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Finnegan Japan RT 07 JAPAN ROUNDTABLE: Avoid invalidity risks in court IN ASSOCIATION WITH: 2007 JAPAN: ROUNDTABLE Many companies fear that initiating a patent infringement lawsuit in Japan is tantamount to inviting the courts to invalidate their rights. MIP and Finnegan Henderson jointly hosted a roundtable in Tokyo to consider inventive step, invalidity and successful litigation techniques in one of the world’s most important markets Avoid invalidity risks In association with: in court PO: What are the factors that make it difficult for plaintiffs to win still not brought to the court – that only happens at stage three. Of patent litigation in Japan? course, the defendant would want to avoid the risk of an injunc- NY: There are a lot of good reasons to file patent litigation in tion and therefore they will try their best to reach some kind of res- Japan. It is very, very fast, and injunctions are available. You could olution, so only those cases where such resolutions were not pos- even say it is easier than in the US. Also, judges are very experi- sible would be taken to court. enced. But the major concern that many companies have is that in AI: The viewpoint of Mitsubishi Heavy Industries on patents more than 80% of cases – of course you can dispute the statistics and, I suppose, of Japanese companies in general is that of course – but in more than 80% of cases the patentee loses, and I think if your technical development has a positive outcome you would when you have such a low success rate you will think twice before want to protect it. Plus you would like to respect the rights of filing a lawsuit in Japan. That has been the major concern of many other parties should there be any situation of infringement. companies, both Japanese and foreign. As was mentioned by the Judge, companies would not think TI: I have some statistics about infringement litigation in Japan about one single claim, but they would try to think about poten- for the 10 years from 1997 to 2006. The total of patent infringe- tial cross-licensing, or they would try to look at other transactions ment cases was 2,500. Roughly 45% ended with the final judg- that they might have with the other party to resolve the matter. ment made by the court, and 48.6% were concluded in other Going to court is definitely the last resort. The matter will be taken ways, including settlement. to court only if differences of opinion cannot be resolved or if no In cases decided by the court, the plaintiff won 30.5% of the further concessions can be made. Such deadlocks might occur in time and lost in 67.6% of cases. Awareness about the importance terms of the amount of money demanded or whether or not there of patents has continued to rise in Japan since the year 2000 and is an infringement. If they can’t agree they will decide that a third as a result patent-related disputes between companies have party judgment is needed. increased and are expected to continue to increase. But when And why is there hesitancy to take the matter to court? Because patent disputes occur between companies, not all of the cases will if both of the parties in the dispute are Japanese companies we gen- go to court. In fact, only a small percentage of those disputes are erally believe that it should be negotiable and resolvable through taken to the court. discussion. There is a strong belief among Japanese companies that To analyze whether the winning rate is high or low you have to going to court is cumbersome and a lot of hard work, particularly analyze the situation for patentees, the right holders. In what cir- for the technical experts and the engineers of the company. It cumstances would they expect what outcome, and in what situa- would be more constructive to let such designers and engineers tions would they decide to go to court? As far as I know such com- concentrate their efforts on more R&D for the company rather parative studies are very limited. than wasting time on court matters. Anyway, one thing is clear; the number of patent disputes end- SO: I believe that in the 1990s most patent disputes occurred ing up in court is only a small percentage. The tendency of between Japanese and American companies, and more recently Japanese companies is not to take the matter to court. disputes have been occurring between Japanese companies and In many disputes there would be prior negotiations between the Taiwanese, Chinese, or Korean enterprises. As Judge Iimura has companies and it would be extremely rare for a matter to be sud- mentioned, if it is between Japanese companies then there is a denly taken to court. I believe there are three stages before court. strong tendency to try to avoid litigation in the first place. Today In the first stage in-house counsel in the patent and licensing divi- most of the matters that are discussed in the Japanese courts relat- sions or the legal affairs departments will be engaged in negotia- ing to patents are against Chinese, Korean, and Taiwanese compa- tions with the other side, and these negotiations can take a very nies, whereas in the past it was against American enterprises. long time, as neither side seems to be in a hurry. Before court, the The important issue for Japanese companies today is how to situation can be resolved with, for example, a unilateral or a cross- fight and win against these Chinese, Korean, and Taiwanese com- licensing agreement. panies, and many of the IP strategy staff in Japanese companies In stage two licensed lawyers or patent attorneys, the benrishi, believe that it would not be in their advantage to try to exercise would be invited into the negotiations. Even at stage two this is their rights in these three particular countries. So they would either www.managingip.com 2 An MIP roundtable reprint, in association with Finnegan, Henderson, Farabow, Garrett & Dunner, LLP JAPAN: ROUNDTABLE fight other non-Japanese companies in Japan. For example, disputes ROUND TABLE PARTICIPANTS between two large American companies or between an American company and a Korean company over their IP rights in Japan. NK: We have talked lot about statistics, but I would like to talk Setsuko Asami about the system or the institution. There is a rumour that the win- is director of the examination standards office at ning percentage of patent holders in infringement cases is declin- SA the Japan Patent Office. ing. If there is such a decline, one of the reasons I believe is relat- ed to the Japanese patent law on infringement cases. Quite recent- ly it has become possible to invalidate a patent. Toshiaki Iimura Recently the media reported on a very big case related to the is a judge in the third division of Japan’s IP High electronic ticket issuing system of airline companies. This expand- TI Court. ed into a very large case between the two largest airline companies with ¥10 billion ($84.3 million) sought in compensation, and in Akira Ishikawa this lawsuit an extra piece of information led to the patent being is group manager of the IP and technology law invalidated and therefore the case was withdrawn. group within the legal department of Mitsubishi After all, each and every patent is different, and each patent dis- AI Heavy Industries. pute is also different, so maybe we shouldn’t be too nervous about whether in one particular year that many patentees won and in a different year the patentees did not win at such a high rate. JL: From some of our international clients’ perspective, when Naoki Koizumi they look at the risk/reward of litigating in Japan it is not just the NK is a professor of IP law at Keio Law School in Tokyo. risk side, the invalidity that we have been talking about, it is the reward side as well. There is a belief that damages in Japan are not as high as they are in other jurisdictions. So when you couple that John Livingstone with a perception that your patents are more likely than not to be is an attorney-at-law at the Tokyo office of Finnegan held invalid, the risk/reward slides against litigating here. Even JL Henderson Farabow Garrett & Dunner. though that invalidity finding is not controlling in other jurisdic- tions, it can certainly be persuasive when brought before the court Yukio Nagasawa in other jurisdictions, so many of our clients choose to litigate else- is an attorney-at-law and patent attorney for New where. Bridge Law Office and a former judge at the Tokyo NY: I think one of the major concerns is the obviousness factor YN High Court. in Japan. Often the standards of obviousness or inventive step reflects the patent policy of that country, and it seems to me that – although this may be just my view – compared to the US, Japanese Seiji Ohno inventive step or obviousness standards may be a little high. This is an attorney-at-law and partner of Ohno & means that it is easier to prove obviousness and invalidate a patent SO Partners. during a trial. That certainly seems to be the concern of many Japanese companies. Naoki Yoshida PO: Ms Asami, what are the difficulties in agreeing a consistent (YN) is managing partner of the Tokyo office of standard for assessing inventive step in Japan? Do you think there NY Finnegan Henderson Farabow Garrett & Dunner.
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