Procedural Aspects of Patent Infringement Litigation in Japan
Pre-Suit Investigation & Diligence. A patentee or exclusive licensee who wishes to enforce a patent in Japanese courts invests heavily in pre-suit diligence. For example, the briefing and hearing schedule before the district court moves quickly, and there is precious little opportunity to obtain discovery during the litigation--infringement evidence must be gathered in advance of the action. Since compulsory measures are not available, patentees are resigned to gathering publicly available evidence, which usually means purchasing samples of the accused product, catalogs and instruction manuals, and print as well as online publications about the products. Accused processes present a special problem to patentees who usually retain experts to analyze products produced by the process and infer from the available evidence, such as raw material usage, equipment purchased, etc., how the products could have or must have been made.
In addition to collecting evidence of infringement, the patentee also analyzes the scope of the claims and their validity. Although patent litigation before the Japanese courts is technically limited to issues of infringement and damages, it is possible for the defendant to raise a defense of patent invalidity during trial and seek fees for asserting a clearly invalid patent. Moreover, filing suit in district court typically prompts the defendant to initiate patent invalidation proceedings before the Japanese Patent Office. For these reasons, patentees devote significant time to considering patent scope and validity issues before initiating suit and, where necessary, seek to cure any defects through a trial for correction at the JPO under Article 126 of the Patent Act, which is not available after an invalidation proceeding has commenced. See Article 126(2) of the Patent Act.
Other housekeeping matters addressed during the pretrial diligence is ensuring that the standing requirements are met, including registration of patent assignments and exclusive licenses at the JPO. The value of sending warning letters to give notice of the infringement is often considered. Some practitioners send the letters to obtain insights into the defenses that the accused infringer will raise during trial. Other practitioners hesitate sending warning letters due to the risk that the letters will prompt the accused infringer to file a preemptory declaratory judgment action or initiate an invalidation proceeding. In certain situations, the necessity of a letter is a forgone conclusion. If the patentee has received the patent rights by assignment, then notice of the assignment is required under Article 467 of the Civil Code. In addition, if the patentee has pending applications before the JPO with claims that may be assertable against the accused infringer, notice of those provisional rights is required under Article 65 of the Patent Act to entitle the patentee to damages during the time between giving notice and the registration of the allowed claims.
Preparing & Serving the Complaint. Although pleading requirements for patent matters in the United States have become stricter, pleading patent infringement in Japanese courts involves much more formality. Article 53 of the Rules of Civil Procedure sets forth the essential components of the complaint:
(1) A complaint shall contain statements of the object and statement of the claim (meaning the facts necessary for identifying the claim), concrete statements of the cause of action, and statements of material facts related to said cause and evidence for the respective grounds that require proof.
(2) When stating allegations on facts in a complaint, insofar as possible, allegations on the cause of the action and allegations on the facts related to said cause shall be stated separately.
. . .
In addition, Article 55(2) of the Rules of Civil Procedure requires the complainant to “[attach] a copy of any document that is to serve as evidence . . . which is material, with regard to any grounds that require proof.”
In patent actions, patentees are required to plead the “specific conditions” of the infringement, which involves a detailed exposition of the claim elements and where they are found in the accused product or process. Formally, the complaint has three parts: (1) a description of the parties, (2) the summary of the demand, and (2) statement of the claim. The summary of the demand identifies the relief sought by the patentee, which usually includes an injunction against the manufacture and sale of the accused product, destruction of infringing goods, monetary damages, and court and attorneys’ fees.
The statement of the claim is often complex. In addition to identifying and describing the patents in suit and their claims, the statement of the claim is where the patentee reveals its infringement analysis, demonstrating where each claim element is found in the accused product. The analysis can become so involved that it is sometimes accompanies the complaint as an attachment. The statement of the claim further includes an explanation of the grounds and evidence supporting the claim for damages. As a matter of practice, the evidence supporting the assertions made in the complaint is attached, including the JPO patent and assignment registrations. Finally, a “revenue stamp” is attached to the complaint demonstrating payment of the filing fee.
Unlike U.S. procedure where the plaintiff is responsible for serving the complaint, the court clerk of the Japanese district court carries out service of the complaint and summons to appear. Domestic service is typically handled by the post office. Service on defendants outside of Japan is conducted through diplomatic channels.
Preparing the Answer. The defendant usually has about six weeks to prepare and file an answer to the complaint. Similar to U.S. practice, the defendant must admit, deny, or state that he is unaware of facts that would enable him to admit or deny. The practice of answering a complaint in Japan diverges from U.S. practice, however, in the quantity of substantive information required when denying an averment in the complaint.
Article 80(1) of the Rules of Civil Procedure sets forth the general requirements for an answer:
A written answer shall contain statements of the answer to the object of claim, concrete statements of admission or denial of the facts stated in the complaint and facts of defense, and statements of material facts related to said facts and evidence for the respective grounds that require proof. In cases where it is not possible to include such statements due to unavoidable circumstances, a brief containing such statements shall be submitted promptly after submitting the written answer.
Significantly, Article 80(2) of the Rules of Civil Procedure requires that “A written answer shall have attached a copy of important documentary evidence for grounds that require proof. . . .”
Article 104-2 of the Patent Act requires that “in order to deny the specific conditions of an article or process that a patentee or an exclusive licensee claims as one that composed an act of infringement, the adverse party shall clarify the specific conditions of his/her act. . . .” Under this provision, the accused infringer is required to engage in the same detailed analysis as the patentee, addressing the alleged infringement on an element-by-element basis with regard to the accused product or process and explaining how the accused product or process is different from the patent claims.
Trial Briefs & Hearings. Trial of patent cases in Japanese district court is typically conducted in two phases. The first, and most lengthy phase, focuses on issues of infringement and patent validity. If infringement of valid claims is found or conceded, the trial enters the second phase to damages phase of the trial. Trial in Japanese courts is quite different from trial in U.S. courts in several ways. First, each litigation is presided over by a panel of three judges instead of a single judge as in the U.S. Second, there is no jury involvement in the trial of patent cases. The judges decide all legal and factual issues. Finally, a patent “trial” in Japanese district court is not a single event but is, instead, a series of events involving multiple briefings and hearings that continue until the court is satisfied that it has fully heard the parties’ arguments and evidence and is prepared to rule.
The Japanese courts do have rules governing the admission of documentary and testimonial evidence, but those rules are much less formal than the rules of evidence in the United States. For example, there is no rule against the admission of hearsay evidence. Because there is no jury, the court does not play a gatekeeper role in determining the admissibility of evidence. It is assumed that the panel of judges will accord proper weight to evidence received during trial. In fact, the timing and extent of the presentation of evidence during trial is left entirely to the discretion of the judges on the panel.
Witnesses can be summoned to hearings and are subject to questioning by the parties and the judges. See Article 113 of the Rules of Civil Procedure. The party calling the witness conducts direct examination and then redirects the witness after the opposing party has an opportunity to cross examine the witness. See Article 114 of the Rules of Civil Procedure. Article 115(2) of the Rules of Civil Procedure prohibits the following types of questions:
(i) Questions that insults or confuses the witness
(ii) Leading questions
(iii) Questions that overlap with any previous question
(iv) Questions unrelated to the issues
(v) Questions seeking statement of opinion
(vi) Questions seeking statements on facts which the witness has not experienced directly
Expert opinion evidence is admissible. In patent cases, the court often seeks neutral opinions from court-appointed experts but also receives the opinions of the parties’ experts, typically in writing. See, e.g., Article 132(2) of the Rules of Civil Procedure.
There is no set schedule for the hearings except that Article 60(2) of the Rules of Civil Procedure requires the presiding judge to schedule the first hearing within thirty (30) days of the filing of the action. The overall schedule and sequence of events is typically determined early in the case during the parties’ scheduling conference with the court. Article 95(1) of the Rules of Civil Procedure sets the agenda for the scheduling conference in which “the court and the parties shall confirm the relationship between the examination of evidence in oral argument and the issues, and hold a consultation on other necessary matters concerning the process of the suit.”
Although there is no set schedule these hearings, there are features that are typical and common across all patent trials in Japanese District court. The main type of hearing is the formal oral hearing (口頭弁論 “koutou benron”) that is held in open court. The purpose of the oral hearing is for the parties to appear and address the judges’ questions about the briefs and evidence submitted in advance of the hearing. Usually early in the case, one oral hearing is devoted to the plaintiffs’ positions and evidence and another oral hearing is devoted to the defendants’ positions and evidence. Because the court usually identifies issues that are not addressed by the parties in their opening statements, the court orders additional briefing on specific issues. After the parties brief the additional issues, they appear for an oral hearing to provide argument and answer the court’s questions. The briefings and hearings usually occur at one to two month intervals. This procedure continues until the court is prepared to rule.
Additionally, at any time but typically very early in the case, the court will conduct an informal preliminary hearing (弁論準備 “benron junbi”) that is most often closed to the public and conducted in a conference room. These preliminary hearings are used for scheduling and, importantly, for the parties to educate the judges on the technical and issues in the case. The parties typically have an opportunity to make technical presentations or tutorials on the patented inventions and accused products. Technical presentations can be made in formal oral hearings but often occur in the preliminary hearings, utilizing PowerPoint slides and other media.
As the liability phase draws to an end, the court will often conduct mediation sessions with the parties in an effort to facilitate settlement. The court will often share its views on the merits of the case in an effort to motivate the parties to settle. If the parties do not reach a settlement, the court will order a final hearing and then proceed to judgment. Traditionally, the court renders its judgment by reading all or excerpts of its written decision in open court with the parties present. See Article 155 of the Rules of Civil Procedure.
“Discovery” & Document Production Orders. Japan does not have formal “discovery” procedures as in the United States under the Federal Rules of Civil Procedure. Although most evidence of infringement is gathered during the patentee’s pre-suit investigation from third-party sources, there are mechanisms under Japanese law and procedure for obtaining evidence from opposing parties.
For example, Article 104-2 of the Patent Act requires that “in order to deny the specific conditions of an article or process that a patentee or an exclusive licensee claims as one that composed an act of infringement, the adverse party shall clarify the specific conditions of his/her act. . . .” Thus, the accused infringer may not simply deny averments in the complaint and force the patentee to overcome the denial with evidence. Instead, the accused party must state facts and describe evidence that the party contends refutes the averment. Article 104-3(2) of the Patent Act imposes additional pressure on the accused infringer to cooperate in the pleading process. That article provides:
Where the court considers that the materials used for an allegation or defense under the preceding paragraph are submitted for the purpose of unreasonably delaying the proceedings, the court may, upon a motion or ex officio, render a ruling to the effect that the allegation or the defense is to be dismissed.
Moreover, Article 80(2) of the Rules of Civil Procedure requires the defendant to attach the evidence supporting its assertions to the answer. Accordingly, patentees may make strategic use of the complaint as a discovery device, rendering the accused infringer’s answer a response to an interrogatory or request for admission.
Japanese procedural law permits party inquiries akin to interrogatories in U.S. discovery. Article 163 of the Code of Civil Procedure permits a party without court permission to request for specific information from another party “with regard to the matters necessary for preparing allegations or proof.” The request and response are exchanged in writing. See Article 84 of the Rules of Civil Procedure. The requests must be narrow in focus, cannot seek opinions, and cannot impose an undue burden on the other party. See Article 163 of the Code of Civil Procedure. There is no numerical limit on the requests, except that they may not be repetitive or overlap. Id.
In patent litigation, Article 105 of the Patent Act permits the court “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. . . .” The other side is permitted to assert reasons why the documents should not be produced, and the court may order in camera inspection to determine if, and to what extent, the opposing party has met its burden of demonstrating that the documents should not be produced. Id.
The need for “discovery” from the accused infringer is most acute when the patent is asserted against an accused process. Ordinarily, the publicly available information about a manufacturing process is limited, and it is often difficult to infer the manufacturing method from the end product. Article 104 of the Patent Act addresses that problem, at least to some useful extent, by creating a presumption of infringement in a narrow set of circumstances:
Where the invention of a process of producing a product has been patented and the product was not publicly known in Japan prior to the filing of the patent application, a product identical with such product shall be presumed to have been produced by the patented process.
Thus, if the product produced by the patented product was not generally known at the time of the patent application and the accused infringer’s product has identical characteristics to the product produced by the patented product, then the burden of proof shifts to the accused infringer to provide evidence that its process is different from the patented process. The extent to which the accused infringer must disclose its process to overcome Article 104’s presumption is a matter that is briefed and heard during the litigation.
Protective Orders. Patent litigation before the Japanese courts necessarily involves the introduction of sensitive business and technical information that is not generally known in the public. Moreover, the opposing parties are typically not only adversaries in court but also competitors in the marketplace. Facilitating the production and use of such sensitive information in U.S. litigation is most commonly accomplished by confidentiality orders or “protective orders” entered by the court that governs who can see the evidence and how it can be used.
In Japanese patent litigation, there are typically three approaches to protecting sensitive trade secret information introduced during litigation. First, under Article 92 of the Code of Civil Procedure, the court may seal the case record from public inspection. Although this protection is worthwhile in protecting the case materials from public disclosure, it does not prevent parties to the case from inspecting the entirety of the case record, and it does not place any restrictions on the parties’ use of evidence introduced during the litigation.
Article 105-4 of the Patent Act was enacted to respond to this concern and permits the court upon motion of a party to enter an order restricting the use of evidence received by a person under the order to purposes related solely to the litigation. Article 200-2 of the Patent Act establishes severe penalties for violating the protective order, including imprisonment up to five years and/or a fine up to 5,000,000 yen. Perhaps due to the stiff criminal penalties for violating protective orders and the narrowness of information to which Article 105-4 applies, parties often forgo moving for a protective order under Article 105-4 of the Patent Act. Instead, they generally negotiate mutual non-disclosure and non-use agreements with civil penalties to facilitate the exchange and introduction of sensitive information during patent litigation.