News Update from Japanese IP Scene

	The Copyright Law Is Amended
	Partly in preparation for accession to the WIPO Copyright Treaty of December 1996, the Copyright Law was amended. The bill for the amendment passed the Diet on June 15, 1999. The amendment contains the following five major items: 1) Unauthorized removal of copyright protection means or programs, using such software as "copy guard canceler," will become a criminal offence; 2) Removal or modification of electronic control information, such as electronic watermarks, used for copyright protection will be restricted; 3) Distribution rights, subject to the first sale doctrine, will be additionally given to music, publications, computer software, etc.; 4) Rights to show art works and photographs will be provided much the same way as screening rights for movies; and 5) Reproduction of music from recording media and use of it as background music at hotels and restaurants are currently exempted from copyright infringement. Such exemption will be abandoned in favor of stronger copyright protection. Fees will be collected from hotels and restaurants which use copyrighted music sources for their business, just Karaoke joints and discos have to.
	Patent Law Amendment Passes the Diet
	The legislation for amending the Patent and Trademark Laws which was submitted to the Diet in February passed the Diet on May 7, 1999. The amendment will be publicly announced on May 14, 1999. It is only about one year since we saw the last amendment to the Patent and Design Laws last year in April.
	Supreme Court Decides for Generic Drug Makers
	On April 16, 1999, the Supreme Court handed down an awaited decision concerning the question of experimental use exemption in favor of generic drug manufacturers. The Court found that tests carried out during the patent term in an attempt to obtain governmental approvals for manufacture and sales after the expiration of patents do not constitute patent infringement under Section 69(1) of the Patent Law. English translation of the decision in HTML format (8 kb).
	Industrial Property Digital Library Opens
	The Japanese Patent Office opened its Industrial Property Digital Library on March 31, 1999. It is a hugely expanded version of what was available from its web site previously. For example, all patent and patent applications filed since the establishment of the patent system in 1885 can be found in the new database. Information searchable using Roman characters includes Patent Abstracts of Japan, all trademarks, registered or otherwise pending, and famous trademarks containing Roman characters. Available data include drawings for patents, utility models and trademarks as well as patent maps prepared by JPO. URL
	"Intellectual Property Basic Law" Contemplated by MITI
	The Ministry of International Trade and Industry (MITI) is now considering an entirely new law tentatively called "Intellectual Property Basic Law." This law is going to set a framework within which the government will form comprehensive policies for patent, trademark, and copyright matters. Currently patent and trademark policies are administered by MITI and copyright policies are handled by the Ministry of Culture. MITI hopes to submit a bill for this new law to Diet next year at the earliest.
	Japanese Patent Office to Evaluate the Financial Value of Patents
	In an effort to promote venture businesses, the Japanese Patent Office (JPO) announced that in April 1999 it will start a new service of evaluating patents for possible value as loan collaterals. JPO will coordinate with some semi-governmental financial institutions, such as the Japan Development Bank (http://www.jdb.go.jp/index_e.html). Upon requests from a financial institution, JPO will evaluate the value of patents owned by venture businesses into categories A, B, C, etc., and the financial institution will provide required support based on the result of the evaluation and other factors such as probable sales. The JPO also plans to evaluate the performance of Japanese private corporations in terms of their IP management.
	Patent and Trademark Law Amendment Takes Shape
	On February 5, the Japanese Patent Office announced a bill for a new patent and trademark law amendment and submitted it to the Diet. The reform includes five major groups of changes. (1) Shorter Term for Requesting Examination The term for requesting deferred examination will be shortened to 3 years from the current 7 years. (2) Absolute Novelty Knowledge or acts, including Internet publications, outside Japan is to be a novelty bar in Japan. (3) Stronger Enforcement against Patent Infringement Remedies for infringement are strengthened. For example, according to the bill, the court may order certain documents to be produced so as to prove acts taken by the other party in a suit. The court will also be allowed to appoint accounting experts for calculation of damages and obtain opinions or reports from them. The level of causation required by the court to relate infringing acts to damages will be lowered. Criminal sanctions will become harsher for corporations in connection with fraud and false marking. Extension of patent terms will be allowed for lost patent terms of less than two years. (4) Fee Reduction (Again!) Another reduction of fees is forthcoming. Annuities and fees for requesting examination will be lowered by about 8% on average. Also, small entities will enjoy further reduced annuities and fees for requesting examination. This represents the second round of recent fee reductions. Last year, JPO reduced annuities. (5) Getting Ready to Join the Madrid Protocol. Japan will join the Madrid Protocol. The necessary changes will be made in the Trademark Law to this end.
	Patent Attorney Law Will Be Amended in 2000
	The tentative schedule for an amendment of the Patent Attorney Law has now been set. A new legislation will be submitted to Diet in early 2000, and the amended law should take effect in 2001. This will the major overhaul of the more than 70 years old law. Proposals include, for examples, the allowance of having more than one office in Japan and elsewhere, the possibility of incorporation of patent firms, and the extension of what patent attorneys can do before and outside courts. The current discussions are very fluid and no final proposals have emerged.
	JPO Announces Simultaneous Examination Among the Trilateral Offices
	The Japanese Patent Office announced in January 1999 that it will begin to accept requests for simultaneous examination among USPTO, EPO and JPO sometime in 1999. If such a request is filed, these three offices will exchange information about their examination. A decision on whether to grant or not will be made by each patent office.�@ This new scheme has been positioned as another step toward the "Worldwide Patent System."
	The Japanese Go on the Offensive
	Recently, several Japanese corporations brought law suits against patent infringements abroad. As reported in the media, three cases filed by Japanese companies are now pending at the International Trade Commission (ITC) in the US. In February 1998 Fuji Film filed a Section 337 complaint on "disposable cameras" initially against 28 companies; Mitsubishi Chemical concerning optical drums for copiers against 12 companies; and in August, Sumitomo Special Metals against 9 companies concerning its high performance neodymium magnets. In last November, Asahi Chemical Industry sued General Electric in Spain for a patent infringement of its technology for making polycarbonate resins, and Takeda Pharmaceutical sued a Korean company in Korea for patent infringement there. Fujitsu settled in October 1998 with a Korean company in another ITC case.
	LTOs Spring UP in Japan
	With strong backup from the Ministry of International Trade and Industry (MITI), many Japanese universities are setting up licensing technology offices (LTO). Because national universities do not have legal status as a corporate body, university professors and venture capitalists are forming separate organizations which look like cooperatives. Private universities such as Waseda University are also setting up LTOs.
	Highest Damages Awarded in Japanese IP History
	SmithKline Beecham, a British pharmaceutical company, and its Japanese subsidiary successfully sued Fijimoto Pharmaceutical of Osaka, Japan for a patent infringement and obtained a damage award of 3.06 billion yen (about 26 million US dollars) plus interest. The damage award is highest in the Japanese IP history. The previous high was a 760 million yen decision in 1973 for an infringement on a design registration owned by Honda. October 12, 1998, Tokyo District Court rendered a decision in which the court found an infringement on SmithKline's Japanese patent, which related to a method of preparing an anti-ulcer drug called cimetidine. The infringement took place betweeen 1986 and 1993. Fujimoto imported the infringing drug from former Yugoslavia. This drug is well known as a so-called "H2 blocker". The court applied Section 104 of the Japanese Patent Law and presumed that the alleged infringer used the patented method because the product was unknown in Japan at the time of priority filing.
	Supreme Court To Improve Patent Litigation Capability among Japanese Courts
	The Supreme Court of Japan has recently announced its policy of strengthening processing capability of patent litigations at various courts in Japan. The number of IP litigations has increased from about 300 in the early 90's�@ to the current level of 500 to 600. Among those, patent litigations increased from a little more than 100 in fiscal 1994 to 166 last fiscal year. The number of pending cases also increased from 828 in fiscal 1992 to 1084 in fiscal 1997. The Tokyo District Court will have another special IP division in addition to the existing two IP divisions. Also, attempts will be made to have more judges with technical knowledge and send judges abroad so that they will have some international perspective.
	Priority Documents from EPO
	In the last week of December 1998, the Japanese Patent Office (JPO) announced that it will no longer require certified priority documents as of January 1, 1999, provided that basic applications are European (EP) patent applications. This is because the electronic data link between EPO and JPO can be used to exchange application information between the two offices starting January next year. Please note that the above is applicable only to cases in which the Convention priority is claimed on the basis of European patent applications filed under the European Patent Convention. If the priority is based on national applications, such as German, British, and French national applications, it is still necessary to submit priority documents. Also, for Japanese applications filed prior to January 1, 1999, we would still have to file certified priority documents. Although the U.S. Patent and Trademark Office (USPTO) is also a party to the trilateral data exchange program with EPO and JPO, no formal announcement has been made as to priority documents issued by USPTO thus far.
	"Super Bar Code Wars" Case - Electronic Game Machine with Software Elements
	On October 30, 1998, the Tokyo District Court rendered a decision in a case between two Japanese toy and game makers, Epoch and Bandai. The product at issue was an electronic game machine which accepts bar-coded picture cards. Two players use their collection of cards having bar codes for fighting games on this machine. The bar code on each card contains information concerning the personality and strength of the fighter appearing on it. Although the patent claim was directed to a game machine which consisted of means for various functions, an important part of the invention was found in the process steps that were carried out in the machine. The court found a literal infringement. The damage award was 114 million yen plus interest for the patentee, Epoch, calculated using a reasonable royalty rate of 5% on the retail price for infringement done within the period between the laid-open publication and the issuance of the patent. This royalty rate adopted by the court is relatively high particularly in view of the fact that the patentee is asserting his rights based on the patent that remained as an application during the acts of infringement and issued later. Under Section 65 of the Japanese Patent Law, the patentee can collect compensation in a sum of money equivalent to what he would normally be entitled to receive for the working of the invention if the invention were patented.
	Matsushita to Beef Up its IP Muscle
	In the September 2, 1998 issue of Nihon Keizai Newspaer (Nikkei), Matsushita Electric Industrial (Matsushita Denki Sangyo) is reported to increase its patent budget in the fiscal 1998 by 30-40% compared to the previous year. It plans to increase foreign patent filings in this fiscal year by 30% from the level of 5,000 in the previous year. On the other hand, a reduction is sought for Japanese filings from the current level of 12,000. The largest emphasis will be on China. Applications to be filed in China is expected to be 50% more this year than the previous year and should amont close to 1,000.
	New Appointments
	Mr. Takeshi ISAYAMA assumed the position as the Commissioner of the Japanese Patent Office on June 19, 1998. He is 55 years old and a graduate of the Tokyo University's law department. Also, Mr. Shozo Uemura of Japan and Mr. Roberto Castelo of Brazil assumed the two remaining Deputy Director General positions at WIPO on July 6, 1998.
	New Guidelines for Licensing Patents Owned by the Government
	On June 29, 1998, the Japanese Patent Office disclosed new guidelines for determining royalty rates for licensing patents owned by the Japanese Government. The new guidelines do not set specific figures for standard royalty rates and allow flexibility to set higher or lower rates depending on the value of a patent. Under the old guidelines, such rates were set to be 2 to 4% of sales with the possibility of minor variations. This revision of guidelines is for the first time in fifty years. These guidelines are used as a de-facto standard by some in Japan. It is aimed that patentees in general as well as the Japanese government will be able to collect more money in return for a license and that patent protection should become stronger with possible higher damage awards calculated according to the new liberalized guidelines.
	JPO's Interpretation Proceedings (Hantei) to be Improved
	Starting with requests filed on July 1, 1998, the Japanese Patent Office (JPO) will speed up the Hantei procedure. Hantei is a procedure unique to Japan, in which a panel of appeal examiners at JPO provides a non-binding opinion as to the scope of patent claims. No determinations for damages or injunctions are involved. JPO announced that requests for Hantei filed on or after July 1, 1998 will be processed to reach a conclusion within six months. JPO intends to deal with issues of the doctrine of equivalents in it.
	Amendment to Patent and Design Laws Passes the Diet on April 24
	The bill for the amendment to the Patent and Design Laws passed the Diet on April 24, 1998 and became law. Under the amended Patent Law, the court is freed from the constraint of an "average" royalty. The term "reasonable" which is found in the provisions setting the minimum level of damage awards for patent infringement (Section 102 of the Patent Law) and which reads more like "normal" or "averaged" in Japanese has been one of reasons for conservative damage awards found by Japanese courts. Also, patent annuities for the 13th year and beyond have been reduced starting June 1, 1998. Criminal sanctions are to become harsher under the amendment. The design protection will also be overhauled.
	Another Patent Law Amendment Considered for Next Year
	May 1998, JPO announced that it is planning to amend the Patent Law once again to improve the enforcement aspect of patent protection in Japan. It will submit a bill during the next session of the Diet. The following proposals are made: (1) to make it possible for the court to shift the burden of proof to defendants in patent infringement cases; (2) to impose monetary penalties in addition to damage awards; (3) to allow more active roles for patent attorneys (Benrishi) in patent infringement litigations; (4) to have experts on the calculation of damage awards; and (5) to shorten the term for requesting substantive examination. The proposals are still at a discussion stage and details are in flux. The new term for requesting examination is proposed to be shortened to 2 years from the current 7 years.
	The Tokyo High Court Renders an Awaited Decision concerning Generic Drugs
	On March 31, 1998, the Tokyo High Court rejected an appeal made by Otsuka Pharmaceutials against a Tokyo Disctrict Court decision rendered on July 18, 1997 in which experiments carried out by a generic drug manufacturer (Towa) for obtaining a governmental approval for sale after the expiration of a patent were found not to constitute a patent infringement under the experimental use exemption (Section 69 of the Patent Law). Otsuka Pharmaceutials has appealed this decision before the Supreme Court. Currently conflicting decisions have been rendered by various District and High Courts. For the conclusive resolution of this issue, a decision by the Supreme Court, or a law amendment, is required.
	JPO to Place All Patent and Trademark Information on Internet
	May 18, 1998, JPO announced that it will place all the patent information in its possession, 40 million pieces to be specific, on Internet by March 1999 for free access from all over the world. The information will include prosecution data, examination guidelines and descriptions of the F term system, which is a subclassification of the IPC developed by JPO for its internal use. This is a windfall from one of the current economic stimulation plans which would inject billions of US dollars worth of money to lift the Japanese economy out from its current crisis. Also, on July 31, 1998, JPO opened a new page on its Web site (http://www.jpo-miti.go.jp) for 49 items of information on 350,000 pending and 1,650,000 registered trademarks for free access.
	No Power of Attorney is Required for Normal Filings in Japan as of April 1, 1998
	As reported earlier, as of April 1, 1998, powers of attorney are no longer required for filing ordinary applications in Japan.�@ It is not necessary to send executed powers to Japanese attorneys at the time of instructing them to file new patent, trademark or design applications. An executed power will only be necessary for certain procedures, such as the conversion of a patent application into a utility model application and the withdrawal of an application.
	Industrial Property Arbitration Center Opens
	In April 1998, the Japan Patent Attorneys Association and Japan Federation of Bar Associations jointly opened a new arbitration center for disputes related to patents, trademarks, and designs. The initial cost of requesting arbitration is only 50,000 yen (about 400 US$) plus an investigation fee of 100,000 to 200,000 yen. Additional charges apply for each hearing held. In successful cases, 1.5 to 10% of monetary values of a settlement will be charged. The resolution of disputes is sought within 6 months. Costs will be much less and time required would be much shorter than those required by the court proceedings.
	Three Japanese Law Firms To Open Offices in China
	Biweekly Japanese magazine NBL (New Business Law) reports in its March 1, 1998 issue that three major Japanese law firms, Mori Sogo, Anderson Mori, and TMI, obtained approvals in Febraury from the Chinese Department of Justice to open offices in China.
	Major Doctrine of Equivalents Decision by Supreme Court
	On February 24, 1998, in appeal from a Tokyo High Court decision rendered February 1994 in the so-called ball spline bearing case between THK and Tsubakimoto, the Supreme Court redefined the doctrine of equivalents and remanded the case to the original court. The Tokyo High Court had found the allegedly infringing product fell under the patent applying the doctrine of equivalents. The Supreme Court stated that for the doctrine to be applicable five criteria have to be satisfied. The Supreme Court pointed out that the Tokyo High Court failed to consider whether the allegedly infringing product was within the teaching of prior art as of the filing date of the patent in dispute or obvious from the prior art, and remanded the case. English translation of this decision has been made available to us by Chris Mizumoto of Hiraki & Associates. Click for WordPerfect Ver. 5.1 file (18 kb) or HTML file (19 kb). A copy of the decision in the Japanese language can be found at the Supreme Court site at http://www.courts.go.jp. Some have termed this decision as a major step forward for more meaning patent protection in Japan. My personal view is different: this is not a good decision. If the Supreme Court was to take the doctrine of equivalents more seriously, it should not have remanded the case to the original court for what appears to any technically-minded person as pure legal subtlety. The Court wondered whether the infringing product was obvious from the prior art at the filing of the patent in dispute. However, the disputed patent has survived invalidation proceedings, and the infringing product was an improvement, however minor it may be, over the patent. How could the infrining product be more obvious than the patented invention? Also, the Court made a mistake when it defined the first criterion by stating that the portion in the patent claim which differs from the accused product is "not the essential portion in the patented invention." It should have instead stated that: "the difference is not essential to the invention." This is not a minor point. Reading this Supreme Court decision, the accused person would certainly assert that the difference exits on the essential or important part of the patent invention. To argue against it would be awkward for the patentee.
	Gaiben Law to be Amended Again
	On February 14, 1998, an outline of amendment to the Foreign Attorneys Law (so-called Gaiben Ho or Gaiben Law) was made public. A bill will be submitted to the Diet during the current session. The amended law is expected to take effect in September 1998. In order to register as a foreign attorney in Japan, the period of required practical experience will be reduced to 3 years from the current 5 years and one year experience in Japan can be counted as part of the new 3 years requirement. Also, restrictions on partnership with Japanese attorneys will be somewhat eased, but changes will be minor. Currently about 80 foreign lawyers are registered in Japan.
	Proposed Reform of Patent Enforcement Fizzles
	To set the record straight, I would like to loudly applaud those who have made courageous efforts to push the proposed reform of patent enforcement in Japan. The Japanese Patent Office worked against long odds toward the realization of enhanced protection of patented inventions. I do hope that such efforts will be further pursued. On February 10, 1998, the government submitted the Diet a bill for patent and design protection reform. The bill contained a proposed reduction of patent annuities, an increase of up to 150 million yen (from current 5 million yen) in possible fines imposed on juristic persons who infringe a patent, and a reform of design protection. However, what was dropped in the bill from the proposals made last year included the shift of burden of proof concerning patent infringement under certain circumstances, possible damages up to three times the reasonable royalty, the extension of maximum imprisonment to ten years from the current five years, the possible recovery of attorney costs in wining cases, and the broader obligation of document production beyond what is provided in the current Code of Civil Procedure, which took effect as recently as January 1, 1998. A major obstacle was the consistency with other laws. For example, it has been expected that a possible award of triple royalty may be considered to be against the tenet of the current Civil Code, which only allows the recovery of actual damages suffered by a plaintiff and under which the enforceability of a treble damage award made by the Californian Supreme Court was denied by the Japanese Supreme Court. The Ministry of Justice seems to have acted against many proposals which were instigated by the Japanese Patent Office and the Ministry of International Trade and Industry (MITI). The bill will be discussed in the Diet; however, the restitution of dropped elements would be difficult. The Japanese Patent Office has been pushing the patent reform in many different fronts, and the down-scaled bill should not hamper the overall movement toward forceful protection of patents and inventions in Japan.
	Creating a New Japanese Patent Office
	As you may have gathered from news posted in this site, Japanese Patent Office (JPO) has been working very hard to reform itself particularly in past a year or two. This goes beyond the harmonization efforts made by JPO over last 10 years. A recent announcement made on December 25, 1997 also signals this movement. Although it was made only in Japanese, JPO announced the first phase of "JPO User Friendly Program (Tokkyo-cho Shinsetu Undou)" consisting of 23 items, which also include some old items announced previously. Several important ones are listed in the following: 1. By the year 2000, the first official actions will be issued within 12 months in patent, trademark, and design applications. This represents a significant cut from the level of 22 months for patent applications as of December 1996. 2. When expedited examination is validly requested, the first actions will be issued within three to four months. 3. As of April 1998, no power of attorney will be required when filing new applications with the Patent Office. A power will be necessary only such situations as withdrawing, abandoning, or converting an application. 4. In patent publications, the scope of search carried out by the examiner will be identified. 5. As of April 1998, the average time between a request for invalidation proceedings before JPO and a decision will be shortened to 12 months for patent cases from the current level of 27 months. In case of design and trademark invalidation, this will be 6 months. Trademark oppositions will be examined and decided in 12 months. 6. As of April 1998, the JPO examiners will visit certain localities outside the Tokyo area to conduct appeal proceedings so as to improve communication with users residing away from Tokyo. 7. As of January 1998, the schedules of oral hearings, list of newly filed cases, and decisions will be posted (in Japanese) in the JPO website. This has already started and we can actually obtain the above-mentioned information from the JPO site in the Japanese language. 8. As of February 1998, the whole content of patent (laid-open and grant) publications issued during past one month will be made available through the Internet. 9. Some time during the fiscal 1998 (i.e., April 1998 through March 1999) the bibliographic information, abstract, drawings and examination history of laid-open publications (in Japanese) will become available through the Internet. Patent Abstracts of Japan (in English) and relevant examination history, as well as information about the International Patent Classification (IPC) and FI (File Index: JPO's own classification which supplements the IPC) and the list of well known or famous trademarks, will also become available through the Internet. 10. As of January 2000, design and trademark publications will be made available in CD-ROMs. 11. As of January 1998, information on patents available for licensing will be listed and provided through the Internet. -------------------------------------------------------Also, the following is two items of interesting information available from JPO. TRILATERAL STATISTICAL REPORT 1996 (posted Nov. 20, 1997) TRILATERAL PROJECT 24.1 - Biotechnology Comparative Study on Biotechnology Patent Practices Comparative Study Report (posted Nov. 11, 1997)
	Annuities REDUCTION at the Japanese Patent Office
	On December 15, 1997, the Japanese Patent Office announced that it plans to reduce patent annuities. It is nearly 90 years since the JPO had a fee reduction last time in 1909. Annuities for the 13th year and on will be fixed at 123,200 yen per year (about 131 yen per US dollar) if the number of patented claims is 5, while currently annuities steeply go up until the very end of patent terms (for example, 246,400 yen per year for the 13th to 15th years). According to a news report appeared in Yomiuri Shinbun, the reduction of annuities will amount to 11.5% reduction of the overall JPO fees paid on average by applicants including filing, examination and other fees. The new annuities structure should take effect in April 1998 at the earliest.
	SONY to Reward Inventors
	November 29, 1997 issue of Nikkei reports that SONY will make it possible to award inventors more than 20,000,000 yen (about 160,000 US dollars) over ten years in accordance with the contribution his or her invention makes to the company. Presently, the reward payment is one time only and has never been more than 2,000,000 yen. More Japanese companies now provide more generous incentives for in-house inventors. This trend is more emphasized in electronics areas.
	A MITI Advisory Council Issues a Report on Patent Protection
	November 20, 1997, the Industrial Property Advisory Council (an advisory organization for the Ministry of International Trade and Industry) made the draft of the final report on patent protection. It proposes to make it possible for the court to award damages which are three times more than the reasonable royalty rates. Also proposed is to make it possible for the court to order production of documents beyond the provisions of the current Code of Civil Procedure. Further, criminal sanction is reinforced by making possible imprisonment to 10 years from current 5 years and by increasing the maximum of fines to 150,000,000 yen (about 1.2 million US dollars). The Council will approve the final report on December 26, 1997, and the MITI plans to introduce a legislation based on this report next year.
	Trilateral Agreement toward Common Patent System
	At a meeting held in Kyoto on November 13 and 14, 1997, the heads of the US Patent and Trademark Office, European Patent Office, and Japanese Patent Office agreed to begin working toward the realization of the "Common World Patent System" and adopted "the Kyoto Action Plan". They will: (1) set up communication links among the three offices during 1998 to construct a "Trilateral Network," (2) begin on-line searches of prior art called "Trilateral Concurrent Search and Examination," and (3) establish a "Trilateral Web Site" containing patent information which is freely accessible from anywhere in the world through Internet. Also, on December 4, 1997, the JPO announced that all decisions made in invalidation proceedings by its Appeal Department will be published (in Japanese) on its website starting January 1998. View the JPO press release.
	NEC is to reduce the time before patent filing to 30 days
	November 9, 1997 issue of Nikkei (Nihon Keizai Shinbun) reports that NEC has started operating a network system covering patent attorneys offices as well as R&D specialists and the IP department of the company. The time from the submission of invention disclosure by the inventor till the filing applications with the Japanese Patent Office will be reduced to 30 days maximum from the current level of about 130 days.
	TI Loses in a Dispute against Fujitsu
	September 10, 1997 the Tokyo High Court handed down a decision in the patent infringement dispute between Texas Instruments and Fujitsu involving the Kilby patent. The case was an appeal from the Tokyo District Court decision of August 1994, in which no infringement was found on the disputed patent. The High Court focused on the question of propriety of a divisional application which resulted in the patent in dispute. The Court reasoned that the patent was likely to be found invalid because the divisional application was illegal due to the substantial identicality of the claims between the parent and child applications, and it would be abusive to enforce such a patent. The invalidation proceeding is pending before the Japanese Patent Office for three years now. Tokyo High Court also considered the meaning of "laid down" found in the patent claim and favored Fujitsu in this regard by noting that layers in the disputed products were not "laid down." The Court referred a court decision made by the Court of Customs and Patent Appeals in a US case involving the corresponding US Kilby patent. The Tokyo High Court did not go any further into the issue of claim interpretation unlike the Tokyo District Court. The original patent application was filed in 1960 under an old patent law which did not provide a 20 years cap from the filing date on the patent term. The resulting patent expired in 1980. A divisional from the original application was patented in 1989 after prolonged prosecution and the disputed patent is to expire in 2001.
	Conflicting Decisions in Generic Drug Disputes - Experimental Use Exemption
	July 18, 1997, the Tokyo District Court rendered three decisions for actions brought by Otsuka Pharmaceutical Co., Ltd. against several generic drug makers. In those decisions, the 29th division of the Court found no patent infringement for experiments done by generic drug makers during the patent term for the sole purpose of obtaining government approvals for future manufacture and sale after the expiration of patents. This is a complete reversal of earlier decisions made by various courts. For example, in the Synthelabo case, the Nagoya District Court had found patent infringement because the experimental use exemption (Section 69, Patent Law) was not applicable to experiments which were done for the sole purpose of obtaining governmental approval for future sale of old patented drugs and which do not lead of scientific advances. The line of reasoning set out in the Synthelabo cases was followed by the Kanazawa branch of the Nagoya High Court and Osaka District Court.
	Getting Tougher on Patent Infringers
	August 7, 1997, the Japanese Patent Office (JPO) made it public that it will introduce a new legislation next year to amend the Patent Law toward increased damage awards and tougher penalties for patent infringement. According to the JPO proposal, the upper limit of fines for patent infringement is raised to 100 million yen (about 0.88 million US dollar) from the current limit of 5 million yen. The way damages are calculated will be modified toward possible increases in their amounts and the burden of proof on the patentee will be eased.
	Method of Breeding a New Peach Variety Found Patentable
	The Tokyo High Court upheld a Patent Office decision in which an invention directed to a method of breeding a new variety of peach was found patentable. In invalidation proceedings before the JPO and in appeal before the Tokyo High Court, two Japanese agricultural associations asserted the patent invalid because the probability of obtaining the desired variety is low according to the patented method of cross breeding two peach varieties. Judge Takeda of the Tokyo High Court found that the reproducibility does not have to be 100%. The patent application was filed in 1977 and a patent was granted in 1988.
	Speedier Examination of Design and Trademark Applications
	Starting September 1, 1997, it will become possible to request expedited examination if (1) the applicant finds a third party using or preparing to use the design or trademark in the application; (2) a person receives a warning letter form a third party applicant; (3) a person is requested to have a licensing negotiation by the applicant; or (4) the applicant has filed corresponding foreign applications. The JPO will soon publish guidelines for the implementation of accelerated examination.
	Supreme Court Says Popeye Was Created Only Once
	July 17, 1997, the Supreme Court reversed an earlier decision by the Tokyo High Court in a copyright infringement case concerning the well-known cartoon figure Popeye. The Tokyo District Court granted an injunction order to stop the sale of neck ties displaying the Popeye figure with word "POPEYE" and awarded damages, and the Tokyo High Court affirmed this lower court decision. The High Court reasoned that each piece of cartoon in the Popeye series established new copyrights, and therefore the Popeye figure is protected under more recent pieces of cartoons. Partially reversing the High Court decision with respect to the injunction order only, the Supreme Court (the first petty bench) noted that subsequent cartoons in the series contained merely copies of the original Popeye created in 1929 and did not reestablish the copyright for the original Popeye figure while new features created later may still be protected under copyrights which have not yet expired. It also noted that the Copyright Law does not protect an abstract Popeye character, but it protects specific figures shown in cartoons. Popeye was first created in 1929 and even with a special extension of about 10 years for lost protection during the World War II, copyrights based on the first publication expired in 1990.
	US Punitive Damage Awards Not Enforceable in Japan
	July 11, 1997, the Supreme Court affirmed an earlier Tokyo High Court decision in which a US court decision was found partially unenforceable in Japan because the damage a US court awarded was more than actual damages suffered by the plaintiff. The Supreme Court stated that punitive damages in the US have a function similar to that of punishments such as fines in Japan and are not compatible with the basic principles and philosophy of damages awarded by the court in Japan. Therefore, punitive damage awards are against the public order and morality and cannot be enforced in Japan. This is the first case in which the Supreme Court reviewed this issue. The US court decision was enforceable in Japan for actual damages. The case was between a US developer, North Con I, which had a project with a Japanese machine maker, Mansei Kogyo, to help a local subsidiary of the Japanese manufacturer set up a factory in an industrial part in Oregon, but the project fell through. A Californian state court awarded a total of $1.55 million to the US developer including actual damages of US$ 420,000. This decision has been reviewed and affirmed by a State appellate court.
	IP Strategies of Major Japanese Corporations
	Nikkei (Nihon Keizai Shinbun: a Japanese best known business newspaper) reported July 15, 1997 on its front page that Japanese corporations are shifting their emphasis from domestic patent applications to foreign filings. The focus is the US and Asian countries. The following is a short summary. 1. Mitsubishi Heavy Industries will nearly double its foreign filings to 1300 patent applications this year from the previous year's total of 660. 2. Toshiba is going to change its 3-to-1 ratio between Japanese domestic and foreign applications to 1 to 1 by the year 2000. 3. NEC is also increasing its foreign filings from the last year's figure by 60% by the year 2000. Emphasis will be placed on the US. 4. Ricoh is increasing its foreign filings particularly in Asia and change its 7-to-3 ratio of domestic and foreign filings to 6 to 4 in two to three years. Also, it plans to use PCT more. 5. Sony is hiring three US patent attorneys in its San Jose office to make the total number of IP staff in the US 26, and will also have patent specialists in Honk Kong. 6. NEC is reviewing its 10,000 plus foreign patents and trying to generate US$ 90 million in royalties. 7. Fujitsu is putting more emphasis on foreign filings from its current domestic to foreign ratio of 2 to 1.
	Japanese Supreme Court Sets New Law in Parallel Import Case
	July 1, 1997, the Supreme Court rendered an awaited decision in the BBS Aluminum Wheel case. The Supreme Court affirmed the Tokyo High Court decision of March 1995 in which no patent infringement was found for parallel importation of goods patented in Japan and Germany. Japanese importers had imported aluminum wheels manufactured by a German car wheel maker, BBS, into Japan from Germany without authorization of BBS while the wheel maker had corresponding patents in Germany and Japan. In the decision, the Supreme Court set a new law that if the patentee or a purchaser of products in a foreign country marks products with a statement that the products are not to be sold or used in Japan, the patent can still be enforced against parallel imports. (This report was modified on Sept. 11. Earlier I took the view that the Supreme Court supported the international exhaustion. Please see Fujino-san's translation of the decision and his comments. MS Word file (33 kb) or HTML file (26 kb).)
	No Longer Necessary to Provide the Fair Trade Commission with Copies of Grey International Agreements
	Article 6 of the Japanese Anti-trust Law has been amended effective June 17, 1997. Paragraph 2 of Article 6 was deleted altogether. While it remains prohibited to have international agreements containing provisions that constitute restrictive or unfair trade practice, it is no longer necessary to submit copies of international agreements falling under certain criteria, such as one which would result in a combined market share exceeding 10%, to the Fair Trade Commission. This simplifies paper work for all concerned.
	Law Amendment Planned for Increased Damage Awards
	The Japanese Patent Office (JPO) reportedly plans to submit a new legislation to increase the amount of damages awarded by Japanese courts in patent infringement litigations. It is well recognized that damages awarded in Japan tend to be quite low compared with other countries. Statistics show that in about 55 % of recent cases involving damage claims, damages were awarded based on conservative estimates of reasonable royalty rates, and 37 % being based on infringer's profit. The JPO intends to introduce before the Diet a legislation for some type of law amendment next year. The details of the legislation are now under consideration.
	The JPO to Propose a Common Patent System among US, EP and JP
	In the trilateral meeting among the patent offices of the U.S., Europe and Japan to be held in Kyoto in November 1997, the JPO plans to propose a common patent system among these three major patent offices. According to an outline of the proposal which appeared in the Nihon Keizai Shinbun newspaper in June, as the first step a common database for novelty searchesis to be set up, and as the second step the results of searches are to be exchanged among the three patent offices, so that based on the result of examination done by one office, patents may be allowed more or less automatically in the two other offices. The target year to start for this new system according to the JPO is 2010. The aim is to reduce redundant examination efforts among the respective patent offices.
	The Report of the Commission on Intellectual Property Rights in the Twenty-first Century
	The English version of the Report was entitled "Challenge for 21st Century" and published on April 7, 1997 at the same time with a Japanese version which is somewhat longer in its length with more details. Click for MS Word 7.0 format file (173KB)

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