Indirect Patent Infringement in Japan: When is a Company Liable for Supplying Components for a Patented Product, Like a Cheaper Remote Control?

In the competitive world of technology, patentees often face challenges not only from direct competitors who manufacture identical products but also from those who supply components or parts that, while not infringing on their own, enable or encourage end-users to assemble or use the patented invention. This is where the doctrine of indirect patent infringement becomes crucial. Japanese Patent Act, in its Article 101, provides a framework for holding such suppliers liable. Understanding the nuances of this provision is vital for businesses operating in or selling into the Japanese market, whether they are patent holders or component suppliers.

Let's explore this using a hypothetical scenario: Imagine a company, "Alpha Innovations," holds a patent for an innovative gaming console system, the "DreamConsole," which features a unique motion-sensitive controller. Another company, "Beta Accessories," starts selling a third-party remote control, the "QuickPlay Remote," which is cheaper than Alpha's official remote and is designed to work with the DreamConsole. When can Beta Accessories be held liable for indirect patent infringement in Japan?

The Foundation: "Production" of the Patented Invention by the End-User

Most provisions of Article 101 concerning indirect infringement of a product patent relate to the supply of items used for the "production" (seisan) of the patented product. Thus, a foundational question is whether the end-user, by combining or using the supplied component with other elements, engages in an act of "production" of the patented invention.

Under Japanese patent law, "production" is not limited to manufacturing an item from raw materials. It can include acts of assembly or combining parts to create a product that falls within the scope of the patent claims. For instance, in the Ichitaro case (Intellectual Property High Court, September 30, 2005), the act of an end-user installing word processing software onto a personal computer was deemed to constitute "production" of a patented information processing system defined in the claims. In our gaming console scenario, when a user connects Beta's QuickPlay Remote to Alpha's DreamConsole, making the patented controller system operational, this act would likely be considered "production" of the patented controller system.

However, the definition of "production" is not without its limits. For example, in the Thiazolidine Derivative Case (Osaka District Court, September 27, 2012), which concerned a patented pharmaceutical combination, the court found that the mere concomitant administration of two separate, existing drugs by a patient did not constitute "production" of the patented combination. The court reasoned that the drugs were being used as intended, without any further act of physically combining them into a new entity. This suggests that for "production" to occur in the context of combining components, there must be an act that brings into existence the claimed invention as a complete, operable entity. The user's subjective intent is generally not the determining factor; rather, it's the objective act of creating what the patent claims cover.

Type 1: Supplying Components for "Only" Use (Art. 101, items 1 and 4)

One category of indirect infringement involves supplying an item that is used "only" for the production of the patented product (Article 101, item 1) or "only" for the use of a patented process (Article 101, item 4).

The "only" (nomi) requirement means that the supplied component has no substantial non-infringing use that is economically, commercially, or practically significant. A mere theoretical or trivial alternative use will not typically negate this requirement. The standard is quite high.

• Single-Use Components: If Beta Accessories sells a version of the QuickPlay Remote (let's call it QuickPlay One) that is exclusively designed to work with Alpha's patented DreamConsole and has no other function, this would likely meet the "only" use test.
• Multi-Functional Components: What if Beta sells QuickPlay Two, which, in addition to working with the DreamConsole, also functions as a standard remote control for televisions? Here, the "only" use requirement is unlikely to be met because QuickPlay Two has a clear, substantial non-infringing use.Historically, the Bread Maker Case (Osaka District Court, October 24, 2000) suggested that even for a multi-functional product, if one of its functions was to implement the patented invention and users would likely use that function, the "only" requirement might be satisfied for that specific infringing function. However, this interpretation has been critiqued, especially since the Japanese Patent Act now has distinct provisions (discussed next) that are better suited for analyzing multi-use components. Today, it's generally understood that if an item has a commercially viable non-infringing use, it will not fall under the "only" use category of indirect infringement.

Type 2: Supplying "Indispensable" and "Non-Staple" Components (Art. 101, items 2 and 5)

Recognizing that many components can have multiple uses, Japanese law also provides for indirect infringement when a supplied item, though not for "only" use, is (a) "indispensable for the resolution of the problem by the said invention," (b) not a "staple article of commerce" (i.e., not widely distributed in Japan), and (c) supplied with the knowledge that it will be used to produce the patented product/use the patented process and that the patent exists (Article 101, items 2 and 5).

a. The "Indispensability" (fukaketsu) Requirement:
This is a key element. The component must be crucial for achieving the core inventive concept of the patent – specifically, for solving the technical problem that the invention addresses. It's not enough for the component to simply be part of the patented product; it must be intrinsically linked to the invention's novelty and inventive step.

• JPO Guidance: The JPO has explained "indispensable" items as "parts, tools, raw materials, etc., by using which the 'problem to be solved by the invention' is solved for the first time." This implies that the component enables the core inventive function.
• "Essential Part" Considerations: Many discussions revolve around whether the component constitutes an "essential part" (honshitsuteki bubun) of the invention. If the component merely relates to a conventional aspect of the product, while the invention's core lies elsewhere, it might not be deemed indispensable. In the Clip Case (Tokyo District Court, April 23, 2004), a generic clip, though part of a patented jig, was not found indispensable because the invention's solution to the problem did not reside in the clip's specific features but rather in other aspects of the jig.
• Application to QuickPlay Two: Even if QuickPlay Two also works as a TV remote, is its functionality as a controller for the DreamConsole "indispensable" for realizing the specific inventive features of Alpha's patented controller system? For example, if Alpha's patent focuses on a unique wireless communication protocol or a novel motion-sensing algorithm, and QuickPlay Two is specifically designed to implement these features to work with the DreamConsole, it might be considered indispensable for that patented function, even if its TV remote capabilities are generic.

b. The "Non-Staple Good" Requirement (Excluding Widely Distributed Items):
The supplied component must not be a common "staple article of commerce" or an item "widely distributed in Japan." This exception prevents patent rights from extending too broadly to everyday items like generic screws, basic electronic components (e.g., standard resistors or capacitors), or raw materials that have numerous non-infringing applications.

• The Ichitaro case noted that even if a software package as a whole is widely distributed, if a specific module or function within that software is used to carry out the patented invention and that function is not itself a "staple," the software (in respect of that function) might not be considered a staple good for the purposes of this exception.
• Application to QuickPlay Two: While remote controls are common, a multi-function remote specifically configured to interact with the patented DreamConsole's unique system is unlikely to be considered a mere staple good in the same way a generic battery or a standard USB cable would be.

c. The "Knowing" Requirement:
For these categories of indirect infringement (items 2, 3, 5, and 6 of Art. 101), the supplier must act with knowledge: knowledge that the item is to be used for the production of the patented product (or use of the patented process) and knowledge that the invention is patented (for items 3 and 6, related to process patents where the process itself is not patented but its product is). This subjective element ensures that innocent suppliers of dual-use items are not unfairly held liable.

The Interplay with Direct Infringement: Independence vs. Dependence Theories

A long-standing debate in Japanese patent law, as in other jurisdictions, concerns whether an act of indirect infringement requires a corresponding act of direct infringement by an end-user or another party.

• Literal Wording: Article 101 states that the specified acts "shall be deemed to be an infringement of the patent right." This language does not explicitly condition indirect infringement on a finding of direct infringement.
• Independence Theory (dokuritsu setsu): This theory, which is influential in Japan, argues that indirect infringement can stand on its own. The focus is on the objective act of the supplier in providing means that directly and inevitably lead to the realization of the patented invention, regardless of whether the end-user's specific act constitutes a legally actionable direct infringement.
• Dependence Theory (jūzoku setsu): This theory posits that indirect infringement is parasitic upon direct infringement; without a direct infringement, there can be no indirect infringement.

This debate is particularly relevant in scenarios like our DreamConsole example, where the primary end-users are consumers using the console in their homes. Under Article 68 of the Japanese Patent Act, patent rights generally extend only to the working of an invention "in the course of business." Purely private, non-commercial use by an individual in their home typically does not constitute direct patent infringement.

If the end-user's act of combining the QuickPlay Remote with the DreamConsole is not direct infringement (because it's private use), can Beta Accessories still be liable for indirect infringement by supplying the remote?

• Under a strict dependence theory, liability would be difficult to establish.
• Under the independence theory, Beta's liability would hinge on whether its act of supplying the remote (QuickPlay One, which has no other use, or QuickPlay Two, if it's deemed indispensable and non-staple for the patented system) is objectively an act that facilitates the realization of Alpha's patented invention, potentially undermining Alpha's ability to exclusively control the means for practicing its invention.

Courts in Japan have not always been entirely consistent, but there is a tendency to recognize indirect infringement even without a clearly proven, actionable direct infringement, especially when the supplier's actions are seen as a deliberate attempt to commercially exploit the patented invention by enabling widespread use, even if that use is predominantly private. The underlying policy is to prevent the patentee's rights from being hollowed out by activities that enable the core utility of the patent to be enjoyed without compensation. However, if the end-user's act involves, for example, the permissible repair or replacement of a worn-out, non-essential part of a legitimately acquired patented product (as explored in cases like the Ink Tank Case, Supreme Court, November 8, 2007, primarily in the context of exhaustion and repair), the analysis of whether this constitutes "production" for indirect infringement purposes becomes very nuanced.

Conclusion: Navigating the Grey Areas

Article 101 of the Japanese Patent Act provides patentees with essential tools to combat indirect infringement. However, its application, particularly for components that are not exclusively for infringing use, involves a detailed, fact-specific analysis of the component's nature, its technical and commercial relationship to the patented invention, the supplier's knowledge and intent, and the objective consequences of its supply.

For companies supplying components or accessories that interact with potentially patented systems in Japan, a thorough understanding of these rules is critical. This includes assessing whether their products could be seen as having "only" an infringing use, or whether they are "indispensable" and "non-staple" for a patented invention. For patentees, Article 101 offers a pathway to protect their innovations from those who seek to profit by facilitating infringement, but success requires a clear demonstration that the specific conditions laid out in the law have been met. The line between legitimate component supply and actionable indirect infringement can be fine, requiring careful legal navigation.