3

Procedures for the Establishment and Transfer of Industrial
Property Rights and Requirements for Such Rights to Have
Legal Effects against Third Parties in Major Countries andInternational Organizations

As economic activities become increasingly global and borderless, how to strengthen the international
competitiveness of Japanese industry is being actively studied. Among others, speeding up the registration
procedures for industrial property rights is an important task.
The existing Japanese patent and trademark systems seem to have problems such as requiring certificatesthat are stricter than those required in other countries. To clarify such problems, it is necessary to investigate theforeign procedures for the transfer of rights.
Furthermore, as the license registration system is rarely used in Japan, the transfer of a patent right due tobankruptcy affects the legal status of non-exclusive licensees whose license is not legally effective against third
parties.
For the purpose of speeding up the procedures, the Japan Patent Office currently considers providing on line
registration systems, but there is almost no reliable references regarding the legal requirements and effects under
the patent and trademark systems in other countries.
The purose of this study is harmonizing the Japanese registration systems with foreign ones, andinvestigating the intellectual property systems in major countries and international organizations (18 systems in
total), from the perspective of the material fact theory, and also investigating information management systems
in such countries and organizations.

Part 1Introduction: Purpose and Outline of the
Study
This study investigates the procedures forfiling applications for patent rights and trademark
rights, requirements for such rights to have legal
effects against third parties, and information
management systems in major countries andinternational organizations, with the aim ofcontributing to the discussion on how to develop
desirable procedures for the establishment andtransfer of industrial property rights anduser-friendly registration systems for such rights
in Japan, while taking international harmonization
into account.
This study targets 18 systems in total;
patent and trademark systems in the UnitedStates, United Kingdom, Canada, Germany,
France, China, Republic of Korea, Taiwan, theEuropean Patent Convention and the Regulationon the Community Trade Mark (CTM).
It examines the specific procedures withregard to the following matters as well as therequirements for rights to have effect against
third parties, from the perspective of the material
fact theory: (1) establishment of patent rights andtrademark rights; (2) transfer of rights; (3)licensing rights of the patented invention orregistered trademark; (4) security interest; (5)other changes in rights; (6) maintenance andenforcement of patent rights and trademark rights,

IIP Bulletin 2005

and restrictions on the disposal thereof.
It also examines information management
systems covering the process from the filing of
applications to the extinguishment of rights.
Characteristic features of each systems are
outlined below.

Ⅰ US Patent System
Under the U.S. patent system, therequirements for a licensing right to have legal
effect against third parties are characterized asfollows.
When a licensor (patentee) files forbankruptcy, the Trustee of the bankrupt debtor(the licensor) may reject the license if it is an“executory contract.” When this happens, thelicensee loses its license rights and any
investment made in reliance on the patent rights
may be lost.
Provisions were added to the U.S.
Bankruptcy Code (BC) in 1988 to protect
licensees confronted with these types ofproblems (BC §§ 101(35A), 365(n)). Special
protection is now afforded to licensees of certain
intellectual property (excluding trademark rights)
in the event the Trustee elects to reject thelicense.
In other words, unless and until the licensor
rejects the license, the licensor must, upon
written request by the licensee: (1) perform thelicense agreement or (2) provide the licensee● 18 ●

with the intellectual property held by the Trustee(BC § 365(n)(4)(A)).
Prior to rejecting the license, the Trustee
cannot interfere with the licensee’s rights under
the license, including the right to obtain theintellectual property from a third party. If theTrustee rejects the license as an executory
contract, the licensee may elect either to treat
the license agreement as terminated or to retain
its rights to the licensed technology (BC§ 365(n)(1)).
If the licensee elects to treat the license
agreement as terminated, the licensee will forfeit
any rights to the intellectual property, but thelicensee will have a breach of contract claim fordamages.
On the other hand, if the licensee elects toretain its rights to the licensed technology, thelicensee preserves its ability to use the licensed
invention according to the terms of the license as
it existed before the bankruptcy filing.
The licensee retains the right to enforce any
exclusivity provisions, but does not have the rightto obtain any specific performance by the licensor.
Also, the licensee must make all royalty
payments required under the agreement and isdeemed to have waived any rights to setoff of theroyalty payments and any claim allowable underBC § 503(b) arising from the performance of theagreement (BC § 365(n)(2)-(n)(3)). Furthermore,
the licensee’s access to future developments inthe technology is restricted as is the licensee’s
access to ancillary services such as maintenanceand training.
To take advantage of this option, the licensee
must make a written request to the licensor toallow the licensee to continue the use of thelicensed technology.
If the Trustee assumes the license, theTrustee must perform the license agreement
according to its terms. The BC allows the Trustee
toassignany
contracts
itassumes,notwithstanding any anti-assignment provision in
the agreement (BC § 365 (f)(3)). If the Trustee
assigns the agreement or sells the licensed
technology, the assignee or purchaser is subject
to the licensee’s license and the licensee willthen be making payments to, and receiving
maintenance and support from, the assignee orpurchaser.

Ⅱ U.S. Trademark System
Under the U.S. Trademark Law, trademark
rights are not established by registration but by
use. A common-law trademark can be obtained
based on the use of the mark for goods orservices. In general, a common law trademark is
only effective in the regions where the trademark
is used, and the right to use the trademark

depends on the goods or services to which thetrademark is applied.
The assignment of a U.S. trademark
application or U.S. trademark registration must
be in writing, duly executed, given for
consideration, and clearly indicate that the
goodwill is included (Lanham Act § 10, 15 U.S.C.
§ 1060). The sale of trademark rights apart fromthe goodwill symbolized by the trademark is
known as an “assignment in gross” and it isinvalid.
The general principle for the transfer of
trademark rights also applies to the bankruptcy
procedures or the procedures for the assignmentof the property of the estate for the benefit ofcreditors. The Trustee cannot sell the bankrupt
debtor’s trademark right apart from the goodwill.
If the Trustee sells the bankrupt debtor’s
trademark right with the goodwill, the purchaseror the new owner of the trademark right shallprevail over the debtor (the former owner). Suchassignment shall be effective to third parties at
the time of the sale by the Trustee, if, prior to thesale, the interested parties are given notice andopportunity of a hearing (BC § 363 (b)(1)).
The provisions newly added to the BC toprotect licensees (§§ 101(35A), 365(n)) shallapply to U.S. patent applications or US patentrights but they shall not apply to rights relating to
U.S. trademarks.

Ⅲ UK Patent System
Patent rights and trademark rights, being
personal property, can be held in trust. A
document which affects proprietorship of a patent,
whether by creating trusts or otherwise, is not
excluded from the Patent Office (PO) register.
Consequently, a document on the creation of truston patent can be registered, and failure to register
will cause an adverse consequence to the trustee.
The reasons are as follows; where the patentis subsequently infringed, the trustee or
exclusive licensee shall not be awarded damages
in respect of such subsequent infringement insome cases (Section 68 of the UK Patents Act),and any person who claims to have subsequently
acquired the patent bona fide shall be entitled tothe patent (Section 33 of the UK Patents Act).
Therefore, the person who has acquired a right toa patent can protect his right by registering theacquisition to prevent the patentee or former
patentee from assigning any conflicting right to athird party.

Ⅳ UK Trademark System
Trademark rights owned by a bankrupt vestin the trustee immediately on his appointment
taking effect or, in the case of the Official● 19 ●IIP Bulletin 2005

Receiver, on his becoming trustee. Like otherproperty, trademark rights vest in the trustee
without any conveyance, assignment or transfer(Section 306 of the Insolvency Act of 1986).
The trustee may register title to thetrademark. However, normally, the trustee or
Official Receiver notifies the PO of thebankruptcy and of his appointment. The PO
places a free text note on the register stating thatbankruptcy proceedings have commenced andthat the trustee or Official Receiver has been
appointed. Normally, the trustee or Official
Receiver will sell the trademark to satisfy thebankrupt’s creditors. Trademarks may be
assigned with or without an assignment of the
goodwill of the business (Section 24 of the Trade
Mark Act of 1994).
Corporate insolvency is dealt with in asimilar manner. Depending on the type of
insolvency proceedings, the insolvent company’s
assets will not automatically vest in the liquidator,
administrator, administrative receiver or nominee.
However, a liquidator is required to take allcompany property into his custody or control.
Where the company is being wound up by the
court, the court may order that all or any part ofthe property shall vest in the liquidator, andthereupon the property to which the order relates
vests accordingly (Section 145 of the Insolvency
Act of 1986).

V Canadian Patent System
As Canada is a confederation comprising
Quebec where civil law applies and nine otherprovinces where common law applies, it should be
noted that province-ordered issues such as ahypothec may be handled differently between
Quebec and the other nine provinces.
Under Quebec civil law, a hypothec on apatent right shall be in the form of a security
interest on movable property. The hypothec isvalid and enforceable between the parties at the
moment of its constitution, but publication isrequired in order for the hypothec to have effectagainst third parties and to establish where thehypothec ranks in respect to the rights of othercreditors.
In other nine Canadian provinces, a security
interest may be granted over intellectual property
in accordance with their particular personal
property security acts (PPSA).
In order to have a valid and enforceable
security interest in the nine provinces, thesecurity interest must be attached and be
perfected. The concept of attachment under the
PPSA is similar to the concept of publication
under the Quebec civil law.

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Ⅵ Canadian Trademark System
Trademark rights may exist at common law(Section 7 of the Trademarks Act) on the basis ofuse and distinctiveness even in the absence ofregistration. The unregistered trademark owner
may seek relief before the courts if anotherperson adopts a similarly confusing mark in acompetitive business.
However, it may be difficult in certain
circumstances for an unregistered trademark
owner to make out the elements necessary toobtain relief against a third party infringer. The
owner of an unregistered trademark must
establish that the unregistered trademark has
attained the distinctiveness and establish asufficient goodwill or reputation in respect of
those goods and services each time it wishes toenforce those unregistered rights.
These unregistered rights are also limited toa geographical area covered by the exposure of
the unregistered trademark. The unregisteredtrademark owner must also establish that the
infringing mark is confusing with theunregistered mark, and that the infringer has
passed off its goods or services for those of theunregistered trademark owner.
Enforcement of common law rights is usuallytaken before the provincial courts whereas relief
in respect of registered intellectual property
rights can be taken before the Federal Courts.
Thus, if unregistered rights are being affected in
more than one province, a separate action willneed to be taken in each province. Furthermore,should the owner wish to expand the use of its
trademarkbeyondtheinitialprovincial
boundaries, it may be precluded from doing so byanother party who had already adopted a similar
mark in that jurisdiction.
A trademark is transferable, and deemedalways to have been transferable, either inconnection with or separately from the goodwillof the business and in respect of either all orsome of the goods or services in association withwhich it has been used (Section 48(1) of theTrademarks Act).

Ⅶ German Patent System
The German patent system and the Japanese
patent system have many features in common
such as the substantive examination principle, thefirst-to-file principle, the publication system, andthe request for examination system. However,they also have differences in respect of thefollowing points.
In case of national German patent application,
the minimum formal requirement to bring alawsuit is the publication of the patent application.
In case of an EPC application, the minimum● 20 ●

formal requirement to bring a lawsuit is not only
the publication of the EPC application, but also
the publication of the German translation of theclaims of the EPC application at the German
Patent and Trademark Office (GPTO) if the EPC
application is not described in German.
Consequently, a lawsuit may be brought evenduring the pendency of the patent application.
Under the German Patent Act, theassignment of rights of a license, even in the caseof assignment arising from the bankruptcy of thepatentee, shall not affect licenses previously
granted to other persons (Section 15(3)).
Consequently, where a patent right is transferred,
the owner’s title as patentee is separated from his
title as licensor, and he shall lose the patent right
due to the transfer whereas he continues to be
the party to the license. Therefore, the licensee
may claim his beneficial excuse for the use of thepatented invention against the new owner of thepatent right to the extent of the license.
In the German practices, the legal
relationships between the assignor and theassignee are set by a contract beforehand, andtherefore no legal problems have been posed in
respect of the protection of licensees in the eventof the bankruptcy of the patentee.

Ⅷ German Trademark System
A license agreement for a German trademark
shall, immediately upon its conclusion, become
legally effective between the parties concernedand against third parties.
Unlike under Section 30 of the German
Patent Law as well as
Section 23 of theCommunity Trade Mark Regulation (European
Council Regulation 40/94 of 20 December 1993), alicense concerning a German trademark cannot
be recorded in the Register of the GPTO.
As a consequence, a third party cannot obtain
any information regarding licenses from theGerman Trademark Register. In the case that amark is assigned, the assignee may not be awareof the existing licenses with other parties.
Section 30(5) of the German Trademark Act
stipulates in this respect that the transfer of a
trademark shall not affect licenses previously
granted to third parties.
Thus, the granted licenses remain in force
even if the assignee did not have any knowledgeof the license.

Ⅸ French Patent System
The characteristic feature of the French
patent system is that the patent applicant has theright to sue for infringement (Article 613-1 of theFrench Intellectual Property Code).
Nevertheless, an action based on a French

patent application may be taken only after
publication of the patent application or
notification to the third party of a certified copy of
the application (Article 615-4 of the FrenchIntellectual Property Code). In case of European
patent application, such an action may be taken
only after publication, and if the application is not
in French, after publication by the French patentoffice of the French translation of the claims of
the application (Article 614-9 of the FrenchIntellectual Property Code).
Patent infringement action is under the
exclusive jurisdiction of the first instance Courts,
as well as the courts of appeal to which thesecourts are attached (Article 615-17 of the FrenchIntellectual Property Code and Rule 631(1) of theRegulations for the French Intellectual PropertyCode).
The exclusive licensee recorded in the patentregistermay
independently
initiatetheproceedings to sue for infringement if the patentee
fails to initiate the proceedings even after the
licensee makes a request for the patentee to sue
for infringement, unless otherwise provided in thelicense agreement (Article 615-2 of the FrenchIntellectual Property Code).

X French Trademark System
As in the case of patent, the trademark
applicant has also the right to sue forinfringement, and an action may also be taken
only after publication of the application or
notification to the alleged infringer of a copy of
the trademark application (Article 716-2 of theFrench Intellectual Property Code). The Court
will stay the proceedings till publication of the
trademark registration.
In the case of a trademark owned by two or
more persons, each co-owner may independently
sue for infringement in order to protect his
exclusive interest in the trademark, but shallsend a bill of complaint to other co-owners.

Ⅺ Chinese Patent System
The Chinese Patent System has thefollowing characteristic features.
(1) The scope of protection under the Chinese
Patent Law includes utility model and design inaddition to patent (Rule 2 of the Implementing
Regulations of the Chinese Patent Law).
(2) The intellectual property authorities in China
are specialized in different fields.
(3) Substantive examination shall be conducted
for patent applications (Article 35 of the Chinese
Patent Law) whereas it shall not be conducted for
utility model or design applications.
(4) The patent right shall take effect as of the dateof announcement (Articles 39 and 40 of the● 21 ●IIP Bulletin 2005

Chinese Patent Law) whereas any assignment of
the right to apply for a patent or the patent rightshall take effect as of the date of registration(Article 10 of the Chinese Patent Law). Where
the right to apply for a patent or the patent rightis assigned to a foreigner, the parties shallconclude a written contract and register it withthe patent administration department under theState Council (Article 10 of the Chinese Patent
Law). A patent license shall be registered as
required. Where a pledge is created on the patentright, the pledge contract shall take effect as ofthe date of registration.
(5) In the event of infringement, the patentee
may seek relief before the court as well as seek
protection before the authorities concerned.
The assignment of the patent right shall not
influence the effect of any license that has alreadytaken effect, unless otherwise provided under the
license agreement.
As for a patent license, the parties shallconclude a written contract and register it within
three months from the date on which the contract
takes effect. Unless it is clearly agreed that theregistration is required for the license to takeeffect, any license shall take effect on the datedesignated under the agreement between theparties and whether or not the license isregistered shall not influence the effect of thelicense between the parties. Unregistered license
shall not have effect against bona fide third
parties.

ⅩⅡ Chinese Trademark System
The Chinese Trademark System has thefollowing characteristic features.
(1) Protection under the Chinese Trademark Law
is afforded for a wide range of trademarks,
including trademarks for goods, service marks,
collective marks and certification marks ( Articles
3 and 4 of the Chinese Trademark Law).
(2) The intellectual property authorities in China
are specialized in different fields.
(3) The first-to-file principle (Article 29 of theChinese Trademark Law) and the principle of one
application for one trademark (Article 13 of theChinese Trademark Law) shall apply.
(4) A trademark right shall take effect as of thedate of registration at the Trademark Office(Article 37 of the Chinese Trademark Law).
Where a trademark right is assigned, theassignment shall take effect upon registration,and the assignee shall enjoy the trademark rightfrom the date of publication (Article 39 of theChinese Trademark Law). As for a trademark
license, a duplicate copy of the license contract
shall be registered at the Trademark Office within
three months from the date of conclusion of thecontract (Article 4 of the Law concerning

IIP Bulletin 2005

Registration of Trademark License Contracts),
and unregistered license shall not have effectagainst third parties. Where a pledge is createdon the trademark right, the pledge contract shalltake effect as of the date of registration.
(5) In the event of infringement, the trademark
owner may seek relief before the court as well as
seek protection before the authorities concerned.
The assignment of the trademark right shallnot influence the effect of any license that has
already taken effect, unless otherwise provided
under the license. Registered trademark license
shall have effect against any person who
subsequently obtains the trademark right.
As for a trademark license, the parties shallconclude a written contract and register it within
three months from the date on which the contract
takes effect. Unless it is clearly agreed that theregistration is required for the license to takeeffect, any license shall take effect on the datedesignated under the agreement between theparties. Unregistered license shall not have any
effect against bona fide third parties.

XⅢ Korean Patent System
The Korean patent system and the Japanese
patent system have many features in common.
An exclusive patent license shall not haveeffect unless the parties agree and register the
grant of the license (Article 101(1)(ii) of the
Korean Patent Act). Even if the written license
contract is notarised to secure the authenticity of
the license, the notarisation only proves that theparties are obliged to establish the license under
the contract, and such license shall not take effecteven between the parties.
On the other hand, a non-exclusive license
shall take effect between the parties if they agree
to the grant of the license.
A non-exclusive license shall not take effectagainst any person who subsequently acquires
the patent right or an exclusive license unless it
is registered (Article 118(1) of the Korean Patent
Law).
Under the Korean Patent Law, the effect of alicense may be claimed against third parties only
through registration, and notarization or depositof license contracts is not accepted.

XⅣ Korean Trademark System
The Korean trademark system and theJapanese trademark system have many featuresin common.
The requirements applicable to patent rights
shall also be applicable to trademark rights inorder for an exclusive license to take effect andfor a non-exclusive license to take effect between
the parties and have effect against third parties● 22 ●

(Articles 55, 56, and 58 of the Korean Trademark
Law).

XV Taiwan Patent System
There are three types of license in Taiwan,
monopolistic exclusive license, monopolistic
non-exclusive license (exclusive license under
the agreement in which the patentee shall notgrant the licensee the right to preclude othersfrom using the patented invention) andnon-exclusive license.
The exclusive licensee shall have amonopolistic, and in principle, exclusive right(the licensee may not be granted the right topreclude others by agreement) whereas the
non-exclusive
licensee
shall
have
a
non-monopolistic and non-exclusive right.
A patent license need not be registered totake effect (interpretation of the provision of
Article 59 of the Taiwan Patent Act). It shall takeeffect under substantive law immediately when
the parties reach an agreement. The licensor
cannot deny that the licensee has effectively
acquired the patent license on the ground that thelicense is not registered. This applies both toexclusive license and non-exclusive license.
After a non-exclusive license is registered,any person who has acquired the patent right or
exclusive license cannot refuse the claim made by
the licensee for the registered non-exclusive
license.
Under the Taiwan Patent Act, trust can becreated on patent rights (Article 59 of the Taiwan
Patent Act).

XⅥ Taiwan Trademark System
Similar to Taiwan patent rights, there are
two types of license concerning Taiwan
trademark rights: exclusive license andnon-exclusive license. In terms of significance,
exclusive trademark license and non-exclusive
trademark license are almost the same as
exclusive patent license and non-exclusive patent
license respectively.
However, unlike patent, the exclusive
trademark licensee shall have a monopolistic andexclusive right whereas the non-exclusive
trademark licensee shall have a non-monopolistic
but exclusive right.
In other words, since the Taiwan Trademark
Act does not have any provisions corresponding
to Article 84(1) and (2) of the Taiwan Patent Act,
either the licensor, the exclusive licensee, or the
non-exclusive licensee can claim his or her rights
against infringing third parties under his or her
own name to the extent of the license under theagreement.
Under the Taiwan Trademark Act, trust shallnot be created on trademark rights.

XⅦ Patent System under the European
Patent Convention (EPC)
Under Article 73 of the EPC, a European
Patent application can be licensed in whole or inpart for the whole or part of the territories of thedesignated contracting states. If the parties
desire, the licence can be registered with the
EPO; the interested party must produce
documents to satisfy the EPO that the licence has
been granted and pay the administrative fee. It is
not possible to initiate proceedings until theapplication has proceeded to grant.
Registration of license has no effect with the
EPO. Some national courts require registration ofa licence if it is to be relied upon. As there are nonational files for EP applications, the only
possible way is registering with the EPO.

XⅧ Trademark System under the
Regulation on the Community
Trade Mark (CTM)
Whilst the CTM Regulation sets out certain
rules regarding CTMs being objects of property,
Article 16 of the CTM Regulation sets out the
principle of dealing with CTMs as national
trademarks. Thus, when answering a question as
to transfer or assignment of CTMs, one must lookto the relevant national law of the member state
where the trademark proprietor has his habitualresidence or place of business.
The same applies to enforcement. Under
Article 91 of the CTM Regulation, each member
state must designate its own “Community Trade
Mark court”. As for infringement litigation, there
is no central community first instance court. Thus,
any claim will be brought to a “Community Trade
Mark court” in one of the member states which
will apply its own property and procedural law.

Part 2This part presents comparative tables on
industrial property systems in the countries andinternational organizations based on the results of
the research shown in Part 1.

● 23 ●(Senior Researcher: Akira Kｕｍａｓａｋａ）

IIP Bulletin 2005