A NEW TREND IN IP LITIGATION(1)(2)(3)(4)
I.

Jurisdiction
Creation of Article 104-3 of the Patent Law (Invalidity Defense)
Expert commissioners system
Order to keep confidentiality
EXCLUSIVE JURISDICTION

Intellectual Property Divisions in the Tokyo District Court, Osaka
District Court and Tokyo High Court were established more than forty or fiftyyears ago.
In the Tokyo District Court, there are 18 judges, including young
associate judges and 7 research officers. In Osaka District Court, there are 6judges, including young associate judges and 3 research officers. In theIntellectual Property High Court, there are 18 judges and 11 research officers.
On April 1, 2004, an amendment to the Code of Civil Procedure went
into effect that should bring about speedier hearings in patent and othertechnical cases in Japan. This amendment provides that the Tokyo andOsaka District Courts will have exclusive jurisdiction over all cases relating topatent rights, utility model rights, circuit layout utilization rights and authors
rights as to the program work in Japan. That is, the Tokyo District Court
now has exclusive jurisdiction over these cases in the eastern part of Japan andthe Osaka District Court has exclusive jurisdiction over these cases in thewestern part of Japan.
This amendment also provides the Tokyo High Court with nationwide
exclusive jurisdiction over appeals of patent and other technical cases from theTokyo and Osaka District courts. The IP High Court was established as ofApril 1, 2005 as a "special branch" of the Tokyo High Court, taking over its
duties from the IP Division of the Tokyo High Court, which had carried its
responsibility for more than half a century. Since all cases under thejurisdiction of the Tokyo High Court can be heard by the IP High Court, the IP
High Court now has a nation-wide exclusive jurisdiction over appeals fromthe Tokyo and Osaka District courts regarding patent and other technicalrelated cases.
Therefore, at present all patent and other technical cases are heard at theIP divisions of the Tokyo and Osaka District Courts in the first instance, andappeals of those cases are heard at the IP High Court.
With respect to cases relating to design rights, trademark rights,
copyrights (excluding program copyrights) and unfair competition prevention
law, the Tokyo and Osaka District Courts have the overlapping jurisdictions
over these cases for the sake of the smooth and speedy hearing. That is,
those cases under the jurisdiction of a district court in eastern Japan may bebrought before the Tokyo District Court, while those cases under thejurisdiction of a district court in western Japan may be brought before theOsaka District Court.
II.

INVALIDITY DEFENSEA.

Creation of Article 104-3 of the Patent Law

With an amendment of the Patent Law and other laws enacted on April
1, 2005, a defendant is now able to raise the invalidity defense in patent andother I.P litigation.
The Japanese Supreme Court decided on April 11, 2000 in the Kilby
case that if a patent is apparently invalid, a defendant can make a defense ofabuse of rights in patent infringement litigation. This is called an apparent
invalidity defense. Before this decision, it was difficult for us to adopt thisdefense.
The April 1, 2005 amendment to the Patent Law and other I.P Lawschanged the apparent invalidity defense into an invalidity defense. After thisamendment, we no longer have to consider whether invalidity is apparent ornot.
This amendment, however, will have little impact on the practice ofdistrict courts in infringement litigation, because the district courts, relying on
the Kilby decision, were already willing to decide validity of a patent without
waiting for a decision by the Boards of the Japanese Patent Office (JPO) on aninvalidation petition.
The provision authorized a court to decide validity of a patent 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 theJPO.

B.

Invalidation Based on the Kilby Case

According to the JPO, an allegation of "abuse of a patent right" hasbeen raised as a defense more frequently in infringement litigations since theKilby decision. In 2004, the defense was alleged in as many as 80% ofinfringement lawsuits. In 60% of those cases, invalidation petitions weresimultaneously submitted to the Boards of the JPO. The creation of Article104-3 will not change the significance of invalidation decisions by Boards ofthe JPO, because the Boards can invalidate the patent right itself. It is
anticipated that the role of the invalidation hearing in infringement litigation
will be even more important since the creation of Article 104-3.
According to the Kilby decision, even if the evidence supporting
invalidation of a patent is clear and convincing, exercise of the patent rightis permissible if there are extraordinary circumstances which justify theexercise of the patent. One example of such circumstances is thepossibility of a correction hearing before a Board of the JPO. When aparty asserts invalidity of a patent, the patentee often responds by filing apetition for correction before a Board of the JPO or makes a request ofcorrection of claims within the invalidation hearing. Even if a petition forcorrection is commenced or a request of correction is made within theinvalidation hearing, the claims remain same until the Board of the JPO
permits the correction through a correction hearing or finds correctedclaims valid through an invalidation hearing. However, if it is certain thatthe corrected claim is still invalid and the accused product will still fallwithin a scope of the corrected claim, a widely supported view is thatexercise of the patent right should not be regarded as "abuse of a right."
The new provision 104-3 should be interpreted in the same way as before
and a court can consider possible success of correction by a patentee in
applying Article 104-3(1).
C.

Article 104-3(2)Article 104-3(2) was added to the Patent Law along with Article104-3(1) in order to prevent an abuse of Article 104-3(1). Under thisprovision, if the accused infringer submits the grounds for invalidation for thepurpose of causing undue delay in the proceedings, the court may dismiss
such invalidation defense.
When Article 104-3(1) was introduced, legislators were concerned thatparties might abuse the provision by listing as many grounds for invalidationas possible. So far, such a situation has not happened, and no case has beenreported in which the allegation or evidence for invalidation was dismissed
pursuant to Article 104-3(2).
D.

Dual tracks of invalidation hearings and infringement proceedings

There are quite a few cases where an invalidation hearing and an
infringement case with respect to the same patent are pursued at the same timein a district court and a Board of the JPO. Those cases often arise when adefendant in an infringement case alleges as a defense that the patent is invalid
based on Article 104-3 of the Patent Law, and also makes an invalidation
petition before a Board of the JPO or files a lawsuit against a Board decisionin the IP High Court. As a result, there are situations where a lawsuit againsta Board decision is pending before the IP High Court while infringement
litigation or its appeal with respect to the same patent is pending before adistrict court or the IP High Court.
When a lawsuit against a Board decision and an appeal against thedistrict court decision involving the same patent are concurrently pending
before the IP High Court, it is a general practice of the High Court that thesame panel will hear both cases if possible, depending on the parties'
willingness and the progress of the cases.
The actual practice varies among district courts. As I understand it,
judges of the Osaka District Court tend to stay infringement lawsuits while
awaiting the decision of the IP High Court on validity of the patent, if thedistrict court might have different views from the Board decision regarding
validity of the patent. In contrast, judges of the Tokyo District Court rarely
stay infringement proceedings.
III.

EXPERT COMMISSIONERS SYSTEM

The expert commissioners or expert advisors system is a uniquesystem from comparative law standpoint. This system was introduced in
April 2004 in order to offer highly professional judicial service in the field ofrapidly-developing, highly-specialized and advanced technology.
Expert commissioners are appointed by the Supreme Court as part-timecourt staff with a term of office of two years. They are chosen from amongleading experts of various technical fields, including university professors,researchers at public organizations or private companies and patent attorneys.
One hundred eighty-two expert commissioners have been appointed to theTokyo District Court, Osaka District Court and IP High Court. Additional
expert commissioners may be appointed from time to time if necessary.
In practice, expert commissioners usually participate in preparatory
hearings. When a patent or other related case involves highly technicalissues and a panel of judges needs explanation by experts on such issues, thepanel considers designating expert commissioners who are most suitable forthe particular case from among those appointed. The designated expert
commissioners serve as neutral and fair advisors to the court in theproceedings they participate in, explaining background or significance of theinvention based on evidence and arguments submitted by parties to the court.
Although explanations given by expert commissioners in the proceedings are
not competent as evidence in principle, they are very useful to help the court
to deepen its understanding of the invention and other references involved in
the case and to make a decision based on the evidence. A combination ofresearch officials' daily support and expert commissioners' case-by-caseassistance will give the Tokyo and Osaka District Courts and the IP High
Court greater expertise to resolve highly technical cases.
The expert commissioner system has brought a variety of positive
impacts on the judiciary. Explanation by an expert commissioner to a judge
leads to higher quality decisions. The explanation is helpful for judges todeepen their understanding of the background and get a total picture of aninvention, which is not an easy task for them to do based solely on thesubmitted evidence. It also clears up their questions and doubts, and gives
them confidence.
IV.

ORDER TO KEEP CONFIDENTIALITY (PROTECTIVE ORDER)

We do not have a discovery system, but if a court thinks it necessary to
decide the case, it can order a party to submit documents necessary to prove
the structure or disposition of the accused products or processes anddocuments to calculate the damage amount.
The court, however, could not order the party to submit such documents
if it had sufficient reasons to refuse submission of documents (Article 105).
If a party had trade secrets that justified refusing a document submission, it
was difficult for the court to quickly reach a final conclusion in patent
infringement litigation.

The protective order system was established by the amendment to thePatent Law and other I.P laws enacted on April 1, 2005 in order to ensure that
litigation proceeds swiftly. The other IP laws are The Design Law, theTrademark Law, the Unfair Competition Prevention Law and Copyright Law.
If a defendant has sufficient reason to refuse disclosure of documents
due to a trade secret, the court can order the parties and attorneys not to reveal
any trade secrets to a third party and to use the information only forprosecution of the patent litigation and can then order the defendant to submit
the documents.
This protective order system is the system that has been adopted in theUnited States and in England for a long time. In the past, it was difficult for
us to introduce this system in Japan. So, this amendment shows that theJapanese industrial world seriously asked the Court for a quick procedure inI.P litigation as well as powerful and quick protection of patent and other I.Prights.
Up to now, only one such motion has been filed and admitted at theTokyo District Court. The limited use of this order may be attributable toparties' reluctance to use this system. Parties seem to be wary of requesting aprotective order, because the order imposes a heavy and broad obligation on
the party receiving the order which is applied beyond the particular case and isensured with a threat of criminal sanction. Some regard this system asproblematic, because it does not apply to employee invention litigation.