10

Enforcement of Patents on the Internet- Challenges, Trends, and Approaches(*)
Invited Researcher: Agnieszka Kupzok(**)

This research paper investigates how Japanese patent law responds to the challenges that globally
operating companies face when asserting patent rights in Internet-based inventions. It is motivated by theobservation of a twofold evolution of the globalized market. On the one hand the new means ofcommunication, facilitated by the Internet, have the potential of dislocating patent infringement away fromthe national boundaries. On the other hand, the global market, globalized communication and cooperation inbusiness make it more possible for infringers to cooperate across borders and devise ways of exploiting theinventions without falling into the ambit of the respective countries’ laws. Such developments posechallenges to law, and intellectual property law in particular, which is territorial in nature. This research
paper aims to first, highlight the legal issues involved, second, discuss existing approaches within theJapanese legal framework, and third, consider potential options in order to provide companies with better,more innovation-conducive industrial policy.

Ⅰ Introduction
Patent law is increasingly under pressure dueto the Internet-related developments. The more
wireless, globally mobile, and territorially-independent businesses become the morenationally-bound patent laws are challenged. These
challenges are based on several premises. On the
one hand, it is widely accepted that patent law iscreated as part of the innovation policy efforts,
which, at the basis, should stimulate businesses toinvest more in innovation. According to theJapanese Patent Act, its purpose is to “encourage
inventions by promoting their protection andutilization so as to contribute to the development of
the industry1”. This statement expresses the typeof role that the Japanese government foresees thepatent law to fulfill in today’s Japanese economy.
The purpose of this report is to examine how
the objective of promoting the protection andutilization of inventions is fulfilled in Japan in a
specific area of enforcement of patents on theInternet. The choice of Internet enforcement isdue to the observation of a rapid increase ininventions related to computer programs, thepervasive presence of computer-related innovationin human lives and the general development trend
from information economy to knowledge-basedsociety and finally to a digital society. With theadvance of the Internet and the expansion ofpatentable subject matter to software2, questions

have been raised as to how adequate the current
patent laws are in the new, digital age.
In order to promote intellectual property
protection, the Japanese government must assurethat right holders not only have access toprocedures for obtaining registration-based IP
rights, such as patents and trademarks, but alsothat they are fully able to enforce all of theintellectual property rights regardless of theirnature and, in case of industrial property rights,
regardless of the areas of technological innovation.
Without doubt, the establishment and global reachof the Internet and computer technologies is one of
the greatest technological milestones in humanhistory3. The Internet and the establishment of thecyberspace have provided a new dimension ofhuman activity. As such, it required introduction oflaws to regulate such activity.
If the current developments on the Internet
prove to be a continued challenge for the Japanese
patent system, they may pose a threat to theinventive activity and as such may put at
disadvantage the development of the industry,
which would go directly against the goals
enshrined in Article 1 of the Patent Act. This
provides a strong motivation to analyze the issues
involved, in order to gain clarity on how thegovernment can best support the objectives ofpatent law. A generally-accepted theory has not yet
been established, which encourages academic
discussion of the issues and invites suggestions for(*)

This is a summary of the report published under the Industrial Property Research Promotion Project FY2010 entrusted
by the Japan Patent Office.
(**) PhD Candidate, International Max Planck Research School for Competition and Innovation (IMPRS-CI) at the Max
PlanckIIP Bulletin 2011 Vol.20● 1 ●consideration in the future policy and legislative
considerations.

about what can be protected and how their patentrights may be enforced.

Ⅱ Challenges posed to patent law
by the Internet

Ⅲ Patent enforcement under Japaneselaw

The advent of the Internet has brought a
possibility of instantaneous, global, unhindered
communication. As a globally distributed
environment, Internet exists across and despite
borders. Digital information, lines of computercode, flow through the networks of computers fromone end user seeking information to another end
user providing the file. In that sense, Internet is
a-territorial and its ubiquitous nature challenges
the notion of legal space, which is defined andbased on territoriality principle. Principle ofterritoriality is one of the cornerstones ofsovereignty and thus enshrined, even if just
implicitly, into the laws of most countries. In
essence, territoriality in patent law means that“the grant, transfer, validity and so on of patentrights in each country is governed by the laws ofthat particular country, and that the validity of apatent will be recognized only within the territoryof that country”4
As Internet enables seamless commercial
transactions across borders, it also provides anenvironment, where patent infringement may be“steered” from abroad but having an effect in theJapanese territory. In addition, its complexity,
instantaneous effect, and international dimension
tend to hinder law enforcement5”.
The inclusion of computer programs in thescope of patentable subject matter introduced into
the patent law for the first time subject matter,
which is very different from machinery andchemical components and other typical types ofinventions 6 . It thus challenged the existing
concepts of patentable subject matter. The Internet
cannot exist without software and using Internet isimproved, tailored, and exploited with the help ofvarious applications. Software is intangible,
ubiquitous, and modular. Its nature is very similar
to other material, such as music files, which can beso easily copied on the Internet.
In a modular computer program, a single
component can fulfill its functions only bycommunicating with other related components. As
the role of computer software and network
technologies is increasing, the significance of theinfringements in this area of patentable subject
matter must be given due attention in order toprovide inventors with legal certainty and clarity

In general, analysis of the infringement
requires first a full-fledged investigation into theinvention at hand. The Japanese patent law
stipulates in Article 2(1) that "Invention" in thisLaw means the highly advanced creation oftechnical ideas by which a law of nature is utilized”.
It also provides, in Article 70 (1) that the technicalscope of the patent is delimited by patent claims
and that the meaning of patent claims should beinterpreted in the light of description and drawings(Art. 70 (2) of the Patent Act). Under Japanese
patent law, a patent right has both an active and apassive effect. This means that the right holder hasa right to commercially work the invention (Art. 68
Patent Act) and a passive right to prevent othersfrom commercially working the patented invention.
The scope of “working the invention” is defined inarticle 2 of the Patent Act. Following a series ofchanges in the legal framework in 1997, 2000, and2002 certain aspects relating to computer
programs as patentable subject matter have beenclarified and it is now without doubt that softwareand business methods are eligible for patents.
Forbidden acts can be categorized into threegroups: direct infringement, indirect infringement
and joint infringement. Both direct and indirect
infringements are differentiated between productand process patents.
Analysis of direct infringement involves first,
construing the invention from the claims with thehelp of description and drawings. Next, construed
invention is compared with the allegedly infringing
product or process. All elements rule applies7,
meaning that all elements of the claims must be
found in the allegedly infringing product or process
in order for direct infringement to be found. Twotypes of direct infringement are recognized inJapan,
namelyliteralinfringement
andinfringement under the doctrine of equivalents,
which is a recognized expansion of the scope of thepatent right. In case of both direct and indirect
infringement both injunctive relief and damages
are available for patentees.
The scope of indirect infringement has been
expanded, effective on January 1, 2003 due to anamendment, which stated that “manufacturing andusing intentionally the articles (excluding those
widely distributed in Japan), which are
indispensible for overcoming the problem to be● 2 ●IIP Bulletin 2011 Vol.20

solved by the patented invention shall be deemed
to be infringing on a patent right8”. The provisions
make it very clear that “knowledge requirement”
is part of the indirect infringement construct. Thisis deemed a fair balancing of, on the one hand,
expanding the scope of patent right, and on theother hand, limiting potential infringement to
informed activities.
In addition to the infringement provisions
enshrined in the Patent Act, joint tortfeasorship on
the basis of Article 719 and active inducement on
the basis of Article 719 (2) 9 of the Civil Code may
be analyzed. In case of a claim under civil code, thepatentee can seek damages according to article
70910 of the Japanese Civil Code but not injunctive
relief11.
An issue related to the actions purely carriedout on the Internet is the concept of “commercial
working” of the invention, when the invention is acomputer program or a software. It is the opinionof some of the respondents that with regards tothese types of patentable subject matter it is often
difficult and sometimes impossible to differentiate
between private and commercial “working”. When
“working of a software invention” is taken into
consideration, the active exclusive right of“working the invention” of the patent right holder
is involved. Computer program is always treated asa “product” for the purpose of the “working”
analysis, irrespective of what technological form it
has12. In some of the respondents’ opinion this is
too broad of a definition, which gives too muchprotection to software patents, which coverprocesses.
One of the biggest challenges posed by thedevelopments on the Internet, currently
recognized by scholars and the respondents in theinterviews is the legal situation of infringements ofsystem network patents13. In these inventions two
or more elements together form a system, which
communicates via the Internet. Infringement ofsuch technological constellations may involve
several parties, potentially located in different
jurisdictions. Should this be the case, the plaintiff
may be faced with a situation in which it is
impossible to prove that each and every element of
the infringing device is infringing the patented
invention. Thus, the emergence of network systeminventions may pose a serious problem to thenational enforcement mechanisms. Moreover,tracing the involved parties and obtaining evidence
may prove very difficult.
The Japanese patent law does not provide
guidance on enforcement of patents in cases whenelements of the infringing product are located in

IIP Bulletin 2011 Vol.20

two separate jurisdictions. Moreover, there isvery little case law that is even tangentiallyrelevant to the issues raised in this research paper.
On of the exceptions is formed by the Clock facecase.14 In deciding the case, the Tokyo District
court found that “the effect of the patent right
granted in Japan is limited within the Japanese
territory (i.e. principle of territoriality) and while
in principle the defendant is liable for working theinvention in Japan, the exporting of the
manufactured products cannot be enjoined”. If ananalogy for the Internet is construed, as to argue
that every of the Internet-related inventions isexported because each of the inventions is partly
placed on a server abroad, then it could possibly beconvincing that all of such inventions are exported
and thus the right holders are not able to enforce
their rights.
When two or more infringing parties are
involved, the analysis must be extended to indirect
infringement and joint tortfeasorship. In case ofindirect infringement, the Ichitaro15 case presents
a good starting point, as it was the first softwarecase in which both the Tokyo District Court andthe IP High Court applied the newly introduced
provisions on indirect infringement. Also it was
the first case in which the newly established IP
High Court used the Grand Panel16. In the policy
dimension, the case provoked sharp criticism ofsoftware patents and especially patents on userinterface technology17. In the Ichitaro litigation18,
the IP High Court elaborated on the concept of“articles that are widely distributed to the public in
Japan” in the course of the indirect infringement
analysis.
When further considering issues related to
the Internet, helpful insights for dealing with thelegal aspects of Scenario 1b can be derived fromthe jurisprudence in the Hoya19 case. This case isespeciallyrelevant
becauseit
involves
communication via the Internet among multiple
parties. The court differentiated the infringement
analysis into considerations of “satisfaction of
constituent elements of the patented invention”(i.e. whether the defendant’s allegedly infringing
product falls within the technical scope of theplaintiff’s patented invention) and the issue of“recognition of the exploitation of the patented
invention” (i.e. whether the defendant can be
regarded as having exploited the patented
invention)”20. Hoya case provides an example of“control” test being used in patent law. The“control” test is well known from Japanese
copyright jurisprudence. It was first introduced in
the Karaoke case 21 , where the owner of the● 3 ●karaoke bar was found liable to infringement of
copyright exploitation right when providing the
karaoke equipment, together with music texts inbooklets to the customers, who then performed
the copyrighted pieces without having anappropriate license to perform the pieces. The
judgment in the Hoya case emphasizes thepotential flexibilities of the Japanese courts.
Especially in case of software, which demonstrates
a nature similar to those files, which normallyobtain copyright protection, such flexibility may
open doors for efficient and adequate protection forright holders.
Next, an issue of joint totfeasorship under
Civil Code Article 71922 must be examined. While
joint tort is an available legal tool, as a civil code
measure, it relates to the damage done but cannot
govern the property right aspects of the patentright. Thus, when joint tort is found, the court may
grant damages but cannot grant an injunction
against the patent infringer. A notable case inpatent law, which involved cross-border issues andrequired the Supreme Court to elaborate on theconcept of territoriality in patent law, was the socalled FM signal demodulator case 23 . The caseinvolved a right holder, who only had a patent on
the card reader in the United States, who wanted
to prevent the Japan based manufacturer of
infringing card readers from manufacturing andexporting the products from Japan to its fully
owned subsidiary in the United States. The Court
explicitly stated that Japan follows the principle ofterritoriality. The text of the judgment indicates anuneasy position of the Court vis-à-vis cross-border
or extraterritorial activities, which may have aneffect in the territory of Japan. As infringement ofpatent rights on the Internet involves suchconcepts to a greater degree than tangible
inventions, this ambiguity may mean that the rightholders feel uncertain about the type of remedies
that they can seek in Japan.
Apart from the solutions available from thejurisprudence, the academic community in Japan
has been considering ways of dealing withmulti-party infringement. One of such efforts is thedevelopment of a theory of joint direct
infringement. In cases where “multiple entities
jointly work all of the constituent features of an
invention of a process while each of them performs
only a part of the process and cases where an
entity works a part of the constituent features
while having other entities work the rest of thefeatures, current patent law does not provide a
remedy. In the “Study of Patent Enforcement
Against Patent Infringement by Plural Independent

Entities 24 ” of the Japan Intellectual Property
Association, a “role-sharing type 25 ” of patent
infringement is identified. In the report two
academic theories with respect to the role-sharing
patent infringement are presented. Furthermore,
Tomioka26 opines that the basis for the joint direct
infringement is the ambivalent formulation of
Article 101 of the Patent Act, as the law does notmake it explicit, whether it refers to cases where
one or multiple parties commit the infringement.

Ⅳ Suggestions
The Japanese legal system is a civil law
system, which prevents as active and significant
role of courts in the interpretation of legal norms
as it is the case in the common law system. In
the civil law system, jurisprudence is subject tochange, as every court is free to interpret the codeanew. Except for the judgments of the Supreme
Court, no judgments have the force of setting
precedent. In the Japanese case, it seems, this“freedom to interpret” is largely used by some IP
High Court judges as well as Tokyo and Osaka
District Court judges to suggest highly novel legal
solutions without much explanation. Combinedwith the fact that judges rotate every few years
between different types of courts and that there isa low number of litigations in the area of patent law,a situation of confusion and intransparency iscreated. In such a situation, it should be
encouraged that these judges come into much
more contact with each other and with the users of
the patent system.
The judges could be
encouraged to openly discuss their own opinions
on the patent cases that have already been litigatedmore frequently and should also opine on the legal
issues involved in current developments more
often. Such collective exercise could help bringabout a bit more transparency in the system.
In terms of changes in the law, the above
analysis has shown that the penetration of Internet
into the vast majority of areas of humanengagement presents continued challenges to thelegal framework. While several adjustments havebeen made, this report suggests that the concept of“working the invention” in patent law should be
scrutinized.
This
could
involvefurtherdevelopment of the concept or a further
elaboration of activities constituting the “working”.
Moreover, this study reveals that there is
support in the academic community for theconsideration of a new type of infringement, thejoint direct infringement. It is especially worth
noting that the research report demonstrates that● 4 ●IIP Bulletin 2011 Vol.20

the advances in the Internet-related technologies
are provided as the strongest factor motivatingsuch an amendment.
Nevertheless, it must be noted that the report
also points out that for some aspects introduced
into the enforcement reality by the existence of thecyberspace it will be difficult to adapt the current
standards. One of the mentioned issues is the“commercial” context of patent exploitation. In
some circumstances it may be very difficult to
detect how a patented invention on the Internet
was used. Thus, what may be entertained is toconceptualize anew the notion of patent
infringement as to include a separate category for“cyberspace patent infringement”.
An alternative to setting up a completely new
category of infringement could be a revision of thepatent infringement provision in the patent law, inorder to define infringement also according to theeffect it leads to. Currently the prohibited acts
together with the definition of “working theinvention” form the core analysis. If the “effect”
was also included in the analysis, then potentiallycross-border activities with an effect in Japan could
also fall within the scope of infringement.
Another issue is the consideration of how
compatible the national patent systems are witheach other. Article 16 of the IP Basic Act indicatesclearly that Japanese government not only has theobligation of ensuring adequate protection within
its borders but also should engage in dialogue withother nations in order to improve intellectual
property enforcement globally. This obligation
could not be more relevant in the age ofInternet-based communication, trade, and patent
infringement. Especially with regards toInternet-based business method patents, one
needs to be aware that certain jurisdictions, forexample in Europe, do not see business methods
as patentable subject matter.
1Art. 1, Japanese Patent Act, Law No. 121 of April 13,
1959, as amended, translation accessible at
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=01&dn=1&yo=&kn[]=%E3%81%A8&x=11&y=
19&ky=&page=16
2
In this paper software is defined following the Japanese
Patent Office’s Implementing Guidelines for Inventionsin Specific Fields as “a program relating to the operationof a computer” and a computer program as “a sequenceof instructions suitable for a computer to perform aparticular processing”. The Internet is “a global system
of interconnected computer networks that use thestandard Internet Protocol Suite (TCP/IP) to servebillions of users worldwide.”3
See for example Cairncross, Frances, The Death ofDistance: how the Communications Revolution Is

IIP Bulletin 2011 Vol.20

Changing Our Lives, Harvard Business School Press,
Boston, 2001, footnote 1 on page 75.
4Tokyo District Court Decision of Oct. 16,
H14(2002)(wa)1943, [Coral case].
http://www.tomeika.jur.kyushu-u.ac.jp/result.php?s=49ad07dddf8070213df126c2e9c17296&c=95bda1d6770bf04b
b3028edb28cf5585 See also 2002 IP High Court
Judgment and the Judgment of the Third Petty Benchupon Case 1995 (O) No. 1988 rendered on July 1, 1997,
Minshu Vol. 51, No. 6, at 2299.
5
Godard, Benoit, IP Crime: the new face of organizedcrime. From IP theft to IP crime. Journal of Intellectual
Property Law & Practice, 2010, Vol. 5, No. 5. 381, 378.
6
See, for example: See Matsuda, Shunji, HOYACORPORATION v. TOKAI OPTICAL CO., LTD. Tokyo
District Court Dec. 14, 2007, Patent Vol. 62 No. 8, p.
58-69 (2009), pg. 14.
7
Nakayama, Nobuhiro, Law Lectures Series, Industrial
Property Law, Section 8, subsection 4, Item 4: Indirect
Infringements, pg. 424, Vol.1, Koubundou Publishers, IIP
Translation.
http://www.iip.or.jp/e/e_publication/nakayama/index.html
8
Hayashi, Sekizo, Main Changes of Japanese Patent
System and Important Decisions, pg. 15.
http://asamura.jp/test/patent/pdf/main_changes_of_japan
ese_patent_system.pdf
9Article 719 (2) of the Civil Code, English translation
retrieved from: (Liability of Joint Tortfeasors)
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=02&dn=1&yo=civil+code&ky=&page=3
10
Article 709 of the Civil Code, English translation
retrieved from: (Damages in Torts)
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=02&dn=1&yo=civil+code&ky=&page=3
11
Japan Intellectual Property Association, The First
Subcommittee, The Second Patent Committee, Study ofPatent Enforcement Against Patent Infringement by
Plural Independents Entities, Intellectual Property
Management, Vol. 60 No. 8, p. 1249-1264 (2010).
12
See Matsuda, Shunji, HOYA CORPORATION v. TOKAIOPTICAL CO., LTD. Tokyo District Court Dec. 14,
2007], Patent Vol. 62 No. 8, p. 58-69 (2009).
13
See Matsuda, Shunji, Ibid, pg. 1.
14
Tokyo District Court, September 20, 2001 (2000 (wa)No. 20503) [Clock face case]
15
Justsystem Corp. v. Matsushita Electric Industrial Co.,Intellectual Property High Court, Sep 30, 2005 (Heisei
17 Ne 10040).
16
Ono, Yuki, Ichitaro Case in Japan. IP High Court
Applied Two New Patent Provisions to Software Related
Patents: Indirect Infringement and the Limitation of
Exercising an Invalid Patent, CASRIP Newsletter, Fall
2005, Vol.12, Issue 2.
17
See Ibid pg. 6.
18
The IP High Court in section 2. Issue 2 Indirect
Infringement. Justsystem Corp. v. Matsushita ElectricIndustrial Co., Intellectual Property High Court, Sep 30,
2005 (Heisei 17 Ne 10040).
19
Hoya Corporation v. Tokai Optical Co., Ltd., Tokyo
District Court Dec. 14, 2007, Case No. (wa) 25576 of2004.
20
Shunji Matsuda, HOYA CORPORATION v. TOKAIOPTICAL CO., LTD. Tokyo District Court Dec. 14, 2007,
Patent Vol. 62 No. 8, p. 58-69 (2009).

● 5 ●

21

Japan Supreme Court judgment of March 15, 1988,
Case 1984 (o) No.1204, Minshu, Vol. 42, No. 3, p. 199[Club Cat’s Eye case]. English translation available at:
http://www.courts.go.jp/english/judgments/text/1988.03.
15-1984.-o-.No.1204.html
22Article 719 of the Civil Code, English translation
retrieved from: (Liability of Joint Tortfeasors)
http://www.japaneselawtranslation.go.jp/law/detail/?ft=2&re=02&dn=1&yo=civil+code&ky=&page=3
23
Japan Supreme Court, Case no. 2000 (Ju) No., 580,
26.9.2002, Minshu Vol. 56, No. 7, at 1551. [FM Signal
Demodulator Case]
http://www.courts.go.jp/english/judgments/text/2002.9.2
6-2000.-Ju-.No..580.html
24Japan Intellectual Property Association, The First
Subcommittee, The Second Patent Committee, Study ofPatent Enforcement Against Patent Infringement by
Plural Independents Entities, Chizai Kanri Intellectual
Property Management, Vol. 60 No. 8, p.1249-1264(2010).
25
Ibid.
26
Ibid.

● 6 ●

IIP Bulletin 2011 Vol.20