Intellectual Property System in Japan Toshiko Takenaka, Ph.D. WRF/W. Hunter Simpson Prof. of Tech Law, Director, CASRIP, University of Washington School of Law

Outline Overview of Japan’s IP System Japan’s National IP Strategy Int’l Agreements Infrastructures Domestic laws Japan’s National IP Strategy Basic IP Law and Its Implementation Evaluation of Impact from National IP Strategy

IP System Overview

Int’l Agreements Paris Convention (1883) Berne Convention (1886) Industrial Property National Treatment; Right of Priority; Independence of Patents Berne Convention (1886) Copyright No Formality Requirement

Int’l Agreements WTO TRIPS (1994) Industrial Property; Copyright; Geographical Indication; IC Layout Designs; Trade Secrets; Licenses Most favored Nation Treatment IP Enforcement

Overview Industrial Property – JPO-METI Patents and Utility Model Industrial Designs Trademark (Geographical Indications) Unfair Competition Trade secrets, trade dress, unregistered TM IC Layout-Designs Copyright & Related Rights– MEXT

Patents Eligible Subject Matter First-to-File Principle Living subject matter; software Medical methods First-to-File Principle 6 month grace period (scope limited) Substantive Examination Domestic Priority System No opposition proceeding Patent Term: 20 years from filing

Comparative Law Business Method; Computer Software U.S.: Bilski Machine-or-Transformation Test Applicable to process claims Meaning limits to the claim scope Tied to a machine, manufacture or composition of matter or Transform an article into a different status or thing

Comparative Law Business Method; Computer Software U.S.: Bilski Machine prong Mere field-of-use limitation insufficient Insignificant post-solution activities insufficient Transformation prong Not limited to a physical object or substance Include electric signal representative of a physical object or substance

Comparative Law Business Method; Computer Software Japan: Patent Act Article 2: Definition of Statutory Invention "Invention" in this Act means the highly advanced creation of technical ideas utilizing the laws of nature.

Comparative Law Business Method; Computer Software JPO Examination Guidelines Non-statutory Inventions A law of nature as such Mere discoveries Those contrary to a law of nature Those in which a law of nature is not utilized Example: A method of collecting money for an electricity bill or a gas bill etc., by rounding off the total amount to be collected to the nearest 10 yen unit.

Comparative Law Business Method; Computer Software As a Whole Approach Even if a claim includes an element which utilizes a law of nature, claimed subject matter as a whole must utilize a law of nature Business methods which are not tied to a machine fall into this category. Computer Software-Related Inventions A claim utilizes a law of nature and thus patent-eligible if it passes Japanese machine test.

Comparative Law Business Method; Computer Software JPO Examination Guidelines Japanese Machine Test Hardware resources must concretely execute information processing through software Reading the clamed software into a computer results in a machine for a special use Such machine provides a concrete means in which software and hardware resources are cooperatively working so as to realize the specific use through arithmetic operation or manipulation of information

Comparative Law Business Method; Computer Software JPO Examination Guidelines Examples of Statutory Inventions Software providing control of a machine or data processing for the control Software providing data processing based on the physical or technical properties of an object

Patents Exclusive Rights Limitations Making, using, offering for assigning & exporting, assigning, importing & exporting a patented product Using a patented process or using, offering for assignment & exporting, assigning, importing & exporting the product obtained by the process Limitations Private use; experimental use

Patents Scope of Protection Defense of Invalidity Claims define the scope of exclusivity Reference to the specification and drawings Literal Infringement Doctrine of Equivalents Defense of Invalidity Infringement proceeding Invalidation trial at JPO

Utility Model Petite Patent System Eligible Subject Matter Method is excluded from eligibility No Substantial Examination Eligible subject matter Limitation on Enforcement JPO’s validity certificate is necessary Protection Term: 6 years from filing

Industrial Designs Eligible Subject Matter Substantive Examination Shape, pattern or color or any combination of an article Substantive Examination Novelty and nonobviousness Protection Term: 15 years from filing

Trademarks Unfair Competition Registered mark: Trademark law Characters, figures, signs, three-dimensional shapes of goods Limited scope of eligible subject matter Unregistered mark: UCPL Well known mark Famous mark Trade dress protection

Trademarks Unfair Competition Trade Dress Protection Difficult to obtain a registration No inherently Distinctive Very difficult to establish secondary meaning No protection for color as such Unregistered Trade Dress New design in Japanese Market Automatic three year protection

Trade Secret Misappropriation of Proprietary Information The act of acquiring a trade secret while being aware that such trade secret has been acquired through improper acquisition or, through gross negligence, not being aware of such matter; or the act of using or disclosing a trade secret so acquired; The act of using or disclosing a trade secret after becoming aware, subsequent to its acquisition, that such trade secret has been acquired through improper acquisition or, through gross negligence, not becoming aware of such matter; The act of using or disclosing a trade secret which has been disclosed by the business entity holding it for the purpose of unfair business competition or otherwise acquiring an unfair benefit, or for the purpose of inflicting injury on such holder;

Trade Secret The act of acquiring a trade secret while being aware or, through gross negligence, not being aware that there has been an improper disclosure of such trade secret (defined, in this case and hereinafter, in the case stipulated in the previous item, as an act of disclosing a trade secret for the purpose stipulated in such item, or an act of disclosing a trade secret in breach of a legal duty to maintain secrecy) or that such trade secret has been acquired through improper disclosure; or the act of using or disclosing a trade secret so acquired; The act of using or disclosing an acquired trade secret after becoming aware, subsequent to its acquisition, that there has been improper disclosure of such trade secret or that such trade secret has been acquired through improper disclosure, or, through gross negligence, not being aware of such matter;

Copyrights Author’s Rights Moral Rights Divulgence: If or how his work is published. Authorship: how his authorship is represented in the work. Integrity: Preventing the modification of her work Economic Rights Reproduction Adaptation Communication

Copyrights Neighboring Rights Performer’s rights Phonogram producers’ rights Broadcasters’ and wire diffusers’ rights

Copyright Conditions for Protection No Formality Requirements Fixation or registration is not necessary Creativity Similar to a modicum of creativity required by US Supr. Ct. in Feist Thin protection for compilation of facts Asaban v. Higashi-Nihon Tel, Tokyo Hi. Ct. Sept. 7, 2000

Copyrights Limitations A list of exceptions Private use Library use Quotations Textbook use Educational use Non-profit performance Press release Political speech etc.

Copyrights Fair Use No general Provision Can a parody be a defense for Japanese copyright infringement? Possibly yes under the quotation exception But no regarding moral right

Japan’s National IP Strategy and Its Impact: Comparative Analysis Toshiko Takenaka, Ph.D. WRF/W. Hunter Simpson Prof. of Tech Law, Director, CASRIP, University of Washington School of Law

Background METI-JPO “Pro-Patent Policy” Initiative Political Landscape Mr. Hisamitsu Arai Major patent law revisions during his tenure as JPO Commissioner (Damages) Political Landscape JPO/METI Committees (Experts) Competition with other ministries and agencies Industry groups (Nippon Keidanren, JIPA, etc.) IP Professionals (JFBA, JPAA, etc.)

Basic IP Law Enacted: November 2002 National Strategies To enhance competitiveness by enriching Japan with IP rights (IP-based nation) Intellectual Creation Cycle Creation of IP Strategy Headquarters within Cabinet To develop a uniform IP policy To coordinate activities at the ministry and agency levels

IP Headquarters Original Composition Prime Minister Koizumi and his cabinet members Secretariat Headed by Mr. Hisamitsu Arai Bureaucrats dispatched from related ministries and agencies, and courts Experts Industry representatives, professors and lawyers

IP Headquarters Annual Strategic Program & Review Expert Task Forces Set a target for each action plan executed by a ministry or agency Revise the target if necessary Expert Task Forces Medical method patents Media content Enforcement

First Phase Self-Assessment Major Advancements IP Creation Japanese Bayh-Dole System IP Protection IP High Court Human Resources Legal Education for IP Professionals

Technology Transfer System University Inventions Japanese Bayh-Dole Act Enacted: 1999 Universities retain IP rights resulting from publicly funded research TLO Promotion Act A variety of support to facilitate university to TLO creation

Technology Transfer System University Inventions Pre-Basic IP Law Professors retain IP rights in university inventions Post-Basic IP Law National universities obtained a legal entity Majority of Japanese universities adopted an IP policy to obtain IP rights in university inventions from professors

Impact of Legislation Increase in Patent Applications and Royalty Revenues Domestic Applications Foreign Applications Royalty Revenues (Thousand-Yen) Domestic Applications Foreign Applications Royalty Revenues

Technology Transfer System University Inventions Increase in number of patent applications

Technology Transfer Increase in number of tech. ventures

IP High Court IP Enforcement Restructure 2003 Civil Proc. Revision Exclusive jurisdiction: First instance-Tokyo & Osaka Dist. Ct.; Appeal-Tokyo High Ct. April 2005: IP High Court Semi-independent from Tokyo High Court Patent-Technology expertise in all levels

IP High Court Symbol of Pro-Patent Policy Patent Unfriendly Judges Dist. Courts - Rocket-docket Patent experienced judges Chosakan plus external expert committee Patent Unfriendly Judges High Invalidity Rate Low chance of infringement finding Limited damages

Invalidity in Litigation

Invalidity through the JPO

Legal Education IP Professionals American Style Law School System Business experience Science background Competent in global market American Style Law School System Educating in-house counsels and patent attorneys in industry (shakai-jin) Educating students with science background

Legal Education Bar passing rate – lower than expected Expectation: 70-80% Justice System Reform Council Recommendation 2006: 48.35% 2007: 40.18 % 2008: 27-32% (expected) IP – Optional subject in Bar Exam

Legal Education Entering Student Body Total Shakai-jin 2004 5767 486 Engineering Science Shakai-jin 2004 5767 486 (8.4%) 2792 (48.4%) 2005 5544 432 (7.8%) 2091 (37.7%) 2006 5784 326 (5.6%) 1925 (33.2%) 2007 5713 273 (4.7%) 1834 (32.1%)

Legal Education Focus on Bar Exam Subject Noki-Ben problem Very little expansion of job opportunities Marginal or zero compensation IP Professional Schools More evening schools Taught by business people and lawyers More attractive to Shakai-jin

Did Japan complete the mission for National IP Strategies? Impact on Japan’s Economy and Int’l Competitiveness

Technology Trade Balance Major Countries

Technology Trade Balance

Technology Trade Balance USA Matoaki Suzuki, Powerful and Overwhelming IP Activities in the Pro-patent Era (http://www.jfe-steel.co.jp/archives/en/nkk_giho/88/pdf/88_20.pdf)

Technology Trade Balance Japan

Int’l Competitiveness IMD Ranking

Int’l Competitiveness Global Competitiveness Report Ranking

Conclusion Japan’s mission completed Japan created a unique IP system by adopting U.S. systems through localization Japan’s economy shows a strong sign of recovery and its ranking of int’l competitiveness is improving But the recovery of Japan’s economy is suffering from the impact of subprime loan crisis in the United States and rapid increases in oils and raw materials