Exploration of the Patent Prosecution and Patent
Litigation System in Japan (*)
Invited Researcher: LIU, Yinliang (**)
This research will explore the patent prosecution and litigation system in Japan, involving theprocedures of patent trials, appeals and litigation, aiming at investigating the rationale andefficiency of the patent prosecution system in Japan. It will also compare the patent prosecution
system in the United States and Germany. The methodology of the research will include analysis of
the patent law systems, literature review, interviews, and collection of the statistical data andrelevant cases. Its conclusion can help understand the patent prosecution and litigation system inJapan and its experience could be useful for China to modify its patent prosecution and litigation
system, including the patent court system.

I. Introduction: background, the issues and methodology
Patent prosecution and litigation remain critical procedures within the patent law. How todeal with the issues of patent prosecution and patent litigation has always been one important
aspect for a patent system to maintain its fairness and efficiency. Though each country may haveits unique patent law history and institutional arrangement, however, from perspective ofcomparative study, exploration of the patent prosecution and litigation system in Japan which isalso a Civil Law country may discover institutional mechanism that may be helpful for China toreshape its patent prosecution and litigation system.
For this purpose, this research will explore the patent prosecution and litigation system inJapan, including mainly, (1) the procedures including patent application, opposition, appeal andtrial, and the relevant litigation, (2) the organizations including the Japan Patent Office (JPO) andthe specific intellectual property (IP) courts, (3) the Kilby decision and the legislation of Article104-3 of the Patent Act of Japan and their implications, (4) the double-track invalidation of patent
at JPO and before the IP courts, and (5) statistical analysis of potential negative effects caused by
the invalidation defense. Comparison with the US will also be presented. The final part is
conclusion and recommendations for China to improve its patent prosecution and litigation system.
The methodology of the research will include mainly (1) analysis of the patent system inJapan, (2) literature review, (3) interviews with administrative judges at the Trial and Appeal(*) This is a summary of the report published under the 2016FY Industrial Property Research Promotion Project entrusted by theJapan Patent Office.
(**)Professor of Law, Peking University Law School, at our institute over a period of approximately 2 months from June 30, 2016
through September 1, 2016, as an Invited Researcher for the Fiscal Year 2016.

iDepartment of JPO and judges at the (Tokyo) Intellectual Property High Court (IPHC), (4)collection and analysis of statistical data f rom various resources regarding patent applications,patents in force, PCT applications, patent or IP lawsuits, among others, and (5) comparison of therelevant data of patent prosecution and litigation between Japan and the US.

II. Justification of the key role of patent prosecution and litigation processes inpatent law
Patent prosecution and litigation refer to the processes of patent application, examinationand the possible opposition and invalidation, and the consequent possible patent litigation on theissues in patent prosecution or patent infringement. Patent prosecution concerns essentiallyinteractions between patent applicants and patent office regarding whether to grant a patent for an
invention or to invalidate a granted patent; and patent litigation concerns mainly judicial review ofadministrative decisions in patent prosecution and remedies for patent infringement.
Any legal system shall be efficient and fair, so is the patent prosecution and litigation system.
Efficiency concerns how quickly a patent applicant can get a patent grant for his patent application,and in case of his patent being challenged or being infringed, how long that dispute will be solved
judicially. Meanwhile, fairness or justice shall be maintained by the patent prosecution andlitigation system, or it may ruin the basis of patent law and let the system run to a wrong direction,and it is closely related with efficiency. Fairness of the patent prosecution and litigation system canbe maintained and sustained by the corresponding legislation, administration and judicial activities
in the field of patent law and others, including civil procedure law and administrative procedurelaw.
Fairness and efficiency of the patent prosecution and litigation concern both procedural andsubstantive issues in patent law, and relate to both administrative and judicial proceedings. In
Japan, decisions of the JPO are judicially regarded as being of quasi-judicial nature due to its“quasi-judicial proceedings with a high level of fairness similar to that required in judicial
proceedings”, and based on this reason and the specialized technical knowledge possessed by the
JPO, the lawsuit against the appeal or trial decisions of JPO is instituted directly to the IPHC byomitting the district court level.1

1 See General Secretariat of the Supreme Court of Japan, Intellectual Property High Court, September 2015.

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III. Investigation of the patent prosecution and litigation system in Japan
1. Evolution of the patent law and the IP court system in JapanAt the present stage, procedures of patent prosecution and litigation in the patent law ofJapan are quite complicated. These procedures of patent prosecution and litigation in the patentlaw of Japan have been evolving in a long time. The IP court system in Japan has a history of morethan 60 years. In 2005, the IPHC was established as a “special branch” within the Tokyo High
Court. At district court level, in 2004, the Tokyo District Court and Osaka District Court were
empowered exclusive jurisdiction over patent cases and other technology related IP cases in theeastern and western area of Japan, respectively. Meanwhile, these two district courts have nonexclusive jurisdiction over non-technology related IP cases.
2. Technical expert system with the IP courts
The industry in Japan has three major concerns for the IPHC: speedy trials, trials with moreexpertise, and unified judicial decision in early stage such as on a high court level. The issue ofexpertise has been well resolved with help from the technical expert system. There have two kindsof technical expert systems with the IP courts in Japan: research officials as staffs of the IP courts,
and the technical expert advisors (commissioners) as part-time staffs of the IP courts. The
explanations of the technical experts can be of critical importance for the panel to learn thetechnical background and the advantage of the involved patent in comparison with the prior art. By
presenting a whole picture of the patent, the technical experts can help the IP courts to overcome
the technical barriers that may exist between judges as legal experts and the technical issues. With
this technical aid, judges in the IP courts can be more confident to give a judgment with fair andjustice. The technical expert system is a unique system in the patent prosecution and litigation
system in Japan.
3. The quasi-judicial nature of JPO decision and its judicial remedies
Though the decisions of JPO are made by an administrative organization, they are deemed
either theoretically or judicially as quasi-judicial decisions: “A trial decision is equivalent to the
judgment in a court action.”2 Litigation against a trial decision of JPO is an administrative lawsuit.
2 Nobuhiro Nakayama, Patent Law, 2nd ed., Koubundo, 2012, p. 269.

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In lawsuits against JPO decisions, the central issue for the IPHC is to judge whether the trial
decision is legal or illegal according to the Patent Act and other applicable laws. Due to separationof the power, the court does not have authority to reverse the administrative decision of JPO andrender a new decision judicially such as claiming invalidity of the involved patent even if it findthe trial decision was illegal or groundless; instead, the IPHC can only rescind the JPO decisionand require it to make a new decision. Comparatively, the IPHC has been playing a central andcritical role in the enforcement of patent law in Japan, a role similar to that of the CAFC in the US.
4. A procedural impasse for patent prosecution and litigation
As a Civil Law country, the patent law in Japan has maintained basically a dualism in which
the JPO is responsible for patent examination, registration, opposition, and invalidation, among
others, while the IP courts are responsible for handling judicial issues such as hearing patent
infringement cases and judicial remedies for decisions of the JPO. If a party, including an accused
infringer, wants to challenge validity of a patent, it needs to institute a trial of invalidation with the
JPO, he could not challenge validity of an involved patent in a single judicial procedure such as alawsuit on infringement of the involved patent. This institutional arrangement obviously runs
contrary to judicial economy. In regards to patent invalidation, the administrative procedure andjudicial procedure are parallel to each other, and the issues cannot be handled in a single andunified process that may save costs of the involved parties and the administrative and judicial
resources as well.

IV. Rationale and efficiency of the patent prosecution and litigation system inJapan
1. Efficiency of the patent prosecution and litigation system in Japan
During the past half century, JPO has remained one of the leading patent offices in the world.
It can be proved easily that JPO has a high efficiency, remaining one of the top 3 patent offices
worldwide. The IP courts in Japan also have a high efficiency. Such high efficiency has beenachieved by enforcement of the patent prosecution and litigation system in Japan.

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2. The Kilby decision
In the Kilby case in 2000, the Supreme Court issued its decision, holding that if a patent isapparently invalid, the patentee may not be supported by court to claim injunction and damages
against the defendant because it is a kind of abuse of right. An “apparent invalidity defense” wasthus initiated.3 While incurring lots of criticisms, the Kilby decision has meanwhile received highpraise from the IP academia and judges. It is reasonable and equitable, for it can give solution to
the conflicts at one time and does not need to incur both administrative and judicial procedures,and expedite the patent infringement litigation. It can save procedures of patent prosecution andlitigation and contribute to judicial economy of patent litigation, and it can hopefully overcome theintrinsic barrier within the patent law system in a Civil Law country. It can be said that the Kilby
decision initiated a new era for the patent law system in Japan. It could be deemed a truly
meaningful milestone case along the patent law history in Japan.
3. Legislation of Article 104-3 of the Patent Act
After the Kilby decision of the Supreme Court, the invalidation defense was legislated into
Article 104-3(1) of the Patent Act in 2004. It is in general more attractive for a defendant in patent
infringement lawsuits to claim defense of invalidation according to Article 104-3 than byfollowing the Kilby decision, because the court does not need to consider whether an involve
patent can be invalidated “apparently”. Article 104-3 “…authorized a court to decide validity of apatent in infringement lawsuits for total and single-round resolution of patent disputes. It does not
request the accused infringer to make an invalidation petition to the JPO.” 4 The invalidation
defense can ensure procedural economy for patent infringement lawsuits, and help saveadministrative, judicial and other social resources.
4. Double-track invalidation: advantages and disadvantages
Since the Kilby decision and legislation of Article 104-3 of the Patent Act, there developed adouble-track system for patent invalidation in Japan that may help increase efficiency of the patent
prosecution and litigation. Administratively, on one hand, a person may institute a trial ofinvalidation of a patent with JPO; judicially, on the other, if he was involved in a patent
3 See Ryuichi Shitara, “A New Trend in IP Litigation”, speaking at the PanEuropean Intellectual Property Summit: Brussels IP

2006, December 2006, at http://www.ip.courts.go.jp/eng/vcms_lf/061207_02.pdf (Note: all the websites cited by this report waslast accessed on September 30, 2016 and this will not be attached hereinafter).
4 Ibid.

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infringement lawsuit, he may select to allege an invalidation defense. Regarding its potential
advantages, the invalidation defense is argued to be construed “to aim to solve disputes on
infringement of patent rights within the procedures for patent infringement suits to the greatest
possible extent, thereby achieving prompt solution to such disputes”, and “to prevent a delay incourt proceedings that would occur when the court conducts examination and determination on anallegation of invalidity”, whether allegation or counter-allegation of invalidity of a patent. 5
However, it is argued that the invalidation defense may have disadvantages, too, such as placing
more burdens on the patent right holders and there may have contradiction between the JPO andthe IP courts, and it may even deteriorate the legal stability and reliability of the patent system.6
However, these aspects may not well justified. If taking into consideration of all the aspects theinvalidation defense may have brought to the patent law system in Japan, it can be said the doubletrack invalidation system had essentially initiated a new era for the patent law of Japan.
5. The debated issues
When a legal system is evaluated, generally people need to see whether it is fair and efficient.
Efficiency is easier to describe or compare, such as that of JPO and the IP courts in Japan.
Comparatively, fairness or justice of a system is rather difficult to argue or justify. For invalidation
defense, there are basically two kinds of points of view, i.e., for it or against it. With theinvalidation defense, the court can settle the patent disputes more confidently and appropriately
with better and speedy solution in a way possibly benefit all parties. However, those criticizing theinvalidation defense deemed that after the Kilby decision, the winning rate of patentees in patent
infringement litigation was as low as 20%, and there had less patent infringement lawsuits since
2000.7 Judge Shitara observed the reported low winning rate of about 25% of patent right holders
may be misleading because it overlooked those settled between parties without judgment of the IP
courts. Furthermore, effective proceedings and appropriate judgments are more important than asimple winning rate for patent right holders. 8 The central debated issue regarding invalidation
defense is whether this mechanism had promoted the patent system in Japan or become a barrier tothe patent system or the industry in the past decade?

5 Sumiko Sekine, “Allegation of Patent Invalidity in Patent Infringement Litigation”, April 2009, at

http://www.ip.courts.go.jp/eng/vcms_lf/090415_1.pdf.
6 See Makiko Takabe, “The measure to harmonize patent trial and litigation in Japan”, May 2016, at

http://www.ip.courts.go.jp/eng/vcms_lf/harmonization_TAKABE.pdf
7 See, e.g., “Establishment and Operation of a Patent System Conducive to Patent Stability in Infringement Lawsuits”, IIP Bulletin,

2014, Vol.23, pp.48-55.
8 See Ryuichi Shitara, “Intellectual Property Litigations in Japan and IP High Court”, February 2015, at

http://www.ip.courts.go.jp/eng/vcms_lf/150226_rikadai.pdf.

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6. Statistical analysis of possible negative influence caused by the invalidation defense
Regarding the role of invalidation defense, it may be applicable to use IP indicators toillustrate: Whether patenting activities in Japan had been held back? Whether patenting activities andthe related receipt of charge for IP use by Japanese companies became less competitive? Whether
there had a trend of less IP lawsuits and can they sustain a functional patent system in Japan?
(1) Domestic: the trend of patent applications and patents in force at JPO
It is observed, since 2001, there did have a trend of decreasing in patent application with
JPO, and this trend of decreasing correlates clearly with the trend of resident patent applications,but not that of the non-resident patent applications which have been remaining at a same or even aslightly higher level. This may have paradoxical explanations: if domestic patent applicants inJapan had been discouraged by the Kilby decision or Article 104-3 of the Patent Act, their
sentiment had not been shared by the foreign patent applicants; and, if the resident applicants ofJapan remained as reasonable as the non-residents, ignoring of the possible influence ofinvalidation defense on patent application, then the decreasing of resident patent applications may
have alternative reasons. In addition, the patent in force had manifested a trend of steadyincreasing in the past decade (2004-2014). This may indicate a trend of increasing of control andcompetitiveness in domestic market in Japan.9(2) International: PCT applications, patent families and others
According to the data of WIPO, in 1996-2014, the number of PCT applications filed by theresidents of Japan had been in a trend of increasing. Additionally, during roughly the past decade(2005-2013), it is observed that the PCT national phase entries filed by the residents of Japan had
been increasing steadily, second only to the US, and much higher than those of Germany, France,
Switzerland and others.10 At international dimension, in 1996-2012, the number of patent families
owned by the residents of Japan had been in a trend of increasing. According to the data of theWorld Bank, in 1996-2014, the receipt of charge for IP use by the residents of Japan was in a trendof increasing, second only to the US. Moreover, there observed obvious correlations between the
PCT applications, the patent families, and receipt of charge for IP use, of or owned by the residents
of Japan. These trends and their mutual correlations may indicate that the increasing global
9 WIPO, World Intellectual Property Indicators (2015), WIPO Publication No. 941E, p. 51.
10 WIPO, Patent Cooperation Treaty Yearly Review (2015), WIPO Publication No. 901E/2015, p. 53.

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competitiveness of Japan had not been expectedly influenced or held back by the invalidation
defense since 2000.
(3) The trend of civil patent cases filed before the IP courts
It is observed that the number of civil patent cases filed before all the district courts in Japanremained comparatively few during 1990-2015, roughly between 100~220 a year. For civil IP
appeal cases filed before IPHC (before 2005, it was the Tokyo High Court), during 2005-2015,
there observed no trend of decreasing of IP lawsuits as second instance. For the number of lawsuits
against JPO filed before the IPHC, however, it did experience a trend of decreasing during theperiod. It may be reasonable to say, in the past two decades or so, though there had few civil patent
cases (about 120-220 a year) in all the district courts, and even less civil patent appeal cases in the
IPHC, the judicial patent law system has been efficient and competent to help sustain theincreasing millions of patents in force in Japan. Based on the statistical data and observations, it
can be argued that in the past decade, there had no less competitiveness of the industry of Japan,
whether domestically or internationally.

V. Comparison of the patent prosecution and litigation systems in Japan, the US
and Germany
Relevant data may imply that the JPO is at the same level with the USPTO, and thepatenting activity in Japan is almost as active as those in the US. However, it was observed that in
the past decade (2006-2015), the number of lawsuits against decisions of the JPO and the USPTO
filed before the IPHC and the CAFC, respectively, are in sharp contrast. Regarding patent
infringement lawsuits, it was observed that the number of civil patent lawsuits in Japan remained
extremely fewer than those in the US, whether for the first instance or the second instance. These
trends are interesting and the underlying reasons may deserve further exploration.
Believably, the patent system in Japan has been a successful one that can support well theindustry, trade and economy of Japan by promoting innovation and commercialization, as
indicated by the success of the many transnational companies originated in Japan. Judicially, in theUS, in contrast to the general impression that patentees are more like to be supported before afederal court in the US, researchers found that during 2009-2013, the winning rate of patentees in
the federal courts of the US had been remained 26%, seemingly at the same level as that in Japan.

viiiVI. Conclusion and recommendation: experience and lessons for China
Based on the observations and justification in the several parts above, it can be said thepatent prosecution and litigation system in Japan has the following features. Firstly, its historicalevolution in the 20th/21st century has been a slow process in a long time. Secondly, the patent
prosecution and litigation system has been well supplied by other laws, such as the Code of Civil
Procedure. Thirdly, there is a double-track system for patent invalidation before the JPO and the IP
courts, respectively. Fourthly, the IP court system, supplied by the judicial research officials andtechnical advisors, has been well designed by taking into consideration of the features of patent
practice in Japan. Fifthly, the IPHC has been playing a central and critical role in the enforcementof patent law in Japan, similar to that of the CAFC in the US. Sixthly, there have roughly 200 civil
patent lawsuits each year before the IP district courts in Japan, together with even fewer civil
patent appeal cases before the IPHC, while the judicial IP or patent system can help sustain thepatent prosecution and litigation system and in general the patent law system in Japan. Finally, themost important feature regarding patent prosecution and litigation system in Japan is theinvalidation defense realized by the Kilby decision in 2000 and Article 104-3 of the Patent Act. It
could be deemed an important creation along the patent law history of Japan in the 21st century.
For recommendations, China may need to consider whether to introduce the invalidation
defense in proceedings of patent infringement litigation to solve the issues of procedural
redundancy, patent litigation cycle and others. Within the procedure for patent infringement, an IP
court may not need to sustain the proceedings to wait for a decision on patent invalidity from the
Patent Review Board under the State Intellectual Property Office (SIPO) in China. The experienceof the IP court system in Japan also has meaningful implications for China to establish its IP or
patent court system.

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