REVISIONS OF THE JAPANESE PATENT LAW

by JPAA
January 2000

With a view to providing better protection for intellectual property, a bill for revisions to the Patent Law has recently passed the Diet in Japan. The motivation for the revision comes from (1) excessively narrow interpretation of patent claimes in infringement litigation, (2) insufficient compensation for damages, and (3) too much time needed before acquiring and enforcing rights.

Since 1994, various amendments have been made to the Patent Law to improve the intellectual property protection in Japan. The latest revisions to the Patent Law, together with the revisions made to the Patent Law in April, 1998, mark a great advance toward the adequate protection of intellectual property.

The primary objective of the revisions is to enable patent rights to be acquired, maintained and protected (1)strongly, (2) quickly, (3) at lower cost and (4) by simplified procedures, as briefly described below.


<1> Strengthening of Patent Protection

1. Reduced Burden of Proof in Litigation

(1) Amendments to the Civil Procedure Law
In the former civil procedures, heavy burden of proof imposed on the plaintiff was an obstacle to prompt protection of rights. This tendency was particularly noticeable in patent infringement cases where proof of infringement was difficult.

Amendments to the Civil Procedure Law came into effect on January 1,1998. These amendments have brought about a substantial reform in the procedures of civil action. Noteworthy revisions concerning the burden of proof include imposition of greater obligation of document production and introduction of interrogatories.

(a) Higher Duty for Document Submission:
According to the former Civil Procedure Law, one party could request the other party to submit only a limited range of documents. The Civil Procedure Law has now been amended to impose general obligation of document submission on both parties, whereby each party is required to submit documents unless the requested documents are specifically exempted* in the Law.

*Exemption: The document is exempted from submission if it includes information "relating to technical and trade secrets" or "which is to be held in confidence by an attorney at law or a patent attorney."

(b) Introduction of Direct Interrogatories:
According to the amended Civil Procedure Law, each party may make inquiries directly to the other without routing through the court. This amendment is expected to enable either party to make quicker access to the necessary information. However, the amended Civil Procedure Law provides no sanction against the party refusing to reply.
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(2) Proof of Infringement

(a) Document Submission Order for proof of Infringement (revised 1999, effective as of January 1, 2000):

To facilitate the proof of patent infringement, the Patent Law has been amended to empower the court to order either party, at the request of the other party, to submit a document needed for the proof of infringement. However, the party holding such a document may refuse its submission if there is a reasonable ground for refusal. (Patent Law, Section 105(1))

(b) In-camera Procedures to be Followed for Refusing Court's Order for Document Submission (revised 1999, effective as of January 1, 2000):

In case where a party ordered to submit a document for the proof of infringement refuses to do so, the court may make the party submit a document needed for judging if there is a reasonable ground for refusal. No one can request the disclosure of the document submitted for this purpose.

If any party does not obey the court's order to produce such document, the court may acknowledge (1) "the other party's assertion as to the document to be true," or (2) "the other party's assertion as to the fact to be true" if it is extremely difficult to prove by any other evidence.

Though submission of documents may be refuse for reasons of trade secrets, it is expected that an appropriate judgment be made by the court through the in-camera procedures.

(c) Defendant's Obligation for Clarification of Acts to Deny Alleged Infringement (revised 1999, effective as of January 1, 2000):

According the amended Patent Law, if a patentee alleges a specific product or process as constituting an infringement, the other party will have to disclose its own acts for denial of the infringement with respect to the alleged product of process unless there is a reasonable ground for refusing to do so.(Section 104bis)

Before amendment, the plaintiff under obligation to identify the defendant's acts for proof of infringement (of a product or process patent) often needed much time and/or found it impossible to point out what specifically constitutes an infringement. The new provision of Section 104bis is expected to substantially reduce the plaintiff's burden of proof in identifying the allegedly infringing act.

(3) Proof of Damages Suffered by Patentee

Article 709 of the Civil Code stipulates that any infringer should compensate for the damages caused by an infringement. Such compensation is made only if there are (1) an infringement, (2) an intent or negligence of the infringer, (3) damages suffered by the patentee, and (4) a causal relationship between the infringement and the damages.

In view of difficulty of proof as to the damages, the former Patent Law provides that "the profits earned by the infringer is presumed to be the damages suffered by the patentee," or the patentee may seek to recover at least "the amount which is normally received for the working of a patented invention." However, because of the difficulty of proving the causal relation, namely the requirement (4) above, there were many cases in which the patentee could recover only the amount equivalent to the normal royalties for the licensing of the patent.

In view of this situation, the following amendments were made in 1998 and 1999:

(a) The word "normally" was deleted from the "amount which is normally received for the working of a patented invention" (revised 1998, effective as of January 1, 1999):

As a result, it is possible to prevent the recoverable amount from being unjustifiably low due to the interpretation of the word "normally."

(b) Simplified Calculation of Damages (revised 1998, effective as of January 1, 1999):

Under Section 102(1) of the amended Patent Law, the patentee may request compensation for the damages determined according to the following equation.

Damages = (number of infringing products sold) x

Under this new provision, the patentee has only to prove the number of infringing products sold by the infringer and the unit profit. Therefore, the patentee's burden of proof is significantly lessened especially when the patented invention is worked by the patentee itself. The burden of proof is imposed on the defendant for requesting any reduction from the damages determined as above. Thus, the burden of proof is equally shared by the plaintiff and the defendant.

(c) Appraiser Appointed by Court (revised 1999, effective as of January 1, 2000):

Under Section 105bis, the court may appoint an appraiser for evaluating any matters necessary for calculation of the damages at the request of either party. The parties have to provide necessary information to the appraiser.

There were some litigation cases where the court had an appraiser calculate the profits and/or damages, but the parties had no obligation to cooperate with the appraiser. However, under the new provision, it is obligatory for the parties to give the information which the appraiser deems necessary, thereby realizing more accurate determination of the damages.

(d) Determination of Reasonable Damages by Court (revised 1999, effective as of January 1, 2000):

Under new Section 105tert, when it is extremely difficult to prove the damages in a litigation where infringement is acknowledged, the court may award reasonable damages on the basis of the hearings and evidences as a whole.


2. Severer Penalties for Infringement

Criminal penalties are stricter for patent infringement, as briefly described below. In particular, fines for a corporate infringer are markedly raised. The heavier penalties are expected to provide an improved deterrence against patent infringement.

(1) Initiation of Public Prosecution without Lodgment of Complaint against Patent Infringement (revised 1998, effective as of January 1, 1999):

Before the amendment of the Patent Law in 1998, public prosecution could be initiated only upon lodgment of a complaint.(Section 196(2) now abandoned)

Such a restriction for the initiation of public prosecution has been removed in order to more effectively deter patent infringement.

(2) Heavier Fines for Corporate Infringer (revised 1998, effective as of January 1, 1999):

When an officer or employee of a corporation commits a patent infringement in business of the corporation, the corporation itself may also be held liable. The upper limit for the fines imposed on the corporation has been raised to 150 million yen from current 5 million yen.

(3) Heavier Fines Imposed on Cooperation for Fraudulent Conducts against Patent Office or for False Patent Marking (revised 1999, effective as of January 1, 2000):

When an officer or employee of a corporation obtains a patent, a patent term extension, a decision in an opposition case or a decision in a trial case through fraudulent conducts, the corporation may also be held liable. The same also applies to false patent marking. The upper limit for the fines imposed on the corporation in such a case will be raised to 100 million yen from current 3 million yen.

3. Other Improvements for Stronger Patent Protection

(1) Improvements in Patent Term Extension (revised 1999, effective as of January 1, 2000):

Currently, the following requirements must be met for obtaining a patent term extension.

(a) The period in which the patentee cannot exploit the patented invention due to the need for governmental approval for safety confirmation etc. has to be 2 years or more.

(b) An application for extension must be filed at least 6 months prior to the expiration of the patent.

These two requirements will be deleted. Thus, a patent term extension may be obtained even if the unexploitable period is less than 2 years, provided that an application for such an extension is filed prior to the expiration of tha patent.

(2) Closer Communication between the Court and the Patent Office (revised 1999, effective as of January 1, 2000)

The court should inform the Patent Office as to the filing and termination of an in fringement suit. On the other hand, the Patent Office should inform the relevant court of any trial filed against the patent involved in the litigation, the decision in the trial, or withdrawal of the trial damand. (Patent Law, Sections 168(3),(4)).

This amendment is expected to result in a timely decision for avoiding such a situation that the court awards damages in an infringement litigation of a patent which is later invalidated by the Patent Office.

(3) Improvements of the so-called "Hantei" Procedures Calling for Non-binding Official Opinion of the Patent Office as to the Scope of Patented Invention (revised 1999, effective as of January 1, 2000)

A patentee or an interested third party may seek for non-binding official opinion of the Patent Office as to the scope of the patented invention. This administrative action made by the Patent Office is called "Hantei".

Since a "Hantei" opinion is made by three trial examiners who are technically experienced, it is considered reasonably reliable. For further enhancing utility and reliability of the "Hantei" procedures, the following features will be newly introduced.

(a) The inspection of evidence will be performed in accordance with the relevant provisions of the Civil Procedure Law.

(b) The court may request the Patent Office to issue a "Hantei" opinion if necessary.



<2> Early Grant and Protection of Patent

1.Shorter Period for Requesting Examination (revised 1999, effective as of October 1, 2001):

The period for filing a request for examination will be shortened to 3 years (currently 7 years) as counted from the filing date. The period in which substantive examination may be requested is an uncertain period where a third party may not know the subsequent fate of the application with a possibility for amendments of the claims as published. Consequently, anyone making a decision on new research and development projects or business investments would have to run a risk. This has been one of the discouraging factors in making research, development and investment.

Statistically (for applications filed in 1990), substantive examination was requested for 48% of all patent applications, and 51% of the requests was made in the last 2 years of the 7-year period. This means that many applications (about 1/4 of all applications) were held uncertain or unstable for at least 5 years from the filing date.

The shortened period for requesting examination will correspondingly shorten the uncertain period while realizing a quicker grant of a patent.

2.Early Laying-open of Application (revised 1999, effective as of January 1, 2000):

The applicant of a patent application may request that the application be laid open even if 18 months has not lapsed from the filing date (or the earliest priority date). The following advantages may be expected from the early laying-open.

(1) Earlier establishment of provisional protection (for demanding a compensation for the unauthorized exploitation of the claimed invention as laid-open), which is enforceable after grant.

(2) Earlier establishment of prior application status prevailing over later-filed applications directed to the same invention on the basis of the whole content approach.

(3) Earlier disclosure of invention for defensive purposes.
The applicant of an international application can enjoy the earlier provisional protection for demanding a compensation only if a Japanese translation of the international application is published.

3. Improved Treatment of Prior Application Status (revised 1998, effective as of January 1, 1999):

Before the amendments of the Patent Law in 1998, a prior-filed application was accorded a "prior application status" prevailing over a later-filed application with a double-patenting relationship even if the prior-filed application was later rejected decisively or abandoned. According to Section 39(5) of the amended Patent Law, by contrast, if a patent application is finally rejected or abandoned, it loses its prior application status prevailing over later-filed applications. This change eliminates the irregular situation where an application has a prior application status even without disclosure of its content to the public if it is finally rejected or abandoned before its laying-open.

Consequently, an applicant should consider requesting early laying-open of the application to avoid final rejection before it is compulsorily laid-open. If the application is rejected before the laying-open, it cannot be cited against later applications directed to the same invention.

4. Facilitation of Trial Procedures before the Patent Office

(1) Expedition of Invalidation Trials (revised 1998, effective as of January 1, 1999):

Before the revisions of the Patent Law in 1998, an amendment of grounds for invalidation, including submission of new grounds, was unlimitedly allowed until the parties were notified of the termination of the trial. This often caused a delay of the trial prosecution, resulting in delayed issuance of a decision.

Under the 1998 revisions, it is no longer permitted to amend the gist of grounds for invalidation specified at the time of filing a trial, thereby expediting the trial prosecution.

(2) Appointment of Trial Secretary (revised 1999, effective as of January 1, 2000):

A new provision is introduced to empower the Commissioner of the Patent Office to appoint, besides the Board of Trial, a "trial secretary" in a trial case. (Section 144bis) The trial secretary is responsible for matters concerning notarial acts, such as preparation of records.

The purpose of this new provision is (1) to accelerate oral hearings through the strengthened notarial function for shortening the time up to the decision, and (2) to speed up the trial procedure by reducing the work load of the trial examiners, thereby enabling them to concentrate on the trial proceedings. The responsibilities of the trial secretary include (1) preparation of records, (2) jobs relating to serving notices and (3) other jobs as ordered by the trial examiner-in-chief.

A similar provision has been also introduced with respect to the post-grant opposition procedures.


5. Change of Requirements in Entering Amendment during Opposition Procedures and Invalidation Trials (revised 1999, effective as of January 1, 2000):

In a post-grant opposition and an invalidation trial, the patentee may amend the specification and the drawings at the time of responding to an Official Action. Under the current Patent Law, an amendment may be entered only when the invention after the amendment is patentably defined. Therefore, the Examiners in charge must first consider whether or not the amendment should be entered in view of this requirement.

However, the above requirement for entry of the amendment actually coincides with the grounds for opposition or invalidation. Thus, according to the revised Patent Law, the amendment may be entered even if the claimed invention as amended lacks patentabillity, but the patent will be canceled or invalidated for lack of patentability.


<3> Cost Reduction in Obtaining and Maintaining Patents

1. Decrease of Annuities for Maintaining Patent

(1) Leveling of Annuities (revised 1998, effective as of July 1, 1998):

The annuities for the 10th and any subsequent years have been leveled for a given number of patented claims. This has realized a considerable decrease of fees for maintaining the patent.

(2) Further Decrease of Annuities (revised 1999, effective as of June 1, 1999):

In addition to the above leveling, the annuities for additional claims (other than the first claim) have been decreased.

2. Decrease of Fees for Requesting Examination (revised 1999, effective as of June 1, 1999):

Further, the fees for requesting examination with respect to additional claims (other than the first claim) have also been decreased/

3. Broadening of Entities Entitled to Exemption from Fee Payment etc. (revised 1999, effective as of January 1, 2000)

Under the current Patent Law, only inventors or their heirs who cannot afford to pay annuities or examination fees may be entitled to decreased fee payment, deferred fee payment or fee payment exemption, subject to approval of the Commissioner of the Patent Office. The revised Patent Law broadens the scope of entitled entities to include legal entities such as small business concerns.

<4> Simplification of Procedures

1. Exemption from Submission of Priority Documents under Paris Convention (revised 1998, effective as of January 1, 1999):

In accordance with the discussion of three patent offices (Japan, U.S.A. and EPO), the provision regarding the submission of the priority documents was revised. An applicant claiming priority under the Paris Convention is not required to submit the priority documents, provided that the Japanese Patent Office can exchange priority data through electronic means with the office with which the basic home application was filed.
At present, this exemption applies only to an application claiming priority based on an European Patent application. In this case, the applicant needs only to make the priority claim at the time of filing the application and later specify the application number of the basic home application within 16 months from the priority date.

2.Exemption from Document Submission at the time of Converting or Dividing Application (revised 1999, effective as of January 1, 2000):

Presently, when converting or dividing an application, the applicant is required to re-submit the priority documents and/or the documents for supporting the applicant's entitlement to exception to the loss of novelty at the time of the conversion or division. According to the revised Patent Law, these documents will no longer be required.


<5> Other Revisions for Adjustment

1. Change in the Definition of Novelty (revised 1999, effective as of January 1, 2000):

In view of the present situation where much information is globally available not only through printed publications but also otherwise, Section 29(1) of the Patent Law is amended to include "publicly known or used abroad" as a new ground for the loss of novelty. In whole, Section 29(1) provides that novelty is lost if the claimed invention is:

(1) publicly known in Japan or abroad;
(2) publicly used in Japan or abroad;
(3) described in a printed publication distributed or become publicly available through electric telecommunications in Japan or abroad.

2. Broader Exception to Loss of Novelty (revised 1999, effective as of January 1, 2000):

The revised Patent Law provides for a broader scope of exception to the loss of novelty. For example, an invention disclosed in a printing or at a technical conference will not be considered to have lost novelty if a patent application is filed for the disclosed invention is filled within 6 months from the date of disclosure.

In practice, the invention for which exception to the loss of novelty is claimed in an application may not be exactly the same as the previously disclosed invention. Thus, for encouraging research and development, exception to the loss of novelty is also applied to an invention is obvious from the disclosed invention. Therefore, Section 29(2) (provision for lack of inventiveness step) of the Patent Law will not be applied to such an invention.

3. Treatment of Inventions Disclosed through Internet (revised 1999, effective as of January 1, 2000):

Since a large quantity of information are available through Internet at the present time, it is confirmed that the invention disclosed through Internet will be treated in the same was as that disclosed in a printed publication.

Specifically, Section 29 of the Patent Law is amended to read:
"an invention which is described in a distributed publication or become available to the public through electric telecommunications"

Similarly, Section 30 of Patent Law regarding exception to the loss of novelty is amended to read:

"published in a distributed publication or published through electric telecommunications."