Protecting and Enforcing Intellectual Property Rights in Japan: What Are the Conflict of Laws Rules?

In an increasingly globalized marketplace, intellectual property (IP) rights such as patents, copyrights, and trademarks are critical assets for businesses. When these rights are infringed across borders, or when they are transferred internationally, determining which country's law applies to the various legal issues that arise becomes a complex but essential task. Japanese private international law, while not having a single, consolidated statutory chapter on IP, addresses these issues through a combination of general principles, specific interpretations of its Act on General Rules for Application of Laws (AGRAL) (Hō no Tekiyō ni Kansuru Tsūsokuhō, 法の適用に関する通則法), and reference to international conventions.

This article explores the Japanese conflict of laws approach to IP rights, focusing on the governing law for infringement actions (patents and copyrights) and for the assignment or transfer of IP rights.

The Principle of Territoriality in Intellectual Property Law

The foundational principle governing IP rights in the international context is territoriality (zokuchi-shugi no gensoku, 属地主義の原則). This means that IP rights are generally granted by and effective only within the territory of the sovereign state that grants them. For example, a Japanese patent provides rights enforceable in Japan, while a U.S. patent provides rights enforceable in the United States. The Supreme Court of Japan has affirmed this principle, stating, for instance, in the "BBS Wheels" case (Supreme Court judgment, July 1, 1997, Minshū Vol. 51, No. 6, p. 2299), that patent rights, their transfer, and their effect are determined by the law of the country that granted the patent, and their effect is recognized only within that country's territory.

This principle has significant implications for conflict of laws:

• No Single "International" IP Right: There is generally no single IP right that is automatically valid worldwide (though international application systems like PCT for patents or the Madrid System for trademarks facilitate obtaining national rights).
• Independent Rights: Rights in one country are generally independent of rights in another (Principle of Independence, often enshrined in treaties like the Paris Convention Article 4bis and Berne Convention Article 5(2)).
• Choice of Law Focus: The choice of law often revolves around identifying which country's territorial law is relevant to the specific IP issue at hand (e.g., infringement occurring in a particular country, validity of a patent granted by a particular country).

International conventions like the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works play a crucial role. They establish principles like national treatment (requiring member states to grant nationals of other member states the same IP protection as their own nationals) and minimum standards of protection. There is ongoing debate among scholars as to whether certain provisions within these treaties (especially in the Berne Convention) directly function as choice-of-law rules or primarily dictate substantive obligations for member states, which then inform the application of domestic private international law.

Applicable Law for Patent Infringement in Japan

Determining the law applicable to patent infringement (tokkyo-ken shingai, 特許権侵害) involves considering both claims for injunctive relief and claims for damages.

General Approaches and Judicial Practice

• Law of the Country of Registration/Protection: The prevailing approach, both in Japanese judicial practice and dominant academic theory, is that infringement of a patent is governed by the law of the country for which the patent was granted and where protection is sought. This is often referred to as the lex loci protectionis or, more specifically for registered rights, the law of the country of registration (tōroku-koku-hō, 登録国法).
• The "Card Reader" Case (Supreme Court judgment, September 26, 2002, Minshū Vol. 56, No. 7, p. 1551): This landmark case significantly shaped the Japanese approach. The Supreme Court distinguished between the types of relief sought:
  • Claims for Injunctions: The Court held that a claim for an injunction based on a foreign (U.S.) patent, due to its nature as an assertion of the patent's exclusive right, should be governed by the law of the country where the patent is registered (the U.S. patent law in that case). This was not based on a specific statutory choice-of-law rule but on "sound reason" (jōri, 条理), recognizing the territorial and exclusive nature of patent rights.
  • Claims for Damages: For damages arising from the infringement of the foreign patent, the Court treated the issue as a tort and held that the applicable law should be determined by the general choice-of-law rule for torts (then Article 11, paragraph 1 of the Hōrei, now AGRAL Article 17). AGRAL Article 17 generally points to the law of the place where the result of the wrongful act occurred, subject to a foreseeability exception.

Scholarly Discussion on the "Card Reader" Approach

The Supreme Court's bifurcated approach in the Card Reader case has generated considerable discussion:

• Support: Some scholars support the distinction, viewing injunctive relief as directly enforcing the proprietary, exclusive aspects of the patent (governed by patent law of the granting state), while monetary damages are seen as a compensatory remedy for a wrongful act, fitting within the tort framework.
• Criticism and Alternative Views: Others criticize the separation, arguing it can lead to inconsistent outcomes or fail to provide holistic protection for the patent right.
  • Some advocate for applying the lex loci protectionis (registration country law) uniformly to both injunctions and damages related to patent infringement.
  • Others suggest treating the entire infringement claim (both injunction and damages) as a tort, to be governed by AGRAL Article 17 (and related provisions like Article 20 for flexibility and Article 22 for public policy).
  • A further view considers claims for injunctive relief under patent law as matters of public law or internationally mandatory rules of the protecting state, thereby falling outside the scope of choice-of-law selection by the forum court (i.e., a Japanese court would not issue an injunction based on a foreign patent law's injunctive provisions directly, though it might consider other remedies). Damages, under this view, would still be a tort issue.

Applicable Law for Copyright Infringement in Japan

The approach to copyright infringement (chosaku-ken shingai, 著作権侵害) shares some similarities with patent infringement but is heavily influenced by the Berne Convention.

Prevailing View: Berne Convention Article 5(2) as a Choice-of-Law Rule

The dominant view in Japanese courts and among scholars is that Article 5(2), third sentence, of the Berne Convention ("the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed") acts as a direct choice-of-law rule. This points to the application of the lex loci protectionis – the law of the country where copyright protection is being sought (usually where the infringing acts occur). (See, e.g., Tokyo District Court, May 31, 2004, Hanrei Jihō No. 1936, p. 140; Tokyo District Court, April 30, 2009, Hanrei Jihō No. 2061, p. 83).

Scope of Protection and Distinction for Remedies

While Article 5(2) of the Berne Convention refers to both the "extent of protection" and "means of redress," Japanese judicial practice, mirroring the Card Reader approach for patents, often distinguishes between:

• Injunctive Relief: Governed by the lex loci protectionis (via the Berne Convention).
• Damages: Often treated as a tort claim, with the applicable law determined by AGRAL Article 17 (law of the place where the result occurred, subject to foreseeability and Article 22).

This distinction for remedies in copyright cases is also a subject of academic debate, with arguments made for a more unified application of the lex loci protectionis to all aspects of infringement.

Applicable Law for the Assignment and Transfer of Intellectual Property Rights

The transfer of IP rights (chiteki zaisan-ken jōto, 知的財産権譲渡) involves both contractual and proprietary elements, and Japanese PIL generally distinguishes these for choice-of-law purposes.

The Dual Nature of IP Assignment

1. Contractual Aspects (The Obligation-Creating Act - Saiken Kōi, 債権行為): The validity of the assignment contract itself, the mutual obligations of the assignor and assignee (e.g., payment, warranty of title), and remedies for breach of the assignment contract are governed by the general choice-of-law rules for contracts found in AGRAL Articles 7 et seq. This means parties can choose the applicable law, or in the absence of choice, it will be determined by the "closest connection" test (often presumed by the law of the assignor's habitual residence/place of business as the characteristic performer).
2. Proprietary Aspects (Transfer of the IP Right Itself, Effect on Third Parties - Bukken-teki Henkō, 物権的変動): The actual transfer of the IP title, whether the assignment is effective to transfer ownership of the IP right, and its opposability to third parties (e.g., subsequent assignees, creditors) are generally considered proprietary issues. Japanese courts and the prevailing academic view hold that these aspects are governed by the law of the country for which protection of that specific IP right is sought (the lex loci protectionis or the law of the country of registration for registered rights). This is often based on an analogy to AGRAL Article 13, which governs rights in rem in tangible property by the lex rei sitae.

Japanese judicial practice has consistently followed this distinction (e.g., Tokyo High Court judgment, May 30, 2001, Hanrei Jihō No. 1797, p. 111; Tokyo High Court judgment, May 28, 2003, Hanrei Jihō No. 1831, p. 135). This means that even between the assignor and assignee, if the dispute concerns who actually owns the IP right as a result of the purported assignment, the lex loci protectionis would be decisive, rather than solely the law of the assignment contract.

Analyzing Scenarios

Let's illustrate with scenarios adapted from the reference material (Case 30, No. 12).

Scenario 1: Patent Infringement (Adapted from Problem 1)

• Facts: Mr. A, a Japanese national, holds a patent ("Patent Alpha") in Country X. Company B, a Japanese company, manufactures products in Japan that fall within the scope of Patent Alpha. Company B exports these products to Country X and sells them there through its local subsidiary. Mr. A sues Company B in Japan seeking: (i) an injunction against the manufacture in Japan for export to Country X and against the export itself, and (ii) damages for infringement of the Country X patent. Mr. A does not hold a corresponding Japanese patent.
• Analysis (assuming Japanese court has jurisdiction):
  • Damages for Infringement in Country X: Following the Card Reader case, this is a tort claim. The "result" (infringing sales, lost profits for A related to the Country X market) occurred in Country X. This was likely foreseeable for Company B. Thus, the law of Country X would apply to the damages claim (AGRAL Article 17), subject to the limitations of Japanese public policy under AGRAL Article 22 (e.g., if Country X law allows for types or amounts of damages not recognized in Japan).
  • Injunction:
    • Against sales in Country X: The Card Reader case suggests that the effect of the Country X patent, including the right to enjoin infringing acts within Country X, is governed by Country X patent law. A Japanese court might be reluctant to directly issue an injunction operative in Country X but could potentially order Company B (a Japanese entity before it) to cease activities that lead to infringement in Country X.
    • Against manufacture in Japan for export to Country X: This is more complex. The act of manufacturing occurs in Japan. If Japanese law does not consider manufacturing for export, where the sole infringing sales occur abroad, as an infringement of a foreign patent, then an injunction based directly on the Country X patent might be difficult. Mr. A has no Japanese patent. However, if Country X law (as the applicable tort law for damages, and potentially for characterizing the overall wrong) considers such preparatory acts as part of the infringement or contributory infringement, this could be a factor. The Card Reader case itself involved injunctions against manufacture in Japan for export and export to the US, and the Supreme Court remanded this part for further consideration under US patent law (as the registration country law).

Scenario 2: Copyright Assignment (Adapted from Problem 2)

• Facts: Company C, a Japanese art gallery, plans an exhibition of works by Artist D, a deceased national of Country B. Company C obtains permission from D's heirs. However, Company E, a Country B entity, claims that Artist D, before his death, assigned the relevant copyrights to Company E by a contract. Company E sues Company C in Japan for (i) an injunction against the reproduction of D's paintings in exhibition catalogues and their distribution in Japan, and (ii) damages.
• Analysis (assuming Japanese court has jurisdiction):
  • Validity and Effect of the Assignment Contract between Artist D and Company E (Contractual Aspect): This is governed by the rules for contracts (AGRAL Articles 7 et seq.). If no explicit choice of law, it would likely be the law of Country B (Artist D's habitual residence as the characteristic performer/assignor).
  • Ownership of Copyright and Opposability of Assignment to Company C (Proprietary Aspect): The core issue is whether Company E effectively acquired the copyright in a way that is enforceable against Company C in Japan. The alleged infringement (reproduction and distribution by C) is occurring in Japan. Therefore, the lex loci protectionis is Japanese law. Japanese copyright law will determine who is recognized as the copyright owner for the purpose of bringing an infringement action in Japan. The Japanese court would look to Japanese copyright law (which may include provisions on the recognition of foreign assignments or formalities for assignments to be effective against third parties) to determine if the assignment from D to E, governed by Country B law contractually, results in E being the proper entity to enforce rights against C in Japan. If Japanese law requires certain registration or formalities for an assignment to be opposable to third parties like C, and these were not met, E's claim might face challenges, even if the D-E contract itself is valid under Country B law.

Conclusion

Navigating the choice-of-law rules for intellectual property in Japan requires a keen understanding of the pervasive principle of territoriality. For infringement actions, Japanese courts, influenced by landmark decisions and international conventions like Berne, often apply the lex loci protectionis, though they may distinguish between injunctive relief and damages, treating the latter under general tort rules. For IP assignments, a crucial distinction is made between the contractual obligations (governed by contract choice-of-law rules) and the proprietary effects of the transfer (governed by the lex loci protectionis). Businesses involved in international IP licensing, enforcement, or transactions with a Japanese nexus must carefully consider these principles to effectively protect and manage their valuable intangible assets.