CASRIP Newsletter - Winter/Spring 1999, Volume 5, Issue 4
Infringement of Functional Claims under Japanese Patent Law
Epoch K.K. v. K.K. Bandai1
Since the Federal Circuit affirmed the patentability of software patents, as long as the claims are directed to the concrete and useful result, in Alappat2 and State Street Bank,3 U.S. patent professionals' interests have shifted from patentability issues to infringement issues. Because many software inventions are defined in terms of function, rather than structure, those who are not familiar with Federal Circuit case law may fear that such functional claims will be given a broad scope of protection by courts to include all embodiments that accomplish recited functions. However, 35 U.S.C. Section 112, Paragraph 6 and Federal Circuit case law require courts to interpret functional claims to cover only the embodiments expressly disclosed in the specification and their structural equivalents.4 Moreover, recent Federal Circuit decisions indicate that the doctrine of equivalents may not be used to find infringement of functional claims.5 This results in very narrow protection for functional claims.
In contrast, Japan's Patent Act does not include a provision comparable to 35 U.S.C. Section 112, Paragraph 6. Thus, in theory, courts interpret functional claims in the same manner as structural claims. Nevertheless, some early decisions indicated that courts may punish patentees who adopt ambiguous functional definitions by limiting the coverage of functional claims to embodiments disclosed in the specification.6 However, JPO recently changed their guidelines and expressly endorsed the use of functional claims.7 Responding to this change, a 1995 decision supported a more patent-friendly position of interpreting claims that covers all possible embodiments that produce the functions recited in the claim.8 The 1998 Epoch case also supports a broad interpretation and suggests that Japanese courts may afford broad coverage of software patents.
Epoch obtained a patent for a toy apparatus for card games. The sole independent claim was defined primarily in terms of function, as read:
A toy apparatus comprising: (a) a card barcode reader for reading the barcode, said barcode being associated with cards and indicating necessary game parameter data; (b) a memory means for storing said data read by said reader; (c) an offense and defense decision means for choosing data associated with one card, said data read by said recorder as the offense side, and data associated with another card read as the defense side; (d) an offense key prompted by the offense side for playing the game according to the parameter data associated with the card; (e) a calculation means for calculating damages on the defense side when the offense key is prompted; (f) a survival determination means for calculating said damages resulting from the calculation by said calculation means and data associated with the defense side card to determine whether the defense side has survived; and (g) a display means for showing the result from said survival determination means.
The accused infringer manufactured and sold a similar game toy apparatus for playing a similar game, with a minor variation in sequence. The accused infringer emphasized these variations and argued that its apparatus did not literally infringe the patent.
Further, the accused infringer argued that the patent was obviously invalid and thus unenforceable because an improper amendment prevented the patent from benefitting from the original filing date. In such a case, the application is deemed filed as of the date of amendment. Thus, because the content of the application was laid-open to public before the amendment date, the patent should be found invalid as anticipated by its own publication.
In interpreting the claim, the court examined the disclosure in the specification. The court cited the following explanation of the sequence of game in the specifications:
(1) First, player P1 inputs its card data and displays the data associated with the card. Player P2 then inputs its card data and displays the data associated with the card. (2) The offense and defense decision means decides which of P1 and P2 is the offense side. If P1 is found to be the offensive side, player P1 prompts the offense key. (3) In response to the prompt, player P1 attacks player P2. The life power value on player P2 is calculated by deducting damages from the life power data associated with player P2's card and the result is displayed. (4) P1 wins if the value is zero. If the value is more than zero, P2 prompts the offense key. (5) Player P2 then attacks player P2 and the process is repeated.
Based on this explanation, the court defined: (a) "the offense side" as the side which can attack and select whether to use a power-up key; (b) "the defense side' as the side which can neither attack nor select whether to use a power-up key; and (c) "the offense and defense decision means" as a means of deciding which player will be "the offense side" and which will be "the defense side."
In the accused apparatus, the court found that the player's option decision means also decides which player will be attacking the other player that will be the defense side, and thus meets the claim limitations with respect to (c), the offense and defense decision means. The accused infringer argued that the patented apparatus operates on the basis of a premise that damage to the defense side is instantly calculated after deciding the side of each player. Instead, the accused apparatus cannot calculate damages until the offense side inputs the offense power and the defense side inputs the defense rate. The court found that the patented apparatus does not calculate damages immediately because the offense side may select to use the power-up key. Thus, it rejected the accused infringer's argument as based on an improper premise.
Further, the specification of the embodiment indicated that the apparatus decides the offense and defense sides according to the data associated with the respective players' cards. The accused infringer argued that the offense and defense means recited in the claim must be limited to the disclosed sequence and thus does not cover the accused apparatus, in which both players can select either the offense or defense side. The court rejected this argument, stating that the claim does not include a limitation requiring the decision be made based on the data associated with the player's card.
With respect to (d), the defense key, the accused infringer's offense option key does not start an attack until the attack start key is prompted. In contrast, according to the embodiment of the patent, the offense key's prompt starts an attack. Thus, the accused infringer argued that the accused apparatus does not meet the limitations of the offense. The court also rejected this argument, stating that the claim language does not require an attack to start immediately after a prompt of the defense key. The court interpreted the term "when said offense key is prompted" as meaning when or after the offense key is prompted, so that the attack need not occur immediately after the prompt. The additional step of prompting another key to start an attack does not affect the result of the invention. Thus, the court concluded there is no basis to adopt the limited interpretation advanced by the accused infringer.
The court also found that infringement was not prevented by an additional feature of the accused apparatus enabling both players to select the offense side at the same time. Finding that all recited limitations read on the accused apparatus, the court concluded that the accused apparatus literally infringed the patent.
The court then examined the argument of unenforceability. In determining the amendment to add (c), an offense and defense decision means, the court recognized that the original application included only a brief description of the offense and defense decision means that "[the apparatus] decides which player is the offense side according to the data associated with the player's card which was read by the barcode recorder means and stored in the memory means." The court viewed the embodiment discussed in the specification as one example of various embodiments of the invention. It concluded that the offense decision means disclosed by the specification included all offense decision means which are well known to one skilled, such as a means which does not decide the offense side according to the data associated with the player's card. Thus the court found proper the amendment to add the term "(c) an offense and defense decision means for choosing data associated with one card, said data read by said recorder as the offense side, and data associated with another card read as the defense side," even if the term covers both means to decide the offense side according to the data associated with the card and means to decide the offense side independent from the data associated with the card. Accordingly, the court found the patent to be enforceable, removing the last barrier to patentee's recovery of compensation, under Patent Act article 65 ter, for commercial exploitation of the patented invention during the period before grant of the patent but after the laid-open publication of the patent
The Epoch case is truly an "epoch" making decision in Japanese case law. First, the court's analysis in the case shows a stark contrast with Japanese courts' analyses in early decisions on claim interpretation. These decisions relied on the inventor's recognition theory and limited the protection scope to cover only embodiments expressly disclosed in the specification.9 This rule applied to both functionally defined claims and structurally defined claims. However, the Tokyo District Court clearly rejected this view by refusing to use embodiments to limit the claim scope. Further, the addition of functions or steps did not prevent the court from finding infringement in Epoch case. This contrasts highly with some early cases.10
With respect to each claim limitation, any means to accomplish the recited function, e.g., the means to decide the offense and defense sides, if known to one skilled as of the filing date, is deemed to be disclosed in the specification and to be covered by the claim language. This interpretation results in broad coverage including any variations or additions done by the competitor unless such variations or additions are not known as of the filing date.
Further, the court examined the invalidity defense introduced by the accused infringer. Japanese courts traditionally refused to examine this defense as patent validity issues are considered to be within the exclusive jurisdiction of the patent office.11 However, the Tokyo High Court in Fujitsu v. Texas Instruments Inc.,12 recently broke with this tradition by finding the claim-in-suit obviously invalid and refusing to enforce the patent. The Epoch court may have taken account of the exceptional background involved in the Fujitsu case and refused to extend the rule to this case. Instead, the court examined the patentability defense fully and upheld the validity before enforcing the patent. This will lead to a significant increase in courts' workloads in the infringement process because courts need to address three aspects of obviousness: (1) nonobviousness (inventive step) and other patentability questions of the claim to uphold validity; (2) obviousness (lack of inventive step) of the replacement between the claim and the accused embodiment to uphold equivalency;13 and (3) nonobviousness of the accused embodiment to affirm the finding of equivalency.14
- Judgment of Tokyo District Court, Oct. 30, 1998 (Unreported as of 3/16/1999).
- In re Alappat, 33 F.3d 1526, 31 USPQ 2d 1545 (Fed. Cir. 1994).
- State Street Bank & Trust v. Signature Financial Group, 149 F.3d 1368, 47 U.S.P.Q. 1596 (Fed. Cir. 1998).
- In re Donaldson, 16 F.3d 394 1189, 29 U.S.P.Q.2d 1845 (Fed. Cir. 1994).
- Down Equipment Co. v. Kentucky Farms, Inc., 140 F.3d 1009, 46 U.S.P.Q.2d 1109 (Fed. Cir. 1998).
- Tokyo Seimitsu K.K. v. N.T. Toyo Bearing K.K., Judgment of Tokyo District Court, March 17, 1976, Hanrei Taimuzu No. 381, 165 (1976). For a general discussion, see Takenaka, Interpreting Patent Claims: The United States, Germany and Japan, 17 Iic Studies 223 (1995).
- Japanese Patent Office's Examination Standard Office, Kaisetsu: Heisei 6 nen Kaisei Tokkyohou no Unyou (Practices in Examination and Appeals under the 1994-Revised Patent Act) 132 (1995).
- Judgment of Tokyo District Court, December 22, 1995, Tokkyo to Kigyou 322, 67 (1996). For a study of functional claims, see SOFTIC, Report of Software-Related Patents: Focusing on Case Decisions Involving Functional Claims (March 1998).
- Takenaka, supra note 6 at 43.
- Nikkan Industry K.K. v. Shin-Kobe Denki K.K., Judgment of Tokyo District Court, May 12, 1978, 10 Mutaishu 173.
- Takenaka, Harmonizing the Japanese Patent System with Its U.S. Counterpart Through Judge-Made Law: Interaction Between Japanese and U.S. Case Law Developments, 7 Pacific Rim Law & Policy Journal 250, 266 (1998).
- Judgment of Tokyo High Court, Sept. 10, 1997, Hanrei Jihou No. 1615, 10 (1998). A report of this case is found in Takenaka, Recent Developments in Japan: TI's Kilby Patent Found Invalid and Unenforceable, Casrip Newsletter (Center for Advanced Study and Research in Intellectual Property, University of Washington School of Law, Seattle, Fall 1997), available on-line at http://www.law.washington.edu/casrip/newsletter/Vol4/newsv4i3jp3.html.
- See K.K. Kouken v. K.K. Tatsumi Ryouki, reported in this issue at pages 6-9.