Patent Invalidation Trials at the Japanese Patent Office

Historically, Japan has had a bifurcated system for adjudicating patent rights—issues of patent infringement were resolved in the district courts in infringement trials, and the Japanese Patent Office resolved questions of patent validity in patent invalidation trials. That clear division of labor has become blurred since the Supreme Court’s “Kilby” decision in Fujitsu v. Texas Instruments, Hei 10 (o) 364 (S. Ct. Apr. 11, 2000), Minshu Vol. 54, No. 4, page 1368 where the Supreme Court ruled that the district courts may entertain questions of patent validity and decline to enforce patents that have clear grounds for invalidation.

Although the Kilby decision created a new line of defense in patent litigation in Japanese district courts, it did not change the legal significance of patent invalidation trials before the JPO—the JPO retains exclusive jurisdiction over the final adjudication of patent validity. Thus, initiating patent invalidation trials at the JPO remains an important strategic avenue for defendants accused of patent infringement in district court actions and persons who wish to ensure their freedom to operate their commercial activities without fear of patent infringement liability.

By way of summary, a patent invalidation trial is conducted before the Board of Appeals at the Japanese Patent Office by a panel of three or five trial examiners, one of whom is designated as the chief trial examiner. See Articles 136 & 138 of the Patent Act. Decisions by the panel are made by majority vote. See Article 136(2) of the Patent Act. Appeals from the panel’s decision are made to the Japanese IP High Court.

Japan’s Patent Act defines the substantive and procedural requirements for patent invalidation trials. The following describes the significant provisions related to trials for patent invalidation before the Japanese Patent Office:

1. Grounds for Initiating a Trial for Patent Invalidation

2. Persons Eligible to File a Request for Invalidation Trial & to Intervene

3. Pleadings—Request & Answer

4. Invalidation Trial Proceedings

5. Patentee’s Request for Correction

6. Decision by the Trial Panel

7. Requests for Retrial

8. Appeals from Invalidation Trial Decisions

1. Grounds for Initiating a Trial for Patent Invalidation. Article 123 of the Patent Act defines the grounds for seeking patent invalidation, providing:

(1) Where a patent falls under any of the following, a request for a trial for patent invalidation may be filed. In the event of two or more claims, a request for a trial for patent invalidation may be filed for each claim.

(i) where the patent has been granted on a patent application (excluding a foreign language written application) with an amendment that [introduces new matter not found in the original specification, claims, and drawings of the application];

(ii) where the patent has been granted in violation of Articles 25 [grant to non-resident foreign nationals in countries without reciprocal patent rights], 29 [lack of novelty], 29-2 [identical subject matter of another application by inventor], 32 [subject matter “liable to injure public order, morality or public health], 38 [less than all inventors] or 39(1) to 39(4) [first inventor to file provisions];

(iii) where the patent has been granted in violation of a treaty;

(iv) where the patent has been granted on a patent application not complying with the requirements as provided in Article 36(4)(i) [lack of enabling disclosure] or 36(6) (excluding 36(6)(iv)) [lack of clear and concise written description];

(v) where matters stated in the description, scope of claims or drawings attached to the foreign language written application are not within the scope of matters stated in foreign language documents;

(vi) where the patent has been granted on a patent application filed by a person who is not the inventor and has not succeeded to the right to obtain a patent for the said invention;

(vii) where, after the grant of a patent, the patentee has become unable to hold a patent right under Article 25 [reciprocity with foreign countries], or the patent has become in violation of a treaty; and

(viii) where the correction of the description, scope of claims or drawings attached to the application for the patent has been obtained in violation of the proviso to Article 126(1), Article 126(3) to (5) (including its application mutatis mutandis under Article 134-2(5)) [trial for correction of claims shall not broaden the scope of the claims] or the proviso to Article 134-2(1) [same].

A request for trial for patent invalidation may be filed at any time, even after the patent has expired. See Article 123(3) of the Patent Act.

2. Persons Eligible to File a Request for Invalidation Trial & to Intervene. Article 123(2) of the Patent Act liberally permits “any person” to file a request for a patent invalidation trial on any of the permitted grounds except Article 123(1)(ii) (regarding Article 38 (less than all inventors)) and (vi) (misappropriation of the invention by one who is not the inventor). Only “interested persons” who claim rights under the invention may request a patent invalidation trial under Article 123(1)(ii) regarding Article 38) and (vi).

Additionally, other provisions work to avoid a multiplicity of invalidation proceedings on the same patent and to promote efficiency. For example, Article 132 of the Patent Act contemplates and permits the joint request for a patent invalidation trial by two or more eligible persons, and Article 148 of the Patent Act further permits additional persons to intervene in the trial to participate in the trial as a demandant or to assist the original parties.

3. Pleadings—Request & Answer. The formalities of the request for trial for patent invalidation before the Japanese Patent Office are governed by Article 131 of the Patent Act, which provides:

(1) A person filing a request for a trial shall submit a written request stating the following to the Commissioner of the Patent Office:

(i) the name, and the domicile or residence of the party and the representative

thereof;

(ii) the identification of the trial case; and

(iii) object and statement of the claim.

The substantive content of the trial request is governed by Article 131(2) of the Patent Act, which requires:

When a request for a trial for patent invalidation is filed, the facts on which the invalidation of the patent is based shall be specified in concrete terms, and the relationship of each fact that is required to be proved with the relevant evidence shall be stated in the grounds for the request as provided in item (iii) of the preceding paragraph.

In the event that the written request for trial does not comply with the Article 131 requirements, the chief trial examiner issues a deadline to the demandant to amend the request and conform to the pleading requirements. See Article 133(1) of the Patent Act. If the demandant fails to meet the deadline or the amendment does not conform to the pleading requirements, the chief trial examiner may dismiss the action. Id. at 133(3). Article 135 of the Patent Act authorizes the chief trial examiner to dismiss defective actions “without giving the demandee an opportunity to submit a written answer.”

At other times, the demandant may amend the trial request to further clarify the object and statement of the claim, provided that the amendment does not materially alter “the gist” of the original trial request. See Article 131-2(1) of the Patent Act. However, the chief trial examiner may approve the enlargement of “the gist” of the original trial request where “there is no possibility of unreasonable delay of the proceedings by such amendment” and the amendment is the result of either (1) new matter introduced by a request for correction by the demandee patentee or (2) existence of “reasonable grounds for not stating the grounds for the request” in the original filing and the demandee patentee consents to the amendment. Id. at 131-2(2).

After the trial request is filed, the chief trial examiner serves a copy of the written request on the demandee and provides a deadline for submitting an answer. See Article 134(1) of the Patent Act. After the answer is filed, the chief trial examiner serves the answer on the demandant. Id. at 134(3).

4. Invalidation Trial Proceedings. An invalidation trial before the JPO is an inter partes proceeding in which the interested parties are each given an opportunity to address the issues presented, i.e., the asserted grounds for patent invalidity. Article 145(1) of the Patent Act authorizes the panel of examiners to conduct either “oral proceedings” or upon motion of a party, a “trial by documentary proceedings.” The ordinary practice is to hold oral proceedings in adjudicating patent validity in the JPO.

Ordinarily, the invalidation trial proceedings are conducted in public unless the panel determines that public access to the proceedings is likely to injure “public order or morality.” See Article 145(5) of the Patent Act. The trial clerk is responsible for preparing the trial record and with regard to oral proceedings, prepares “a trial record stating the gist of the proceedings and all other necessary matters on each trial date.” See Article 147(1) of the Patent Act.

When trial is conducted by “oral proceedings,” the chief trial examiner sets the date and location for the proceedings and issues summonses to the parties to attend. Customarily, the parties are alerted to the issues to be presented and addressed during the oral proceedings and given an opportunity to submit briefs and supporting evidence prior to the proceedings. As in district court litigation, an invalidation trial is usually not a single event but comprises a series of briefings and oral hearings that continue until the panel of examiners has determined that issues have been fully addressed by the parties, and they are ready to decide the case. During the oral hearings, the chief trial examiner typically gives each party an opportunity to address the issues presented. Time is reserved, both during the parties’ argument and after, for the panel members to ask questions and solicit information from the parties. At the end of the proceedings, the panel members often consult with the parties on the need for additional hearings and issues to be addressed.

Although the parties’ pleadings (the trial request and answer) typically circumscribe the issues presented during an invalidity trial at the JPO, the panel of examiners are not confined to the issues raised by the parties. Article 153(1) of the Patent Act expressly provides that “[a]ny grounds not pleaded by a party or intervenor may be examined in a trial.” In such event, the chief trial examiner gives notice to the parties of the new issues and provides an opportunity “to present opinions.” Id. at 153(2).

5. Patentee’s Request for Correction. The issues addressed during an invalidation trial are often a moving target, given the panel’s ability to specify issues for argument that are outside of the parties’ pleadings. Also, Article 134-2 of the Patent Act adds to the fluid nature of the proceedings by permitting the patentee to file a request for correction during the invalidation trial proceedings. Article 134-2(1) of the Patent Act provides:

(1) The demandee in a trial for patent invalidation may file a request for a correction of the description, scope of claims or drawing(s) attached to the application only within the time limit designated in accordance with paragraph (1) or (2) of the preceding Article, paragraph (1) or (2) of the following Article or Article 153(2); provided, however, that such correction shall be limited to the following purposes:

(i) restriction of the scope of claims;

(ii) correction of errors in the description or of incorrect translations; and

(iii) clarification of an ambiguous description.

After the request for correction is filed, the chief trial examiner serves the request on all demandants. Id. at 134-2(2). The demandants are given an opportunity to respond to the request for correction, and the new issues raised by the request become part of the briefing and hearing before the panel.

6. Decision by the Trial Panel. Article 156(1) provides that “[w]hen the case has reached the point at which a trial decision may be rendered, the chief trial examiner shall notify the parties and intervenor(s) of the conclusion of the proceedings.” The trial decision is ordinarily delivered within 20 days of the conclusion of the proceedings. Id. at 156(3). The trial effectively ends when the examining board’s decision is rendered. See Article 157(1) of the Patent Act. The trial decision identifies the parties, the trial number and case, the date of the decision, and, importantly, the “reasons for the trial decision.” Id. at 157(2).

The announcement and timing of trial decision is important to parties who are discussing settlement. Article 155(1) of the Patent Act allows a trial request to “be withdrawn before a trial decision becomes final and binding.” However, the trial request cannot be withdrawn without the patentee’s consent and not until after the patentee has filed a written answer to the trial request. Id. at 155(2). Where an invalidation trial has been requested with regard to two or more patent claims, the withdrawal request may be made for less than all of the claims presented for invalidation during the trial. Id. at 155(3).

The timing of settlement is especially critical if there are any reasons that the parties, including the trial demandant, may wish to have one or more of the patent claims survive, because when a decision invalidating a patent becomes final and binding, “the patent right shall be deemed never to have existed.” See Article 125 of the Patent Act.

7. Requests for Retrial. Article 171(1) of the Patent Act provides, “A party or an intervenor may file a request for a retrial against a final and binding trial decision.” Pursuant to Article 171(2) of the Patent Act, the grounds for the requested retrial are provided in the following provisions of Japan’s Code of Civil Procedure:

Article 338(1). Where any of the following grounds exist, an appeal may be entered by filing an action for retrial against a final judgment that has become final and binding; provided, however, that this shall not apply where a party, when filing the appeal to the court of second instance or final appeal, alleged such grounds or did not allege them while being aware of them:

(i) The court rendering judgment was not composed in accordance with law.

(ii) A judge who shall not be allowed by law to participate in making the judgment participated in making the judgment.

(iii) The judgment was made in the absence of the authority of statutory representation, authority of representation in a suit or the delegation of powers necessary for performing procedural acts.

(iv) The judge who participated in making the judgment has committed a crime in relation to his/her duties with regard to the case.

(v) Another person's act that is criminally punishable caused the party to admit any fact or prevented him/her from advancing allegations or evidence that should have affected a judgment.

(vi) The documents or any other objects used as evidence for making the judgment were forged or altered.

(vii) False statements by a witness, an expert witness, interpreter or a party or statutory agent who had sworn were used as evidence for making the judgment.

(viii) The judgment or other judicial decision on a civil or criminal case or administrative disposition, based on which the judgment pertaining to the appeal was made, has been modified by a subsequent judicial decision or administrative disposition.

(ix) There was an omission in a determination with regard to material matters that should have affected a judgment.

(x) The judgment pertaining to an appeal conflicts with a previous judgment that has become final and binding.

Article 338(2). Where any of the grounds set forth in items (iv) through (vii) of the preceding paragraph exist, an action for retrial may be filed only if, with regard to a punishable act, a judgment of conviction or judgment of a non-criminal fine has become final and binding, or a final and binding judgment of conviction or final and binding judgment of a non-criminal fine cannot be obtained due to grounds other than grounds of lack of evidence.

Article 339. Where the grounds prescribed in paragraph (1) of the preceding Article exist with regard to the judicial decision based on which a judgment is made (limited to the case prescribed in paragraph (2) of said Article if any of the grounds set forth in items (iv) through (vii) of said paragraph exist), such grounds may be stated as reasons for retrial against the judgment, even if any method of entering an independent appeal against such judicial decision is specified.

Generally speaking, a retrial request must be filed within 30 days of discovering a permissible ground for retrial but in no event later than three years following the date on which the trial decision became final and binding. See generally, Article 173 of the Patent Act. However, Article 173 of the Patent Act provides several, liberalizing exceptions to these deadlines and is reproduced in full as follows:

(1) A request for a retrial shall be filed within 30 days from the date on which the demandant became aware of the grounds for the retrial after the trial decision became final and binding.

(2) Where a person intending to file a request for a retrial is unable to file the said request within the time limit as provided in the preceding paragraph due to reasons beyond the control of the person, notwithstanding the said paragraph, the said person may file the request within 14 days (in the case of an overseas resident, within two months) from the date on which the said reasons ceased to exist, prior to the lapse of six months from the expiration of the said time limit.

(3) Where a request for a retrial is filed on the ground that the demandant was not represented in accordance with the applicable legal provisions, the time limit as provided in paragraph (1) shall be counted from the day following the date on which, by being served a copy of the trial decision, the demandant or his statutory representative became aware that the trial decision had been rendered.

(4) No request for a retrial may be filed after the expiration of three years from the date on which the trial decision became final and binding.

(5) Where a ground for a retrial has arisen after the trial decision became final and binding, the time limit as provided in the preceding paragraph shall be counted from the day following the date on which the ground first arose.

(6) Paragraphs (1) and (4) shall not apply to a request for a retrial filed on the ground that the trial decision is in conflict with a final and binding trial decision previously rendered.

Patent rights that are restored through retrial of the invalidation proceeding are not “effective against any product imported into or produced or acquired in Japan without knowledge, after the trial decision became final and binding but before, the registration of the request for a retrial.” See Article 175(1) of the Patent Act. Moreover, the Patent Act further provides that “where a person, without knowledge, been working the invention in Japan or has, without knowledge, been making preparations therefore, after the trial decision became final and binding but before the registration of the demand for a retrial, such person shall have a non-exclusive license on the patent right, to the extent of the invention and the purpose of such business worked or prepared.” Article 176 of the Patent Act.

8. Appeals from Invalidation Trial Decisions. Technically speaking, a decision from a JPO invalidation trial decision is not appealed. As a matter of procedure, a legal action against the trial decision is filed with the Tokyo High Court, which has exclusive jurisdiction over such actions. See Article 178(1) of the Patent Act. A division of the Tokyo High Court known as the IP High Court presides over the action, and a panel of five judges is appointed to hear the action. See Article 182-2.

The legal action in the Tokyo High Court “may be instituted only by a party in the case, an intervenor, or a person whose application for intervention in the trial or in the retrial has been refused.” See Article 178(2) of the Patent Act. The action must be initiated within 30 days of service of the certified copy of the invalidation trial decision. See Article 178(3) of the Patent Act.

The High Court may affirm the trial decision, find for the plaintiff and rescind the trial decision, or remand the matter back to the JPO for further proceedings. See generally, Article 181 of the Patent Act.