CASRIP Newsletter - Fall 1998, Volume 5, Issue 3
Japan-U.S. Patent Infringement Litigation Comparison: a Visit to the United States Court of Appeals for the Federal Circuit
by Setsuko Asami
Japanese Patent Office Appeals Examiner
(Translated by Shoko Leek, Associate at Christensen, O'Connor, Johnson and Kindness, Seattle, Washington)
Between November of 1997 and March of 1998 I stayed in Washington, D.C. on an assignment from the Japanese Patent Office and had the opportunity to visit the United States Patent and Trademark Office and the Court of Appeals for the Federal Circuit.
Trials in the United States, including patent infringement trials, are generally said to move quickly to arrive at a swift resolution. Thus, many Japanese companies are bringing cases in the United States. I investigated trial conditions in the United States to see why courts move fast while maintaining the high quality of trial resolutions.
In this article, I compare U.S. courts, focusing on the Court of Appeals for the Federal Circuit, with its corresponding Japanese courts in terms of its jurisdiction, organization, and trial method.
1. Jurisdiction of the Court of Appeals for the Federal Circuit (CAFC) and the Japanese Courts
THE UNITED STATES
In the United States, both the federal government and each of the state governments have their own independent judicial system and, thus, federal courts and state courts coexist. The jurisdiction of federal courts is defined by the constitution and statutes, and federal courts have exclusive jurisdiction over cases involving patents (28 U.S.C §1338).
The courts of first instance in the federal court system are Federal District Courts. Their appellate courts are twelve regional Federal Courts of Appeals, and the Court of Appeals for the Federal Circuit (hereinafter "CAFC"), which was established in 1982 (see Figure 1 for the general organization of the U.S. court system).
The CAFC is located in a brick building near the White House. The building was named after the first Chief Judge of the CAFC and is called the "Markey Building." The CAFC unitarily handles appeals from patent infringement cases, appeals from both dispositions (interference-related decisions) made by the Patent and Trademark Office. In addition to covering appeals from Federal District Courts and the Patent and Trademark Office regarding patents, the CAFC also has jurisdiction over appeals concerning determinations made by the United States International Trade Commission (ITC) relating to Section337 of the Tariff Act of 1930, appeals from final decisions of the Merit Systems Protection Board, and appeals from the Federal District Courts regarding the Plant Variety Protection Act (28 U.S.C. §1295). About 30% of all the cases handled by the CAFC relates to patents.
Though the CAFC currently does not have jurisdiction over trademark and copyright infringement cases, one judge on the CAFC expressed his hope that it would handle copyright cases in the future.
On the other hand, Japan has a unitary judicial system of three instances: District Courts, High Courts, and the Supreme Court, as illustrated in Figure 2.
Sixty-two percent of intellectual-property-related infringement cases are brought into either Tokyo District Court or Osaka District Court (data from 1997). The other District Courts tend to be rather inexperienced in handling cases involving highly technical matters and, as a result, such cases brought in these courts tended to be prolonged. Therefore, the new Civil Procedure Law (effective January of 1998) expanded the jurisdiction of Tokyo District Court and Osaka District Court to handle intellectual property cases arising from any district, while maintaining other District Courts' jurisdiction over cases arising from their respective districts. Accordingly, it is expected that more cases involving intellectual property infringement will be brought to either Tokyo District Court or Osaka District Court, and, thus, will be appealed to either Tokyo High Court or Osaka High Court. Tokyo High Court also has exclusive jurisdiction over appeals from decisions made by the Japanese Patent Office.
2. Establishment of the CAFC
The CAFC was established on October 1, 1982, to replace the Court of Claims and the Court of Customs and Patent Appeals (CCPA). The CCPA was a special court and had jurisdiction over appeals from the Patent and Trademark Office and appeals from the ITC, but did not have jurisdiction over patent infringement cases.
According to the CAFC's history book, events leading to its establishment are described as follows: As industry progressed, the number of law suits significantly increased. Although thousands of appeals were filed with the Supreme Court, the Court was able to review only 150 decisions annually because it had only nine justices. Accordingly, circuit courts in fact served as final reviewing courts. Even if there were conflicts among decisions by circuit courts, the Supreme Court was unable to review. Therefore, it was clear that great uncertainty in the law ensued. A study conducted by the Hruska Commission revealed that conflicts persisted, especially in the areas of patent law and federal tax law.
As a result, lawyers began forum shopping. In general, circuit courts emphasized the dangers of monopoly and invalidated a number of patents without giving due respect to the examination by the Patent Office.
To remedy this problem, a proposal was made to establish a uniform circuit court and to create a healthy setting for patent cases. The serious objections to creating the CAFC, that it would be too specialized, were resolved by the broad range of jurisdiction given to the proposed new court.
In the United States, one of the powerful defenses available to a defendant in a patent infringement case is to claim the invalidity of the patent at issue. In Japan, one cannot invalidate a patent in a court. Therefore, to invalidate a patent in Japan, one needs to seek a patent invalidity judgment from the Japanese Patent Office. This point in the Japanese system is similar to that of the German system. In this regard, Judge Rich of the CAFC expressed his view that the U.S. system, which allows a court to render a judgment on an issue of validity, is preferable because a court, in deciding the issue of infringement, necessarily defines the scope of a patent.
3. Judges and Law Clerks
THE UNITED STATES
CAFC judges are nominated and appointed by the President upon approval by the Senate. A judicial appointment is a lifetime and fixed-salary position (currently, approximately $140,000). There are twelve seats for active judges (with one empty seat as of June of 1998), among whom one is the Chief Judge (currently Chief Judge Mayer). After having served for a certain number of years and passing a certain age, a judge can decide to become a senior judge (currently four senior judges) with his or her workload reduced to about one-third, but many justices remain active. Judge Rich, who is known for numerous famous cases, is ninety-four years old and still remains as an active judge. Four out of eleven judges (Chief Judge Mayer and Judges Newman, Lourie, and Gajararsa) have technical backgrounds, and Judge Gajarsa also has experience as a Patent and Trademark Office Examiner.
Law schools in the United States offer a three-year course of graduate-level study in law. Typically, a student must obtain a four-year degree in social science or natural science prior to entering law school and, therefore, it seems natural that more American judges have technical degrees as compared to Japanese judges. Close to 20% of all the Federal District Court judges have technical degrees.
In Japan, those who pass a bar examination, which is the most difficult national examination in the country, receive two years of nationalized legal training and, thereafter, may decide to become a judge, a prosecutor, or a private attorney, based partially on their own preferences. The bar examination does not require a college degree in law, but many applicants take the bar while enrolled in, or upon graduation from, a law department of a university or a four-year college.
Tokyo High Court includes three sections specializing in intellectual property matters, which include ten justices (of which three are senior justices). Osaka High Court has three justices for handling intellectual property-related matters. At the District Court level, because more cases are expected to be filed in Tokyo District Court and Osaka District Court as described above, in April of 1998 Tokyo District Court added one more section to its intellectual property department and increased its justices from eight to ten, while Osaka District also increased its justices from three to four.
In Japan, judges are often reassigned to serve in various courts all over the country. On the other hand, the two senior justices who have just retired from the intellectual property department of Tokyo High Court at the beginning of 1998 had served in the intellectual property department of Tokyo High Court for more than ten years. The retirement age for Japanese justices is sixty-five.
(2) Law Clerks and Expert Examiners
THE UNITED STATES
Each active justice of the CAFC has three law clerks, and each senior justice has one law clerk. Most of the law clerks have a technical degree and have recently passed a bar examination. The term is typically two years. Law clerks examine each case in detail, discuss the case with the justice prior to an oral argument, and draft an opinion. A law clerkship is helpful in obtaining a job in the future and thus is very popular and tends to attract talented people. Many justices and law school professors are former law clerks.
Figure 3 illustrates an organization of the CAFC.
On the other hand, Japan has an expert examiner system. As described above, the Japanese educational system differs from that of the United States, and many bar exam takers major in law at their university. Accordingly, a majority of judges lack a technical background. Therefore, in patent-related cases, judges often need the assistance of expert examiners who possess specialized technical knowledge and who also are familiar with the patent system. As of 1997, Tokyo High Court has nine expert examiners, Tokyo District Court has five expert examiners, and Osaka District Court has three expert examiners. Tokyo High Court assigns an expert examiner to each case depending upon the particular technology area involved in the case.
4. The Number of Patent Infringement Cases and their duration
(1) Trial of the First Instance
THE UNITED STATES
For the year from July 1997 through June 1998, 1996 patent-related cases were filed in the United States Federal District Courts, of which only 107 cases, 5.4% of the total, went to trial. This percentage is higher than 3.0%, which is the percentage for all civil cases filed in the Federal District Courts. Nevertheless, the number of 5.4% indicates that the majority of patent cases are settled prior to going to trial. The reasons behind this may include the high amount of damages, the unpredictability of jury verdicts, the high cost of attorneys, and the increase in cost the longer a case is pending. Out of the 107 cases that resulted in a trial, 62 cases (approximately 58%) had a jury trial.
In general in the U.S., trials are said to move quickly, a judgment supported by data in Table 1. The median for patent-case-pending periods is eight months, which is the same as the median for all civil cases. The median for cases which resulted in a trial is twenty-nine months (as compared to eighteen months for all civil cases).
One of the reasons for the swift resolution may lie in the American discovery system. The discovery system allows one to force an opponent, or a third party, to disclose evidence relating to the case prior to trial, and serves to prevent surprises at trial, in which all issues are resolved intensively. Though discovery itself may sometimes take time, it is conducted amongst the parties themselves and does not require court intervention unless a dispute arises between the parties. Therefore, because a case can be resolved intensively in one trial, each case does not substantially burden the Federal District Court's time.
Some of the Federal District Courts have designed their own local rules to expedite the processing of each case. For example, the Federal District Court in the Eastern District of Virginia maintains a so-called "rocket docket" and is famous for moving cases quickly and for handling many patent infringement cases.
On the other hand, Japanese data relating to all intellectual property matters show that, in 1997, 550 cases were resolved at the District Court level, of which 201 cases (37%) were settled, 101 cases (18%) were withdrawn, and 224 cases (41%) reached final judgments. Among the cases reaching final judgments, plaintiffs' claims were allowed in 90 cases, rejected in 132 cases (kikyaku: dismissal after examining merit) and dismissed in 2 cases (kyakka: dismissal without examining merit).
The median of case-pending periods for all intellectual property-related matters is one to two years, as shown in Table 2, which is longer than the median of three to six months for all civil cases.
THE UNITED STATES
For the year from July 1997 through June 1998, 448 cases were appealed from the Federal District Courts to the CAFC, and 51 cases were appealed to the CAFC from decisions made by the Patent and Trademark Office and interference-related decisions. (See Table 3.)
With respect to the time intervals from filing to disposition, between October of 1982, when the CAFC was established, and June of 1988, the average is 10.1 months for cases appealed from the Federal District Courts, and 7.7 months for cases appealed from the Patent and Trademark Office.
The number of cases pending (see Table 3) as of the end of June 1998 is less than the number of cases resolved within the previous year and, therefore, an average case-pending period is assumed to be less than one year.
CAFC strives for rendering "the best quality decisions, at the least cost, in the shortest time," and its effort is highly praised by many patent attorneys in the United States.
For intellectual-property-related matters in Japanese High Courts (see Table 4) the median of the time intervals from filing to disposition is one year to two years for cases appealed from both the District Courts and the Japanese Patent Office. These numbers are not so different from the corresponding numbers for the CAFC in the United States.
In comparing the number of cases resolved by Japanese High Courts with that of the CAFC (see Table 5), one can see that Japanese High Courts handle proportionately more cases appealed from the Japanese Patent Office as compared to infringement cases. With respect to the rate of decisions which were reversed, although the CAFC reversed appeals from district courts more than the Japanese High Courts and the Tokyo High Court reversed appeals from decisions of the JPO more than the CAFC, the total reversal rate of intellectual property cases is substantially the same for both the CAFC and Japanese High Courts.
5. Appeals Procedures
THE UNITED STATES
The appeals procedures for the CAFC are governed by the CAFC procedure rules, which partially supplement and are modified from general federal appeals procedure rules.
In the United States, appeals courts deal only with issues of law, and cannot decide issues of fact and, as more fully described below, their appeals procedure rules are designed to ensure expedited resolution of each case.
An appeal must be filed within 30 days of the date when the decision is recorded in the Federal District Court, and the fee for filing an appeal is $100.
Figure 4 illustrates the flow of CAFC procedures.
In Japan as well as in the U.S., an appeal must be filed within 30 days of the date when one receives a notice of trial judgment.
THE UNITED STATES
In principle, three briefs can be submitted in each case: (a) a plaintiff's brief, (b) a defendant's brief, and (c) a reply brief by the plaintiff to the defendant's brief. Any additional briefs may be filed only with the court's approval.
Brief submission deadlines are defined as follows: (1) a plaintiff must submit a plaintiff's brief within 60 days from the date when a notice of appeal is filed and docketed in the CAFC; (2) a defendant must file a defendant's brief within 40 days from the date when the plaintiff's brief is submitted; and (3) the plaintiff must submit a reply brief within 14 days from the date when the defendant's brief is submitted; thus, the plaintiff has 114 days (about 4 months) from the date the appeal is docketed until its reply brief is due. There is no extension of time for submitting briefs, even when parties are foreigners. A plaintiff's brief and a defendant's brief have a limit of 50 pages, unless a party receives permission by the court to exceed the limit, and a plaintiff's reply brief must be 25 pages or less.
Plaintiffs are responsible for submitting portions of previous trial records when quoted in either a plaintiff's brief or a defendant's brief.
In Japan, there is no rule or restriction regarding the number of briefs a party may submit or the number of pages which may be included in each brief. The exchange of briefs ceases when a judge decides that the case has been fully tried, with both parties having exhausted their arguments, and the parties so agree.
Eighty-five percent of all administrative litigation involves industrial property rights, and the median for the number of briefs submitted in all administrative litigation is six. Thus, six may be assumed to be the number of briefs submitted in a typical administrative litigation involving industrial property rights.
(2) Oral Argument
THE UNITED STATES
An oral argument is held about two months after the date a plaintiff's reply brief is submitted. In appeals courts, including the CAFC, a panel of three or more justices hears each case. Parties typically find out which justice will sit on the panel on the very day of an oral argument.
Each appeals court can decide how much time is allotted to each oral argument. A party needs not exhaust the entire time allotted to him, and a court can end an oral argument whenever the court decides that the argument is no longer necessary.
In practice, in more than 90% of cases, a plaintiff has 15 minutes to argue, a defendant has 15 minutes to respond, and the plaintiff has 5 minutes to reply. In particularly complicated cases, the allotment may be modified to be 30 minutes/30 minutes/5 minutes.
In actual oral arguments that I have observed, three justices on the panel actively address questions to each party, and in some cases, observers could rather accurately predict the outcome of a trial at the end of the oral argument based on the justices' questioning.
In Japan, intellectual property-related cases are essentially argued and tried in briefs, and oral arguments are made only as a matter of formality in most cases. In the majority of oral arguments, a plaintiff and a defendant make a simple statement that "I argue pursuant to the briefs heretofore submitted in this case."
THE UNITED STATES
Usually, immediately after an oral argument, three justices on the panel retire to a separate room and decide the case by a show of hands, and one of the majority judges is assigned to write an opinion. In many cases, law clerks working for the assigned judge draft an opinion.
In cases where the decision of the first instance is upheld, and no opinion needs to be attached to the decision, that is, the decision includes only a conclusion, a court clerk may process the decision. In some cases, justices may decide that a decision is so clear that no opinion is necessary at the end of an oral argument. The length of time between the date of an oral argument and the date when a decision is rendered is typically several months, but could be two to three years on rare occasions.
In Japan, non-senior justices write opinions based on briefs prepared and submitted by their expert examiners. Decisions from the High Courts always include opinions.
(4) Appeals to the Supreme Court
THE UNITED STATES
Decisions from the CAFC can be appealed to the U.S. Supreme Court. The U.S. Supreme Court often reviews cases involving points of law about which several Appeals Courts have rendered conflicting decisions. The decisions from the CAFC, however, are not subject to conflicting decisions from other Appeals Courts, and, therefore, cases from the CAFC are reviewed only if they involve very important issues which have no precedent.
Ever since the CAFC was established, there have been very few reviews granted by the U.S. Supreme Court. Lately, though, it should be noted that the U.S. Supreme Court issued the Markman Decision (April of 1996) and the Warner-Jenkinson Decision (March of 1997).
In Japan also, it is rare that the Supreme Court takes up cases appealed from the High Courts. In 1997, forty-one civil cases involving intellectual property matters and sixty-nine cases appealed from decisions made by the Japanese Patent Office were submitted for review by the Supreme Court. This number of appeals is more than two times of appeals filed in 1996. Most of them were denied review.
However, in July of 1997, the Supreme Court rendered the BBS decision regarding parallel import of patented goods, and in February of 1998, the Supreme Court rendered the Ballspline case involving the doctrine of equivalents. The U.S. government had been expressing its interest in the development in Japan concerning issues of parallel import and the doctrine of equivalents, and both decisions appear to be welcomed in the United States.
6. Law School Lectures by a CAFC Justice
At the Georgetown University Law Center, I attended lectures on patent law given by Judge Rader, one of the CAFC's judges, and Professor Wegner.
The first lecture by Judge Rader was about the role of patent claims. After generally explaining what claims are, he explained an invention involving sports shoes and asked students to write claims covering the invention. Thereafter, he showed an actual patent specification describing the invention, and a figure showing an alleged infringing device. He assigned a couple of students to argue on behalf of a patentee and a defendant, respectively, and finally asked the rest of the class to render a judgment on the case. Thus, the lecture was easy to understand and had very practical contents. Judge Rader also gave a very dramatic performance by appearing in a black robe to hear the students' arguments.
As a part of the class activity, students also observed actual oral arguments heard before Justice Rader at CAFC. Prior to the oral arguments, law clerks for Justice Rader gave an explanation of each case to the students. There were four cases to be heard that day: a patent infringement case, a case involving treatment of a government employee, a case regarding jurisdiction, and a case regarding interference. The panel included Judgee Rader, Judge Rich, and Judge Gajarsa. The oral arguments started at 10 a.m. and ended at noon, and the three justices rendered decisions afterwards in a separate room. Thereafter, Justice Rader came back to the room where students gathered, and asked students' opinions regarding the oral argument for each case.
During his lectures, I had the opportunity to hear Justice Rader's frank opinions regarding the CAFC decisions, and I enjoyed very much the atmosphere which allowed the free exchange of opinions among Justice Rader and the students. I distinctly remember the words Justice Rader used in his first lecture in explaining to the students why he was there: "I love teaching."
During my visit, I was impressed by how those concerned with patent matters closely watched decisions from the CAFC and also by how quickly the information from the CAFC is disseminated. As soon as important decisions are rendered by the CAFC, they are published and also posted on the Internet. These cases were then discussed extensively in law schools, at patent firms, or at professional seminars by patent attorneys, law students, law school professors, and even CAFC justices. The above-mentioned Japanese Supreme Court case on the doctrine of equivalents, issued in February of 1998, was also hotly debated in various settings including law schools. Immediately following the rendering of this Japanese decision, Professor Wegner of George Washington University and also Professor Takenaka of University of Washington School of Law have published an article discussing the decision. It was an eye-opening experience for me to witness the lively exchange of opinions among law professors, justices, and patent attorneys. This Japanese decision, by the way, was highly praised by Professor Wegner. It was also referred to as a sign of improvement in Japan with respect to claim interpretation in various U.S. governmental reports, such as the Foreign Trade Impediment Report and the Special 301 Review Report, issued in March and April of 1998, respectively, by the United States Trade Representative (USTR). All of this attention and praise regarding this particular decision made me feel proud as a Japanese national.
1. Hideo Tanaka, Eibeiho Soron, A general View of Anglo-American Law (1980)
2. Ryuichi Shitara, Beikoku Tokkyo Shingai Soshou no Jitsujo to Nihon no Kintouron ni tuiteno Ichikousatsu (A view on Practice of U.S. Patent Infringement Litigation and the Doctrine of Equivalents in Japan), 48 Hanrei Jiho (1996).
3. Douglus Cardwell, Litigation Practice on the United States Court of Appeals for the Federal Circuit (unpublished manuscript)
4. The United States Court of Appeals for the Federal Circuit, A History 1982-1990 (1991)
5. The United States Court of Appeals for the Federal Circuit Rules of Practice, Effective July 1, 1997.
6. Almanac of the Federal Judiciary Vol. 2 (1998)
7. The statistics concerning the U.S. courts were obtained from the Administrative Office of the United States Courts.
8. Annual Report of Judicial Statistics for 1997, Vol. 1, Civil Case.
Translation of Tables/Figures were prepared by Hiroshi Kitaoka and Elaine Gin