Developments in and an Evaluation of Intellectual Property Rights in Japan (Evaluation of the pro-patent trend since the latter part of the 1990s, in particular the patent system)

Author Name KIYOKAWA Yutaka  (Senior Fellow, RIETI)
Creation Date/NO. December 2006 06-J-060
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The debate about intellectual property rights has recently intensified significantly. Behind this trend, there have been developments such as the declaration, by Prime Minister Koizumi in his 2002 policy speech, that Japan aimed to be "a nation based on intellectual property," and the subsequent enactment of the Basic Law on Intellectual Property and establishment of the Strategic Council on Intellectual Property.

However, pro-patent developments can be traced back to the mid-1990s. In order to overcome the severe economic situation that followed the collapse of Japan's bubble economy, compounded by factors such as globalization and in particular the emergence of China, it was considered necessary to promote innovation through pro-patent policies such as those in the United States in the 1980s, and to shift the industrial structure to higher-value-added fields and toward greater differentiation, with the aim of maintaining and developing Japan's international competitiveness.

At that time, there were arguments about intellectual property rights, particularly the patent system. These included arguments about the slowness of patenting, the limited scope and interpretation of patent rights, delays in litigation in cases of violations, and the inadequacy of compensation even in the event of winning lawsuits. It was amid these circumstances, compounded by the Japan-U.S. talks on patents and other matters and the conclusion of the TRIPS agreement in the Uruguay Round, that the Patent Law was revised in 1994, and this revision included a provision liberalizing the format for the statement of claims. Studies continued subsequently and a further revision in 1998 rationalized the calculation of damage compensation. A 1999 revision brought changes such as those allowing swifter and more appropriate patent litigation. In this way, a course was set for the strengthening of patent rights.

In this paper, I give an overview of how Japan's patent system became pro-patent, namely, how the strengthening of patent protection progressed, and I attempt to evaluate this, focusing on the period since the 1994 revision of the Patent Law to the present day. Specifically, I give an overview of the revision of laws such as the Patent Law and how they have been administered at the Patent Office, and the trend of judicial precedent in the courts with regard to the acceleration of the granting of patent rights, the handling of new technologies such as biotechnology and software, the rationalization of the scope of instituting claims, methods of interpreting claims, the validity of patent rights, dispute procedures, and the rationalization of compensation and strengthening of penal regulations as remedial measures.

My conclusion is that acceleration has not yet been fully achieved, but the surrounding situation has been improved and the scope of claims and their interpretations have been rationalized; the effects of patent rights have been improved, though I retain some personal doubt with regard to inventions made by employees as part of their duties; and in patent suits considerable results have been achieved with regard to increasing the speed and the amounts of compensation. Accordingly, the level of patent protection in Japan has improved substantially compared with the latter half of the 1990s, when pro-patent policies began to be advocated.

What must be kept in mind is that a patent right is an exclusive right and could exert a bad influence in the form of market distortion. Therefore, excessive enhancement is not desirable, and it is essential to have a good balance with competition measures. In view of this, there has recently been talk in the U.S., the forerunner in this sphere, of reviewing the pro-patent stance out of concern that technology development may be hampered by factors such as the excessive numbers of patents and the severity of lawsuits and compensation. In Japan, too, technology development is becoming increasingly complex and advanced, and also more costly, with the result that it is difficult for single companies to accomplish it, making it necessary to do so in collaboration with others. Accordingly, although the promotion of innovation is premised upon the protection of the fruits of that innovation by means of patents, there is room for debate about the extent to which exclusiveness should be insisted upon for the further promotion of innovation. I believe that the pro-patent objective of strengthening protection has been substantially achieved, and that from now on it is important to have patent policies that are more conducive to promoting innovation.