Kaoru Kuroda - Patent Exhaustion In Japan

AIPLA Mid-Winter Institute
IP Practice in Japan Committee Pre-Meeting Seminar
Patent Exhaustion in Japan
JPAA International Activities Center
Kaoru Kuroda
Exhaustion Cases in Japan
BBS Supreme Court Case (1997)
adopted the domestic exhaustion in dicta.
Once a patentee assigned a patented product
in Japan, the patent right will not be effective
against activities such as using, assigning or
leasing this patented product because the
patent right for this product is exhausted by
achieving its purpose.
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Exhaustion Cases in Japan
BBS Supreme Court Case (1997) stated
following rationales for domestic exhaustion.
(1) Protection of security of transaction:
When the patented product is placed on the market, the
product is assigned to the assignee on the premise that
the assignee will obtain the rights to use and reassign
the product. Otherwise, free circulation of products in a
market would be obstructed ;
(2) Preventing double recovery:
There is no need for the patentee to receive a double
recovery during the course of distribution of the product.
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Exhaustion Cases in Japan
BBS case (Sup. Ct., 1997)
Products are processed
or replaced by third party
“Manufacturing”
Approach
“Exhaustion” Approach
Disposable Camera (1), (2)
(Tokyo, Dist. Ct., 2000)
Acyclovir
(Tokyo High Ct., 2001)
Acyclovir
(Tokyo Dist. Ct., 2001)
Ink Cartridge
(Tokyo Dist. Ct., 2004)
Ink Cartridge (Sup. Ct., 2007)
Ink Cartridge (IP High Ct., 2006)
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Disposable Camera (1) & (2)
(Tokyo Dist. Ct., 2000)
Fact (Konica case and Fujifilm case)
Plaintiff has utility model rights or patent rights
relating to a disposable camera. Defendant was
accused of refilling the used plastic housings of
disposable cameras with new film and batteries
and selling the refilled product.
“Disposable Camera” = only pre-equipped film is
supposed to be used.
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Disposable Camera –Konica
(Tokyo Dist. Ct., 2000)
Holding (“Exhaustion” approach)
By judging from the nature of the product, the character of
the transaction, and utilization form of the product in
accordance with social convention, the right holder may
not necessarily grant the assignee unqualified rights to
reassign the assigned product free from being accused.
In that case, the right holder may exercise his right if the
assignee’s activity exceeds the qualified scope of activity.
Not exhausted (=infringe) because the accused activity
was beyond the scope of activity foreseen by the right
holder as of the assignment.6
Disposable Camera –Fujifilm
(Tokyo Dist. Ct., 2000)
Holding (“Exhaustion” approach)
A patent right would not be exhausted when
(1) A third party reuse or reassign after the function of
the patented product has been depleted; or
(2) A third party replaces an element of a patented
product that corresponds to the essential part of the
patented invention, and thus the resulting product is
not equivalent to the original patented product.
Not exhausted (=infringe) because the function of the
disposable camera at issue was depleted when it was
used up.
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Acｙclovir case
(Tokyo Dist. Ct., 2001,
Tokyo High Ct., 2001)
Fact
The defendants bought a pharmaceutical compound
containing the patented drug “acyclovir” as an active
ingredient. They extracted and purified the acyclovir,
then produced and sold a new pharmaceutical
compound containing the resulting acyclovir as an
active ingredient.
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Acyclovir
(Tokyo Dist. Ct., 2001)
Holding (“Exhaustion” approach)
same as Fujifilm case
Exhaustion is denied when:
(1) a functionally depleted patented product is reused;
(for the same purpose as the original use) or
(2) an element of a patented product corresponding to
the substantial part of the patented invention is
replaced. The situation in this case did not fall into
either category.
Exhausted (=not infringe) because the fact in this case
did not fall into either category.
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Acyclovir
(Tokyo High Ct., 2001)
Holding (“Manufacturing” approach)
A patent right may be exhausted with respect to the
assignee’s activities, such as using and assigning, but
may not be exhausted with respect to the assignee’s
manufacturing activity. Therefore, if the assignee’s
activity is evaluated as manufacturing a new product, it
constitutes infringement of the patent right.
Exhausted (not infringe) because the defendants’ activity
did not yield any chemical reaction with regard to the
acyclovir, nor did this activity produce any new acyclovir
by some chemical reaction (not manufacturing).
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Ink Cartridge
(Tokyo Dist. Ct., 2004,
IP High Ct., 2006,
Sup. Ct., 2007)
Fact
The plaintiff, an owner of a patent right relating to an ink
tank for an inkjet printer, produced an ink cartridge as a
patented product and sold it.
The defendant’s accused infringement, in relevant part,
was washing the used ink tanks and refilling it with ink,
and selling the products thus obtained.
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Ink Cartridge
(Tokyo Dist. Ct., 2004)
Holding (“Manufacturing” approach)
same as Acyclovir case
A patent right may not be exhausted with respect to the
assignee’s manufacturing activity. Therefore, if the
assignee’s activity is evaluated as manufacturing a new
product, it constitutes infringement of the patent right.
Exhausted (=not infringe) because refilling the used ink
tank with ink does not constitute manufacturing a new ink
tank.
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Ink Cartridge
(IP High Ct., 2006)
Holding (“Exhaustion” approach)
A patent right is not exhausted in the following situations:
(1) where the patented product is reused or recycled after
its function has been depleted due to the expiration of
the original life span of the product (1st Category), or
(2) where a third party processes or replaces the whole or a
part of the patented product which corresponds to the
essential part of the patented invention (2nd Category).
Not Exhausted (=infringe) because refilling the used ink tank
constituted processing or replacing the essential part of the
patented products (2nd Category).
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Ink Cartridge
(Sup. Ct., 2009)
Holding (“Manufacturing” approach)
If a patented product transferred by the patentee in Japan is
processed or partially replaced, and by those actions it is
recognized that a non-identical patented product is freshly
manufactured, the patentee should have the right to enforce
the patent right with regard to the freshly manufactured
product..
Not Exhausted (=infringe) because when ink is used up,
the essential function of the ink tank is blocked, however,
when Defendant washed the used tank and refilled it with
ink, the essential function was revived, which constitutes
manufacturing a non-identical patented product.
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Thank you!
Abe, Ikubo & Katayama
Kaoru Kuroda
[email protected]