patent litigation in japan april 7, 2008 presented by: david w. hill partner, finnegan, henderson,...

Patent Litigation in JapanPatent Litigation in Japan

April 7, 2008April 7, 2008

Presented by:David W. Hill

Partner, Finnegan, Henderson, Farabow,

Garrett & Dunner, LLP

ContentsContents

Legal Professionals in Patent LitigationCentralization of Patent CasesPatent-Related ProceedingsCollection of Evidence Invalidity of Patents Computation of DamagesConclusion

BengoshiBengoshi

About 20,000 Bengoshi. (About 1,000,000 lawyers in the U.S.) Pass National bar examination (about 1,500 in 2006)

– Law schools like those in the U.S. were established in 2004, and the number of people passing the bar examination is expected to increase to 3,000 annually by 2010

Train at Legal Training and Research Institute of the Supreme Court of Japan (Shiho Kenshujo)

Choose to become a judge, a public prosecutor, or a lawyer. No technical background required for a Bengoshi to practice in patent

field (Bengoshi may register as a Benrishi without taking the national examination to become a Benrishi)

Most Bengoshi who practice patent law have no technical background Only about 300 Bengoshi are registered as Benrishi

BenrishiBenrishi

Benrishi is not required to be an attorney at law Technical background is not necessary to become a

Benrishi, but most do have technical training Benrishi handles prosecution of patents, and also

prosecution of trademarks Benrishi may represent clients directly in actions of

annulment of JPO decisions at the IP High Court Benrishi may jointly represent clients with Bengoshi in

patent litigation if the Benrishi passes a special additional examination

In patent litigation or actions to annul JPO decisions, Bengoshi and Benrishi typically work together

Foreign Lawyers in JapanForeign Lawyers in Japan

Small number of Foreign Lawyers admitted after World War II – (Junkai-in)– Allowed to practice Japanese law as any

Bengoshi since 1955 (only 4 remain)

Law 66 passed in 1986 (effective April 1, 1987) allowed registration as Gaikokuho jimu bengoshi (licensed foreign lawyer)

Currently 252 licensed Foreign Lawyers in Japan (April 1, 2007)

Legal Professionals in Patent Legal Professionals in Patent LitigationLitigation

Establishment of law schoolsAt the initiative of the Justice System Reform

Council (established by the Cabinet), American-style graduate-level law schools that emphasize professional training have been established.

- The number of successful candidates will be increased from 1,000 to 3,000 by 2010

- By about 2018, the number of legal professionals actively practicing is expected to increase from 20,000 to 50,000

- 70 to 80 % of law school graduates will pass the national bar exam (current pass rate is 3%)

- It is expected that the number of lawyers who have technical backgrounds will increase

Centralization of Patent CasesCentralization of Patent Cases

The Tokyo District Court

The Osaka District Court

Jurisdiction of IP Cases in JapanJurisdiction of IP Cases in Japan

Types of Cases 1st Instance Koso

Appeal

Jokoku

Appeal

-Patent Infringement-Utility Model Rights Infringement-Software Copyright Infringement

N/A

TDC

or

ODC

- Exclusive Jurisdiction

IP High Ct.

The Supreme Ct.-Other Copyright

Infringement-TM Infringement-Unfair Competition (including Trade Secret)

N/A

District courts having jurisdiction under the Civil Procedure Law

The Corresponding High Ct.

- Suit Regarding Validity of Patent and TM

JPO

IP High Ct.

N/A

Centralization of Patent CasesCentralization of Patent Cases

All the patent infringement cases including the cases at the Osaka District Court are appealed to the IP High Court.

140 technical experts (Senmon-iin) assist Judges in patent infringement cases.

Patent-Related ProceedingsPatent-Related Proceedings

Patent infringement action

Declaration of non-infringement

Invalidation of patents

Action for annulment of the trial decision


Court proceedingsFiling

- Complaint

- EvidenceTrial (Preliminary hearing/Hearing)

- Brief

- Evidence

- Examination of witnessesJudgment or Settlement


Why has the procedure become so fast?Trial planningIncrease in the number of judges in IP

divisionsExpansion of measures to collect evidenceNonexistence of thorough discovery


CostsOfficial filing fee

- The plaintiff must pay a certain percentage of the economic value of the case with revenue stamps as an official filing fee to the court included with the complaint

Economic value Filing fee (District Courts)

$1,000,000 $4,000

$10,000,000 $30,000


CostsAttorney’s fee

- The economic value basis fee is more common than the time charge basis fee

- Economic value basis fee

- Initial retainer is calculated based on the economic value claimed in the complaint

- Success fee (in the case of winning or favorable settlement) is calculated based on the economic value actually obtained

Economic value Retainer Success fee Total fee

$1,000,000 $35,000 $70,000 $105,000

$10,000,000 $230,000 $460,000 $690,000

Collection of EvidenceCollection of Evidence

Order to produce documents (Bunsho teisyutsu meirei) - §105 (1) of the 1999 Patent Law

- On the request of a party, the court may order the other party to produce documents necessary to prove infringement or to assess damages caused by the infringement

- If the other party has a legitimate reason for refusing to produce them, the request is denied


Order to produce documents (Bunsho teisyutsu meirei)

- The court may assume that the plaintiff’s assertions are true, if

1) this order is ignored, and

2) it is especially difficult for the other party to allege concrete facts relating to the contents of the document and to prove the facts in the document by other evidence


Expert opinion- Examination of an expert in the courtroom is

rarely conducted

- A written expert opinion is usually produced- If the court orders an expert opinion on the

issue of damages, the other party must explain the matters necessary for the expert opinion to be given - §105-2 of the 1999 Patent Law


Inspection (Kensho)- If a process patent is at issue and the other

party is unlikely to agree on the accused process, the court may conduct an inspection at the defendant’s factory

- If the other party has a legitimate reason for refusing the inspection, the inspection is not ordered - §105 (3) of the 1999 Patent Law


In camera procedure- Decide whether the other party has a

legitimate reason for the refusal of production of documents or the inspection of the factory

- The court weighs 1) the disadvantages the owner of the documents would suffer from the disclosure and 2) the disadvantages the parties in the case would suffer from the nondisclosure


In camera procedureIf the court finds that the accused device is

different from the patent,- Deny the order- Order the party to produce only a part that

is different from an element of the claim- Permit limited persons such as plaintiff’s

attorneys or assistants to have access to the information on the condition that they promise to keep it secret.


In camera procedureIf the court finds that the accused device is

within the scope of the claim, - the court will order the defendant to

produce the document- the defendant does not have a legitimate

reason to refuse to submit such information related to the infringing device

Invalidity of PatentsInvalidity of Patents

Fujitsu v. TI decision (Sup. Ct. 2000)- The courts that decide infringement of patents

may decide whether it is clear that the patent is invalid

- If it is clear the patent is invalid, to seek the injunction and damages based on the patent is considered as an abuse of right unless there are special circumstances

Effects of Fujitsu decision- After this decision, validity of patents has become

one of the major defenses in patent litigation

Computation of DamagesComputation of Damages

Computation of damagesLost profits based on the number of infringing

products - §102(1) of the 1998 Patent Law

- Multiplying the number of infringing products sold by the infringer by the profit per unit the plaintiff would have earned in the absence of infringing activities up to a limit not exceeding the ability of the patentee to supply the products

- If, however, there are any circumstances that would have prevented the patentee from selling all or part of the infringing products, those sales will be deducted.


Computation of damagesPachinko (Slot machine) patent case (Tokyo

Dis. Ct. 2002) – $60mil- The purpose of section 102 (1) is to recover the

patentee’s lost opportunities in the market- “exercising ability” only refers to potential capabilities- “profit the plaintiff would have earned without the

infringing activities” means not accurately calculated profit but approximate average profit through the period during which the sale of the patentee’s products would be affected by the infringing activities

- “any circumstance that prevents the patentee from selling part or whole of the sold products” does not include the infringer’s commercial efforts or the existence of noninfringing substitutes


Lost profit presumed by infringer’s profitsLicense royalty - §102(3) of the 1998 Patent Law

- “A patentee may claim an amount of money which he would normally be entitled to receive for the working of the patented invention, as the amount of damage suffered by a patentee”

- The word “normally” was deleted- Under the new provision, courts can

consider such actual situations of the case as concrete technical value of the patented invention, business relationship between the parties, or the profit gained by the infringer


Expert opinion - §105-2 of the 1999 Patent Law- If the court appoints an expert for the

calculation of the amount of damages, the both parties must provide the expert with the necessary information for the expert opinion to be given

Award of reasonable damages - §105-3 of the 1999 Patent Law- The court may determine the reasonable amount

of damages at its discretion based on the entire tenor of the oral proceedings and the examination of evidence if the patentee shows the presence of damages but cannot prove the amount of the damages because of the nature of the relevant facts in the case

ConclusionConclusion

Filing a patent infringement suit in Japan has become a more attractive choice- Cost effectiveness in patent litigation in Japan

is fairly high- Predictability or uniformity has been heightened

(recent statistics favor accused infringer) But, if you file a patent-infringement suit in

Japan, thorough preparation before filing is critical because you do not have enough time to collect evidence or change your strategy once you file a suit

patent litigation in japan april 7, 2008 presented by: david w. hill partner, finnegan, henderson,...

Documents

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