Outline of the 2021 amendments to IP in Japan

On May 14, 2021, the Diet passed a bill to amend the Patent Act, the Utility Model Act, the Design Act and the Trademark Act (respectively the “Amendment” and the “Amended Patent Act, etc.”). The Amendment was promulgated on May 21, 2021. We highlight a few notable changes resulting from the Amendment below: 

1.Licensee’s consent to abandonment of or correction to patent, utility model right or design right etc., is no longer required.

If the owner of a patent, utility model right or design right wants to abandon or make a correction to a right for which a license has been granted to another party, the Japan Patent Office (the “JPO”) presently requires said owner to submit a document showing the consent of the licensee as a condition for the requested abandonment or correction. Although this requirement has not been strictly enforced since the JPO has no means to ascertain the existence of a licensee unless it is registered with the JPO, this requirement has been troublesome for owners of patents, etc., in cases where a patentee is forced to make a correction to its patent claims as a defence against an invalidation action filed by a third party which has become aware of the existence of a licensee through a press release or other sources.

The Amendment abolishes the licensee consent requirement. Under the Amended Patent Act, the Amended Utility Model Act and the Amended Design Act, the consent of a licensee need no longer be sought by an owner of a patent, utility model right or design right in order to abandon or make a correction to its right, unless the licensee is an exclusive licensee registered with the JPO. If there is an exclusive licensee or a pledgee registered with the JPO, the consent of such licensee or pledgee is still required, whereas an unregistered licensee’s consent is not required regardless of the exclusivity of such unregistered licensee. Notwithstanding the foregoing, if a license agreement expressly requires the consent of a licensee as a condition for the licensor’s abandonment of or correction to a licensed patent, such express provision will have force and effect.

The Amendment applies to the abandonment of or correction to a patent, etc., for which a license has already been granted to another party at the time the Amendment becomes effective in early 2022. Having said that, a licensee may argue that it and the licensor should be deemed to have been in an agreement of the kind that requires the consent of the licensee when the licensor abandons or makes a correction to its patent, even though such consent requirement was not expressly provided for in its contract with the licensor, since, the licensee might argue, said license agreement was entered into at a time when the default rule of the Patent Act required its consent. This issue may arise in the future.

It should be noted that the Amendment does not apply to the Trademark Act and that, therefore, the abandonment of a registered trademark by its owner still needs the consent of unregistered and registered licensees or pledgees, as the case may be.

2.Amicus briefs may be solicited in actions for patent and utility model right infringement.

Actions for infringement of patents and utility model rights are heard in the first instance by the Tokyo District Court and the Osaka District Court, and thence can be appealed to the Intellectual Property High Court. The Amendment introduces a new system whereby the Court, upon the request of a party to the litigation, may solicit amicus briefs from third parties and institutions.

3.The JPO’s oral hearing may be held online.

Oral hearings are, in principle, required during proceedings for an invalidation trial held before the JPO. These oral hearings are attended by appeal examiners from the JPO and by attorneys representing the petitioner and the patentee, and they may be observed by anyone who comes to the hearing venue in person. Due to the Covid19 pandemic, there has arisen a necessity for holding oral hearings online, and the Amendment prescribes the relevant rules that enable such online hearings. It appears that a party residing in a foreign country may be given an opportunity by the appeal examiners to view an oral hearing online, although all oral arguments must be made by the representing attorneys in Japan.

4.Restoration of a right may be available unless there is an intentional lapse of a prescription period for the prosecution and maintenance of a patent, etc.

There are many prescription periods for the prosecution and maintenance of a patent, utility model right, design right or trademark right. These prescribe periods for claims of priority, for submitting a translation of patent claims and specifications, for requesting a substantive examination for a patent application, or for the restoration of rights having expired due to a failure to pay annual or renewal registration fee. If such a prescription period lapses, then restoration of a right is available only when it is established that there was a justifiable reason for the delay. However, as established by judicial precedent, mere human error is not considered to constitute a justifiable reason for a failing to act within the prescription period, and therefore restoration is very difficult or almost impossible in practice. The Amendment relaxes this judicial rule. Under the Amendment, unless a lapse of a prescription periods is caused intentionally, restoration is available under certain conditions, including procedural ones to be prescribed by the ordinance of the Ministry of Economy, Trade and Industry.

5.Expanding the scope of the act of “importation” of goods.

Unauthorized “importation” of goods bearing a trademark or design which is identical to or confusingly similar to a trademark or design registered by another person with the JPO constitutes infringement of a trademark right or of a design right, except where it constitutes a legitimate parallel import of authentic goods. The Amended Trademark Act and the Amended Design Act now prescribe that the definition of “importation” includes an act of a person residing in a foreign country where said person causes another person to bring goods from a foreign county into the territory of Japan. No similar amendment has been made to the Patent Act or to the Utility Model Act.

6．Effective Dates

The effective dates for the changes prescribed by the Amendment are to be declared by orders of cabinet. Many of the changes will be effective within one year from the date of promulgation except for those related to (i) the JPO’s online oral hearing (within six months), (ii) the scope of “importation” (within one year and a half), and (iii) the restoration of lapsed prescription periods for patent, utility model right and design right (within 2 years).

By Yasufumi Shiroyama, Tay & Partners, Malaysia, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact malaysia@transatlanticlaw.com

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