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Enforcement of IP Rights in JAPAN

Enforcement of Intellectual Property Rights in Japan

1. What measures can an IP owner take in response to infringement of its intellectual property rights?

A lawsuit before court, provisional disposition (preliminary injunction or Karishobun in Japanese), conciliation and arbitration are available.

If the products in question are being imported, an injunction to have customs stop importation of the infringing products may be filed in accordance with the Customs Tariff Law. In this case, infringement is determined by customs officers and/or police officers, even for products infringing patents for high technology inventions. A criminal suit can also be filed, but is effective only if the subject products infringe a relatively simple patent, a utility model, a design right or a trademark right.

Before filing a lawsuit, a warning letter should be sent by contents-certified mail. In some cases, sending a warning letter to department stores and supermarkets, instead of the infringer, will have substantially the same effects as an injunction. In such case, however, a patent owner should confirm that infringement has actually occurred. Otherwise, it could be counter-sued and may have to provide compensation for damages.

If the infringer agrees to negotiate a settlement after receiving the warning letter, it is much less expensive than taking the case to the court. In addition to courts, disputes can be arbitrated by the Arbitration Center for Industrial Property, which was jointly established by the Japanese Bar Association and the Japan Patent Attorneys Association. Further, arbitration covering the whole area of commercial business is handled by the Japan Commercial Arbitration Association.

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2. What are the necessary documents or materials for taking such measures?

An attorney-at-law must be designated as a representative in every lawsuit before court, provisional disposition, conciliation or arbitration. Accordingly, a power of attorney is required.

Necessary documents or materials are as listed below.

1. Accurate name and address of the alleged infringer; name of the representative; detailed information concerning the infringing products (the actual infringing products in question, package, catalog, company profile, drawings and the like or other necessary information identifying the infringing products); approximate quantity of the manufactured infringing products and approximate date when selling of the infringing products began;

2. Registration number of the intellectual property right owned by the plaintiff; copy of the gazette disclosing the right; certificate proving the filing and prosecution procedures; accurate name and address of the owner of the intellectual property right; name of the representative; certificate signed by a notary public in case the plaintiff is a person or legal entity having neither domicile nor residence in Japan (in case of the latter, a certified corporate registration is acceptable).

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3. Tell us more about having Customs stop importation of infringing articles.

Customs Tariff Law Art. 21-1-5 prohibits importation of goods which infringe a patent, utility model, design, trademark, copyright, rights adjacent to copyrights and the right of layout-designs of integrated circuits. According to this article, a Customs Director can order seizure, disposal and reshipment of the infringing goods.

Based on trademark, copyrights and other neighboring rights, it is possible to file a "Request for Suspension of Import"; before the Customs Offices. In the case of patent rights, designs, utility models, it is possible to submit information relating to suspension of import before Customs Offices.

These two proceedings are essentially similar to each other in their effects. However, in the former, a requester of the suspension of import must post a considerably high bond in order to protect the innocent importer, who could suffer a lot of damages due to the suspension of import, if it is eventually determined that there is no infringement in the main suit.

Upon requesting the suspension of import, the following documents are required in addition to a written request for "Request for Suspension of Import":

1. Documents proving the existence of one's rights, such as copies of Official Gazettes, copies of the Trademark Register or documents proving copyrights;

2. Materials used to compare genuine products and counterfeit products, such as samples or photographs; and

3. (if necessary) relevant court decisions, copies of Japanese Patent Office's Interpretation, opinions from lawyers and warning letters.

These documents must be submitted to each of the designated Customs offices and their controlling offices. If all the Customs in Japan are to be designated, 9 copies of such documents must be submitted at the time of requesting and, after the request is accepted, an additional 111 copies of such documents must be submitted.

The effective term of the request is for two years, but the terms are renewable.

It should be noted that there are cases in which parallel import of genuine products is not deemed infringement of intellectual property rights.

Further information is available at the Customs Intellectual Property Information Center (CIPIC) or each Customs office.

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4. What are the costs (including official fees and attorney's fees) for taking the measures listed in Q1?

The official fees are determined based on the right claimed by the plaintiff. The amount of revenue stamps to be affixed to a petition is determined based on the total amount of the following three figures (the claimed right).

1. the amount of compensation for damages;

2. the amount of profit obtained by the plaintiff through an injunction;

Although it depends on the court, the amount of profit is calculated as follows. For a patent, utility model, or design right: the plaintiff's decrease in annual sales (or the annual sales of the defendant) x plaintiff's profitability (or defendant's profitability) x the number of remaining years of the right owned by theplaintiff x adjusting value (1/5 ~ 1/8)

3. expenses required for publishing an apology

If the amount of compensation for damages (listed in 1. above) is large,the amount of the revenue stamps can be lowered by claiming compensation for only part of the damages, especially when the chances of winning the case are low. In case of a provisional disposition, an injunction can be filed with revenue stamps equal to the amount of 1,500 yen.

Attorney's fees are basically determined in accordance with the value of the accused products. However, attorney's fees may vary, depending on the number of designated attorneys. An attorney's hourly charge is approximately 20,000 yen to 35,000 yen. However, as a general practice in Japan, an attorney starts to work for a client upon receipt of an advance payment of 1,000,000 yen to 10,000,000 yen. Accordingly, when nominating an attorney, it is advisable to negotiate and confirm what is included in the advance payment. In Japan an attorney-at-law has an exclusive license to act as an agent in civil and criminal cases. However, in a lawsuit concerning an intellectual property right, it is advisable that a patent attorney, who is a technical expert, be involved in most cases as an assistant. The cost required for nominating a patent attorney is 1,000,000 yen at minimum.

There is no official fee for requesting suspension of import or submitting information relating to infringing products. The attorney's fees vary depending on the case.

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5. What is the cost of a lawsuit including attorney's fees, government fees and other miscellaneous expenses?

The cost of litigation varies, depending on the amount of damages, how complicated the subject matter is, how much time is required for prosecution, and the selected attorney-at-law and patent attorney. In most cases, a lawsuit will cost no less than 1,000,000 yen even for provisional disposition and no less than 5,000,000 yen for the main suit.

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6. Are there any differences in the enforcement of the different kinds of intellectual property rights, i.e., patent, utility model, design and trademark?

Except for utility model rights, there is basically no difference in the procedures taken to enforce each intellectual property right. When sending a warning letter involving a utility model right, one must request the Japanese Patent Office for a utility model technology evaluation sheet (search report on prior art) and present the evaluation sheet with the warning letter. Trademark infringement is relatively easily understood by the Japanese courts in comparison to other intellectual property rights. However, in patent and utility model right infringement cases, where technical matters are disputed, and in design right infringement cases, where similarity between designs is disputed, the scope of the right cannot be easily determined. The Tokyo District Court and the Osaka District Court have special departments to handle intellectual property right infringement cases. However, other local district courts are less experienced in handling lawsuits concerning intellectual property right infringement and may have difficulties in understanding and/or interpreting the scope of a right or the technology concerned. Accordingly, depending on the scope of the right or the technology concerned, the court should be carefully selected. Furthermore, it is advisable that an opportunity to explain the relevant technology to the judges, after filing a law suit, be scheduled.

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7. Can a plaintiff freely select a court when bringing an Infringement suit?

The court in which an infringement suit may be filed is limited by certain restrictions. For an injunction, the court which has jurisdiction in the place where the defendant is located must be used. However, it is possible to file a lawsuit before the court where the infringement, such as manufacturing and sales of the articles that are the subject of injunction, occurred. By simultaneously claiming damages, it is possible to file a lawsuit before the court where the plaintiff is located.

As to a lawsuit relating to a patent or utility model, the right of layout-designs of integrated circuits, and the right of authorship of computer programs, it is possible to file a lawsuit in the Tokyo District Court if the jurisdiction is located north of the jurisdiction of the Nagoya High Court. Further, it is possible to file suit in the Osaka District Court if the jurisdiction is located south of the jurisdiction of the Nagoya High Court.

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8. How are damages calculated in court? Are punitive damages allowed in Japan? How are damages calculated if the patent covers only a part of the accused product?

Roughly, there are three types of damage calculations:

1. To estimate the lost profit of the proprietor as damages in accordance with the Civil Code Art. 709;

2. To estimate the amount of the profit earned by the infringer as damages in accordance with the Patent Law Art. 102-1; and

3. To estimate the amount equal to a license royalty as damages in accordance with the Patent Law Art. 102-3.

As for the amount of damages involved in an intellectual property right infringement case, in general, it has been assumed that the amount of the profit earned by the infringer is equal to the amount of damages suffered by the proprietor. In cases where it is difficult to determine and prove the infringer's profits, one may demand damages equal to a license royalty.

In case where the quantity of infringing products is confirmed and proven, the amount of lost profit is calculated as damages based on the quantity (the quantity of infringing products sold by the infringer x profitability (%) of the proprietor). The amount of damages, however, shall not exceed the production capability of the owner of an intellectual property right. Furthermore, the amount of damages that is equivalent to the patent license royalty calculated in consideration for actual individual circumstances can be demanded.

Under the amended Patent Law which will be effective as of January 1, 2000, the court will be able to order the other party to produce documents necessary not only for the assessment of the damage caused by the infringement, but also for proving the infringing act, unless the party has a legitimate reason for refusing to produce them (Patent Law 105(1)-1). Furthermore, the court will be able to order the party to produce documents for its review to allow the judges to determine whether the reason is legitimate. In this case, no one but the court will be able to peruse the submitted documents (so-called "in camera" system). Moreover, the amended Patent Law includes introduction of judgement of calculation of the damages (Art. 105 bis), and the enlarged discretionary power of the judge as to the finding of the amount of the damages (Art. 105 ter.).

At present, Japan does not allow for punitive damages. However, damages awards have been on the rise. For example, in the case of a stomach medicine called "H2 Blocker", damages in the amount of 30 billion yen were awarded.

In a case where a patent only covers a part, the damage is calculated taking into consideration the contribution of the part to the sales of the whole product. For example, if you claim damages that are equal to the amount of a royalty payment, let us assume that the total sales of the whole product is 100 million yen, that the royalty rate is 5 percent and that the contribution of the part to the whole product is 30 percent. The damage will be calculated as 1.50 million yen (i.e., 100 million x .005 x .30). However, it is always very difficult to determine the contribution rate.

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9. How long does it take to reach a decision in an infringement lawsuit?

In a civil law suit, it normally takes three to five years for the first hearing (local court) and one to three years for the second, and the third hearing, respectively. However, the time varies considerably case by case.

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10. Is there any institute which will conduct a search to determine whether there is any infringement of an intellectual property right in Japan?

No. Generally speaking, it is very difficult to conduct a search for infringing goods unless the occurrence of an infringement has already been discovered. If the infringing product is known, one may hire an inquiry agency or a private detective agency to conduct an investigation. In such case, investigation costs will be less expensive if the alleged infringer and the product(s) have already been located. However, such agencies do not have the ability to determine infringement.

Accordingly, an infringement search is usually conducted after obtaining an infringing product and roughly confirming the alleged infringer's name and address. The investigator confirms that the name, address, and representative of the alleged infringer are accurate. Furthermore, the investigator confirms the manufactured quantity and storage location of the infringing product. Such investigation costs are about 300,000 yen to 1,000,000 yen. An investigation confirming only whether the alleged infringer is making a profit would be relatively inexpensive (less than 100,000 yen).

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11. Can we order a law firm or patent firm to effect such a search?

Generally speaking, a law firm or patent firm does not provide such search or investigation services. Private investigation agencies are usually used to collect evidence of infringement. However, a law firm can arrange or contact an investigative firm for you.

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12. Is it effective to send a warning letter to infringer?

Yes. Although sending a warning letter to an infringer is not obligatory and thus has no legal effect, by doing so, the recipient is no longer able to claim that the infringing actions are either unknowing or negligent. Therefore, it provides a certain advantage to the sender in, for example, claiming damages.

Further, in claiming return of unjust profits, with a warning letter having been sent to the infringer, it will be easier to prove willfulness on the part of the infringer. This may lead to a higher damage award than in the case of innocent infringement.

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13. Is it necessary to send a warning letter prior to filing an infringement suit?

No, it is not obligatory to send a warning letter prior to filing an infringement suit. In a case where the validity of the patent appears to be uncertain or the remaining term is too short to provide satisfactory results, it may be advisable to file an infringement suit without prior warning.

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