31/07/2019

Sonoda & Kobayashi Newsletter - July 2019
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July 2019

Dear Valued Clients and Colleagues,

Sonoda & Kobayashi's bi-monthly Newsletter has been upgraded !

This new version includes two additional sections that will provide our experts' views on the latest IP law
changes in Japan, as well as give you some insight on IP news in China.

Good reading!

Contents
News about Sonoda & Kobayashi
1. Webinar : Software and AI-related Inventions : Overview of Legal Systems and Recent

Trends in Europe and Japan
2. Publication of Sonoda & Kobayashi and Dr.Sonoda pro les in Eurobiz Japan
3. Ranking in IAM Patent 1000 : The World's Leading Patent Professionals 2019
4. Sonoda & Kobayashi successful at the IP High Court

Latest IP News in Japan
1. New JPO Commissioner appointed
2. Revision of Examination Guidelines for Design
3. Recent trends in AI-related inventions
4. The 12th IP5 Heads of O ce Meeting held
5. Japan’s blockchain sandbox is paving the way for the ntech future
6. Huawei's chipmaking ambitions at risk after Arm cuts tie
7. Japanese companies opposed to U.S. slapping additional tariffs on Chinese goods
8. Japan aims to protect its high-end fresh fruit varieties
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IP Law Updtates in Japan : Insights from Sonoda & Kobayashi
1. Update of Guidelines for recovery of lapsed deadlines for justi able reasons
2. Amendments of Japanese Patent Law 2019

IP News in China
1. Semi-annual statistics on patents, trademarks, geographical indications and integrated

circuit layout design released- News about Sonoda & Kobayashi 1. Webinar : Software and AI-related Inventions : Overview of Legal Systems and Recent Trends in
Europe and Japan

Sonoda & Kobayashi held its latest webinar on June 28th, 2019, in collaboration with the EU-Japan Centre
for Industrial Cooperation and Murgitroyd Munich O ce, titled "Patents : Patentability of Software Invention
and AI-Overview of Legal Systems and Recent Trends in Germany, Japan and other European jurisdictions".

In this webinar we cover the following :When is software eligible subject matter and are the requirmeents different per jurisdiction (Japan,
Germany etc.) ?
What clarity requirements are imposed on software inventions and how should clarity rejections be
overcome ?
What is an the inventive step requirements for software inventions ?
How are AI-related inventions treated by the law and how can they be protected ?
Watch the full webinar on Youtube.

2. Publication of Sonoda & Kobayashi and Dr. Sonoda pro les in Eurobiz Japan

Sonoda & Kobayashi is pleased to announce that our rm’s pro le has been published in the May issue ofEurobiz Japan, a monthly print magazine about trade, business and investment from Europe to Japan.
This issue features their annual Who’s Who of Legal, a section in which top legal professionals talk about
their company and areas of expertise. In addition to our rm’s pro le, the publication also refers to Dr.
Sonoda and mentions Harumi Kokaji and Natalie Cox as Key People.
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Read the full pro le at p.41 of the magazine.

3. Ranking in IAM Patent 1000 : The World's Leading Patent Professionals 2019

Sonoda & Kobayashi has been ranked among the top rms in Asia for the prosecution and enforcement ofIP rights and recommended by IAM Patent 1000 for offering a unique combination of professional
expertise and cosmopolitan awareness.

Read the full pro le here.

In addition, Dr. Sonoda has been ranked among the top Patent Prosecutors.

Read more about his extensive experience and knowledge in the eld here.

4. Sonoda & Kobayashi successful at the IP High Court (Heisei 31(2019) (Gyo-ke) 10117)

On April 12, 2019, Division 1 of the Intellectual Property High Court (“IP High Court”) released an extensive
written opinion in favor of plaintiff Asha Nutritional Sciences, Inc., represented by Sonoda & Kobayashi,
cancelling a decision of a Board of Appeals of the defendant JPO.

Japanese patent application 2014-99072, which had received a trial decision of rejection by a Board of
Appeals of the JPO, concerns compositions containing lipids and methods of use thereof. The IP High
Court agreed with the claims of the plaintiff with respect to the erroneous rulings of the defendant onclarity and support. Speci cally, with respect to clarity, the IP High Court ruled that, when taking into
account the entirety of the speci cation, features of the claims were not so unclear as to unreasonablehinder a third party. With respect to support, the IP High Court ruled that the Board of Appeals had
improperly engaged in a formalistic rather than substantial consideration of whether one skilled in the art
would recognize from the totality of the speci cation and/or common technical knowledge that theinvention could solve the problem to be solved by the application.

- Latest IP News in Japan https://mailchi.mp/5b044a121e41/sonoda-kobayashi-newsletter-july-2019?e=76ba65459e

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1. New JPO Commissioner appointed
July 2019, Ministry for Economics, Trade and Industry (METI)

Earlier this month Mr. Akira Matsunaga was appointed as the Commissioner of the Japan Patent O ce,
succeeding Commissioner Naoko Munakata. From now on, he will manage JPO’s operations and oversee
Japan's policy on patents, trademarks, and design rights. Mr. Matsunaga previously served as DirectorGeneral for Regional Economic and Industrial Policy. He holds a Bachelor of Laws from the University ofTokyo and an LL.M. from Harvard Law School.

Read the full article here

2. Revision of Examination Guidelines for Design
June 14, 2019, Japan Patent Office (JPO)The JPO released on its website information on the content of the revisions of the examination guidelines
for Design applied to applications with lling dates on or after May 1, 2019)

The revised Design examination eases the requirements for applications and drawings and includes majoramendments, such as the abolishment of the requirement of a set of drawings, the abolishment of thesection “Partial Design” in the application documents and the acceptance of the inclusion of unclaimed
objects in the drawings, which means other than those for which a design registration is sought, as longas the articles are su ciently recognizable.
Furthermore, the revised guidelines allow applicants to use various methods to indicate omissions andsuppress the requirement to mention in the application the measurements of parts that are omitted.

Read the full article here

3. Recent trends in AI-related inventions
July 2019, Japan Patent O ce (JPO)The JPO published a statistical report on AI-related patent applications worldwide.

The past few years, Arti cial Intelligence (AI) related technology has considerably grown, especially

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regarding deep learning methods. Therefore, the number of patent applications
is globally increasing across technologicalelds and the report shows this trend in Japan and otherleading countries.

Among the most signi cant data collected, it is worth mentioning that in 2017, about 3,100 applications
for AI-related inventions wereled ( ＋ 65 ％ compared with the previous year), including about 900

applications for AI-core inventions (＋55％ compared with the previous year). Furthermore, the major used
AI-related inventions are machine learning with half of it referring to deep learning in the application
documents.

Read the full article here

4. The 12th IP5 Heads of O ce Meeting held
June 17, 2019, Ministry for Economics, Trade and Industry (METI)On June 13, 2019, the 12th IP5 Heads Meeting was held in Incheon, Republic of Korea, gathering theheads of the ve-intellectual property (IP) o ces of Japan, Europe, Republic of Korea, China, and the U.S.

Among the decisions taken as part of the meeting, the Heads of the IP5 O ces approved the launching ofa New Emerging Technologies and Arti cial Intelligence (NET/AI) taskforce for discussion on the impactof NET/AI and preparations for it, including examination guidelines for AI-related inventions. Also, theyagreed on the nal results of patent harmonization projects for these ve years and the de nition of
metrics for evaluating the bene t of the PPH scheme.

Read the full article here

5. Japan's blockchain sandbox is paving the way for the ntech future
June 26, 2019, Forbes

After creating effective laws governing cryptocurrency businesses, Japan is currently incubating
blockchain innovation via a unique regulatory sandbox system under the Cabinet Secretariat of Japan.

According to Forbes, the Government of Japan introduced the sandbox regime in June 2018 to speed up

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the introduction of new business models and innovative technologies. Domestic organizations andcompanies and ones located abroad as well can apply to demonstrate and experiment with newtechnologies such as blockchain, arti cial intelligence, and Internet of Things (IoT) inelds such as

nancial services, healthcare and transportation.

The sandbox aims to check whether the new business will work in the real market and the experiments
take place in virtual space without any geographical restrictions. After reviewing the results of the tests,
the government intends to introduce deregulation measures.
Tokyo-based crypto nance rm Crypto Garage was chosen for the sandbox program and since its launch,
the sandbox has approved six projects for experiments involving a wide range of business applications.

Read the full article here

6. Huawei's chipmaking ambitions at risk after Arm cuts tie
May 1, 2019, Nikkei Asian Review

The U.K.-based chip designer Arm Holdings owned by Japan’s SoftBank Group, and which
provides intellectual property used in 90% of the world's mobile processors, decided to suspend businesswith Huawei Technologies to “comply with all the laws and regulations set forth by the U.S government”.

According to the Nikkei Asian Review, Arm’s move jeopardizes Huawei’s business as the company holds
chip designs crucial to the Chinese group’s semiconductor program. However, Huawei seems to haveanticipated Arm’s decision, as the company made sure to seal an advanced deal by signing contracts toobtain a broader portfolio of the designer's intellectual properties. Therefore, Arm’s decision will not
impact Huawei’s chip design for now but might be a serious issue in the future.

Furthermore, the Nikkei Asian Review reported that Japanese mobile carriers SoftBank Corp. and KDDI,
Taiwan's Chunghwa Telecom, British Telecom's EE and Vodafone UK decided to delay or suspend plans tosell new Huawei smartphones. Japan's Panasonic will halt supplies of certain components to Huawei.
Also, German chipmaker In neon became the rst non-U.S. supplier to express its need to stop Americanorigin shipments to Huawei to observe U.S. laws.

Read the full article here

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7. Japanese companies opposed to U.S slapping additional tariffs on Chinese goods
June 15, 2019, The Japan Times

In response to alleged intellectual property and technology theft by Chinese companies, the Trumpadministration hiked on May 10, U.S. tariffs on $200 billion of Chinese goods to 25 percent from 10
percent, which is the most signi cant move in Washington’s trade war with Beijing.

According to the Japan Times, US a liates of Japanese companies, as well as American and Chinese
businesses, have expressed their objection to President Donald Trump’s proposed tariffs of up to 25
percent on an additional $300 billion of Chinese products.

Effectively, several companies such as Mitsubishi Chemicals Corp. strongly disagree with the proposed
tariffs on the grounds that the additional tariffs will have substantial, negative and long-term impact on
American businesses, farmers, families and the U.S economy. Furthermore, those tariffs might not be aneffective tool to change China’s trade practices.

A hearing was held in June before the O ce of the U.S. Trade Representative where business leadersconverged to talk about what would happen if the government goes through with plans to impose thosetariffs on all Chinese goods.

Read the full article here

8. Japan aims to protect its high-end fruit varieties
June 16, 2019, The Japan Times

According to the Japan Times, the Agriculture, Forestry and Fisheries Ministry will shortly launch
comprehensive measures to prevent its premium fresh fruits from falling into the hands of foreign
growers. Under this initiative, the relevant rules, regulations, and legislation will be restricted to protectthese varieties.

As an example, it’s worth mentioning the case of Shine Muscat, a high-end variety grape invented in Japanthat has had intellectual property protection under the Plant Variety Protection and Seed Law since 2006.
However, Japan did not register this variety overseas and the grapes are being grown in China and South
Korea without authorization and exported to Malaysia, Thailand, and other Southeast Asian countries athttps://mailchi.mp/5b044a121e41/sonoda-kobayashi-newsletter-july-2019?e=76ba65459e

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Sonoda & Kobayashi Newsletter - July 2019very competitive prices compared with the Japanese fruit.
Therefore, the Ministry aims to prevent similar cases from occurring in the future.

Read the full article here

- IP Law Updates in Japan : Insights from Sonoda & Kobayashi 1. Update of Guidelines for recovery of lapsed deadlines for justifiable reasons
June 20, 2019

Author : Dr. Yoshitaka Sonoda

The JPO published on June 20, 2019 updated English guidelines for recovery of lapsed deadline forjusti able reasons.

According to the JPO’s explanation, the content is substantially identical to those published in 2016. Itshould be noted that there are two types of recovery, those accepted when there is a) a “justi able reason”
and when there is b) a “reason not attributable to the applicant” for the lapse of deadline, as described
below. The published guidelines apply only for the former.

a) a “justi able reason” for the lapse of deadline“Justi able reasons” are those unexpected despite the precautionary measures taken by the applicant,such as, earthquakes, disorder of computers unpredictable for users, data errors which occurred for
unpredictable reasons despite the measure taken to avoid errors, etc.

Deadlines which may be recovered:-claim for priority;- ling of a Japanese translation subsequent to a PCT or Japanese application in a foreign language;-request for examination;-assignment of patent administrator;-retroactive payment of registration/maintenance fee.

b) a “reason not attributable to the applicant” for the lapse of deadline (this one is even more di culthttps://mailchi.mp/5b044a121e41/sonoda-kobayashi-newsletter-july-2019?e=76ba65459e

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than a))- ling of evidence regarding exemption from loss of novelty;- ling in response to the Commissioner’s reminder of a certi ed copy of a priority application;- ling of a divisional application within a predetermined period after decision of grant/rejection by theexaminer;-transfer of an UM or a design application or a registered UM to a patent application;- ling of an advance announcement relating to an extension of patent term;- ling of an Appeal against Rejection by the Examiner;- ling of a re-Appeal;-request of refund of a payment made in error.
- ling of an advance announcement relating to an extension of patent term;- ling of an Appeal against Rejection by the Examiner;-request of refund of a payment made in error.

Read the full guidelines here

2. Amendments of Japanese Patent Law 2019
June 21, 2019

Author : Dr. Yoshitaka Sonoda

The law amending the Patent Law passed the parliament on May 10, 2019 and was published on May 17,
2019. The amendments will be enacted within one year but the date of enactment is yet to be determined.

The amendments introduce an on-site inspection and a new procedure for damage calculation to the
Patent Law. The amended damage calculation is also introduced into the Utility Model Law and the
Design Law while the on-site inspection is introduced only into the Patent Law.

I. On-site inspection

Under the introduced on-site inspection system, the court can order an independent specialist to visit thesite of the alleged infringer and collect evidence relevant to the dispute at issue and make a report
thereon. (Patent Law, Art. 105bis, Section 1)

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Requirements for the Order

1. A patent infringement lawsuit is ongoing
2. The defendant possesses the evidence
3. The evidence is necessary for the proof of infringement or damage
4. The evidence cannot be obtained otherwise
5. Infringement is strongly likely
6. On-site inspection is reasonable in view of all the circumstances
Flow of on-site inspection

1. Request of an on-site inspection by a party
2. Hearing of the opinion of the other party
3. Decision by court whether to order an on-site inspection
4. On-site inspection by an independent specialist
5. Submission of an on-site inspection report by the independent specialist :a. Drafting an on-site inspection report by the independent specialist
b. Sending the draft report to the other partyc. Request to conceal con dential information in the draft reportd. Decision by court whether to conceal or not (if the other party agrees, the draft
is disclosed to the party to decide whether to conceal or not)e. Transfer of the report to the party for potential use in the lawsuit as evidence

Comments
Many systems have been implemented in the Patent Law and the Code of Civil Procedure in thelast 20 years to facilitate the plaintiff to collect evidence of infringement, i.e., obligation of the
defendant to disprove the infringement allegation (Art. 102bis), court order for the submission ofevidence necessary to prove infringement and/or damage (Art. 105), presumption of the method
when the method of making is unknown (Art. 104), etc.However, these provisions have not been
often used in lawsuits because discretion was given to courts which have been reluctant toexercise these provisions in the fear of losing the balance between the necessity of the patentee toprove infringement and the necessity of the defendant to protect its trade secret.
A strong likelihood of infringement and reasonableness in view of all the circumstances are
required so that an on-site inspection is ordered, and we are not sure how high the thresholds arehttps://mailchi.mp/5b044a121e41/sonoda-kobayashi-newsletter-july-2019?e=76ba65459e

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for these requirements.
In view of the above-described requirements, it is unlikely that the on-site inspection is ordered inan early stage of proving the infringement, it would be necessary that the infringement is almost
proved but only a relatively small part is left to be proved.
The infringement courts are expected to be more positive to the application of the on-site
inspection in view of the backgrounds on which the new provision was considered to benecessary.

II. New procedure for Damage Calculation

The new procedure for damage calculation increases damages especially when the number of infringing
products made or sold by the infringer exceeds the production capacity of the patentee. Under theprovision before the amendments, when the number of infringing products exceeds the production
capacity of the patentee, damages were limited by the production capacity of the patentee as long as theprovision which allows the damages calculation based on the expected pro t of the patentee is relied on.
(Art. 102, Section 1)

The calculation under the new law is as follows :a. If the number of infringing products exceeds the production capacity of the patentee

Damages = (production capacity of the patentee) x (per unit pro t of the patentee)+ (number of infringing products – production capacity of the patentee) x royalty(the second line was added by the amendments)b. If the number of infringing products is within the production capacityof the patentee

Damages = (number of infringing products) x (per unit pro t of the patentee)

There are three provisions in the Patent Law which provide the calculation of damages caused by patent
infringement. The above-described provision (Art. 102, Section 1) which has been amended this time, is
one of them. In addition to the provision, there is a provision which allows the pro t of the infringer to behttps://mailchi.mp/5b044a121e41/sonoda-kobayashi-newsletter-july-2019?e=76ba65459e

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deemed the damages of the patentee (Art. 102, Section 2), and a provision which allows the hypotheticalroyalty to be the damage (Art. 102, Section 3), which remain unchanged.

(This article is solely for general information and cannot substitute for legal advice and consultation.)

You can see the JPO’s review in English here.

- IP News in China1. Semi-annual statistics on patents, trademarks, geographical indications and integrated circuit layout
design released
July 9, 2019

Author : Yan Hui Wang from Sonoda & Kobayashi

The State Intellectual Property O ce of China released semi-annual statistics on patents, trademarks,
geographical indications and integrated circuit layout design applied by China in the rst half of 2019.

(1) With respect to patents, in the rst half of 2019, the number of patent applications for inventions
dropped by 9.4% compared with the same period of last year, while 238,000 patents were authorized, anincrease of 9.9% compared with the same period last year. Among them, 192,000 patents were authorized
for invention in China. In the rst half of the year, the top three enterprises in China (excluding Hong Kong,
Macao and Taiwan) in terms of patent authorization for invention were Huawei Technology Co., Ltd.
(2314), China Petrochemical Co., Ltd. (1595) and OPPO Guangdong Mobile Communications Co., Ltd.
(1312).

In the rst half of 2019, a total of 24,000 PCT international patent applications were accepted, an increaseof 4.9% over the same period last year. Among them, there were 22,000 domestic applications, anincrease of 2.8% over the same period last year. The number of requests for invalidation increased by
12.8% compared with the same period last year, while the number of closures increased by 18.9%
compared with the same period last year.
In the rst half of 2019, China's patent review cycle for invention was 22.7 months, for high-value patents
20.5 months, for utility models 6.2 months, for designs 4.0 months, for patent review requests 11.7
months and for invalidation of patents 5.0 months.
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Sonoda & Kobayashi Newsletter - July 2019(2) In terms of trademarks, in the rst half of 2019, the number of applications for trademark registrationin China was 3.438 million, down 4.1% from the previous year; the number of trademark registrations was
3.515 million, up 67.8% from the previous year.

(3) Regarding geographical indications, 229 registered geographical indications trademarks wereapproved in the rst half of 2019.

(4) In IC layout design, 2904 applications for IC layout design registration were received in the rst half of2019, an increase of 45.7% over the previous year.

Read the full article here (Chinese only)

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