Protecting intellectual property rights

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Eiichi Fukushima and Takashi Michishita
Asahi Koma Law Offices, Tokyo

This article provides a brief explanation of patents, trademark rights, copyrights and protection from unfair competition (passing-off) and intellectual property dispute resolution in Japan.

Patents

The Patent Law of Japan (the Patent Law) offers protection for inventions in such fields as mechanical engineering, chemical engineering, electronics, biotechnology, computer programs, business methods, new varieties of plants and microorganisms and animals with particular characteristics.

A patent is available only for such invention that satisfies the standards of industrial applicability, novelty and inventive step (the inventive step standard denies patentability if, at the time of filing the patent application, the invention could have easily been invented from prior art by a party having ordinary skill in the pertinent art). In addition, the invention cannot be identical to any invention described in any application that had been filed prior to the applications for the patent and disclosed in the official Patent Gazette after the application for the patent.

The inventor or any party who acquired the rights to patent the invention from the inventor or their successor may file a patent application for the invention.

The Japan Patent Office (JPO) examines applications for patents on a first-to-file basis. Companies and individuals of a PCT signatory country may apply for a Japanese patent in accordance with the PCT procedure. Further, foreign companies or individuals that have filed a patent application in one or more Paris Convention signatory countries other than Japan may enjoy the benefit of the first filing date in any of the countries for 12 months from the date with regard to the application for a Japanese patent.

Examination of patentability usually takes one to two years (25 months was the average in 2003). A registered patent can be subject to a motion for invalidation trial, which may be filed by any party with the JPO on any of the invalidation grounds stipulated under the Patent Law.

The term of a patent is generally 20 years from the date of application.

A patent owner may grant a licence to third parties. A patent licence is generally classified into three categories, namely: non-exclusive licence (tsujou-jisshiken); non-registered exclusive licence (dokusenteki-tsujou-jisshiken); and registered exclusive licence (senyou-jisshiken). A registered exclusive licensee may bring a lawsuit against infringement of the patent, while non-exclusive/non-registered exclusive licensees may not.

If a party commercially exploits another party’s patent without the authorisation of the patent owner, that party is liable for direct infringement of the patent. In addition to direct infringement, the Patent Law provides for four types of acts that constitute indirect infringement.

In determining the infringement, the Japanese court applies the doctrine of equivalents. The doctrine of equivalents was defined by the Supreme Court in the Ball Spline case (Supreme Court Decision: 24th February 1998). The Supreme Court ruled that even if the patented claim is different from the allegedly infringing product in certain portion, the product still infringes the patent if: (i) the portion is not an essential part of the patented invention; (ii) the purpose of the invention may be achieved and the same function and results are obtained even if the portion is replaced by the corresponding element of the allegedly infringing product; (iii) the replacement would have been easily conceived by a party having ordinary skill in the pertinent art at the time that the allegedly infringing product was manufactured; (iv) the allegedly infringing product is not identical to any art publicly known at the time of filing for the patent and could not have easily been conceived by a party having ordinary skill in the pertinent art at the time of filing for the patent; and (v) there are no such special circumstances such as the allegedly infringing product falling within the category that was intentionally excluded from the scope of the claim in the course of prosecution.

It is generally considered that the burden of proof with respect to the above (i), (ii) and (iii) is on the patent owner, while the remainder rest with the allegedly infringing party.

Among various defences available against a claim of patent infringement, patent invalidity is the most fundamental defence in patent litigation. In April 2000, the Supreme Court ruled in the Kilby Patent case that if the patent was apparently invalid any exercise of the patent would be an abuse of right and would not be permissible (Supreme Court Decision: 11th April 2000). In current practice, lower courts follow the ruling and even more broadly permit defendants to raise patent invalidity defences in patent litigation.

If a Japanese court finds patent infringement, the patent owner is entitled to: (i) injunctive relief; (ii) damages; and/or (iii) measures to restore its business reputation. The amount of damages is generally determined by the greatest of: (i) loss of profits suffered by the patent owner; (ii) the amount of profits that the infringing party obtained from the infringing activities; or (iii) the ordinary licence royalty for the infringing use of the patent.

Trademark rights

Under the Trademark Law of Japan (the Trademark Law), trademark rights do not come into existence by use of a trademark; rather, they are granted by the JPO to applicants for trademark registration upon completion of the registration process.

Trademark registration is generally available for those marks of letters, figures, symbols or three-dimensional shapes or any combination among them and/or any colours, which are used with regard to goods or services.

Within 18 months from the date of application for trademark registration, the JPO registers the trademark, if it finds that the trademark satisfies the requirements that it: (i) is used or intended to be used by the applicant; (ii) is not similar to another party’s registered trademark and is not to be used for goods or services designated in such other party’s registration; (iii) does not fall within one of the categories prescribed in the Trademark Law that are considered to cause confusion as to the origin of the goods or services, to lack distinctiveness or to be misdescriptive; and (iv) is not repugnant to public policy.

Foreign companies may apply for trademark registration in Japan. Since Japan is a signatory to the Paris Convention, a six-month priority period is available for applicants who have filed applications for the subject trademarks in one of the signatory countries. Further, since March 2000, the JPO has accepted international applications for trademark registration in accordance with the Madrid Protocol.

The term of a trademark right is 10 years from the date of registration. It may be renewed any number of times by filing an application for renewal within the six-month period before the expiry of the previous term.

The trademark right holder enjoys an exclusive right to use the registered trademark on the goods or services designated in the registration in Japan. A trademark licence is generally classified into the three categories applied to patent licences.

Any unauthorised use by a third party of a registered trademark – or any trademark similar to the registered trademark – with regard to the designated goods or services or any goods or services similar to those, constitutes an infringement of trademark rights.

A trademark right holder may claim injunctive relief and damages against infringement. The amount of damages is generally determined by the greatest of: (i) loss of profits suffered by the trademark right holder; (ii) the amount of profits that the infringing party obtained from the infringing use; or (iii) the ordinary licence royalty for the infringing use of the trademark.

Copyrights

The Copyright Law of Japan (the Copyright Law) extends its protection to literary, scientific, artistic or musical works, including computer programmes and databases. The Copyright Law protects not only the expression of a work, but also any idea underlying in the work.

In order to qualify for protection under the Copyright Law, a work must have creativity. It is generally understood that the required level of creativity is higher than those levels required in the US and most of the EU member states. The Copyright Law does not require any formalities such as publication or registration of a work for protection.

Since Japan is a signatory to the Berne Convention, works created by nationals of any Berne Convention signatory country and works first published in such countries qualify for the same protection as a work of a Japanese national enjoys under the Copyright Law.

The authorship of a work generally belongs to the party who created the work. Unless otherwise agreed between the employer and its employee, the authorship of a work that is created on the initiative of the employer by the employee in the course of his/her duties, and is published under the name of the employer, belongs to the employer (the second criterion is not required for a work of computer program).

The Copyright Law provides authors of copyrightable works with moral rights. Moral rights are inherent to the author and consist of (i) the right to decide publication of the work; (ii) the right to determine indication of the author’s name; and (iii) the right to preserve the integrity of the work.

By virtue of their copyrights, copyright holders may enjoy exclusive right to commercially exploit the copyrightable works. Copyright holders may assign, license and/or pledge their copyrights.

As a general rule, the term of copyrights is for the life of the author plus 50 years. For works authored by a company, copyrights last for 50 years after publication (if not published within 50 years from the creation, the protection terminates upon expiry of the 50-year period from the creation).

The copyright holder may claim injunctive relief and damages against an infringing party. The damages are generally determined by the greater of: (i) the profits that the infringing party obtains from the infringing activities; or (ii) the ordinary licence fee that the infringing party would pay to the copyright holder if the infringing party used the copyright work under a licence from the copyright holder.

The Copyright Law provides for neighbouring rights. These offer protection to performers with regard to, for example, recording, broadcasting and transmission of their performance; to producers of phonograms with regard to, for example, reproduction, transmission and lease of their phonograms; to broadcasting organisations with regard to re-broadcasting and wire diffusion of their broadcasts; and to wire diffusion organisations with regard to broadcasting and re-diffusion by wire of their wire diffusions. The term of neighbouring rights protection is generally 50 years from the date of fixation.

Protection from unfair competition (passing-off)

The Unfair Competition Prevention Law provides for 15 types of unfair competition, which include three types of passing-off.

The first type is the act of using an indication identical or similar to another party’s widely recognised indication of goods or business, so as to cause confusion with such party’s goods or business. The second type is the act of a party using an indication identical or similar to another party’s well-known indication of goods or business as its own indication. While a locally known indication may qualify as widely recognised, only a nationally famous indication may qualify as well known. Owners of famous brand names and characters defeat counterfeit businesses and diluting activities by asserting that they fall under these first and second types of passing-off. The third type is dealing of dead copy products.

For these three types of passing-off, the Unfair Competition Prevention Law provides the remedies of injunctive relief, damages and measures to restore the business reputation. The amount of damages is generally determined by the greater of the profit generated by the passing-off or the ordinary licence fee.

Dispute resolution

With regard to the intellectual property rights discussed above, the right holder may bring two types of lawsuits, either independently or simultaneously: a primary suit (honso) seeking both permanent injunction and damages, and a petition for preliminary injunction (karishobun) seeking preliminary injunction only.

Except for the limited cases where the right holder evidences a present and immediate danger of great losses or damages, the court usually examines preliminary injunction cases and the corresponding primary suit at the same hearings and, if it finds any infringement, it usually grants a preliminary injunction subject to the right holder depositing a bond for a certain amount and commences examination on the amount of damages in the primary suit proceedings. No juries are involved in any stage of court proceedings. The primary suit usually takes one to two years to come to a conclusion.

The Japanese courts have a strong tendency to rely upon written documentation submitted by the parties, while allowing parties to examine witnesses at hearings. Since the Code of Civil Procedure of Japan does not provide strong discovery measures as in the United States, a party may have difficulties in causing other parties to produce evidence in their possession for the court and in many cases can only produce evidence in its possession.

The lawsuit is usually first brought before a Tokyo or Osaka district court, which have exclusive jurisdiction over litigation on patent, utility model and program copyright and non-exclusive jurisdiction over litigation on trademark, design, copyright excluding program copyright, neighbouring rights, publishing rights and unfair competition. If the decision rendered in a primary suit before the district court is not satisfactory, it is possible to file an appeal before a High Court. The proceedings before a High Court are basically a continuation of what has taken place before the district court. An appeal from the High Court lies with the Supreme Court. However, the grounds on which the Supreme Court will hear a case are strictly limited to such grounds as a violation of the Constitution or inconsistency with the precedents of the Supreme Court.

If the parties to a dispute concerning intellectual property rights agree, the dispute may be brought before the Japan Commercial Arbitration Association, the International Chamber of Commerce Japan or the Japan Intellectual Property Arbitration Centre. Each of these has its own arbitration rules and fee schedules.