1 Current Status on the Recovery of Patent Rights which Lapsed Due to Unpaid Fees Atsushi Aoki Seiwa Patent & Law October 21, 2015

PREAMBLE Non payment of Patent fee is really an unfortunate incident. Traditionally, maintenance / administration of patent has been recognized as a responsibility owed by a patent holder [H26 (Gyo-ko)1003 ], thus, Japan Patent Office has set very high standard for a restoration of lapsed patent. However, the time is changing, in particular, thinking PLT and other International current of harmonization, Japanese Laws / practice have been changing, and may (hopefully) be modified. 2

Term of Fee/ annuity payment Transmittal of grant 1~3year Payment 30 days +30 days Reg. date 3Y4Y Payment of 4 Y 5Y Payment of 5Y Payment of 5~--- Late payment is permissible (6mon with double amount) A108(1)(3) Must be paid before (n-1 year) A108(2) A112(1)(2) 3

Failure to observe the period What happens if a patent holder (or an applicant) does not pay annuity before the dead line? 4 For 1~3

Law reforms * (H6) 2011 (H23) 2014 (H26) (For 4~ )6mon. Grace period was given. But no Restoration Restoration (for 4~)is introduced 1.Within 6 mon. from a dead line/ 14days (2mon.) from the day when the reason disappears 2. Reason that is not attributable to the patent holder 1.Within 1 year from a dead line/ 2mon. from the day when the reason disappears 2. Legitimate reason Prior A112-2 Restoration (For 1~3) is introduced A108(4) Paris A5-(2) PLT Natural disaster New A112-2

Before H23 Amendment How failures ware cured? Reason of failure to observe the period shall be: Courts have found the meaning as: However, the condition was so strict that there have been no examples that JPO restored the lapsed patent right under the H6 patent Law. 6 Grounds not attributable to a patent holder” in Article (1)(H6) “The incidents that a person with an ordinary attentiveness cannot avoid in spite of his best care expected to pay in the situation”.

Cases that H06 Law applied H06 Law applies to Patent rights lapsed before 2012, April 1 Case No. /Date/ CourtDecisionPoints of the case Case 1 H26(Gyo-ko)10003 Decided on July 16, 2014 IP High Court DismissedFailure by an Agent but: * Just before the due date Mega Quake hit japan * Loss of Instruction letter / Miss-input of original data Case 2 H23 (Gyo-u)443 Decided on August 31, 2012 At Tokyo District Court DismissedDefects of CP software * CP Program at issue was a version up program * Software company provided information, but Patentee did not aware the change Case3 H19(Gyo-u)56 Decided on July 5, 2007 At Tokyo District Court DismissedFailure by an Agent * The patent holder acquired a group of patent from former patentee slightly before the due date * The Patent Rights lapsed also in EU. However, they are restored. 7

Present Patent Law Article 112 bis Requirements are eased Legitimate reason? Measures taken by the patent holder were the measures to be evaluated as appropriate in the circumstances JPO’s Guide line regarding a remedy to a failure to observe the period (March 2015)(3.1.1) 8 Reason not attributable to a patent holder H6 H23 “Legitimate reason” in H23 is almost the same as of “Due Care” standard adopted by EPO.[Q&A 1-1-4]

Procedure for a restoration of 4~ Payment of annuity (Normal fee X2) within the restoration term, and submit a petition (Reason for Restoration)stating: * Evidence supporting the explanation is necessary ---Ex. Manual of handling annuity * Supplement of additional evidence is permissible but only within the restoration period. * The day a patent holder discovers the non-payment / and lapse of patent right is, in general,considered to be the day. 9 Why the reason that prevented the patent holder from paying annuity corresponds to “Legitimate reason”. The day when the legitimate reason disappear

Time frame to seek a restoration (4~) * 10 Due date 6mon. Grace period Must pay double amount One Year 2mon. Petition + ￥ Annuity of the correspondence term X 2 Reason / situation why the patent holder cannot observe the due date exists The date the reason /situation disappeared

How materially changed According to the Q&A, “Legitimate reason” is understood as “Lenient conditions" compared with “Reason not attributable to the party” [Q&A 1-1-3]. Although the practice may still be unclear at this moment. The Guide Line and the Q & A show some directions. 11

Extract from Guide Line In what situations “legitimate reason” is granted? 12 Incidents that caused the lapse of dead line Regardless of measures / cares taken by a party Can be a legitimate reason Not a legitimate reason Foreseeable? Yes No Judged by the measures taken before and after the incidents on a case-by-case basis Ex. Data Miss input Manager's resignation Earth quake

1.By Natural Disaster 2.By CP System’s defects 3.By human’s mistake 13 What criteria are used? Whether the patentee was not able to proceed the needed actions. e.g.: The patentee’s facility was closed and was not be able to work before due date. Whether the selection / introduction of the CP system was proper. In principle, if a human mistake is the reason of the failure to observe the time limit, “Legitimate reason” cannot be granted. However, if special situation exist (e.g.: the patentee is a very small entity, and a layman who suddenly became a manager because of a prior manager’s sudden illness, made the mistake), a legitimate reason may be granted. JPO’s Guide line regarding a remedy of lapse of due date

*continue 4. By a sudden absence (by accident) of a person (in a company) in charge of annuity payment 5. By an agent / or a patent administration company 14 To examine Personal administration system, accident manual, etc. And To examine whether or not a replacement of the person by other person was practically possible, In principle, to find whether there is a legitimate reason is the same as of the explanation of “Human’s mistake”. In addition to this point, whether the process of selection was proper becomes a point to be taken into account.

Examples of situations where restorations are granted / are not granted Q & A for JPO’s Guide line regarding a remedy of lapse of due date (Q&A) GRANTED Not Granted 15 1.In the case where the patent holder has used a CP system for administering due dates, the due date was lapsed by an unforeseeable CP system’s defects in spite of the patent holder’s appropriate cares expected to be made in the ordinary situations for the selection, introduction, and utilization of the system. 2. In the case where the measures taken by the patent holder was granted to be appropriate in the light of its business size, the patent holder’s sudden illness was found to be the direct reason of the failure to observe the time limit. (And these points were successfully proved by evidence, such as a diagnostic documents of a hospital) 1.Instructions of payment by the non-resident was send to JP patent administrator in the local time of its country (may be final day). The non-resident who did not recognize the time difference. The JP administrator was not able to recognize the instruction before the due date and did not pay the annuity and the patent right lapsed 2. A patent holder sent a mail to its agent asking for a payment of annuity, though the agent did not understand the necessity to proceed the payment within the payment term because the communication was improper. Then, the agent did not pay and the patent right lapsed. Granted Not Granted

Conclusion Still difficult to assess a chance of success, and may be not so high. However, under the present Law (H23), it can be said that the criteria became lenient. Under H06 Law, there were no successful cases, though there have been a few cases for which restoration were granted under the present Law. Thus, Except cases that are clearly bad, it may be advisable to challenge. 16