10

Facilitation of the Use of Patented Inventions

It has been pointed out that the exercise of patent rights for inventions related to upstream
technologies in life sciences and those for inventions involved in technical standards in
information communication and electronics would, contrary to the purport of the patent system,
hinder technology development or impair the pubic interest. This study discussed this problem,
which would affect the facilitation of the use of these patented inventions, while trying to findlegal principles under laws other than intellectual property laws that can be applied or used as
reference for solving this problem. First, the details of regulations under anti-monopoly laws inJapan, the United States and Europe with regard to the exercise of patent rights were examined,focusing on the regulations for patent licensing agreements and the cases where the exercise of apatent right was disputed under anti-monopoly law. Then, in order to understand the legal
principle for determining whether to grant or deny an injunctive relief upon the exercise of apatent right in the United States, the cases after the eBay Case were reviewed. Next, the legal
principle of abuse of rights under the Civil Code of Japan was researched in terms of the relevant
academic theories and judicial precedents as well as the cases where the principle was applied tothe exercise of a patent right. Lastly, in relation to the requirement of “for the public interest”
under the award system, the legal principles for restricting private rights “for the public interest”
under the Constitution, the Civil Code, and the Land Expropriation Land were examined

compulsory license, and examined themthough comparison with those in Japan.
However, systems for restricting theexercise of patent rights under laws otherthan the Patent Act and other intellectual
property laws have not yet been fully studied,
and which system is applicable at all and ismost suitable to solve a particular problem
has also not yet been clearly identified.
Furthermore, full study has not been
conducted with regard to the methods fordetermining the applicability of relevant
legal principles under laws other thanintellectual property laws and factors to be
taken
into
considerationfor
suchdetermination.
With the awareness of the problems
mentioned above, this study aimed toconsider measures to facilitate the use ofpatented inventions by examining legal
principles under laws other than intellectual
property laws that may be applicable forcoping with these problems and obtainingreference information on the methods fordetermining the applicability of relevant
legal principles and factors to be taken intoI

Introduction
The possibility that the exercise ofpatent rights would hinder technology
development or impair the public interest has
been pointed out. This problem arises frompatented inventions related to research tools(technologies used in the R&D process) in thefield of life sciences, and also from patented
inventions involved in technical standards inthe fields of information communication andelectronics. If these patented inventions
cannot be used freely in the R&D process orindustry, it would hinder technology
development or impair the public interest.
Possible countermeasures for the issue of“difficulty in using patented inventions
freely” may be “experimental/research use
exception” under Article 69(1) of the Patent
Act and an award to grant a non-exclusive
license “for the public interest” under Article
93(1) of the same Act. The 2004 study
entitled “Exceptions to and Limitations of theEffect of Patent Rights” collected andcompiled information on legal systems andjudicial precedents in foreign countries withregard to such experimental use defense and1
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take note of future developments.
Since
the
provisionsoftheAnti-Monopoly Act are written in abstract
expressions, it is desirable to understandtheir meanings by referring to individual
relevant cases. In Japan, the number of casesof Anti-Monopoly Act violation is basicallysmall. From among a limited number of casesof Anti-Monopoly Act violation involving
patent rights, nine cases were examined ascases where the JFTC issued a cease anddesist order, and six cases were also
examined as cases where violation of theAnti-Monopoly Act was alleged in lawsuits on
infringement of patent rights, etc.
The next subject was the regulations
under the US anti-trust law, which is a very
important legal system that has provided thebasis for the Anti-Monopoly Act of Japan.
First, the specific Acts forming the anti-trust
law were outlined, namely, the Sherman Act,
the Clayton Act, and the Fair Trade
Commission (FTC) Act, and basic concepts
under the anti-trust law, such as “horizontal”
and “vertical” relationships, the “rule ofreason,” “illegal per se,” and “safety zone,”were also briefly described. Then, various
issues on licensing were reviewed based on
the basic court decisions in the past and theprovisions of the guidelines. To show
examples of monopolization, the Verizon
Case disputing discriminatory service andthe case disputing reverse payment
settlement (under the settlement contract in
the patent infringement lawsuit, theinfringing company promised to suspend the
R&D process for its products for a certain
period of time on the condition that it receive
some consideration) were illustrated. Brief
descriptions were also presented regarding
various restrictions on licensing, including
those on licensees’ activities (resale pricemaintenance), licensing terms (tying clauses),and royalty. Next, among the issues
concerning anti-trust lawsuits against
patentees, “standing to sue” was discussed.
Most anti-trust cases taking place in the
United States are civil actions. In order toprevent too many actions from being brought
to court, the anti-trust law provides for someconsideration for such determination.

II

Regulations under anti-monopoly law
regarding patent rights (Japan, US,
Europe)Anti-monopoly
law
is
that
for
maintaining
andpromotingmarketcompetition by regulating acts that are likely
to impede competition. On the other hand, apatent right is “monopoly” right granted by
the State which has “exclusive” nature as its
basic element. Therefore, the exercise of apatent right impedes market competition; it
has the potential risk of conflicting with
anti-monopoly law.
Based on this understanding, thissection examined the details of regulations
under the anti-monopoly laws in Japan, theUnited States, and Europe with regard to theexercise of patent rights. In particular,
research was performed on the contracts
concluded between businesses whereby thepatentee licenses the other party to work thepatented invention, focusing on the details of
regulations
under
the
respective
anti-monopoly laws and the cases where
disputes occurred under the anti-monopoly
laws in terms of patent rights.
To examine the regulations under the
Anti-Monopoly Act of Japan, this section
reviewed the “Guidelines for Patent andKnow-how Licensing Agreements under the
Anti-Monopoly Act” (July 30, 1999) whichindicate the policy of the Japan Fair Trade
Commission (JFTC) on the licensing issues.
The Patent and Know-how Guidelines show
the
JFTC’sviewpoints
under
the
Anti-Monopoly Act regarding the exercise ofpatent rights, as well as those regarding (1)private monopolization, (2) unreasonable
restraint of trade, and (3) unfair tradepracticeswithregardtolicensing,corresponding to Article 3 and Article 19 of
the Anti-Monopoly Act. In particular, withregard to unfair trade practices prescribed in
Article 19, the guidelines indicate four
categories of restrictions under licensing
agreements according to the four grades ofillegality. These guidelines are currently inthe revision process by the JFTC. We should
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requirements for “standing to sue.” Also inthis context, reference was made to theexercise of a patent right obtained by fraud,
which was disputed in the Walker ProcessCase, and to the abuse of industrial
standards. As the last topic, the concept of“patent misuse” was outlined. The scope of
patent misuse is not exactly the same as, but
mostly overlaps with, that of anti-trust law
violation. The requirement for the proof ofpatent misuse is not as strict as that ofanti-trust law violation.
EU competition law, along with the US
anti-trust law, is one of the most influential
competition laws in the world, and theregulations and guidelines thereof have
served as reference for Japan’s anti-monopoly
policy.
Therefore,
focus
was
placedparticularly on the issues concerning the“Block Exemption Regulation for Technology
Transfer Agreements” and the guidelines
thereof. The existing regulation andguidelines differ from the former versions inthat they contain economic perspectives suchas the competitive relationships and themarket share of the parties to the agreement.
In this respect, the existing versions enable
the parties to the agreement to make aflexible and appropriate decision for
individual agreements, while, at the sametime, requiring them to keep monitoring
their competitors and market share. In
addition, since markets change dynamically,
the present conditions cannot be accurately
identified by means of such monitoring,which only indicates the competitive
relationships and market share in the past,and therefore, problems arise when therelationships have changed. For this reason,
the revision of the regulation and guidelines
is criticized as having reduced legal stability.
Furthermore, EU competition law isbased on the call for market integration,
which is peculiar to Europe, and therefore
strictly
regulates
territorial
marketsegmentation. Because of this, territorial
restrictions under licensing agreements thatare not illegal in the United States or Japan
may be regarded as illegal in some cases in
Europe.

III

Legal principle for restricting theexercise of a patent right in the UnitedStates: grant or denial of an injunctive
reliefAn injunctive relief that a patentee canclaim in the United States significantly
differs from that prescribed in the Japanese
Patent Act. An injunctive relief in the UnitedStates is a relief (1) to be granted by the court(2) in accordance with the principles of equity
specific to common law, and (3) the court may
grant or deny it.
Based on these points of difference, thissection reviewed the background information
on injunctive relief in the United States. In
order to obtain a permanent injunction at the
US court, the plaintiff should satisfy thefollowing four conditions (“four-part test”): (1)the plaintiff suffered an irreparable injury;(2) remedies available at law, such asmonetary damages, are inadequate tocompensate for that injury; (3) considering
the balance of hardships between theplaintiff and defendant, a remedy in equity isappropriate; and (4) the public interest would
not be disserved by a permanent injunction.
In the past, special treatment was applied inpatent infringement cases, unlike other typesof cases, that is, if the court found that thepatent was valid and enforceable and that it
was infringed, an injunction against the
infringement was automatically granted.
However, in the eBay Case in 2006, theSupreme Court abolished this special
treatment for patentees, holding as follows:“the decision whether to grant or deny
injunctive relief rests within the equitablediscretion of the district courts, and (that)such discretion must be exercised consistent
with traditional principles of equity, inpatent disputes no less than in other cases
governed by such standards.”
Based on such background information,
research was made to identify the influenceof the eBay Case on subsequent patent
infringement cases for an injunctive relief.
First, two cases were examined in which apermanent injunction was granted. In the
Telequip Case, the court followed theconventional policy of automatically granting
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theories on the requirement for abuse ofrights, the emphasis was initially placed on“determination based on the subjective
circumstances” such as the right holder’sintention to do harm. However, subsequently
in the Unazuki Onsen Case and the
Kumamoto Power Plant Case, the emphasis
was shifted to the “objective requirements,”
which means that by making comparison of
the objective interest for the right holder andthat for the other party, abuse of a right may
be found even when the right holder had nointention to do harm. In the Itazuke BaseCase, the court clearly stated that the rightholder’s intention to do harm was notnecessarily required. Such determination
made based only on the comparison of theobjective interests is criticized as giving
preference to the interest of the strong party
who has created a fait accompli. The current
common theory is that determination should
be made from a comprehensive perspectiveby also taking into consideration thesubjective circumstances on the side of theright holder.
Since the requirement for abuse of rights
varies depending on the type of the rightallegedly abused and other circumstances
concerned, it is impossible to establish ageneral standard that can be applied in everycase. The legal principle of abuse of rights
functions as a general provision to correctand supplement the existing rules, andbecause of this function, there is a limit to theattempt to establish it as a general standard.
The last part of this section examined
the past cases where an assertion of abuse of
a right was made against the exercise of apatent right. Specifically, eight patent
infringement cases were presented in which
the exercise of a patent right was alleged as
constituting abuse of a right. In almost all ofthese cases, the court did not uphold orconsider the defendant’s (the allegedly
infringing party’s) assertion of abuse of theright. There is only one case where the court,
taking into consideration the process inwhich the patent right had been exercised,found the patentee to have abused the rightby filing a petition for provisional disposition.

an injunctive relief based on the finding ofvalidity/enforceability and infringement of
the patent. This is because the defendant did
not respond at all to the bill of complaint orappear at court. In the TiVo Case, the trial
judge properly applied the four-part test as
required by the eBay judgment. Next, an
additional two cases were examined in which
a permanent injunction was denied. In the z4
Techs. Case, the plaintiff was unable to provethat it suffered an “irreparable injury” orthat “monetary damages were inadequate tocompensate for that injury.” In the Paice
Case, the plaintiff was also unable to provesatisfaction of the four conditions.

IV Legal principle of abuse of rights
under the Civil Code
Article 1(3) of the Civil Code provides
that “No abuse of rights is permitted.” Today,
in almost all patent infringement cases, theallegedly infringing party raises a defense ofabuse of a right, generally “asserting abuse of
the right based on the grounds for its
invalidity.” Apart from such “assertion of
abuse of a right based on the grounds for its
invalidity,” this section examined theacceptability of an “assertion of abuse of aright in the original sense,” which means thaton the premise that the right is valid, theexercise of the right appears to be legal but it
is actually contrary to its social nature andtherefore unacceptable.
In this context, the basic legal principleof abuse of rights was reviewed in terms of its
concept and history, as well as trends inrelevant academic theories and judicial
precedents. Article 1(3) of the Civil Code is a
general provision to which no particularrequirement is attached. Therefore, it
enablesjudgestomakeflexible
determinations, thereby making up for the
shortage in statutory discipline. However,there is also a problem that if the generalprovision is applied thoughtlessly, thebinding force of statute laws would be
ignored. For this reason, it is a common ideathat the general provision should be applied
as a “last resort.”
In the judicial precedents and academic
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The provisions on human rights under
the Constitution were originally considered
to be intended primarily to protect rights andfreedom of citizens from state power. For thisreason, academic theories are divided basedon whether the provisions on human rights
are also applicable between private citizens.
The current common theory is the “indirect
application theory” which argues that any actof violating human rights that occurs
between private citizens should be nullified
in accordance with the provision on public
policy and other general provisions under
private law by implanting the purport ofhumanrightsprotection
under
the
Constitution in these provisions.
The theories on the meaning of the term
“public welfare” were roughly divided into
three by Professor Ashibe: (1) theory of
external constraint; (2) theory of combinationof internal and external constraints; (3)theory of internal constraint. According to
the theory of combination of internal andexternal constraints, only the rights for
economic freedom under Articles 22 and 29
and the social right under Article 25 may beconstrained for the “public welfare.”With regard to the standard for defining
the limit of restrictions on human rights(standardfordetermining
theconstitutionality), the “double standard
theory” is widely supported which argues
that human rights should be categorized into
rights for political freedom and rights for
economic freedom and the constitutionality ofrestrictions on political freedom should bedetermined more strictly than economic
freedom.
In the phase of determining theconstitutionality, restrictions on economic
freedom are categorized into two: (1)restrictions for negative purposes, such as
preventing hazard to the life and health ofcitizens and maintaining public order andsafety in society or eliminating or reducing
hindrance thereto, and (2) restrictions for
positive purposes, such as protecting the
weak in economic aspects according to thephilosophy of the welfare state or achievingbalanced development of society andAt least in the present situation, it is veryrare that an assertion of abuse of a rightagainst the exercise of a patent right isupheld.

V

Legal principle for restricting privaterights for the “public interest or
welfare”
Under the Japanese patent system, anon-exclusive license may be granted by anaward when the working of a patented
invention is particularly necessary “for the
public interest” (Article 93 of the Patent Act).
However, since this award system has been
applied very carefully, no award has been
given to date. The Operational Manual for
the Award System illustrates only two cases
as examples of “when the working of apatented invention is particularly necessary,”
and it does not provide any specificexplanation about the requirements of“hindrance of the sound development ofindustry” and “substantial harm to the livesof citizens.” Thus, in Japan, due to the lack ofany precedents regarding various criteria for
determining whether to give an award, wemust say that it is difficult to predict thepossibility of the grant of an award.
The concept of “public interest” or “publicwelfare” is used not only in the Patent Act
but also in other laws such as theConstitution and the Civil Code. Under suchother laws, this concept has been applied toactual disputes and discussed in a lot of
academic theories. This section investigated,categorized, and examined the cases andacademic theories in which private rights
were restricted “for the public interest” underlaws other than intellectual property laws, so
as to find helpful information for examining
the concept of “for the public interest” under
the Patent Act. Specifically, the Constitution,
the Civil Code, and the Land Expropriation
Act were targeted.
Under the Constitution, the term “public
interest” is used in Article 12, Article 13,
Article 22(1), and Article 29(2). In particular,
Article 29(2) provides that “Property rights
shall be defined by law, in conformity withthe public welfare.”5
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individuals’ interest. In order to meet thedefinition of the phrase “projects for the
public interest” in Article 2, it is not sufficientfor projects to contribute to national economy
and indirectly benefit the public, and theyshould not be implemented for convenience or
incidentally. Since this definition is difficult
to understand, Article 3 lists the types ofprojects that fall under the category of“projects for the public interest.”
Article 20 provides for the requirements
for granting recognition of a project.
Although the term “public interest” is not
used here, the “public interest nature” of a
project often becomes a point of issue when
considering whether the project satisfies therequirement set forth in item 3 of the said
Article, “the project plan shall contribute to
the appropriate and reasonable use of theland.” The leading case on this issue is the
Nikko Taro Ceder Case, in which the court
held as follows: “Whether the project satisfies
the requirement under Article 20(iii) should
be determined by comparing the public
interest to be obtained when the land is used
for the project and the private or public
interest to be lost when the land is used forthe project, and the requirement shall befound to be satisfied if the former interest
comes first.”
However, this comparison method poses
questions: (1) whether it is possible to makecomparison between the public interest andthe private interest, which are different inkind; (2) how to measure the interest or value
to be taken into consideration for comparison.
Academic theories are also divided as tothe nature of the administrative agency’s
discretion for determining the satisfaction of
the requirement under Article 20(iii), or more
specifically, whether the administrative
agency has limited discretion (the agency
must take a certain measure if a certain
statutory requirement is satisfied) or
unlimited discretion. The limited discretion
theory was common in the past, but recently,
the unlimited discretion theory has become
dominant by reason that whether or not togrant recognition of a project should bedetermined from the policy perspective. The

economy.
Article 29(3) of the Constitution provides
that “Private property may be taken for
public use upon just compensation therefor.”This provision means that public authority
may restrict or seize property rights ofprivate citizens if it provides compensation
therefor. Academic theories are divided as towhat is “just” compensation; the current
dominant theory is that compensation should
cover the loss completely.
Article 1(1) of the Civil Code provides
that “Private rights must conform to the
public welfare.” This means that privaterights are recognized as long as they are
consistent with the development of social
community life, and in this sense they have alimit (social nature of private rights). The
term “public welfare” can be explained tomean “improvement and development ofsocial community life as a whole.” In Japan,
after the war, Article 1(1) of the Civil Codewas created based on the provision of Article
29(2) of the Constitution, “Property rights
shall be defined by law, in conformity withthe public welfare.” Academic theories are
divided with regard to the relationships
between paragraph 1 of Article 1 and twoother paragraphs of the same Article, namely
paragraph 2 on the doctrine of good faith andparagraph 3 on abuse of rights. The pastcommon theory argued that paragraph 1 of
Article 1 of the Civil Code declared theprinciple of social nature of private rights,
and paragraph 2 and paragraph 3 of thesame Article applied this principle. However,Professor Wagatsuma’s theory is thatparagraphs 1 to 3 independently govern
different legal relationships. This theory wascited in the Ananogawa Water Right Case.
The Land Expropriation Act provides forthe expropriation and use of the land, etc.
that is needed to implement projects for the
public interest. The term “public interest”
under the Land Expropriation Act has
different meanings in individual clauses inwhich it appears. The term “public interest”
in Article 1 has the same meaning as that in
Article 29(3) of the Constitution, referring to
the public’s interest in society beyond
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circumstances being taken into account.
When applying this principle, the subjective
requirements (e.g. the right holder’sintention to do harm) and the objective
requirements shall be examined, while
making comparison between them. It is a
general provision for which no clear
requirement is set, and therefore judges canmake flexible determinations. However, if
such a general provision is appliedthoughtlessly, the binding force of statutelaws would be ignored. Therefore, carefulconsideration is required when applying it to
the exercise of a patent right.
Under the Japanese patent system, anon-exclusive license may be granted by anaward when the working of a patented
invention is particularly necessary “for the
public interest” (Article 93 of the Patent Act).
However, since there is no precedentregarding various criteria for determining
whether to give an award, this study
investigatedandobtainedreference
information from the cases and academic
theories involving the concept of “public
interest or welfare” as used under theConstitution, the Civil Code, and the Land
Expropriation Act. When a private right isrestricted for the public interest, comparison
shall be made between the public interest to
be obtained and the private interest to be lost.
However, questions are posed as to thedifference in kind between these interestsand how to measure the interest or value
concerned.
As outlined above, this study categorized
and examined legal principles under laws
other than intellectual property laws that
restrict the exercise of patent rights.
The purpose of the patent system is to
grant the person who has made an invention
the right to exclusively work the invention fora fixed period of time, while requiring theinventor to disclose the invention, thereby
encouraging the activities for making
inventions and achieving the development ofindustry (Article 1 of the Patent Act). If
research investments can be safely recoupedby exercising patent rights, R&D will bepromoted and trade of technology will bemajority of the supporters of this theory
require control over the process for making adetermination,
arguingthattheadministrative
agency’s
discretionary
determination should be found to be illegal if
there was an error in the method or process
in which it was made.

VI Conclusion
This study discussed the problem thatthe exercise of patent rights might hinder
technology development or impair the public
interest, while trying to find legal principles
under laws other than intellectual property
laws that can be applied or used as reference
for solving this problem.
Based on the regulations underanti-monopoly laws in Japan, the UnitedStates and Europe, even where the exercise
of a patent right appears to be legal “exercise
of a right” under the patent law, it shall be
subject to regulation if it is intended tounduly expand the scope of the right, which
would result in impeding market competition.
Acts that would be regarded as such exercise
of a right include: (1) concluding across-licensing
agreementwiththecompetitor for the segmentation of the sales
area or the production adjustment for thepatented product (2) forming a patent pool so
as to control or eliminate competitors’
business activities by exercising the patent;(3) imposing restriction on the licensee withregard to the sales price of the patented
product.
Under the US law, an injunctive relief
for patent infringement is left to judicial
discretion, and in order to obtain it, thepatentee should satisfy the four conditions
according to the principles of equity (specificto common law). In this context, where thepatentee does not himself work the patented
invention, an injunctive relief is less likely to
be granted under the US law than the Patent
Act of Japan.
The legal principle of abuse of rights
prescribed in Article 1(3) of the Civil Codecan be applied where the exercise of a rightappears to be legal but it is found to becontrary to its social nature with the specific7
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invigorated. In short, patent rights aredesigned to promote industrial development.
However, if patent rights become toostrong to the extent that they would hinderindustrial development contrary to theoriginal purpose thereof, the necessity toreview or restrict these rights would arise.
This study was conducted based on suchassumption.
In this respect, it is inappropriate torestrict patent rights thoughtlessly on an ad
hoc basis. Rather, it is necessary to aim anappropriate balance between protection andrestriction of patent rights, while fully
considering various factors concerned, suchas whether the exercise of the patent rightreally hinders industrial development,
whether the right is really too strong,whether the restriction of the right does notproduce any conflict with other legal systems,
and whether there is any other solution thatis more suitable for the actual circumstances.
(Senior Researcher:
Sachiko NAKAMURA)

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