Transcript Patent Litigation in Japan - Law Seminars International

Patent Litigation in Japan
April 7, 2008
Presented by:
David W. Hill
Partner,
Finnegan, Henderson, Farabow,
Garrett & Dunner, LLP
Contents
 Legal
Professionals in Patent Litigation
 Centralization of Patent Cases
 Patent-Related Proceedings
 Collection of Evidence
 Invalidity of Patents
 Computation of Damages
 Conclusion
Bengoshi
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About 20,000 Bengoshi. (About 1,000,000 lawyers in the U.S.)
 Pass National bar examination (about 1,500 in 2006)
– Law schools like those in the U.S. were established in 2004, and the
number of people passing the bar examination is expected to increase
to 3,000 annually by 2010
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Train at Legal Training and Research Institute of the Supreme
Court of Japan (Shiho Kenshujo)
Choose to become a judge, a public prosecutor, or a lawyer.
No technical background required for a Bengoshi to practice in
patent field (Bengoshi may register as a Benrishi without taking
the national examination to become a Benrishi)
Most Bengoshi who practice patent law have no technical
background
Only about 300 Bengoshi are registered as Benrishi
Benrishi
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Benrishi is not required to be an attorney at law
Technical background is not necessary to become a
Benrishi, but most do have technical training
Benrishi handles prosecution of patents, and also
prosecution of trademarks
Benrishi may represent clients directly in actions of
annulment of JPO decisions at the IP High Court
Benrishi may jointly represent clients with Bengoshi in
patent litigation if the Benrishi passes a special additional
examination
In patent litigation or actions to annul JPO decisions,
Bengoshi and Benrishi typically work together
Foreign Lawyers in Japan

Small number of Foreign Lawyers
admitted after World War II – (Junkai-in)
– Allowed to practice Japanese law as any
Bengoshi since 1955 (only 4 remain)

Law 66 passed in 1986 (effective April 1,
1987) allowed registration as Gaikokuho
jimu bengoshi (licensed foreign lawyer)
 Currently 252 licensed Foreign Lawyers in
Japan (April 1, 2007)
Legal Professionals in Patent
Litigation

Establishment of law schools
 At the initiative of the Justice System Reform
Council (established by the Cabinet), Americanstyle graduate-level law schools that emphasize
professional training have been established.
- The number of successful candidates will be increased
from 1,000 to 3,000 by 2010
- By about 2018, the number of legal professionals actively
practicing is expected to increase from 20,000 to 50,000
- 70 to 80 % of law school graduates will pass the national
bar exam (current pass rate is 3%)
- It is expected that the number of lawyers who have
technical backgrounds will increase
Centralization of Patent Cases
The Osaka
District Court
The Tokyo
District Court
Jurisdiction of IP Cases in Japan
Types of Cases
1st Instance
Koso
Appeal
-Patent
TDC
or
ODC
- Exclusive
Jurisdiction
IP High Ct.
District courts
having
jurisdiction
under the
Civil
Procedure
Law
The
Correspon
ding High
Ct.
Infringement
-Utility Model Rights
Infringement
-Software Copyright
Infringement
Copyright
Infringement
-TM Infringement
-Unfair Competition
(including Trade
Secret)
N/A
-Other
- Suit Regarding
Validity of Patent and
TM
N/A
IP High Ct.
JPO
N/A
Jokoku
Appeal
The
Supreme
Ct.
Centralization of Patent Cases

All the patent infringement cases
including the cases at the Osaka District
Court are appealed to the IP High Court.
 140 technical experts (Senmon-iin) assist
Judges in patent infringement cases.
Patent-Related Proceedings

Patent infringement action

Declaration of non-infringement
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Invalidation of patents
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Action for annulment of the trial decision
Patent-Related Proceedings
Court proceedings
Filing
- Complaint
- Evidence
Trial (Preliminary hearing/Hearing)
- Brief
- Evidence
- Examination of witnesses
Judgment or Settlement
Patent-Related Proceedings
Why has the procedure become so fast?
Trial planning
Increase in the number of judges in IP
divisions
Expansion of measures to collect evidence
Nonexistence of thorough discovery
Patent-Related Proceedings
Costs
 Official filing fee
- The plaintiff must pay a certain percentage of the
economic value of the case with revenue stamps as
an official filing fee to the court included with the
complaint
Economic value
Filing fee (District Courts)
$1,000,000
$4,000
$10,000,000
$30,000
Patent-Related Proceedings
Costs
 Attorney’s fee
- The economic value basis fee is more common
than the time charge basis fee
- Economic value basis fee
- Initial retainer is calculated based on the
economic value claimed in the complaint
- Success fee (in the case of winning or favorable
settlement) is calculated based on the economic
value actually obtained
Economic value
Retainer
Success fee
Total fee
$1,000,000
$35,000
$70,000
$105,000
$10,000,000
$230,000
$460,000
$690,000
Collection of Evidence
 Order to produce documents (Bunsho
teisyutsu meirei) - §105 (1) of the 1999 Patent Law
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On the request of a party, the court may order
the other party to produce documents
necessary to prove infringement or to assess
damages caused by the infringement
If the other party has a legitimate reason for
refusing to produce them, the request is denied
Collection of Evidence
 Order to produce documents (Bunsho
teisyutsu meirei)
-
The court may assume that the plaintiff’s
assertions are true, if
1) this order is ignored, and
2) it is especially difficult for the other party
to allege concrete facts relating to the
contents of the document and to prove the
facts in the document by other evidence
Collection of Evidence
Expert opinion
- Examination of an expert in the courtroom is
rarely conducted
- A written expert opinion is usually produced
- If the court orders an expert opinion on the
issue of damages, the other party must
explain the matters necessary for the expert
opinion to be given - §105-2 of the 1999 Patent
Law
Collection of Evidence
Inspection (Kensho)
- If a process patent is at issue and the other
party is unlikely to agree on the accused
process, the court may conduct an inspection
at the defendant’s factory
- If the other party has a legitimate reason for
refusing the inspection, the inspection is not
ordered - §105 (3) of the 1999 Patent Law
Collection of Evidence
In camera procedure
- Decide whether the other party has a
legitimate reason for the refusal of production
of documents or the inspection of the factory
- The court weighs 1) the disadvantages the
owner of the documents would suffer from the
disclosure and 2) the disadvantages the
parties in the case would suffer from the
nondisclosure
Collection of Evidence
In camera procedure
If the court finds that the accused device is
different from the patent,
- Deny the order
- Order the party to produce only a part that
is different from an element of the claim
- Permit limited persons such as plaintiff’s
attorneys or assistants to have access to
the information on the condition that they
promise to keep it secret.
Collection of Evidence
In camera procedure
If the court finds that the accused device is
within the scope of the claim,
- the court will order the defendant to
produce the document
- the defendant does not have a legitimate
reason to refuse to submit such information
related to the infringing device
Invalidity of Patents
Fujitsu v. TI decision (Sup. Ct. 2000)
- The courts that decide infringement of patents
may decide whether it is clear that the patent
is invalid
- If it is clear the patent is invalid, to seek the
injunction and damages based on the patent is
considered as an abuse of right unless there
are special circumstances
Effects of Fujitsu decision
- After this decision, validity of patents has
become one of the major defenses in patent
litigation
Computation of Damages
Computation of damages
 Lost profits based on the number of infringing
products - §102(1) of the 1998 Patent Law
- Multiplying the number of infringing
products sold by the infringer by the profit
per unit the plaintiff would have earned in
the absence of infringing activities up to a
limit not exceeding the ability of the
patentee to supply the products
- If, however, there are any circumstances
that would have prevented the patentee
from selling all or part of the infringing
products, those sales will be deducted.
Computation of Damages
Computation of damages
 Pachinko (Slot machine) patent case (Tokyo Dis.
Ct. 2002) – $60mil
- The purpose of section 102 (1) is to recover the
patentee’s lost opportunities in the market
- “exercising ability” only refers to potential capabilities
- “profit the plaintiff would have earned without the
infringing activities” means not accurately calculated
profit but approximate average profit through the period
during which the sale of the patentee’s products would
be affected by the infringing activities
- “any circumstance that prevents the patentee from
selling part or whole of the sold products” does not
include the infringer’s commercial efforts or the
existence of noninfringing substitutes
Computation of Damages
 Lost profit presumed by infringer’s profits
 License royalty - §102(3) of the 1998 Patent Law
- “A patentee may claim an amount of money
which he would normally be entitled to
receive for the working of the patented
invention, as the amount of damage
suffered by a patentee”
- The word “normally” was deleted
- Under the new provision, courts can
consider such actual situations of the case
as concrete technical value of the patented
invention, business relationship between
the parties, or the profit gained by the
infringer
Computation of Damages
Expert opinion - §105-2 of the 1999 Patent Law
- If the court appoints an expert for the
calculation of the amount of damages, the both
parties must provide the expert with the
necessary information for the expert opinion to
be given
Award of reasonable damages - §105-3 of
the 1999 Patent Law
- The court may determine the reasonable
amount of damages at its discretion based on
the entire tenor of the oral proceedings and the
examination of evidence if the patentee shows
the presence of damages but cannot prove the
amount of the damages because of the nature
of the relevant facts in the case
Conclusion
 Filing a patent infringement suit in Japan has
become a more attractive choice
- Cost effectiveness in patent litigation in Japan
is fairly high
- Predictability or uniformity has been
heightened (recent statistics favor accused
infringer)
 But, if you file a patent-infringement suit in
Japan, thorough preparation before filing is
critical because you do not have enough time
to collect evidence or change your strategy
once you file a suit