㸳 Dispute Resolution Practices Concerning
Patent Rights or the like (*)
Regarding the practice of solving disputes over patent rights, utility model rights, and design rights (the“patent right or the like") in Japan, there is data indicating that the number of intellectual property related
lawsuits including patent infringement lawsuits in Japan is significantly lower than the number of suchlawsuits in other countries and that the win rate of the patentees in patent infringement lawsuits is low in Japanin comparison with other countries. Some people have pointed out that these circumstances make the Japanese
intellectual property systems difficult to use. There are various views regarding how Japanese companies solve
disputes over patent rights or the like. However, no one has necessarily captured the overall picture of cases
where the parties concerned solved the dispute without filing a lawsuit or where the parties concerned reached asettlement during a lawsuit. This research was conducted aiming to prepare basic materials for consideration ofdesirable ways of dispute resolution of patent right or the like for the future, by surveying the overall flow ofactions taken by Japanese companies or the like starting from the time of occurrence of a dispute concerning apatent right or the like until the time of resolution thereof and thereby clarifying actual state of how such disputes
have been resolved.

Ϩ Introduction
1

Background and purpose of thisresearch
Regarding the practice of solving disputes
over patent rights, utility model rights, anddesign rights (the “patent right, etc.”) in Japan,
there is data indicating that the number ofIP-related lawsuits including patent infringement
lawsuits filed in Japan is significantly lower thanthe number of such lawsuits filed in othercountries and that the win rate of the patentees inpatent infringement lawsuits is low in Japan incomparison with other countries. Some people
have pointed out that these circumstances makethe Japanese IP systems difficult to use.
On the other hand, in view the facts that data
indicates that half the lawsuits filed in Japan overpatent rights, etc. are resolved through settlement
and that, in those settled cases, the rate ofsettlement that is equivalent to winning a case fromthe viewpoint of the right holder is high, it has been
pointed out that the win rate of right holders is notnecessarily low in substance if such type ofsettlement is counted as a win. Furthermore, inJapan, the parties in a patent-related dispute wherepatent infringement is clearly recognizable tends toresolve the dispute through settlement before
filing a lawsuit. Some people say that, since thesecases may not be reflected in the litigation
statistics, the win rate of the right holders merely
appears to be low. Meanwhile, it may beconsidered that there are cases where the rightholders accept a settlement that is equivalent tolosing a case from the viewpoint of the rightholders for fear of suffering invalidation of theirpatent rights under Article 104-3 of the Patent
Act or in an attempt to avoid invalidation of theirpatent rights, for which the JPO had made adecision of invalidation in a trial for invalidation.
Also, some people pointed out that a
relatively small number of infringement lawsuits
are filed in Japan because Japanese companies tend
to avoid lawsuits for fear of a negative effect on thebusiness relationships with other companies in thesame industry and because of the risk ofreputational damage, etc. as a result of the very
fact of filing an infringement lawsuit, and because
large companies have the capability and preference
for settling patent-related disputes out of court.
As described above, there are various views
regarding how Japanese companies solve disputes
over patent rights, etc. However, no one hasnecessarily captured the overall picture of cases
where the parties concerned solved the disputewithout filing a lawsuit or where the parties
concerned reached a settlement in a lawsuit.
In a report compiled by the IntellectualProperty Committee of the Industrial Structure
Council and also in the Intellectual Property
Strategic Program 2014, further research andanalysis are considered to be necessary in order to
get a comprehensive understanding regarding how
disputes on patent rights, etc. arise and get resolved.
This report studies the overall flow ofactions taken by Japanese companies etc. starting(*) This is an English summary by Institute of Intellectual Property based on the FY2014 JPO-commissioned researchstudy report on the issues related to the industrial property rights system.
IIP Bulletin 2015 Vol.24● 30 ●from the time of occurrence of a disputeconcerning a patent right, etc. until the time ofresolution thereof and thereby clarifies how sucha dispute is resolved.
2

Method of conducting this research
In this research, I conducted the following
surveys in order to capture the entire picture ofdispute resolution practices.
(1) Research on judgments and settlements
I conducted research on the lawsuits overinfringement concerning patent rights, utility
model rights and design rights (the “patent rights,etc.”) where district courts handed down
judgments in the past 10 years and also on theappeals of those lawsuits where high courts
handed down judgments in the past 10 years.
Based on this research, I identified recent trends,etc. by carrying out a statistical analysis fromvarious perspectives such as the perspective of (a)who were the parties of those infringement
lawsuits concerning patent rights, etc. and (b)what types of judgments the courts handed down.
Thanks to the cooperation from theAdministrative Affairs Bureau, General Secretariatof the Supreme Court, I was able to study therecord of settlements and conducted similar
research on patent/utility model infringement
lawsuits that were ended by court settlement in
the past three years.

(3) Research on overseas information
I conducted a questionnaire survey on local
law firms to ask questions about the civil lawsuits
and infringement lawsuits over patent rights, etc.
in the U.S., the U.K., Germany, China, and South
Korea to gather information about the number ofcivil lawsuits, the number of infringement
lawsuits over patent rights, etc., and the relevant
background circumstances in the past three years
or so. Based on the survey results, I made acomparison between Japan and each of thosecountries and analyzed the difference.
(4) Questionnaire survey and interview
surveyI prepared a questionnaire containing
questions that were selected based on, among
other things, the result of domestic information
searches, and sent the questionnaire to 1,124
survey subjects in order to understand why theparties to a dispute reached a settlement insteadof filing a lawsuit or came to file a lawsuit after
detecting infringement, sending warnings, andhaving negotiations or why they reached asettlement, etc. after filing a lawsuit. I carried out
an analysis on the replies from 446 respondents.
Separately, I conducted an interview survey
concerning ten law firms and nine companies. In
this way, I conducted a domestic questionnaire
survey and a domestic interview survey.

ϩ Summary(2) Research on publicly available information
I conducted research on publicly available
information such as books, magazines, papers,
various reports, databases, and online informationthat have been published in and outside Japan
about civil cases and infringement lawsuits
involving patent rights, etc. and also about thesettlement system and the current state thereof.
I also conducted research on publicly
available information on institutions establishedto provide alternative dispute resolution for
disputes over patent rights, etc. in Japan from theperspective of the number of disputes handled bysuch institutions per year. I examined data about
various arbitration/dispute resolution centers andfound that the Japan Intellectual Property
Arbitration Center is the only institution that has
substantive experience in settling IP-related
disputes. Thus, this institution is the only one
covered by this research.

An analysis of the results of the aforementioned
surveys gave me the following insights.
Until today, no researcher has revealed theoverall picture as to how disputes over patentrights, etc. are resolved in Japan. This paper
conducted a comprehensive examination of the
dispute resolution practices in Japan. The overall
understanding of such practices enabled me toidentify the strengths of the Japanese patent
litigation system and its weaknesses that needfurther studies.
1Overall picture of dispute resolution
practices
In this research, a statistical analysis of thecontent of judgments has revealed that 44% of theinfringement lawsuits over patent rights, etc. thatwere filed with district courts ended with therendering of a judgment, while 27% ended withcourt settlement.
On the other hand, in the United States, 89%of the cases reached a settlement after lawsuits● 31 ●IIP Bulletin 2015 Vol.24

(2009).1 This means that the tendency to choose
settlement is much stronger than in Japan.
Therefore, settlement is not unique to Japan andis one of the means of dispute resolutioncommonly used in other countries as well.
2 Strengths and weaknesses of the system(1) Dispute resolution costs, judgment
predictability, examination efficiency
Regardingjudgment
predictability,
examination efficiency and dispute resolution
costs in patent infringement lawsuits in Japan, theresult of the questionnaire survey has revealed
that right holders consider “dispute resolution
costs” and “judgment predictability” as the firstand second most important factors to take into
consideration when determining whether toexercise their rights.
Regarding this point, in the interview survey
conducted to further study the Japanese dispute
resolution practices, many respondents repliedthat the level of judgment predictability in Japanis relatively high in comparison with othercountries and that the Japanese system isexcellent in terms of dispute resolution costs andexamination efficiency as well, while some
respondents replied that the level of judgment
predictability is insufficient.
(2) Evidence gathering procedure
In civil lawsuits such as infringement
lawsuits, it is necessary to provide evidence toprove any allegation (issue) disputed by eitherparty. Therefore, it is important for each party togather advantageous evidence. Currently, thecourt has the authority to order submission of
documents under Article 105 of the Patent Act.
However, if a suspected infringer alleges that
there is no evidence concerning the issue, thecourt has no authority to force the suspected
infringer to submit any documents. This is one ofthe problems that have been pointed out. In otherwords, the obligation to submit evidence isimposed on the patentee and the suspected
infringer in an unbalanced manner.
In the interview survey, respondentssuggested that a better means to gather evidence
should be offered by establishing a system that issimilar to the discovery system in the U.S. forexample. On the other hand, a small number of
respondents expressed hesitation about the ideaof introducing a discovery system in Japan due tothe risk of increasing court costs.
While it is important to improve theevidence
gatheringprocedure
fromtheIIP Bulletin 2015 Vol.24

perspective of enhancing the functions of theJapanese patent litigation system, it is also
important to carefully determine to what extent
information disclosure should become mandatory.
Further studies need to be conducted inconsideration of the balance of interests between
patentees and suspected infringers.
(3) Amount of damages
The amount of damages turned out to be low,i.e., less than 10 million yen, in about 39% of thepatent infringement lawsuits filed in Japan (inabout 26% of which the damages was five million
yen or lower.). Such small damage awards is oneof the reasons why the number of patent
infringement lawsuits is relatively low in Japan.2
In this interview survey, some respondents
pointed out that the amount of damages awarded
in infringement lawsuits may not be evaluated ina uniform manner since patentees and suspected
infringers have different perspectives, while
many respondents replied that the amount ofdamages is low.
(4) Stability of rights
In the patent infringement lawsuits filed inJapan, a certain number of patents are invalidated
due to a patent invalidity defense or a trial forpatent invalidation. In this research, I studied
judgments and found that the proportion ofpatents invalidated by lawsuits is 36% in terms ofthe number of judgments (if the total number ofjudgments is used as the denominator). Similarly,
the proportion of patents invalidated in the U.S.
Federal District Courts is 16% in 2013 in terms ofthe number of judgments. In 2013, the ratio of thenumber of cases where patents were invalidated
to the total number of cases filed with district
courts (the total of the number of judgments andsettlements) is 23% in Japan and 2% in the U.S.
This indicates that patent rights are less likely to
be invalidated in the U.S. than in Japan.
In the questionnaire survey, 35% of therespondents replied that, if they are patentees,
they will be likely to agree to a settlement for fearof having their patent rights, etc. invalidated.
This indicates that the instability of patent rights
is one of the reasons why patentees dare tochoose settlement in Japan.
An examination of the current patent
infringement litigation system from the perspectiveof patent stability reveals that Japan has adopted a
so-called double track system, which allows
litigants to dispute the validity or invalidity ofpatent rights on both tracks, i.e., a trial for patent● 32 ●

invalidation at the JPO and an infringement lawsuit
at a court. Regarding this double track system,various opinions were presented in the interview
survey. In particular, in the questionnaire survey,
4% of the respondents replied that it became easierfor them to exercise their rights after theenforcement of Article 104-3 of the Patent Act(Provision concerning the patent invalidity defense),while 24% of the respondents said it became
difficult for them to do so. This indicates that said
provision might have affected patentees andsuspected infringers in an unbalanced manner.
Regarding the capability of the authorities todetermine the legitimacy of patent rights, etc., 42%of the respondents replied that it is reasonable for
the JPO to determine the validity of patent rights,etc. from a technical viewpoint, while 8% of therespondents replied that it is not reasonable for theJPO to do so. On the other hand, 25% of therespondents replied that it is reasonable for a court
to determine the validity of patent rights, etc. froma technical viewpoint, while 15% of the respondents
replied that it is not reasonable for a court to do so.
This indicates that the JPO is found to be morereliable. In the interview survey, many respondentsincluding small and midsize companies, largecompanies, and law firms replied that adetermination on an inventive step should be madeby the relevant specialized agency, i.e., the JPO.
These survey results suggest that, since the JPO isa specialized agency, its determinations on technicalmatters are considered to be relatively reliable. In
order to further enhance the stability of patentrights, etc., it is necessary to pay attention to abalance between patentees and suspected infringers
within the entire framework of the infringement
litigation system and to make necessary
adjustments to the current system such asredefining what functions the courts and the JPO
should be authorized to perform respectively inorder to allow them to perform functions that areappropriate for their respective roles.

3Conclusion

In this research, I clarified an overall pictureof the dispute resolution practices concerning
patent rights, etc. and identified the strengths of
the Japanese litigation system and its weaknesses
that need further studies. For example, theJapanese system is highly praised for being
superior to the corresponding systems in the U.S.
and European countries in terms of judgment
predictability, examination efficiency, and dispute
resolution costs. Japan should widely distributeinformation about the strengths of its system
around the world. On the other hand, this research
has revealed that further studies are needed toimprove the system from the perspective of thestability of patent rights, etc., the amount ofdamages, and the procedure to gather evidence. In
other words, the current treatment of patentees
and suspected infringers is clearly unbalanced in
all of these respects. In particular, in the interview
survey covering small and midsize companies, therespondents expressed their concerns by sayingthat “it would be more advantageous to become acounterfeiter. We are not sure if we shouldcontinue making efforts to make inventions.”
Without any alterations, the current system could
discourage companies from obtaining patent rights,
etc. and consequently cause small and midsize
companies, which support the Japanese economy,
to lose their enthusiasm to make innovations. As aresult, it could hinder the creation of newindustries. Therefore, it is very important tofurther improve the system from the perspectivesof the stability of patent rights, etc., the amount ofdamages, and the procedure to gather evidence. In
particular, it is essential to take a balance between
the offensive means and the defensive means into
consideration when creating a dispute resolution
system. In the interview survey, regarding theoffensive means available for patentees and thedefensive means available for suspected infringers
under the current system, only 5% of therespondents replied that the current system gives
more advantage to patentees, whereas 34% of therespondents replied that it gives more advantage
to suspected infringers. This indicates that thecurrent system discourages patentees fromexercising their rights.
As described above, it is extremely
important to further promote the use of patentrights and accelerate the IP creation cycle inJapan by adjusting the balance between patentees
and suspected infringers under the patent
litigation system as a whole. More researchshould be conducted with a focus on theaforementioned issues that need further studies
in consideration of the users' needs and thecorresponding systems in other countries.
㸦Senior Researcher: Junichi TAIRA㸧12● 33 ●FY2013(Heisei25) JPO-commissioned research reporton the issues related to the industrial property rights
system on“Establishment and Operation of a Patent
System Conducive to Patent Stability in Infringement
Lawsuits”, p.61 (Japanese only)
Supra note 1, p58-59

IIP Bulletin 2015 Vol.24