The Experimental Use Exception in Japan: What Activities Are Shielded, Especially for Pharma R&D?

Patent rights grant exclusive control over an invention for a limited period, a system designed to incentivize innovation. However, an overly broad application of these rights could stifle further technological development and scientific inquiry. To prevent this, most patent systems incorporate an "experimental use exception," allowing certain types of research or experimentation on patented inventions without constituting infringement. Japan is no exception, with Article 69(1) of its Patent Act providing such a safe harbor. Understanding the scope and limitations of this exception is crucial, particularly for research-intensive industries like pharmaceuticals, where extensive testing is often required before a product can reach the market.

This article explores the experimental use exception under Japanese patent law, detailing its statutory basis, underlying rationale, the types of activities it covers, and its specific application—and limitations—in the context of pharmaceutical research and development, including a look at a pivotal Supreme Court decision.

Statutory Basis and Rationale: Article 69(1) of the Japanese Patent Act

The core provision for the experimental use exception in Japan is Article 69, Paragraph 1, of the Japanese Patent Act. It states: "The effects of the patent right shall not extend to the working of the patented invention for experimental or research purposes."

The rationale behind this exception is multifaceted:

• Promotion of Technological Progress: The primary goal of the patent system is to foster industrial development through the advancement of technology. Allowing experimentation on patented inventions enables further understanding, improvement, and the development of new, non-infringing alternatives or even superior technologies. Prohibiting such activities could create technological bottlenecks.
• Limited Commercial Impact: Generally, activities conducted purely for experimental or research purposes are not seen as directly competing with the patentee's commercial exploitation of the invention. The patentee's opportunity to profit from the market is not usually undermined by such non-commercial research.

Scope of the Exception: Key Limitations and Interpretations

While Article 69(1) provides a general exemption, its application is not unlimited. Japanese courts and practice have delineated its scope based on several factors, primarily the object of the research and its ultimate purpose.

A. Limitation by the Object of the Experiment or Research

A fundamental limitation is that the exception typically applies only when the patented invention itself is the direct subject of the experiment or research. This means the research is aimed at understanding, testing, or improving the patented invention.

Crucially, Article 69(1) does not generally exempt the use of a patented invention as a mere tool or instrument in the course of researching something else. For example, if a company uses a patented laboratory instrument (e.g., a specific type of testing machine) to conduct research on unrelated new materials, the use of that patented instrument itself is not shielded by the experimental use exception with respect to the instrument patent. The exception would apply if the research was focused on the patented instrument itself (e.g., to understand its workings, improve it, or see if it functions as described). The rationale is that allowing the free use of patented research tools would significantly devalue patents for such tools, which often have their primary market in the research sector.

B. Limitation by the Purpose of the Experiment or Research

Beyond the object of the research, the underlying purpose of the activities is a critical determinant of whether they fall under the exception. Courts often consider whether the purpose aligns with the Patent Act's goal of fostering technological progress and whether it unfairly prejudices the patentee's legitimate commercial interests.

1. Generally Permissible Purposes:

• Understanding the Patented Invention or Verifying its Disclosure: Experiments conducted to ascertain the technical content of a patented invention, to understand how it functions, or to verify that it works as disclosed in the patent specification are typically considered within the exception.
• Improving the Patented Invention or Inventing Around It: Research aimed at making improvements to the patented technology, finding new uses, or developing alternative, non-infringing technologies is generally protected. This is seen as directly contributing to technological advancement.
• Testing for Patentability or Validity: Experiments performed to check whether a patented invention actually meets the requirements of patentability (e.g., novelty, inventive step), often as a basis for a potential invalidity challenge, are also generally considered permissible. Such activities help to eliminate invalid patents from the register, thereby clearing the way for legitimate innovation and public use of non-patentable subject matter.

2. Generally Impermissible Purposes:

• Commercial Exploitation or Market Testing: Using the patented invention for direct commercial purposes, even on a trial basis to gauge market demand or to promote sales, is generally not covered by the experimental use exception. Such activities directly impinge upon the patentee's exclusive right to exploit the invention in the market and are not primarily aimed at technological discovery or verification.

The Experimental Use Exception in Pharmaceutical R&D: A Special Focus

The application of Article 69(1) to the pharmaceutical industry is of particular importance due to the extensive and lengthy regulatory approval processes required for new drugs. A key question has been whether using a patented drug during the patent term to conduct tests necessary for obtaining marketing approval for a generic version after the patent expires constitutes permissible experimental use.

The Landmark Supreme Court Decision: Ono Pharmaceutical Co., Ltd. v. Kyoto Pharmaceutical Co., Ltd.

This issue was definitively addressed by the Supreme Court of Japan in its decision on April 16, 1999 (Heisei 10 (o) No. 364), often referred to as the "Guanidinobenzoic Acid Derivatives" or "Camostat Mesylate" case.

• The Issue: The case concerned whether clinical trials and other tests conducted by a generic drug manufacturer using a patented pharmaceutical compound, during the term of the patent on that compound, constituted patent infringement if the sole purpose of these tests was to gather data required for obtaining regulatory approval to market the generic drug after the patent's expiration.
• The Supreme Court's Holding: The Court held that such activities do fall within the scope of "experimental or research purposes" under Article 69(1) and, therefore, do not constitute patent infringement.
• Rationale of the Supreme Court: The Court's reasoning was grounded in several considerations:
  • Lengthy Regulatory Approval Process: Pharmaceutical products are subject to stringent regulatory review (under the then Pharmaceutical Affairs Law, now the PMD Act), requiring extensive clinical trials and data submission, a process that invariably takes a significant amount of time.
  • Preventing De Facto Patent Term Extension: If generic manufacturers were prohibited from conducting these necessary tests until after the patent expired, they would only be able to begin the approval process at that point. This would delay the market entry of generic drugs for a substantial period beyond the patent's statutory term, effectively granting the patentee an unwarranted de facto extension of their market monopoly. Such an outcome would not be in the public interest, as it would delay access to more affordable generic medicines.
  • No Direct Harm to Patentee's Market During Patent Term: The Court reasoned that as long as these regulatory trials are conducted solely for the purpose of obtaining marketing approval and do not involve any commercial sale or stockpiling of the drug for sale during the patent term, they do not directly encroach upon the patentee's exclusive market rights during the life of the patent. The quantities of the drug produced and used for such trials are typically consumed during the testing process and do not enter the commercial market.

Limitations on the Pharmaceutical Experimental Use Exception

The Supreme Court's 1999 decision, while significant, does not provide an unlimited shield for all activities related to patented pharmaceuticals. Key limitations include:

• Strictly for Regulatory Approval: The exception only covers activities that are genuinely necessary and conducted for the purpose of obtaining marketing approval from the regulatory authorities. Any use beyond this specific purpose, such as for commercial promotion or other business activities, would likely fall outside the exception.
• No Stockpiling for Post-Expiry Sale: A crucial limitation, noted by the Supreme Court in an obiter dictum in the 1999 decision and affirmed in subsequent understanding, is that the exception does not cover the manufacture of the patented drug in quantities exceeding what is necessary for the regulatory trials, especially if such excess production is intended for stockpiling to be sold immediately upon patent expiry. Such stockpiling is considered a commercial preparation for sale and thus an infringing act if done during the patent term.
• Effect of Patent Term Extension: If a pharmaceutical patent's term is extended (e.g., due to delays in obtaining its initial marketing approval), the principle allowing third parties to conduct trials for their own subsequent approvals still generally applies. The policy is to facilitate generic entry as soon as the effective patent protection (including any extension) ends. Conducting trials even during the original, unextended part of the term for post-overall-expiry marketing is generally permissible.

Remedies if the Exception is Exceeded (e.g., Stockpiling)

If a company's activities go beyond the permissible scope of Article 69(1) – for example, by stockpiling a patented drug during the patent term – the patentee may seek remedies:

• Damages: The patentee can claim damages for the infringing acts (e.g., the unlawful manufacturing for stockpiling) that occurred during the patent term. This claim can be pursued even after the patent has expired, but the damages would generally be calculated based on the extent of the infringing activity during the patent's life (e.g., the quantity improperly manufactured).
• Injunctive Relief (Article 100(1) of the Patent Act): An injunction to stop infringing acts is generally only available while the patent is still in force. Once the patent expires, there is no existing exclusive right to be infringed, so future actions are usually not enjoinable under patent law.
• Destruction of Infringing Products (Article 100(2) of the Patent Act): A patentee can request the destruction of products resulting from infringement or machines solely used for infringement, typically "in connection with" a request for an injunction (Article 100(1)). If an injunction is no longer possible (e.g., due to patent expiry), the prevailing view is that a standalone request for destruction under Article 100(2) may also be unavailable.
  However, an alternative academic argument suggests that Article 100(2) might have an independent function to mitigate ongoing harm from past infringing acts, particularly if infringing stock made during the patent term still exists and poses a threat. For practical purposes in resolving disputes or in examination settings, however, the interpretation linking destruction to the viability of an injunction is often considered the safer starting point.

Comparison with U.S. Experimental Use Doctrines

The Japanese approach to experimental use, especially in the pharmaceutical context, presents interesting parallels and contrasts with U.S. law:

• U.S. Common Law Experimental Use Exception: The U.S. has a very narrow common law experimental use defense. As famously articulated in Madey v. Duke University (Fed. Cir. 2002), this defense generally does not apply if the use is in any way related to the alleged infringer's legitimate business purposes, regardless of whether it is for profit or not. It is often limited to acts done "for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry." This makes the U.S. common law defense far more restrictive than Japan's Article 69(1) for general research.
• U.S. Statutory "Safe Harbor" (Bolar Exemption - 35 U.S.C. § 271(e)(1)): For pharmaceuticals and certain other regulated products, the U.S. provides a broad statutory safe harbor, often called the "Bolar Exemption." This exempts from infringement the use, sale, or importation of a patented invention "solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products."
  This provision broadly shields activities undertaken to obtain FDA approval, including clinical trials for generic drugs, and it applies during the patent term. It is functionally similar in outcome to the Japanese Supreme Court's interpretation of Article 69(1) for pharmaceutical regulatory submissions.

Key Differences and Similarities:

• Basis for Pharma Exception: Japan achieves its "Bolar-like" outcome through judicial interpretation of a general experimental use provision (Article 69(1)), whereas the U.S. has a specific statutory exemption for drug regulatory activities (§ 271(e)(1)).
• General Research Scope: For non-pharmaceutical experimental uses, Japan's Article 69(1) might offer a broader shield than the U.S. common law defense, provided the purpose aligns with "promoting technological progress" and does not unduly harm the patentee's commercial interests. The U.S. common law defense is exceptionally narrow if any business nexus exists.
• Prohibition on Stockpiling: Both Japanese and U.S. law (under § 271(e)(1) interpretations) clearly do not permit the experimental use or regulatory submission exceptions to be used as a cover for commercial stockpiling of infringing products during the patent term for immediate sale upon patent expiry.

Conclusion

Article 69(1) of the Japanese Patent Act provides an important, albeit carefully delineated, exception to patent infringement for activities conducted for experimental or research purposes. While its general application requires a careful assessment of the object and, critically, the purpose of the research, its interpretation by the Japanese Supreme Court in the pharmaceutical context has profound implications, allowing for the timely development and regulatory submission of generic drugs. This balances the rights of patentees with the public interest in having access to more affordable medicines after patent expiry.

For businesses, particularly those in research-driven sectors like pharmaceuticals, a thorough understanding of the boundaries of this exception is essential. Activities must genuinely be for "experimental or research purposes" – whether for understanding an invention, improving upon it, or, in the specific pharma context, for securing regulatory approval for post-expiry market entry. Any activities that stray into commercial preparation, such as stockpiling, will fall outside this protective ambit and risk infringement liability. Navigating the nuances of this exception is a key aspect of patent risk management and R&D strategy in Japan.