CASRIP Newsletter - Spring 1995, Volume 2, Issue 2
A decision legalizing a parallel importation of patented true goods trembled intellectual property specialists in Japan. Japanese courts have long established a defense against trademark infringement where goods are true goods which originate from the trademark registrant in the importing country. [e.g., Decision of Osaka Dist. Ct. Feb. 27, 1970] The defense is rejected where the trademark registrant of the exporting country is not sufficiently affiliated with the trademark registrant of the importing country. [e.g., Decision of Tokyo Dist. Ct. Aug. 31, 1973] In contrast, Japanese courts have rejected a defense of parallel importation of patented goods [e.g. Decision of Osaka Dist. Ct. June 9, 1969] and copyrighted goods [Decision of Tokyo Dist. Ct., June 7, 1988. ] until the Tokyo High Court applies the exhaustion theory regardless of the place where the first sale occurs in the following decision. A jokoku appeal against the following decision is now pending with the Supreme Court.
Decision of Tokyo High Court, March 23, 1995
Not yet reported
The plaintiff is a German company who has a Japanese patent directed to an automobile wheel. It also has a German patent directed to the same invention and manufactures wheels covered by the German patent in Germany. A defendant, a Japanese import company, bought wheels made and sold by the plaintiff in Germany and sold them to another defendant, a Japanese automobile part seller. The parties did not dispute that the Japanese patent covers their wheels but disputed whether the exhaustion theory (first sale doctrine) applies to the Japanese patent where a patentee sold a patented good in another country. The Tokyo District Court found for the plaintiff and rejected the defense of parallel importation.
The Tokyo High Court reversed the Tokyo District Court decision, and upheld a defense of parallel importation. According to the court's reasoning, patentees are guaranteed only one opportunity to secure a reward for the disclosure of their invention. The court reasoned that the exhaustion theory must apply to prevent patentees from controlling patented goods after they used the opportunity. Otherwise, transferees of patented goods are required to obtain a permission from the patentee to exploit the invention, which would violate the safety of trade and create obstacles in flow of goods, resulting in an inconsistency with the patent law goal of encouraging industrial development. This is true regardless of the place where the patentee took the opportunity and secured his reward unless regulation or laws of the country (such as price regulation on food and drugs) prevented the patentee from being sufficiently rewarded. The court concluded that the plaintiff's patent is exhausted when the wheels were sold in Germany.