DECISIONS & DISCUSSION ON ORDER TO PRODUCE DOCUMENTS in PATENT LITIGATION AIPLA Annual Meeting IP Practice Japan Committee Pre-Meeting Washington, D.C. Oct. 25-26, 2016 Hirokazu Honda Attorney-at-Law Abe, Ikubo & Katayama

Order to Produce Documents The court may order document holders to produce documents for the proof of infringement or damages, upon a motion of a party who needs to prove. Generally provided in Code of Civil Procedure, Art.221, based on general obligation to produce documents under Art.220 [Exception] Trade Secret, etc. Special provision of Patent Act, Art.105 in patent infringement lawsuit in order to strengthen the rule of Code of Civil Procedure [Exception] “Reasonable Grounds” to refuse the production (≠ trade secret) Abe, Ikubo & Katayama Oct. 25-26, 2016

Code of Civil Procedure Art.220 In the following cases, the holder of the document may not refuse to submit the document: (i) Where a party personally possesses the document that he/she has cited in the suit. (ii) Where the party who offers evidence may make a request to the holder of the document for the delivery or inspection of the document. (iii) Where the document has been prepared in the interest of the party who offers evidence or with regard to the legal relationships between the party who offers evidence and the holder of the document. (iv) In addition to the cases listed in the preceding three items, in cases where the document does not fall under any of the following categories: (a)(b) [omitted] (c) A document stating the fact prescribed in Article 197, paragraph (1), item (ii) or the matter prescribed in Article 197, paragraph (1), item (iii), neither or which are released from the duty of secrecy (d)(e) [omitted] Art.197 Para.(1) In the following cases, a witness may refuse to testify: (ii) Cases where a doctor, dentist, pharmacist, pharmaceuticals distributor, birthing assistant, attorney at law (including a registered foreign lawyer), patent attorney, defense counsel, notary or person engaged in a religious occupation, or a person who was any of these professionals is examined with regard to any fact which they have learnt in the course of their duties and which should be kept secret (iii) Cases where the witness is examined with regard to matters concerning technical or professional secrets Abe, Ikubo & Katayama Oct. 25-26, 2016

Patent Act Art.105 Para.(1) In litigation concerning the infringement of a patent right or exclusive license, the court may, upon a motion of a party, order the other party to produce documents that are required to prove the said act of infringement or to calculate the damage arising from the said act of infringement; provided, however, that this shall not apply where there are reasonable grounds for the person possessing the documents to refuse production of the said documents. Abe, Ikubo & Katayama Oct. 25-26, 2016

Decision on Mar. 28, 2016 IP High Court Heisei 27(ne)10029 [Patent: JP4696179] Process of operation of communication network constituted as mobile wireless network (Claim 9) Communication system with network as mobile wireless network, a base station and signaling channel (Claim 22) [Alleged infringer] provided communication service for cell phone (FOMA) Patentee filed a petition for ordering the alleged infringer to produce source codes and manuals, in order to prove infringement by alleged infringing process and system. IP High Court held that the following factors are required to order to produce documents: Necessity of Examination of Evidence The court shall not be required to examine evidence offered by a party that the court considers to be unnecessary. Code of Civil Procedure, Art.181 Para.(1) No Reasonable Ground to Refuse Production Abe, Ikubo & Katayama Oct. 25-26, 2016

Necessity of Examination of Evidence [Order to produce documents for proof of patent infringement] Prima facie evidence of “reasonable doubt” of infringement is required for petitioner. Strong necessity Products under control of an opponent No sign of process on products (process patent cases) Disadvantage of an opponent Abuse of Petition for accessing information such as trade secrets Petition for searching (hunting) documents without definite proof Abe, Ikubo & Katayama Oct. 25-26, 2016

Necessity of Examination of Evidence Prima facie evidence of “reasonable doubt” of infringement, but … This is measurement for collecting evidence necessary for proof of infringement. The court hold that: It is sufficient if reasonable doubt of existence of infringement is proved prima facie to the extent that doubt of abuse of petition or petition for searching documents is removed. Such an extent should be tested under such factors as: Existence and extent of necessity of examining the documents; Difficulty of proving the facts; Existence of alternative evidences; and Circumstances of other proofs Abe, Ikubo & Katayama Oct. 25-26, 2016

Necessity of Examination of Evidence The court found in this case: Infringement may occur in limited cases, so it is not easy to detect the results timely finding such cases; Evidences unevenly exist at the alleged infringer; The alleged infringer’s proof of the contrary facts was not completely effective; and Circumstances of other proofs by the patentee Prima facie evidence of “reasonable doubt” of infringement is found; the necessity of examination of evidence is not denied. Abe, Ikubo & Katayama Oct. 25-26, 2016

Reasonable Ground for Refusing The alleged infringer alleged these documents are trade secrets and therefore reasonable ground should be found, but: Reasonable Ground ≠ Trade Secrets The court held: disadvantage of document holder (the extent of protection of the secret) disadvantage of the petitioner if documents are not submitted (necessity as evidence) should be compared The court said, when compare: The extent of utility as evidence proving the infringement should be considered. Clear for an opponent to use the structure different from the invention → the extent of protection of the secret increases Clear to use the structure falling within the invention → the extent of protection of the secrets decreases Abe, Ikubo & Katayama Oct. 25-26, 2016

Reasonable Ground for Refusing The court also said, for the extent of the protection of the secret; The following should be taken into account: Contents and nature of the secrets; disadvantage by disclosure; Existence and scope, etc. of protective order or non-disclosure agreement The court used “in camera” rule under Art.105 Para.(2) of Patent Act to determine reasonable ground. The court read the documents The court found in this case; The documents have no description for utility as evidence proving the infringement. Even with consideration of the existence of NDA, the extent of protection of the secret surpasses the necessity as evidence. Abe, Ikubo & Katayama Oct. 25-26, 2016

Patent Act Art.105 Para.(2) – In camera When the court finds it necessary for determining whether or not there are reasonable grounds as provided in the proviso to the preceding paragraph, the court may cause the person possessing the documents to present such documents. In such a case, no person may request the disclosure of the documents presented. The court makes an order to request to present documents and examine them for determining existence/non-existence of reasonable ground. Only the court can see the documents. Abe, Ikubo & Katayama Oct. 25-26, 2016

Patent Act Art.105-4 Para.(1) In litigation concerning the infringement of a patent right …, where there is prima-facie evidence of the fact that trade secrets (refers to trade secrets as provided in Article 2(6) of the Unfair Competition Prevention Act …) possessed by a party satisfy all of the following paragraphs, the court may, upon a motion of the party, order by a ruling that the parties, etc., attorneys or assistants shall neither use the trade secrets for any purpose other than those for the proceedings of the litigation nor disclose the trade secrets to any person other than those who receive the order regarding the trade secrets under this provision ... : (i) where the trade secrets possessed by the party were or are contained in the briefs already submitted or to be submitted or such trade secrets were or are contained in the evidence already examined or to be examined (including documents disclosed under Article 105(3) and under Article 105-7(4)); and (ii) where it is necessary to restrict the use or the disclosure of the trade secrets under the preceding paragraph to prevent any possible interference with the party's business activities based on the trade secrets, that might arise if the trade secrets are used for any purpose other than those for the proceedings of the litigation or if the said trade secrets are disclosed. Abe, Ikubo & Katayama Oct. 25-26, 2016

Decision on Mar. 28, 2016 Tokyo District Court Heisei 26(wa)1690 [Patent] Panel for construction (JP2898893) Structure of support of the lower edge of wall panel (JP3455669) [Defendant] imported and sold fireproof panels The court found infringement and validity. Patentee filed a petition for order the defendant to produce sales slips, copies of invoice, reports of the cost of production, and specification of costs, in order to prove the sales and profit amount of defendant’s products are as the patentee alleges. The court ordered the defendant to produce them within 14 days, but the defendant did not follow. The court recognized that the patentee's allegations concerning the fact to be proven by those documents (the sales and profit) are true. Abe, Ikubo & Katayama Oct. 25-26, 2016

Code of Civil Procedure Art.224 (1) If a party does not comply with an order to submit a document, the court may recognize that the opponent's allegations concerning the statements in the document are true. (2) The provisions of the preceding paragraph shall also apply where a party, for the purpose of disrupting the opponent's use thereof, has caused the document to be lost or otherwise unusable despite his/her obligation to submit. (3) In the cases prescribed in the preceding two paragraphs, if it is extremely difficult for the opponent to make specific allegations concerning the statements in the document and prove, by other evidence, the fact that is to be proven by the document, the court may recognize that the opponent's allegations concerning such fact are true. Abe, Ikubo & Katayama Oct. 25-26, 2016

Discussion on Evidence Collection No Discovery Procedure [Prior to filing of an action] Inquiry prior to filing of action Disposition of Collection of Evidence prior to filing of action Preservation of Evidence [After filing an action] Obligation to clarify the specific conditions of alleged infringer’s product or process If an alleged infringer denies a patentee’s claim on the specific conditions of an alleged infringing product or process, he shall clarify the specific conditions of his product or process, except where there exist reasonable grounds preventing from so doing. Order to Produce Documents Protective Order Abe, Ikubo & Katayama Oct. 25-26, 2016

Evidence Collection The above rules have not necessarily worked well… Not enforceable against the breach of inquiry/disposition No sanctions against non-performance of obligation to clarify the specific conditions Courts’ conservative attitude to order to produce documents, considering trade secrets, abuse of right, etc. Current system is biased in favor of the alleged infringer; quite hard to collect evidence with regard to a manufacturing process, products impossible to access or obtain, etc. Discussion in the government and industries Necessity of Evidence for proof of infringement Protection of Trade Secrets & Fear to Abuse of Right to collect documents Abe, Ikubo & Katayama Oct. 25-26, 2016

Evidence Collection [Report by Intellectual Property Dispute Resolution System Review Committee] Need to discuss measures in order to implement appropriate and fair evidence collection procedures which are based on both parties’ understanding and which respect the need for trade secret protection and abuse prevention Order to Produce Documents Making it easier to issue orders where an alleged infringer did not perform the obligation to clarify the specific conditions of his product or process Combination of the order with protective order Introducing an examination system for evidence examination by a neutral third party expert Abe, Ikubo & Katayama Oct. 25-26, 2016

Evidence Collection [Intellectual Property Strategic Program 2016] (Intellectual Property Strategy Headquarters) “With regard to evidence collection procedures following the filing of a lawsuit, the issues that arise are (1) … when the alleged infringer denies the infringement claim, they are passive in the performance of the obligation to clarify the specific conditions of infringement, …; (2) … the filings by the parties have few examples of orders for submission of documentation issued …, and their usage is not always fully developed; and (3) courts can find it difficult to strike a balance between the need for evidence and the need for protecting an alleged infringers trade secrets. In light of the above, and in order to implement appropriate and fair evidence collection procedures which respect the need for trade secret protection and leak prevention, there needs to be discussion about mechanisms for making it easier to issue orders for submission of documentation and introducing an examination system for evidence examination (i.e., a system whereby a court-appointed neutral third party expert examines (on-site examination of factories, etc.) the alleged infringer).” Abe, Ikubo & Katayama Oct. 25-26, 2016

Wrap-Up Hurdle for obtaining an order to produce documents for proof of infringement: but best effort to allege and prove “necessity of examination of evidence” and to rebut on “reasonable ground” NDA may be useful. Order is a good tool for evidence of damages. See the situation on further discussion over reform of the rules and on future amendment Abe, Ikubo & Katayama Oct. 25-26, 2016

Abe, Ikubo & Katayama Oct. 25-26, 2016