Misappropriated Patent Applications in Japan: How Can True Inventors Recover Their Rights and What Differs from US Derivation Proceedings?

Japanese Attorney at Law - Bengoshi L.L.

• 12 min read

The integrity of the patent system hinges on granting exclusive rights to those genuinely entitled to them – typically the true inventor or their rightful successor. However, situations arise where a patent application is filed, or a patent is obtained, by an individual or entity that did not invent the subject matter and has no legitimate claim to it. This is known as a "misappropriated patent application" (冒認出願 - bōnin shutsugan) in Japan. Such actions directly contravene the fundamental principle that only true inventors or their assignees should benefit from the patent system.

Japanese patent law provides a framework to address these improper filings and offers remedies for the true owners of an invention to recover their rights. Understanding these mechanisms is crucial for innovators and businesses to protect their intellectual property. This article explores how Japan deals with misappropriated patent applications, the avenues available for true inventors to assert their rights, and some key differences compared to U.S. derivation proceedings.

The "Inventor Principle" and the Right to Obtain a Patent in Japan

At the heart of Japanese patent law is the "inventor principle" (発明者主義 - hatsumeisha shugi). Article 29(1), in its introductory paragraph, stipulates that only an inventor, or their successor in title, who has made an invention that is industrially applicable may obtain a patent. This establishes that the right to a patent originates with the inventor.

This foundational right is termed the "right to obtain a patent" (特許を受ける権利 - tokkyo o ukeru kenri). Key characteristics of this right include:

  • It arises upon the completion of an invention by the inventor(s).
  • It initially belongs to the actual inventor or inventors.
  • It is a transferable right (Article 33(1) of the Patent Act). The transfer of this right before a patent application is filed is typically perfected against third parties by the act of filing the application (Article 34(1)). If the right is transferred after a patent application has been filed, the transfer must be notified to the Director-General of the Japan Patent Office (JPO) to be effective (Article 34(4)).

The "true owner" or "rightful person" (真の権利者 - shin no kenrisha) in this context refers to the actual inventor(s) or those who have legitimately succeeded to their right to obtain a patent.

What Constitutes a Misappropriated Application (冒認出願 - bōnin shutsugan)?

A misappropriated patent application is one filed by a person or entity who is:

  1. Not the true inventor(s) of the claimed subject matter, and
  2. Has not legitimately acquired the right to obtain a patent from the true inventor(s) or their successors.

This can occur in various scenarios, such as when an invention is disclosed in confidence and the recipient then files a patent application in their own name, or when an employee files for a patent personally for an invention where the right to apply belongs to their employer under an employee invention agreement. Importantly, even if the applicant is an inventor, their application could still be deemed a misappropriated one if, for example, they had previously assigned their right to obtain the patent to another party, yet subsequently filed the application in their own name. Amendments to the Japanese Patent Act in 2011 clarified this aspect in Article 49(vii) (grounds for rejection) and Article 123(1)(vi) (grounds for invalidation).

Impact of a Misappropriated Application on the True Owner's Patenting Efforts

The existence of a misappropriated application can complicate the true owner's attempts to secure their own patent rights. The specific impact depends on the timing of the true owner's actions relative to the status of the misappropriated application.

A. True Owner Files an Application Before the Misappropriated Application is Published

  • Prior Application Status of the Misappropriated Application (Article 39): Under Japan's first-to-file system (Article 39), if two applications claim the same invention, the earlier-filed one generally prevails. Following 2011 amendments, even a misappropriated application can, for some purposes, establish a prior filing date. This change was intended to ensure that if the true owner later recovers the patent right through legal means (e.g., via a transfer under Article 74), that recovered patent can still have priority over intervening third-party applications for the same invention. Consequently, if the true owner files their own application for the same claimed invention after a misappropriated application has been filed for it, the true owner's application might initially be rejected as a later-filed application. The true owner's remedy would then lie in recovering the rights to the earlier, misappropriated filing.
  • No "Enlarged Scope of Prior Application" Effect (Article 29-2): However, a crucial distinction exists regarding Article 29-2 of the Patent Act. This article prevents patenting an invention that was disclosed (even if not claimed) in the specification or drawings of an earlier-filed and later-published patent application by another party. Significantly, a misappropriated application is not treated as a prior application for the purposes of this "enlarged prior art" effect under Article 29-2. The rationale is to protect the true owner; it would be unjust if the mere disclosure in a wrongly filed application by a misappropriator could bar the true owner from patenting their own related but distinct inventions that were part of that disclosure. Thus, if the true owner's application claims subject matter that was merely disclosed (but not claimed) in the misappropriated application, Article 29-2 will not be a barrier based on that misappropriated filing.

B. True Owner Files an Application After the Misappropriated Application is Published

Patent applications in Japan are typically laid open for public inspection (published) 18 months after their filing date (Article 64(1)). Once a misappropriated application is published, it becomes part of the prior art available to the public under Article 29(1)(iii) (disclosure in a printed publication or through telecommunication lines).

  • Loss of Novelty: If the true owner files their application after the misappropriated application has been published, their application may be rejected for lacking novelty over the published disclosure.
  • Exception to Loss of Novelty (Article 30(1)): Japanese patent law provides exceptions for loss of novelty in certain circumstances. If the disclosure in the published misappropriated application occurred against the will of the person having the right to obtain the patent (the true owner), they can claim this exception under Article 30(1). To benefit from this, the true owner must generally file their own patent application within six months from the date of such undesired publication. This exception can overcome a novelty rejection based on the publication but does not alter the effective filing dates for the purpose of determining priority between competing applications under Article 39.

Remedies Available to the True Owner

Japanese law provides several avenues for the true owner of an invention to recover their rights when faced with a misappropriated application or patent. The appropriate remedy depends on the procedural status of the improper filing.

A. While the Misappropriated Application is Pending at the JPO

If the misappropriated application is still pending examination at the JPO:

  1. Lawsuit for Confirmation of Right: The true owner can initiate a lawsuit in court against the wrongful applicant to obtain a judgment confirming that they (the true owner) are the person actually entitled to obtain the patent for the invention.
  2. Request for Change of Applicant's Name at the JPO: Armed with a final and binding court judgment confirming their entitlement, the true owner can then file a request with the Director-General of the JPO to change the name of the applicant on the pending application from the misappropriator to themselves. This procedure is based on Article 34(4) (governing the notification of succession in the right to obtain a patent) and is supported by established JPO practice and court precedents (e.g., Tokyo District Court, November 29, 2010, "Screw" case).
    It's important to note that the JPO examiners, during routine examination, typically do not investigate or decide substantive disputes about entitlement or inventorship. They will examine the application based on the named applicant. If the application meets the patentability criteria, a patent may be granted to the named (misappropriating) applicant even while an entitlement dispute is ongoing in court. Should this happen, the true owner's court action might need to be amended or refiled as a request for the transfer of the granted patent right (see below).

B. After a Patent Has Been Granted Based on a Misappropriated Application

If a patent has already been granted to the misappropriator:

  1. Trial for Patent Invalidation (無効審判 - mukō shinpan):
    A patent granted to a person not entitled to it (i.e., not the inventor or their rightful successor) is a ground for patent invalidation under Article 123(1)(vi) of the Patent Act. The true owner can file an invalidation trial with the JPO seeking to nullify the improperly granted patent.
    • Standing to Request Invalidation: While most grounds for invalidation can be raised by "any person" (Article 123(2)), an invalidation trial based specifically on the ground of improper entitlement (misappropriation) can only be requested by a person who actually has the right to obtain the patent for that invention (i.e., the true owner) (Article 123(2), proviso).
    • Invalidity Defense in Infringement Litigation: If the true owner is sued for infringement by the patentee who obtained the patent through misappropriation, the true owner can raise an invalidity defense under Article 104-3, asserting that the patent should be invalidated on grounds of misappropriation. Whether a third party (not the true owner) who is sued for infringement by the misappropriator-patentee can similarly raise misappropriation as an invalidity defense is a point of some academic discussion, given their lack of standing to file a JPO invalidation trial on that specific ground.
  2. Request for Transfer of Patent Right (特許権の移転請求 - tokkyoken no iten seikyū) (Article 74):
    A crucial remedy, significantly strengthened by the 2011 amendments to the Patent Act, is provided by Article 74. This article allows the person truly entitled to obtain the patent (the true owner) to file a lawsuit demanding the transfer of the granted patent right from the person who improperly obtained it (the misappropriator) or from any subsequent assignee of that improperly obtained patent.
    • This transfer remedy under Article 74 also applies in cases of violations of the joint application requirement (Article 38) – for example, if one co-inventor improperly files a sole application or excludes other rightful co-inventors. In such situations, the omitted co-owner(s) can demand the transfer of their respective share(s) in the patent right.
    • Retroactive Effect: Upon the registration of such a court-ordered transfer, the patent right is deemed to have belonged to the true owner from the outset (Article 74(2)).
    • Curing of Invalidity Ground: Once the patent right has been transferred to the true owner under Article 74, the original defect of misappropriation (or improper joint application) is considered cured. Consequently, that initial defect can no longer be used by third parties as a ground to invalidate the patent (see provisos to Article 123(1)(ii) and (vi)). This protects the true owner after they have recovered their rights.

Complexities: Joint Inventions, Improvements, and Third-Party Protection

A. Joint Inventions and Misappropriation

If an invention is made jointly by multiple inventors, they co-own the right to obtain a patent. If one co-inventor files a sole application without the others, or improperly deals with their share in a way that prejudices other co-inventors, this involves elements of misappropriation concerning the other co-inventors' entitlements. As mentioned, Article 74(3) allows aggrieved co-owners to seek the transfer of their rightful shares in the patent. The proportion of shares among co-inventors, if not otherwise agreed, is typically determined based on their respective contributions to the invention.

B. Improvements Made by the Misappropriator

A complex situation arises if the misappropriator, in their application, not only claims the true owner's invention but also includes their own subsequent modifications or improvements to it.

  • If the core underlying invention still clearly belongs to the true owner, but the granted patent claims also encompass improvements made solely by the misappropriator, the true owner's right to demand transfer might be for a share of the patent reflecting their original contribution, rather than the entire patent, particularly if the improvements themselves have inventive merit. Article 74(3) concerning shared entitlement would likely be applied or considered by analogy.
  • Unlike trademark registrations, a granted Japanese patent cannot be "divided" post-grant into separate patent rights for different claims. Therefore, if a misappropriator adds new claims for their own distinct (though perhaps related) invention alongside claims covering the true owner's misappropriated invention in a single patent, the true owner's remedy is typically to claim a share of the entire patent that reflects the value and contribution of their misappropriated part.

C. Protection of Third Parties ("Intervening Rights" - 中用権 - chūyōken) (Article 79-2)

The 2011 amendments also introduced Article 79-2 to provide a degree of protection (an "intervening right" or chūyōken) for certain third parties who, in good faith, dealt with the misappropriator before the patent right was formally transferred to the true owner. This provision grants a statutory non-exclusive license to:

  • A person who, in good faith (i.e., without knowledge of the misappropriation), acquired the patent from the misappropriator (or their assignee) and was already working the invention as a business in Japan, or making preparations for such business, before the registration of the transfer of the patent right to the true owner.
  • A person who, in good faith, obtained an exclusive or non-exclusive license from the misappropriator (or their assignee) and was similarly working or preparing to work the invention in Japan before the transfer.

This statutory license is limited to the scope of the invention and business being conducted or prepared at the time of the transfer. The true owner, upon recovering the patent, is entitled to receive reasonable remuneration from such an intervening rights holder (Article 79-2(2)). This good faith requirement could potentially even protect a misappropriator who themselves were acting in good faith, for instance, if they genuinely but mistakenly believed they were entitled to the invention.

D. Defining the Scope of "Misappropriation" for Intervening Rights

A nuanced issue is whether situations where an initially valid transfer of the right to obtain a patent later becomes retrospectively void (e.g., due to contract rescission for fraud, duress, mistake, or non-payment) should be treated as "misappropriation" for the purposes of Articles 74 (transfer to true owner) and 79-2 (intervening rights for third parties).

  • If such retrospective invalidation of an initial transfer is treated as creating a "misappropriated" patent in the hands of the initial (but now disentitled) transferee, then third parties who subsequently dealt with that transferee in good faith might seek protection under Article 79-2.
  • However, general provisions of Japanese Civil Code regarding the protection of bona fide third parties in cases of voidable transactions (e.g., Article 96(3) for fraud, Article 545(1) proviso for contract rescission) might also apply. These Civil Code provisions could offer different outcomes – for example, potentially allowing a bona fide third-party assignee of the patent to retain full ownership, not just a license, and possibly without an obligation to pay remuneration to the ultimate true owner.
  • It is argued that where specific Civil Code rules for third-party protection apply due to the nature of the contractual defect (like fraud or rescission), those specific rules might take precedence over the more general patent-specific intervening right under Article 79-2. Article 79-2 might be more apposite for "pure" misappropriations where there was no initial color of right or contractual relationship that was later nullified. If an application was filed after a relevant contract was clearly and finally terminated, it would likely be treated as a straightforward misappropriation.

Comparison with U.S. Derivation Proceedings

The U.S. approach to addressing inventions improperly taken by one party from another is primarily through "derivation proceedings" before the Patent Trial and Appeal Board (PTAB), as established by the Leahy-Smith America Invents Act (AIA) (35 U.S.C. § 135).

  • Purpose: A derivation proceeding is initiated by a petitioner (an inventor) who claims that an inventor named in an earlier-filed patent application or patent "derived" the claimed invention from them and filed the application without authorization. The PTAB determines whether such derivation occurred.
  • Timing: A petition for a derivation proceeding must generally be filed within one year of the first publication of a claim to an invention that is the same or substantially the same as the derived invention.
  • Outcome: If derivation is proven, the PTAB can order the cancellation of the derived claims in the earlier application/patent or issue a patent to the petitioner if their application is otherwise allowable. It can also correct inventorship.
  • Key Differences from the Japanese System:
    • Forum: U.S. derivation is an administrative proceeding within the USPTO (before the PTAB). Japan's system involves a combination of court actions (for confirmation of entitlement, for transfer of a granted patent) and JPO proceedings (invalidation trials, administrative name changes).
    • Direct Transfer of Granted Patent: Japan's Article 74 provides a relatively direct judicial mechanism for the true owner to demand and obtain the transfer of an already granted patent right. While U.S. derivation can lead to the derived claims being invalidated or a patent issuing to the true inventor, it doesn't involve a court directly ordering the "transfer" of an existing patent in the same manner.
    • Statutory Intervening Rights: Japan's Article 79-2 provides explicit statutory intervening rights for bona fide third parties who dealt with the misappropriator. U.S. law concerning intervening rights is more developed in the context of reissued or reexamined patents; protections for those who dealt with a deriver might be less statutorily defined and could depend on broader equitable principles or the specifics of how derivation affects existing licenses.

Conclusion

Japan's patent system offers robust, albeit complex, mechanisms to protect the rights of true inventors against misappropriated patent applications and improperly granted patents. Through a combination of court actions for confirming entitlement or demanding the transfer of rights, and JPO procedures for invalidation, true owners have several avenues to reclaim their inventions. The 2011 amendments, particularly the introduction of a clear right to demand transfer of a patent under Article 74 and the creation of statutory intervening rights for bona fide third parties under Article 79-2, have further refined this framework, aiming to balance the strong protection of rightful inventors with a degree of legal certainty for those who may have unknowingly transacted with a misappropriator. For inventors and businesses, vigilance in protecting their nascent inventions and a clear understanding of these recovery and protective measures are paramount in the Japanese patent landscape.