Draft Report of the Dispute Settlement Subcommittee, Intellectual Property Policy Committee, Industrial Structure Council

Transcription

1 Draft Report of the Dispute Settlement Subcommittee, Intellectual Property Policy Committee, Industrial Structure Council October 2002

2 Table of Contents Chapter 1 Overview and Problems of Legal Systems Concerning Dispute Settlement Section 1 Present Status of Dispute Settlement Systems for Patent Rights 1. Types of dispute settlement systems (1) Disputes over patentability and the validity of rights (2) Disputes over the existence of infringing acts 2. Use of dispute settlement systems 3. Situations in other countries Section 2 Current Efforts and Problems Concerning Dispute Settlement Systems 1. JPO trial system 2. Court procedures 3. ADR Chapter 2 Concrete Direction for Revising the Systems Section 1 Desirable Form of the JPO s Dispute Settlement Systems Related to the Validity of Patents Item 1 Desirable Form of the System of Opposition against Grant of a Patent and the System of Trial for Invalidation 1. Demands for the JPO s dispute settlement systems 2. Current system and problems thereof (1) Current system (2) Problems in the current system 3. Situations in other countries 4. Concrete direction for revising the system (1) Basic concept (2) Concrete analysis 5. Opinions in the subcommittee Item 2 Basic Framework of the New Invalidation Trial System 1. Concrete analysis of the basic framework (1) Eligible demandants (2) Structure of proceedings (3) Grounds for the demand (4) Time for the demand 1

3 2. Opinions in the subcommittee (1) Basic framework (2) Other requirements Item 3 Desirable Form of Proceedings of the New Invalidation Trial System 1. Optimization of the attack/defense opportunities (1) Current system (2) Problems in the current system and the direction of analysis (3) Situations in other countries (4) Concrete analysis (5) Opinions in the subcommittee 2. Prevention of the rehashing of disputes (1) Current System (2) Problems in the current system (3) Situations in other countries (4) Concrete analysis (5) Opinions in the subcommittee 3. Desirable scope of examination of evidence ex officio (1) Current system (2) Opinions in the subcommittee 4. Improvement of the provisions on non-public proceedings (1) Current system (2) Situation of other quasi-judicial procedures by administrative bodies (3) Necessity of non-public proceedings (4) Opinions in the subcommittee 5. Ensuring prompt and precise proceedings in the new invalidation trial system (1) Concrete analysis (2) Opinions in the subcommittee Section 2 Desirable Form of Actions against Trial Decisions and Trials for Correction Item 1 Actions against Trial Decisions under the New Invalidation Trials System 1. Parties to Actions against Trial Decisions under the New Invalidation Trials System (1) Current system (2) Situations in foreign countries (3) Concrete analysis 2

4 (4) Opinions in the subcommittee 2. Participation of the JPO in Actions Against Trial Decisions under the New Invalidation Trial System (1) Necessity of Participation of the JPO in Judicial proceedings (2) Situations in foreign countries (3) Concrete analysis (4) Opinions in the subcommittee Item 2 Desirable Form of Trials for Correction During the Pendency of Actions Against Trial Decisions 1. Mechanism and the current status of the passing of cases back and forth between court and the JPO (1) Passing of cases pertaining to the correction of patents (2) Present status of the passing of cases back and forth between court and the JPO 2. Problems in the passing of cases back and forth between court and the JPO and the direction of analysis 3. Concrete analysis (1) Plan to completely bar corrections (2) Plan to establish a time limit for demanding a trial for correction (3) Plan to allow a limited opportunity for correction and have the JPO carry out the proceedings (4) Plan to allow a limited opportunity for correction and have the court examine the correction (5) Plan to have the court conduct the proceedings for correction of the patent and that on the validity of the corrected patent together. 4. Opinions in the subcommittee Section 3 Desirable Form of Communication between Infringement Actions and JPO Trials 1. Background (1) Current system (2) Before the Kilby case decision (3) Kilby case decision (4) Impacts of the Kilby case decision 2. Verification of the problems indicated since the Kilby case decision (1) Differences in the determinations (2) Verification of the burden on the right holder to deal with the proceedings 3

5 3. Basic direction and the possibility for resolution (1) Adjustment of the progress between infringement actions and JPO trials (2) Sharing of information on claims and evidence raised by the parties between the infringement action and the invalidation trial 4. Concrete analysis (1) Adjustment of the progress of proceedings between the infringement action and the invalidation trial by suspension (2) Sharing of information between court and the JPO 5. Opinions in the subcommittee Section 4 Desirable Form of the Hantei System 1. Necessity for enhancement of ADR and the Hantei system (1) What is ADR? (2) Expectations for ADR and the present situation (3) Recommendations by forums (4) Direction of analysis 2. Current system (1) Outline of the Hantei system (2) Hantei system under the legal amendment of 1999 (3) Use of the Hantei system 3. Present situation of private ADR dealing with industrial property rights 4. Premises of analysis 5. Specific measures 6. Opinions in the subcommittee Section 5 Desirable Forms of Dispute Settlement Systems under the Utility Model Law, the Design Law and the Trademark Law Item 1 Utility Model Law 1. Desirable forms of the JPO s dispute settlement systems on the validity of rights 2. Desirable form of suits against decisions in trials for invalidation 3. Improvement of the communication between infringement actions and JPO trials 4. Desirable form of the Hantei system 5. Opinions in the subcommittee Item 2 Design Law 1. Desirable forms of the JPO s dispute settlement systems on the validity of rights 4

6 2. Desirable form of suits against decisions in trials for invalidation 3. Improvement of the communication between infringement actions and JPO trials 4. Desirable form of the Hantei system 5. Opinions in the subcommittee Item 3 Trademark Law 1. Desirable forms of the JPO s dispute settlement systems on the validity of rights 2. Desirable form of suits against decisions in trials for invalidation 3. Improvement of the communication between infringement actions and JPO trials 4. Desirable form of the Hantei system 5. Opinions in the subcommittee Chapter 3 Summary of Analyses Section 1 Issues to be Immediately Addressed 1. Matters related to amendment of law (1) Consolidation/integration of the opposition system and the invalidation trial system (2) Framework for the new invalidation trial system (3) Action against a trial decision under the new invalidation trial system (4) Desirable form of invalidation trial under the Utility Model Law, Design Law, and Trademark Law 2. Revision of practice (1) Optimization of the attack/defense opportunities (2) Elimination of demands that are based on insufficient grounds (3) Improvement of operations for more prompt and precise proceedings (4) Improvement of communication between infringement actions and JPO invalidation trials (5) Further improvement of the quality of the JPO s examination and proceedings Section 2 Issues to be Discussed Further 1. Relation between infringement actions and JPO trials (1) Adjustment and coordination between infringement actions and JPO trials (2) Infringement actions and JPO trials 2. Desirable form of the Hantei system 3. Non-publication of trade secrets in invalidation trials 4. Expansion of the court s scope of proceedings in an action against a trial decision 5

7 References [Reference 1] History of Dispute Settlement Systems [Reference 2] Operational Measures for Ensuring Prompt and Precise Trial Proceedings [Reference 3] Systems for Correcting Patents in Other Countries [Reference 4] Number and Rate of Infringement Cases and Trials for Invalidation [Reference 5] Difference between the Determination on Validity of Patent Made by a Court in an Infringement Case and the Determination Made by the JPO in a Trial for Invalidation In the Intellectual Property Policy Outline adopted on July 3, 2002, the conventional term Chiteki Shoyuken was replaced with Chiteki Zaisan or Chiteki Zaisanken. Similarly, the term Kogyo Shoyuken was replaced with Sangyo Zaisan or Sangyo Zaisanken. The report in Japanese uses the new terms in accordance with these replacements. 6

8 Chapter 1 Overview and Problems of Legal Systems Concerning Dispute Settlement Section 1 Present Status of Dispute Settlement Systems for Patent Rights Disputes over patent rights are divided into disputes over patentability, disputes over the validity of rights, and disputes over the existence of infringing acts. The JPO settles disputes over patentability in appeals against examiner s decision of refusal, disputes over the validity of rights in trials for invalidation, oppositions to the grant of a patent and trials for correction, and disputes over the existence of infringing acts by the advisory opinion on the technical scope of a patented invention (hereinafter called Hantei ). Though amendments have been made to these JPO dispute settlement systems on a case-by-case basis along with changes of the time, the essential role to be played by these systems in settling disputes over patent rights has never changed since the establishment of the Patent Law in the Meiji period. In most countries as in Japan, patent offices, which are administrative bodies, play a role in dispute settlement in addition to courts. 1. Types of dispute settlement systems Disputes over patent rights are divided into disputes over patentability, disputes over the validity of rights, and disputes over the existence of infringing acts. Disputes over patentability are settled in appeals against decisions of refusal, disputes over the validity of rights in trials for invalidation, oppositions to the grant of a patent and trials for correction, and disputes over the existence of infringing acts in infringement actions, Alternative Dispute Resolution (ADR) and Hantei. Among these systems, oppositions to the grant of a patent, trials for invalidation and trials for correction are procedures to examine the appropriateness of the JPO s administrative dispositions on patent rights. Infringement actions, ADR and Hantei are procedures to judge upon the existence of infringing acts. Infringement actions and ADR also serve as procedures to consider compensation for damage and injunction in the case where an infringement is recognized. 7

9 Before grant of patent Disputes over patentability Appeals against decisions of refusal After grant of patent Disputes over validity of rights Disputes over the existence of infringing acts Oppositions to the grant of a patent Trials for invalidation Trials for correction Infringement actions ADR Hantei Those in boxes are procedures processed by the JPO Appeals Department. (1) Disputes over patentability and the validity of rights (i) Procedures at the JPO Disputes over patentability and disputes over the validity of rights are settled in complaint procedures against administrative dispositions by the JPO, i.e. decision to refuse a patent application or decision to grant a patent. These procedures are: appeals against examiner s decision of refusal, trials for invalidation, and oppositions to the grant of a patent 1. Trials for invalidation/correction and oppositions to the grant of a patent are carried out at the JPO Appeals Department by trial examiners who have technical knowledge and experience in patent examination 2, through administrative procedures that are relatively simpler than judicial procedures. In these trials and oppositions that are administrative procedures, trial examiners may examine additional evidence ex officio unlike in lawsuits where, in principle, judgments may only be made based on the arguments of the parties involved in the lawsuit. (ii) Procedures at court Appeal/trial decisions and rulings on oppositions are administrative dispositions made by the JPO as an administrative body, and suits may be filed to courts against these decisions and rulings. Since it would not always be beneficial to parties concerned in terms of legal fees if they had to start judicial procedures at district courts in order to obtain judgments on the appeal/trial decisions or rulings on oppositions which went through certain procedures, suits against appeal/trial decisions 1 In the past, opportunities to file oppositions had been given before the grant of patent for the purpose of examination by the public. However, in order to avoid a longer period before grant due to the pre-grant opposition system, the system was revised to the post-grant opposition system in the legal amendment in 1994 (effective in January 1996). 2 Trial examiners should satisfy requirements such as having experience of serving as examiners for not less than five years (Article 13 of the Patent Law Enforcement Law). 8

10 shall directly be filed to the Tokyo High Court, skipping over the first instance. In The Tokyo High Court, the Intellectual Property Department is established to specifically deal with cases relating to intellectual property rights such as patent rights, and judicial research officials are assigned to support judges by providing them with technical knowledge. Parties who are unsatisfied with judgments by the Tokyo High Court may further appeal to the Supreme Court. (2) Disputes over the existence of infringing acts (i) Procedures at court Disputes over the existence of infringing acts are deemed to be disputes over the appropriateness of enforcement of private rights (right to claim for compensation for damage, right to claim for injunction, etc.), and are settled in civil lawsuits, beginning with the first instance at district courts. In both the Tokyo and Osaka District Courts, with which more than 70% of all cases relating to intellectual property rights including industrial property rights such as patent rights are filed, the Intellectual Property Department is established to specifically deal with such intellectual property-related cases, and judicial research officials are assigned to support judges by providing them with technical knowledge on industrial property rights. Parties who are dissatisfied with judgments by these district courts may appeal to High Courts and further to the Supreme Court. In infringement actions, for the purpose of respecting the tentative validity of an administrative disposition of granting a patent, judgments shall in principle be made on the premises that the patent right in dispute is valid. For earlier settlement of intellectual property-related disputes, the Tokyo and Osaka District Courts sometimes refer the case to a civil mediation procedure in which parties concerned negotiate with each other to settle the dispute in the audience of members of the mediation committee selected from judges and lawyers/patent attorneys who have good knowledge of intellectual property (technical mediation system). (ii) Procedures to judge the existence of infringing acts other than lawsuits Disputes may be settled in ADR such as mediation and arbitration, instead of in civil lawsuits. There are private ADR institutes that deal with intellectual property-related disputes, such as the Japan Arbitration Center for Intellectual Property which was established jointly by the Japan Federation of Bar Associations and the Japan Patent Attorneys Association in 1998 and the Japan Commercial Arbitration Association which was established in In private ADR, parties concerned may by themselves choose who is to judge the case and what procedures are to be taken and how, and procedures are usually carried out behind closed doors. However, since the parties concerned must pay all the expenses for the procedures, it is usually impossible for them to appeal against the ADR decision. The JPO Appeals Department provides advisory opinions as Hantei on the 9

11 scope of patent right, which is deemed to be part of ADR. 2. Use of dispute settlement systems Annually, about 20,000 appeals against decision of refusal are filed to dispute over patentability, and the number has been increasing in recent years. The annual number of suits against appeal decisions is about 60. (Fig.) Trend in the number of appeals against decision of refusal Annually, about 4,000 oppositions to the grant of a patent are filed to dispute over the validity of rights, and the number has been decreasing after hitting a record of about 7,000 when the post-grant opposition system was introduced in The annual number of suits against rulings of oppositions is about 150. (Fig.) Trend in the number of oppositions to the grant of a patent The annual number of trials for invalidation is about 300, which has significantly increased in recent years. The number of suits against trial decisions is about 150. (Fig.) Trend in the number of trials for invalidation As the backgrounds of the decrease in the number of oppositions shown above, it is pointed out that (1) strict patent examination, which has been carried out at the JPO Examination Departments in recent years, has increased the number and the rate of decisions of refusal while decreasing the number and the rate of decisions of grant, and (2) people are reluctant to use the opposition system because opponents cannot actively participate in the procedures due to the structure of proceedings 3. (Fig.) Trends in the number of decisions of grant and in the rate of decisions of refusal Number of decisions of grant Rate of decisions of refusal Among ADR systems, the number of cases of using the JPO s Hantei system had been 3 Under the post-grant opposition system, which is designed as a simple system, once an opposition is filed to the JPO, the procedures to re-examine the patent in dispute are carried out only between the JPO and the patentee. 10

12 increasing since However, after reaching a peak in 2000, it decreased to 75 in By contrast, private ADR institutes such as the Japan Arbitration Center for Intellectual Property have been used less frequently 4. Trend in the number of requests for Hantei 3. Situations in other countries Disputes over the existence of infringing acts are settled at courts in civil lawsuits in most countries while disputes over the validity of rights are settled in various systems depending on the country. (i) United States In the United States, the validity of patents is disputed in patent infringement actions or actions for declaration of invalidation of patents at federal district courts. From July 1, 2000 to June 30, 2001, 2,386 cases were handled. The U.S. litigation systems that are characterized by the jury system and the discovery system have problems such as low predictability of the results and high legal expenses. The Court of Appeals for the Federal Circuit (CAFC), which was established in 1982 for the uniformity of judgments, has an exclusive jurisdiction over appeals against infringement actions. Four out of twelve judges at the CAFC have technical knowledge, and three law clerks with technical knowledge are assigned to support each technical judge. Since judicial procedures require a lot of time and money, the re-examination system was introduced in July 1981 as a system for settling disputes over the validity of patents at the USPTO, a technically specialized agency, more promptly and at lower cost than in lawsuits. However, there are various restrictions in the re-examination system: the requesting person may only argue based on new publications that were not judged by the examiner in the process of granting the patent; third parties are not given enough opportunities to present their opinions; appeals may be filed within the USPTO but they may not be filed with courts. Due to such restrictions, the re-examination system is not sufficiently exploited as a system to settle disputes over the validity of patents (the re-examination system is annually used in about 400 cases, half of which are cases in which patentees use the system when they themselves find prior art and desire to correct the claims.) In light of these disadvantages of the re-examination system, a new system was introduced in 1999 to provide third parties with more opportunities to present their opinions as the inter-partes 4 Until FY 2001, only 22 requests for mediation/arbitration were filed to the Japan Intellectual Property Arbitration Center. 11

13 re-examination system (only applicable to patents concerning applications filed on or before November 29, 1999). However, this system is also criticized for its restrictions in that the third-party requesting person may not appeal to courts or argue the same reason for invalidation in an infringement action as that argued in the re-examination procedures once the USPTO made the final judgment. Currently, a bill for legal amendment is under deliberation with respect to the third-party requesting person s right of appeal to court. (ii) Germany In Germany, the validity of patents is disputed in actions for declaration of invalidation of patents at the Federal Patent Court. Though not expressly provided in law, the validity of patents may not be disputed in infringement actions at district courts. The Federal Patent Court was established in 1961, consisting of the former Invalidation Department (dealing with cases concerning invalidation of patent) and the Appeal Department (dealing with appeals against decisions of refusal and rulings on opposition), both of which were separated and reorganized from the Patent Office. In the Invalidation Department of the Federal Patent Court, the council of five judges makes judgments on invalidation of patent. The council consists of one legal member as the presiding judge, another legal member, and three technical members. Judges examine facts and evidence ex officio. (iii) European Patent Convention (EPC) An EPC application is a bundle of patent applications designating EPC members as designated countries, and after the European Patent Office (EPO) grants a patent right to an EPC application, domestic patent rights are obtained in the designated countries. As a result, disputes over the validity of patents are handled by dispute resolution systems under national laws of individual countries. However, the EPC provides for the opposition system with the aim of allowing the EPO to uniformly revoke patents based on an EPC patent within a certain period of time after the grant of patent. In 1999, the European Commission proposed establishing the European Community Patent which would be effective over the whole EU area and would create and extinguish a patent right integrally in the area. Along with this proposal, the European Commission also proposed establishing a court that would specifically deal with disputes over infringements and the validity of European Community Patents. 12

14 Section 2 Current Efforts and Problems Concerning Dispute Settlement Systems In a growing awareness of intellectual property rights, the JPO has been making efforts to reinforce and improve dispute settlement systems through repeated system revisions. Currently, there is a further growing call for the improvement of the systems in order to settle disputes on intellectual property rights more promptly and precisely. In response to such call, recommendations have been presented on various problems of current dispute settlement systems in governmental forums, such as the Strategic Council on Intellectual Property, the Working Group on Intellectual Property Strategy of the Council for Science and Technology Policy, the Task Force on Industrial Competitiveness and Intellectual Property Policy, and the Commission on the Civil Code and the Law of Procedure in Actions relating to Personal Status on the Legislative Council of the Ministry of Justice. 1. JPO trial system A person who intends to dispute over the validity of a patent at the JPO may demand a trial for the invalidation of the patent at the JPO, and if dissatisfied with the trial decision, the person may file a lawsuit for the revocation of the patent to the Tokyo High Court. This system, in which the JPO is entrusted as a technical agency with the primary judgment on the maintenance or revocation of a patent right, has continued from the pre-war trial system (see Reference 1), and has the following advantages. (i) Technical matters on a patent right are fully examined at the JPO, an administrative agency having a number of employees who specialize in the technology concerned, in an effort to settle the dispute, which reduces qualitative and quantitative burden on courts. (ii) The JPO may examine ex officio additional evidence other than that produced by the parties concerned and review the judgment on the grant of a patent from its independent viewpoint as an administrative agency. (iii) Judgments at trial (trial decisions) are considered as administrative dispositions and they are effective not only to the parties concerned but also to third parties. (iv) Trials may be demanded to prevent disputes before they become obvious. Following the recent pro-patent policy, the JPO is currently requested to examine patentability more precisely so that patentable inventions are properly patented. In light of this, the JPO is making various efforts to improve the trial proceedings including positive use of oral trial. As for recent appeal/trial decisions, for example, among all decisions on appeals against decision of refusal, the rate of decisions to refuse patent applications increased from about 20% in 1997 to about 40% in Such tendency is also seen for rulings on oppositions to the grant of a 13

15 patent and decisions on trials for invalidation: Among all rulings on oppositions to the grant of a patent, the rate of decisions to revoke patents increased from about 20% in 1997 to about 35% in 2001 while among all decisions on trials for invalidation, the rate of decisions to invalidate patents increased from about 30% in 1997 to about 50% in Thus, the JPO is becoming stricter in judging patentability 5. (Fig.) Trend in the rate of decisions to refuse patent applications in appeals against decision of refusal Rate of decisions to refuse patent applications * The rate of decisions to refuse applications was low in 1996 because more decisions to grant patents were given than usual due to the abolishment of the Kokoku system (system of publication of examined applications for oppositions). (Fig.) Trend in the rate of decisions to invalidate patents and in the rate of rulings to revoke patents Rate of decisions to invalidate patents Rate of rulings to revoke patents * Including decisions to partially invalidate patents ** Including rulings to partially revoke patents Considering that it is important to ensure effective protection of patent rights by promptly settling disputes over the validity of patent rights, the JPO carries out procedures for oppositions and for invalidation trials in preference to procedures for appeals against decision of refusal that are to be handled before the grant of patent. Furthermore, since oppositions and invalidation trials are closely related to infringement lawsuits, the JPO aims to identify and promptly examine cases that are related to infringement lawsuits, by promoting information exchange with courts. In addition, the JPO has experimentally introduced the planned proceedings, by which the JPO prepares a schedule for notification of appeal/trial decision and carries out trial proceedings according to this schedule, with the aim of promptly promoting trial proceedings. With all these efforts, the JPO has succeeded in significantly reducing the duration of proceedings for appeals against decision of refusal to 18 months and the duration for oppositions and invalidation trials, which are related to infringement actions, to 12 months. On the other hand, as the current systems also have various problems, a lot of 5 Such tendency of stricter judgment is also seen in examination of patent applications. Considering that higher-quality examination is required in examination of patent application under the pro-patent policy, the JPO strictly judges upon the requirements for patentability such as novelty and inventive steps. As a result, the rate of decision of refusal increased from about 35% in 1998 to about 45% in

16 recommendations have been presented for one-stop dispute resolution, as well as for prompt and precise dispute settlement. The Task Force on Industrial Competitiveness and Intellectual Property Policy points out that it is necessary to review the significance of coexistence of the opposition system and the invalidation trial system and to distinguish between the role of a judgment on the validity of a patent made in an infringement action and the role of a decision on a trial for invalidation 6. The Working Group on Intellectual Property Strategy of the Council for Science and Technology Policy proposes launching the review of the current systems with the objective of ensuring one-stop dispute resolution. The Strategic Council on Intellectual Property proposes fundamentally reviewing the relation of the opposition and invalidation/correction trial systems with court procedures Court procedures Recently, courts have been promoting reinforcement of the specialized processing systems to deal with increasing intellectual property-related cases, and making efforts to ensure more prompt and effective trial proceedings by introducing the planned proceedings. The Recommendations of the Judicial Reform Council prepared in June 2001 suggested that, with the aim of reducing the duration of proceedings for cases related to intellectual property rights by about half, in order to make the specialized departments at both the Tokyo and Osaka District Courts function substantially as patent courts, the specialized processing system of these courts should be further reinforced by concentration of both judges with strengthened expertise and court research officials who are technical experts, the introduction of the expert commissioner system, and the granting to the Tokyo and Osaka District Courts of exclusive jurisdiction for cases related to patent rights, utility model rights, etc. Following this recommendation, the Commission on the Civil Code and the Law of Procedure in Actions relating to Personal Status on the Legislative Council of the Ministry of Justice started deliberation in September 2001 and published the Interim Draft Proposal of the Amendment of the Code of Civil Procedure, which presented proposals on the expert commission system and on the granting to the Tokyo and Osaka District Courts of exclusive jurisdiction. After further deliberation, a bill for the amendment of the Code of Civil Procedure will be submitted to the ordinary Diet session of With respect to the granting to a high court of exclusive jurisdiction over intellectual property-related cases in order to reinforce the specialized processing system of the court, the Strategic Council on Intellectual Property, the Task Force on Intellectual Property Strategy of the 6 Report by the Working Group on Industrial Competitiveness and Intellectual Property Policy (June 5, 2002), p Intellectual Property Policy Outline (July 3, 2002), p

17 Council for Science and Technology Policy, and the Task Force on Industrial Competitiveness and Intellectual Property Policy have proposed concentration of jurisdiction at the Tokyo High Court. The Commission on the Civil Code and the Law of Procedure in Actions relating to Personal Status on the Legislative Council of the Ministry of Justice is currently deliberating this issue. As for expansion of the human base of the courts, the Committee is discussing introduction of an expert commission system. The Strategic Council on Intellectual Property has suggested further consideration of an ideal form of involvement of experts in court procedures, including review of the current judicial research official system. 3. ADR ADR is expected to play a role of promoting autonomous settlement of disputes between parties concerned before they go to court and of dealing with cases that are essentially not fit for judicial proceedings. The Recommendations of the Judicial Reform Council suggest that ADR by the Japan Arbitration Center for Intellectual Property and the Japan Patent Office (Hantei system) should be expanded and vitalized, and coordination between litigation and ADR should be reinforced, in light of the fact that it is also necessary to make possible flexible settlements that are not based on judicial proceedings for proper and prompt processing of disputes over intellectual property rights 8. In response to the recommendations, the Liaison Conference of Relevant Ministries and Agencies and the Consultation Group on ADR of the Office for Promotion of Justice System Reform have been established to discuss measures for expanding and vitalizing overall ADR activities. The Strategic Council on Intellectual Property also recommends that consideration should be given to functional enhancement and vitalization of ADR institutions as means for resolving disputes over intellectual property rights. 8 Recommendations of the Judicial Reform Council (June 12, 2001), p

18 Chapter 2 Concrete Direction for Revising the Systems Section 1 Desirable Form of the JPO s Dispute Settlement Systems Related to the Validity of Patents Item 1 Desirable Form of the System of Opposition against Grant of a Patent and the System of Trial for Invalidation The dispute settlement systems related to the validity of patents are expected to achieve: (1) prompt proceedings; (2) one-stop dispute resolution; and (3) highly reliable determination. With regard to the current system of opposition against grant of a patent (opposition system) and system of trial for invalidation (invalidation trial system), the detriment of having two similar systems for determining the validity of a patent and the changes in the needs of the opposition system users have been pointed out. Therefore, it would be necessary to consider revision of the current opposition system and invalidation trial system. The concrete direction for the revision can be either: (1) to consolidate/integrate the two systems; or (2) to improve the systems as two separate systems. In either way, the resulting system(s) should serve both functions: to resolve disputes between parties including potential disputes and to have the JPO self-review its administrative dispositions. 1. Demands for the JPO s dispute settlement systems Presently, the JPO s dispute settlement systems on the validity of patents are subject to such demands as shown below. It is necessary to examine the extent in which each of these demands should be met. (i) Demand for prompt proceedings The increased importance of patents has given an impetus to the recent demand for speeding up infringement actions. Since the validity of a patent often serves as an important premise in an infringement action, speedier processing is also being demanded for JPO trials on the validity of patents. (ii) Demand for one-stop dispute resolution With respect to JPO trial cases related to infringement actions, it has become popular to have multiple cases brought before the JPO over the validity of a single patent right or to have both an opposition and an invalidation trial filed by the same person for a single patent right. In addition, 17

19 even if only one trial were filed on the validity of a single patent right, it often takes a long time until the dispute is finally settled since the case is sometimes remanded to the JPO after being appealed to the High Court. Because such a trend is particularly distinctive for important patents that have large social impacts, adequate measures are being sought both for the stability of rights and for reducing the patentee s burden to deal with such disputes. From the viewpoint of adequate protection of patent rights, it would be necessary to not only settle the individual trial cases, but to rationally resolve multiple cases as a whole if they are related to a single patent right. (iii) Demand for highly reliable determination While precise determination by trial examiners, who have technical expertise, is sought for in disputes over the validity of patents, the frequent occurrence of disputes over highly technical patents with the advancement and increased complexity of technology in recent years is further fueling such demand. 2. Current system and problems thereof (1) Current system Currently, there are two systems in which the JPO determines the validity of patents: the opposition against grant of a patent system and the trial for invalidation system. Although a pre-grant opposition system had been adopted until 1996 from the perspective of examination by the public, in 1996, the system shifted to a post-grant opposition system in which oppositions can be filed after the grant of a patent with the purpose of speeding up the grant of right. At the time of the above revision, opinions were divided between those who wished to streamline and integrate the opposition system and the trial for invalidation system and those who wished to leave the opposition system as a simple reviewing procedure. In the end, a decision was made to shift the pre-grant system to a post-grant system on the basis of clarifying its difference with the invalidation trial by adopting an ex parte structure between the patentee and the JPO, instead of an inter partes structure as adopted in the pre-grant system. In addition to these JPO systems for determining the validity of patents, it has become possible for the infringement court to judge, to a certain extent, whether the grounds for invalidation are found in the patent, ever since the Supreme Court decision in the Kilby case 9 in April As a result, the three systems presently co-exist as systems for determining the validity of patents. 9 Supreme Court decision on April 11, 2000 (Supreme Court, 1998 (O) No. 364). See p. 83 et seq for details. 18

20 Major Differences between the Opposition System and the Trial for Invalidation System Opposition Trial for Invalidation Time for Demand/Filing Within six months from Any time registration Eligible Demandant Any person Interested person Grounds for Demand Only grounds for public interest Grounds for public interest + attribution of right Structure of Proceedings Between the patentee and the JPO (ex parte) Between the patentee and the demandant of the invalidation trial (inter partes) + principle of examination of evidence ex Appeal Only the patentee can appeal when a ruling to revoke the patent has been rendered officio Either party can appeal against a trial decision to invalidate/maintain the patent (2) Problems in the current system (i) Problems pertaining to the co-existence of the opposition system and the trial for invalidation system (a) Difficulty in conducting concurrent proceedings Sometimes, the opposition procedure and the invalidation trial procedure pend concurrently before the JPO in cases of patents drawing much attention from competitors, important patents, and patents related to infringement actions. Even in such cases, the procedures cannot be merged due to the structural differences between the two systems, and because a demand for correction can be submitted separately under each system, it is also difficult to carry out the procedures concurrently. As a consequence, the final settlement of the dispute over the patent validity takes longer and the patentee must engage in a larger number of cases when the patent in question is an important one that particularly needs prompt processing. 19

21 Grant of right Oppositions (4 cases) H Trial for invalidation H Concurrent pending of procedures under multiple systems Demand for correction Notice of reasons for revocation & demand for correction Acceptance of correction Trial decision of invalidation Acceptance of correction Ruling to maintain Appeal to high court Trial for invalidation Multiple demands for invalidation trials made by a single demandant Court decision to cancel the trial decision Trial decision is cancelled by the correction becoming final and conclusive Trial decision that the patent is valid Trial decision Merge of that the procedures patent is valid Trial for invalidation Trial for invalidation Trial for invalidation Appeal to high court Appeal to high court Trial for invalidation Merge of procedures Demand for correction Trial for invalidation Court decision to cancel the trial decision Court decision to cancel the trial decision Demand for correction Withdrawal of demand Withdrawal of demand Withdrawal of demand Notice of grounds for invalidation (b) Overlapping of patent reviewing procedures within the JPO Furthermore, due to the co-existence of the two systems, a person seeking invalidation of a patent tends to file a simpler, less-burdening opposition first and demand a trial for invalidation if he/she is dissatisfied with the result of the opposition procedure. Since the same party s patent reviewing procedure would be repeated within the JPO as a result, it contributes to lengthening the final settlement of the whole dispute Of the trials for invalidation demanded from 1998 to April 2001, the number of cases in which an opposition was also filed for the same right was 306 (approximately 24% of the total number of invalidation trial cases) and the number of cases in which the demandant of the invalidation trial and that of the opposition trial were the same person was 114 (approximately 9% of the total number of invalidation trial cases, but as oppositions can be filed under any person s name, the procedures may be overlapping even more in actuality). The number of demands for invalidation trials peaks around one year from the patent registration, but as for the cases in which the demandants of the invalidation trial and the opposition trial are the same, the number peaks around two years from the patent registration, indicating the tendency that additional demands for invalidation trials prolong the 20

22 (ii) Problems specific to the opposition system (a) Demand for the opponent s positive participation In the post-grant opposition system, the patent reviewing procedure only takes place between the JPO and the patentee once an opposition has been filed. Thus, the opponent neither has the opportunity to state his/her opinions nor the eligibility to appeal against a ruling to maintain the patent. However, some users of the system are dissatisfied with their lack of opportunity to state their opinions during the proceedings, causing them to further demand an invalidation trial against a ruling to maintain the patent. Therefore, there is growing demand for allowing the opponent to make positive participation in the procedure. (b) Overlapping of oppositions Under the present post-grant opposition system, there are fewer cases in which two or more oppositions are filed against a single patent right, compared to the time of the pre-grant opposition system. However, multiple oppositions still concentrate on certain patents, such as those drawing much attention from competitors and important patents. In fact, during the period from 1996 to 2001, 36% of the overall oppositions concentrated on 18% of the opposed patents on the whole, and there was even a patent against which 23 oppositions were filed. One of the reasons is that multiple opponents are unable to learn the content of oppositions of the other opponents, because due to preparation reasons, the filing of oppositions concentrate near the end of the time limit of six months after the grant of the right for filing an opposition. If the opposition system had no time limit, a potential opponent may closely examine the content of opposition of another opponent in advance, and refrain from filing an opposition if he/she judges that the other opponent s opposition had sufficient cause. However, as the current system has a time limit, it triggers unnecessary oppositions in an overlapped manner and imposes burden on both the patentee and the opponents as a result. Concentration of Oppositions oppositions 0.4% Five or more oppositions 4% Three or more oppositions 16% Two or more oppositions 36% One opposition dispute settlement. 21

23 3. Situations in other countries Although the infringement court s ability to determine the validity of patents differs by country, most countries have a procedure to determine the validity of patents within the national patent office. Such countries as Holland and France have a system where the patent validity is only determined by court and no such function resides with the administrative body. These are exceptional countries that have special circumstances, such as not conducting substantive examination at the administrative body. The procedure for determining the validity of patents is usually taken at the patent office if the country has a specialized administrative body as such. Even in the United States, which used to be exceptional in conducting declaratory actions seeking invalidation in court, the Patent and Trademark Office introduced the reexamination system for reviewing rights in the 1980s. In 1999, it further introduced the inter partes reexamination system allowing the requester more participation in the case for better convenience. 4. Concrete direction for revising the system (1) Basic concept Although there are a raison d être and a necessity for administrative determination on the validity of patents, the current system should be optimized and streamlined as a whole, considering that the co-existence of the opposition system and the invalidation trial system has come to cause adverse effects. From this viewpoint, it would be necessary to build a system that meets the basic demands, such as (1) prompt proceedings, (2) one-stop dispute resolution, and (3) highly reliable determination. (2) Concrete analysis The concrete direction for the revision can be either: (1) to consolidate/integrate the two systems; or (2) to improve the systems as two separate systems. (i) Consolidation/integration of the two systems In order to resolve the problems that arise from the co-existence of the current opposition system and the invalidation trial system, it would be more appropriate to unify the systems into a single system rather than having two separate systems. When the post-grant opposition system was introduced in 1994, the opposition system and the invalidation trial system were defined in such a manner that the former focuses on the JPO s self-review of its administrative dispositions and the latter focuses on resolving disputes between parties including potential disputes. In reality, however, the two systems both have aspects of 22

24 reviewing of administrative dispositions and dispute settlement, and users are not making clear distinction between the two systems in choosing which one they will use. Therefore, if the current systems were to be consolidated/integrated, the new system should cover both functions of the current two systems: to have the JPO self-review its administrative dispositions and to resolve disputes between parties including potential disputes. (2) Improvement of the systems as two separate systems When the current opposition system was adopted with the 1994 amendment, an opinion to leave the opposition system in the patent system as a simple reviewing procedure was respected, and a clear distinction was made with the procedural requirements for the trial for invalidation, such as adopting an ex parte structure between the patentee and the JPO instead of an inter partes structure. Considering such a background, it is also possible to leave the current opposition system and the invalidation trial system and redress the problems in the opposition system by sufficiently taking account of users demands for the opposition system. Possible revisions could include allowing the opponent more participation in the procedure, giving them the opportunity to state their opinions and produce evidence, and allowing them to appeal to the high court when the opposition fails. It should be noted, however, that if the opposition becomes extremely similar to the trial for invalidation as a result of the revision, there would be even less significance in the co-existence of the two systems, which already have many aspects in common. 5. Opinions in the subcommittee The majority opined that consolidation/integration of the opposition system and the invalidation trial system would be more appropriate in light of the detriments caused by the co-existence of the current two systems and the emerging new demands for the opposition system. As for the purport of the integrated system, some viewed that the only purport of the system should be to have the JPO self-review its administrative dispositions, which is expected in the current opposition system. However, the major opinion was that the new system should serve both functions of resolving disputes between parties including potential disputes, which is expected in the current invalidation trial system, and having the JPO self-review its administrative dispositions, which is expected in the current opposition system. In light of these opinions, it would be more appropriate to consolidate/integrate the opposition system and the invalidation trial system. In addition, the integrated system should serve the functions of both of the current two systems instead of principally serving the functions of either system. 23