How Do Japanese Suits to Rescind Trial Decisions Interact with IP Infringement Lawsuits? (The "Double Track" System Explained)

In Japan, disputes over intellectual property (IP) rights, particularly those like patents that are granted through an administrative process by the Japan Patent Office (JPO), can unfold along two distinct yet interconnected procedural pathways. An IP right holder might sue for infringement in a civil court, while simultaneously, the validity of that same IP right can be challenged through the JPO's trial system, with the JPO's trial decision then being appealable to the Intellectual Property (IP) High Court via a "Suit to Rescind a Trial Decision" (shinketsu torikeshi soshō). This potential for parallel proceedings creates what is often referred to as the "double track" (ダブルトラック) system, leading to complex interactions and strategic considerations for litigants.

Q: What is the "double track" system in Japanese IP litigation, and how did it evolve?

A: The "Double Track" System and its Evolution

The "double track" system arises from the dual avenues available for addressing the enforcement and validity of IP rights that are subject to JPO registration, such as patents, utility models, designs, and trademarks.

• Track 1: JPO Validity Challenges and Judicial Review: The validity of these IP rights can be formally challenged at the JPO through mechanisms like an invalidation trial (無効審判 - mukō shinpan). The JPO trial panel issues a trial decision (shinketsu) on validity. This administrative trial decision can then be challenged in court by filing a Suit to Rescind that Trial Decision with the IP High Court. This track is primarily concerned with the erga omnes (against the world) validity of the IP right itself.
• Track 2: Civil Infringement Lawsuits: Separately, the holder of an IP right can file an infringement lawsuit in a civil court (typically a District Court, with subsequent appeals for patent and utility model cases often going to the IP High Court). This action seeks remedies such as injunctions against the infringing activity and monetary damages.

Evolution of the System:

• Historical Context – Pre-Kilby Era: Traditionally, Japanese civil courts hearing infringement lawsuits were generally reluctant to allow defendants to mount a full-fledged defense arguing that the asserted IP right was invalid. Influenced by legal traditions (like that of Germany) that emphasized a strict separation between infringement courts and the specialized administrative bodies responsible for granting and revoking IP rights, the JPO was seen as having primary, if not exclusive, jurisdiction over determining the validity of the rights it granted. This often meant that a defendant in an infringement suit who believed the IP right was invalid had to initiate a separate invalidation trial at the JPO and then try to persuade the civil court to stay the infringement proceedings pending the JPO's decision, or hope for a swift and favorable outcome from the JPO.
• The "Kilby Case" – A Turning Point: A pivotal shift occurred with the Supreme Court judgment of April 11, 2000 (Minshū Vol. 54, No. 4, p. 1368), widely known as the "Kilby case" (キルビー判決 - Kirubī hanketsu). In this landmark decision, the Supreme Court held that if a patent clearly possesses grounds for invalidation, then the assertion of rights based on such a patent in an infringement lawsuit could, in the absence of special circumstances, constitute an abuse of rights and therefore be impermissible. This opened the door for infringement courts to consider the underlying validity of the IP right more directly.
• Statutory Codification – Article 104-3 of the Patent Act: Responding to the Kilby judgment and the evolving needs of IP litigation, the Patent Act was amended in 2004 (effective from 2005) to introduce Article 104-3. This article explicitly provides that in an infringement lawsuit concerning a patent right or an exclusive license, if it is recognized that the patent in question should be invalidated by a patent invalidation trial, the patentee or exclusive licensee may not exercise their rights against the adverse party. Similar provisions were subsequently introduced into the Utility Model Act (Article 30), Design Act (Article 41), and Trademark Act (Article 39).
• The Resulting "Double Track": This legal evolution has solidified the "double track" system. The validity of an IP right can now be substantively contested in two distinct forums:
  1. Through the specialized JPO trial system (e.g., an invalidation trial) and any subsequent Suit to Rescind that JPO trial decision at the IP High Court. This administrative law track primarily focuses on the formal, erga omnes status of the IP right.
  2. As a defense (often called an "invalidity defense" or "Kilby defense") within an IP infringement lawsuit before a civil court. The civil court's finding on validity in this context is, in principle, an inter partes finding (binding only between the litigating parties) made primarily for the purpose of deciding the specific infringement claim before it.
     This concurrent possibility of validity assessment by different bodies is the essence of the "double track" system and brings with it both opportunities for comprehensive review and challenges related to potential inconsistencies.

Q: How does a finding on validity in an infringement lawsuit affect a Suit to Rescind a Trial Decision (or the underlying JPO trial)?

A: Impact of Infringement Lawsuit Validity Findings on JPO/Rescission Suit Proceedings (侵害訴訟の判断が審決取消訴訟に及ぼす影響 - shingai soshō no handan ga shinketsu torikeshi soshō ni oyobosu eikyō)

When a civil court handling an infringement lawsuit makes a determination on the validity of the IP right (e.g., under Patent Act Article 104-3), the question arises as to what effect, if any, this has on parallel or subsequent proceedings at the JPO or in a Suit to Rescind a JPO Trial Decision before the IP High Court.

• Nature of the Infringement Suit Judgment: A judgment in an infringement lawsuit is primarily aimed at determining whether an infringement has occurred and what remedies (such as an injunction or damages) are appropriate. The court's assessment of the IP right's validity in this context is technically a preliminary issue or a component of its reasoning for its decision on the infringement claim itself; the ultimate "subject matter of litigation" (soshōbutsu) is the infringement claim, not the erga omnes validity of the IP right.
• No Direct Legal Binding Effect on JPO or IP High Court (in its administrative capacity): As a matter of Japanese law, a civil court's finding on the validity of an IP right in an infringement case—even if that finding is made by the IP High Court acting in its capacity as an appellate court for civil infringement matters—does not have a direct, legally binding effect (such as res judicata or similar issue preclusion) on the JPO when it conducts an invalidation trial, nor on the IP High Court when it is adjudicating a Suit to Rescind a JPO Trial Decision (which is an administrative litigation proceeding). The JPO and the IP High Court (when acting in its administrative litigation capacity reviewing JPO decisions) make their own independent determinations on the erga omnes validity of the IP right. This independence stems from their distinct statutory mandates and the specialized nature of the JPO's examination and trial system.
• Factual or Persuasive Influence: While not legally binding, a well-reasoned decision on validity from an infringement court, particularly if it is a carefully considered judgment from the IP High Court (acting in its civil appellate role), can certainly exert a significant factual or persuasive influence on the JPO trial examiners or on the IP High Court judges hearing a related administrative rescission suit. There is a natural, albeit informal, inclination within the Japanese legal system to strive for consistency and avoid overtly contradictory decisions by different state organs concerning the same IP right, especially when sophisticated judicial bodies like the IP High Court are involved in both tracks.
• Information Sharing and Coordination: To mitigate potential conflicts and promote informed decision-making, mechanisms for information sharing exist. For instance, Article 168 of the Patent Act includes provisions for mutual notification between a court handling an infringement suit and the JPO concerning pending proceedings related to the same patent. This helps ensure that both forums are aware of parallel actions involving the same IP right. Within the IP High Court itself, which has jurisdiction over appeals from many infringement decisions and original jurisdiction over Suits to Rescind JPO Trial Decisions, there may be internal case management efforts or informal practices to foster consistency, such as potentially assigning related cases from both tracks to the same panel of judges or facilitating communication and information exchange between different panels handling related matters. However, it is important to note that this is more an operational consideration aimed at harmonization rather than a formal procedural consolidation or a guaranteed fusion of the two distinct legal tracks.

Q: How does a JPO trial decision (or a judgment in a Suit to Rescind it) affect a pending or subsequent infringement lawsuit?

A: Impact of JPO Trial Decision / Rescission Suit Judgment on Infringement Lawsuits (審決取消訴訟の判断が侵害訴訟に及ぼす影響 - shinketsu torikeshi soshō no handan ga shingai soshō ni oyobosu eikyō)

The outcome of JPO trial proceedings (and any judicial review thereof) can have a profound impact on concurrent or future IP infringement litigation.

• Effect of a Final JPO Invalidation Trial Decision (mukō shinketsu):
  • If the JPO issues a trial decision invalidating an IP right, and this decision becomes final and binding (either because no Suit to Rescind is filed within the statutory period, or if such a suit is filed but is ultimately dismissed by the courts, thereby confirming the JPO's invalidation decision), the IP right is generally deemed to have never existed ab initio (from the beginning), or from a specific point in time if it was invalidated on certain grounds like loss of entitlement by the patentee after the grant (see, e.g., Patent Act Article 125).
  • Impact on a Pending Infringement Suit: If an infringement lawsuit based on that now-invalidated IP right is currently pending, the defendant in the infringement suit can present the final JPO invalidation decision to the civil court as conclusive evidence that the asserted IP right is null and void. This would typically compel the civil court to dismiss the infringement claim, as there is no longer a valid underlying IP right to be infringed.
  • Impact on a Finalized Infringement Judgment (Pre-2011 Amendment Complications): Historically, a more complex situation arose if a civil court had already issued a final judgment in favor of the IP right holder in an infringement suit, and subsequently the JPO issued a final and binding decision invalidating that same IP right. Under Japanese law, such a supervening administrative decision (the JPO's invalidation) that fundamentally alters the basis of a prior civil judgment could constitute grounds for a "retrial" (再審 - saishin) of the finalized infringement judgment, as per Article 338, Paragraph 1, Item (viii) of the Code of Civil Procedure (which allows for retrial if a judgment was based on an administrative disposition that was later altered by a subsequent administrative disposition). This meant that a hard-won infringement victory could potentially be undone if the IP right it was based on was later invalidated by the JPO, creating a degree of legal instability for IP right holders.
• Effect of a Final JPO Trial Decision Upholding Validity (furadaki shinketsu):
  • If, conversely, the JPO issues a trial decision that dismisses an invalidation request and thereby upholds the validity of the IP right (often termed a "request not well-grounded" - 請求不成立審決 seikyū fuseiritsu shinketsu), and this decision becomes final, it significantly strengthens the IP right holder's position in any concurrent or future infringement litigation. While such a JPO decision upholding validity is not, in theory, strictly binding on the civil court hearing the infringement suit (due to the Kilby principle and provisions like Patent Act Article 104-3, which allow the infringement court to make its own independent assessment of validity), it is nonetheless a highly persuasive finding from the specialized administrative agency responsible for granting and examining IP rights.
  • It's also important to note the preclusive effect of such a JPO decision upholding validity. Under Article 167 of the Patent Act (as amended in 2011), a final JPO trial decision in an invalidation trial has an effect (ichiji-fusaikō-kō) that prevents the parties who participated in that JPO trial (and their successors or assigns) from filing another invalidation request at the JPO based on the same facts and same evidence. This effect is now primarily inter partes (between the parties to the JPO trial).
• Effect of a Judgment in a Suit to Rescind a JPO Trial Decision:
  • If the Court Rescinds a JPO Invalidation Decision: Suppose the JPO had invalidated a patent, but the IP High Court, in a Suit to Rescind, finds the JPO's invalidation decision unlawful and rescinds it. The case is then remanded to the JPO for a new trial. If the JPO, upon this remand, ultimately issues a new trial decision that upholds the patent's validity, this outcome would obviously support the patentee's position in any related infringement lawsuit.
  • If the Court Rescinds a JPO Decision that had Upheld Validity (or that had Refused an Application): Conversely, if the JPO had initially upheld the validity of a patent (by dismissing an invalidation request), and the party who sought invalidation successfully sues to rescind that JPO decision, the matter is remanded to the JPO. If the JPO, on remand, then issues a new trial decision invalidating the patent, this would be detrimental to the patentee in any related infringement suit.
  • If the Court Dismisses a Suit to Rescind (thereby confirming the JPO's trial decision): In this scenario, the JPO's original trial decision stands with judicial affirmation. The impact on any infringement litigation would then depend directly on what that JPO trial decision was (e.g., whether it invalidated the IP right or upheld its validity).

Q: Have there been any recent legislative changes to manage the complexities of the "double track" system, particularly concerning final infringement judgments?

A: Legislative Refinements – Patent Act Article 104-4 (主張の制限 - shuchō no seigen)

The potential for a finalized civil judgment in an infringement case to be overturned by a subsequent JPO invalidation decision (via a retrial action) was seen as problematic for legal stability.

• The Problem: As mentioned, a defendant who had lost an infringement suit and exhausted their appeals in the civil courts could, in theory, continue to file (or have others file) invalidation trials at the JPO. If any of these subsequent JPO trials resulted in the invalidation of the IP right, the defendant might then be able to use that JPO decision to seek a retrial of the original infringement judgment, potentially undoing a finally adjudicated civil liability. This created prolonged uncertainty, especially for patentees who had successfully enforced their rights in court.
• The 2011 Patent Act Amendment (Effective April 1, 2012) – Introduction of Article 104-4: To address this concern and enhance the finality of civil judgments in infringement cases, Article 104-4 was introduced into the Patent Act.
• Effect of Article 104-4: This article restricts the ability of a party who was a party to a finalized infringement lawsuit (or related proceedings for preliminary injunction compensation) to assert, in a subsequent retrial action (saishin no uttae) against that final civil judgment, the fact that certain types of JPO decisions—specifically, a JPO decision revoking or invalidating the patent, or a JPO decision invalidating a patent term extension, or certain types of JPO decisions allowing for correction of the patent claims—have subsequently become final and binding.
• Purpose and Scope: The primary aim of Article 104-4 is to prevent a party who has already had a full opportunity to litigate the validity of the patent as a defense in the infringement suit (under the mechanism of Article 104-3) from effectively getting a "second bite at the apple" by trying to unravel a final civil court judgment through later, successful JPO invalidation proceedings. It seeks to give greater finality to the civil court's decision on infringement and validity as between those specific litigating parties, once the infringement litigation has run its course.
• Limitations: It is important to note that Article 104-4's preclusive effect is generally understood to apply only to the "parties to said [infringement] litigation". It does not necessarily prevent a third party (one who was not involved in the original infringement suit) from successfully challenging the patent's validity at the JPO. If such a third party obtains a JPO decision invalidating the patent, that decision would still have erga omnes effect, meaning the patent is invalid against the world, even if Article 104-4 might restrict the original infringement defendant from using that specific JPO decision to directly seek a retrial of their own finalized infringement judgment. The precise interplay in all scenarios remains a complex area of law. Similar restrictive provisions (applying their respective IP Act's version of Article 104-3) have been introduced into the Utility Model Act, Design Act, and Trademark Act.

Q: How do courts and the JPO attempt to manage potential conflicts or inefficiencies arising from the double track?

A: Managing the Double Track System

Given the potential for parallel proceedings and different forums addressing the same underlying IP right, various mechanisms and practices are in place to manage the "double track" system:

• Stays of Proceedings (訴訟手続の中止 - soshō tetsuzuki no chūshi):
  • A civil court handling an infringement lawsuit has the discretion to stay (suspend) its own proceedings if a related JPO invalidation trial or a Suit to Rescind a JPO Trial Decision is pending and its outcome is likely to be dispositive or highly relevant to the infringement case (Patent Act Article 168, Paragraph 2).
  • Conversely, a JPO trial panel also has the discretion to stay its own proceedings if related court litigation (e.g., an infringement suit where validity is being hotly contested) is pending (Patent Act Article 168, Paragraph 1).
  • The decision to grant a stay in either forum is discretionary and will depend on various factors, including the respective stages of each proceeding, the likelihood of a prompt decision in the other forum, the degree of overlap in the issues, and the potential for prejudice to either party if a stay is or is not granted.
• Information Exchange System (通知制度 - tsūchi seido): Article 168 of the Patent Act also establishes a formal system for information exchange:
  • The civil court handling an infringement suit is required to notify the JPO Commissioner-General of the institution of such a suit and also of its conclusion (Article 168(3)).
  • Upon receiving such notification, the JPO Commissioner-General must, in turn, inform the court whether any JPO trial proceedings (e.g., an invalidation trial) concerning that same patent are pending or have been initiated, and also notify the court of the outcome of such JPO proceedings (e.g., dismissal of the trial request, issuance of a trial decision, or withdrawal of the request) (Article 168(4)).
  • Furthermore, if the court is notified by the JPO that a trial is pending, and if the invalidity defense under Article 104-3 has been raised in the infringement suit, the court is then required to notify the JPO Commissioner-General of this fact (Article 168(5)).
  • Upon receiving this latter notification, the JPO Commissioner-General may then request the court to provide copies of relevant documents from the court record (such as briefs or evidence related to the validity challenge) that the JPO trial examiners deem necessary for their own trial proceedings (Article 168(6)).
    This statutory notification system is designed to ensure that both the civil courts and the JPO are aware of parallel proceedings concerning the same IP right, which can facilitate more informed and potentially more consistent decision-making.
• The IP High Court's Potential Role in Harmonization: As the IP High Court in Japan frequently handles both appeals in civil IP infringement cases (especially for patents and utility models, where it has exclusive appellate jurisdiction) and original jurisdiction over Suits to Rescind JPO Trial Decisions, there is an institutional opportunity for promoting consistency and harmonization between the two tracks. While the two types of proceedings are legally distinct and arise from different jurisdictional bases (civil vs. administrative), the fact that the same specialized court is often involved at a high level allows for a more cohesive overview of related issues. As previously mentioned, practical efforts may be made through judicial case assignment policies or internal discussions among judges to foster consistency where appropriate, although this does not amount to a formal consolidation of the legally separate proceedings.

Conclusion

The "double track" system in Japanese IP litigation, which allows for the validity of an IP right to be challenged concurrently in JPO administrative proceedings (and their judicial review via a Suit to Rescind a Trial Decision) and as a defense in civil infringement lawsuits, presents both opportunities for a thorough and multifaceted examination of IP rights and inherent risks of procedural complexity, delay, or even potentially conflicting outcomes. Legislative innovations such as Patent Act Article 104-3 (allowing the invalidity defense in infringement suits) and Article 104-4 (restricting retrials of infringement judgments based on later JPO decisions between the same parties), along with procedural mechanisms like stays of proceedings and formal information exchange systems, represent ongoing efforts to manage and rationalize these interactions. Parties involved in significant IP disputes in Japan must develop their litigation strategies with a keen awareness of both tracks and a clear understanding of how developments and decisions in one forum can critically influence the proceedings and outcomes in the other.