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Slowly changing Japan’s IP dispute resolution system

We Japanese often say “お変わりありませんか?(okawari-arimasenka?)” that means, in English, “Nothing has happened (or everything remains unchanged)?” to someone whom we meet after a long interval. No change is a good thing in Japanese culture. I’m just wondering if we can change such a greeting to something by which we can expect or accelerate change.

JPO commissioner Naoko Munakata mentioned the necessity of improvement of Japanese IP litigation system and demonstrated the high level of interest, in an opening speech for Global IP Strategy Forum 2019 which was held on January 28 2019 in Tokyo.

However, I have seen a difference of opinion between SMEs and large enterprises,  a conservative court, and also surprisingly witnessed the tension between JPO and industry groups of large enterprises, at the advisory committee. So, we are in no situation to expect impressive outcomes immediately. On January 25, the government published a report on the discussion thus far among its members to invite public opinion.

Inspection procedure is likely to be introduced. In order to facilitate evidence gathering to prove patent infringement especially for manufacturing methods, BtoB products, software etc., the court can issue the inspection order in response to a patent holder’s motion, by which neutral experts inspect the facility of the alleged infringer to gather necessary materials and make a report. It is allowed to file the motion only after filing a suit, to prevent abuse of this procedure and secret leak.

Regarding damage calculation, compensation more than actual damages (e.g. punitive compensation, taking away all of profit) has been discussed, but faced many opposition. After all, it was decided to continue further discussion. However, provisions relating to presumed damages is likely to be revised so that damages is calculated a little higher than at present.

The Japanese Patent Law has three provisions for presumed damages; (1) lost profits that a patent holder could have sold if there had been no infringement (Article 102 (1)), (2) the profit of the infringer (Article 102 (2)), and (3) equivalent to license fee (Article 102 (3)). One of the noteworthy things is that the provision (1) has a limitation that is “within the limits of an amount proportionate to the ability of the patent holder to work the patented invention”, by which the presumed damages is deducted. In addition, for the deducted amount, the provision (3) has not been practically applied by the court, thus the patent holder cannot receive an amount equivalent to a license fee. Considering this issue, the patent law will be amended to stipulate explicitly that the provision (1) can be applied in conjunction with the provision (3).

The following topics were also discussed, but decided to continue further discussion.

  • Two-step proceedings that separates infringement proceedings and damages proceedings, to realize a rapid injunction.
  • Shifting the burden of attorneys’ fees to reduce the cost of SMEs

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