Japan: Unexpected Shift Sees Courts Become Increasingly Pro-Patentee

Q |   How can patent owners best enforce their rights in your jurisdiction?

Patent infringement litigation is the most common and effective measure in many circumstances. A patent owner may seek a permanent injunction or damages in litigation.

In some circumstances, strategically combining a preliminary injunction with litigation is a great option to expedite a case.

Q |   Are mediation and arbitration realistic alternatives to litigation?

Mediation and arbitration are not commonly used in Japan. Many patent owners choose litigation over mediation or arbitration, trusting formal court procedures.

Recently, the Tokyo and Osaka district courts started providing arbitration services for IP-related disputes. The services are intended for simple cases and are not suitable for complex patent infringement disputes.

Q |   Who hears patent cases?

A panel of three judges hears a case. One main judge reviews the case, and an experienced chief judge supervises him or her. A court-appointed technical expert may support judges to help them understand the technical aspects of the case as most judges do not have technical backgrounds.

Q |   What level of expertise can litigants expect from courts?

Japanese courts have highly specialised divisions dedicated to IP-related cases. In particular, the chief judge of each division has extensive experience in patent infringement lawsuits.

Q |   Are validity and infringement dealt with together in proceedings?

Japanese courts decide infringement and validity issues together. Parties are expected to raise both infringement and validity arguments at an early stage; however, parties are often allowed to raise an invalidity defence later as the prior art search takes time.

Q |   Who may represent parties engaged in a dispute?

Attorneys-at-law (bengoshi) may represent a party in an infringement lawsuit. A patent attorney (benrishi) who holds a specific certification that is relevant for an infringement lawsuit may represent a party, but only together with an attorney-at-law.

Q |   To what extent is forum selection possible in your jurisdiction?

There is little room for forum selection in Japan. The Tokyo and Osaka district courts have exclusive jurisdiction over first-instance patent-related cases. In some circumstances, patent owners may have the option to choose between those two courts.

The Intellectual Property High Court is the only appellate court for patent-related lawsuits.

Q |   To what extent is pretrial discovery permitted?

Japan does not have discovery proceedings. In some circumstances, a court may grant a document production order; however, this is not always available owing to strict requirements. It is difficult to obtain evidence from an opposing party.

Japan has an inspection procedure that allows a court-appointed expert to inspect the manufacturing plant of an accused infringer; however, a patent owner must first show a certain level of probability of infringement to use this procedure, and this requirement is difficult to meet. The availability of this procedure is limited.

Q |   To what extent is evidence written and oral at proceedings?

Japanese patent litigation particularly focuses on written evidence. Witness testimony is extremely rare in patent infringement cases. Parties are generally expected to submit written declarations instead of witness testimony.

Q |   What role, if any, can expert witnesses play?

In many cases, the parties will retain their own technical expert and submit a written expert declaration. Having an expert helps the parties to persuade the judges regarding technical issues; however, technical arguments that are too detailed are often not helpful. It is important to choose an expert who appears trustworthy to Japanese judges.

Q |   Is the doctrine of equivalents applied by courts in your jurisdiction and, if so, what form does it take?

Five requirements must be satisfied for the doctrine or equivalents to apply:

• the difference between the claim and the accused product does not constitute an essential part of the patented invention;
• the invention can achieve the same purpose and function, even if the distinguishing element is replaced by the technology used in the accused’s product or method;
• a person who is ordinarily skilled in the art could have easily conceived of the accused’s product or method at the time of manufacture of the product;
• the configuration of the patented product was neither publicly known nor easily conceived at the time of the patent application; and
• no special circumstances exist, such as prosecution estoppel.

Q |   Are there problems in enforcing certain types of patent relating to, for example, biotechnology, business methods or software?

The field to which the patent relates does not affect patent enforcement. The patent eligibility requirements in Japan are less strict than those in the United States and the European Union. The only exceptions are SEPs: it is difficult to obtain injunctions based on SEPs, and the damages awarded in cases concerning SEP infringements are also very low.

Q |   To what extent are courts obliged to consider previous cases that have covered issues similar to those pertaining to a dispute?

Japan is not a common law country; however, lower courts usually follow the previous decisions of higher courts. Arguments based on the previous decisions of higher courts are often very persuasive to Japanese judges.

Q |   To what extent are courts willing to consider the way in which the same or similar cases have been dealt with in other jurisdictions? Are decisions from some jurisdictions more persuasive than those from others?

Decisions from the US or European courts on the same dispute may affect the outcome; however, their influence is limited.

Q |   What realistic options are available to defendants seeking to delay a case? How might a plaintiff counter these?

The strategy depends on the judges handling the case. A defendant may delay the litigation by filing a patent validity claim before the Japan Patent Office (JPO). Some judges will wait for the JPO’s decisions, but others will not.

Judges usually allow time extensions owing to the need to translate documents for foreign parties.

If a plaintiff seeks damages together with a permanent injunction, an extra six months is required. A plaintiff in strong need of an early injunction may only seek a permanent injunction first and later file another lawsuit to recover damages.

Q |   Under what circumstances, if any, will a court consider granting a preliminary injunction? How often does this happen?

Obtaining a preliminary injunction is a separate procedure from that for obtaining a permanent injunction, but the procedures are very similar. As judges carefully review both infringement and validity, preliminary injunction proceedings often take more than 10 months. A preliminary injunction should be granted if an accused infringer causes substantial harm to a patent owner by infringing a valid patent.

Q |   What is the realistic time frame to get a decision at first instance from the initiation of proceedings?

If a patent owner seeks both a permanent injunction and damages, the proceedings will usually take around 18 months. If a patent owner seeks only a permanent injunction, the proceedings will take approximately 12 months. If a defendant is a non-Japanese entity, an extra six months will be required owing to service of complaint.

Q |   How much should a litigant budget to take a case through to a decision at first instance?

This varies depending on the case and the law firm. Usually, the total budget will be US$80,000 to US$200,000.

Q |   To what extent are the winning party’s costs recoverable from the losing party?

If a plaintiff wins a case, a court may award reasonable attorneys’ fees as damages. A defendant will not recover its attorneys’ fees even if it wins a case. The court costs paid by the winning party are recoverable from the losing party; however, those costs are often foregone as they are small.

Q |   What remedies are available to a successful plaintiff?

A permanent injunction and damages are available.

Q |   How are damages awards calculated?

Damages are presumed based on:

• the marginal profit of the plaintiff’s product multiplied by the quantity of the infringing products sold by the defendant;
• the marginal profit of the defendant’s product multiplied by the quantity sold by the defendant; or
• reasonable royalties.

The marginal profit of the whole product is presumed as damages even if the technical significance of the patent relates to only part of the product. The defendant may rebut the presumption by proving relevant facts, such as the market difference, the existence of other competing products, its marketing efforts or the existence of other features of the product that the invention does not have.

Q |   Under what circumstances will courts grant permanent injunctions?

A court will grant a permanent injunction as long as it finds that an accused infringer is infringing a valid patent.

Q |   Does the losing party at first instance have an automatic right of appeal?

The losing party always has the option to appeal before the Intellectual Property High Court.

Q |   How long does it typically take for the appellate decision to be handed down?

It takes around six months.

Q |   Is it possible to take cases beyond the second instance?

A losing party may appeal the appellate court’s decision, although it is rare for the Supreme Court to hear a patent infringement case. The success rate is as low as 1 per cent.

Q |   To what extent do the courts in your jurisdiction have a reputation for being pro-patentee?

In recent years, the Japanese courts have been very pro-patentee. Japan used to be recognised as an anti-patentee jurisdiction, but official statistics indicate that the success rate for patentees has doubled in the past five years.

Q |   Are there forums outside the court system in which it is possible to assert patents in your jurisdiction? If so, under what circumstances might it be appropriate to use them?

A customs suspension to prevent the import of infringing products is available. A panel appointed by customs reviews the case. However, the panel often waits for a court decision, especially in a complex case; therefore, the effectiveness of the customs suspension is often limited for patent owners.

Q |   In what circumstances do courts in your jurisdiction accommodate remote hearings, for example, during pandemic-related lockdowns?

Most hearings can be held remotely as long as the court finds it adequate and both parties agree; however, the final oral hearing should be held in person.

Q |   Are there any other notable issues relating to the enforcement system in your jurisdiction?

Japanese courts have been very pro-patentee in the past few years, which makes Japan an attractive jurisdiction in which to file infringement lawsuits. At the same time, the patent infringement risks are larger, and companies are strongly advised to conduct a thorough risk evaluation when providing their products or services in Japan.