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Enforcement of IP Rights in JAPAN

Defensive strategy in an infringement suit

1. When a foreign company introducing a product into the Japanese market receives a warning letter or a complaint from an IP owner alleging infringement of its rights, how should the foreign company respond? What is a recommended strategy?

First, one should consider the existence of the right in question, the details of the right, the efficacy of the right and whether the products in question are within the scope of the right. If the products are considered to be within the scope of the right, then one may consider whether there exist any reasons/rights under the provisions of the relevant law (Houteijisshiken in Japanese) which would allow it to continue to manufacture and/or sell the product in Japan.

If it is obvious that infringement has actually occurred, it is advisable to negotiate with the IP owner, regarding compensation for damage, disposition of infringing products, assignment of the property right and the possibility of granting a license. Not sending a reply letter should be avoided, not only because a lawsuit might be filed, but also because one might be forced to stop manufacturing and selling products due to provisional disposition.

If there is some doubt concerning the effectiveness of the IP right and whether infringement has actually occurred, one may argue such in the reply letter. One should not argue too far, however. From a strategic point of view, only necessary arguments should be made at this stage. In the case where there is some doubt concerning the effectiveness of the IP right, one may consider demanding an invalidation trial and/or requesting interpretation of the technical scope by the Japanese Patent Office. Before a lawsuit is filed by the proprietor, one may file a lawsuit to affirm non-existence of rights to claim injunction, a lawsuit to affirm non-existence of liability, a lawsuit to stop distribution of false facts or statements and/or a lawsuit to claim damages (based on Unfair Competition Prevention Law Art. 2-1-11.). After a lawsuit has been filed by the proprietor, one may request discontinuation of the lawsuit proceedings based on the invalidation trial (Patent Law 168-2).

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2. If a provisional attachment or provisional disposition (preliminary injunction or Karishobun in Japanese) is made, what should we do?

Since a provisional disposition takes effect immediately upon issuance, you, as a debtor, are obliged to counter it without being able to manufacture and sell the alleged infringing products. If you are not satisfied with the provisional disposition, you should immediately file an appeal in case you are a creditor or immediately proceed with requesting opposition against preservation or cancellation of preservation in case you are a debtor.

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3. Do prior user's rights exist under the Japanese system?

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Yes. Prior user's rights are acknowledged under the Patent Law Art. 79, Design Law Art. 29, and Trademark Law Art. 32. However, in order to claim prior user's right in a trademark, the mark must have been used in connection with his/her goods, without unfair purposes prior to the filing date of the other party's trademark and such use must be widely known.

4. Does license negotiation including obtaining a license or cross-license and buying a patent work effectively to resolve the dispute?

Yes. Although higher damage awards are now available due to recent amendments of the relevant laws, the expenses of a lawsuit, including the official fees and the attorney's fee, are still very hard to offset for both parties.

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5. Is an expert opinion such as a non-infringement opinion or an invalidity opinion effective for resolving the dispute? What is the cost for obtaining such an expert opinion from a patent attorney, patent agent or attorney-at-law?

An expert opinion would be helpful during negotiations for settlement. However, in a lawsuit, as long as the property right is still existing, the court must presume that the right is valid. If there is a high probability that the right is invalid, the right may be interpreted with a more limited scope without invalidating the right. The fee for an expert opinion is 480,000 yen or more.

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