What Are Prior Use Rights in Japanese Patent Law, and What Conditions Must Be Met to Establish Them?

Japanese Attorney at Law - Bengoshi L.L.

• 10 min read

In the competitive landscape of innovation, businesses often independently develop technologies that, unbeknownst to them, are later patented by another party. Japan's patent system, which operates on a "first-to-file" principle, generally grants patent rights to the first person to file an application for an invention, regardless of who invented it first. However, to balance the interests of such independent prior innovators against those of the patentee, Japanese Patent Act provides for "prior use rights" (先使用権 - senshiyōken). This doctrine allows a person who was already using an invention or preparing to use it in business before someone else filed a patent application for the same invention to continue that use under certain conditions, even after the patent is granted. Understanding the scope and requirements of these prior use rights is crucial for any business operating or planning to operate in Japan.

The Statutory Basis and Rationale of Prior Use Rights (Article 79)

The foundation for prior use rights in Japan is Article 79 of the Japanese Patent Act. This provision grants a non-exclusive license to a person who, without knowledge of the invention claimed in another's patent application, had either created the invention independently (or learned it from such an independent creator) and was working or preparing to work the invention as a business in Japan at the time the patent application was filed.

The rationale behind Article 79 is multifaceted. While it certainly serves to protect those who have already invested in an invention from the unexpected disruption of a later-filed patent, its policy objectives are deeper than merely preventing economic waste or ensuring fairness in a general sense. A prevailing view is that the provision encourages a prompt decision by innovators: either to apply for a patent and disclose the invention, or to implement it commercially (potentially as a trade secret). By offering protection for prior commercial use or concrete preparations, Article 79 facilitates the actual working of inventions and aims to prevent an excessive number of purely defensive patent applications filed merely out of fear of being blocked by others.

Conditions for Establishing Prior Use Rights in Japan

To successfully claim a prior use right, several stringent conditions must be met. These generally relate to the prior user's actions and knowledge before the patent application's filing date.

A. Invention and Its Working or Preparation for Working in Japan

Article 79 requires that the person asserting the prior use right must satisfy two main prongs related to their activity:

  1. Independent Creation/Acquisition: They must have, without knowledge of the content of the subsequently patented invention:
    • created the invention themselves; or
    • learned the invention from someone who themselves created it without knowledge of the subsequently patented invention. This emphasizes the independent origin of the prior user's technology.
  2. Business Activity or Concrete Preparations in Japan: At the critical date – the filing date of the patent application by the other party – the person must have been:
    • "working the invention as a business in Japan"; or
    • "making preparations for such business in Japan."

The term "business" (事業 - jigyō) implies a commercial or industrial scale of activity, rather than purely personal or academic endeavors. The more frequently litigated aspect is what constitutes "making preparations for such business."

"Preparations for Working" (準備 - junbi):
Japanese courts have interpreted "preparations" to mean more than mere conceptualization or abstract planning. The Supreme Court of Japan, in a key decision on October 3, 1986 (known as the "Walking Beam Furnace" case, Shōwa 58 (o) No. 1157), established that "preparations" require both:

  • A subjective intent to immediately work the invention.
  • Objective actions that clearly manifest this intent to a recognizable degree.

Case law provides guidance on what sort of objective actions meet this threshold:

  • Completion of a Prototype: Having a working prototype is strong evidence of preparation. For instance, commissioning the manufacture of a prototype based on one's invention and receiving the completed prototype has been found sufficient (Tokyo District Court, March 11, 1991, "Sweatband" case). Similarly, for a method invention, commissioning samples made by the method and using those samples for marketing efforts can establish preparations (Osaka District Court, July 11, 1995, "Anchor Manufacturing Method" case).
  • Specific and Significant Investment: Making investments that are specifically tailored to the working of the invention is a strong indicator. This can include:
    • Completing drawings for molds, ordering trial materials, and commencing mold manufacturing (Osaka District Court, July 28, 2005, "Monkey Wrench" case).
    • For pharmaceutical methods, submitting clinical trial plans for drug products made by the method and having manufacturing facilities operational (Tokyo District Court, March 22, 2006, "Bioactive Protein Production Method" case).
    • Purchasing specialized equipment necessary for the invention (e.g., a high-pressure boiler for a food manufacturing process), contracting for the supply of resulting products, and commissioning the design of key manufacturing apparatus (Osaka District Court, March 11, 1977, "Candy Manufacturing Equipment" case).
  • Substantial Business Development Efforts: Even without existing physical manufacturing equipment, substantial investments in engineering, design for custom-ordered items, or securing necessary licenses for large-scale projects like industrial plants can qualify as preparations (Tokyo District Court, April 27, 2000, "Continuous Aromatic Carbonate Production Method" case, involving engineering work for a plant).
  • Insufficient Preparations: Conversely, merely creating general schematic diagrams without detailed design work tailored to specific customer requirements, or without substantial investment linked directly to the implementation of the invention, may not be considered sufficient "preparations" (Tokyo District Court, June 24, 2002, "6-Roll Calender Structure and Use Method II" case).

B. The Invention Must Be "Completed" (発明が完成していること - hatsumei ga kansei shiteiru koto)

Although not explicitly stated in Article 79, it is an established requirement that the invention the prior user was working or preparing to work must have been "completed" by the patent application's filing date. An incomplete or merely conceptual idea that is not yet technically viable or reducible to practice cannot form the basis for a prior use right.

"Completion" does not necessarily mean that final manufacturing blueprints must exist. It is generally sufficient if the invention is defined to such an extent (e.g., through design drawings) that a person skilled in the art (POSITA) could proceed to build and operate it based on that information (Supreme Court, "Walking Beam Furnace" case). Furthermore, the prior user does not need to have a full academic or theoretical understanding of why the invention works, as long as it can be demonstrably shown to work for its intended purpose (Osaka District Court, February 14, 1966, "Fused Alumina" case).

C. Subjective Requirement: Independent Creation and Lack of Knowledge (主観要件 - shukan yōken)

Article 79 explicitly requires that the prior user must have either:

  • "created such invention himself/herself, without knowledge of the content of the invention claimed in the patent application," or
  • "learned such invention from a person who created it without knowledge of the content of the invention claimed in the patent application."

This "subjective requirement" underscores that the prior user's invention must, as a general rule, have an independent origin from the invention of the patentee. If the prior user's activities were based on information derived from the patentee or their invention (e.g., through a license agreement, confidential disclosure before patenting, or industrial espionage), a prior use right cannot be established. The aim is to protect bona fide independent developers, not those who have somehow derived the invention from the eventual patentee.

An important nuance arises in cases of misappropriation (冒認 - bōnin). If the patent application itself was filed by someone who was not the true inventor and had no right to the invention (e.g., they derived it from the person now claiming prior use), it is generally considered that the person from whom the invention was misappropriated can still assert prior use rights. Their use is not based on "knowledge of the content of the patented invention" in the spirit intended by the statute, as the patent itself is improperly filed. This can also be relevant if, for example, one co-inventor files a patent application in their sole name without the knowledge or consent of other co-inventors who were continuing to work the invention.

Scope and Effect of Prior Use Rights

If all conditions are met, the prior user is granted a statutory non-exclusive license (法定通常実施権 - hōtei tsūjō jisshiken) under the patent. This license allows them to continue working the invention despite the patent.

The scope of this license is defined by Article 79 as being "within the scope of the invention which has been worked or for which preparations for working have been made and within the scope of the purpose of such business." This means the right is not unlimited and is tied to the nature and scale of the prior user's activities at the time the patent application was filed.

Key aspects of the scope include:

  • Changes in the Mode of Working (実施形式の変更 - jisshi keishiki no henkō): A prior user is generally allowed to make improvements or modifications to their method of working the invention, as long as these changes do not go beyond the essential identity of the invention they were originally working or preparing. The Supreme Court in the "Walking Beam Furnace" case indicated that the right extends to modified forms as long as they do not lose "identity" with the invention as originally worked.
    A more detailed interpretation suggests comparing the prior user's initially worked invention (U) with the patented invention (P). If U and P are essentially the same in terms of technical idea, the prior user may have considerable freedom to modify their working within the scope of P (provided such modifications do not infringe other patents). However, if the prior user's invention U only corresponds to a part or a narrower embodiment of the patented invention P, then their right to modify and continue working is confined to that narrower scope. This approach aims to allow for natural technological development by the prior user without unduly prejudicing the patentee, aligning with the policy of encouraging actual implementation of inventions.
  • Changes in Business Form (事業形式の変更 - jigyō keishiki no henkō): If a prior user was, for example, only engaged in selling (distributing) products embodying the invention (manufactured by others), their prior use right for selling does not automatically extend to allow them to start manufacturing those products. Manufacturing is often seen as a qualitatively different business activity requiring new and substantial capital investment, and allowing such an expansion could significantly increase the impact on the patentee beyond what was originally protected. However, more routine business adjustments, such as relocating a manufacturing facility while maintaining a similar scale of operation, would likely be considered within the scope of the prior use right.
  • Cessation of Business (事業の中止 - jigyō no chūshi): If the prior user had voluntarily and definitively ceased their business activities or preparations related to the invention before the patent application was filed by the other party (and this cessation was not caused by the actions of the eventual patentee), the basis for the prior use right may be lost. The right is intended to protect ongoing or imminently planned activities.
  • Transferability: A prior use right is generally transferable only with the business in which the invention is being worked or prepared (Article 94(1) of the Patent Act). It is not a freely assignable personal right.
  • Assertion Against Third Parties: The prior use right, being a statutory license, can be asserted against the patentee and any subsequent transferees or exclusive licensees of the patent without needing to be registered (Article 99 of the Patent Act).

Who Can Assert Prior Use Rights? (援用権者 - en'yōkensha)

The primary person entitled to assert a prior use right is, of course, the entity that fulfilled the conditions of Article 79. However, the right can sometimes be invoked by or extend to others in specific circumstances:

  • Principals and Subcontractors (下請 - shitauke): If a company (the principal) has independently developed an invention and directs a subcontractor to manufacture products embodying that invention according to the principal's specific designs and instructions, and if all such manufactured products are delivered exclusively to the principal, the principal can establish prior use rights. The subcontractor, while performing the manufacturing, may be able to rely on the principal's prior use right to the extent of their activities for that principal (Supreme Court, October 17, 1969, "Globe-shaped Radio" case). This derivative right for the subcontractor is typically limited to prevent an expansion of the prior use beyond the scope of the principal's original business and preparations.
  • Purchasers of Products from a Prior User:
    • A person who purchases a specific product unit that was manufactured and sold under a valid prior use right can generally use or resell that specific unit without infringing the patent. This is akin to the principle of exhaustion applying to that lawfully produced unit (Chiba District Court, December 14, 1992, "Connecting Tool for Building Panels" case).
    • Furthermore, it's generally understood that a business purchasing such products from a prior user for the purpose of resale can also resell them without infringing. If this were not the case, the prior user's ability to conduct their business (which the prior use right is intended to protect) would be severely undermined as they would struggle to find distributors (Nagoya District Court, April 28, 2005, "On-board Equipment" case, obiter dictum).

Relationship with Article 69(2)(ii) (Right to Work Articles Existing at Patent Filing)

It is also important to distinguish prior use rights under Article 79 from another provision, Article 69(2)(ii) of the Patent Act. This latter article states that the effects of a patent right shall not extend to articles existing in Japan at the time the patent application was filed.

This provides a defense for the use or sale of specific, individual articles that were already in existence in Japan when the patent application was filed, irrespective of whether the conditions for Article 79 (such as business preparations or independent invention) are met for those specific articles. However, Article 69(2)(ii) only protects those pre-existing physical items. It does not grant a general right to continue manufacturing new, identical articles after the patent filing. To obtain a right to continue manufacturing, one must satisfy the more demanding requirements of Article 79.

Comparison with U.S. Prior User Rights

The concept of prior user rights in the U.S. has a different trajectory and scope compared to Japan's long-standing Article 79.
Historically, U.S. patent law did not have a broad, generally applicable prior user rights defense at the federal level, with some exceptions in state trade secret law or very specific circumstances.
The American Inventors Protection Act of 1999 (AIPA) introduced a limited prior user rights defense specifically for business method patents.
The Leahy-Smith America Invents Act (AIA) of 2011 significantly expanded this, creating a broader prior user rights defense. However, it primarily applies to "a process, or a machine, manufacture, or composition of matter used in a manufacturing or other commercial process."

Key differences often include:

  • Scope of Subject Matter: Japanese prior use rights under Article 79 are not explicitly limited to certain types of inventions or uses (like "manufacturing or other commercial processes") in the same way the AIA defense has been structured.
  • "Commercial Use" and "Preparations": While both systems require some form of commercial activity or significant preparation, the specific thresholds and judicial interpretations of what constitutes "making preparations for such business" in Japan versus the AIA's requirements for establishing "commercial use" can differ.
  • Historical Context and Systemic Role: Japan's prior use rights have long been an integral part of its first-to-file system, serving as a crucial balancing mechanism. The U.S. federal prior user rights are a more recent and evolving feature.

Conclusion

Prior use rights under Article 79 of the Japanese Patent Act offer a vital defense for businesses that have independently developed and begun to commercialize an invention before another party files a patent application for it. Establishing these rights requires meticulous proof of independent creation, completion of the invention, and concrete business activities or preparations in Japan as of the patent application's filing date. While the scope of the resulting non-exclusive license is limited to the prior user's existing business and invention, it provides an important shield against infringement claims. For companies engaging in R&D and commercial activities in Japan, maintaining thorough records of their innovative efforts, investment, and commercial preparations can be critical in the event a prior use right needs to be asserted. This doctrine underscores the Japanese patent system's efforts to balance the exclusivity granted by patents with fairness to bona fide independent innovators.