CASRIP Newsletter - Spring/Summer 1998, Volume 5, Issue 2
Practices of Patent Litigation in Japanese Courts
The Civil Procedure Act of Japan went through a major revision and has become effective as of January 1, 1998. Many aspects of the revised Act were introduced to respond to foreign criticisms for being too difficult for patentees to present their cases successfully and to improve the system of collecting evidence from accused infringers and third parties. Although some say that the new Act has adopted a discovery system from the United States, the effectiveness of the adopted system to collect evidence significantly differs from its U.S. counterpart. Thus, this article will explain new aspects of the Japanese discovery system and recent developments on procedural aspects relating to practices of patent litigation in Japanese courts.
Japanese Discovery under the Revised Civil Procedure Act
I. Order to Produce Documents
The revised Civil Procedure Act significantly expanded the scope of the duty to produce documents. Article 219 of the Civil Procedure Act provides a procedure for requesting the production of documents. Its items 1 to 3 remain as they were under the old Act and provide a narrow scope of the duty to produce documents. Item 1 enables a party to request the opposing party to produce documents owned by the opposing party where the opposing party has relied on or cited the documents. Item 2 enables a party to request an owner of document to produce the document where the requesting party has a right to receive or see the document. (For example, the requester is a company stockholder and requests the stock certificate.) Item 3 enables a party to request an owner of document to produce the document where the document is prepared on behalf of the requesting party or is prepared to show the legal relationship between the party and the owner of the document. (For example, the requester is a party of the agreement and request to produce an agreement between the requester and the owner of the agreement.)
The newly added item 4 expands the applicability of the duty to parties of the case as well as third parties in general, except for those documents under the control of government officials with respect to their official duty. However, a broad range of exceptions applies. One does not need to produce documents if he or his spouse is indicted for a criminal charge and the production of the document would result in a criminal sanction against himself or his spouse. Further, one does not need to produce documents which include information that may result in a slander suit. Also, documents protected under the attorney-client privilege or doctor-patient privilege and documents about proprietary information, including technological know-how and trade secrets, are exempted from the duty.
Although the new Act imposes the duty to produce documents on citizens in general, for a party to request a court to order the owner of a document to produce the document, article 221 requires the party to show the court that the document is relevant to an issue of the case at trial and necessary to present the case. Accordingly, even under the revised Civil Procedure Act, a party cannot take advantage of the new provision to fish for evidence.
The revised law increases the sanction for refusing to comply with the court order to produce a document. Under the old law, a refusal to comply with the court order resulted in a finding of the document contested by the requesting party. The new law enables courts to treat a refusal as admission of argument advanced by the requesting party. (For example, when the plaintiff contends that the defendant's profits are at least 1,000,000 yen and requests the defendant to produce books to show its profits, a refusal by the defendant would result in an admission of the plaintiff's argument that the defendant has at least 1,000,000 yen in profit, which is presumed to be the patentee's lost profits under article 102, paragraph 1, of the Patent Act.)
II. Interrogatory System
The revised Civil Procedure Act introduces a system similar to interrogatories under the U.S. discovery system. Under article 163, this system makes it possible for a party to send an opposing party questions on items necessary for preparing arguments and producing evidence, and to request answers in writing within a reasonable time after a case is brought to court, i.e., after the receipt of a complaint by the defendant. These questions must be definite and particular (Item 1). They should not be confusing (Item 2). Accumulative questions (Item 3) and questions requesting comments from the opposing party (Item 4) are improper. Questions are also improper if answering the questions requires significant labor or cost (Item 5). Questions directed to items exempted from the duty to testify, such as proprietary information, including technical know-how and trade secrets, are also improper (Item 6).
Courts will not be involved in the process of interrogation at all. This means that a party cannot request a court to order another to answer questions. The Civil Procedure Act provides no sanctions even if the requested party does not answer the questions. Although a false answer would negatively affect judges' findings of fact on the disputed issues, there is no sanction against a false answer. This is highly contrasted with interrogatories in the U.S., where courts participate in resolving disputes between parties with respect to the appropriateness of interrogatory questions.
However, a party can use another provision to obtain an answer from its opposing party. Article 149 enables a judge to clarify ambiguous points. Therefore, a party can request a judge to exercise the right to clarify points related to the unanswered question in a brief or at a trial because the Japanese Civil Procedure Act provides parties with a right to clarify unclear points. An experienced, smart lawyer would make use of this system.
III. Questions in Writing
The revised Civil Procedure Act introduces, under article 205, a system to question the opposing party in writing. This provision is effective particularly when a witness is in prison, or a witness, such as a medical doctor or lawyer, finds it difficult to come to the court to testify at a trial. Where the parties agree and the court finds it proper to use this system, the court prepares questions and sends them to a witness. The answers will be introduced as a testimony at trial. This system is particularly useful if a witness lives in a distant place, such as a foreign country. The value of the testimony obtained through this system is, however. less than that obtained at trial because the opposing party is not given an opportunity to cross-examine the witness.
Other Patent-Related Developments Affecting Procedural Aspects of Patent Litigation
I. Determination of Reasonable Damages
The revised Civil Procedure Act introduces a new provision for determining reasonable damages (art. 248). This provision applies where the plaintiff has established the presence of damages but cannot establish the amount because of the nature of those damages. Under this provision, courts can determine reasonable damages based on the overall arguments and evidence introduced at trial. Before this revision, some courts rejected an award of damages resulting from intellectual property infringement because patentees could not establish the amount of damages to the extent required under Japanese civil procedure even if courts found the presence of damages. The new provision prevents courts from choosing an easy way out by refusing an award of damages just because of the difficulty in assessing the amount of damages.
II. Revision of Conditions for Jokoku Appeal by the Supreme Court
The revised Civil Procedure Act limits the parties' right to have their cases reviewed by the Supreme Court by providing that a party can appeal to the Supreme Court only where (1) there is a violation of constitutional right and (2) lower courts have made a significant mistake. Even if a case does not have one of the above two reasons, a party can file a certiorari for a review by the Supreme Court. For example, where the lower court misinterpreted a law, which would affect the result of the case, the Supreme Court may find it necessary to review the case and exercise its discretion to accept the certiorari. After accepting the certiorari, the Supreme Court treats the exceptional case as other statutory cases involving the above two reasons of jokoku appeals. When the Supreme Court finds it unnecessary to review the case, it rejects the certiorari. This discretionary review system is adopted from the U.S. Supreme Court's certiorari system.
Under the old law, fifteen Supreme Court justices had to review all appeals including minor procedural or factual error cases as well as important constitutional cases, resulting in a heavy docket to each justice, caused by the increased number of appeals. The revision of the Supreme Court appeal system is the major revision of civil procedure. The new law makes it possible for the Supreme Court to choose cases that are important enough for substantive review by the Court and to spend more time on such important cases. This improvement aims at increasing the role of Supreme Court in the Japanese judicial system.
III. Allocation of the Burden of Proof to Establish Elements of Infringement under the Doctrine of Equivalents
Japanese courts have been criticized for giving too narrow a protection scope when Japanese claims are interpreted. One reason for such a narrow protection scope is that no Supreme Court decision has existed to affirm infringement under the doctrine of equivalents. A most recent Supreme Court decision indicates that Japanese courts can find infringement under the doctrine of equivalents if the following five elements are established: (1) substituted elements are not the essential parts of the invention; (2) the accused device, even if some claimed elements are substituted, attains the objective of the invention, providing the same function and result as the patent in dispute; (3) one skilled in the art of the invention could have readily substituted claimed elements with the substituted corresponding elements in the accused device in light of the state of the art as of the infringement time; (4) the accused device is not anticipated or obvious from the prior art; and (5) the accused device was not intentionally removed from the patent scope during the prosecution.
The Supreme Court did not clarify the allocation of the burden of proof between parties with respect to these elements. Although it is the task of lower courts to clarify the content and allocation of the burden of proof, the author thinks that the burden of proof to establish elements 1 to 3 is on the patentee and the burden of proof to establish the element 4 and 5 is on the accused infringer.
IV. Validity Challenge in Infringement Proceedings and Invalidation Trial
It is well accepted under Japanese Patent Law that a party cannot challenge the validity of a patent in infringement proceedings because a patent right has been extended to third parties. Therefore, when a Japanese court in infringement proceedings believes that the accused infringer exploits the patented invention in dispute but the patent is invalid by being anticipated by the prior art, the court resorts to the abuse of right theory to refuse the enforcement of such an invalid patent. A majority of scholarly opinion indicates that a court can dismiss the case by allowing the accused infringer to introduce a defense of prior art by showing that the device is part of the state of the art prior to the application date of the patent. The most recent Supreme Court decision appears to support this view. If accused infringers are allowed to raise this defense in future infringement proceedings, the practices in Japanese patent litigation will move closer to those of its U.S. counterpart.
V. Court System for Adjudicating Patent Cases
A party must bring a case to a district court in the district where the defendant is located as the court of first instance. There are fifty district courts in Japan. Article 6 of the revised Civil Procedure Act makes it possible for a patentee to bring a patent case to either the Tokyo or Osaka District Court. This is because patent cases involve complex technology issues and these courts have a special section dedicated to intellectual property cases due to the complexity of technologies involved in patent cases. In the second instance, all of the eight appeal courts (high courts) can review appeals from district courts. In particular, the Tokyo High Court has three sections dedicated to patent. In these sections, law clerks that are patent experts assist judges.
A party can appeal to the Supreme Court where fifteen justices create three panel benches to review each case. All fifteen justices review en banc only very important cases. In the Supreme Court, thirty judges selected from lower courts serve as law clerks to assist Supreme Court Justices.
The Board of Appeals within the Japanese Patent Office reviews an appeal from a rejection of application by a JPO examiner. The Tokyo High Court has exclusive jurisdiction over an appeal from the decision of the JPO's Board of Appeals as the court of first instance. The Supreme Court reviews an appeal from the judgement of the Tokyo High Court. Accordingly, a party has only two chances of judicial review with respect to decisions issued by the JPO board of Appeals. Qualification for judges who decide patent cases are the same as that of judges who deal with cases other than patent cases. Japanese patent judges are not engineering or science experts.
Translated by: Toshiko Takenaka
*Professor of Law, Waseda University