, the patent claims always form the primary basis for considering the existence of infringement. It is normally permitted to interpret the claim as narrow as specific embodiments disclosed in the specification unless you have good reasons to do so. There are several aspects to patent infringement in general. They will be discussed as follows: 1.
Literal Infringement
As a first step, check if the allegedly infringing product or method contains all the features or limitations cited in any of the patented claim in disputed patent. If the answer is affirmative, there is a literal infringement, and in many cases, it is better to admit the infringement. Based on this determination, it may be necessary to enter into negotiation with the patentee or consider possible modification to the design of the product or the method in question so as to place it outside scope of patent protection. The possibility of using prior art references or the content of the prosecution history should be considered to reach a narrow interpretation of the patent claims. However, unless the patent is clearly invalid in the view of such information, the patentee often takes positions difference from yours and brings a lawsuit before the court. Therefore, it is important to take a practical approach and weigh the influence of such a lawsuit on your business when deciding on the course of actions. On the other hand, if the disputed product lacks one or more elements or 71
features recited in pertinent claims or if the method is missing one or more steps or limitations found in the claimed method, no literal infringement would be found by the court. If the answer to the question is negative, the possibility of a broader interpretation of the patented claims should then be considered. 2.
Doctrine of Equivalents The doctrine of equivalents gives the patentee a broader interpretation of
claims based on the understanding that it is often very difficult to provide adequate patent protection, if no exceptions are provided beyond the literal infringement of the patent claims. In the recent court decisions, the Tokyo and Osaka High Courts provided affirmative views on the application of the doctrine. Further, on February 24, 1998,
in an appeal filed by the accused infringer in the ball spline bearing case,
the Supreme Court redefined the doctrine of the equivalents. The Supreme Court stated that for the doctrine to be applicable the following five criteria have to be considered: Even if there exists a portion in the patent claim that is different from the alleged infringing product, an infringing may be found provided: 1.
the differing portion is not an essential part of the patented invention;
2.
the same function and results are still obtained serving the same purpose as that of the patented invention even if that portion is replaced by the corresponding element found in the allegedly infringing product;
3.
the above replacement would have easily conceived by a person skilled in the art with reference to the time of manufacture of the infringing product;
4.
the infringing product is not the same as the art publicly known at the time of filing for disputed patent and it could not have been easily conceived by a person skilled in the art at the time of filing for patent based on such publicly known art; and
5.
no special circumstances exist such as the international exclusion of infringing product from the scope of the patented claim during the prosecution of the patent application for patented invention. The significance of this decision is the fact that it was rendered by
Supreme Court. In a strict sense, Supreme Court decisions alone have the 72
authoritative status in Japan. Different from lower court decisions, Supreme Court decisions function as law and are regarded as binding on lowers courts. The mere fact that Supreme Court said nothing negative about the doctrine of equivalents and clarified the criteria gives legitimacy to assertions of doctrine of equivalent infringement. Lower courts have hand down a number of decisions on the application of the doctrine since this Supreme Court decision, and the above criteria have been invariably adopted in those decisions. 3.
Indirect Infringement and Direct Infringement If a production in question contains, as mention above, all the features and
limitations recited in a patent claim or if it is considered to be an infringement under the doctrine of equivalents, it would constitute a direct infringement. The same is true for patent claims directed to methods. If your product does not contain some portion of the elements or features found in a claim, no direct infringement should be found with respect to that claim. Moreover if some one produces a kit which contains all elements that form the claimed product and a person purchase and assembles it at home, neither the sale of such kit nor assembly would constitute direct infringement, because the kit would lack some features or elements that tie the claimed structural elements together, while the assembly cannot be considered to have done “commercially2 as required in section 68 of Patent Law. This is also true if an unauthorized person is selling an essential component of the claimed product by omitting a new trivial elements or features recited in a patent claim. Such acts cannot be overlooked from the standpoint of the meaningful patent protection. Therefore, the Japanese Patent Law contains some provisions (Section 101, Patent Law)
that regard such acts as another form of
infringement, so-called “indirect infringement,” thus giving the same protection as against a direct infringement. In some the other countries, similar types of infringement are called contributory infringement. 5.
Review Your Position against the Patentee The status of the patent in question has now been checked, and its prosecution
history reviewed. The possibility of the infringement by comparing the disputed product method and the patent claims has also been evaluated while taking the prior art into consideration. 73
It is necessary to review the defensive position against the patentee. 1.
Reexamination of Your Patent Portfolio The patent you have in your portfolio need to be checked with respect to the
patentee’s, or its licensee’s, products or methods. If one or more of your patents appear to cover such products or methods, they may be raised and an offer to cross license can be made. This will strengthen your position during negotiations. 2.
Prior User Right The date on which the product or method began to be made or used or
substantial preparation thereof was made should be checked. For example, if the product has already been made or significant preparation for the production had been started as of filing date of the patent in question, a so-called “prior user right” may be available as defense (Patent Law, Section 79). Under the prior user right, it is possible to continue to make, use or sell the product or use the method without any liability associated with the patent infringement. Also, a patent cannot cover products that existed before the effective filing date or those merely passing through Japan in transit (Patent Law, Section 69(2)) as well as Paris Convention, Article 5ter). 3. Experimental Use Under (Patent Law, Section 69(1)), acts done for experimental or research purposes are excluded from the patent protection. If you are making a product or using a method for scientific test purposes, you basically cannot infringe any patent. For the purpose of Section 69(1) is to promote scientific or technological developments. Therefore, experimental manufacturing and sale for testing market is not exempted. Another big issue is whether or not carrying out experiments for the sole purpose of obtaining governmental approvals for marketing generic drugs may be exempted under Section 69(1). On April 16, 1999, the Supreme Court handed down an awaited decision concerning the question of experimental use exemption in favor of generic drug manufacturers. The court found that tests carried out during the patent term in an attempt to obtain governmental approvals for manufacture and sales after the expiration of patents do not constitute patent infringement under 74
Section 69(1) of the Patent Law. This decision is apparently in line with two recent decisions by German Supreme Court although fact situations are not entirely the same between Japanese and German cases. Prior to Supreme Court Decision, on July 18, 1997, the Tokyo District Court rendered three decisions in actions brought by Osaka Pharmaceutical Co., Ltd. against several generic drug makers. In those decisions, the 29th civil division of court found no patent infringement for experiments done by generic drug makers during the patent term. This is a complete reversal of earlier decisions made by various courts. For example, in the Synthelabo case, the Nagoya District Court had found patent infringement because the experimental use exemption (Section 69, Patent Law) was not applicable to the experiments which were done for the sole purpose of obtaining governmental approval for future sale of old patented drugs and which did not lead to scientific advances. The KANAZAWA branch of the Nagoya High Court and the Osaka District Court have also followed the line of reasoning set out in Synthelado cases. Thus, two lines of contradicting reasoning used to be adopted by different courts in Japan, and the above Supreme Court decision put an end to confusions. Also in this connection, preparation of drugs under prescriptions given by medical doctors would not constitute a patent infringement as provided in (Patent Law, Section 69(2),). 4.
Compulsory Licenses The Patent Law allows the granting of compulsory licenses for implementing
dependent, i.e., related invention (Patent Law, Section 92). It is also provides for compulsory licenses for the use of inventions that have not been used for an extended period of time (Patent Law, Section 83) as well as compulsory licenses on patented inventions in the interest of the general public (Patent Law, Section 93). When a patent invention is implemented, such use may result in the implementation of another patented invention which has a prior filing date and which is owned by another party. This type of situation occurs when a patent is granted on an improvement on another patented invention with an earlier filing date. The later filed invention is called a dependent invention. The implementation of the dependent invention would constitute an infringement on the basic patent. In order to use the dependent invention the patentee has to obtain a license on the basic patent. When such license is not available, however, the dependent invention 75
cannot be utilized (Patent Law, Section 72) impeding further development of technology and industry. Therefore, the Law provides procedures for granting compulsory licenses on the basic invention by going through a prescribed arbitration process. The law also provides for granting of similar licenses when a patented invention has not been utilized over an extended period of time, so as to encourage patentees to utilize their patents. Compulsory licenses may also be granted when it is clear that the public will enjoy large benefits if an unused patented invention is implemented. Several applications have been filed to initiate the arbitration process; however, no compulsory licenses of any kind have been granted thus far. Also, under one of the two bilateral agreements between Japan and the U.S. respectively concluded in January and August 1994, it has now become practically impossible to obtain a compulsory license to use a patented dependent invention if a basic patent exists, (The August 1994 agreement stipulates that: “Other than to remedy a practice determined after judicial or administrative process to be anti-competitive or to permit public non-commercial use, after July 1995, the JPO is not to render an arbitration decision ordering a dependent patent compulsory license to be granted). 6.
Reply to the Warning Letter Normally, a requested date for a reply is stated in warning letters. Although there is
no legal obligation to reply by this date, it would be advisable to send some more form of reply. It is possible to simply state that the process of reviewing the situation is under way, while setting another date for a more substantive reply. After the above-mentioned review process is finished, a reply stating your position can be sent to the sender of the warning letter. 7.
Possible Actions in Response to Allegation of Infringement I.
When Infringement is Likely If your review leads to the conclusion that an infringement is likely to be found
by the court if litigation occurs, it is necessary to consider the following options.
76
1.
Stop Infringement Stop the infringement acts, such as the manufacture, sale, and importation of
products that come under the scope of patent protection. However, It is possible that, as an accused infringer, you may be liable for past damages even if you stop the infringement acts immediately. 2.
Enter into Licensing Negotiations Enter licensing negotiations with the patentee or exclusive licensee, provided
that he is willing to give you some type of license. The above-discussed review of your patent portfolio and consideration of other favors will be important in strengthening your position during negotiations. Another option is to buy a portion or the entirety of the patent and become the patentee yourself. 3.
Design around With some modifications on the design of your product or changes in your
method, patent infringement may be avoided. This normally costs substantial amounts of money, particularly if manufacturing has been done on the large scale. This option has to be considered in the context of he costs involved in the other options. Also, the patentee may seek the recovery of damages for past infringement. II. When no Infringement Exists 1.
Argue for non-infringement If the patent appears to be invalid after your review of the prior art and the
prosecution history, you can state such in your reply to the patentee. It is possible that the patentee simply did not know the existence of prior art references which would invalidate the patent. If the patentee is willing to withdraw his allegation of the patent infringement, it is often wise to maintain the patent because in effect you may be able to exclude others from entering your market based on the patent. Even if you believe, however, that there is no infringement because your product or method is outside the scope of the patent protection, i.e., non-infringing, it may still be difficult to convince the patentee of your position. It may be necessary to consider the options discussed above for situations in which infringement is likely.
77
2.
File for Invalidation Proceedings Unlike many other countries where you can contest the validity of a patent
before the same court that is considering the question of infringement, in order to invalidate a patent in Japan it is necessary to separately request the Patent Office to invalidate the patent. If the Patent Office, and the Tokyo High Court if appealed, (the Tokyo high Court has exclusive jurisdiction over case which are appeals from by the appeal decisions made by the Department of the Japan Patent Office), finds that the patent is invalid, there is no patent infringement for both past and future. According to the Supreme Court decision mentioned above, it is possible for an infringement court to find a patent invalid. The determination made by such court is binding to the parties only. In order to get rid of a patent entirely or without an infringement lawsuit, it is still required to go to the Patent Office first. Normally the court is unwilling to halt or stay the proceedings of the infringement case in order to wait for the Patent Office to decide on the question of invalidity because unless both parties agree, at least one party is likely to suffer from a delayed court decision. Unless it is very clear that patented invention lacks novelty, the court presumes that the patent is valid regardless of the ongoing invalidation proceedings before the Patent Office. 3.
Declaratory Judgment Action As an alleged infringer, you can bring a lawsuit to have a court confirm
non-infringement. Such action is often called a declaratory judgment action. It may be filed to obtain the court confirmation, for example, that you have no liability with respect to infringement of the patent, that the patentee does not have a right to obtain injunction order from the court, or that you have prior user rights. The advantage of filing a suit before the other party does lies in your ability to have your choice of court. Normally, more than one district court has jurisdiction over your dispute. If you file a suit first, you can have your choice of court. Having a court decide to transfer a case to another court is not easy while it is not impossible. 8.
Beginning Litigation and Going through It After going through the above steps, you may decide to bring a declaratory
judgment action. The Tokyo and Osaka District Courts have special divisions for IP matters. At the Tokyo District Court, three divisions are specializating in IP matters. Each division has three or four judges. Therefore, you may want to bring a suit there to 78
find judges more familiar with patent disputes than those in other courts. In order to bring this type of lawsuit, or any lawsuit in general, it is necessary for a plaintiff to show that he has substantial interest in the case. Conversely, the patentee may bring two types of lawsuits, either independently or simultaneously: the so-called main suit and a petition for preliminary injunctions, as discussed above. The main suit is normal type of proceedings. After the plaintiff files a complaint, some form of preliminary hearings and formal hearings take place at intervals of one to three months. Each hearing is normally short, lasting less than half an hour unless the examination of witnesses is involved. The Japanese court has a strong tendency to reply on written documentation submitted by the parties. The main suit takes one and a half years to four years to come to conclusion. Within the framework of judicial reforms that are going on some time now in Japan, the court proceedings are becoming faster. The preliminary injunction cases should, in principle, proceed faster than the main suit. However, if there are unresolved issues such as the scope of disputed patent, the court may not be willing to decide in preliminary injunction action any sooner than in the corresponding main suit. Even in preliminary injunction cases, the court hears both parties, while the evidence that it can examine is limited to documentary evidence and witnesses who voluntarily appear before the court. Settlements are very often encouraged within the framework of litigation by the judges hearing the case. It is also possible to have negotiations with the other party in addition to and aside from the lawsuit. 9. Appeals Examination If a decision in the main suit rendered by a District Court is not satisfactory, it is possible to file an appeal before the High Court that has jurisdiction over the particular district Court. The High Court in this case is another trial court, so it is possible to raise question concerning facts before this court as well. No juries are involved at stages of court proceedings. The proceedings at the High Court are a continuation of what has been done before District Court. From a high Court decision, appeal is possible to the Supreme Court, but it considers only questions related to interpretation of the Constitution and law. The Supreme Court consists of 15 judges. The ground for appeals to the Supreme Court are essentially limited to cases where decision has been made based on a wrong interpretation of the Constitution or otherwise it violated the 79
Constitution. With a petition for an appeal, the Supreme Court has the discretion whether or not it accepts the review of decisions that seriously violate law and precedent set by the Supreme Court or its predecessors. Appeals from decisions in preliminary injunction cases are different from the main suit and more complicated. 10. New Code of Civil Procedure January 01, 1998, the new Code of Civil Procedure took effect. This is essentially the first overhaul of the civil procedure in Japan since 1926. The entire code was rewritten. The goal of the reform is to make civil procedure easer to use and more understandable for the people. IP litigations are now processed with higher speed and improved
efficiency. We have already seen a clear indication that the new code is used
well to make litigation process smoother. The Supreme Court, which drafted new court regulations under the new code, has indicated that the pendency time of court cases should be shortened by 40%. To certain extent, it has become easier for the patentee to obtain documentary evidence from the infringer. Some of numerous changes are outlined below. 1.
Jurisdiction Only for intellectual property related cases, a plaintiff can choose between the
Tokyo or Osaka District Court and a district court that would otherwise have jurisdiction under the old Code. Each of the Tokyo and Osaka District Courts offers the advantage of having specialized intellectual property divisions. The new provisions provide party who cannot, under the previous system, bring actions before the Tokyo or Osaka District Court with an option to have judges with more specialized experience consider their cases. 2.
Preparation for Court Hearings The Japanese court system has been criticized because the extended periods of
time that is required to finish civil cases at the district court level. For rather complicated cases, such as those involving patent infringement disputes, it used to take up to five years to go through district court proceedings. One reason for this is that there are no strong incentives for parties to identify the issues in dispute and the relevant evidence at an early stage of the proceedings. Pertinent information is sometimes withheld until later stages of the proceedings. Also, by comparison to practice in the US., the court hearing are quite formal, and a spontaneous and 80
effective exchange of arguments is rare due to a heavy emphasis on written pleading and replies. Moreover, each hearing, which normally lasts less than one-half hour, takes place at intervals of one to three months. To alleviate these problems, the new law provides several forms of well-defined preparatory procedures and encourages to have concentrated formal hearings involving witness examination (the new Code, Art. 182). 3. Time Limits on Producing Offensive or Defensive Evidence The new Code provides that a court can set specific time limits during which each party is required to submit all of its arguments and supporting evidence that are relevant to the disputed issues. (The new Code, Art. 156) provides that: “means for attack or defense have to be produced with appropriate timing in accordance with the progress of court proceedings”. Willful or negligent delays may result in the rejection of newly produced offensive or defensive means. 4.
Expanded Measures for Collection of Evidence Japan does not have “discovery” unlike Anglo-American countries that have
adopted this system of evidentiary sleuthing. The obligation to produce documents used to be very limited (Art. 312, the old Code of Civil Procedure) often making it very difficult to gather sufficient documentary evidence to assist the court in considering cases. The court might be able to order the production of only limited types of documents, but such order was often ineffective (Art. 316 and 317 of the Code). This was in clear contrast to the provisions concerning witnesses in which a person has a general duty to testify and can refuse to testify only under limited circumstances provided in the old Code (Art. 271-281 of the Code of Civil Procedure). The new provisions concerning more effective collection of evidence will be summarized below. 4.1 Extended Duty to Produce Documents The new law provides for an expanded scope of duty to produce documents. The duty to produce documents goes to nearly the same extend as for the duty of a witness to appear and testify in the court. The obligation is now general; specific circumstances under which there is no duty are listed in the Code. Those who are not parties in a particular lawsuit also have this duty. Under Article 220 of the new Code, paragraphs (1) to (3) are essentially the 81
same as in the old law. Paragraph (4) is new and provides for the general duty of document production. A holder of documents generally has a basic obligation to produce them when ordered by the court. In paragraph (4), item a) is for preventing self-incrimination and incrimination of close family members, and item b) is for maintenance as secret of facts that certain professionals, such as doctors and attorneys, obtained during his or her professional duties. Item c) means that the holder of, for example, personal diaries or memos for internal use within a company can refuse to produce them. If the duty exists, the failure to comply with court orders to produce documents may attract court sanctions. If one of the parties does not produce documents despite court orders, the assertion made by the other party in connection with the content of such documents, as well as the facts to be supported by the documents, may be regarded as true by the court. This assumption of facts would represent a significant expansion of the sanctions that could be used to encourage full production. In the case of violation of document production orders against a third party, one who violates the order is expected to face a fine of up to 200,000yen, which is higher than the current maximum penalty of 100,000 yen for not testifying as a witness. When requesting the production of certain documents, a party has to file a petition identifying the documents. It is often very difficult, however, to identify a particular document at the time of filing the petition without knowing what the other party really has. The requesting party is now required only to provide some clues that would enable the holder to identify the document. 4.2 Examination of Documents by Judge under Secrecy The new law empowers the court to order the presentation of the requested documents so that the court can independently determine if secrecy is justified, and what should be produced before the court. In such cases, the court’s examination will be in camera. Only judges have access to the produced documents and neither the opposing parties nor their counsels can examine them. The old Code had no provisions for determining whether a holder of documents, particularly where the documents may contain trade secret or confidential information. The in camera procedure provides a new tool to discover documents held b the other party. 82
4.3 Inquiries Article 163 of the new law defines a new procedure in which the parties can directly exchange inquiries, termed as Shokaisho, requesting information and documents without intervention of the court. When a party needs to support its argument or showing, this new procedure allows it to directly request the other party to answer certain questions or requests. No penalties are specially provided against a party who refuses to answer proffered inquiries; however, it is possible or the court to form an adverse impression of the case or use its discretionary power if a party does not respond to the court’s urging to answer inquiries. 4.4 Protection of Secrets in Civil Cases Article 92 of the new law includes provisions which would limit access to case records to the party only. A party can ask for a ruling to restrict the public’s access to certain parts of the case records which, if disclosed, would be significantly harmful to its interests. If the requested order for protection is granted, only the opposing party can request an inspection or copies of the particular parts of the case records covered by the order. A third party can request the cancellation of such a ruling. The old Code provides that, as a rule, any person can inspect all case records. An interested person may even obtain copies of those records, albeit under somewhat limited circumstances. This is certainly a problem when a lawsuit involves trade secret or privacy issues. For example, The Unfair Competition Prevention Law was amended in 1990 to provide protection for trade secrets. However in order to obtain effective protection, a company may have to disclose some or even all of its secrets during court proceedings. Such secrets are described in the case record that becomes open to the public. This may in effect deprive the company of long-term protection for its valuable trade secret rights and opportunities to seek remedies before the court. 5.
Other Items in the New Code of Civil Procedure The new Code includes various procedural changes with respect to numerous
aspects of courts proceedings, such as summon, service procedure, settlements, timing of rendering judgments, and contents of written decisions. Appeals before 83
the Supreme Court are more restricted. Also, new provisions are included on small claim cases and class action suits. In short, these changes to the Code of Civil Procedure signaled the beginning of a major shift in Japan’s judicial procedures and practice toward a harmony with those already adopted in the Anglo-American legal systems as well as with he reality of the modern Japanese society. The Japanese patent prosecution system has improved dramatically in recent years. It has become more in the line with the approaches taken by the European Patent Office and US patent and trademark Office. Now efforts are more focused on improvements in the enforcement fields. It seems that Japanese Courts are responding to what Japanese society needs: higher efficiency of court proceedings and open attitudes toward new ideas as well as transparency of making decision processes. II. Trademark 1.
Civil Remedies
(1) Jurisdiction A trademark infringement action is started at the District Court and then may be appealed to the High Court and finally may appealed at Supreme Court. However, under the new Civil Procedure Law which effective from January 01, 1998, the reason for appeal before the Supreme Court is restricted. (2) Investigation and Collection of Evidence of Infringing Acts As the plaintiff must specify the infringing goods and must describe it in the complaint from the beginning, investigation as to the infringement and the collection of evidence concerning the infringing act are very important. (3) Check the own Registered Trademark Before sending a warning letter, the owner of registered trademark should check as to whether there is a possibility that the registered trademark will be invalidated. If there is a possibility, it is recommendable to refrain from taking legal action. 84
If a trademark has not been used for three consecutive years, it will be cancelled by a non-use cancellation trial filed by a third party. Thus, when the trademark is not used, it is recommendable to refrain from taking legal action. (4) Warning Letter by Content-and Delivery Certified Mail The first step taken by the trademark owner is to send a warning letter by content-and-delivery certified mail to infringers. In Japanese experience, almost trademark infringement cases are finished at this stage because it is easy to determine whether trademark infringement has taken place or not and almost warning letter is sent to distributors, not manufactures. As the labor costs in Japan is high, most counterfeit goods are manufactures are manufactured in other Asian countries, not in Japan. (5) Temporary Injunction In order to avoid incurring damages from a trademark owner while a main lawsuit is pending, a Temporary Injunction is prepared. (6) Main Lawsuit In the main Lawsuit, the trademark right owner or his registered exclusive licensee may seek an injunction, compensation for damages and restoration of the plaintiff’s business reputation, e.g. the announcement of an apology in newspapers at the defendant’s expanse. - Injunction (Article 36) - Compensation of damages (Article 709 of Civil Code) - Presumption of amount of damage (Article 38) - Presumption of negligence (Article 39) - Restoration of the plaintiff’s business reputation (Article 39) (7) Injunction (Article 36) Trademark right owner or his registered exclusive licensee may demand that an infringer cease the conduct constituting the infringement. An injunction may be done against either a person who is actually infringing or one who is likely to infringe a trademark right. In the latter instance, however, the trademark right owner or his registered exclusive licensee must prove that future infringement is highly probable. An injunction may be rendered against infringer even if e has committed the infringement 85
without willfulness or negligence. Upon demanding an injunction, the trademark right owner or his registered exclusive licensee may also demand the destruction of any articles, which constitute infringement, the removal of facilities used for the act of infringement and other measures necessary to prevent the infringement. (8) Damages (Article 709 of Civil Code, Article 38, Article 39 of Trademark Law) If the infringement was either intentional or negligent, the trademark right or his exclusive licensee may seek compensation for any damage caused by the infringement. There is a statutory presumption in favor of the trademark right owner or his exclusive licensee that any infringement was negligently made. Thus, if the trademark right owner or his exclusive licensee seeks damages, the infringe will not be exempt from the obligation to pay damages unless he successfully rebuts the presumption by providing that the act of infringement was free from negligence. In principle, the party claiming such damages under the tort law must prove the amount of damages. 1.
Profit Gained by Infringe The trademark law presumes, however, that the amount of damages suffered by
trademark right owner or his registered exclusive licensee is equivalent to the profit gained by the infringe as a result of the infringement (Article 38, Paragraph 2 of the Trademark law) 2.
Lost Profit The Trademark Law provides for the formula to determine lost profits of the
trademark right owner or his registered exclusive licensee (Article 38, Paragraph 1 of the Trademark Law), namely, lost profit = (quantity sold or transferred by infringe) x (profits per product that the trademark owner of his registered exclusive licensee could have gained if the trademark right was not infringed). 3.
Royalty A trademark right owner or his exclusive licensee may demand an amount of
money equivalent to a royalty for license on the trademark right concerned as damages, thereby allowing the trademark right owner or his exclusive licensee to claim damages in excess of the amount of the profits (Article 38, Paragraph 3 of the Trademark Law). In the past, courts have awarded two to five percent as a normal 86
royalty rate in most cases. On the other hand, the courts found that 10% would be a normal royalty rate for worldwide well-known trademarks having high reputation such as Chanel, Louis Vuitton. 4.
New Trademark Law (effective on January 1, 2000)
Under the Patent, utility Model, Design and Trademark Law which will be effective on January 01, 2000, in assessing the damage, not only factors proven to have contributed to the damage but also those which are recognized by a judge to be substantially likely to have contributed to the damages hall be taken into consideration so that indemnification in the amount as close to the amount of actually caused damages as possible shall be granted. When it is considered to be extremely difficult to substantiate the damages although it is recognized that the damages have been caused, the court may determine the amount of the damages based on the gist of the oral hearing and review of the evidential materials. (9) Unjust Enrichment A trademark right owner or his registered exclusive licensee may seek restitution for unjust enrichment in cases where the infringer has gained profits as a result of the infringement. The right to claim compensation for damages under general tort law lapses by statutory prescription if not exercised within three years from the time when the trademark right owner of his registered exclusive licensee becomes aware of such damage or of the identify of the infringe, or any case, in twenty years from the act of infringement. A claim for restitution for unjust enrichment may be made any time within ten years from the time of the act of infringement. (10) Recovery of Reputation In lieu of or in addition to damages, a trademark right owner or registered exclusive licensee may request the court to order an infringement to take such measures as are necessary to restore the business reputation of the injured plaintiff. The court might order the infringement to make a public apology in a newspaper. (11) Monetary Claim Once an application is registered and following a warning, the application may require the monetary claim against a party, who has used a trademark which is identical with or similar to the applied for trademark on goods/or services which are identical 87
with or similar to the goods/services designated in the application. The sum amount of monetary claim would be equivalent to the commercial loss caused by the other party’s use of applied for mar during the application is pending. The application can enforce the monetary claim only after the application is registered. Thus, an applicant cannot enforce it when the application is withdraw, rejected, etc. 2.
Criminal Action Trademark infringement is also the subject of the criminal actions. A person who
has infringed a trademark right shall be liable to imprisonment with labor not exceeding five years or to a fine not exceeding ¥5000,000 in the case committee by legal entity, a fine not exceeding ¥150,000,000. In order to proceed with prosecution, it is necessary to prove the willfulness of the infringer. Thus, the police authorities ask the trademark owner to send a warning letter to an infringer. If an infringer sells infringing goods after receiving a warning letter, it is evidence proving that the infringer willfully infringed the trademark right. However, most infringers do cease selling infringing goods after receiving a warning letter. The police authorities have a stronger power of investigation compared with private investigation. They obtain an opinion from the Japan Patent Office on the trademark infringement. 3.
Settlement
(1) Settlement by Warning Letter Upon settlement, infringing goods in stock are usually transferred to the trademark right owner or such goods are destroyed by fire. (2) Settlement before Court Settlement is also carried out before a court. A settlement before a court may be given the same effect and enforceability as a court judgment if the settlement is made before the judge and recorded in the hearing record of the court.
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CHAPTER VI CONCLUSION Nothing is complete unless I put this research paper into final shape. Through this study I believe that intellectual property rights have been being a main driving force in economic development. The role and advantages of intellectual property system has been becoming an important factor in all economic activities. It also becomes major national and international concern. With the emergency of IP becoming another new main factor in economic activities, IP Offices are empowered more significant responsibilities to further strengthen IP protection system which functions as a systematic infrastructure for the active circulation
of
human
creations
including
the
three
aspects
of
“creation”,
“rightualization” and “commercialization”. Another efforts, IP Offices concentrate on encouragement of new creations by young generation student creators, research and development. These are administrative role of IP offices. In addition, IP Offices in each country are obliged to actively join in the international efforts to build up an effective global IP system, fully responding to newly emerging IP issues stemming from the rapid advance of high technology and economic globalization. Despite developed countries have still not reached a satisfactory level of enforcement. They will therefore continue to drive its anti-counterfeit policies as follows: Firstly, they have permanently improved IP related laws in order to guarantee the adequate and effective protection of industrial property and to bring their legal framework in full compliance with internationally establishment rules for the protection of intellectual property including the TRIPTS-WTO Agreement. Especially JPO has made efforts to improve and develop IP laws to secure more adequate and effective protection of IP. Secondly, It is difficult to combat counterfeit goods only by the improvement of legal system. The strict and effective enforcement of laws to secure the system’s effectiveness is important.
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Thirdly, both of trade circles and consumers must be aware that selling and buying are the particular form of economic crime is illegal. In order to heal up the world environment without counterfeit goods, each country will constantly continue to strengthen its each public awareness campaigns. I hope that Cambodia will more contribute to the world intellectual property culture through research and study experiences from developed countries. I am sure that this research study provides me new knowledge that can be used to upgrade and strengthen IP protection system in Cambodia as well.
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