An International Guide to
Patent Case Management for Judges

7.6 Judicial patent proceedings and case management

This section sets out the process for seeking an injunction against, or damages for, an alleged infringement of a patent right, with a particular focus on the district court process. It addresses jurisdiction and case assignment; conciliation; the two-stage district court process for assessing infringement and damages; provisional dispositions (preliminary injunctions); and discovery and appeal. This section also outlines the remedies a patentee may seek when a person infringes or is likely to infringe a patent right, including an injunction, damages, measures to restore credibility and the return of unjust enrichment.

The IP divisions of the Tokyo District Court and the Osaka District Court adopt the following two-stage process for patent infringement lawsuits:

1. 1. infringement determination stage – the court determines whether a patent has been infringed (including the validity of a patent); and
2. 2. damages determination stage – if the court finds that infringement has occurred, a second stage is conducted to determine the amount of damages.

Figure 7.10 provides an overview of the patent infringement lawsuit litigation process.

The IP divisions of the Tokyo District Court and the Osaka District Court have published the following guidelines on the two-stage infringement lawsuit process in English:

• Proceedings Model for Patent Infringement Suit (Stage for Examination on Infringement) (Tokyo District Court);
• Proceedings Model for Patent Infringement Suit (Stage for Examination on Damages) (Tokyo District Court);
• Flow of Procedures for a Patent/Utility Model Right Infringement Suit (Osaka District Court); and
• Instructions for Proceedings of the Stage for Examination on Damages (Osaka District Court).²³²

7.6.1 Jurisdiction and case assignment

As noted in Section 7.3, the Tokyo District Court or the Osaka District Court handles first instances of civil lawsuits for an alleged infringement of a patent.²³³ Patent infringement cases are assigned to panels of the IP divisions of the district courts according to the order in which they are filed. Civil Divisions 29, 40, 46 and 47 of the Tokyo District Court and Civil Divisions 21 and 26 of the Osaka District Court specialize in IP infringement proceedings.

A panel of three judges will usually hear patent infringement cases. Fact-finding does not involve jurors and is conducted by judges. However, judicial research officials – examiners seconded from the JPO, or patent attorneys – are assigned to assist district court judges with technical matters.

Any appeal against a district court decision in a patent infringement lawsuit is under the exclusive jurisdiction of the IP High Court.²³⁴ A party that is dissatisfied with a decision of the IP High Court may file a final appeal or a petition for the acceptance of a final appeal to the Supreme Court.²³⁵

7.6.2 Statements of case (complaint and answer)

On the first date for oral argument, the plaintiff will present the complaint, and the defendant will present an answer. The answer should outline the arguments that the defendant intends to present, including:

• identification of the alleged infringing product or process and a description of its composition;
• admission or denial of the assertions made in the complaint; and
• the defense of patent invalidity.²³⁶

The parties should submit basic documentary evidence – for example, the patent register, the patent gazette or a pamphlet describing the defendant’s product – along with a description of the evidence.

7.6.3 Early case management (preparatory proceedings)

In most cases, after the first date for oral argument, the court refers the case to preparatory proceedings to identify and organize the issues and evidence. The presiding judge and another judge from the three-judge panel will conduct the preparatory proceedings during which the parties will present their detailed arguments.

On the first or second date of the preparatory proceedings, the court and the parties will confirm the issues in dispute and may decide a schedule for the proceedings. Depending on the arguments made on each date of the proceedings, the court and the parties may adjust the schedule or discuss what the parties should prepare for the next date for proceedings.

During preparatory proceedings, according to Article 104-2 of Patent Act, when the defendant denies the description of the allegedly infringing products or process described by the plaintiff in the complaint, the defendant should present a description of those products or process prepared by the defendant. Based on this description, the defendant will present a brief that includes arguments as to whether the alleged infringing product or process falls within the technical scope of the patented invention. If the defendant argues a defense of patent invalidity, the defendant will present a brief outlining the defense based on an investigation of publicly known prior art documents and should also submit any other relevant and necessary documentary evidence in its possession.

The plaintiff will also present a brief that outlines the plaintiff’s arguments against the defendant’s denial of infringement in terms of the technical scope of the patented invention, as well as any defense of patent invalidity (including the defense of correction), and will also submit any necessary documentary evidence to support its assertions.

On the third date of preparatory proceedings, the defendant will present another brief to counter the plaintiff’s allegation made at the previous day of preparatory proceedings regarding the technical scope of the patented invention. The defendant may also provide supplementary material relevant to the defense of patent invalidity.

On the fourth date of preparatory proceedings, the plaintiff will present briefs that outline any supplementary arguments with respect to the defense of patent invalidity. At this stage, the key arguments on infringement, including the validity of the patent and their proof, will be completed.

7.6.4 Provisional measures (preliminary injunction against patent infringement)

Article 23(2) of the Civil Provisional Remedies Act provides for a provisional disposition (preliminary injunction) to prohibit the supply of goods or services that infringe a patent right, in addition to a permanent injunction issued in an infringement action based on the merits.²³⁷ Article 23(2) provides that a preliminary injunction may be issued “when such status is necessary in order to avoid any substantial damage or imminent danger that would occur to” the patentee with respect to “the relationship of rights in dispute.”

If a patentee is successful in an infringement action on the merits, the court will permit the patentee to exercise the right to:

• stop the infringing activities;²³⁸
• demand the disposal of infringing products;²³⁹
• demand compensation for damages;²⁴⁰ and
• demand measures to restore the patentee’s reputation.²⁴¹

However, in the case of a preliminary injunction against patent infringement, only the following remedies are permitted:

• an injunction against the infringing activities; and
• the retention of the infringing products by the court enforcement officer for the purpose of ensuring the disposal of the infringing products upon obtaining a final judgment.²⁴²

Article 24 of the Civil Provisional Remedies Act provides the following:

In order to achieve the objective of a petition for an order of provisional disposition, the court may issue a disposition ordering the [respondent (alleged infringer)] to take or prohibit from taking certain actions, ordering the [respondent] to tender performance, or causing the object to be placed in the custody of a custodian, or issue any other necessary disposition.

The case for a preliminary injunction may be filed at the same time as the main action. When the same counsel represents each party in both matters, the case for a preliminary injunction and the main case will often be considered by the court at the same time.

7.6.4.1 Requirements for a preliminary injunction order

The requirements for a preliminary injunction are a likelihood of success on the merits and the necessity to preserve the patentee’s position pending the final determination. Article 13(1) of the Civil Provisional Remedies Act provides: “A petition for an order for a provisional remedy must clarify the purpose thereof and the rights or relationship of rights that must be preserved and the necessity of preserving it.”

To show that there is a likelihood of success on the merits, it is necessary to demonstrate that a patent right is infringed – that is, that the other party’s goods or services fall within the technical scope of the patented invention. The respondent (alleged infringer) may deny this by showing that the right should be invalidated in a trial for invalidation before the JPO or that the right is not infringed.²⁴³

The necessity of the preliminary injunction must be established by prima facie evidence that shows serious damage or imminent danger to the petitioner (patentee).

7.6.4.2 Proof in a preliminary injunction case

The proof required for a preliminary injunction is a prima facie case. Article 13(2) of the Civil Provisional Remedies Act provides that a prima facie case must show “the right or the relationship of rights to be preserved and the necessity to preserve it.” Prima facie evidence is evidence that can be assessed immediately by the court.²⁴⁴ Documentary evidence is generally provided, and hearing of a witness who is not present in court is not permitted. A court will accept prima facie evidence that is above factual doubt.

The proof required in an action on the merits is “certainty beyond a reasonable doubt.” The burden of proof is lower for a prima facie case. However, in practice, the proof required for a preliminary injunction is often closer to that required in an action on the merits, particularly when the impact on the respondent (alleged infringer) will be significant and if the possibility of the preliminary injunction being suspended is low.

7.6.4.3 Proceedings of preliminary injunction cases

The Tokyo District Court and the Osaka District Court have jurisdiction over preliminary injunction cases.²⁴⁵ In principle, the court deciding a preliminary injunction case must hold oral proceedings or a hearing date at which the respondent (alleged infringer) may be present. However, Article 23(4) of the Civil Provisional Remedies Act provides that this does not apply when the objective of the petition for an order of preliminary injunction cannot be achieved if such proceedings are held. The time required for a hearing depends on the complexity of the case, but it usually takes several months from the filing of the petition to the handing down of the decision if the case involves issues of infringement or invalidity.

7.6.4.4 Preliminary injunction cases and necessity of security deposit

A respondent (alleged infringer) may incur damage if a preliminary injunction is incorrectly issued. Therefore, it is usual for a court to require a security deposit when issuing a preliminary injunction. Under the Civil Provisional Remedies Act, whether a security deposit is required is left to the discretion of the court. Article 14(1) of the Civil Provisional Remedies Act provides the following:

An order for a provisional remedy may be issued while requiring provision of security or requiring provision of security within a certain period of time that is found to be reasonable as a condition for implementing the execution of the provisional remedy, or not requiring the provision of security.

The court determines the amount of the security deposit after reviewing materials submitted by the parties and taking various circumstances into account. The amount of the security deposit may be high if the sales generated by the alleged infringing goods or services are large. In addition, the security deposit will not be refunded until the dispute is resolved.

7.6.4.5 Execution of an order for a preliminary injunction

A permanent injunction is not enforceable until a declaration allowing the execution is issued or a judgment becomes final and binding. Conversely, a preliminary injunction order can be executed immediately.

A preliminary injunction is a provisional disposition prohibiting the respondent from performing an action (an alleged infringement) that comes into effect when a preliminary injunction order is served on the respondent (the alleged infringer). When a respondent is in violation of a preliminary injunction, the petitioner (patentee) can seek enforcement by filing a petition for substitute execution or indirect compulsory execution with the execution court based on an authenticated copy of the preliminary injunction order.²⁴⁶

To enforce an indirect compulsory execution, a petitioner must prove that the respondent is likely to breach their obligation not to act, but it is not necessary to prove that the respondent is actually in breach of their obligation not to act.²⁴⁷

A preliminary injunction order must be executed within two weeks from the day on which the preliminary injunction order is served on the respondent.²⁴⁸

7.6.4.6 Appeal against a preliminary injunction case

If a petition for a preliminary injunction order is dismissed, the petitioner (the patentee) may file an immediate appeal within two weeks from the day on which it is notified of the decision.²⁴⁹ When a preliminary injunction order is issued, the respondent (the alleged infringer) may file an objection to the preliminary injunction with the court that issued the order.²⁵⁰

An objection to a preliminary injunction order establishes a forum for reassessing the right to be preserved and the necessity of preservation. Although a petition for the stay of the execution of a preliminary injunction may be filed at the same time as an objection to a preliminary injunction order, it is practically impossible to obtain a stay of the execution of a preliminary injunction order. This is because a prima facie case is required to demonstrate the grounds for revocation of the order, and the execution of the preliminary injunction is likely to cause damage for which compensation cannot be made.²⁵¹ Therefore, the hurdle for seeking a stay is high.

The respondent may file a petition for an order against the petitioner to file a suit on the merits. If the petitioner does not file a suit on the merits despite the issuance of the order, the respondent may file a petition for revocation of the preliminary injunction. Article 37 of the Civil Provisional Remedies Act provides:

1. (1) At the petition of the [respondent], the court that issued the order for a provisional remedy must order the [petitioner] to, within a certain period of time that it finds to be reasonable, file an action on the merits and submit a document certifying such filing, or, if the [petitioner] has already filed an action on the merits, to submit a document certifying that such action is pending before a court.
2. (2) The period referred to in the preceding paragraph must be two weeks or more.
3. (3) The court must revoke the order for a provisional remedy at the petition of the [respondent] if the [petitioner] fails to submit the document set forth in paragraph (1) within the period set forth in said paragraph.

7.6.4.7 Claim for damages against an erroneous order for a preliminary injunction

If, after a preliminary injunction order against infringement has been issued, it becomes clear in a judgment on the merits – as a result of a successful invalidity defense or a non-infringement argument – that there is no right to be preserved, and the judgment becomes final and binding, the petitioner (the patentee) who has executed the preliminary injunction order is liable to compensate the respondent for damage suffered as a result of the execution of the preliminary injunction if the petitioner was willful or negligent when enforcing the illegal preliminary injunction. Unless there are special circumstances, it is generally presumed that the petitioner was negligent when executing an illegal preliminary injunction.²⁵²

7.6.5 Discovery (limited) and gathering of information

Commentators have noted that the law relating to evidence collection in Japan needs amendment because it favors infringers.²⁵³ Attorney–client privilege is rarely an issue in patent infringement suits in Japan as discovery is limited.

The process for evidence collection under the Patent Act includes special provisions that were based on and supplement the Code of Civil Procedure.

7.6.5.1 Order to produce documents

One of the traditional methods for collecting evidence under Article 105 of the Patent Act is an order to submit documents.²⁵⁴ Article 105, which is a special provision that supplements Article 220 of the Code of Civil Procedure, aims to reduce the burden of the plaintiff to prove the act of infringement and the amount of damage. The exceptions to the obligation to submit documents are more limited in the Patent Act compared to the Code of Civil Procedure. Article 105(1) of the Patent Act stipulates the exception as “reasonable grounds,” whereas Article 220 of the Code of Civil Procedure stipulates a list of specific situations in which a person may not refuse to submit a document.

7.6.5.1.1 Requirements

Article 105(1) stipulates that, in litigation concerning the infringement of a patent right or exclusive license, the court may, upon a motion of a party, order the other party to produce documents that are required to prove the act of infringement or to calculate the damage arising from the act of infringement. It also stipulates that this shall not apply where there are reasonable grounds for the person possessing the documents to refuse production of the documents. For example, it may be reasonable grounds to refuse the production of a document if it contains trade secrets. However, the courts have found that reasonable grounds are not found merely because a document contains trade secrets. A confidentiality protective order under Article 105-4 of the Patent Act can reduce the disadvantage to a person possessing such a document and is a relevant factor when denying reasonable grounds.²⁵⁵

7.6.5.1.2 Determination of reasonable grounds

Article 105(2) of the Patent Act stipulates that, if a court finds it necessary to decide whether there are reasonable grounds, the court may cause the person possessing documents to present such documents. In such a case, no person may request the disclosure of the documents.

It is not always easy for the court to decide whether there are reasonable grounds. However, generally speaking:

• when the documents would prove infringement, reasonable grounds will often be denied under the protection of a protective order; and
• when the documents would not prove infringement, reasonable grounds will often be found.

It is not appropriate for a court to decide this issue based solely on the assertion of the person possessing the documents. Therefore, Article 105(3) of the Patent Act provides that a court may disclose the documents to the parties or their attorneys when it is necessary to make a decision concerning the existence of reasonable grounds. In addition, under Article 105(4), a court may disclose the documents to a technical advisor with the consent of the parties when it is necessary to hear an explanation based on technical knowledge or acquire technical advice from the technical advisor.²⁵⁶

The inspection of evidence relating to infringing objects such as manufacturing equipment is indispensable to proving infringement in some patent litigation cases. Therefore, under Article 105(5) of the Patent Act, the same rules outlined above in relation to document production apply mutatis mutandis to the production of an infringing object.

7.6.5.1.3 Effect of a party’s noncompliance with an order to produce a document

According to Article 224 of the Code of Civil Procedure, a court may find an adverse party’s allegations concerning the details of a document to be true if a party:

• does not comply with an order to produce a document; or
• has caused a document to be lost or otherwise unusable for the purpose of preventing the adverse party from using it.

This provision ensures the effectiveness of the system of production of documents.

7.6.5.2 On-site examination by an expert (inspection system)

Article 105-2 of the Patent Act provides for an inspection system, in which a neutral technical expert (inspector) enters the facility of an alleged infringer, conducts an investigation when there is a possibility of patent infringement, and submits a report to a court. The inspection system is thought to be an effective measure for collecting evidence in cases where the production method is unclear or where infringement cannot be determined by physically taking the product apart.

The inspection system can only be used in limited circumstances. The term “in litigation” under Article 105-2(1) of the Patent Act implies that the system can only be used after a patent infringement suit has been filed. Accordingly, a party cannot use the inspection system when filing a preliminary injunction action (see above).

7.6.5.2.1 Requirements to issue an inspection order

According to Article 105-2(1), the court, after hearing the opinions of the parties, may issue the inspection order after considering the following:

• whether the evidence is necessary to prove the infringement;
• the probability that the evidence will prove the infringement. This is required to prevent abuse of the inspection system. The level of the “probability” required is not as high as for the proof of infringement;²⁵⁷
• whether there is no alternative. This requirement will not be satisfied when an alleged infringer’s product can be easily acquired on the open market; and
• whether it is not too burdensome for the party subject to the inspection. A typical example of such a burden is that the party is forced to shut down its factory for a while.

7.6.5.2.2 Inspector

Under Article 105-2(2), the court designates neutral and appropriate experts as inspectors. These inspectors may include lawyers, patent attorneys or university professors. Under Article 105-2-4(2), designated inspectors may enter a defendant’s factories, office or other place and demand the production of documents, inspect equipment or conduct experiments. Depending on the case, two or more experts may be designated as inspectors.

7.6.5.2.3 Disclosure of the inspection report to the plaintiff

Article 105-2-4(1) provides that, after conducting the inspection, inspectors must summarize the results and submit a report to the court. The report will be disclosed to the inspected defendant but not to the plaintiff at this stage. The defendant may petition the court not to disclose the report for the protection of a trade secret.²⁵⁸ The court will then decide whether to disclose the whole or a part of the report to the plaintiff.²⁵⁹ The defendant’s petition will be allowed if reasonable grounds not to disclose the report are found. Otherwise, the report will be disclosed to the plaintiff, and the plaintiff may submit it to the court as evidence.

7.6.5.2.4 Effect of noncompliance with an inspection order

Under Article 105-2-5, if a party does not comply with an inspection order, the court may find the adverse party’s allegations concerning the facts to be proved to be true, as is the case when a party does not comply with a document production order.

7.6.6 Infringement determination

7.6.6.1 Explanatory session

The court will usually not hear parties or witnesses in patent infringement lawsuit proceedings. Rather, the court determines the scope of the patented invention and patent infringement using documentary evidence, such as patent specifications, technical documents of prior art and specifications of the allegedly infringing products. It is also rare for an expert witness to be used to prove the technical background of a patented invention.

However, as the last substantive step of the stage for assessing infringement, the court will usually preside over an explanatory session (technical briefing session).²⁶⁰ These sessions are held not only for cases involving cutting-edge technology or highly specialized technology but also to establish the general understanding of persons having ordinary skill in the art in the technical field in question, or where general technical knowledge in the art is at issue.

Explanatory sessions may take various forms. For example, an explanatory session may be conducted as an official oral court hearing or as part of the preparatory proceedings. An explanatory session conducted as an oral court hearing will be attended by the judges, the judicial research official in charge of the case, a court clerk and three technical advisors selected from among the experts in the technical field in question.²⁶¹

At the beginning of the session, each party will make a presentation lasting approximately 30 minutes summarizing their arguments and covering technical matters, such as the details of the invention, prior art and common general technical knowledge available at the time when the application was filed. The parties may provide an explanation by using the products produced by working a patented invention and the allegedly infringing products and may use diagrams, presentation software or videos to indicate correlations between the patented invention and the allegedly infringing product.

After the presentation, the participants engage in a discussion that allows both parties, the technical advisors, judges and the judicial research official to ask questions about the content of the presentation or to clarify points in the arguments or evidence. The technical advisors may also present explanations about technical matters. These sessions allow all participants to identify issues and deepen their understanding of technical matters.

7.6.6.2 Preliminary view and settlement

Following the explanatory session, the court will prepare a preliminary view on infringement, taking into account the arguments and evidence, including the technical explanations given by the parties.

If the court finds non-infringement, the court closes the proceedings and delivers a judgment. In some cases, the court may recommend the parties compromise and designate a date for settlement. There are a number of reasons why the court may still recommend settlement in these circumstances, including that the case is not strong and the successful party is not sure if they will be successful in IP High Court proceedings, or that the settlement agreement includes a licensing clause.

If the court finds infringement, the court will express its preliminary view, then proceed to the stage for assessing damages. In some cases, the court may recommend the parties settle at this stage and designate a date for settlement. The court expresses this view on the premise that both parties have completed their arguments and the introduction of evidence regarding infringement.

A large number of cases resolved through court settlement tend to favor the patent holder, including cases where a large amount of damages is claimed.²⁶² In Japan, court settlement is widely recognized as an efficient and speedy way to reach an appropriate resolution.

7.6.7 Damages determination

When the court proceeds to the stage for assessing damages, the plaintiff should clarify the allegations regarding the amount of damage, including the relevant statutory provision that constitutes the basis for the plaintiff’s claim for damages.²⁶³ If the plaintiff does not make any change to the statement of the claim written in the original complaint, the plaintiff should state so on this date.

The plaintiff or the defendant presents their arguments on price, quantities, costs and other matters relating to the allegedly infringing product or process that are necessary to determine the amount of damage, depending on the nature of the damages claim.²⁶⁴

The plaintiff will then present a document that clarifies their arguments regarding the amount of damages based on the quantities and values introduced by the plaintiff and the defendant, which could include an amendment of the amount claimed in the written complaint.²⁶⁵ Following this, the defendant will present a document that either acknowledges or denies the amount of damages claimed by the plaintiff. If the defendant denies the damages claim, the document has to state appropriate reasons for that denial.

If disputes remain between the parties, the court may order that an opinion of a neutral expert (to be appointed by the court) be obtained for the calculation of damages. In such a case, the parties are obliged to assist the expert witness in their calculation of damages.²⁶⁶

The plaintiff may then counterargue and provide supplementary evidence, and the defendant may do the same. Following this, the stage for determining damages is complete. The court will prepare its final view regarding the amount of damages. It will then conclude the preparatory proceeding and oral argument and deliver a judgment. In some cases, the court may disclose its opinion to the parties and advise them to compromise.

The methods for calculating damages are outlined below in Section 7.7.2.

7.6.8 Conciliation

IP conciliation is designed to provide simple and speedy resolution of IP rights disputes. IP conciliation is suited to patent infringement cases when the issues in dispute are clear but have not been able to be resolved through negotiations between the parties.

The IP divisions of the Tokyo District Court and Osaka District Court provide IP conciliation services.²⁶⁷ While summary courts have general jurisdiction over conciliation cases, the Tokyo District Court and the Osaka District Court handle IP-specific conciliation cases. A case is handled by the district court agreed to by the parties.²⁶⁸

The Osaka District Court has published information on its IP conciliation process in English:

• Explanation of the New IP Conciliation at the Osaka District Court; and
• Guidelines for IP Conciliation Proceedings at the Osaka District Court.²⁶⁹

IP conciliation is conducted by a conciliation committee composed of three members: a judge of the IP division of the district court and two experts, such as a patent attorney or a lawyer with extensive experience in IP cases. In cases that involve technical matters, a judicial research official may administer some matters during a conciliation process.²⁷⁰

The parties to an IP conciliation are required to submit their allegations and related evidence by the first day of proceedings, and the conciliation committee is required to provide its opinion verbally by the third date of the proceedings. The committee’s opinion includes not only its determination on the issues but also its view on whether the case would be more suited to litigation, given the difficulties of proof and the complexity of the case.

The parties may then choose to either continue or terminate the conciliation (due to an unsuccessful conciliation process or the withdrawal of the petition). If the conciliation is terminated, the case may return to out-of-court negotiations, or a party may file a lawsuit or request a preliminary injunction. If the parties reach agreement during conciliation, and the agreement is recorded, this record will have the same effect as a judicial settlement.²⁷¹

If a lawsuit is filed in relation to the same claim as a terminated conciliation, judges of any of the IP divisions other than the division of the judge who served as a member of the conciliation committee will conduct the lawsuit proceedings.