Patent Law and Lex Causae ~explained with a precedent~

December 28, 2004
Harakenzo World Patent & Trademark
Patent attorney Yoshiki UEBA

1. Introduction

         I think that many people do not know “private international law”. Until recently, I have heard the term but have not known the meaning of the term.

         In Japan, there are various laws such as the Constitution which specifies legal relationships between the State and a person, the Civil Code which specifies legal relationships between persons, and the Criminal Code which regulates and disciplines the deeds of a person. Generally speaking, “private international law” is a kind of such laws, but has great differences in substances from such laws.

         Simply speaking, “private international law” determines which of the involved states’ laws is to be applied in international legal relationships (legal relationships involving two or more states). The law which is determined to be applied is termed “lex causae”. However, the Six Codes (Roppou) does not use the term “private international law” but use the term “Act Concerning the Application of Laws (Hourei)”. In order to help you understand private international law, the following explains a concrete example.

         For example, suppose that A who has a German nationality was married with B who has an American nationality and resided with B in Korea. Due to A’s work, A and B paid a short visit to Japan. During the visitation in Japan, A had a matrimonial infidelity with C who has a French nationality. As a result, B brought a divorce lawsuit at a Japanese court.

         At that time, which of the German law, the U.S. law, the Korean law, the French law, and the Japanese law is to be applied to judge whether the divorce is possible or not? It is difficult to determine which law is to be applied. “Private international law” has a role for determining which of the involved states’ laws is to be applied. In other words, “private international law” only determines which law is to be applied (e.g. the German law is to be applied or the U.S. law is to be applied) and is not involved in a concrete legal effect in principle.

2. Relationship with the Patent Law

         Recently, as globalization has proceeded, such problem has occurred that which of the involved states’ patent laws is to be applied. The following specifically explains the problem by using a precedent (an example of a trial held by the Supreme Court of Japan; Decision of the First Petty Bench of the Supreme Court of Japan, September 26, 2002). Note that, in order to avoid the complication of the example, the precedent is suitably simplified. Therefore, the following explanation is a bit different from the actual precedent.

(1) Case

         X, a Japanese resident in Japan, had the U.S. patent right of the subject invention. However, X did not have the Japanese patent right of the invention identical with the subject invention. On the other hand, cooperation Y, a Japanese legal entity, produced products A (supposed to belong to the technical scope of the subject invention) in Japan, exported A to the U.S., and caused Z, a U.S. legal entity, to sell the products A.

         Therefore, X brought a lawsuit against Y at a Japanese court for demanding (i) injunction against producing the products A in Japan for the purpose of exporting the products A to the U.S. and against exporting the products A produced in Japan to the U.S., (ii) abandonment of the products A owned by Y in Japan and (iii) compensation for damages caused by the illegal deeds.

(2) Summary of decision and personal opinion

(2-1) Regarding (i) and (ii)

         The Supreme Court decided that: though the demand for injunction and the demand for abandonment are based on the property right of a person and both of the involved parties are a Japanese and a Japanese legal entity whose address or location of a head office is in Japan and the demands are regarding the deed in Japan, the demands are based on the right granted under the U.S. Code title 35, and therefore it is necessary to determine lex causae.

         In order to determine lex causae, first, the nature of the legal relationship must be determined. Roughly speaking, it must be determined what kind of conflict the present lex causae is applied to. Note that, in the provisions of Act Concerning the Application of Laws, legal effects etc. are specified in accordance with the natures of legal relationships.

         The demands are different from a demand based on an illegal deed in terms of its contents and natures, and are based on exclusive effects of the U.S. patent rights. Therefore, the nature of the legal relationship is “the effect of a patent right”. However, Act Concerning the Application of Laws does not have a requirement on “lex causae on the effect of a patent right”.

         Therefore, it is appropriate to consider that the present lex causae should be a law of a state which is most relevant to the patent right and where the patent right is registered (the state may be referred to as the most relevant state). Namely, it was decided that the present lex causae is the U.S. law. Generally, the range to which the private international law is applied is up to here. After that, the U.S. law (the U.S. Code title 35) is applied to this case and it is judged whether the demands noted in (i) and (ii) are permitted or not.

         However, in case where the demand for injunction (demand for abandonment) is permitted under the U.S. Code title 35, it follows that the demand for injunction (demand for abandonment) is permitted in Japan. This is against the rule of a so-called territoriality principle. Therefore, this conclusion is not appropriate.

         However, Act Concerning the Application of Laws provides that in case where the application of provisions of a foreign law is against public policy or good morals, those provisions shall not apply (Article 33). Consequently, the Supreme Court applied the requirement to this case and rejected the application of the U.S. Code title 35. Namely, the demands noted in (i) and (ii) were not permitted.

(2-2) Regarding (iii)

The Supreme Court decided that: though both of the involved parties are a Japanese and a Japanese legal entity whose address or location of a head office is in Japan and the demand for compensation for damage is regarding the deed in Japan, the demand is related to a legal relationship including international elements in that the infringed interest is the U.S. patent right, and therefore it is necessary to determine lex causae.

         The Supreme Court judged that the demand for compensation for damage caused by infringement of the patent right is not a matter proper to a patent right but a civil remedy concerning the infringement of a proper right, and therefore the nature of the legal relationship is “a matter of an illegal deed”.

         Article 11 of the Act Concerning the Application of Laws specifies lex causae under which an illegal deed is to be judged. Article 11(1) of the Act Concerning the Application of Laws provides that “the formation and effect of obligations due to illegal deeds shall be governed by the law of the place where the facts forming the cause of such obligation have occurred”. On the other hand, Article 11(2) provides that “the provision of the preceding paragraph shall not apply to unlawful acts in case the facts occurring in a foreign country are not unlawful according to Japanese law”. Namely, in case where a deed is regarded as illegal according to the U.S. law but not regarded as illegal according to Japanese law, the deed is not regarded as illegal. In this way, not only the U.S. law but also the Japanese law is accumulatively applied.

         The Japanese law does not have a requirement corresponding to 35 U.S.C. 271(b) which allows patent rights to remain in effect on deeds performed in an area other than a homeland. As a result, the Japanese law cannot regard the deeds as illegal which deeds positively conduct infringements of patent rights in the area other than the homeland.

         Therefore, the Supreme Court judged that the defendant’s deed does not meet the requirement for illegal deeds. Namely, the demand noted in (iii) is not permitted.

3. Conclusion

         The above explanation got complicated because of the precedent, but I hope that you understand what “private international law” is. Though the conclusion of the precedent is appropriate, the reason for the conclusion is still in conflict. In fact, the reason has hectically changed after the first trial. I will follow how the relationship between lex causae and the patent law changes in the future.

4. Reference

         Jurist  extra number  100 patent precedents
         No. 170 2004/2  published by Yuhikaku