The Latest Amendments to Japanese Patent and Utility Model Laws in 2004

There are three bills this year that amend the Japanese Patent Law, Utility Model Law and Civil Procedure Law. One bill was passed by the Diet on May 28, 2004, and some of the amendments of that bill will come into force next year (2005). The other bills, reflecting a prominent decision by the Supreme Court and establishing the Intellectual Property High Court, are still being examined in the Diet. A brief explanation of the major points of the amendments is given below.

1. Conversion of Utility Model Registration into Patent Application: effective as of April 1, 2005

A utility model registrant (right holder) will be able to convert his/her utility model registration into a patent application within three years from the filing date of the application for the utility model registration, on condition that the registrant abandons the utility model registration (Section 46bis of the Patent Law). In such a case, the new patent application shall be deemed to have been filed at the time of filing of the utility model application.

2. Extension of Term of Utility Model Registration: effective as of April 1, 2005

The term of a utility model registration will be extended from six (6) years to ten (10) years from the filing date of the utility model application (Section 15 of the Utility Model Law). This extension was introduced in response to opinions from small and medium enterprises. However, it also appears the JPO is seeking to reduce the number of patent applications to be examined by increasing the incentive to file utility model applications.

3. Reward for Employee's Invention (Section 35 of Patent Law): effective as of April 1, 2005

An employee shall have the right to reasonable remuneration (reward) when he has assigned to his employer his right to obtain a patent or the patent right based on an invention within the scope of employment. An employee shall have the right to reasonable remuneration (reward) when he has assigned to his employer his right to obtain a patent or the patent right based on an invention within the scope of employment.According to the amended Patent Law, Section 35, the amount of such a reward is not to be decided unilaterally by the employer, but rather should also sufficiently reflect the inventor’s opinion through discussions. If the amount of the reward is found by a court to be unreasonable, then the court shall decide the amount of the reward, considering the employer’s profits, burdens overcome and contributions made with respect to the invention, the manner by which the employer compensated the employee, and other factors.

4. Unenforceability of a patent having an invalidation reason (new Section 104ter of Patent Law): still being examined in the Diet

According to the current Patent Law, a patent having an invalidation reason can be invalidated only through examination by JPO appeal examiners having special knowledge and expertise after an invalidation appeal is filed before the JPO (Article 125 of the Patent Law). The patent right shall be effective and valid until such an invalidation appeal decision by the JPO becomes conclusive. Therefore, until the following Supreme Court case was decided, in a patent infringement case, a subject patent was presumed valid when determining whether or not an accused product fell within the technical scope of the subject patent, unless the subject patent was invalidated by the JPO.
However, in Texas Instruments Inc. v. Fujitsu Ltd. Case (Kilby Patent Case) (April 11, 2000), the Supreme Court held that where the subject patent clearly has an invalidation reason and it is foreseeable that the subject patent is likely to be invalidated by the JPO, it is unreasonable to allow the subject patent to be enforced against the accused products for the following reasons:

1.Allowing such patent to be enforced against the accused products gives unfair profits to the patentee and gives unfair disadvantages to the accused party, which is contrary to the doctrine of equity.
2.It is desirable to solve disputes as quickly as possible through a single procedure. If a patent infringement court case like the present case must wait the conclusive invalidation decision by the JPO before reaching a decision on the ground that the subject patent is invalid, then the accused party is unfairly forced to file an invalidation appeal before the JPO, which is contrary to the economy of lawsuits.

Therefore, even before a subject patent is actually invalidated by the JPO, a court examining a patent infringement case may judge whether or not the subject patent clearly has an invalidating reason. When the result of such an examination makes it clear that the subject patent has an invalidating reason, then enforcing an injunction or damage claim based on such invalid patent right falls within the abuse of patent right (Section 1(3) of Civil Code) and therefore should not be permitted. This interpretation does not contradict the purpose of the Patent Law.

Most of lower court decisions have followed the Supreme Court’s ruling to prohibit from enforcement an invention having an invalidating reason on the ground of the abuse of right (Section 1(3) of Civil Code).
The newly added Section 104ter implements this Supreme Court ruling and is expected to come into force on April 1, 2005. Section 104ter proposes to go one step further than the Supreme Court decision, making courts obligated to consider prior art evidence presented in an invalidity argument by the accused party. This increases the importance and worth in searching the prior art for effective materials to invalidate a subject patent. There is basically no strict time limit for submitting such invalidating materials. Of course, it is still effective to file an invalidation appeal before the JPO.
On the other hand, a correction appeal for requesting the JPO to correct patented claims is an effective tool for a patentee to protect his patent against a finding of an abuse of right based on invalidating reasons. In such instance, the patentee can request the court to wait for the JPO’s decision on the correction appeal.
Under this new rule (Section 104ter), even if a patent right is determined to be invalidated by a court, such invalidity is effective only as against the parties of the specific case.

5. Establishment of Intellectual Property High Court: still being examined in the Diet

If this bill is passed by the Diet, an Intellectual Property High Court will be established in the current Tokyo High Court on April 1, 2005. All intellectual property cases appealed to the Tokyo High Court will be decided by the Intellectual Property High Court.

A law suit seeking reversal of a JPO decision must be brought to the Tokyo High Court, and therefore will be decided by the Intellectual Property High Court.
As for patent infringement lawsuits, cases for appealing decisions of district courts must be filed with the Tokyo High Court, and therefore will be decided by the Intellectual Property High Court.

An “invention described in a publication distributed prior to the filing of a patent application” is not patentable in Japan (Section 29(1)(iii)), as in other countries.
The Patent Examination Guidelines published by the JPO define the meaning of the phrase “invention described in a publication.”
According to the old Guidelines, an “invention described in a publication” means an invention identified by the matters described or essentially described, though not literally, in a publication. “Matters essentially described, though not literally, in a publication” means those directly derivable from the matters described, taking into consideration the common general knowledge at the time of distribution of the publication. “The common general knowledge” means technologies generally known to a person skilled in the art (including well-known or commonly used art) or matters clear from empirical rules.
Under the amended Guidelines, the definition is the same as that under the old Guidelines except that the criterion “at the time of distribution of the publication” was changed to “at the time of filing of the present application.“
The amount of common general knowledge at the time of filing is believed to be greater than that at the time of distribution, and therefore the examination standard of novelty and inventive step is believed to have become higher or stricter under the amended Guidelines. The JPO sometimes cites a new prior art reference in a final rejection by reason of well-known technology. The amended Guidelines will allow the JPO to cite more frequently in final rejections, publications distributed prior to the filing of a patent application. The amended Guidelines apply to patent applications which are examined after December 24, 2003.