Accused of Patent Infringement in Japan? Key Defenses You Need to Know

Facing an allegation of patent infringement in Japan can be a daunting prospect for any business. The remedies for infringement, including injunctions and substantial damages, can have severe operational and financial consequences. However, an accusation is not a conviction. Japanese patent law provides a range of robust defenses that an accused party can raise to either demonstrate that no infringement occurred or that the patent itself is invalid or unenforceable.

This article provides an overview of the key defenses available under Japanese patent law when facing an infringement claim. Understanding these can be crucial in formulating an effective response strategy.

I. Defenses Based on Non-Infringement of a Valid Patent

Even if a patent is valid, infringement only occurs if the accused product or process falls within the scope of the patentee's exclusive rights.

A. The Act is Not Within the Patent's Scope

This is the most fundamental defense: arguing that the accused product or process simply does not meet the limitations of the asserted patent claims. This involves detailed claim construction to determine the precise meaning and scope of the patent claims, followed by a comparison of the construed claims to the features of the accused product or process. If the accused embodiment does not practice all elements of any asserted claim (the "all elements rule" for literal infringement), or if it is not an equivalent under the Doctrine of Equivalents, then there is no infringement.

Another aspect is that patent rights in Japan extend only to the working of the patented invention "as a business" (業として - gyō to shite) (Article 68, Patent Act). Purely personal or household activities are generally excluded from the scope of patent rights. While this is less often a defense for corporate entities, it's a foundational limitation.

B. Experimental or Research Use (Article 69(1) - 試験又は研究のための実施 - Shiken Kenkyū no Tame no Jisshi)

Article 69(1) of the Patent Act provides a significant exception: "The effects of the patent right shall not extend to the working of the patented invention for experimental or research purposes."

1. Purpose: This provision is designed to promote technological progress and further innovation by allowing individuals and entities to use patented inventions for scientific inquiry, learning, and development without fear of infringement lawsuits. It ensures that patents do not unduly stifle the very innovation they are meant to encourage.
2. Scope of Permitted Activities: The scope of "experimental or research purposes" can include:
   • Research on the Patented Invention Itself: This covers activities aimed at understanding the patented invention, verifying its disclosed functions and effects, exploring improvements or alternative embodiments, or designing around it to develop non-infringing alternatives.
   • The "Bolar" Exemption Equivalent for Generic Drugs and Agrochemicals: A critical application of this exception, affirmed by the Supreme Court in the Pancreatic Disease Treatment Agent Case (Judgment of April 16, 1999), concerns generic pharmaceuticals and agricultural chemicals. Tests and trials conducted during the term of the original patent solely for the purpose of obtaining regulatory approval to market a generic version of the patented drug or agrochemical after the patent expires are generally considered to fall under this experimental use exception. This allows generic manufacturers to prepare for market entry promptly upon patent expiration, fostering competition and access to more affordable medicines.
3. Limitations – The "Research Tool" Issue:
   A significant limitation is that Article 69(1) generally does not cover the use of a patented invention as a tool in research directed to a different subject matter, if the patented invention (the "research tool" itself, e.g., a patented DNA sequence, a specific assay method, or specialized lab equipment) is being used for its intended commercial or operational purpose in that research. In such cases, the use of the patented tool might require a license. The distinction is often framed as "research on the invention" (generally permitted) versus "research with the invention as an instrument for other research" (potentially infringing if the tool is patented and used without license). This area can be complex, especially in biotechnology.

C. Exhaustion of Patent Rights (特許権の消尽 - Tokkyoken no Shōjin) (First Sale Doctrine)

The doctrine of patent exhaustion, similar to the "first sale doctrine" in copyright, dictates that once a patentee (or their authorized licensee) sells a specific patented product, their patent rights with respect to that particular sold item are "exhausted."

1. Domestic Exhaustion:
   • Principle: If a patented product is lawfully sold in Japan by the patentee or with their consent, the patentee loses the right to control the subsequent use, resale, or repair of that specific physical item. The buyer and subsequent owners can generally use and resell that item freely without further permission from the patentee.
   • Rationale: This doctrine is based on the idea that the patentee has received their economic reward for the invention embodied in that item through its first authorized sale. Allowing the patentee to control downstream uses and sales of that specific item would unduly restrain trade and allow for "double dipping" (multiple remunerations for the same item). It ensures the free circulation of goods once they are legitimately placed on the market.
   • Repair vs. Reconstruction: A critical and often litigated issue is whether activities performed on a sold patented product constitute permissible "repair" (which is generally allowed under exhaustion) or impermissible "reconstruction" or "making anew" (which essentially creates a new infringing article not subject to the exhaustion of the original item). The Supreme Court of Japan in the landmark Canon Ink Tank Case (Judgment of November 8, 2007) established a multi-factor test to distinguish repair from reconstruction. The court stated that if processing or replacement of parts results in the creation of a "new product lacking identity with the original patented product that was sold," then the patent rights are not exhausted with respect to this "newly manufactured" item. Factors considered include the nature of the product, the essence of the patented invention, the mode and extent of processing/replacement, and ordinary trade practices.
2. International Exhaustion and Parallel Imports:
   This concerns whether the sale of a patented product abroad by the patentee (or with their consent) exhausts their Japanese patent rights with respect to that specific item if it is subsequently imported into Japan (parallel importation).
   • General Rule in Japan: No Automatic International Exhaustion: The Supreme Court of Japan in the BBS Wheels Case (Judgment of July 1, 1997) held that international exhaustion is not the default rule in Japan. Patent rights are territorial, meaning a Japanese patent is distinct from a patent in another country, even if for the same invention and owned by the same entity. Thus, an authorized sale abroad does not automatically extinguish the Japanese patent rights for that item upon its importation into Japan.
   • Implied License / Restriction on Enforcement for Parallel Imports: However, the BBS Wheels decision also established an important qualification. The Japanese patentee's right to prevent parallel importation of genuine goods (those lawfully sold abroad by the patentee or an economically identical entity like a subsidiary) can be restricted if:
     • The patentee did not explicitly and clearly reserve their Japanese patent rights at the time of the first sale abroad. This typically requires both a contractual agreement with the first purchaser in the foreign country restricting resale into Japan, AND a clear physical indication on the product itself that it is not to be imported or sold in Japan.
     • If such clear reservation and notice are absent, the Japanese patentee may be deemed to have granted an implied license for the goods to be imported and sold in Japan, or the enforcement of the Japanese patent against such parallel imports might be considered contrary to good faith.
       This creates a nuanced situation where parallel importation is often permissible unless the patentee has taken specific steps to prevent it.

D. Prior Use Right (先使用権 - Sen'yōken) (Article 79)

This is a significant defense for parties who were already using or preparing to use an invention before someone else filed a patent application for it.

1. Rationale: The prior use right aims to protect the investments and established business activities of those who independently developed and began utilizing an invention before it was patented by another party. It balances fairness to these prior users with the "first-to-file" principle of the patent system.
2. Requirements for Establishing a Prior Use Right:
   • Independent Creation/Legitimate Acquisition: The person asserting the right (or their predecessor) must have independently made the invention claimed in the patent, or legitimately learned of it from such an independent inventor, without knowledge of the content of the invention in the patent application before its filing.
   • Working or Preparation in Japan: At the time the patent application was filed by the other party, the person must have been, in good faith:
     • Commercially working the invention in Japan, OR
     • Making bona fide preparations to commercially work the invention in Japan.
       "Preparations for working" require more than just a mere idea; there must be an immediate intent to work the invention, which is objectively manifested through concrete actions (e.g., creating detailed designs, acquiring specialized machinery, securing materials). The Supreme Court in the Walking Beam Furnace Case (Judgment of October 3, 1986) provided guidance on what constitutes sufficient "preparations."
3. Scope of the Right:
   If a prior use right is established, it grants the prior user a statutory non-exclusive license to continue working the patented invention.
   • This license is royalty-free.
   • Its scope is limited to the invention and the business purpose for which it was being worked or prepared at the time the patent application was filed by the other party. This allows the prior user to continue their existing activities and natural expansions thereof, but not to extend into entirely new fields or uses of the invention beyond what was contemplated at the critical date. The courts have allowed for some evolution in the mode of working as long as the essential inventive idea remains the same.

II. Defenses Based on the Invalidity or Unenforceability of the Patent Itself

Even if an accused act falls within the scope of the patent claims and no other specific exceptions apply, the defendant can still challenge the patent itself.

A. Defense of Patent Invalidity (特許無効の抗弁 - Tokkyo Mukō no Kōben) (Article 104-3)

This is a powerful defense in Japanese patent infringement litigation.

1. Principle: An accused infringer can argue in court that the patent being asserted against them is, in fact, invalid because it contains one or more grounds for invalidation (e.g., lack of novelty, lack of inventive step, insufficient disclosure, improper amendment during prosecution).
2. Effect: If the court, after considering the evidence, is persuaded that the patent "should be invalidated by a patent invalidation trial" (i.e., the court finds clear and convincing evidence of an invalidity ground), then the patentee cannot enforce their patent rights against that defendant in that specific litigation (Article 104-3(1)).
   • Importantly, the court in an infringement action does not formally invalidate the patent on the JPO register; only the JPO can do that through a separate invalidation trial (無効審判 - mukō shinpan). However, the court's finding effectively renders the patent unenforceable against the defendant in that case.
3. Background: This defense was statutorily codified by Article 104-3, building upon earlier case law (notably the Kilby Case, Supreme Court, April 11, 2000) which had allowed such a defense under the broader doctrine of abuse of rights if the patent's invalidity was "clear and obvious."
4. Patentee's Counter-Argument ("Correction Rebuttal" - 訂正の再抗弁 - Teisei no Saikōben): If the defendant raises an invalidity defense, the patentee can counter by arguing that even if a ground for invalidity exists in the patent as currently worded, this defect could be cured by a permissible correction (amendment) of the claims or specification (e.g., through a Trial for Correction or a request for correction in a JPO proceeding). The patentee would then argue that the accused product would still infringe the (hypothetically) corrected, valid claims. The court would then need to consider the allowability of such a hypothetical correction and infringement of the notionally corrected claims. This adds another layer of complexity to the proceedings.

B. File Wrapper Estoppel (出願経過禁反言 - Shutsugan Keika Kinhan-gen)

As mentioned in the context of claim interpretation and the Doctrine of Equivalents, statements, arguments, or claim amendments made by the applicant/patentee during the prosecution of the patent application (or during post-grant JPO proceedings like oppositions or invalidation trials) can create an estoppel.

• If a patentee, to secure the patent or maintain its validity, clearly and unambiguously surrendered or disclaimed certain subject matter or interpretations, they may be estopped from later asserting an interpretation or scope of equivalents that contradicts those earlier representations.
• This functions as a defense because it limits the assertable scope of the patent right based on the patentee's own prior conduct.

C. Abuse of Patent Rights (権利濫用の抗弁 - Kenri Ran'yō no Kōben)

This is a general defense rooted in Article 1(3) of the Japanese Civil Code, which prohibits the abuse of rights.

• In exceptional circumstances, even if a patent is technically valid and infringed, its enforcement may be denied if such enforcement is found to constitute an abuse of the patent right.
• This could apply if the patentee's assertion of their rights is grossly unfair, contrary to good faith, serves an improper ulterior purpose that undermines the objectives of the patent system, or violates public policy.
• Examples where this defense might be raised (though success is rare and fact-dependent) could include certain types of conduct by "patent trolls," or the enforcement of Standard-Essential Patents (SEPs) in a manner that grossly violates FRAND (Fair, Reasonable, and Non-Discriminatory) licensing commitments.

III. Other Specific Statutory Defenses/Limitations

The Patent Act also contains a few other specific limitations on the reach of patent rights:

• Acts of Transit, Pre-existing Articles (Article 69(2)): Patent rights do not extend to vessels or aircraft merely passing through Japanese territory, or to articles that were already existing in Japan from before the patent application was filed.
• Compounding of Medicines by Pharmacists (Article 69(3)): Patent rights concerning inventions of medicines made by mixing two or more medicines, or methods of such mixing, do not extend to the act of compounding medicines by pharmacists according to a doctor's or dentist's prescription, or to the medicines so compounded for that prescription.
• Various Intervening Rights (中用権 - Chūyōken, etc.) (Articles 79-2, 80, 176): As briefly mentioned under statutory licenses, these provisions grant non-exclusive licenses to parties who acted in good faith in complex situations involving patents that were later found to be owned by someone else, or patents that were invalidated and then subsequently restored through re-trial proceedings. These rights typically require the payment of reasonable remuneration.

Conclusion

Facing an allegation of patent infringement in Japan initiates a complex legal process, but accused parties are not without recourse. A robust array of defenses is available, ranging from arguments that the accused activity falls outside the statutorily defined scope of patent rights (e.g., it's not "as a business," or it qualifies for the experimental use exception), or that the patent right has been exhausted with respect to the specific item in question, to more fundamental challenges asserting that the patent itself is invalid and unenforceable. Furthermore, equitable doctrines like file wrapper estoppel and abuse of rights can provide additional layers of defense in appropriate circumstances.

Understanding these diverse defenses and the specific conditions under which they apply is crucial for any business operating in Japan, whether it is asserting its own patents or navigating the patent landscape to avoid infringing the rights of others.