CASRIP Newsletter - Summer 2007, Volume 14, Issue 3
Patents as Property: International Injunctive Relief
By Kenji Shimada, Yi-Hsuan Chen, Chi-Yuan Kuo, Alfredo DeLaRosa, and Jeremiah Miller[*]
In the modern age, patent protection has become imperative to a fully functioning economy. Patents encourage innovation and spur economic growth. However, patent rights mean very little absent an effective method to police those rights and, just as importantly, prevent infringement. Injunctive relief for patent infringement varies by jurisdiction. In the modern economy it is important for inventors and business people to understand the implications of seeking patent protection in various jurisdictions. Chief among the concerns should be the injunctive relief available to stop actual and threatened infringement. This paper undertakes a brief survey of the manner in which various jurisdictions approach the issue of injunctive relief. It then conducts a more detailed analysis with respect to Japan, comparing post eBay issuance of permanent injunctions in the United States and injunctive remedies in Japan.
II. THE UNITED STATES
Title 35 U.S.C. §283 provides “[t]he several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.” This terse grant of power has been amplified by the federal courts of the United States.
A. Preliminary Injunctions
The granting of such injunctions is subject to a Federal Circuit test that is similar to the standard test for preliminary injunctions. A preliminary injunction is proper if: (a) the patentee is likely to prevail in the case on the merits; (b) the patentee will suffer irreversible harm if the injunction is not granted; (c) the balance of hardships favors the patentee; and (d) the injunction is in the public interest.
Likelihood of success on the merits can be demonstrated by the plaintiff showing that it will ‘ “likely prove” infringement, and “likely withstand” the defendant’s attack on patent validity. In order to overcome the plaintiff’s showing of probable success on the merits, the defendant must show by “clear and convincing evidence” that either the patent is not infringed, or the patent is invalid.
For a harm to be “irreparable” it must be shown to be “neither remote nor speculative, but actual and imminent” and damages must be insufficient to remedy it. Irreparable harm may be assumed by the court if the plaintiff clearly demonstrates the validity of the patent and actual infringement. Such a presumption is rebuttable. Typically, however, if requirements (a) and (b) are met, the court will presume (c) and (d) by implication.
B. Post-judgment Injunctions
Once infringement has been found, the patentee is typically entitled to an injunction to prevent the infringer from continuing to infringe. In some cases, a permanent injunction may be denied in favor of what amounts to a compulsory license. The recent Supreme Court decision in eBay v. MercExchange, LLC held that such injunctions are not automatic, but subject to the same four-part test enunciated for preliminary injunctions. If the criteria for injunction are not met, damages are the only remedy.
Generally, patent holders in Europe have access to both preliminary and permanent injunctions as remedies for patent infringement. Such relief is encompassed in various international treaties. The particulars of the injunctions are left largely to the national courts, however.
Historically, the five most heavily used national court systems for patent infringement suits are Germany (~32%), the United Kingdom (~24%), Italy (~20%), France (~14%) and Switzerland (~10%). This list roughly corresponds to the countries granting the most patents nationally (only Italy does not appear in the top five patent granting countries).
A. International Agreements Affecting Injunctions for Patent Infringement
In Europe, international agreements set the baseline requirements for many aspects of patent law. While the European Patent Convention (EPC) creates a procedure for a common patent application and the Agreement on Trade Related Aspects of International Property Rights (TRIPs) sets a baseline, the remedies for infringement are left largely up to nation-states. ,  Adding a further level of complexity, the national court systems are not uniform in their treatment of remedies. Often, the outcome of a case depends not only upon the nation, but on regional peculiarities within the nation.
Among the signatories to TRIPs are the five primary locations for litigation of patent infringement suits in Europe: Germany, United Kingdom, France, Italy and Switzerland. Article 44, section 1 of TRIPs provides:
The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right.
From this language, it is clear that signatories to TRIPs have an obligation to provide for injunctions, but the content of the required injunctions is not specified, leaving the details to the signatories themselves.
2. European Patent Convention
The European Patent Convention established the basis for a unified patent system throughout much of Europe. However, “[a]ny infringement of a European patent shall be dealt with by national law.” Thus, in determining the effect of a successful infringement suit, one must consider the law of the nation-state in which the case is tried. The interaction between the EPC and TRIPs is complex. While the European Patent Office (EPO) has acknowledged the requirement of TRIPs, the EPO is not a signatory to the treaty and so it is not clear that TRIPs could be enforced in the EPC context.
3. Brussels Convention
An additional complication to the granting of preliminary injunctions in Europe appears in the Brussels Convention. The Convention was signed by Belgium, the Netherlands, Germany, France, Italy and Luxembourg. It provides: “[w]here proceedings involving the same cause of action and between the same parties are brought in the courts of different Contracting States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.” The practical effect of this section is that a preliminary injunction granted by a court in one signatory nation may be enforced in other member nations. Conversely, a pre-emptive negative declaratory judgment as to a patent’s validity may be enforced in all of the member nations. Given the local variation in the courts, such a strategy may be used to gain an injunction (or a declaration of patent invalidity) in a nation where it is easy to obtain one, and then contesting the issue in a nation where it is easy to prevail on the infringement action itself.
1. Preliminary Injunctions
Generally speaking, German courts may grant preliminary injunctions. The foundational rules for granting this kind of interlocutory relief are based in the German Code of Civil Procedure; while the specific application to patent infringement is provided for in the German Patent Law. Such injunctions are enforced by both civil and criminal penalties.
Typically, such injunctions are only granted when the plaintiff has established a strong prima facie case of infringement. Such a “strong case” cannot be shown where the patented subject matter is complex (i.e. requires expert opinion); or where the infringement alleged falls under the “doctrine of equivalents” type use.  Also, although there is a presumption that a patent is valid in the German Courts, if there is any doubt as to its validity, a preliminary injunction may be denied. The plaintiff must also show an urgent need for an injunction. Filing a request for injunctive relief within 1-2 months of discovering the infringement is normally sufficient to demonstrate urgency. Another key consideration in the decision to grant or withhold a preliminary injunction is the balance of hardships. As in the United States, preliminary injunctions may be granted ex parte; although the willingness of German courts to do so varies by locale.
The German criteria for granting a preliminary injunction are similar to the criteria used in the United States. As in the United States, a plaintiff in Germany must show that he or she is likely to prevail on the merits. However, the German system is somewhat more stringent on this requirement, barring preliminary injunctions in cases where the litigation is complex or is an “equivalent” infringement. There does not appear to be an exact parallel in Germany to the U.S. requirement that the plaintiff show irreversible harm in the absence of a preliminary injunction; although the German requirement for “urgency” (i.e. impending harm) may essentially be the same as the requisite showing of harm in the United States.
Both the United States and Germany engage in a balancing of hardships to determine the appropriateness of a preliminary injunction. Finally, there is no German requirement comparable to the public interest analysis in the United States. In evaluating the relative difficulty of obtaining preliminary injunctions in the United States and Germany, one must keep in mind the U.S. propensity to assume the last two prongs of its test once likelihood of success on the merits and the presence of irreversible harm have been established. On the whole, U.S. jurisprudence establishes a lower barrier to the granting of a preliminary injunction than the German tests.
2. Post-judgment Injunctions
As with the United States, post-judgment injunctions are a common remedy for patent infringements.
C. United Kingdom
1. Preliminary Injunctions
Preliminary injunctions are available by statute in the United Kingdom. As in the United States, the statutory grant has been modified by the U.K. courts.
The primary consideration in deciding whether to grant a preliminary injunction is the likelihood of the plaintiff’s success on the merits of the claim for patent infringement. , The possibility of irreparable harm to the plaintiff and the balance of convenience (a “glass half full” version of the balance of hardships) are also considered. Ex parte injunctions are also available. True to the common law tradition, a multi-part standard has been enunciated:
[I]n deciding whether to grant interlocutory relief, the court should bear the following matters in mind:
(1) The grant of a preliminary injunction is a matter of discretion and depends on all the facts of the case.
(2) There are no fixed rules as to when an injunction should or should not be granted. The relief must be kept flexible.
(3) Because of the practice adopted on the hearing of applications for interlocutory relief, the court should rarely attempt to resolve complex issues of disputed fact or law.
(4) Major factors the court can bear in mind are (a) the extent to which damages are likely to be an adequate remedy for each party and the ability of the other party to pay[,] (b) the balance of convenience[,] (c) the maintenance of the status quo[, and] (d) any clear view the court may reach as to the relative strength of the parties' cases.
Ultimately, the test used by Courts in the U.K. to determine whether a preliminary injunction is proper is quite similar to the U.S. test. Like the U.S., one major consideration is the likelihood of irreparable harm to the patentee. Also, the U.K. Courts consider the likelihood of the patentee’s success on the merits, according it similar weight as in the United States. Both the U.S. and U.K. legal systems consider the balance of the costs to the parties involved. The U.K. explicitly considers maintenance of the status quo, something not done in the U.S.; conversely the U.S. considers the effect on the public while the U.K. does not. The two systems are roughly equivalent in granting a preliminary injunction.
2. Post-judgment Injunctions
Post judgment injunctions are available as a standard remedy for patent infringement in the United Kingdom.
1. Preliminary Injunctions
Preliminary injunctions are available by statute in Italian courts. In Italy, preliminary injunctions require a showing that the plaintiff is likely to succeed on the merits of the claim (i.e., the patent is valid and there has been infringement). , If a preliminary injunction is obtained, it carries considerable weight, as it can be enforced against both retailers and producers.
Prior to becoming party to TRIPs, such injunctions were rarely available. Even after implementing TRIPs, the Italian courts are still reluctant to grant preliminary injunctions, particularly ex parte. This reluctance has led to a strategy known as the “Italian torpedo.” Under the Brussels Convention, if patent litigation is begun in one country, proceedings in other signatory countries are stopped. Since the Italian courts rarely grant preliminary injunctions, an infringer could bring suit for a declaratory judgment of non-infringement or patent invalidity in Italy and prevent the patentee from obtaining a preliminary injunction in a more favorable jurisdiction. This can be particularly troubling for information-based technologies, where preliminary injunctions may be essential to protecting the invention.
2. Post-judgment Injunctions
Italian law provides for post-judgment injunctions against further infringement.
1. Preliminary Injunctions
Statutory injunctions have only been available in France since 1984. Even though injunctions are technically available, they are rarely awarded. French courts consider: likelihood of success on the merits, the likelihood of irreparable harm in the absence of an injunction, and the “urgency” of the request. The urgency requirement is similar to the German urgency requirement; the action for infringement must be instituted quickly after the plaintiff learns of the infringement. “Quickly” in this context means less than seven months. Preliminary injunctions can be challenged by showing invalidity. Patent Applicants may not seek injunctions, only patentees. Also, the judge may condition the grant of such injunction on the plaintiff providing a bond to cover potential damages to the defendant if non infringement is found.
The French criteria for the granting of a preliminary injunction are similar to the criteria used in the United States. As in the U.S., a plaintiff in France must show that he or she is likely to prevail on the merits. Also, the plaintiff must show irreversible harm in the absence of a preliminary injunction. There is no apparent French parallel to the balancing of hardships test in the United States. Finally, there is no French requirement comparable to the public interest analysis in the United States. In evaluating the relative difficulty of obtaining preliminary injunctions in the U.S. and France, one must keep in mind the U.S. propensity to assume the last two prongs of its test once likelihood of success on the merits and the presence of irreversible harm are established. On the whole, U.S. jurisprudence establishes a lower barrier to the granting of a preliminary injunction than the French tests, similar to Germany.
2. Post-judgment Injunctions
Post-judgment injunctions are available to the patentee in France.
1. Preliminary Injunctions
Switzerland had no functioning patent system well into the modern era;  the first effective law arrived in 1954. Several revisions of the national patent law brought it into compliance with Switzerland’s duties under TRIPs, the EPC and PCT. Preliminary injunctions are available; the plaintiff must show that the risk of harm in the absence of the injunction is serious and that there is a likelihood of destruction of evidence in the absence of an injunction.
Relative to the United States, Switzerland’s injunction scheme is substantially less well developed. As a result, it is difficult to say whether injunctive relief is easier to obtain in Switzerland. However, given the historical reluctance of the Swiss to protect intellectual property at all, it seems likely that such injunctions are less frequently granted.
2. Post-judgment Injunctions
As with other countries, post-judgment injunctions are available in Switzerland.
G. European Summary
At a relatively high level of abstraction, the nations in Europe that are the primary locus of patent litigation provide similar levels of injunctive relief. In the truest sense of a remedy for infringement, Germany, the United Kingdom, Italy, France and Switzerland all provide for post-judgment injunctions. This is hardly surprising given the property-like aspects of patents. Similarly, before infringement has been definitively determined, the same countries all provide for some species of preliminary injunction. The interesting differences arise at the level of the criteria forobtaining the preliminary injunction.
In most of the fora mentioned above, preliminary injunctions are not trivial to obtain. With the possible exception of Switzerland, all of the primary nations for patent litigation require plaintiffs to demonstrate a likelihood of success on the merits to justify a preliminary injunction. The U.K. and Switzerland both require a showing of harm if the injunction is not granted; in a similar vein Germany and France require a showing of urgency (e.g. harm is imminent). The Italians seem to be less focused on the harm, confining their inquiry to the merits. Additionally, Germany and the U.K. consider which party can best bear the costs involved.
Whatever the particular technical variances across the European states, other issues, including the lack of specialized patent courts, court costs, and additional requirements have created differences in the application of preliminary injunctions. Thus, preliminary injunctions are more easily obtained in Germany and Switzerland, while it is more difficult to obtain such relief from Italy or France. In the case of Germany, Italy, and France, the Brussels Convention creates the opportunity for a clever litigant to manipulate the patent system. This can be achieved either by a patentee obtaining an ‘easy’ injunction in one country and then contesting the merits in a forum with a low barrier to finding patent infringement, or by an alleged infringer obtaining a negative declaratory judgment in a jurisdiction unlikely to grant injunction.
The European test for granting injunctions is roughly similar to theUnited States.s,. The U.S. emphasis on a showing of success on the merits is found in Europe, as is the requirement that the plaintiff show harm in the absence of an injunction. If these two requirements are met, U.S. courts often infer the other requirements, however. As such, the U.S. system represents a more streamlined approach.
In light of the fact that the economies of the major industrialized western powers are increasingly integrated, there is a compelling business interest in creating some uniformity in the granting of preliminary injunctions. Businesses must be able to forecast risk. In the United States, a unified legal system with specialized courts creates a relatively stable patent jurisprudence from which a business can predict the risk involved in a given course of action. On the other hand, if a business deals in several countries in Europe, its ability to forecast risk is impaired by substantial penalty variation. This problem is readily apparent in the “torpedo” phenomenon. Thus, from a business perspective, strengthening TRIPs Article 44 to include a specific grant of the right to preliminary injunctions on a showing of likely success on the merits and irreparable harm in the absence of injunction would be best. However, given the local variation in European courts, this change might not, in fact, increase the predictability of the grant of a preliminary injunction. Without a truly unified court system, the uniformity that currently exists in some nation-states (e.g. the United States, Germany and Switzerland) is probably not attainable throughout Europe.
Taiwan is a civil law country. The purpose of injunctive relief in Taiwan focuses on securing the satisfaction of compulsory execution and preventing material harm or imminent danger. The Taiwanese Patent Act provides for a permanent injunction in section 84 and for provisional attachment in section 86. However, in practice, injunctive relief under the patent system operates under the Taiwanese Code of Civil Procedure. In addition, the Patent Act was modified in 2003 to keep pace with WTO members. An amended version of the Patent Act was proposed last year.
A. Injunctive Relief System in Taiwan
While Title 35 of the United States Code (Patent Act) provides for injunctive relief for patent infringement in the United States, the Taiwanese Patent Act does not have a section specifically relating to injunctions for patent infringement. Instead, parties must rely on the Code of Civil Procedure as the basis for injunctive remedies. The injunctive relief system in Taiwan includes four methods: permanent injunctions, provisional injunctions with provisional attachment, preliminary injunctions, , and temporary restraining orders.
1. Permanent Injunctions
Section 84 of the Taiwanese Patent Act promulgates a “right to claim” which acts as a permanent injunction. The “right to claim” allows a party to demand the cessation of actual or threatened infringement.
2. Provisional Injunctions and Provisional Attachments
In a patent infringement suit, a provisional injunction and provisional attachment are used for purposes of securing the satisfaction of a compulsory execution. They could be requested before the trial or anytime at trial. To avoid falling into the technical details and to prevent an excessive burden to the judicial system, they do not receive substantive investigations. Courts usually allow a provisional injunction or a provisional attachment to issue without an explanation of need or an investigation of the appropriateness of such a remedy, provided that an adequate security bond is provided.
3. Preliminary Injunctions
Preliminary injunctions focus on preventing material harm or imminent danger. Since litigation for patent infringement in Taiwan usually takes two or more years, patent infringement tends to cause imminent damages; as a consequence, the patent owner would like to stop the infringement as early as possible via a preliminary injunction, before a civil action has been initiated.
Like provisional injunctions and provisional attachments, preliminary injunctions can be requested before the trial or anytime during trial. These also are not subjected to substantive investigations by the court, and they will be allowed without explaining their necessity if a security bond is provided. Nonetheless, the amount of the security bond should be sufficient to cover the damages that the other party may suffer as a result of an injunction issuing.
4. Temporary Restraining Orders (Urgent Disposition)
The court may, if it believes it necessary, order an urgent disposition by issuing a temporary restraining order before issuing a preliminary injunction. Such an order must expire within seven days. The order may be extended for a period not exceeding three additional days.
B. Elements for Injunctive Relief in Taiwan
1. General Rule
As mentioned above, preliminary/provisional injunctive relief does not require substantive investigation; however, to satisfy the formal investigation requirement a security bond and “infringement analysis report” are necessary.
2. Guarantee Bond
In practice, the amount of the guarantee bond is one third of the claim’s value.
3. Infringement Analysis Report
Section 131 the Patent Act states that a patentee shall submit an infringement analysis report and a written notice for a complaint. Although this article was found unconstitutional by the Justice Committee because it violated the constitutional right to institute legal proceedings, an infringement analysis report is accepted as a satisfactory basis for requesting injunctive relief since the constitutionality of the article relates only to the complaint portion of the law.
C. Satisfactory Elements for Preliminary Injunction
1. Legal Relation
Legal relation means that a party has standing to make a legal request, i.e., a preliminary injunction may be issued only if the petitioner is an interested party. Under this element, even though the petitioner has standing, the extent of the claim should be clear and specific in order to prevent an unreasonably broad injunction from issuing.
2. Material Harm or Imminent Danger
This element is similar to “irreparable harm” in the four-part test for injunctive relief under the American system. To satisfy this test, the petitioner has the burden to prove a material harm or imminent danger.
This element is similar to “balance of hardship on the parties” requirement in the “four-part test.” The necessity should be based on consideration of the possibility of success and the interests of the two parties. According to the Code of Civil Procedure amended in 2003, both parties deserve an opportunity to be heard to explain why an injunction is, or is not, necessary.
D. Enforcement of Preliminary Injunctions in Taiwan
Prior to 2003, the Patent Act included criminal provisions. Consequently, the patent owner was able to commence a civil action in a criminal court by attaching a civil complaint to a criminal case covering the same subject matter. However, the criminal provisions no longer exist. As a result, preliminary injunctions now play a more important role in litigation strategy since the threat of criminal sanctions no longer spurs settlement. In some cases of patent infringement, multiple concurrent injunctions can issue. In such a situation an injunction should be distinguished as either an affirmative or negative injunction. The affirmative injunction is an injunction for requesting non-action; the negative injunction is an injunction for enduring non-acting. The general rule is that a negative injunction preempts an affirmative injunction. If the multiple injunctions contradict each other, then priority is determined on the basis of timing.
After obtaining a preliminary injunction, the petitioner may request the Court to enforce the injunctive order. The opposing party may appeal to the High Court, arguing that there is no necessity, the means are not proper, the amount of the guarantee bond is insufficient, or insufficiency of the claim. In addition, a decision made by a court of a foreign country may be enforced if such enforcement has been ordered by a Taiwanese court.
Injunctive relief in Taiwan is governed by the Civil Law. As a consequence, injunctive relief in patent cases operates under the Taiwanese Code of Civil Procedure. Among the injunction relief methods, the preliminary injunction plays the key role for preventing patent infringement. According to the Taiwanese Code of Civil Procedure, a request for a preliminary injunction is investigated. However, Taiwanese jurisdictions are now tending to engage in a more substantive investigation by adopting the “four-part test” in order to bring the Taiwanese system into harmonization with the U.S. system.
In China, the patent system was established preliminarily in the1980s. Between 2000 and 2001, the Patent Law of the People's Republic of China (Patent Act) was amended to comply with China’s membership in the WTO. TRIPs, the agreement on trade-related intellectual rights, played a significant role in the improvement of China’s patent system, making China’s domestic IP laws consistent with the standards required by the WTO. One great improvement was to establish enforcement procedures, as required by TRIPs. Unlike most member countries, China has a dual system of legal protection through the judicial and administrative systems which both are available to enforce patent rights. This section will outline the dual system in China, focusing the discussion on the remedy issues, especially those relating to the grant of an injunction.
A. Judicial Protection of Patent Rights
Based on civil actions, the remedies available for patent infringement are: pretrial remedies; remedies during trial; and post-trial remedies.
1. Pretrial Remedies
Pretrial remedies can be divided into three categories, based on the scope of the patent holders’ claims: pretrial injunctions; pretrial evidence preservation; and pretrial property preservation. A pretrial injunction is a temporary measure issued before trial to protect the legitimate interest of the patentee by preventing infringing act from arising or continuing.
Originally, pretrial injunctions were not codified under the framework of either patent law or procedural laws. To protect patent rights effectively and to conform to the standards set by TRIPs, the provision regarding the granting of a preliminary injunction was added to the current Patent Act—which is codified in Article 61. Article 61 provides that the patentee or an interested party, before any legal proceedings are instituted, has the right to request that the court to adopt measures for ordering the alleged infringer to cease infringing. Moreover, in order to enforce article 61, the Supreme People’s Court issued a judicial interpretation titled “Several Provisions of the Supreme People’s Court for the Application of Law to Pre-trial Cessation of Infringement of Patent Right.” Such article and interpretation complete the pretrial remedies of patent rights.
2. Applying Article 61
According to Patent Law Article 61 (1), the patentee or an interested party may request that the court adopt measures for ordering the suspension of infringing acts. The Supreme People’s Court has interpreted “interested party” as “the licensee of a contract for the exploitation of the patent, and the legal heir to the property right of the patent, etc.” When filing the application, the applicant should submit evidence, including documents that prove the authenticity and validity of the patent right, as well as evidence proving the alleged infringer is committing or will commit an act of infringement. Additionally, a security bond should be provided by the applicant when filing an application or the application will be rejected. In the process of executing the injunction, the court may order the applicant to provide a supplementary bond if the alleged infringer will suffer greater losses due to the measure; moreover, unlike the general rule for property preservation, the alleged infringer cannot remove the measure by providing a counter-bond. Where the application conforms to the requirements, the court shall make a written ruling within 48 hours of the application being filed. If the interested party is dissatisfied with the ruling, they can apply for reconsideration within 10 days of the original ruling being issued. Finally, since a pretrial injunction is a temporary measure, the applicant must institute legal proceedings within 16 days of the injunction issuing or the court will vacate the injunction.
3. Examination standard
The Supreme People’s Court’s judicial interpretation does not provide standards for the initial examination of a pretrial injunction, however it creates four factors to consider upon a request for re-examination. The four factors are: (1) whether the act that is being committed, or which will be committed, constitutes an infringement of a patent right; (2) whether irreparable injury is likely to occur; (3) whether the security bond provided by the applicant is sufficient; and (4) whether the public interests would be adversely affected by entering an injunction.
In the context of the literal meaning of the first factor, it requires the establishment of infringement rather than a likelihood of infringement. The “likelihood of infringement” is the general standard in many other countries. For example, in the United States, to obtain a preliminary injunction in a patent infringement suit, a plaintiff must merely establish a “reasonable likelihood of success” on the merits. Similarly, TRIPs requires that there be “a sufficient degree of certainty that the applicant’s patent covers the relevant subject matter and that the applicant’s patent right is being infringed.” Therefore, in theory, this consideration is very likely to be interpreted as likelihood of success rather than inevitability of success. In practice, Chinese courts also tend to rule that likelihood of success is sufficient to fulfill this requirement. The second factor is irreparable injury and the relevant applicable standards are unsettled. In theory, the injury that can be economically compensated should not be sufficient to establish as irreparable injury.
4. Remedies During Trial
Similar to a pretrial injunction, an interlocutory injunction is intended to protect the patentee from the arising or continuation of an infringing act. The major difference is the time the application is filed. For an interlocutory injunction, the applicant files the application after the legal proceeding is instituted, but before the final decision is issued. However, there is no codified procedure for the issuance of an interlocutory injunction. Some courts have ruled that interlocutory injunctions should be used by applying to the provisions of pre-enforcement injunctions. Other courts insist that there is no such temporary measure as an interlocutory injunction and they are limited to pretrial and post-trial permanent injunctions. The resulting confusion has led some to suggest that the Supreme People’s Court should reissue its judicial interpretation in light of the trademark law jurisprudence. In trademark law, the Supreme People’s Court clearly provides that interlocutory injunctions could be applied on the basis of the provisions relating to pretrial injunction.
5. Post-trial Remedies
Post-trial remedies are referred to in China as “civil liabilities.” In China, an intellectual property infringers’ civil liabilities include cessation of infringement, compensation for losses, and any additional action necessary to eliminate ill effects. Here the discussion is focused on cessation of infringement, the right for the patentee to demand that the infringement be stopped, which is very much similar to permanent injunctions in the United States.
There are three requirements that must be met to obtain a cessation of infringement order: (1) patent infringement must be proven; (2) a request must have been made by the plaintiff; and (3) there must be a danger of the infringing act continuing. First, infringement of the patent and the patent validity must be established. Second, the patentee, at the time of filing the suit or during the action, must request cessation of infringement. Courts in China cannot grant relief which is beyond the scope of the request made by the interested party. Therefore, courts will not issue a cessation of infringement order where a timely request is absent. Third, there must be a danger of the infringing act continuing. Where the infringer has already ceased their conduct before the court grants relief, the threat that infringement could continue is likely insufficient to justify a cessation of infringement order.
Generally, if a plaintiff has requested a cessation of infringement order, courts will favor the plaintiff once infringement and validity have been established. As a result, the order is normally issued as a matter of course, although in exceptional cases it may not be issued. Such exceptional circumstances could be when the public interest dictates against issuance of the order or when a patent right is being abused. Where infringement has been found, no patent case has had a cessation of infringement order denied, but traditionally Chinese law does not tolerate the abuse of a right. Therefore, although the post-trial remedies for patent infringement are codified, courts do have certain discretion to weigh the interest of the patentee, the accused infringer, and the public before requiring cessation of infringement.
B. Administrative Protection of Patent Rights
A noticeable characteristic of the Chinese patent law system is its dual legal protection. According to the Patent Act, a dispute concerning the infringement of patent rights should be settled through consultation by the parties. If the parties are not willing to consult or the consultation fails, the interested party may institute legal proceedings in the court, or request the administrative authority for patent affairs to handle the matter.
If infringement is established before the administrative authority, they may order the infringer to stop the infringing activity immediately. The result of such an order is similar to that of an injunction. The infringer may appeal the order to a court within 15 days of the order issuing. The courts then consider the entire matter, not merely the propriety of the order.
The administrative authority and courts operate separately, and, according to the judicial interpretation of the Supreme People’s Court, “If the court receives a case of dispute arising from patent infringement in which the administrative authority for patent affairs has made a determination, the court may, on the request of an interested party, carry on a comprehensive examination.” Therefore, the same subject matter may result in conflicting findings by the courts and the administrative agency. Thus, the administrative process seems to be redundant. As a result, it has been suggested that the administrative authority’s power of enforcement regarding patent infringement is unnecessary and should be removed.
The Australian patent system is governed by the Patent Act of 1990  and the Commonwealth Parliament derives its powers over intellectual property from Section 51(xviii) of the Commonwealth Constitution. Section 51 (xviii) gives the Commonwealth Parliament the ability to create laws specifically related to “copyrights, patents of inventions and designs, and trademarks. Section 122 of the Patent Act of 1990 allows for an injured party to seek relief from infringement, namely through an injunction, as well as allowing a court to order enhanced damages if the situation warrants and if the plaintiff has made a request for such damages.
A. Permanent Injunctions
Generally speaking, Australian courts tend to issue permanent injunctions as a standard practice once infringement is found, despite the fact that injunctions are discretionary, since courts deem the “right to exclude” to be the central right of the patent holder. Therefore, the right to a permanent injunction is implicit within the patent right.
Courts in Australia grant injunctions upon a finding of infringement because it has been determined that the “essence of a patent” at the time of Federation is the right to exclude others from the use and manufacture of the subject matter of the patent. Australian courts have long cited both the United States Supreme Court, the
Privy Council, and the House of Lords as sources of authority for the notion that patents create a right to exclude and, as a corollary, patentees will normally be entitled to an injunction. The Privy Council articulated this viewpoint in National Phonograph v Menck when they stated that “the grant of the right as a sole right, that is to say, put negatively, with a power to exclude all others from the right of production of the patented material.” Likewise, the House of Lords stated in Steers v. Rogers that “what [a] letters patent confers is the right to exclude others from manufacturing in a particular way, and using and particular invention.” This comports with the view of the U.S. Supreme Court expressed in U.S. v. American Bell Telephone that, “but for the patent the thing patented is open to the use of anyone…the only effect of it [the patent] is to restrain others from manufacturing and using that which he invented.” These views of the nature of patents explain why Australian courts tend to enter injunctions as a matter of course despite the fact that such injunctions are discretionary.
An Australian Federal Court in Melbourne described its power to issue patents by stating that:
Where a patentee has conclusively established the validity of his patent and that it has been infringed, as a general rule an injunction will be granted. However that will not happen as a matter of course as an injunction is a discretionary remedy. It is for that reason that there have been cases where injunctions have been refused, for example, where the defendant has satisfied the court that further infringement is not likely. In the present case the judge was not satisfied that no further infringement was threatened and therefore concluded that an injunction was an appropriate remedy.
Therefore, it appears that Australian courts tend to issue injunctions whenever there is a concern that additional infringement may occur. There appears to be little concern about the potential injury that an infringer could suffer should an injunction issue. However, section 122 of the Patent Act of 1990 does allow for a Judge to exercise their discretion when issuing an injunction; so public policy could be considered as a reason to deny a permanent injunction, but such a situation does not appear to occur very often.
B. Interlocutory Injunctions
Public policy always is a concern whenever a patentee is seeking a temporary injunction to prevent further infringement of a patent. Like in the United States, the issuance of a temporary injunction is not governed by patent law, but instead by general principles of equity and necessity. Whereas the United States uses the well known four- part test to determine whether or not a temporary injunction should issue, Australian courts have a three-part test that considers roughly the same subject matter. The general Australian test is whether there is: (1) a serious question to be tried or that the plaintiff has made a prima facie showing that he will be entitled to relief; (2) that plaintiff will suffer irreparable injury; and (3) the balance of convenience favors granting an injunction. These factors parallel the U.S. test and must be found if an injunction is to issue.
Patent cases, in addition to the three articulated factors, have additional considerations that determine whether a party is likely to be successful on the merits of a case. Australian courts have stated that an injunction must not issue if there is a “substantial question to be tried as to the validity of the patents.” Patents do not enjoy the same presumption of validity in Australia as in the United States and the courts have found that a patentee can only show that he is likely to prevail if his patent falls into one of three categories. The first category is where a patent is an “old and undisturbed patent.” This is “generally taken to mean six or more years old.” The second category is when the patent has already been judicially upheld after a legal challenge. And the third is where “the defendant’s conduct enabled the court to say that as against the defendant there was no reason to doubt validity of the patent.” In cases where the patent is an “old patent,” or where it has been upheld judicially, a party may prevent an interlocutory injunction by showing that there is a chance that the validity of the patent may be successfully challenged. Thus, courts in Australia, while quite open to granting permanent injunctions once infringement is found, seem extremely hesitant to issue an interlocutory injunction in patent cases except in very limited instances. Even when those circumstances are present, courts still allow the defendant to attempt to rebut the presumption that may have arisen regarding the validity of the patent.
C. Costs Relating to Seeking Injunctions
Finally, a patentee may not want to seek an interlocutory injunction due to the fact that costs are borne by the losing party. Australian courts follow the English rule that, in most cases, the successful litigant receives costs (including attorney’s fees). A party that is partially successful may also be able to recover the relative portion of the costs, unless they exaggerated the strength of their position to the court, in which case costs could be denied or substantially reduced by the court. Based on the stringent requirements that a patentee must meet in order to receive an interlocutory injunction it may not be a sensible business decision since a denial would be very costly from a monetary standpoint. Additionally, once infringement is proven, an injunction will issue and the patentee will be able to recover all damages that have resulted from the infringement.
Based on the manner in which the Australian courts address injunctions, and the costs related to seeking an injunction, a patentee would likely want to forego a temporary injunction unless the patent has already been upheld in court, is old, or the actions of the infringer indicate that it is likely to be found valid. Otherwise, a patentee should wait for a permanent injunction, after a finding of infringement, since permanent injunctions tend to issue as a matter of course.
Japan is a “civil law country” in which only statutes are binding laws. Court cases, other than precedent established by the Supreme Court, are not binding authority. So, to understand injunctive relief for patent infringement in Japan, one must look to the Japanese Patent Act (JPA).
Article 100 (1) of the JPA assures a patentee of a right to seek an injunction against an infringer by stating that “a patentee or exclusive licensee may demand a person who infringes or is likely to infringe a patent right or exclusive license to stop or prevent such threat or infringement.” At the same time, the JPA does not provide any other rules that limit conditions under which an injunction against a patent infringement may be issued. In light of this provision of the JPA, once a Japanese court finds a patent to be valid and infringed, the injunctive relief, which is equivalent in the United States to a “permanent injunction,” will be automatically issued.
A. Provisional Disposition Provided by Japanese Civil Preservation Code
According to Article 23 (2) of the Japanese Civil Preservation Code (JCPC), “the court may issue an order to establish a provisional status, where it is necessary to issue the order so as to avoid the extreme damage or imminent danger to be suffered by an obligee with a disputed right.” When a patent is infringed, the patentee can, under the provision, file a motion for an order to establish provisional status as the patentee to seek injunctive relief and, subsequently, for the issuance of a provisional injunction. A provisional disposition for an injunction is the equivalent of a “preliminary injunction” in the U.S. judicial system.
For issuance of a provisional disposition, the movant is required to make a prima facie showing of the existence of a patent right and the necessity of an injunction issuing in accordance with Articles 13 (1) and (2) of the JCPC. In other words, in a patent infringement case, a patentee who seeks a provisional disposition for an injunction must make a prima facie showing of the existence of the patent right and the necessity of the issuance of the provisional disposition so as to avoid the extreme damage or imminent danger to be suffered by the patentee, according to Articles 13 (1) and (2) and 23 (2). Furthermore, in determining whether there is such a necessity the court generally considers the balance of hardships between the movant and the respondent. It must be noted that all a patentee is required to do is make a prima facie showing of the factors above. Accordingly, the burden is not heavy for the patentee to receive a provisional disposition.
However, the alleged infringer can file an objection to or move for the rescission of an issued provisional disposition. When there is an objection to a provisional disposition, a court may refuse a provisional disposition only if the alleged infringer makes a prima facie showing that there is no risk or possibility of the irreparable damage that the provisional disposition would seek to prevent under Article 27 (1) of the JPCP. As for the request for rescission, the court may rescind the provisional disposition where the alleged infringer makes a prima facie showing of irreparable damage from the execution of the provisional disposition, or under other special circumstances, listed in Articles 39 (1) and (2) of the JPCP.
Overall, the conditions imposed on a patentee to obtain a provisional disposition for an injunction in Japanese jurisdictions are, to some extent, similar to those imposed on a patentee to obtain a preliminary injunction in the U.S. However, the burden of proof on the patentee in Japan is less severe than the burden of proof on the patentee in the U.S.
B. The Binding Rule for Injunction Provided by Japanese Civil Code
While the JPA does not specifically provide for the granting of an injunction to prevent patent infringement, the Japanese Civil Code (JCC), of which the JPA is a special statute, provides a general rule for the exercise of such a right. Article 1 (3) of the JCC states the general rule for exercise of the right, that “no abuse of rights is permitted.” This provision dominates all the cases where a party seeks to exercise a right, including a patent right. Accordingly, if a court finds that a patentee’s exercise of their right to seek an injunction against a patent infringement to be an “abuse of rights,” it is likely that the court would not grant an injunction, even if it finds the patent valid and infringed.
There have been few cases in Japan when an injunction to prevent infringement has been refused due to an abuse of right. In fact, the Japanese judiciary has never found the exercise of rights to seek an injunction against infringing activities to be an abuse of rights when the courts recognize the patents as valid.
It is safe to say that Japanese courts’ ways of granting an injunction against patent infringement are similar to the U.S. Federal Circuit’s past “general rule,” which was overruled by the U.S. Supreme Court, in that injunctive relief is automatically granted as long as the relevant patent is found to be valid and infringed. But, it is possible that a Japanese court could refuse to enforce patent rights if it believed that an abuse of rights had or was occurring.
C. Determination of “Abuse of Rights”
1. General Theory of “Abuse of Rights”
To determine whether the exercise of rights is an “abuse of rights” under the JCC, the court is required to consider, on a case-by-case basis, the interests of the plaintiff, the defendant, and the public. The two factors the court will consider are:
(1) The legitimacy and appropriateness of the relief sought and;
(2) The potential benefit and the potential loss for each party should the injunction issue or be refused
2. Application of Theory to Patent Infringement Cases
The courts must also determine whether an exercise of the right to seek an injunction against a patent infringement falls under an “abuse of rights.” Generally speaking, a party arguing that an exercise of rights falls under an “abuse of rights” has the burden of proof. In the case of patent infringement, an alleged infringer would have the burden of proof. Succeeding in this claim would be extremely difficult, as shown by the fact that there has been no such successful claim in the past.
Based on these observations, comprehensively considering both issuances preliminary and permanent injunctive remedy against patent infringement, it can be said that the Japanese patent system provides patent holders with a more sufficient degree of protection than the U.S. patent system.
VII. Comparative Study on Post-eBay Issuance of Permanent Injunctions in United States and Injunctive Remedies in Japan
A. Prospect for the Future of U.S. Permanent Injunctions
1. Review of eBay
In eBay, the Supreme Court held that permanent injunctions are not automatic, but instead are subject to the same four-part test enunciated for preliminary injunctions. This decision is very significant in the following sense: before the eBay decision, in the United States, if a patent holding company has either business method patents or improvement patents in a newly emerging field, but makes no products of its own and therefore has no incentive to cross-license any patents that a manufacturing firm may own, and the patent holding company on the one hand accuses the manufacturing firm of infringement against its patent and on the other hand offers a license under the patent, the manufacturing firm would be likely to pay the license fee, which is attractive relative to litigation cost, for fear of an automatic injunction in the case of unsuccessful patent litigation even if the patent has dubious validity.
In addition, the unforeseeability of the results of patent litigation, which have a high possibility of being overturned on appeal, seem to increase the likelihood that the alleged infringer who actually does business upon the accused product would settle. In summary, the eBay decision is significant in that the decision indicated that it might be prohibited for patent holding companies to virtually force other firms into license agreement using the automatic injunction as a shield under the principles of equity.
2. Examples of Post-eBay Decisions when Patent Not Practiced
In z4 Technologies v. Microsoft, and Finisar v. DirecTV Group, two cases decided after eBay, even though the trial courts approved the validity of the patents, they did not grant the permanent injunctions primarily because the patentees did not practice the patented inventions and, therefore, the four factors of the principles of equity were not in favor of awarding injunctive relief. Inferring from these decisions, after eBay, patentees not practicing patented inventions would not be able to easily obtain permanent injunctions.
This means that not only patent holding companies, but also academic researchers or independent inventors would have an extremely hard time obtaining permanent injunctions because, generally speaking, they are of such slender means that they cannot practice their inventions. To the contrary, large companies with deeper pockets may be able to obtain injunctive remedies, because they usually practice the inventions, and, even if sued for patent infringement, such large companies have enough capital to prolong legal proceedings and eventually prevail over underresourced plaintiffs .
3. Spirit of eBay Decision and Trend of Post-eBay Decisions
The Supreme Court stated in eBay, however, that “some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test.” Moreover, Justice Roberts pointed out, in a concurrence, that “the difficulty of protecting a right to exclude through monetary remedies that allow an infringer to use an invention against the patentee’s wishes.” Based on these statements, it is safe to say that the Supreme Court strongly suggests in eBay that academic researchers or independent inventors without sufficient funds could satisfy the four-part test, for the purpose of protecting their right to exclude. Hence, the principles of equity must not necessarily work against patentees, merely because they do not practice the patented inventions.
B. Prospect for Future of Japanese Injunctions and Comparative Study of Japanese and U.S. Judiciaries
A famous court case in Japan, in which the patentee requested an issuance of an injunction against the infringement of a patent which had not been used, offers valuable insight for patent infringement remedies in Japan. This section will outline the court case, and then study the structural dissimilarity between the United States and Japan by comparing the Japanese case and eBay.
1. Impact of Ichitaro Case on Japanese Software Industry
a. Ichitaro Case
On February 1, 2005, the Tokyo District Court in Japan held that Justsystem Corp. (“Justsystem”) infringed a patent on a technique to display on-line help owned by Matsushita Electric Industrial Co. (“Matsushita”), and granted an injunction to prevent Justsystem from producing and selling or licensing its popular software products, “Ichitaro” word-processing software and “Hanako” graphics software. Matsushita filed a patent application titled “information processor and information processing method” in October 1989 and obtained the patent in July 1998. The patented invention is related to a user interface that displays help texts on the computer screen explaining the function of icons on a computer system. While Justsystem produces and sells “Ichitaro” word-processing software and “Hanako” graphics software which have a “help mode” button and a “print” button, and the functional explanation of the print to be displayed after a certain specific sequence of selecting the buttons, Matsushita brought suit in the Tokyo District Court, alleging that Justsystem’s actions were indirect infringement and ordered injunctive relief and abrogation of the products, despite the absence of its practice of the patented inventions.
On September 30, 2005, the Intellectual Property High Court (“IP High Court”) eventually revoked the District Court’s decision and dismissed all of Matsushita’s claims, holding partly that Matsushita could not exercise its patent according to Article 104ter of the JPA regarding, the limitation of exercising a patent, because the patented invention lacked an inventive step and should be invalid. However, the significant impact of the District Court’s decision preventing Justsystem from producing and selling its popular “Ichitaro” product rocked the Japanese software industry, which mainly feared the possibility of being easily sued for infringement of software patents and enjoined against selling their leading products. In addition, in this Japanese judicial case, as well as ones of patent holding companies, academic researchers or independent inventors, one of the crucial points in question is whether or not to automatically grant an injunctive remedy to a patentee, who does not work the patented invention.
b. General Rules on Software-related Intellectual Property” Released by Japanese Government
Responding to the Ichitaro case, on Oct. 18, 2006, the Ministry of Economy, Trade and Industry (“METI”), one of whose affiliated agencies is the JPO, released “General Rules on Software-related Intellectual Property (“General Rule”), ” for the purpose of clarifying what acts should fall under the abuse of exercise of patent right under the JCC with regard to the exercise of patent rights of computer software, including seeking injunctions, which could prevent technological innovation of computer software. This General Rule clearly states that the exercise of patent rights in any of the following situations has the potential to fall into the abuse of right under the JCC:
- In the case that the exercise of the patent right shows wrongfulness, such as purposefulness of offense, in light of the subjectivity of the person who did the exercise of the patent right;(2)
- In the case that the exercise of the patent right shows wrongfulness, such as forcing the opponent party to suffer an unreasonable loss, in light of the acts; or(3)
- In the case that the exercise of the patent right puts the opponent party and the public at much more disadvantage than advantage the person who did the exercise of the patent right obtained.
This General Rule is the research outcome from the general principle of exercise of right under the JCC, and, furthermore, is not, legally binding. However, the opinion of the governing authority of the patent regime must be worthy of attention because it has a certain authority over players in the domestic market under the patent regime.
2. Prospect for Issuance of Injunctions against Patent Infringement in Japan
As reviewed above, many people have had concerns about the automatic granting of injunctive remedies for patent infringement in Japan similar to the concerns in the United States. In addition to the government opinion in Japan, many legal scholars have supported the possibility that the exercise of the right to an injunction based on Article 100(1) of the JPA guaranteed would be denied as the exercise of right under a specific condition. They point out the possibility that, despite awarding damages, an injunction would not be granted, focusing attention on the comparison between the pro-competitive effect of granting the exercise of patent rights and the adverse competitive effect of denying the exercise of it. Such decision of the court would be taken as a de facto compulsory license because it would virtually permit not an injunctive remedy, but a royalty unless the royalty would be too restrictive. These viewpoints may support the theoretical possibility of denial of the exercise of the right to seek an injunctive remedy even in cases of valid patents, but, for the two specific reasons explained below, injunctions will keep being automatically issued if the infringed patent is valid.
a. Ease of Use of Defense of Invalidity in Japanese Courts
In the U.S. judiciary, a patent shall be presumed valid, any challenger bears the burden of persuasion as to disputed facts, and, moreover, the burden of proof is clear and convincing evidence. In addition, while juries are generally sympathetic to patent holders under the presumption of “administrative correctness,” it is quite difficult for the alleged infringer to get them on its side.
Under the Japanese patent regime, however. where according to Article 66 (1) of the JPA, the patent is effective as long as the patent is registered, it is not presumed to be valid. In addition, in Japanese courts, which party is required to bear the burden of proof of the invalidity of the patent generally depends on whether the reasons for patent invalidation to be applied are favorable to the party or not. For example, where novelty or inventive step are the reasons for patent invalidation, alleged infringers are required to bear the burden of proof because denial of novelty or inventive step is favorable to them. As for the requirement for the description of an application or claim, patentees bear the burden of proof because such requirement is the very base of the patent itself and the proof would be favorable to them. These distinctions are because the defense of invalidity, which is effective under Article 104-3 of the JPA in Japan, is much easier to assert in patent litigation in Japan than in the United States.
b. Difficulty in Application of General “Abuse of Rights” Principle
As discussed above, there may be the possibility that the right to an injunction guaranteed by Article 100 (1) of the JPA would be denied as an abuse of rights. However, Japanese courts are sure to face difficulty in applying this general principle to cases under the special act for the following two reasons.
First, under the Japanese legal system, courts are supposed to use such a general principle, without a clearly defined requirement for its application, only as a last resort. Such a general principle generally supplements the discipline of statutes, however, application of the general principle without careful consideration may lead to ignorance of the binding effect of statutes. I n addition, judges misusing such general principles are at risk of deciding cases arbitrarily without relying on the statutes to be followed. Hence, courts must avoid resolution by general principles, which is often described as a “flight” into a general principle. From this perspective, it can be said that Japanese courts are required to avoid the easy use of the general principle of “abuse of right” in patent litigations at least in the case where the infringed patent is valid.
Second, in patent infringement lawsuits in Japan, there has been no judicial case where the exercise of a patent right based on a patent with no reason for invalidation is determined to be an abuse of rights. Therefore, trial courts are sure to hesitate to be the first to apply the general “abuse of right” principle to valid patents actually infringed, even if the principle seems to be applicable.
It can be inferred from the discussion through this section that alleged infringers in patent litigation in Japan can use the defense of invalidity much more easily than that of abuse of rights. As a matter of fact, even in the Ichitaro case, which forced the METI to examine the applicability of the general principle in cases of valid patents, the alleged infringer, Justsystem, eventually won reversal upon the defense of invalidity in the IP High Court. In addition, according to the records in the database of the Japanese Supreme Court, in only about 80 cases, has the defense of abuse of rights ever been raised other than in relation to the existence of some reason for invalidation. These full accounts clearly reflect the aforementioned real Japanese judicial situation. Moreover, such situation where, on the one hand, the defense of invalidity is often used, and, on the other hand, the injunction against patent infringement is automatically issued for a valid patent, will not change in the jurisdiction for the near future because it balances the rights of a patent holder and a third party, assuring both incentives to create a new technology and to prevent the unreasonable exercise of patent rights upon a patent with a defect.
C. Crucial Structural Problem of Patent Litigation in U.S. and Suggestion for Resolution Based on Comparison with Japanese Judicial Situation
This section will point out a crucial structural problem of patent litigation in the United States, and suggest a resolution to it based on the comparative study between the Japanese and U.S. judiciaries in the previous section.
1. Structural Problem in U.S. Patent Litigation
In the comparison of the two judicial situations, a crucial structural problem with patent litigation in the United States shows up. The problem is due to the fact that there exists in U.S. patent lawsuits the powerful presumption of validity, even though the Supreme Court decision in eBay prohibited automatic injunctions. Despite the existence of the general principle of “abuse of rights,” which is, to a certain degree, similar to the principle of equity in the United States, Japanese courts have never taken this last resort, but have invalidated patents in patent infringement lawsuits nonetheless. Moreover, the Japanese industrial arena as a whole seems to approve such judicial operations.
On the other hand, while the U.S. judiciary relies upon the principle of equity from eBay, the industrial arena in the country seems to remain concerned about the unreasonable exercise of patent rights by others. Furthermore, as previously indicated, rigid application of the principle of equity could diminish patent rights owned by academic researchers or independent inventors, to which the eBay decision clearly referred as important players in the U.S. patent arena to be protected. Comparing the two jurisdictions, it can be said that existence of the presumption of validity of patents may permit the unreasonable exercise of patent rights, such as that upon patents to be intrinsically invalidated and to prevent judges in federal courts from flexibly applying the principle of equity on a case-by-case basis.
2. Suggestion for Resolution of Problem Based on Comparison with Japanese Judiciary
In order to correct such a complex situation in the United States, I would like to propose removing the presumption of validity under specific conditions; there is no such presumption in Japanese courts. Originally, such concerns about the unreasonable exercise of patent rights, primarily from large companies, stemmed from the fact that many patent holding companies, may be able to acquire patents of suspect validity, for either business method patents or improvement patents in a newly emerging field, and exercise patent rights against large companies with deep pockets. If the presumption of validity of patents should get much easier to rebut than it is now, then, the defense of invalidity should get much easier and more effective to make. By removing or diminishing under certain conditions the presumption of patent validity, it could help to resolve the concerns from the industrial arena. In addition, if, as a result, federal courts should succeed in lowering the chance that they could allow patent rights with defections to be exercised, it would help them to decide without anxiety to grant injunctions in favor of the weak, such as academic researchers or independent inventors in case of patent with no defection.
3. Reference to “Patent Reform Bill”
On a relevant note, a new patent reform bill, which calls for a first-to-file standard, allows post grant reviews, has a narrower definition of willful infringement, and reduces the amount of infringement awards, was introduced in the House of Representative and the Senate on April 18, 2007. The House judiciary subcommittee forwarded it to the full committee on May 16, 2007. It is particularly worth noting that the issue of post grant reviews in the bill adopts removal of the presumption of validity under its proceeding.
According to Section 6, the bill plans to introduce Section 328 (a) into the Patent Act, which provides that, under the post grant review newly introduced for the purpose of cancellation for the reasons to invalidity of the patent or any claim, “[t]he presumption of validity set forth in section 282 shall not apply in a challenge to any patent claim.” Putting aside specific conditions such as the timing of the effective petition for the post grant review, that proposal in the bill constitutes a dramatic and welcome step in the sense that it plans to introduce the removal of the presumption of validity of patents under certain conditions, so as to prohibit the exercise of patent rights with defections and enhance the quality of patents. I would like to keep a watchful eye on the ambitious endeavor of such dynamic reformation to the U.S. patent regime, hoping that the presumption of validity would be removed or diminished in some way for the reasons above.
One consistency in the injunctive relief system is that all jurisdictions, with the exception of the United States, grant permanent injunctions as a matter of course once a patent is shown to be valid and infringed. The various jurisdictions approach the issues of preliminary injunctions somewhat differently. Certain jurisdictions, such as France and Italy, seem extremely hesitant to allow for any preliminary injunctions. Other jurisdictions, like Taiwan, will largely grant them as a matter of course if the movant is willing to post a sufficient security bond. It would seem that, in the current day and age, an uniform system of injunctive relief would be preferable to the variable systems that currently exist.
My recommendation would be that the various nations of the world adopt a uniform standard so that patentees will understand what must be proven in order to obtain an injunction. Both injunctions should utilize portions of the traditional four part test that a party must demonstrate a likelihood of success on the merits, irreparable injury, balance of hardship favors the moving party, and public policy does not militate against the imposition of an injunction. This would be the test for the issuance of a preliminary injunction, while the test for a permanent injunction would focus on the last three factors. If an infringer was able to show that the last three factors of the injunctive relief test clearly weighed against the imposition of an injunction, then an injunction should not issue. This would essentially return the test to the pre-eBay rule while allowing an infringer more opportunity to demonstrate why an injunction should not issue.
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