New Annual Report of the Japanese Patent Office

1998







Dr. Shoichi OKUYAMA

Okuyama & Co.











June 1998, the Japanese Patent Office (JPO) published the first JPO Administrative Annual Report (Tokkyo-cho Gyosei Nenji Hokoku Sho) in an entirely new format. The JPO has long published its annual reports as an issue of Patent Office Gazette under the name of the JPO Annual Report (Tokkyocho Nenpo). The previous annual reports were filled with policy statements and analysis of intellectual property issues as well as very impressive arrays of detailed statistics. The only thing that was lacking in those reports was readability and graphical appeal. A lot of text in small fonts and never-ending arrays of raw numbers were in fact intimidating to the casual reader.



The overhauled Annual Report published June 1998 on the JPO Web site(1) consists of a lot of graphics, readable short sentences, and the listing of raw numbers much more tempered. Very clear and specific policy statements fill the book indicating the coming of the pro-patent or pro-intellectual property era in Japan. The Annual Report is divided into two major sections: one on policy and the other concerning statistics. In this article, only the Policy Section(2) will be discussed.



Technological Edges of Japanese Companies



The Annual Report begins with the analysis of advanced technologies in Japan. In this year's issue, the JPO chose the areas of laser technology, biotechnology, asynchronous transfer mode technology, and two-legged walking robots. In addition, using the WIPO and JPO statistics for 1995, it is concluded that Japan is ahead of other countries in the areas of memory devices, engines, and electronics parts, but lags in drugs, biotechnology, and petrochemistry areas. Furthermore, citing a survey report put together by the JPO and published March 1998,(3) it is shown that 41% of Japanese applicants still file patent applications primarily for defensive purposes, with 45% primarily for enjoying monopoly and 10% for licensing technology.



Trademarks



Starting April 1, 1997, three-dimensional marks can be registered. During 1997, the JPO saw 1,500 applications for such marks. It has also become possible to cover more than one class of goods or services in a single application. 13,000 applications were filed using the new scheme covering 51,000 classes in total.



IP Litigations



During past year, a number of important decisions were made by the Japanese courts. The Supreme Court rendered its first doctrine of equivalents decision(4) on February 24, 1998. The court took a very positive stance toward the doctrine and noted that the ease of replacement should be judged using the time of manufacturing infringing products as the temporal reference. Also, the same court rendered BBS parallel import decision on July 1, 1997, finding the international exhaustion of patents premature.

Furthermore, among other decisions mentioned in the Annual Report, the Tokyo District Court used 7% as a reasonable royalty in the so-called "Plaster Cast Material Case."(5) The court awarded damages of 270 million yen (about 2 million US dollars) to the patentee. In a separate case, the same court awarded damages of 162 million yen (about 1.2 million US dollars) as requested by the patentee.(6)



The Annual Report analyzes recent court and appeal board decisions to find a pro-patent shift emerging.



IP Administration



May 1998, the most recent patent and design law amendment was announced and became law. It has been made easier for the patentee to establish the amount of damages he suffered. The maximum penalty for patent infringement has been raised to 150 million yen (about 1.1 million US dollars) from 5 million yen. Also, the annuities for 13th years and on were reduced to the same amounts as that for 10th to 12th years. This reduced annuities already took effect on June 1, 1998. Design protection has been overhauled. Creativity level required for design registration will be raised and the formalities on drawings will be simplified starting January 1, 1999. Also, staring January 1, 2000, it will become possible to file trademark and design applications electronically.



Use of Internet for Free Information Distribution



The JPO has been steadily expanding its Web site. Now, patent abstracts and summary case history can be obtained in the English language for applications filed after 1993 from its site, free of charge. Starting March 1999, the JPO will place 40 million pieces of information in Japanese including patent publications and prosecution history on its Web site for free access.



Speeding Up Examination



The JPO has promised to shorten the pendency of invalidation and opposition cases to 12 months by the year 2000. Also, the time between the request for examination and the first action will be shortened to 12 months from the current level of 21 months.



Since January 1, 1996, requesting accelerated examination on patent applications has become easier. The number of requests has increased from 356 in 1995 to 1021 in 1997. Once request is filed, the first action is normally made in 3 to 4 months. It is now possible to request expedited processing for trademark and design applications.



Vision for the Year 2005



Customer satisfaction

The JPO announced its own vision of the IP system to be realized by 2005. The JPO is aiming at the realization of what it calls "real time operation" by 2005 to shorten processing and prosecution time before grant down to a minimum. At the same time, the quality of examination will be improved with outsourcing of routine work and further office automation.



Strategic use of IP rights

Also, the JPO will try to create and expand a patent market in order to reduce the number of apparently unused patents. It will strengthen its capability in dispute resolution by facilitating existing invalidation proceedings and other mechanisms.



Toward a World Patent System

The JPO is putting more harmonization efforts and coordination of granting procedures with patent offices of other countries toward the realization of a World Patent System.



Patent information highway

The appeal and invalidation proceedings will be carried out electronically eliminating paper files at the JPO, in the same manner as all patent examination at the examiner level is currently done. Moreover, patent information will be made instantaneously available to anyone from anywhere in the world by creating an electronic patent library.



Report of the Commission on IP Rights in the 21st Century



The Commission on IP Rights in the 21st Century, consisting of top corporate executives and renowned scholars, issued a report on April 7, 1997 simultaneously in Japanese and in English.(7) The recommendations made in the report are as follows:

1. Adequate protection of new technology

2. Strengthened IP protection

3. More exploitation of research results by universities and research institutes

4. Fostering patent markets to encourage licensing

5. Cyber patent system utilizing modern information technology

6. Cooperation with developing countries

7. The creation of a global patent system

8. Comprehensive national efforts toward stronger IP protection



Kyoto Action Plan - Trilateral Conference



The trilateral conference was held in Kyoto on November 13-14, 1997. Ingo Kober, President, European Patent Office, Bruce Lehman, Commissioner, United States Patent and Trademark Office, and Hisamitsu Arai, former Commissioner of the Japanese Patent Office agreed on the promotion of trilateral patent network, trilateral concurrent searches and examination, and trilateral Web sites, and issued a joint press release.(8)



Survey among 200 Big Japanese Filers



The JPO carried out in November and December 1997, a survey among top 200 Japanese filers of patent applications. The results of this survey have been published on the JPO Web site in Japanese only. The survey is very revealing. For example, the surveyed Japanese corporations got sued by foreign corporations for patent infringement 3.7 time more often than they sued foreign corporations for patent infringement (129 v. 35 cases during past five years). These Japanese corporations sent 310 warning letters in total to foreign companies while they received 967 warning letters from foreigners during the last 5 years.



Also, the surveyed companies aim to increase domestic patent applications by 10.8% between 1996 and 2000 while they estimate to increase foreign applications by 36% for the same period. Their total IP budget is expected to increase from 219 billion yen in 1996 to 278 billion yen (about 2 billion US dollars) in 2000. These figures exclude personnel expenses. The largest increase is forecast to be for costs of foreign filings.



While the overall balance of licensing income and expenditure is in black at about 60 billion yen (430 million US dollars), the same with foreign companies is in red at the balance of minus 33 billion yen.



Current Status for Patents and JPO Policy



The number of patent applications increased slightly in 1997 over the previous year. The figure was about 392,000 applications for 1997 while it was about 377,000 for 1996. The number of utility model applications remains low at about 12,000 applications in 1997. The number of patents granted in 1997 was about 160,000. The number of US patent applications was 206,000 and that of EP applications 79,000 in 1996.



The average time between request for examination and the first action was 21 months in 1997. For appeal cases against rejection, they averaged 22 months. The JPO plans to cut these down to 12 months by 2000.



Current Status for Designs and JPO Policy



The number of design application was about 40,000 in 1997. This figure has remained more or less unchanged past several years. In the US, 15,200 design patent applications were filed in 1996, and in the UK, 9,300 applications in the same year.



Current Status for Trademarks and JPO Policy



The number of trademark applications decreased to about 126,000 in 1997 compared with the previous year. This is due to the fact that it became possible to include more than one class of goods and services in one application starting April 1997.



The average time between the filing and the first action was 21 months in 1997. This is also to be reduced to 12 months by 2000. The same period for appeal examination against rejection was 48 months. This should be reduced to 12 months by 2000.



How to Speed Up Examination

To speed up its processing and examination the JPO will increase the outsourcing of prior art searches and use more support staff for examination and appeal proceedings. It will also improve its search system.



April 1998, the JPO started a new electronic filing system in which ordinary Windows PCs can be used for patent and utility model filing. January 1999, it will start simultaneous checking of formality and substantive examination. Starting January 2000, design, trademark, and PCT applications as well as appeal and invalidation proceedings will be done electronically.



Circuit Examination



To help applicants residing away from Tokyo, the JPO examiners visited 27 localities and had interviews for 1,650 cases between April 1997 and March 1998. Also, TV conferences were held 128 times with 27 applicants between July 1997 and March 1998. Further, appeal examiners visited Sapporo, Fukuoka, and Osaka to conduct oral proceedings.



Support for Japanese Companies against Copying in Developing Countries



The JPO will collect information about IP enforcement in developing countries and discuss issues with foreign governments.



International Arena



The JPO will provide full support for activities of WIPO under the new Secretary General, Mr. Idris. The three major agendas of WIPO for 1998-9 are (1) rule making, (2) improvement of information system, and (3) cooperation for developing countries.



The WTO TRIPS enforcement review has been finished. The issues of biotech protection and geographical indications will be reviewed.



The trilateral (US, EP, and JP) cooperation will continue, and the bilateral discussions with the US will be maintained for the full realization of the objectives expressed in the two 1994 US-Japan agreements and for a new proposal of the IP cyber plan to be submitted to WIPO. Also, the discussions and cooperation with APEC countries will continue. Regular meetings will be held and educational and examination cooperation will go on. By March 1998, the JPO invited 505 people from various developing countries for training that lasts two to four weeks in Japan. It will have a total of 1,000 people by 2000 in such training programs.



Concluding Remarks



We have quickly gone through the new Annual Report issued in June 1998 by the JPO. It is filled with rosy pictures peppered with some negative data. Some of the goals appear to be difficult to achieve without undesirable side effects. For example, speeding up examination is laudable, but the quality of examination may suffer when the number of examiners and appeal examiners is not increased in keeping with the increased work load. However, in the long run, such transitional ills can be corrected. The recognition that stronger IP protection is becoming more important and that the IP system as a whole has to respond to such necessity is becoming accepted to the Japanese society in general. The Japanese IP community is expected to support these bold efforts recently launched by the JPO.





1. The JPO Administration Annual Report is published in the monograph format in August 1998 from the Institute of Inventions and Innovations (Hatsumei Kyokai) which was not available to the present writer at the time of preparing this article.

2. The contents of the Policy Section are as follows:

POLICY SECTION

Part 1 Recent Developments surrounding Intellectual Property

Chapter 1: New Trends in Intellectual Property

Chapter 2: Topics in Patent Administration

Chapter 3: Creation of Patent Market

Part 2 Current Status of Intellectual Property and JPO's Major Policies

Chapter 1: Current Status of Intellectual Property

Chapter 2: Major Policies of JPO

3. The survey results are available only in Japanese at the JPO Web site (http://www.jpo-miti.go.jp). This survey is also discussed in a later section in this article.

4. "Ball Spline Bearing Case", Case No. 1994(o)1083.

5. Case No. 1995(wa)10353, rendered on March 30, 1998.

6. "Temperature-Indicating Material Case;" rendered on March 6, 1998; case No. 1992(wa)474.

7. At http://www.jpo-miti.go.jp/pate/repo/rep21eng.doc the English version summary report can be found (173 kb).

8. Available in English at http://www.jpo-miti.go.jp/siryoe/tri_enfn.htm.