Intellectual Property Information

Expedited Litigation Situation in Japan

14 MAY 2002
Yoshikazu Tani

In Japan, we have seen lots of changes including the Patent Law, the Examination Guidelines, the infringement litigation practices and so on in these five years. These changes are toward pro patent.

According to the revision of the Civil Procedure Law in 1997, the burden of proving infringement is partially shifted to defendant, even though the burden is basically on the side of the plaintiff. In the past, the plaintiff should still prove the infringement, even though the defendant merely negate infringement in response to the assertion of the patent by the plaintiff. Thus, it was very difficult or almost impossible to prove infringement by the plaintiff itself. Because of this drawback, the Civil Procedure Law was revised, so that it is not sufficient for the defendant to just say "no infringement". If the defendant would like to say so, the defendant should show evidences of and clear reason for non-infringement. Otherwise, the court will decide in favor of the plaintiff. This is an important revision toward pro patent climate, since we do not have a discovery system. According to the current Patent Law, an amount of damage is higher than in the past. In the past, minimum royalty was awarded. Now, reasonable royalty or lost profit = (amount of product by infringer)x(unit profit by patentee) is widely applied. Quite recently, in the patent infringement case (slot machine), 57M USD (7.4B Yen) was awarded.

The courts are instructed by the Supreme Court to expedite their proceedings(1-2 years). Average pendency was 21.6 months in 2000 and 18.3 months in 2001. Preliminary injunction is sometimes decided even within 3-6 months. Contrary to the U.S. practice, in the preliminary injunction case, the judges do not review the validity issue precisely and rather take it secondary unless they find serious reasons for validity because of the presumption of validity. Expedited proceedings are instructed by the Supreme Court and thus come first. The Supreme Court and the JPO exchange information on patent infringement litigations and invalidation trials. In the future, all the IP cases will be converged to the Tokyo and Osaka district courts.

Validity issue was not reviewed by a court in the past, so that the court used to stay the case until the judgment on the validity by the JPO trial board became final and conclusive. Since the Supreme Court rendered the decision in April 2000, a court can review validity issues in a patent infringement litigation, if the existence of a reason for invalidation is evident to a court (Fujitsu v. Texas Instruments). The result of the review is only effective to this particular case. In order to invalidate the patent, invalidation trial should be demanded before the JPO.

Since the Supreme Court rendered the decision on doctrine of equivalents (Ball-Spline Bearing Case) in February, 1998, it has become popular among various courts, especially the Tokyo and Osaka District Courts, to apply the doctrine of equivalents. On the other hand, file wrapper estoppel is also applicable as counter allegation. According to the new revision of the Patent Law which passed the Diet in April, 2002, the indirect infringement will be more flexibly applied. In the past, indirect infringement is only asserted in the case of exclusive or designated products. Other than staple articles, we will have more room for relaxed indirect infringement issues.

The number of IP infringement litigation cases disposed in 2000 was 740, 50% of which were processed by the Tokyo District Court which has the three divisions exclusively for IP cases and has fifteen judges and seven judicial research officials having technical backgrounds. 30% of the total IP cases disposed by the Tokyo District Court were patent cases.

According to the statistics on the website of the Supreme Court (http://courtdomino2.courts.go.jp/tokei_misc.nsf) , the number of cases disposed in 2000 by all the district courts was 740 and an average pendency from taking an action to the final disposal was 21.6 months. In 2001, the 717 cases were disposed and the pendency period was even shortened to 18.3 months (15.0 months by the Tokyo District Court and 18.5 months by the Osaka District Court, compared to 26.5 months by the remaining district courts). Further, an average pendency for a general civil litigation was 19.7 months in 2000. Please see Table 1*(See Appendix). Table 2*(See Appendix) shows the details of new cases accepted each year in comparison to the number of cases disposed. In 2000, the percentages of various types of cases follow:

Patent:29%, Utility Model:10%, Design:6%, TM:15%, Copyright:16%,
Unfair Competition Prevention Law:23%, Misc.:1%

Table 3*(See Appendix) shows the percentages of the cases received by the Tokyo and Osaka District Courts. As from 1998, in the case of patent, utility model, mask layout or computer program copyright disputes, a lawsuit can be filed before the Tokyo District Court in the case of the jurisdictions in the eastern part of Japan (Nagoya, Tokyo, Sendai, and Sapporo jurisdictions) and before the Osaka District Court in the case of the jurisdictions in the western part of Japan (Osaka, Hiroshima, Takamatsu and Fukuoka jurisdictions), in addition to the regular jurisdiction district courts. As a result, as many as 70% cases have been converged upon both the Tokyo and Osaka District Courts. Table 4*(See Appendix) shows further details of the convergence ratios of the number of the entire IP litigation cases and the number of the new patent and utility model litigation cases received by the Tokyo and Osaka District Courts to the respective numbers of the litigation cases received by all the District Courts.

Further, the Supreme Court is considering that the Tokyo and Osaka District Courts will have the exclusive jurisdiction of the IP cases in the future, hopefully within 1-2 years in order to further shorten the pendency to less than 12 months, after the Civil Procedure Law will be revised.

The Tokyo High Court has an exclusive jurisdiction for appeal cases against appeal/trial board decisions from the Japanese Patent Office, and also is an appeal court for civil litigations including patent infringement litigations and declaratory judgments.

Recently, the number of the appeal cases from the JPO (invalidation trial, appeal against final rejection etc.) accepted by the Tokyo High Court is increasing. In 2001, 575 cases were accepted, compared to 200 cases in 1997, 390 cases in 1998, 420 cases in 1999 and 480 cases in 2000. On the other hand, the average pendency from instituting the appeal case to the disposal or judgment was reduced to 12 months from 24 months five years ago. It is, however, still required to shorten the pendency.

The Tokyo High Court deals with most of appeal cases on intellectual property, for example, patent infringement litigation in addition to the appeal cases from the JPO, so that it is expected to reinforce the Tokyo High Court because of its specialty. On February 21, 2002, the Supreme Court decided that the Tokyo High Court should be reinforced in the case of a litigation on intellectual property because of an increased demand. That is, the number of judges is to be increased and the pendency is to be shortened. As the first case, a private patent attorney having technical background was appointed as judicial research official in April, 2002. In the new organization, the number of sections in charge of intellectual property cases was increased from three to four from April, 2002. Besides, the number of judges has been increased to 16 from 12, and 2 judicial research officials who review the technical substances are added to the 11 judicial research officials. So far, all the judicial research officials are the Appeal Examiners of the JPO, except the one from private practice.

Since the establishment of the IP Arbitration Center on April 1, 1998, the court has realized a sense of crisis of judicial system. The Committee on the Study of IP infringement litigation, organized by the judges of the Tokyo District Court proposed a reformation plan as to the court proceedings including scheduled proceedings on December 15, 2000 in order to expedite litigation. The above statistics show the substantial efforts by the judges reflecting the sense of crisis.

According to the new Patent Attorney Law passed the Diet in April, 2002, a benrishi or patent attorney can represent a plaintiff or defendant before the infringement litigation court jointly with a bengoshi or general attorney, after the benrishi completes a training course and passes an examination. This means that the benrishi will take full responsibility for the case jointly with the bengoshi. Since many of benrishis have technical background and understanding, it is expected that the more substantial involvement of the benrishi in the infringement litigation will further aid to expedite the court proceeding. This new system will start in 2003.

Table1