NEUES ZUM IPR UND IZVR / PIL AND IPL NEWS
Cross-Border Patent Infringement in Japan
Comment on the Supreme Court’s Decision of September 26, 2002
(The “Card Reader” Case)
Yuko Nishitani *I.
II.

Introduction
The Supreme Court Decision
1. The Facts
2. The Reasoning of the Supreme Court
III. International Jurisdiction to Adjudicate
1. Jurisdictional Rules in Japan
2. Jurisdiction on Patent Infringement
IV. Applicable Law
1. Characterization
2. Governing Law
3. The Application of Governing Law and Double Actionability
V. Final Remarks

I.

INTRODUCTION

In its judgment on September 26, 20021, the Supreme Court of Japan considered thequestion of what law is applicable to a foreign (in this case, U.S.) patent infringement
for the first time. This judgment has been subjected to thorough analysis and criticism
by Japanese scholars, but is also an important touchstone for increasing cross-border
litigation on intellectual property rights, which Japanese courts are beginning to face ina variety of contexts (validity, ownership, transfer and infringement of intellectual
property rights, especially copyright, trademark and patent).
This article seeks to analyze the meaning of this Supreme Court decision in the context of Japanese private international law. Part II of the article sets forth the facts andcontent of the judgment (Section 1 & 2). Part III analyzes the international jurisdiction
to adjudicate a foreign patent infringement case (Section 1). In particular, Section 2
explores whether to subject patent infringement cases to the ordinary rules of international jurisdiction, rather than recognizing the exclusive jurisdiction of the country*
1

The author thanks Mrs. Ashley Harris for her devoted proofreading
Fujimoto v. Neuron Co. Ltd., Minshû 56-7, 1551 (Supreme Court, Sep. 26, 2002); Hanrei
Jihô 1802 (2003) 19; Hanrei Taimuzu 1107 (2003) 80. The English translation of thisjudgment will be published in: Japanese Annual of International Law 46 (2003).

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where the patent is registered. Part IV then approaches the question of what law isapplicable to a foreign patent infringement case from the perspective of the characterization (or classification) method used in the Japanese conflicts of law system(Section 1). It also scrutinizes the determination of governing law (Section 2) and thecontroversial “double actionability” rule of Art. 11 (2) and (3) of Hôrei2 (Section 3).
Final remarks cast an eye to future development, with an emphasis on the on-goingreform of Hôrei.

II.

THE SUPREME COURT DECISION

1.

The Facts

The facts of this case are the following: On June 22, 1983, plaintiff, a Japanese national
residing in Japan, applied for a patent at the United States Patent and Trademark Office
for an invention named “FM Signal Demodulating Apparatus,” which was eventuallyregistered as Patent No. 4540947 on Sep. 10, 1985. Defendant, a Japanese company
whose principal place of business is in Japan, owned the parallel Japanese patent. Fromapproximately 1986 to 1991, defendant produced “Card Reader No. 1” in Japan, andlater from 1992 on “Card Reader No. 2”, which were exported to the United States andsold there by defendant’s wholly-owned U.S. subsidiary.
Card Reader No. 1 was within the technical range of plaintiff’s invention protectedby his U.S. patent. Plaintiff argued that Card Reader No. 2 was within this range as
well, and that defendant induced the infringement of his U.S. patent under 35 U.S.C.
§ 271 (b) [U.S. Patent Laws]. He therefore filed claims against defendant seeking thefollowing remedies:(a) the injunction of (1) production of Card Reader No. 2 for the purpose of exportingto the United States, (2) export of Card Reader No. 2 to the United States, and(3) inducement of defendant’s U.S. subsidiary to import and sell them in the
United States;(b) the destruction of defendant’s products in defendant’s possession in Japan;(c) compensatory damages for defendant’s wrongful act.
2

Hôrei, Law Concerning Application of Laws in General, Law No. 10/1898 as amended by
Law No. 151/1999. Art. 11 of Hôrei stipulates as follows (see EHS LAW BULLETIN SERIES –JAPAN (1986)):(1) The formation and effect of obligations due to negotiorum gestio, unjust enrichment or
unlawful acts shall be governed by the law of the place where the facts forming the cause ofsuch obligation have occurred.
(2) The provision of the preceding paragraph shall not apply to unlawful acts in case thefacts occurring in a foreign country are not unlawful according to Japanese law.
(3) Even when facts occurring in a foreign country are unlawful according to Japaneselaw, the injured person may lodge no claim for compensation for damage or other measures(remedies) except such as are recognized by Japanese law.

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The Reasoning of the Supreme Court

Both the Tokyo District Court in its judgment of April 22, 19993 and the Tokyo High
Court in its judgment of January 27, 20004 dismissed defendant’s claims on the merits,
and plaintiff appealed to the Supreme Court. The Supreme Court affirmed the judgmentof the Tokyo High Court based on the following reasoning:i) First of all, the Court held that appellant’s claims seeking court orders (a) enjoining
the offending actions and (b) demanding destruction of products were based on the property of a private person. They concerned a Japanese national domiciled in Japan and aJapanese company whose principal place of business was in Japan, and the latter party’s
activities in Japan were in question. However, because this claim was based on a right
granted by U.S. patent law, it provided a cross-border element and therefore required adetermination of the applicable law.
According to the Court, the “principle of territoriality” with regards to patent provides that the formation, transfer, and effects of each country’s patents are determinedby each country’s law, and that the effects of a patent do not go beyond the border ofthe country concerned.5 Following this principle, every country regulates patents basedon that country’s industrial policy, determining the procedure and requirements for
granting a patent for an invention and what kind of effects the patent will have. The
effects of a Japanese patent should only be recognized within the territory of Japan. The

3
4
5

Minshû 56-7, 1575-1600; Hanrei Jihô 1691, 131.
Minshû 56-7, 1600-1610; Hanrei Jihô 1711, 131.
Here the judgment quotes BBS Kraftfahrzeugtechnik AG v. Racimex Japan, Minshû 51-6,
2299 (Supreme Court, July 1, 1997). In this parallel import case, plaintiff BBS, a German
company, had both the German and the Japanese patent of the products concerned (aluminium wheels for automobiles). BBS licenced Japanese car manufacturers to exploit his Japanese patent. Defendants Racimex Japan and Japauto Products are both Japanese companies.
They purchased BBS’s products in Germany, imported them to Japan and sold them there.
BBS sought an injunction of defendants’ conduct and damages based on the infringement of
its Japanese patent. Defendants moved to dismiss the case, arguing that plaintiff’s Japanese
patent lost its effect after these products were put into the stream of commerce in Germany,so that they did not infringe upon plaintiff’s patent (doctrine of the “international exhausttion”). In line with the first and second instance, the Supreme Court denied plaintiff’s(appellant’s) claims on the following grounds: The principle of territoriality means that theformation, transfer, and effect of each country’s patent are determined by each country’slaw, and that the effects of patent do not go beyond the relevant country’s border. Therefore,
it is Japanese law that decides whether a Japanese patent has the effect to enjoin the importand sales of the products manufactured abroad. In today’s cross-border transactions, freemovement of goods should be protected as much as possible. Because it can be easily
foreseen that the products once sold in one country could possibly be imported to and soldin another country, the rightholder should not be allowed to exercise his rights protectedunder his Japanese patent, unless he explicitly excluded Japan from the future marketplace
where the products manufactured in Germany would be authorized to be sold or used. As
this was not the case in the action at bar, appellant’s claims cannot be granted.

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Court argued, however, that this principle did not preclude a determination of theapplicable law according to Hôrei when a dispute arose concerning a foreign patent
infringement between private persons.
According to the Court, appellant’s request for (a) injunction of defendant’s actionsand (b) destruction of goods based on appellant’s U.S. patent was different from a tort
action, which sought, in light of justice and fairness, compensation of damages caused
to the victim in the past. Therefore, these requests were characterized by the court asquestions regarding the effects of a patent. The court concluded that there are not explicit provisions in Hôrei regarding the law applicable to the effects of a patent.
Considering it as a matter of jôri (reasonableness), the Court believed the applicablelaw should be the law of the country in which the patent is registered, namely the law of
the country which has the closest relationship to the patent. In this case, the law of thecountry with the closest relationship to the patent was U.S. patent law.
35 U.S.C. § 271 (b) stipulates that someone who actively induces infringement of apatent shall be liable as an infringer. This provision also covers an active inducement
committed outside the U.S., so long as the directly infringing conduct occurs within the
U.S. borders. § 283 provides that courts can order an injunction as a remedy and is construed as allowing courts to order the destruction of the products infringing the patent as
well. However, the issue of a court order enjoining conduct in Japan based on a U.S.
patent, following these provisions, would mean expanding the effects of the concerned
U.S. patent extraterritorially to Japan. The Court concluded that this would contravene
the principle of territoriality. Furthermore, the Court noted that Japan and the U.S. do
not have an agreement requiring them to reciprocally recognize the effects of one another’s patents. Thus, the Court held that granting these remedies by applying the U.S.
patent law would be incompatible with the basic ideas of the Japanese patent law order
and, therefore, would violate Japan’s public policy as it is understood in Art. 33 of Hôrei.
ii) The Court believed that appellant’s request (c) for compensatory damages was nota specific question of patent law, but a question regarding a remedy based on civil law
protecting against the infringement of private property. The Court, therefore, characterized this claim as a tort question, whose applicable law should be determined by Art. 11(1) of Hôrei.
According to the Court, the locus delicti in the sense of Art. 11 (1) of Hôrei should
be interpreted as the place where the directly infringing act was committed and theresult of the infringement occurred, namely the U.S. in this case. This is because (i) if
appellee’s conduct in Japan actively induced infringement of the U.S. patent, the resultof the infringement occurred in the U.S., and (ii) the application of the U.S. law does
not violate appellee’s foreseeability, as appellee intended to export its products to the
U.S. and to have them sold there by its U.S. subsidiary. 35 U.S.C. § 284 provides thatclaimant can be awarded compensatory damages as a remedy based on the civil law.

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Those who actively induced infringement of a U.S. patent in Japan could, therefore, beregarded liable according to § 271 (b) and § 284.
However, the Court found that, according to Art. 11 (2) of Hôrei, Japanese law
should be cumulatively applied in addition to the foreign lex loci delicti. Thus, the court
felt that the appropriate question was whether appellee’s active inducement, effectuatedoutside the country of the patent’s registration, fulfilled the requirements of tort under
the Japanese Civil Code and Japanese Patent Law. In contrast to 35 U.S.C. § 271 (b),Japanese law does not have a provision which enables expansion of the effects ofJapanese patent to an extraterritorial active inducement. The Court stated that, so longas there is no specific legislation or treaty stipulating accordingly, it could not regard
such an act as illegal or constituting tort. For this reason, the Court held that appellee’s
conduct did not constitute tort under Japanese law and, therefore, did not fulfill the requirement of Art. 11 (2) of Hôrei. As a result, the Court decided that the claim fordamages could not be granted.
Thus, the majority of the Supreme Court Justices (Justice Kazutomo Ijima, Justice
Akira Machida, Justice Takehisa Fukazawa, and Justice Kazuko Yokoo) affirmed thejudgment of the Tokyo High Court and did not grant appellant’s claims. Justice Masao
Fujii, however, dissented with regards to the claim (c) for damages and the Majority’s
application of Art. 11 (2) of Hôrei. His opinion can be summarized as follows:
The existence of the U.S. patent shall be regarded as an incidental question, which is
subject to U.S. patent law. In applying Japanese law cumulatively, as provided forunder Art. 11 (2) of Hôrei, the existence of the U.S. patent should be taken for granted,
and we should scrutinize whether the infringement of an equivalent right in Japan
would be regarded as a tort. We should not conclude, based on the fact that the U.S.
patent does not have effects in Japan, that the patent does not exist as a right.
According to Art. 709 and Art. 719 (2) of the Japanese Civil Code, an active inducement of patent infringement is a solicitation or assistance of a wrongful act, and the one
who committed the inducement is regarded as a joint tortfeasor, who is liable for damages together with the direct infringer. In this case, appellee’s conduct fulfilled the requirements for tort under Japanese law.
Further, this consideration does not contravene the principle of territoriality, as it
does not extend the effects of the U.S. patent to conduct effectuated outside the countryof registration, but only acknowledges appellee’s joint liability with the direct infringer
for the direct infringement that occurred in the country of registration.
If we were to consider, in scrutinizing whether the requirements of tort are fulfilled
under Japanese law in the sense of Art. 11 (2) of Hôrei, an equivalent case where active
inducement of the infringement of a Japanese patent occurred abroad, we would cometo the same conclusion. Under Japanese tort law, so long as the direct infringement
occurs in Japan, those who actively induced this infringement in a foreign country are
regarded as joint tortfeasors because of solicitation or assistance.

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For these reasons, the judgment of the Tokyo High Court contains obvious violationsof law, and should be reversed and remanded.

III. INTERNATIONAL JURISDICTION TO ADJUDICATE
1.

Jurisdictional Rules in Japan

There are no written rules on international jurisdictions to adjudicate in Japan, not tomention rules for international patent infringement cases. The general principles fordetermining whether Japanese courts have jurisdiction over international cases,
established by the case law since the Malaysian Airline case of 19816, are derived fromthe national jurisdictional rules provided in Art. 4 and 5 of the Japanese Civil Procedural Code. These principles are based on the theoretical presumption that so far as a
specific court in Japan (e.g. the Nagoya District Court) has the territorial jurisdiction
according to national jurisdictional rules, the international jurisdiction of Japanesecourts is presupposed and therefore granted (doctrine of “reverse presumption”). Afterthe Malaysian Airline case, lower courts started to introduce a discretionary reference
to “special circumstances,” which allow judges, in view of the balance of interests
between the parties as well as due and expeditious process, to decline Japan’sjurisdiction even though it is given based on the national jurisdictional rules. 7 The
reasoning behind this grant of discretion was that it would allow avoidance of inappropriate jurisdiction which can be associated with applying national jurisdictional rules tocross-border cases without restriction. This general framework was finally confirmed by

6

7

Gotô v. Malaysian Airline System, Minshû 35-7, 1224 (Supreme Court, Oct. 16, 1981)[Malaysian Airline case]. In this case, the victim Mr. Gotô signed an air carriage contract
with the Malaysian Airline in Malaysia for a national flight. On the flight from Penang to
Kuala Lumpur, the plane crashed following a brutal highjacking, killing crew and passengers on board. Mr. Gotô’s widow and heirs sued against Malaysian Airline in the Nagoya
District court, alleging to have inherited Mr. Gotô’s claim for damages against the airline.
The Supreme Court granted the international jurisdiction of Japan because, under Art. 4 of
the Civil Procedural Code (prior to the reform of 1998), the national jurisdiction can be
granted to the place where the corporation has a branch office. Thus, Malaysian Airline,
which had a representative and a branch office in Japan, could be subject to Japan’s jurisdiction. For an interesting comparative discussion on the Malaysian Airline case in relation
to American and European rules, see A.F. LOWENFELD, International Litigation and theQuest for Reasonableness – General Course on Private International Law, in: Recueil desCours 245, 11, 83-87 (1994-I).
See e.g. A. TAKAKUWA, Shôgai hanrei hyakusen, 196, 197 (3d ed. 1995).

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the Supreme Court in 1997.8 Japanese scholars, however, often expressed concern thatcourts would overuse this grant of discretion referring to the “special circumstances”
and disregard the requirements of legal certainty and parties’ foreseeability.9
In the underlying case, the international judicial jurisdiction of Japan was not disputed between the parties, presumably because the defendant was a Japanese company
with its principal place of business in Japan and the plaintiff was a Japanese national
residing in Japan. Judges, who decide on jurisdiction ex officio, granted it implicitly by
deciding the case on the merits in all instances, although the subject matter of this casewas the infringement of a U.S. patent.
89Family Co. Ltd. v. Miyahara, Minshû 51-10, 4055 (Supreme Court, Nov. 11, 1997). In thiscase, appellant (plaintiff) was a Japanese company which had its principal place of businessin Japan. The company imported automobiles from Germany and sold them in Japan.
Appellee (defendant) was a Japanese national, who had resided in Germany since about
1965 and transacted mainly in Frankfurt a.M. They signed a contract in December 1987 in
Frankfurt a.M., which stated that appellee would purchase automobiles from various European countries, administer the advanced payment of appellant, conduct the payment, andship the automobiles to appellant. Although appellant transferred, upon request of appellee,
91,747,138 Yen to his bank account in Germany, appellee did not fully perform his
contractual obligations. Appellant brought a suit in Chiba District Court, demanding therestitution of the rest deposit (24,960,081 Yen) and delinquency charge; appellant asserted
the international jurisdiction of Japan, as Japanese law was allegedly applicable to this caseand therefore the place of performance of the contract concerned was the domicile of thecreditor, namely Japan. The Supreme Court, like the lower courts, denied the jurisdiction on
the grounds of the following “special circumstances” :(i) This contract was signed in Germany and put appellee under the obligation to conductvarious activities in Germany. Also, there was not an explicit agreement between the parties
appointing Japan as the place of performance, nor a choice of law clause in favor of Japanese law. Thus, the Court held that it went beyond appellee’s expectations to subject him to
Japan’s jurisdiction.
(ii) Appellee has had his center of life and business in Germany for more than 20 years, andthe evidence about the performance of this contract was concentrated in Germany.
(iii) On the other hand, appellant was a company which imported automobiles from Germany, so it would not be an excessive burden for appellant to litigate in German courts. Taking
these circumstances into consideration, the Court argued that it would be against the idea ofthe balance of interests between the parties as well as due and expeditious process to subject
appellee to Japan’s jurisdiction.
This Supreme Court decision has been criticized by Japanese scholars, as the Court did not
first scrutinize whether Japan’s jurisdiction was founded by national jurisdictional rules as aprinciple; instead, the Court relied solely on the “special circumstances” to deny the jurisdiction of Japan. It is better to make a clear distinction between the primary basis for granting or denying jurisdiction (national jurisdictional rules) and the exceptional reliance on
consideration of “special circumstances” associated with the case. Courts should restrict
consideration of “special circumstances” to only those cases which require adjustment of theprinciple method of determining jurisdiction, in order to guarantee legal certainty and theparties’ foreseeability. See e.g. M. DÔGAUCHI, in: Takakuwa / Dôgauchi (eds.), Kokusai
minji soshô-hô (zaisan-hô kankei) (2002) 40, 46-47. More generally on Japan’s international jurisdictional rules, see A. PETERSEN, Das internationale Zivilprozessrecht in Japan(2003), 41-212.

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As a result, the Supreme Court followed the ordinary rules of jurisdiction, which isin line with the other cases regarding patent infringement, such as the Manchurian
patent case of 195310, the Ueno Seiyaku case of 200111, 12, and the Coral Corporationcase of 2003 13. The same rule was also adopted for cases concerning copyright in10

11

12

13

Nihon Musen Tsûshin Co. Ltd. v. Matsushita Denki Sangyô Co. Ltd., KAMINSHÛ 4-6, 847(Tokyo District Court, June 12, 1953). Plaintiff Nihon Musen and defendant Matsushita
were both Japanese companies. Nihon Musen owned the Japanese and Manchurian patent of
the multipolar vacuum tube concerned. The Japanese patent was then licenced to Tôshiba,
which produced and sold vacuum tubes in Japan. Matsushita bought the vacuum tubes fromTôshiba, produced radio receivers by using them as parts and imported the radio receivers to
Manchuria. Nihon Musen contended that Matsushita infringed upon its Manchurian patent,
and sought for damages as well as delinquency charge. The Tokyo District Court decided on
the merits, granting the jurisdiction of Japan implicitly, and dismissed the plaintiff’s claim
because of non-fulfillment of the “double actionability” test under Art. 11 (2) of Hôrei. See
Part IV 2 and 3.
Ueno Seiyaku Co. Ltd. v. Pharmacia & Upjohn Inc., Hanrei Jihô 1754, 148 (Tokyo District
Court, May 14, 2001). Plaintiff Ueno Seiyaku was a Japanese company, the exclusive licencee of a Japanese patent owned by the patentee R-Tech Ueno Co. Ltd. Defendants were
Pharmacia & Upjohn Inc., a U.S. company incorporated in Delaware (referred to as A),
Pharmacia AB, a Swedish company (referred to as B), and Pharmacia Co. Ltd., A’s subsidiary in Japan (referred to as C). They belonged to the same corporation group. A and B
conducted the development, production and sales of the product in question abroad and did
not do any constant business in Japan. C, which did not own any patent or trademark,imported and sold the product in Japan based on the rights owned by A and B. Ueno
Seiyaku brought a suit against defendants, arguing that they committed a tort jointly inviolating her rights conferred through the patent licence by R-Tech Ueno, and demanded
damages, as well as the injunction of producing, importing and selling defendants’ productin Japan, and the destruction of products possessed by C. The Tokyo District Court first
scrutinized (i) whether defendants’ product fell within the patent claim of plaintiff, andanswered in the negative. Then (ii) the Court denied the jurisdiction of Japan against A andB based on tort, because plaintiff did not bring prima facie evidence with regards to thetortious conducts of A and B in Japan. Furthermore, C conducted business in Japan under its
own responsibility and its annual revenue reached 10 billion Yen, so that its judicial personality was not nominal; A and B could not be subjected to Japan’s jurisdiction solely because
A was C’s parent, or B belonged to the same corporation group. (iii) Based on the facts
found, the Court dismissed plaintiff’s claim against C on the merits.
The decision in the Ueno Seiyaku case has been criticized by scholars in Japan, because the
Court did not regard the allegedly tortious conducts of A, B and C as a whole, but distinguished between those of A and B, and those of C, examining respectively whether the
judicial jurisdiction should be granted. See e.g. S. WATANABE, in: Law & Technology 18(2003) 1, 23-25. Because C, as a Japanese company, was subject to the general jurisdictionof Japan and plaintiff’s claim against A and B was based on the same cause of action, theCourt could have granted the jurisdiction against A and B on the grounds of the joinder ofparties (Streitgenossenzuständigkeit), following some precedents (e.g. Kojima v. Mitsukoshi
Kigyô Corp., Hanrei Jihô 1261, 105 (Tokyo District Court, interlocutory judgment, June 1,1987)) and scholary opinions. For the “joinder of parties” in cross-border litigation, see
Y. SAKURADA, Shukanteki heigô ni yoru kankatsu-ken, in: Takakuwa / Dôgauchi (eds.),
Kokusai minji soshô-hô (zaisan-hô kankei) (2002) 127, 128-135.
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fringement.14 This case law is welcomed by Japanese scholars, even though there is astrong voice among business people arguing that exclusive jurisdiction should be
granted to the country of registration, as they are afraid of having Japanese patent
infringement cases litigated in the U.S. courts under U.S. procedural rules, especially ina jury trial.15
2.

Jurisdiction on Patent Infringement

A patent is an intellectual property right which is conferred by the respective country
based on a thorough examination by the competent authority of the substantive andformal requirements. A patent comes into existence only after being registered, and,once registered, it confers exclusive rights (monopoly) for the exploitation of the invention to the rightholder. Because of these characteristics, the effects of patent are
confined within the territory of the country in which it is registered, i.e. “the protecting
country”. It is generally recognized that granting a patent, its registration, validity, aban-

14

15(Tokyo District Court, Oct. 16, 2003). In this case, Coral Corporation (hereinafter Coral)
and Marine Vio (hereinafter MV) were both Japanese companies which had their principal
place of business in Japan. Coral produces health products from coral and sells them inJapan as well as the U.S. Because MV contended that Coral’s products infringed upon its
U.S. patent and warned Coral to stop selling them in the U.S., Coral requested (1) apreemptive declaration that MV could not enjoin U.S. sale of plaintiff’s products because
Coral’s products were not within the range of MV’s patent or, alternatively, because MV’s
U.S. patent was not valid, and (2) to enjoin MV from sending warning letters to Coral’s U.S.
business partners and to pay damages under unfair competition law. The court recognizedJapan’s international judicial jurisdiction following the ordinary jurisdictional rules (Art. 4(4) of the Japanese Civil Procedural Code: defendant’s principal office) set up by the caselaw. The court reasoned that, even if the territorial effects of patent and patent’s relation to
the political and economic policy of the country of registration might be taken into
consideration in determining the governing law, this would not mean that the court must
decline jurisdiction where the patent is registered in another country. This is due to the factthat a claim for injunction based on a patent is an action on private property. In a patent infringement case, the validity of patent may often be asserted as a statutory defense; this does
not, however, preclude the jurisdiction of countries other than the country of registration,
because the decision on the validity of patent does not have erga omnes effects, but isincidental and binds only the parties. The Tokyo District Court decided further on the
merits, characterizing the claim (1) as a question of “effects of patent” and upheld, under
U.S. law, plaintiff’s assertion that defendant could not enjoin plaintiff from selling its products in the U.S. On the other hand, the court characterized the claim (2) as a question oftort, holding that Japan was locus delicti under Art. 11 (1) of Hôrei and granted the claim
under Japanese unfair competition law.
See the Tsuburaya Production Co. Ltd. v. Sangenchai Sonpote, Minshû 55-4, 727 (Supreme
Court, June 8, 2001) [Ultra-man case]; Yokoyama v. Entercolour Technologies Corp.,
Hanrei Jihô 1812, 139 (Tokyo District Court, Sep. 18, 2002) [Giganter case].
See M. DÔGAUCHI, Jurisdiction over Foreign Patent Infringement from a Japanese Perspective in Consideration of the Hague Draft Convention on Jurisdiction and Foreign Judgments
in Civil and Commercial Matters as of June 2001, in: Japanese Annual of International Law
44 (2001) 35, 49.

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donment and revocation are subject to the exclusive jurisdiction of the country of Registration.16 Art. 22 (4) of the Brussels-I Regulation of Dec. 22, 200017 (Art. 16 (4) of theBrussels Convention of Sep. 27, 1968) expressly provides this idea.
The position is divided among countries on patent infringement, however, as theheated discussions on the project of the Hague Convention on jurisdiction and theeffects of foreign judgments in civil and commercial matters have shown18 : While themajority of countries favored to subjecting patent infringement disputes to normal jurisdictional rules, the United Kingdom, among others, supported the exclusive jurisdictionof the country of registration. The principal argument was that patent validity and infringement are closely connected and a defendant accused of patent infringement often
defends himself by attacking the validity of the patent. Thus, applying different jurisdictional rules to these two questions would lead to the risk of contradictory judgments.19
Even within the framework of Art. 5 (3) of the Brussels-I Regulation (Art. 5 (3) of theBrussels Convention), where infringement of intellectual property is characterized as a
tort20, English courts have declined to hear the case whenever invalidity of foreign intellectual property is raised as a defense or counter-claim in infringement proceedings.21
From a theoretical viewpoint, it should be pointed out that patent infringement is adispute between private persons, where the rightholder seeks remedies from the infringer on the grounds that he infringed on the patent. In this case, the patent is alreadyconferred to the rightholder as a property right and is regarded as prima facie valid.
This is in contrast to questions of registration, revocation or invalidation of patents,
which involve administrative acts or procedures, and must therefore be subject to the
exclusive jurisdiction of the country in which the patent is argued to be, or is, regis-

16

17
18

19

20
21

See e.g. S. CHAEN, Gaikoku tokkyo shingai jiken no kokusai saiban kankatsu, in: Nihon
Kôgyô Shoyûken-hô Gakkai Nenpô 21 (1998) 59; cf. Y. NAKANISHI, Mass Media ni yoru
meiyo-kison / Cyber Space de no chosaku-ken shingai-tô no kankatsu-ken, in: Takakuwa /Dôgauchi (eds.), Kokusai minji soshô-hô (zaisan-hô kankei) (2002) 99, 105.
Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
See the Report of the Special Commission drawn up by Peter Nigh & Fausto Pocar, Hague
Conference on Private International Law – Enforcement of Judgments, Prel. Doc. No. 11[Art. 12 (5)]; Report of the Experts Meeting on the Intellectual Property Aspects of the
Future Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters,
Hague Conference on Private International Law – Enforcement of Judgments, Prel. Doc.
No. 13. Both documents are available at <http://www.hcch.net/e/workprog/jdgm.html>.
See Prel. Doc. 13, supra note 18. In the traditional English case law, the exclusive jurisdiction of the country of registration in patent infringement cases was founded on the “double
actionability” rule, which was abolished through 1995 Private International Law (Miscellaneous Provisions) Act. See M. PERTEGÁS SENDER, Cross-Border Enforcement of Patent
Rights 2.54-2.58 (2002); cf. infra note 62.
J.J. FAWCETT / P. TORREMANS, Intellectual Property and Private International Law (1998) 150.
See Id. at 201-213.

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tered.22 Patent infringement action as a dispute between private persons falls within the
category of tort for the purposes of jurisdiction, so that it ought to be governed byordinary rules of jurisdiction, even as to a foreign patent infringement. The “principle ofterritoriality” does not prevent the national courts from deciding a foreign patent
infringement dispute, since the existence of a foreign patent as a property right, eventhough its exclusive effects as to the exploitation of an invention are restricted to thecountry where it is registered, can be recognized by the national courts, and so can theeffects of an alleged infringement.
Some practical considerations also support this position. First, damages or other remedies are usually most effectively recovered at the domicile of defendant; a judgment
rendered in a foreign county, in which the concerned patent is registered, is not always
enforceable in the country where defendant is domiciled. Second, if both parties are
Japanese with their domicile or principal office in Japan and the subject matter is a U.S.
patent infringement as in the underlying case, a grant of exclusive jurisdiction to the
U.S. might hinder an expeditious dispute resolution and impose a burden on the parties
to sue abroad. Third, if plaintiff owns parallel patents in several countries for the same
products and a defendant allegedly infringes on them, all of the claims can be concentrated in a single national court under ordinary jurisdictional rules.23
It is therefore reasonable and expedient to subject a patent infringement case to theordinary rules of jurisdiction. In a nutshell, the international jurisdiction of Japan shallbe granted as a principle, when (i) the defendant is domiciled in Japan, (ii) the damage
was sustained in Japan, or (iii) an act, from which the damage resulted, was committed
in Japan, subject to an exceptional reference to the above mentioned “special circumstances”; (iv) a choice of forum in favor of Japanese courts or (v) a general appearanceof defendant without contesting jurisdiction is also a basis for international jurisdiction
by an analogous application of Art. 11 and 12 of the Japanese Civil Procedural Code.
The place where the damage was sustained in patent infringement cases shall be regarded as the country where the patent is registered, namely the protecting country, since thescope of the protected right (Rechtsgut) is the territory of the registration country. On
the other hand, the country in which tortuous act was committed can be interpreted aseither always being the country of protection as a consequence of the territoriality ofpatents, as some scholars suggest24, or possibly being another country, when a joint-

22
23
24

M. Dôgauchi, Kokkyô wo koeta chitekizaisan-ken no hogo wo meguru shomondai, in:Jurisuto 1227 (2002) 52, 57.
CHAEN, supra note 16, at 59-61, 73-74.
Some scholars argue that, because of the “principle of territoriality” of patents, the conducts
carried out outside the country of protection do not constitute an infringement, so that theplace of the tortious act always falls within the country of protection. See e.g. S. WATANABE, Chiteki zaisan shingai soshô ni okeru kokusai saiban kankatsu [Nihon], in: Kidana(ed.) Kokusai chiteki zaisan shingai soshô no kiso riron (2003) 133, 152.

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tortfeasor induces the infringing result in the country of protection from abroad.25 If
Japan has international jurisdiction in a foreign patent infringement dispute, shall thenational courts be allowed to decide on preliminary or incidental question of validity ofpatent as well? As a matter of Japanese national law, the invalidation or revocation ofpatent with erga omnes effects can only be decided in a trial procedure by the Patent
Office (Art. 178 (6) of the Japanese Patent Law), which is independent of the subject
matter jurisdiction of courts regarding patent infringement. However, scholarly opinions
recognize that the court seized in an infringement case may verify incidentally whether
reasons for invalidation exist;26 this principle was eventually adopted by the Supreme
Court in 2000.27 The Supreme Court held that, so far as there are obvious grounds forthe invalidity of the patent concerned, claim for injunction or damages based on it shallbe deemed an abuse of rights, unless there are special circumstances to the contrary.28
The rationale is that it would be burdensome for parties to go through two different
procedures. An incidental invalidity declaration by a court, which is binding only forthe parties, does not contradict the distribution of subject matter jurisdictions between
the Patent Office and courts, so long as it is based on obvious invalidity grounds.29
With regards to cross-border infringement cases, the burden and procedural hindrance would be even more remarkable if parties facing an infringement action had torefer to the foreign court in which the patent is registered whenever patent validity isquestioned. Furthermore, if defendant raised an invalidity defense and the national court
stayed the proceeding to await the invalidation decision to be rendered in the foreigncountry where the patent is registered, the national proceeding could be blocked
forever, so long as defendant would not take the step to file a costly and time-consuming invalidation suit in that foreign country. On the other hand, the plaintiff, himself,
would not move to invalidate his own patent, which is formally still valid.30 These practical concerns suggest that we should provide a national court, dealing with infringement, with the power to incidentally rule on the validity of a patent, even if it is aforeign patent.31 The Tokyo District Court expressed this principle in the above men25

26
27
28

29
30
31

In the underlying case, the active inducement of the infringement of the U.S. patent wascommitted in Japan and this conduct was tortious according to U.S. patent law [35 U.S.C.
§ 271 (b)]. So long as the conduct in Japan was obviously directed to the U.S., Japan could
be regarded as the place in which the tortious act was committed. Granting jurisdiction there
might also be of practical interest in terms of efficient enforcement of remedies, especiallythe injunction of exporting products.
See e.g. N. NAKAYAMA, Kôgyô shoyûken-hô [tokkyo-hô] (2nd revised ed, 2000) 1, 408-421.
Fujitsû Co. Ltd. v. Texas Instruments Inc., Minshû 54-4, 1368 (Supreme.Court April 11,2000).
Minshû 54-4, 1372-1374. Other courts follow this ruling of the Supreme Court: e.g. Funai
Denki Co. Ltd. v. MK Seikô Co. Ltd., in: Hanrei Times 1081, 241 (Osaka District Court,
Oct. 24, 2002).
NAKAYAMA, supra note 26, 418-419.
DÔGAUCHI, supra note 15, at 56; CHAEN, supra note 16, at 75.
In this sense also M. DÔGAUCHI, in: Jurisuto 1246 (2003) 278, 279.

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tioned Coral Corporation case.32 This will also enable the court to hear all of the evidence raised in relation to the validity question and to adequately determine the scopeof the patent.33 The risk of contradictory decisions would be alleviated by consolidationof litigations, on the assumption that Japanese courts start to recognize a cross-borderlis pendens.34

IV. APPLICABLE LAW
1.

Characterization

In the underlying case, the Supreme Court distinguished the following two categories incharacterizing plaintiff’s claims : on the one hand, appellant’s claim for (c) compensatory damages was characterized as “tort,” because it aims, in light of justice and fairness, to compensate for damage caused to the victim in the past. On the other hand,appellant’s request for (a) injunction of production, export and inducement of infringement, and (b) destruction of the appellee’s products were deemed as concerning the“effects of patent,” because they did not fulfill the characteristics of tort.35 As a result,
the Supreme Court held that (c) was governed by U.S. law as lex loci delicti in the senseof Art. 11 (1) of Hôrei, and also (a) and (b) were governed by U.S. law as lex lociprotectionis, relying on jôri (reasonableness) in the absence of explicit conflicts rules in
Hôrei.
These reasonings, first of all, presupposed that there are no explicit conflicts rules onpatent infringement in international bilateral or multilateral treaties of which Japan is a
Member State. Admittedly, Art. 2 of the Paris Convention for the Protection of Industrial Property of March 20, 1883 provides for “national treatment,” according to which
nationals of any country of the Union enjoy in all other countries of the Union the same
protection and the same remedy against any infringement of their rights as those countries grant to nationals. Although some foreign scholars argue that this rule includes aconflict of laws aspect and designates lex loci protectionis as the law applicable to

32
33

34

35

See supra note 13.
For these arguments, see AMERICAN LAW INSTITUTE, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes, Preliminary
Draft No. 2 (submitted on Jan. 20, 2004), at 77.
Japanese courts mostly have refused to take a foreign lis pendence into consideration so far.
See e.g. M. DÔGAUCHI, Kokusai soshô kyôgô, in: Takakuwa / Dôgauchi (eds.), Kokusai
minji soshô-hô (zaisan-hô kankei) (2002) 145-151; PETERSEN, supra note 9, at 271-298.
The Tokyo District court followed this characterization as to an injunction based on patentin the above mentioned Coral Corporation case. See supra note 13.

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existence, ownership of patent and infringement upon it36, the majority of Japanese
conflicts scholars contend that this provision is only a rule of law relating to foreigners(Fremdenrecht) and does not determine the governing law.37
Following the consideration of Japanese scholars, the Supreme Court referred to thenational conflict of laws rules. The rationale of the distinctive characterization between
the claims (a)/(b) and (c) obviously lay in traditional Japanese substantive law theory,
according to which injunction or prevention of an infringing act is based on propertylaw (actio negatoria), whereas damages to compensate a loss sustained in the past isbased on tort law. 38 Also the Japanese Patent Law provides for (a) injunction andprevention of an infringement of the patent (Art. 100 (1)) and (b) destruction of infringing products as measures against patent infringement (Art. 100 (2)), and subjects(c) compensatory damages to Art. 709 of the Japanese Civil Code, the general provision
for tort.39 It should be pointed out, however, that this legislature’s decision regarding
the Patent Law was merely a technical one, not a substantial one. 40 Furthermore,according to the prevailing opinion and the case law in Japan, characterization of crossborder legal relations must be performed from the viewpoint of conflict of laws,
independently from substantive national or foreign laws.41
Some Japanese conflict of laws scholars suggest that, since patent is granted throughregistration by the respective country based on its industrial policy, claims (a) and(b) should be deemed as a matter of public law and are subject to that country’s public
36

37

38
39
40

41

See e.g. O. SANDROCK, Die kollisionsrechtliche Behandlung der Deliktshaftung bei der Verletzung von gewerblichen Schutzrechten und Urheberrechten, in: Ernst von Caemmerer(ed.), Vorschläge und Gutachten zur Reform des deutschen Internationalen Privatrechts deraußervertraglichen Schuldverhältnisse (1983) 380, 393-394, 402-407; E. ULMER, Intellectual Property Rights and the Conflict of Laws (1978) 1-11.
Kidana argues that there was no discussions nor implications during the drafting procedureof the Paris Convention that its Art. 2 would order the application of lex loci protectionis toa patent infringement. He puts forth that Member States could not be regarded as violating
the Convention, even though it provided for the application of a different law (for example,
Art. 110 (2) of the Swiss Statute on Private International Law allows the parties to choose
lex fori instead of lex loci protectionis regarding the infringement of intellectual property
rights). S. KIDANA, Kokusai kôgyô shoyûken-hô no kenkyû (1989) 85-91; see also
S. KIDANA, Chiteki zaisan-hô no tôitsu to kokusai shihô, in: Kokusai Shihô Nenpô 3 (2001)
175; J. EGUCHI / S. CHAEN, Kokusai torihiki to chiteki zaisan, in: Matsuoka (ed) Gendai
kokusai torihiki-hô kôgi (1996) 168, 188-189.
See e.g. J. FUNAHASHI, Bukken-hô (1960) 26-27.
See the comment of the clerk in charge of this case, M. TAKABE, L&T 19 (2003) 81, 87.
Nakayama points out that the legislature could insert a provision de lege ferenda into theJapanese Patent Law, which orders damages as a remedy for patent infringement, but itwould not make a difference, as patent infringement must be regarded as a tort. NAKAYAMA,
supra note 26, at 335.
H. EGAWA, Kokusai shihô (17. ed, 1988) 60-61; Y. SAKURADA, Kokusai shihô (3d ed, 2000)
71-74; Y. TAMEIKE, Kokusai shihô kôgi (2d ed, 1999) 127-137; R. YAMADA, Kokusai shihô(2d ed, 2003).51-56 (note 9). As to the case law, see Honma v. Fuji Town Kaihatsu Co.
Ltd., Minshû 48-3, 835 (Supreme Court, March 8, 1994).

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law, without giving rise to a conflict of laws question; claim (c), on the other hand, is tobe characterized as a question of “tort” under Art. 11 (1) of Hôrei.42 Arguably, this consideration as to public law disregards the fact that a patent, once granted and registered,exists as an intangible property right, which can be licensed, assigned, laid in pledge
and renounced by the rightholder.43 The very nature of a patent which has already comeinto existence should be distinguished from the administrative procedure of granting
and registering it. The protection of a patent means to guarantee the intangible property
right provided for a private person against infringing acts of another private person, andfalls within the scope of private law.44 Thus, we cannot dispense of determining the governing law of patent infringement according to a conflicts of laws rule.
As was mentioned above, the Supreme Court drew a parallel to tangible property incharacterizing the request for (a) an injunction and (b) destruction of products as “effects of patent”. With regards to tangible property, claims in rem (dingliche Ansprüche:injunction or prevention of infringement upon tangible property) are subject to lex rei
sitae under Art. 10 of Hôrei, and so are, according to the majority of Japanese conflictof laws scholars, certain kinds of pecuniary claims deriving from property rights (e.g.
claims for damages or reimbursement of costs and expenses), so long as they are closely
related to the property and presuppose its existence.45 Claims in rem should be regarded

42
43
44

45

DÔGAUCHI, supra note 31, at 279-280. As a result, also S. CHAEN, Tokkyo-ken shingai ni
kanren suru gaikoku ni okeru kôi, in: NBL 679 (1999) 13, 15-17.
NAKAYAMA, supra note 26, at 426-480.
See e.g. S. KIDANA, Chiteki zaisan-ken shingai soshô ni okeru junkyo-hô [Nihon], in:
Kidana (ed), Kokusai chiteki zaisan shingai soshô no kiso riron (2003) 277, 281; M. SHIN,
Kokusaiteki na chiteki zaisan-ken shingai jiken ni okeru teishoku-hô riron ni tsuite, in:
Hôgaku Ronsô 154-2 (forthcoming 2004) [The author thanks Ms. Miho Shin for making her
paper available before its publication].
While Japanese conflict of laws scholars unanimously subject claims under property rights
to lex rei sitae under Art. 10 of Hôrei as a question of “property,” opinions are divided as topecuniary claims derived from property rights.
(i) Tameike puts forth that lex rei sitae should be applied as a question of “property”(TAMEIKE, supra note 41, at 319; also Egawa, except in the case of a property infringement
caused by a wrongful act, which should be characterized as “tort” under Art. 11 of Hôrei.
EGAWA, supra note 41, at 195-196), whereas(ii) Orimo suggests that lex loci delicti should be applied according to Art. 11 (1) of Hôrei
as a question of “tort” or “unjust enrichment,” since these pecuniary claims deviate fromproperty rights and constitute an independent statutory chose in action (Y. ORIMO, Kokusai
shihô kakuron (2nd ed, 1972) 100, 106 (note 11)).
(iii) Today’s prevailing opinion takes a middle course and argues that questions which presuppose the existence of property are to be characterized as “property,” whereas otherquestions, in which claims under property rights are transformed into statutory chose inaction, are to be deemed as “tort” or “unjust enrichment”. So for example, in a bailment
case, in which the goods under bailee’s possession were lost owing to his negligence, proprietor’s claim for damages is regarded as a question of “tort,” as it does not concern therestitution of the property, but rather the payment of damages in its place. YAMADA, supranote 41, 296, 298 (note 9); A. TAKAKUWA, in: Kidana / Matsuoka (eds), Kihon-hô konmentâru

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as the effects emanating from absolute rights on tangible property, aiming at recovering
physical control over the tangible property based on its possession or ownership. On theother hand, infringement upon patent as an intangible property is an abstract interference with the rightholder’s exclusive rights to exploitation of the invention and where
the patent infringer takes advantage of its economic interests without due title orauthorization. The measures against patent infringement are supposed to clear the way
for an undisturbed patent exploitation by the rightholder, and it is up to the respective
legislature what kind of measures will be granted. In this respect, the line between theclaims (a)/(b) and that of (c) is relative.46 Since the nature of the measures against patent infringement is different from that of claims in rem founded on the absolute, ergaomnes rights upon tangible property, the parallel characterization of patent infringement
as “effects of patent” regarding the claim (a) and (b) encounters its limits for the purpose of conflict of laws.47
Furthermore, in the underlying case, appellant claimed for remedies against infringement upon his U.S. patent, and the validity or the scope of protection of the patent was
not disputed. While the latter question is deemed as an “incidental question” (Vorfrage)
regarding “effects of patent,” the former is the primary subject matter, which does notnecessarily follow the same characterization. Rather, there are good reasons to characterize the patent infringement as “tort,” without distinguishing between the claim (a)/(b)and (c) : First, as was mentioned above, a cross-border legal relation must be characterized independently from national or foreign substantive legal systems. The governing
substantive law (Japanese law, U.S. law, German law etc.) is not fixed until the applicable conflicts rule is determined through characterization on the level of conflict oflaws. Since it is a matter of each substantive law to construct the types and the range ofremedies for patent infringement, it is incoherent to characterize, on the level of conflictof laws, patent infringement distinctively according to the category of remedies(a) injunction, (b) destruction of products or (c) damages. Second, Art. 11 (1) of Hôrei

46

47– Kokusai shihô (1994) 57, 61-62; Y. SAKURADA, Bukken junkyo-hô no tekiyô han’i, in:
Sawaki / Akiba (eds), Kokusai shihô no sôten ( 2d ed, 1996) 113, 114.
It should be recalled that as to Japanese substantive law, scholars and court decisions havestarted to grant injunction - beside libel based on Art. 723 of the Japanese Civil Code –regarding abuses of the environment and other types of infringements upon individual rights,
even though there are no explicit provisions. The legal construction for the injunction isdivided among scholars, and some of them construct it as the effect of tort law. See e.g.
Y. FUJIOKA, Songai baishô-hô no kôzô (2002) 323-536.
As to the scholarly opinion characterizing patent infringement as a question of the “effectsof patent,” see N. Mon’ya, Chiteki zaisan-ken no kokusaiteki hogo, in: Sawaki / Akiba (eds),
Kokusai shihô no sôten (2d ed, 1996) 25, 27. Also the German legislature as well as scholars might have followed the same characterization by presupposing the applicability of thelaw of the protecting country without any reference to the conflicts rules on tort (Artt. 40 bis
42 of EGBGB). BT-Drucks. 14/343, at 10; A. HELDRICH, in: Palands Kommentar zum BGB– Art. 40 EGBGB, at No. 13; also SANDROCK, supra note 36, at 406-407.

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has a broad scope of application and covers principally all kinds of torts.48 Considering
this factor, it seems in conformity with the present Japanese conflict of laws system toalso subject patent infringement to this provision.49
In light of these considerations, it appears expedient to characterize patent infringement as a question of “tort,” without distinguishing between the claim (a)/(b) and (c).50
As a result, Art. 11 (1) of Hôrei should be applicable and, therefore, lex loci delicti
should govern the patent infringement.
2.

Governing Law

In the underlying case, the Supreme Court held that U.S. law was applicable to the request (c) for damages as lex loci delicti under Art. 11 (1) of Hôrei. The Supreme Court
considered that the directly infringing act was committed in the U.S. and the result of
the infringement was sustained there. Furthermore, the court noted that application of
U.S. law would not violate appellee’s foreseeability, as it intended to export its products
to the U.S. and had them sold there. Also in the above cited Manchurian patent case51,
the lex loci delicti was construed as Manchurian law because the defendant acted in
Manchuria, allegedly infringing upon the Manchurian patent and causing damage there.
The majority of authors put forth the same interpretation of Art. 11 (1) of Hôrei withmore or less the same reasonings as well.52
On the other hand, the first and second instance of the underlying case held that thelocus delicti was Japan, because defendant’s allegedly wrongful acts were all performed
in Japan.53 These courts did not give further explanations, though they may have been
following the interpretation of Art. 11 (1) given by the prevailing scholarly opinion in
Japan on tort over a distance, namely: tort based on negligence is subject to the law of
the place where the wrongful act was committed, whereas tort based on strict liability is

48

49
50

51
52

53

Except for specific types of tort (e.g. product liability), for which the majority of scholars
deny the application of Art. 11 of Hôrei through its interpretation, this provision covers thewhole legal relations to be characterized as tort. See e.g. S. NAKANO, in: Kidana / Matsuoka(eds), Kihon-hô konmentâru – Kokusai shihô (1994) 67-74.
CHAEN, supra note 42, at 15-17; DÔGAUCHI, supra note 31, at 279-280; M. HIZUME, in:
L&T 18 (2003) 35, 40; YAMADA, supra note 41, at 388-389.
Also the Manchurian patent case (see supra note 10 and infra Part IV 2 and 3) characterized patent infringement as tort, though the claim was directed solely to damages. Kidana
contends that the claims (a), (b) and (c) in the underlying case should be, as a whole, characterized as tort in order to avoid the problem of “adjustment” or “coordination” (Anpassung)and alleviate the “principle of territoriality”. KIDANA, supra note 44, at 285-286.
Supra note 10.
S. KIDANA, in: AIPPI 45-5 (2000) [Japanese] 309; N. ÔTOMO, in: Jurisuto 1171 (2000) 109;
as a result, also CHAEN, supra note 42, at 15-17; DÔGAUCHI, supra note 31, at 279-280;
HIZUME, supra note 49, at 40; A. SAITÔ, in: Jurisuto 1179 (2000) 299, 301; YAMADA, supranote 41, at 388-389.
Hanrei Jihô 169, 136; Hanrei Jihô 1711, 136.

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governed by the law of the place where the damage was sustained. 54 Ishiguro also
supported the reference to Japanese law in this case, on the grounds that both the plaintiff’s and defendant’s most significant relationship was with Japan.55
It is, however, generally acknowledged that the existence, validity and effects of apatent are determined by lex loci protectionis, namely the law of the country in which
the patent is registered, and that the effects of a patent do not go beyond the registration
country’s border. Hence the infringement of a patent can occur only within the territoryof the protecting country, even if part of the infringing act is committed in anothercountry;56 the patent infringement presupposes that the directly infringing act is performed in the protecting country. This is a consequence of the “principle of territoriality,” which is the dominating principle for patent and other intellectual property rights
which arise out of registration.57 Considering these characteristics of a patent infringement, the place where the “harmful event occurs” in the sense of Art. 11 (1) of Hôrei is
to be construed as the protecting country, where the relevant factors of a patent infringement are always concentrated.
Because the subject matter in the underlying case was the infringement of a U.S.
patent, the locus delicti could not be anywhere but the U.S. In this respect, we should
support the Supreme Court’s and scholarly opinions’ appointment of U.S. law as thegoverning law, though the justification must be derived from the above mentioned
specific characteristics of a patent infringement; otherwise, a different law than lex lociprotectionis could be deemed as applicable following the reasoning of the Supreme
Court, if, for example, the alleged infringer who acted outside the protecting country
could not have foreseen that damage would have been caused in the protecting country.
54

55
56
57

The rationale of this opinion is that tort based on negligence is geared at the tortfeasor’s
intent and predictability, so that the law of the place where the tortfeasor acted should beapplied. On the other hand, tort based on strict liability is directed to compensation of damages sustained in a certain place, whether or not the tortfeasor was negligent or could haveforeseen the result, so that the law of the place where the damage was sustained should beapplied in this category. ORIMO, supra note 45, at 180; S. IKEHARA, Kokusai shihô: Keiei
Hôgaku Zenshû [Kokusai torihiki-hô] 20 (1967) 377; M. MARUOKA, Fuhô kôi-chi, in:
Sawaki / Akiba (eds), Kokusai shihô no sôten ( 2d ed, 1996) 136; YAMADA, supra note 41,
at 364. Japanese scholars, however, are becoming critical of this opinion, as the criteria for
distinguishing the categories cannot be found in a substantive law, as they should serve todetermine the applicable substantive law; on the other hand, criteria specific to conflict oflaws are difficult to set up and do not guarantee legal certainty or foreseeability.
SAKURADA, supra note 41, at 227; TAMEIKE, supra note 41, at 374. There hardly seems to
be any foreign legislation or scholarly opinion supporting this twofold system nowadays.
See T. KADNER GRAZIANO, Europäisches Internationales Deliktsrecht (2003) 47.
K. ISHIGURO, in: Shihô Hanrei Remarks 21 (2000) 150, 153.
K. KREUZER, in: Münchener Kommentar / EGBGB (3d ed, 1998), nach Art. 38 Anh. II,
No. 26.
For further discussions, especially on the exceptional departures from the principle of territoriality as to copyright and neighboring rights, see AMERICAN LAW INSTITUTE, Preliminary
Draft No. 2, supra note 33, at 106-118.

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The Application of Governing Law and Double Actionability

The remaining problem is the “double actionability” rule in Art. 11 (2) and (3) of Hôrei.
Art. 11 (2) provides for the application of Japanese law, in addition to the foreign lexloci delicti, regarding the requirements of tort, and application of Art. 11 (3) regarding
the effects of tort, namely the types and range of damages and other remedies for tort.
The legislators of Hôrei, which was promulgated in 1898, modeled the contemporary
German and English law and justified the cumulative application of Japanese law on the
grounds that tort concerns the public policy of Japan and must therefore be in conformity with the requirements and the effects of tort under Japanese law.58 Although present
Japanese scholars almost unanimously criticize these rules for inadequately favoring
Japanese law and point out that an inappropriate result of applying the foreign lex locidelicti can be corrected by a reference to the general public policy clause (Art. 33 of
Hôrei)59, Art. 11 (2) and (3) of Hôrei remained in force until today.
In the Manchurian patent case, as mentioned above, the Tokyo District Court construed the lex loci delicti as Manchurian law. The court then applied Japanese law
cumulatively under Art. 11 (2) of Hôrei and held that the defendant’s act did not constitute tort on the grounds that, within the territory of Japan, – based on the “principle ofindependency” of patent – only a Japanese patent is recognized as a right, but not aforeign patent. This decision was rightly criticized by scholars, since the meaning of the
cumulative application of Japanese law is understood only to preclude an enforcementof an outrageous foreign tort law which deems an act wrongful, even if it would be legal
under Japanese law. For this purpose, it must be sufficient that an “equivalent act,”
namely an act infringing on a Japanese patent, is regarded as wrongful under Japaneselaw. Thus, even a foreign patent infringement which occurs in the protecting country
should be deemed to constitute a wrongful act under Art. 11 (1) and (2) of Hôrei.60
In the underlying case, the situation was more complicated as defendant (appellee)
acted only in Japan and allegedly indirectly induced the infringement upon the U.S.
patent in the U.S. The Supreme Court applied the “equivalent act” test here and considered whether an active inducement of a Japanese patent infringement committed
abroad can be regarded as “tort” under Japanese law. The court concluded that it could
not be considered a tort because Japanese patent and tort law do not have a provision
for their extraterritorial application to an active inducement effectuated abroad, which
would correspond to 35 U.S.C. § 271 (b). As a result, the Court held that appellee’s
conduct in Japan did not constitute a wrongful act and that the requirement of Art. 11(2) of Hôrei was not fulfilled.

58
59
60

See Hôrei shûsei-an riyûsho (publishing year unknown).
See e.g. TAMEIKE, supra note 41, at 378; YAMADA, supra note 41, at 363-364.
ORIMO, supra note 45, at 187 (note 4); R. YAMADA, Kokusai shihô no kenkyû 150-154(1969).

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It is doubtful that Japanese judges should check the extraterritorial applicability ofJapanese law in the sense of Art. 11 (2) of Hôrei. In light of the above mentioned purpose of this provision, it ought to suffice that the active inducement is also a wrongful
act under Japanese law, without taking the territorial range of application of Japanese
law into consideration.61 As Justice Fujii precisely argued in his dissenting opinion, an
active inducement of patent infringement is a solicitation or assistance of a wrongful act
and constitutes a joint tort under Art. 709 and Art. 719 (2) of the Japanese Civil Code.
And even if we considered, under Art. 11 (2) of Hôrei, a parallel case in which aJapanese patent infringement was induced from abroad, the indirectly infringing act
would satisfy the requirements for joint tort under Art. 709 and Art. 719 (2) of the Japanese Civil Code, so long as the direct infringement occurs in Japan.
The Supreme Court obviously was hesitant to extraterritorially apply U.S. law to theappellee’s act in Japan, as can be seen in its refusal to apply U.S. law regarding therequests for (a) injunction and (b) destruction of products, on the grounds of such application being a violation of Japan’s public policy under Art. 33 of Hôrei. This public
policy clause is, however, meant to be the last “safety valve” to preclude the applicationof an extreme foreign law, when, and only when the result of applying it would do
unbearable harm to Japan’s moral thoughts and public order. The mere extraterritorial
application of U.S. patent law does not constitute a public policy violation a priori;
rather, courts must first look at the result of its application to the given case. Arguably,public policy violation should have been denied in the underlying case, since Japanesecourts would have granted in an equivalent case the same remedies under Japanese law
as the U.S. Patent Law.
V. FINAL REMARKSThis Supreme Court decision evoked lively discussions among Japanese conflict oflaws scholars about how to solve various questions relating to a cross-border patent
infringement. As was set forth in this paper, this decision contains a number ofdogmatic, theoretical and practical problems. Following the analyses purported in thisarticle, appellant’s claims, as a whole, should have been characterized as “tort” andsubjected to Art. 11 (1) of Hôrei, which would have led to the application of U.S. law,
without being bothered by the “double actionability” rule under Art. 11 (2) and (3) of
Hôrei, or by the public policy clause (Art. 33 of Hôrei). As a result, appellant’s claims
should have been granted, so far as in fact appellee had purposefully directed its activity
to the U.S. market and knowingly induced the infringement of appellant’s patent. We
had better expect Japanese courts to deal with these questions more adequately in the
future.

61DÔGAUCHI, supra note 31, 280.

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271

Since May 2003, Hôrei has been undergoing a thorough reform. We have the chance
not only to abolish the much disputed “double actionability” rule, following the U.K.’s
legislation of 199562, but also introduce an independent provision on the infringementof intellectual property rights and clarify how to characterize this legal relation andwhich country’s law to apply. The option currently being put forth by the Working
Group for the Reform of Hôrei is the application of lex loci protectionis to the infringement of patent, trademark, copyright and other intellectual property rights.63 So far, thisoption has been positively received by the Legislative Commission.64 By stipulating
this clear-cut provision, the new statute would eliminate uncertainty regarding the characterization of patent infringement and the determination of the applicable law, eventhough the development of new technology and the growing demand in practice willcontinuously challenge the appropriateness of this provision.65

ZUSAMMENFASSUNG
In seiner Entscheidung vom 26. September 2002 entschied der OGH im sogenannten„Card Reader-Fall“ zum ersten Mal, welches Recht auf die behauptete Verletzungeines ausländischen Patents (U.S.-Patent) durch Handlungen im In- und Ausland (inJapan und den USA) anzuwenden sei. Dabei kam das Gericht zu dem Ergebnis, daß inerster Linie das Recht desjenigen Landes Anwendung finde, nach dessen Recht das
Patent registriert worden sei (Territorialitätsprinzip). Darüber hinaus stellte es fest,
daß japanische Gerichte bei der Anwendung des ausländischen Rechts bestimmte
Rechtsfolgen und Ansprüche des Patentinhabers nach dem jeweiligen ausländischen
Recht allerdings nicht anerkennen dürften, falls hierdurch eine unmittelbare Rechtswirkung in Japan erzeugt werde. Dies wiederum würde gegen das Territorialitätsprinzip in der japanische Patentrechtsordnung und gegen den ordre public verstoßen.
Die Ansprüche des Revisionsführers wurden vom OGH letztlich zwar mit unterschiedlicher Begründung aber mit dem gleichem Ergebnis wie in den Urteilen der Vorinstanzen verneint und die Revision zurückgewiesen.

62
63
64
65

The U.K. enacted “Private International Law (Miscellaneous Provisions) Act” in 1995 andits § 10 (a) and (b) abolished the double actionability rule except for libel cases.
HÔREI KENKYÛ-KAI, Hôrei no minaoshi ni kansuru shomondai (2) – Fuhô kôi / bukken-tô
no junkyo-hô ni tsuite, Bessatsu NBL 85 (2003) [11-1-8-6].
See the protocol of the Legislative Commission for the Modernization of Private International Law on Nov. 4, 2003 (only in Japanese language) in: <http://www.moj.go.jp/>.
The application of lex loci protectionis to copyright infringement cases already encounterscertain limits regarding infringements caused through the internet. See e.g. J. GINSBURG,
The Private International Law of Copyright in an Era of Technological Change, in: Recueil
des Cours 273 (1998) 322-348.

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YUKO NISHITANIZJAPANR / J.JAPAN.L

Der Beitrag analysiert ausführlich die Entscheidung des OGH und überprüft sie
vom Standpunkt des japanischen internationalen Privatrechts aus im Hinblick auf dieeinzelnen kollisionsrechtlichen Fragen, die sich dabei stellten. Darüber hinaus werden
die verschiedenen möglichen Anknüpfungsmöglichkeiten in Patentfragen bei einer Auslandsberührung und die dabei jeweils auftretenden Konflikte diskutiert. Die Autorin
kommt zu dem Schluß, daß über die Frage des Sachstatuts nach allgemeinen kollisionsrechtlichen Prinzipien zu entscheiden gewesen sei. Unabhängig von der Art der jeweils
geltend gemachten Ansprüche solle dies bei einer Patentverletzung grundsätzlich das
Deliktsstatut nach der Regelung in Art. 11 I Hôrei sein, während der OGH das Statut
jedenfalls zum Teil nach dem Rechtsprinzip der natürlichen Vernunft (jôri) bestimmt
hatte. Zuzustimmen sei dem OGH aber dahingehend, daß auch das Territorialitätsprinzip im Falle von Patentverletzungen zu berücksichtigen sei. Die Verfasserin kommt
daher in dem vorliegenden Fall in gleicher Weise wie der OGH zu dem Schluß, daßU.S.-Recht anzuwenden gewesen sei. Im Unterschied zum Urteil des OGH kommt die
Autorin aber zu dem Ergebnis, daß die geltend gemachten Ansprüche zumindest teilweise begründet gewesen seien bzw. nicht unter Verweis auf den kollisionsrechtlichen
ordre public hätten negiert werden dürfen.
Die seit Mai 2003 tagende Kommission zur umfassenden Reform des japanischen
IPR-Gesetzes beschäftigt sich auch mit dem Problem der Regelung des anwendbaren
Rechts im Falle von Streitigkeiten im Zusammenhang mit Patenten und anderen Immaterialgüterrechten. Die Verfasserin erwartet, daß hierfür in Kürze eine klare Regelunggeschaffen wird.

(Die Redaktion)