On May 20 2021, it was reported that FAST RETAILING CO., LTD., which operates UNIQLO, lost a patent case against an IT company Asterisk Inc. Asterisk owns a patent (JP6469758) for technology of reading data from RFID tags attached to the products, which is used in self-checkout machines. Then, they required Fast Retailing to pay license fees for the self-checkout machines used at UNIQLO. However, reportedly, Fast Retailing requested Asterisk to license it for zero yen, because this patent should be invalidated.

Asterisk filed a motion with the Tokyo District Court against Fast Retailing on September 24 2019, seeking a provisional injunction against patent infringement. However, the IP High Court ruling reported this time is not for the injunction case. This is for an invalidation trial that Fast Retailing filed with the Japan Patent Office in May 2019 to challenge the validity of the patent in question. The Japan Patent Office (JPO) issued a decision that part of the patent should be invalidated, but the Intellectual Property High Court overturned the decision and ruled that the patent in question should be valid. Now, Asterisk can finally start discussing patent infringement with Fast Retailing.

Terrible situation for SMEs with poor financial resources

Not only in this dispute, but whenever a patent holder demands a license fee for a patent, the other party will almost always claim that the patent is invalid. After spending a lot of money to obtain a patent through the examination by the patent office, when it comes time to monetize the patent, the patent holder has to argue the validity of the patent.

This procedure takes time. In this dispute, it took two years for the patent to be valid, after Fast Retailing filed an invalidation trial before the patent office in May 2019. It also costs money for this procedure. I am not going to support patents that should not have been granted. However, I just think such unstable rights are too much for patent holders, especially SMEs who do not have enough money.

There is a mechanism like litigation financing. However, this mechanism does not work unless the amount of damages allowed is high to some extent. Japan has been discussing how to allow higher damages to be awarded. However, unless damages beyond the actual damages are granted, neither the patent holder nor the funder can be the winner.

There may be a solution to help the cash-strapped SMEs by using public funds (i.e. our taxes). If we are going to solve this problem in a capitalistic way instead of using taxes, we may have to provide an environment where funders can earn money.

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