How Can a Prior User Right Be Established as a Defense to Patent Infringement in Japan?

In the intricate world of Japanese patent litigation, one of the key defenses available to an alleged infringer is the prior user right (先使用権 - senshiyō-ken). Codified in Article 79 of the Japanese Patent Act, this right protects individuals or entities who, in good faith, were already working an invention or making substantial preparations to do so before a patent application for the same invention was filed by another party. Successfully establishing a prior user right grants the prior user a statutory, non-exclusive license to continue working the invention within the scope of their existing activities, thereby shielding them from infringement liability.

The underlying policy of the prior user right is multifaceted. It aims to strike a balance between the exclusive rights granted to a patentee and the legitimate interests of those who have independently developed and invested in an invention prior to the patent's emergence. It encourages the actual working and commercialization of inventions by protecting existing investments. Furthermore, it helps prevent a scenario where parties might feel compelled to file for patents defensively on every minor improvement or internal innovation simply to avoid being blocked by a later patent from an independent inventor, thus mitigating excessive and potentially unnecessary patenting. This defense is particularly valuable when the prior use was conducted in a manner that does not invalidate the patent for lack of novelty (e.g., through secret commercial use).

The Statutory Basis: Article 79 of the Patent Act

Article 79 of the Patent Act states: "A person who, without knowledge of the content of an invention claimed in a patent application, has made the invention themselves, or has learned the invention from a person who made the invention without knowledge of the content of the invention claimed in the patent application, and has been working the invention as a business or has been making preparations therefor in Japan at the time of the filing of the said patent application (or, if priority is claimed, at the time of the filing of the earliest priority application), shall have a non-exclusive license (通常実施権 - tsūjō jisshi-ken) on the patent right for the patented invention, but only to the extent of the invention and the purpose of the business which is being worked or for which preparations are being made."

This provision essentially grants a "free," statutory, non-exclusive license to bona fide prior users.

Establishing Prior User Rights: The Key Requirements

Asserting a prior user right is an affirmative defense, and the burden of proving its elements rests on the defendant in an infringement suit. The requirements are stringent and fact-intensive:

1. Timing and Nature of Activity: Working or Preparation for Working at the Time of Patent Filing

The cornerstone of a prior user right is that the person must have been, in Japan, either (a) actually working the invention as a business, or (b) making preparations for such working, at the critical date, which is the filing date of the patent application in question (or the earliest relevant priority date if priority is claimed).

Defining "Preparation for Working" (事業の準備 - jigyō no junbi): This is often a focal point of disputes. Mere conceptualization or preliminary research is generally insufficient. Japanese courts, including the Supreme Court, have clarified this standard:

• Subjective Intent: The prior user must have had a genuine intention to immediately (or in the near future) commercially work the invention.
• Objective Manifestation: This subjective intent must have been manifested objectively to a degree that it can be recognized by others. This principle was notably articulated by the Supreme Court in its decision of October 3, 1986 (Minshu Vol. 40, No. 6, p. 1068), in the "Walking Beam Furnace" case (「ウォーキングビーム炉」事件).
• Relationship-Specific Investment (関係特殊的投資 - kankei tokushuteki tōshi): A strong indicator of sufficient preparation is often whether the prior user has made "relationship-specific investments" – investments that would be significantly devalued or lost if they were subsequently prevented from working the invention due to the patent.

Examples from Case Law Illustrating Sufficient Preparation:

• Completion of a Prototype: Demonstrating a working prototype of the invention is often compelling evidence. For instance, having a third party manufacture a prototype based on the prior user's design, followed by receipt of the completed prototype, was deemed sufficient preparation (Tokyo District Court, March 11, 1991, Sweatband case or 「汗取バンド」事件). Similarly, for a process invention, commissioning samples made by the process and using them for sales pitches indicated adequate preparation (Osaka District Court, July 11, 1995, Anchor Manufacturing Method case or 「アンカーの製造方法」事件).
• Specific Investments in Materials or Equipment: Acquiring materials, tools, or machinery specifically tailored for producing the invention can demonstrate objective preparation. Examples include completing drawings for a mold and initiating its manufacture (Osaka District Court, July 28, 2005, Monkey Wrench case or 「モンキーレンチ」事件), or submitting clinical trial plans using a drug manufactured by the prior user's method and having the manufacturing facility operational (Tokyo District Court, March 22, 2006, Manufacturing Method of Biologically Active Protein case or 「生理活性タンパク質の製造法」事件).
• Significant Contractual or Engineering Efforts: Even without possessing the final physical manufacturing setup, substantial investments in detailed design work, engineering for plant construction, or concluding necessary licensing agreements for components or related technology can qualify as preparation, especially for large-scale industrial projects (Tokyo District Court, April 27, 2000, Continuous Manufacturing Method for Aromatic Carbonates case or 「芳香族カーボネート類の連続的製造法」事件).
• Custom-Ordered Products: In the Walking Beam Furnace case, the Supreme Court recognized that for custom-ordered, high-value industrial equipment, the preparation of detailed quotation specifications and designs submitted to a potential customer could constitute sufficient preparation, even if the specific order was not ultimately received. This was because significant, specific engineering effort had been invested. This contrasts with situations where only general schematic drawings were prepared without detailed adaptation to a customer's needs, which was found insufficient (Tokyo District Court, June 24, 2002, Hanrei Jihō No. 1798, p. 147, Six-Roll Calender Structure case or 「6本ロールカレンダーの構造及び使用方法」事件).

However, if there is a significant interruption or apparent abandonment of the project after initial preparations (e.g., a prototype is made but no further steps towards commercialization are taken for several years), a court may find that the "preparation" was insufficient or had ceased.

2. Completion of the Invention by the Prior User (発明が完成していること - hatsumei ga kansei shiteiru koto)

Although Article 79 does not explicitly state that the prior user's invention must have been "completed" by the critical date, this is a well-established requirement through case law, including the aforementioned Walking Beam Furnace Supreme Court decision.

• Rationale: One cannot realistically be "preparing to work" an invention that has not yet been fully conceived or developed to a workable stage.
• Standard of Completion: "Completion" in this context does not necessarily mean that a fully commercialized product must exist or that final, detailed manufacturing drawings must be finalized. The invention is generally considered completed if its technical idea has been embodied or concretized to such an extent that a person skilled in the art (PSITA) could, based on the existing designs, prototypes, or experimental data, create the final product and put the invention into practice. The Supreme Court in the Walking Beam Furnace case indicated that it is sufficient if the specific constitution is shown by design drawings, and a PSITA could create final manufacturing drawings and manufacture the product based on these.
• Distinction from Patentability Disclosure Standards: This standard of "completion" for prior user rights is not necessarily the same as the enablement or support requirements for a patent application (which demand a disclosure enabling a PSITA to work the invention across the entire claimed scope). The focus for prior user rights is on the prior user's own developed invention.
• Evidence of Completion: Courts scrutinize whether the problem to be solved by the prior user's invention and the means for solving it were sufficiently "materialized" (具体化 - gutaika) before the patentee's filing date. Vague concepts or mere statements of a desired outcome without specific technical means are typically insufficient. For example, a mere assertion of "providing a means to prevent clogging" without specifying that means was deemed incomplete (Tokyo District Court, December 13, 2017, Raw Nori Foreign Matter Removal Device case or 「生海苔異物分離除去装置における生海苔の共回り防止装置」事件). Conversely, if the invention was actually being practiced, detailed academic understanding of the underlying scientific principles is not required (Osaka District Court, February 14, 1966, Hanrei Jihō No. 456, p. 56, Fused Alumina case or 「熔融アルミナ」事件).
  Evidence that key components or data supporting the invention were only acquired or generated by the prior user after the patent filing date can fatally undermine a claim that the invention was completed prior to that date.

3. Subjective Requirement: Independent Creation or Acquisition in Good Faith (善意性 - zen'i-sei)

Article 79 requires that the person asserting prior user rights must have:

• Made the invention themselves without knowledge of the content of the invention claimed in the patent application (i.e., independent creation), OR
• Learned the invention from a person who made it without knowledge of the content of the invention claimed in the patent application (i.e., legitimate acquisition from an independent creator).
• Purpose: This "good faith" or "independent origin" requirement is crucial. It ensures that prior user rights protect genuine, independent innovation and investment, not activities derived from or based on knowledge of the patentee's invention (e.g., after the patent application has been published or the invention otherwise disclosed by the patentee-to-be).
• No Rights for Derivers: If the alleged prior user actually derived the invention from the patent applicant (or someone connected to them), prior user rights cannot be established. The defense is for those who developed or acquired the technology independently.
• Identity between Prior User's Invention and Patented Invention: A nuanced issue is the required degree of identity between the invention completed and worked/prepared by the prior user and the invention as claimed by the patentee.
  • While it was often implicitly assumed that they needed to be substantially identical, some arguments and case law suggest a more flexible approach. The core policy is to protect the prior user's bona fide, pre-existing activities and investments. If the prior user independently developed and was working their invention, and their actual activities would fall within the scope of the later-filed patent claims (even if the patent claims are broader or define the invention slightly differently), there's a strong argument for prior user rights to attach to those established activities. The focus is on protecting the actual scope of the prior user's work or preparations, not necessarily demanding an exact match of the entire conceptual "technical idea" (技術的思想 - gijutsuteki shisō) of the patented invention, provided the prior user's work was independent and in good faith. This is particularly relevant for patents involving selection inventions or numerical range limitations, where a patentee might later claim a specific range within a broader field that the prior user was already legitimately exploring.

Scope and Effect of Prior User Rights

If all requirements are met, the prior user is granted a statutory, non-exclusive license (a type of ordinary working right) under the patent.

A. Limitation to the "Invention and Purpose of the Business"

The scope of this license is not unlimited. It is confined to the "invention and the purpose of the business which is being worked or for which preparations are being made" as of the patent filing date.

• Changes in the Mode of Working (実施形式の変更 - jisshi keishiki no henkō): The prior user is not necessarily "frozen" into the exact embodiment or process they were using at the critical date. The Walking Beam Furnace Supreme Court decision acknowledged that a prior user can make modifications to their product or process. The key is whether these changes remain within the scope of the "invention being worked or prepared for" at the time of the patent filing. If the prior user’s initially prepared invention (let’s call it A) is essentially coextensive with the patented invention (P), then the prior user right might allow working across the scope of P. If A is only a specific embodiment or a narrower concept falling within P, the right is limited to that narrower scope of A and reasonable modifications thereof.
• Changes in the Form or Scale of Business (事業態様の変更 - jigyō taiyō no henkō):
  • From Selling to Manufacturing: If a prior user was merely selling products sourced from others, their prior user right is likely limited to continuing such sales. Expanding into manufacturing the products themselves typically involves new types of investment and activities that might be considered outside the scope of the original "business being prepared," especially if manufacturing was not part of the initial objective preparations.
  • Expansion of Business: Reasonable expansion of the existing business, such as increasing production volume to meet natural market growth or changing manufacturing locations for efficiency, is generally considered permissible, as long as it's based on the same invention for which preparations were made. The aim is to allow the prior user to realize the benefits of their early, independent investment.

Who Can Invoke Prior User Rights? (援用権者 - en'yō-kensha)

The right can be invoked by:

• The Prior User Themselves: The individual or entity that meets the requirements.
• Entities Acting on Behalf of the Prior User (e.g., Subcontractors): If a company (the prior user) commissions a subcontractor to manufacture the invention according to its specific instructions and exclusively for its supply, the company (the principal) can generally assert prior user rights covering that manufacturing activity. This was affirmed by the Supreme Court on October 17, 1969 (Minshu Vol. 23, No. 10, p. 1777, the "Globe-Shaped Radio" case or 「地球儀型ラジオ」事件). The rationale is that the primary investment and initiative lie with the principal. The principal can then continue such manufacturing, even if they switch to a different subcontractor.
• Purchasers from the Prior User: When a prior user, under the protection of their Article 79 right, lawfully manufactures and sells products, the purchasers of those specific products are generally considered able to use and resell them without infringing the patent. This is often viewed as an application of exhaustion principles to products lawfully placed on the market under a statutory license. If purchasers could not freely use or resell such goods, the prior user's right to conduct their business would be significantly impaired. (See, e.g., Chiba District Court, December 14, 1992, Chisai-shū Vol. 24, No. 3, p. 894; Nagoya District Court, April 28, 2005, Hanrei Jihō No. 1917, p. 142).

Relationship with Article 69(2)(ii) (Rights Pertaining to Pre-existing Articles)

It is important to distinguish prior user rights under Article 79 from the provision in Article 69(2)(ii) of the Patent Act. Article 69(2)(ii) states that the effects of a patent right shall not extend to "articles existing in Japan at the time of filing of the patent application."

• Article 69(2)(ii) provides a defense for the use or assignment of specific, tangible articles that physically existed in Japan before the patent application was filed. It does not, however, grant any right to continue manufacturing new instances of the invention.
• Article 79, in contrast, is a broader right that allows the prior user to continue working the invention within the scope of their business, which can include ongoing manufacturing. However, it requires proving the elements of independent development, completion of the invention, and business activity or preparation.

Thus, a party might use Article 69(2)(ii) to sell off existing stock of an item, but if they wish to continue manufacturing and selling new units of that item post-patent filing, they would need to establish a prior user right under Article 79.

Conclusion

The prior user right under Article 79 of the Japanese Patent Act provides a crucial defense against patent infringement claims for those who have independently and in good faith invested in an invention before a patent application was filed by another. Establishing this right requires meticulous proof of the timing and nature of the prior activities, the completion of the user's invention, and the independent origin of that invention. While the resulting license is non-exclusive and limited in scope, it plays a vital role in the Japanese patent system by protecting legitimate pre-existing business activities and fostering a competitive environment that respects both established investments and new innovations.