22 International Jurisdiction about Intellectual Property Rightwith Special Reference to "Intellectual Property: Principles
Governing Jurisdiction, Choice of Law, and Judgments inTransnational Disputes" by the American Law InstituteResearch Fellow:Wataru Fukumoto
The recent number of actions filed in Japan against international infringement of intellectual property
rights is increasing. Under such circumstances, questions arise as to how to determine the applicable law andintellectual jurisdiction in respect of foreign intellectual property rights. In Japan, this issue has been vigorously
discussed since the Card Reader System case, and in particular, various academic views have been presented
regarding jurisdiction along with progress in the discussion for preparing the draft convention at the Hague
Conference on Private International Law. This study report focuses on the draft provisions drawn up by theAmerican Law Institute (ALI). Compared with the draft provisions prepared at the Hague Conference and thosedrawn up by the Max Planck Institute (MPI) as a revision of the Hague Conference Drafts, the ALI Draft is very
unique as it aims to achieve consolidation of proceedings. From a long-term perspective, intellectual property
laws will be further unified on a substantive and substantial level, and the necessity of such consolidation ofproceedings will increase accordingly. This report discusses noteworthy issues in this respect.

Ⅰ Introduction
The recent number of actions filed in Japanagainst international infringement of intellectual
property rights is increasing. Under suchcircumstances, questions naturally arise as to
how to determine the applicable law andintellectual jurisdiction in respect of foreign
intellectual property rights. In Japan, this issue
has been vigorously discussed since the Card
Reader System case, and in particular, various
academic views have been presented regarding
jurisdiction along with progress in the discussion
for preparing the draft convention at the Hague
Conference on Private International Law.
The American Law Institute (ALI) currently
works on and discusses “Intellectual Property:
Principles Governing Jurisdiction, Choice of Law,
and Judgments in Transnational Disputes”(hereinafter referred to as the “ALI Draft”).
The ALI Draft was initially prepared as a draft
convention, but currently, it is being developed as“principles” that are expected to be applied
voluntarily by courts and parties to disputes.
The contents of the ALI Draft will not be adopted
as provisions of the Convention without
modification, but at the present stage when
private international law or law of international
civil procedure applicable to international
intellectual property right disputes have yet tomature, there is no choice but to make reference
to dominant academic views in order to establish
rules available to domestic courts. For this reason,at the present moment, it is important to someextent to examine such draft provisions

IIP Bulletin 2005

suggested by experts overseas.
In particular, the scope of issues addressedin the draft convention discussed at the Hague
Conference have obviously been narrowing in thepast few years, and in light of such situation, therising trend toward intensification and elaborationin the academic discussion is likely to hit a ceilingin the next few years.
Based on this recognition, this study reporton international jurisdiction discusses the ALI
Draft, which is widely accepted among experts
and contains unique provisions. The ALI Draft
addresses a wide range of issues including theissue of applicable law, and it has already beenstudied by some Japanese experts. This report
particularly focuses on cases where invalidationof industrial property rights arising out ofregistration is claimed in infringement actions,which were most controversial at the Hague
Conference, and on cases where proceedings
involving an industrial property right are initiatedin the court of the state of registration while
infringement actions regarding the right brought
in more than one state are consolidated andpending in the court of another state.
Please note that, because of limited space, thestructure of this summary is different from that of
the main text.

Ⅱ ALI Draft and Its Background
One of the points prioritized in the ALI Draft
is efficiency in dispute resolution. It is indeed
often the case that a patent right arising from aninvention made by a single natural or legal person● 162 ●

is registered in different states as different patentrights. From the perspective of ensuring
efficiency, it would be desirable for proceedings
involving all patent rights to be handled in one
forum state.
The ALI also argues that if proceedings
involving patent rights are handled in a single
forum, it would be possible to clarify thedifference in patent laws and patent practices
among states, and such opportunity would not beprovided unless proceedings are consolidated in asingle forum.
The ALI Draft is more unique andinteresting than other draft provisions and otheracademic view because it (i) allows a broader
jurisdiction, (ii) suggests consolidation ofproceedings in a single forum for the purpose ofpromoting efficiency, and (iii) focuses on thecapability of the court where proceedings should
be consolidated.
For comparison with such unique provisionsof the ALI Draft, this report also reviews the
progress in FY2004 in the discussion at theHague Conference and in major academic viewsat the Max Planck Institute (MPI).
1

Hague
Conference
International Law

onPrivateThe
Hague
ConferenceonPrivateInternational Law started working on the“Preliminary Draft Convention on Jurisdiction
and Foreign Judgments in Civil and Commercial
Matters” (hereinafter referred to as the “Hague
Conference Draft”) in 1996, and adopted a draft
convention tentatively at the Fifth Special
Commission in October 1999. Article 12 of the1999 Draft provided for exclusive jurisdiction,
stipulating in Paragraph 4 that the judgment on
the registration, validity, and invalidity ofindustrial property rights shall be subject to the
exclusive jurisdiction of the state of registration.
However, opinions were divided as toinfringement, and three types of provisions wereindicated in the draft: (1) the judgment on theinfringement and validity of right shall be subject
to exclusive jurisdiction; (2) the judgment on thevalidity of right shall be subject to exclusive
jurisdiction, and a defense of invalidity of rightshall not be examined in infringement actions;and (3) the judgment on the validity of right shallbe subject to exclusive jurisdiction, but a defenseof non-existence of right, if any, may be examined
in infringement actions.
The issue of jurisdiction in respect of theinfringement and validity of intellectual property
rights also brought about an intense debate at the
Diplomatic Conference held in 2001. New draft
provisions were proposed at this diplomaticconference: (1) the ruling in the matters arising

as incidental question shall have no binding effectin subsequent proceedings even to the same
parties concerned; and (2)‘court’ shall include a
Patent Office or similar agency.
However, the negotiation process faced
challenges due to an extremely broad range ofmatters
addressedintheConvention.
Consequently, since 2002, the negotiation has
been preferentially focused on the core area
where consensus is expected to be reachedamong the Members.
As of 2004, the “Preliminary Draft
Convention on Exclusive Choice of Court
Agreements” (hereinafter referred to as the“2004 Draft”) is being prepared as the first draft
convention on jurisdiction by agreement. Article
2(2)(k) of the 2004 Draft includes the following
provision. Article 2 lists exemptions from thescope of application, which can be interpreted asmeaning that the Convention may apply to
infringement actions regarding intellectual
property rights other than copyrights.
On the other hand, a defense of invalidity ofright is provided in Article 10, which is partiallyparenthesized due to the lack of common
consensus.
Under Paragraph 1, on which consensus has
been reached, the ruling on the validity of anindustrial property right disputed as an incidental
question shall not be recognized or enforced
under the Convention, which follows the trend in
the past discussions at the Hague Conference.
Paragraph 2 is laid down with the aim ofstressing that the issue of validity of an
intellectual property right shall be subject to
exclusive jurisdiction of the courts of the state
under the law of which the intellectual property
right arose. According to this provision, the courtof a state may refuse to recognize or enforce its
judgment on the validity of right on the groundthat the judgment is inconsistent with the rulingmade by the court of another state under the lawof which the right arose. In this provision, “court”
is supposed to include a patent office. In
consequence, where the patent office makes adecision to invalidate a registered patent right,
the judgment on a patent infringement action thatis made on the basis of the validity of the patentshall not be recognized or enforced.
Paragraph 3 goes a step further than
Paragraph 2. In accordance with Paragraph 3,
where not only a ruling has been made on thevalidity of an intellectual property right in thestate under the law of which the right arose but
also the proceedings on validity are pending inthat state, the court of another state adjudicating
an infringement action regarding the intellectual
property right pursuant to a licensing contract
may postpone recognition or enforcement of thejudgment or refuse an application therefor.

● 163 ●IIP Bulletin 2005

However, the opportunities to file an application
will not be completely lost because a refusal
under this article does not prevent a subsequent
application for recognition or enforcement of thejudgment.
2

Discussion at other entities

While the discussion at the Hague
Conference focuses on exclusive choice of court
agreements, the MPI has worked on a revision of
the original Hague Conference Draft. The MPI
Draft will be included in Intellectual Property in
the Conflict of Laws, which is to be published inearly 2005.
The provisions on the validity in the MPI
Draft are almost the same as those in the Hague
Conference Draft of 2001. The judgment on thevalidity of industrial property rights arising out ofregistration shall be subject to the exclusive
jurisdiction of the state of registration, whereas
the judgment on a defense of invalidity of rightdisputed in infringement actions as incidental
matters shall not be subject to the exclusive
jurisdiction of the state of registration. An
additional provision is given in parentheses thatthe judgment on such incidental matters shall not
be binding on any actions brought later.
This study report particularly discusses
cases where proceedings involving an industrial
property right are initiated in the court of thestate of registration while infringement actions
regarding the right are consolidated and pending
in the court of another state. As mentioned later,
the ALI sets very interesting provisions aimed topromote consolidation of proceedings, while
focusing on the capability of the court.
In this respect, the report also reviews theprovisions of the TRIPS Agreement of patentoffices and courts and points out the necessity toprovide for a scheme to check the capability of
the court where proceedings are consolidated.
Concurrent jurisdiction occurs between the
court in one state and the patent office in anotherstate and between the court of one state and thecourt of another state. This report presents thediscussion on lis pendens in international civil
procedure, which has become relatively
developed within the framework of domestic law.
In Japan, discussion on lis pendens ininternational civil procedure is complicated, andthe comparative theory, which is often regarded
as being closer to common law, seems to be
somewhat dominant among experts and courts.
However, a precedent judgment addressing thisissue was rendered only by a lower court. The
Supreme Court referred to lis pendens in the
recent case (Tsuburaya Production case), but adecisive conclusion has yet to be drawn.
This report also reviews the provisions of

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the “ALI/UNIDROIT Principles and Rules ofTransnational Civil Procedure,” with the aim ofinquiring into the outcome of the comparison
between common law and civil law from the
project carried out by the ALI and the
UNIDROIT.
The provisions on lis pendens in the ALI
Draft are more detailed than those in the
UNIDROIT Principles and Rules, and in particular,
the ALI Draft includes provisions based on thetheory of regulation based on the possibility ofobtaining recognition, which is under the
influence of common law. In this respect, how the
ALI Draft will affect court practices in the UnitedStates is very interesting.

Ⅲ

Actions on Validity and Lis
Pendens in International Civil
Procedure

As mentioned above, the controversial issue
at the Hague Conference on Private International
Law was how to provide for cases whereinvalidation of industrial property rights arisingout of registration in foreign states is claimed in
infringement actions. It is also necessary toprovide for cases where actions are brought inmore than one state.
This chapter reviews the issue of jurisdiction
over infringement actions and actions fordeclaration, which is emphasized in the ALI Draft,
and the issue of lis pendens in international civil
procedure, on which discussion among Japaneseexperts has become relatively developed inconnection with coordination of jurisdiction
between courts.
1

Jurisdiction over infringement actions

The ALI Draft provides for the rules forjurisdiction as follows: Articles 201 to 203
provide for the state where the defendant has its
habitual residence as the general forum state,jurisdiction by agreement, and the forum in thecase of the defendant’s response, and Articles 204
and 205 provide for the special forum for
infringement actions and actions regarding
contracts. As for infringement actions, the ALI
Draft basically gives jurisdiction to the place
where the infringement was committed, and thescope of jurisdiction given under the ALI Draft isbroader than that given under the MPI Draft.
According to both the ALI Draft and the MPI
Draft, the state of registration shall not havecompletely exclusive jurisdiction. Both drafts
give jurisdiction to the state where the defendant
has its habitual residence as the general forum
state, to which actions against infringements
occurring all over the world may be brought.
Both drafts also give jurisdiction to the state● 164 ●

where the defendant acted to cause the alleged
infringement, under certain requirements, but thescope of the state of the defendant’s act differs
between the drafts. According to the ALI Draft,
jurisdiction shall be given to the state where thedefendant acted, including preparatory acts, aswell as the state to which the alleged
infringement was directed, while according to the
MPI Draft, jurisdiction shall be given to the stateof the defendant’s act only in the case of
ubiquitous infringement. Furthermore, the MPI
Draft provides for a limitative requirement thatjurisdiction shall be given only if (a) an essential
part of the activities which are claimed to havecaused the infringement has been carried out by
the defendant in the Forum State, and (b) the
activities which are claimed to have caused theinfringement are not aimed at the market in theContracting State where the defendant ishabitually resident, and have no substantialcommercial effect there.
The MPI Draft is also unique for theprovision on ubiquitous infringement. The
assumed case of ubiquitous infringement is thatan act committed in a state has affected an infinite
number of other states and therefore the range ofthe affected area cannot be specified. A typicalcase is an intellectual property right infringement
via the Internet.
Neither the ALI Draft nor the MPI Draft
gives exclusive jurisdiction over infringement
actions to the state of registration, and therefore,
it is necessary to consider how to deal with cases
where the validity of a patent right is challenged
as an incidental question.
2

Actions on validity and a defense ofinvalidity

In accordance with the draft provisions
prepared at the Hague Conference, actions on thevalidity of industrial property rights arising out ofregistration shall be subject to the exclusive
jurisdiction of the state of registration. There wascontroversy over whether or not to include
infringement actions in the scope of exclusive
jurisdiction of the state of registration, and should
they be included in the scope of exclusive
jurisdiction, how to deal with the claim forinvalidation of rights in infringement actions.
In this respect, the provisions of the ALI
Draft are very unique. The ALI Draft deals withthis issue under the provisions on actions fordeclaration in general. Actions on the validity of aright arising out of registration in one state shallbe subject to the exclusive jurisdiction of thestate of registration, whereas actions on thevalidity of a right registered in more than one
state shall be subject to the exclusive jurisdictionof the state where the defendant has its principal

place of business, and a defense of or acounterclaim for invalidity of a patent right may
be adjudicated in an infringement action.
In light of the ALI’s policy of prioritizing
efficiency, it may be reasonable to provide that adefense of invalidity may be adjudicated in an
infringement action, whereas the ALI gives avery broad jurisdiction to the state where thedefendant has its principal place, which is one of
the most ambitious provisions in the ALI Draft.
This provision was not seen in the draft
convention published in 2002.
However, it seems somewhat disputable togive exclusive jurisdiction to the courts of thestate where the defendant has its principal placeof business in respect of patent rights that exist
all over the world. It is understandable that the
ALI laid down the draft with strong interest inactions brought against infringements via theInternet, but the courts of the state where thedefendant’s principal place of business is located
do not always have sufficient experience orcapability to handle proceedings involving foreign
intellectual property rights.
As mentioned above, the note attached to
Article 33 of the TRIPS Agreement allows
Members to use examination results given byanother state without modification. This provision
relates to the administrative authorities, but it
implies the fact that the patent examination
capability differs among states. The provisions of
the Convention should be prepared while taking
into consideration the difference among courts inthe actual capability to adjudicate cases involving
foreign intellectual property rights. As for the
ALI Draft, more detailed discussion may benecessary for the provisions of Article 225(4)(d)and Article 226(2)(g), which will be mentioned
later.
3

Concurrent action in international civil
procedure

The ALI Draft contains detailed provisions
on the issue of lis pendens in Chapter 2 titled“Simplification of Multiterritorial Actions.” TheMPI Draft receives a higher evaluation because it
provides for jurisdiction more restrictively.
However, the MPI Draft still needs to include a
specific provision on lis pendens in international
civil procedure, because even in accordance withthe jurisdiction provision of the MPI Draft,
exclusive jurisdiction cannot be exercised where
the infringement action and judgment thereof are
only effective between the parties concerned.
Therefore, the ALI Draft deserves credit forincluding detailed provisions on lis pendens.
The ALI Draft is based on the premise thatproceedings for international actions regarding
intellectual
propertyrightsshouldbe● 165 ●IIP Bulletin 2005

consolidated in judicial bodies in a single forum.
Consequently, Article 224 provides for lis pendens
in international civil procedure, whereas Article
225 also regulates cases where there is aconnection between actions brought by the sameplaintiff against different defendants. If there are
exceptional circumstances as set forth in Article
226, the court to which jurisdiction is to be givenin accordance with Article 224 or 225 shalldecline jurisdiction.
Academic views in Japan regarding lis
pendens in international civil procedure are
divided, including the theory of regulation basedon the possibility of obtaining recognition and thecomparative theory. Although a decisive
conclusion has yet to be drawn, courts often apply
the balance of interest theory.
The theory of regulation based on thepossibility of obtaining recognition is often
regarded as being closer whereas the balance ofinterest theory is regarded as being closer tocommon law. The ALI Draft adopts the theory of
regulation based on the possibility of obtaining
recognition under Article 224. The ALI admits
this theory is not familiar to US legal
professionals, but should it be adopted in US
court practices, it would have a significant
influence. Careful attention should be paid to the
future trend.
On the other hand, the ALI repeatedly uses
the concept of “transaction or series oftransactions or occurrences” as a criterion for
judging the scope of actions to be included in the
expanded jurisdiction. Article 224 of the ALI
Draft also uses this concept for judging whether
or not the court second seized should suspend theproceedings. This concept under US law seems tocontemplate a very broad scope of jurisdiction.

Ⅳ Consolidation of Jurisdictions
and Claims Made before Patent
Offices
The issue of lis pendens in international civil
procedure is widely discussed among Japaneseexperts on private interminable law. The major
point of this issue is how to deal with proceedings
for an action brought in a domestic court as thecourt second seized where another action ispending in a foreign court as the court first seized.
Since it is impossible to oblige a court to refer thecase to another court unless provided under aconvention, consolidation of actions has not been
considered very positively. There is anotherquestion on how to deal with cases where theissue disputed in an intellectual property rightaction at the court of one state is to be examinedat the patent office of another state. The ALI
Draft is reviewed in respect of these issues.

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1

Consolidation of actions

Article 225 is titled “Consolidation of
Territorial Claims.”
While Article 224 provides for lis pendens,
Article 225 provides for the criteria for judging
whether or not there are other actions to beconsolidated.
The procedures under Article 225 are
divided into two phases: the court should first
determine whether or not “related” actions
should be consolidated, and should next consider
whether it should carry out proceedings for the
consolidated actions or suspend proceedings.
Whether or not actions and claims are“related” is determined in accordance with
Paragraph 2. As under Articles 220 and 224
claims shall be deemed to be related if they ariseout of the same transaction or “series oftransactions or occurrences.”
Where the court, having considered thesematters, determines that the actions should be
consolidated, the court should next consider
whether it should retain jurisdiction over the
consolidated actions or suspend proceedings infavor of another court. When determining this,the court should consider the matters listed in
Paragraph 4.
Among the matters set forth in Paragraph 4,
those mentioned in (d) and (e) relate to thecapability of courts. It provides that consolidation
shall not be required if the court were “obliged toconsider novel or complex questions of foreignlaw.” Consolidation is desired for the purpose ofpromoting efficiency, and efficiency would be
reduced if the proceedings to be consolidated
include those for actions to which laws of acompletely different legal system are applicable.
Subparagraph (e) focuses on such capabilityof the court, i.e. “whether the court first seized
would be required to decide factual issues
requiring procedures unavailable in thatjurisdiction.”
Despite these detailed provisions on
consolidation, the ALI considers it difficult toactually consolidate proceedings under thecurrent system of law both in Europe and in the
United States. In Europe, under Article 27 of theBrussels Regulation 1, the jurisdiction of thecourt first seized shall prevail over that of thecourt second seized. However, it is provided
under EU law that the courts of the state where
the defendant has its address shall have basic
jurisdiction whereas patent rights, trademark
rights, design rights, and other rights arising outof registration shall be subject to the exclusive
jurisdiction of the state of registration. Due tothese provisions, it is impossible to consolidate
proceedings in a single forum under EU law.
Under US law, on the other hand,● 166 ●

proceedings are highly likely to be consolidated,but the difficulty in consolidation is also
recognized. One of the reasons for such difficultyis that the procedure for suspending proceedings
under US law, which aims to regulate lis pendens,
is not mandatory. It is also pointed out, as a more
important reason, that consolidation of actions
would conflict with due process provisions.
2Claimsofficesmadebeforeforeign

patentAs mentioned in the previous section, the
ALI not only discusses whether or not to rejectan action brought to the court of one state whenanother action is pending in the court of anotherstate, but also attempts to consolidate intellectual
property right actions that may be brought tocourts in more than one state. Article 226
provides that the court where actions are to beconsolidated in accordance with Article 225
should decline jurisdiction if a court of anotherstate is more appropriate to resolve the dispute.
Article 226(1) provides as follows.
In exceptional circumstances, when thejurisdiction of the court seized is not founded on
an exclusive choice of court agreement valid
under § 202, or on a declaration of nonliability
under § 223, the court may, on application by aparty, suspend its proceedings if in that case acourt of mother State has jurisdiction and isclearly more appropriate to resolve the dispute.
Such application must be made no later than at
the time of die first defense on the merits
Exceptional circumstances are specified in
Paragraph 2. Among these circumstances, the one
mentioned in (g) is noteworthy. Under theprovision of this subparagraph, focusing on patent
cases, the court may suspend proceedings if acourt of another state has special capability tohandle patent cases, even if such court is not the
court first seized.
The ALI refers to the U.K. Patent Office and the
U.S. Court of Appeals for the Federal Circuit(CAFC) as courts with such special capability. As
mentioned above, it would bring about somemerits to enable a court of one state to determine
the validity of intellectual property rights arisingout of all states concerned, but such scheme
would not be achieved without the provision of
Subparagraph (g). However, the ALI Draft is only
a rule that is expected to be adopted by courts attheir discretion or by the parties concerned byagreement, and it is not a convention. Therefore,
it cannot impose obligations to states or require
courts to refer cases to more appropriate courts.
The provision of this article, under which thecourt may suspend the proceedings if there is amore appropriate court to handle the case, may be
the limit of such “rule”.
Within this limit, it may still be too early to
set a provision, such as Article 223(2)(b), whichenables a court of one state to determine thevalidity of industrial property rights arising out ofregistration in all states concerned.
A question is posed in this respect. In the
United States, courts play a significant role indetermining the validity of patent rights, whereas
in Japan, Germany, and the Republic of Korea,
patent offices play this role. The question iswhether or not the proceedings should also be
suspended where the validity of patent rights ischallenged at such patent offices.
As mentioned above, in the discussion at theHague Conference, rulings made by patent offices
are treated in the same manner as judgments
rendered by courts.
On the other hand, unlike the Japanese
Patent Law, the US Patent Law authorizes courts
rather than the USPTO to determine the validityof patent rights. However, it has been pointed outthat it is costly to bring actions for invalidation ofpatent rights to courts, and the utilization of the
USPTO has been stressed on several occasions.
Along with this trend, the US Patent Law hasgone through several revisions.
Should the USPTO’s role become moresignificant, there may be some possibility that the
ALI would require courts to suspend theproceedings where trials for invalidation are
demanded at foreign patent offices under Article
226.

Ⅴ Conclusion
Since the discussion at the Hague
Conference on Private International Law has
been focused on limited issues, there is little
chance that a general convention on jurisdiction
over intellectual property right actions will beestablished in the near future.
On the other hand, as the ALI suggests, it isdesired that the proceedings should be
consolidated in specific juridical bodies for the
purpose of ensuring efficiency and fairness inresolution of international disputes overintellectual property rights. in order to realize
consolidation of the proceedings, it is necessary
to establish a system under which courts should
suspendtheproceedingsor
considerconsolidating the proceedings in other judicial
bodies, as the case may be. To this end, it isdesirable that courts should be obliged to suspend
the proceedings or refer cases to more
appropriate bodies, but imposing such obligations
has yet to be fully accepted even within theframework of domestic law, and it is difficult toachieve it unless provided under a convention.

● 167 ●IIP Bulletin 2005

Since FY2004, the ALI draft has been prepared in
the form of principles rather than draft provisions.
The ALI Draft is unique for its detailed provisions
on consolidation of judicial proceedings, but suchprovisions mainly aim to leave it to the discretionof the courts to determine whether or not toconsolidate or decline jurisdiction.
It would also be difficult to set the criteria
for requiring courts to suspend the proceedings
or refer cases to more appropriate bodies. The
requirements for consolidating or declining
jurisdiction may gradually be established as
courts determine this issue at their discretion,
but for the time being, reference will be made todominant academic views when discussing suchrequirements. In this respect, it is necessary to
examine academic views, and in particular, it issignificant to continue following discussions on
the ALI Draft and other draft conventions.

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● 168 ●