JFTC amends IP Guidelines to deal with FRAND issues
By Jinzo Fujino*
On January 21, 2016, Japan Fair Trade Commission (JFTC) announced partial
amendments of the Guidelines for the use of Intellectual Property under the Antimonopoly Act.
The amendment, adding new provisions to the present IP Guidelines, is supposed to clarify thepolicies and principles of JFTC to deal with the issue of FRAND-declaration forstandard-essential patents.
The Antimonopoly Act (AMA) statutorily exempts the enforcement of intellectual
property rights from its application (Article 21). The amendment, however, makes it clear thatAMA would cause a violation of the AMA if the owner of a standard-essential patent withdraws
its declaration of a FRAND license to refuse the license or seeks an injunction order from thecourt against a potential licensee who desires a FRAND license. The effect of the amendment
extends to the assignee(s) of the SEP if a FRAND license has once been declared for it. The
amendment also clarifies that a determination of whether a potential licensee is willing to license
can be made on a case-by-case basis in light of attitude and attentiveness toward negotiations withthe SEP owner.
For reference to readers, the amendment in full text is cited at the end of this article. The
rest of the IP Guidelines remains unchanged and is still effective. Those who are interested aresuggested to visit the JFTC website at:
http://www.jftc.go.jp/en/pressreleases/yearly-2016/January/160121.files/IPGL_Frand_attachment.
pdf
JFTC issued the Patent Pool Guidelines in June 2005 in order to promote patent poolarrangements in Japan. In this guideline, JFTC discusses examples of patent pool arrangements
which may cause a violation of the AMA. And in 2007, JFTC issued the present IP Guidelines
which covers not only patent and know-how licensing but also licensing of other forms ofintellectual property rights. Recognizing that these guidelines were insufficient to deal with theFRAND issue, JFTC has added specific paragraphs. Before finalizing the partial amendment,
however, JFTC released a draft amendment to seek public comments in July 2015. Reportedly,
fifty four comments were submitted from in and outside Japan including one from LES Japan. It
was the first time that JFTC sought public comments for the purpose of amendment of guidelines
under the AMA.
[The newly inserted provisions are cited below.(source: JFTC website)]1Part 3.

Viewpoints from Private Monopolization and Unreasonable Restraint of Trade(1) Viewpoints from Private Monopolization(e) The standard setting organization or trade association (hereinafter referred to as the "SSO")
generally makes the document (IPR Policy) describing principles for license of patents (includingthe other intellectual property rights) essential for implementation of the standards (hereinafterreferred to as the “Standard Essential Patent”). It is specified in IPR Policy that, in order to prevent
exercise of right in respect of Standard Essential Patents from impeding research & development,
production or sale of the products adopting the standards and to broadly diffuse the standards, it
makes the participants in standard setting clearly show whether they hold any Standard Essential
Patents and their intention for licensing for fair, reasonable and non-discriminatory conditions(such conditions are generally called “FRAND conditions”). A Standard Essential Patent holder’s
declaration in writing to show that it is willing to grant licenses under FRAND conditions to the SSO
is generally referred to as the “FRAND Declaration”. According to the IPR policy, the SSO will
study change of the standards to exclude the technology protected by such if such declaration is not
made. Since FRAND Declaration makes it possible for the Standard Essential Patent holders toreceive reasonable compensation for the use of the Standard Essential Patent and also makes it
possible for those who research & develop, produce or sell the products adopting the standards toaccess Standard Essential Patents under FRAND conditions, FRAND Declarations promoteresearch and development investment of the technologies concerning the standards and also
promote positive investments required for research & development, production or sale of the
products adopting the standards.
Refusal to license or bringing an action for injunction against a party who is willing to take alicense by a FRAND-encumbered Standard Essential Patent holder, or refusal to license or bringing
an action for injunction against a party who is willing to take a license by a FRAND-encumberedStandard Essential Patent holder after the withdrawal of the FRAND Declaration for that Standard
Essential Patent may fall under the exclusion of business activities of other entrepreneurs by making
it difficult to research & develop, produce or sell the products adopting the standards. The
description above shall be applied no matter whether the act is taken by the party which made the
FRAND Declaration or by the party which took over FRAND-encumbered Standard Essential Patentor is entrusted to manage the FRAND-encumbered Standard Essential Patent. (The same holds forthe case described in Part4-(2), (iv).)
Whether a party is a “willing licensee (who willing to take a license on FRAND terms)” or notshould be judged based on the situation of each case in light of the behavior of the both sides inlicensing negotiations etc. (For example, the presence or absence of the presentation of theinfringement designating the patent and specifying the way in which it has been infringed, thepresence or absence of the offer for a license on the conditions specifying its reasonable base, the2correspondence attitude to the offers such as prompt and reasonable counter offers and whether or
not the parties undertake licensing negotiations in good faith in light of the normal businesspractices.)
Even if a party which intends to be licensed challenges dispute validity, essentiality or possible
infringement of the Standard Essential Patent, the fact itself should not be considered as grounds todeny that the party is a “willing licensee” as long as the party undertakes licensing negotiations ingood faith in light of the normal business practices.

Part 4. Viewpoints from Unfair Trade Practices(2) Inhibiting the Use of Technology(iv) The acts described in Part3-(1), (i), (e), such as refusal to license or bringing an action for
injunction against a party who is willing to take a license by a FRAND-encumbered Standard
Essential Patent holder, or refusal to license or bringing an action for injunction against a party
who is willing to take a license by a FRAND-encumbered Standard Essential Patent holder after thewithdrawal of the FRAND declaration for that Standard Essential Patent may deprive theentrepreneurs who research & develop, produce or sell the products adopting the standards oftrading opportunities or impede the ability of the entrepreneurs to compete by making it difficult toresearch & develop, produce or sell the products adopting the standards.
Such acts are considered to be Unfair Trade Practices (Paragraph (2) and (14) f the GeneralDesignation) if they tend to impede fair competition, even if the acts do not substantially restrict
competition in the product market and are not considered to be Private Monopolization.
The judgment whether a party is a “willing licensee” or not is described in Part3-(1), (i), (e).]＊Editor/Adjunct Professor of Tokyo University of Science3