2017 <Special News Flash 3>｜News Letter

Supreme Court Rules that Patentee is NOT Allowed to Make Re-Defense Based on Correction against Invalidity Defense After Conclusion of Fact-Finding Proceedings Even Though Correction may be Approved Thereafter

X (Individual) v. Y (Individual), Case No. 2016 (Ju) 632 (Decisions rendered on July 10, 2017)

The Supreme Court considered whether the Patentee was allowed to argue against the findings of the Intellectual Property High Court (IPHC) on the basis of the fact that a correction of claim of the patent at issue was made final and binding after the IPHC’s decision despite the fact that the Patentee had not made a re-defense based on a correction of claim by the conclusion of the oral argument in the IPHC; and ruled that such an argument was not allowed on the grounds that it unduly delayed a resolution of dispute on patent infringement unless the circumstances were exceptional. The details of the case are as follows:

1. History of Proceedings
(1) The 1^st Instance (Tokyo District Court)
The Patentee, X, filed a patent infringement suit against Y who allegedly sold accused tools infringing the patent at issue relating to a sheet cutter in 2013. During the court proceedings, Y made an invalidity defense on the grounds of adding new matter, and not satisfying support requirement and clarity requirement.
The Tokyo District Court rejected the Y’s defense, and upheld X’s infringement allegation in 2014.

(2) The 2^nd Instance (IPHC)
The losing party, Y, appealed against the decision of the Tokyo District Court to the IPHC and made a new invalidity defense on the grounds of lacking novelty and inventive step in 2014. After holding four preparatory proceedings and one oral argument, the IPHC concluded the proceedings. X made no re-defense based on a correction of claim of the patent at issue by the conclusion.
The IPHC upheld the Y’s new defense, and decided that the patent at issue should be invalidated, and cancelled the decision of the Tokyo District Court in 2015.

(3) Development after the decision of the IPHC
The losing party, X, appealed against the decision of the IPHC to the Supreme Court and concurrently filed a demand for a trial for correction of claims of the patent at issue in January, 2016. The correction was approved and made final and binding under the JPO’s proceedings in October, 2016.

(4) History of Trial for Invalidation
Y filed a demand for an invalidation trial on the grounds of adding new matter, and not satisfying support requirement and clarity requirement in 2014 during the 1^st instance of the infringement suit, and the JPO dismissed the Y’s demand in 2014.
Y filed a cancellation action against the JPO’s decision to the IPHC in 2014, but the IPHC dismissed the Y’s action in December 2015, and the decision was made final and binding by January 6, 2016.

According to the above history, it is understood (i) that the cancellation action was already pending at the time Y made the new invalidity defense in the IPHC, and (ii) that X was not allowed to file a demand for a trial for correction or a request for correction in an invalidation trial until January 6, 2016 in order to overcome the new reasons for invalidation (lack of novelty and inventive step), since the JPO’s decision was not made final and binding until January 6, 2016¹).

2. Ruling of the Supreme Court
The Supreme Court first confirmed (i) that an accused infringer is allowed to make an invalidity defense in a patent infringement suit, against which the Patentee is allowed to make a re-defense based on a correction under the Patent Law, and (ii) that Art. 104-3(1) of the Patent Law provides that an invalidity defense is allowed to be made in a patent infringement suit without requiring the decision of invalidation to be final and binding.
Then, the Supreme Court interpreted the meaning of the provision as intending to facilitate the resolution of a patent infringement dispute in the proceedings of the patent infringement suit as early far as possible. The Supreme Court further interpreted the meaning of Art. 104-3(2), stipulating that the court may render a ruling of dismissal, if a submission of an invalidity defense is considered to have been made for the purpose of causing unreasonable delay in the trial, as attempting to avoid the delay of court proceedings due to the consideration of the invalidity defense; and that this was also true for a re-defense based on a correction.

The Supreme Court further confirmed that Art. 104-4 of the Patent Law provides that a party who was involved in a patent infringement suit is not allowed to argue the fact that a correction of claims was made final and binding in the case that a correction of claim was accepted and made final and binding after the final decision of a patent infringement suit was made final and binding.
Then, the Supreme Court interpreted the meaning of the provision as intending to resolve a patent infringement dispute at one time on the premise that a re-defense based on a correction is allowed to be made against an invalidity defense in a patent infringement suit, as stated above.

On the basis of the above interpretations, the Supreme Court ruled (i) that it was equal to accept redoing all the examination and judgment in the fact-finding proceedings²), if it is allowed to argue against the finding of the fact-finding proceedings on the basis of the fact that a correction was made final and binding after the conclusion of the oral argument in the IPHC despite the fact that the Patentee did not make a re-defense based on a correction by the conclusion, even before the final decision of a patent infringement suit was made final and binding; and accordingly (ii) that the Supreme Court that it should not be allowed in view of the intent of Art. 104-3 and 104-4 of the Patent Law to argue the finding of the fact-finding proceedings on the grounds of the fact that a correction of claims was made final and binding after the termination of the oral argument in the IPHC, despite the fact that the Patentee did not make a re-defense by the termination, unless there is any special circumstances on not having argued a re-defense based on a correction, which was beyond the Patentee’s control.

On the basis of the above ruling, the Supreme Court decided as below:
X did not make a re-defense based on a correction against the new invalidity defense by the conclusion of the oral argument in the IPHC; and X was not legally allowed to file a trial for correction nor a request for correction for overcoming the new reasons for invalidation made as the defense by that time. However, it was not necessary to actually file a trial for correction or a request for correction for making a re-defense based on a correction against the new invalidity defense, thus it could not be said that X could not make a re-defense based on a correction against the new invalidity defense in the IPHC, and no other special circumstances on not having argued a re-defense based on a correction, which was beyond the X’s control, was found.

Conclusively, the Supreme Court dismissed the X’s appeal, and upheld the conclusion of the IPHC decision.
The Supreme Court’s decision is made final and binding.

1) Art. 126(2) of the Patent Law stipulates that a trial for correction may not be filed during the period between the time the patent invalidation trial has come to be pending before the Patent Office and the time … the trial decision has been made final and binding; and Art. 134-2(1) of the Patent Law stipulates that a demandee (patentee) in the patent invalidation trial may file a correction of … claim(s) … within the time limit designated in accordance with Art. 134(1) …
2) Under the Japanese Civil Procedure Law, fact-finding is to be made in the 1st instance, i.e. district courts, and in the 2^nd instance, i.e. high courts.

K&P’s CommentsAs seen from the above, the period where a correction, or an amendment after the grant, is allowed to be filed is complicatedly limited under the Japanese Patent Law, in particular, after an invalidation trial is filed.
Accordingly, the Patentee should make a re-defense based on a correction in the oral argument of the 2^nd instance, i.e. the IPHC in the patent infringement suit at the latest in the case the opposite party makes an invalidity defense even though it is a secondary allegation in order to avoid the risk which comes to the surface in the above case.