Recently the GAO released a report on patenting in Japan for American
companies. It is an excellent report, with many insights and lots of
advice on patenting strategies. This part 1 of 2.
Greg Aharonian
Internet Patent News Service
INTELLECTUAL PROPERTY RIGHTS
U.S. Companies' Patent Experience in Japan
U.S. General Accounting Office
GAO/GGD-93-126
July 1993
CONTENTS
EXECUTIVE SUMMARY
INTRODUCTON
Importance of Patents
US, Japanese and European Patent Systems
Cultural Differences Between the US and Japanese Patent Systems
Current Concerns About Japan's Patent System
Objectives, Scope and Methodology
US FIRMS' EXPERIENCES IN OBTAINING PATENTS IN JAPAN
Profile of US Firms Responding to GAO Survey
Survey Results: US Companies' Overall Experiences in Obtaining Patents
in Japan
US Firms' Views of the Japanese Patent Office
US Firms of All Types Experienced Patent Problems in Japan
The Impact of Problems in Obtaining Patents in Japan
European Firms' Patent Experience in Japan
CAUSES FOR US COMPANIES' PATENT PROBLEMS IN JAPAN AND RECENT CHANGES IN THE
JAPANESE PATENT SYSTEM
Systematic Differences and Administration of the Japanese Patent Process
Pose Problems
The Narrow Scope of Protection Granted in Japan, and Related Problems
JPO has Implemented Changes
Japan's Committments Under the Structural Impediments Initiative
PATENT PRACTICES OF US FIRMS CAN AFFECT THEIR PATENT EXPERIENCE IN JAPAN
US Firms' Patent Practices in Japan
Some US Firms Have Adopted Strategies That Improved Their Patent
Experience in Japan
US FIRMS' EXPERIENCE IN ENFORCING PATENTS IN JAPAN
Specific Difficulties Encountered
More Infringement Suits in the United States Than Japan
Effect of Enforcement Problems on Companies
PROGRESS IN WORKING TOWARD INTERNATIONAL PATENT HARMONIZATION
GATT Negotiations Seek to Establish a Minimum Level of Patent Protection
Worldwide
WIPO Patent Harmonization Negotiations
Japan Supports Adoption of Some Provisions in GATT Proposal and Draft
WIPO Treaty
US Government Views of Changes in Japanese Patent System Under
Harmonization
US Companies' Views of Changes in Japanese Patent System Under
Harmonization
Changes in the US Patent System Under a Harmonization Treaty
Success of Draft Harmonization Treaty May Hinge on Outcome of GATT
TRIPS Proposal
=============================================================================
EXECUTIVE SUMMARY
PURPOSE
In recent years, a number of U.S. companies have reported significant
difficulties in obtaining adequate and effective protection for their patents
in Japan. Some of these firms have asserted that their Japanese competitors
use the Japanese patent system as a weapon against foreign firms to
appropriate their technologies. Since 1989, Japan has been on a U.S. Trade
Representative watch list of countries that have inadequate protection for
intellectual property, partly because of reported problems with its patent
system.
Senators John D. Rockefeller IV and Dennis DeConcini, and former Senator
Lloyd Bentsen, asked that GAO review patent protection for U.S. products in
Japan as compared with that in the United States and Europe. Specifically,
GAO examined (1) U.S. companies' experiences in obtaining patents in Japan as
compared with those in the United States and Europe; (2) the sources of U.S.
companies' patent problems in Japan and recent changes in the Japanese patent
system; (3) practices that may affect U.S. companies' patent experiences in
Japan; (4) U.S. companies' experiences in enforcing patents in Japan as
compared with those in the two other jurisdictions; and (5) progress toward
greater international patent harmonization and U.S. firms' views on whether
harmonization would improve their patent experience in Japan.
BACKGROUND
There are significant differences between the u.s. patent system and those
of other countries, including Japan. The United States, for example, is the
only developed country in the world that awards patents to the first inventor
regardless of when the patent application is filed. Moreover, U.S. patent
applications are kept secret until a patent is granted. Japan, like most
developed countries, awards patents to the first inventor to file an
application and publishes all patent applications 18 months after they are
filed.
GAO surveyed 346 US firms that were top patent holders in selected sectors
regarding their experience in obtaining patents in Japan as compared with
that in the United States and Europe. Over 90 percent of the 300 responding
firms had filed patent applications in Japan in the past 5 years, and
two-thirds held 10 or more Japanese patents. The majority of the companies
were large, with almost 60 percent reporting annual sales of over $1 billion.
Ninety percent were U.S. companies or subsidiaries of U.S. companies, while
10 percent were U.S. subsidiaries of foreign firms.
RESULTS IN BRIEF
More than three times as many of the companies responding to the GAO
survey were dissatisfied with their overall patent experience in Japan as
compared with that in the United States and Europe. Further, 65 percent
reported at least one major problem in obtaining patents in Japan, while
25 percent reported at least one major problem in Europe and 17 percent in
the United States. The problems most frequently cited in obtaining Japanese
patents were the length of time involved, the cost, the scope of the patent
protection granted, and the difficulty in obtaining patents for pioneering
inventions (those involving important new technologies). Only 6 percent of
the companies, however, said that patent problems in Japan had a serious
adverse effect on their company.
Both the administration of the Japanese patent process and inherent
differences in the U.S. and Japanese patent systems are posing problems for
U.S. firms. Many of the difficulties are due to delays in patent issuance
in Japan and the narrower scope of patent protection granted. The Japanese
Patent Office has recently adopted some measures to improve the patent
system, however.
Another source of U.S. companies' patent problems in Japan may be their
own patent practices. Both U.S. and Japanese patent attorneys told GAO that
some of the problems encountered by U.S. firms are due to their lack of
understanding of the Japanese patent system, translation difficulties, and
poor communication between U.S. companies and their Japanese patent
representatives. Some companies have adopted strategies for dealing with
these problems. For example, some companies have improved their patent
experience in Japan by tailoring the applications they file to better
conform to the Japanese application style.
Several of the U.S. firms GAO interviewed also reported problems in
enforcing their patents in Japan. Some of these difficulties stem from
differences in U.S. and Japanese substantive law and civil procedure. For
example, the Japanese courts interpret patent claims more narrowly than
those in the United States.
Currently, multilateral efforts are under way to harmonize international
patent procedures through the World Intellectual Property Organization,
an agency of the United Nations. If a harmonization treaty is enacted, it
could lead to significant changes in both the Japanese and U.S. patent
systems. The proposed changes in the Japanese patent system under
harmonization address many of the concerns raised by U.S. companies
regarding patent protection in Japan. About two-thirds of the companies
responding to the GAO survey also supported changes in the U.S. patent
system that would align the U.S. system more closely with those of other
countries.
PRINCIPAL FINDINGS
U.S. FIRMS ARE MORE DISSATISFIED WITH THE JAPANESE PATENT SYSTEM
Thirty-nine percent of the U.S. companies responding to the GAO survey
that had filed for patents in Japan were dissatisfied with their overall
experience in obtaining patents, while 13 percent were dissatisfied with
their patent experience in the United States, and 3 percent with that in
Europe. These results indicate that U.S. companies were not necessarily
partial to the U.S. Patent and Trademark Office, since the responding
companies were generally more satisfied with their overall patent experience
in Europe than in the United States.
Forty-four percent of the companies said that it was more difficult to
obtain patents for pioneering inventions in Japan than in the United States
or Europe, while only 3 percent said it was less difficult in Japan; virtually
all of the other companies said they were "not sure." Twenty-one percent
believed that they had been treated differently than Japanese applicants by
the Japanese Patent Office.
Although many companies said they were dissatisfied with their overall
experience in obtaining patents in Japan, only 6 percent said that these
problems had adversely affected their firm to a great extent. GAO conducted
follow-up interviews with several companies to ask why they had reported
significant patent problems in Japan but had said that these problems had
not caused adverse impacts. Some corporate officials noted that it is
difficult to isolate the effect of patent problems in Japan from other
problems their films face in trying to penetrate the Japanese market. They
noted that they currently had few or no sales in Japan, and therefore,
patent problems had not yet had any severe consequences.
SOURCES OF U.S. COMPANY PATENT PROBLEMS IN JAPAN
Most of the patent problems that u.s. firms have reported in Japan relate
to the long pendency period in Japan and the limited scope of protection that
their inventions have received. It takes about 6 to 7 years for a typical
patent to be issued in Japan compared with about 19 months in the United
States. The longer pendency period in Japan is due to several factors,
including the pre-grant opposition system, which allows rival companies
to raise objections to a proposed patent before it is granted. Another
problem leading to delays includes the fact that the Japanese Patent Office
receives twice as many patent applications per year as its U.S. counterpart,
while employing far fewer patent examiners. Further, several Japanese patent
attorneys said that the scope of patent protection granted by the Japanese
Patent Office is narrower than that granted by the U.S. Patent and Trademark
Office.
The Japanese Patent Office has recently introduced accelerated
examination procedures, allowed multiple claims within one application,
and encouraged Japanese companies to reduce the number of patents they file.
Japan has also reduced patent pendency time by several months and has hired
a small number of additional patent examiners.
U.S. COMPANY PRACTICES MAY AFFECT THEIR PATENT EXPERIENCE IN JAPAN
Other factors also contribute to some U.S. companies' patent difficulties
in Japan. According to both U.S. and Japanese patent attorneys, some problems
are attributable to U.S. firms' patent practices in Japan as well as poor
communication between U.S. firms and their Japanese patent representatives.
For example, some U.S. companies do not fully understand the Japanese system
or make sufficient efforts to work with and oversee their Japanese patent
representatives. Further, Japanese patent attorneys told GAO that many of
their U.S. clients do not give them sufficient time to translate their
applications accurately into Japanese. On the other hand, some U.S. companies
complained that their Japanese patent attorneys are not sufficiently
aggressive in representing their interests before the Japanese Patent Office.
Some U.S. companies have improved their patent experience in Japan by
translating their Japanese applications back into English to ensure their
accuracy, by establishing a patent office in Japan, and by tailoring the
applications they file in Japan to better conform to the Japanese application
style.
U.S. FIRMS HAD PROBLEMS WITH PATENT ENFORCEMENT IN JAPAN
According to U.S. and Japanese patent experts, the Japanese legal system
poses difficulties for a plaintiff in a patent infringement case that do not
exist in the United States. There are many problems in bringing infringement
actions in Japan, including the lack of discovery procedures, the length of
court proceedings, the courts' narrow interpretation of patent claims, and
the adverse Japanese attitude toward litigation. According to U.S. patent
attorneys, these difficulties make it harder for a patent holder to enforce
a patent in Japan than in the United States. Several of the 14 firms GAO
interviewed that had filed patent infringement suits in Japan said that
the difficulties they had had in enforcing their patents in Japan had
adversely affected their companies.
PROPOSED CHANGES UNDER HARMONIZATION MAY ADDRESS U.S. COMPANIES CONCERNS
The United States is currently involved in two sets of multilateral
negotiations on intellectual property rights that may lead to significant
changes in the Japanese patent system and the U.S. patent system: a patent
harmonization treaty through the World Intellectual Property Organization;
and the Uruguay Round of the General Agreement on Tariffs and Trade which
includes negotiations on intellectual property issues.
The Japanese Patent Office is considering making major revisions in its
system within the context of a patent harmonization treaty, including allowing
patent filing in an applicant's native language. A majority of companies
responding to the GAO survey said that most of these changes would greatly
improve their patent experience in Japan. About two-thirds of the companies
also support fundamental changes in the U.S. patent system pursuant to
harmonization, such as (1) the adoption of a system in which the first
inventor to file an application is entitled to receive the patent and (2) the
publication of all patent applications after 18 to 24 months. However, many
companies told GAO they would not support changes in the U.S. patent system
unless Japan agreed to make significant changes in its patent system under
harmonization.
RECOMMENDATIONS
This report contains no recommendations.
AGENCY COMMENTS
In commenting on portions of the draft report, the U.S. Patent and
Trademark Office and the European Patent Office generally agreed with the
information presented. The Japanese Patent Of fice provided some technical
comments that GAO considered in preparing this report. In addition, GAO
received comments from patent attomeys from these jurisdictions as well
as verification from appropriate companies that specific examples presented
in this report accurately represent their views of their experiences.
=============================================================================
CHAPTER 1
INTRODUCTION
Patents are one of the primary forms of intellectual property protection
in worldwide use. There are fundamental differences between the US patent
system and those of other countries, including Japan. For example, among the
developed countries in the world, the United States is the only one that
awards patents to the first inventor regardless of when he or she files a
patent application. Further, US patent applications are kept secret until a
patent is granted. Like most developed countries, Japan awards patents to
the first inventor who files an application. Also, 18 months after a patent
application is filed, Japan publishes the application.
According to US and Japanese patent attorneys, patents are perceived and
used differently in the United States than in Japan. In the United States,
many patent experts assert that the focus of the patent system is to protect
individual patentees and provide them with exclusive rights to their
inventions. By contrast, many experts contend that the focus of the Japanese
patent system is to promote industrial development by diseminating technology.
In recent years, some US companies have complained about difficulties in
obtaining adequate and effective patent protection in Japan. Since 1989,
Japan has been on a US Trade Representative (USTR) watch list of countries
that lack adequate protection for intellectual property.
IMPORTANCE OF PATENTS
A patent is the grant of a property issued by a national government or
an international intergovernmental authority for an invention. Inventions
covered by patents typically include products as well as processes for making
or using new or existing products. While the nature of patent rights varies
by country, a patent typically gives an inventor the right to exclude others
from commercially making, using, or selling the invention during the patent
term. Patents encourage the introduction of innovative products and
technologies to the public by guaranteeing their owners a limited exclusive
right to whatever economic reward the market may provide. Any violation of
the right is considered an infringement.
Patent protection is most important for industries with products that are
easy to duplicate, have long product life cycles, and have high front-end
research and development costs. Several studies have shown that patents are
most important for chemical, pharmaceutical, and biotechnology products and
generally not as important for primary metals, electrical equipment,
instruments, office equipment, automobiles, rubber and textiles.
Strengthening protection for intellectual property rights, including
patents, emerged in the 1980s as one of the more important international trade
issues for the United States. Before then, the U.S. government viewed
protection of such rights largely as a technical matter and not as a trade
policy issue broadly affecting U.S. competitiveness. The recent increase in
concern over inadequate protection of intellectual property rights abroad
stems in part from the perceived decline in U.S. competitiveness in several
key high-technology sectors and the economic development of Japan and
several newly industrialized countries. Some U.S. industries maintain that
the inability to obtain strong protection for their intellectual property
overseas has contributed to this decline. U.S. interest in strengthening
intellectual property protection is not surprising since the United States
is a world leader in inventing new technologies.
U.S., JAPANESE, AND EUROPEAN PATENT SYSTEMS
The three major patent systems in the world today are those of the United
States, Japan, and Europe. In the United States, the patent system is
administered by the U.S. Patent and Trademark Office (PTO) within the
Department of Commerce. In Japan, it is administered by the Japanese Patent
Office (JPO) within the Ministry of International Trade and Industry.
In Europe, patents can either be obtained through national patent offices
in individual European countries or through a centralized organization known
as the European Patent Office (EPO). EPO, founded in 1977 under the European
Patent Convention, issues "European patents" that are valid in up to 17
European countries on the basis of a single application and an examination
procedure using uniform standards.2 Applicants can designate in which of the
17 countries they would like to obtain patent protection. A European patent
gives its holder the same rights in the countries designated as does a
national patent. Patent enforcement matters are governed by national law and
are under the jurisdiction of national courts. For convenience, European and
foreign companies are increasingly filing in Europe through EPO rather than
in individual countries. According to an EPO official, about half of U.S.
applicants file in Europe through EPO.
EPO member states are Austria, Belgium, Switzerland, Germany, Denmark,
Spain, France, the United Kingdom, Greece, Ireland, Italy, Liechtenstein,
Luxembourg, Monaco, the Netherlands, Portugal, and Sweden.
The United States, Japan, and most European countries are parties to the
Paris Convention for the Protection of Industrial Property. The convention
allows foreign applicants to file their patent applications in member
countries up to 12 months after first filing in their country of origin, while
retaining their claim to novelty. U.S. firms, thus, have 1 year after filing a
U.S. application to file in Europe or Japan.
[ In 1883, 11 countries established the International Union for the
Protection of Industrial Property by signing the Paris Convention. As of 1993,
108 countries were party to the convention. The convention requires each
contracting country to grant the same protection to nationals of other
contracting countries as it grants to its own nationals. ]
DIFFERENCES BETWEEN U.S. AND FOREIGN PATENT SYSTEMS
The U.S. patent system varies widely from that of other countries. The
United States, for example, is the only developed country that uses a
"first-to-invent system." Under this system, when there are two or more
applicants for the same invention, the applicant who legally establishes the
earliest invention date will receive the patent.
When two or more persons are claiming substantially the same invention,
U.S. PTO initiates a proceeding to determine priority among the inventors.
This proceeding is termed an "interference". The party that U.S. PTO finds
has made the invention first based on a number of factors will be awarded the
patent. Interference proceedings are fairly rare in the United States,
affecting substantially fewer than 1 percent of the total applications filed
each year. Further, less than one-tenth of 1 percent of all patents are
awarded to someone other than the first to file.
Table 1.1 highlights the major differences between the U.S., European, and
Japanese patent systems.
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TABLE 1.1
Patent System Features US PTO Japan JPO Europe EPO
Patents granted on the NO YES YES
basis of first-to-file
Filing permitted in any YES NO Any European
language? Convention
languages
Are patent applications No, secret 18 months 18 months
published? until patent after filing after filing
is granted
Can patent examination NO YES, for 7 years Yes,for 6 months
be deferred? after 18-month
publication
Is there an opposition NO, but other Yes, before Yes, after
system? parties can patent is patent is
request granted granted
examination
Patent term 17 years from 15 years from date 20 years from
patent issuance of publication for filing
opposition purposes
but not more than
20 years from filing
Grace period (amount of 1 year with no 6 months with 6 months with
time inventors have to restrictions restricted restricted
file patent applications on disclosure disclosure disclosure
after their inventions by inventor permitted permitted
have been made public)
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Japan's patent system was originally patterned after Germany's, and is
fairly similar to the system used by EPO. One feature of the Japanese system
that is different from that in the United States and Europe is that US PTO and
EPO allow applications to be filed in different languages, whereas JPO accepts
applications only in Japanese. US PTO will accept applications in any
language, but an English version must be submitted within 2 months. EPO will
accept applications in languages of the countries that are party to the
European Patent Convention, but a translation must subsequently be submitted
in English, French or German. In EPO, the language of the proceedings, i.e.
English, French or German, is referred to in the case of any patent disputes,
including infringement suits. In U.S. PTO, the original language version is
referred to in the case of any disputes.
Another difference between the US patent system and that in Japan and
Europe involves patent examination. Unlike the United States, JPO and EPO
examine applications only upon request; in Europe, an applicant has 6 months
after publication of the search report to request an examinaton, and in Japan
he or she has 7 years from filing. Failure to request an examination results
in the application's being deemed withdrawn. (The reasons that applicants may
decide not to request examination are discussed in ch. 4.) U.S. PTO, by
contrast, examines all patent applications automatically.
In addition, JPO and EPO both have "opposition systems" whereby third
parties can oppose the granting of a patent on specific grounds. In Japan,
however, applications can be opposed before a patent is granted, whereas in
EPO they can only be opposed during a 9-month period after they are granted.
The United States does not have an "opposition system" per se. However, it
has a limited reexamination procedure whereby parties can request that U.S.
PTO reexamine patents after they are granted to determine their validity.
The term of a patent, i.e., the duration of patent protection, is also
different in the United States than it is in Japan and Europe. In the United
States, the patent term does not begin until the patent is granted, and then
it extends for 17 years. Patents issued by JPO are valid for 15 years from
the date the application is published for opposition (which occurs after JPO
has completed its examination of the patent application), but not more than
20 years from the date when the application was filed. Patents issued by EPO
are valid for 20 years from the filing date.
Another difference between the U.S. patent system and that in Japan
and Europe involves the "grace period", which is a fixed period of time
immediately preceding the filing of a patent application during which
certain disclosures of the invention to the public are permitted without
prejudicing the patentability of the invention. In the United States,
inventors have a grace period of 1 year in which to file an application after
they have disclosed their invention to the public, with no restrictions on
the ways they may disclose their inventions. JPO and EPO have a grace period
of 6 months, but only certain types of disclosures are allowed without loss
of the right to a patent.
Currently, multilateral efforts are taking place to harmonize international
patent procedures and aspects of substantive law through an agency of the
United Nations--the World Intellectual Property Organization. If a
harmonization treaty is enacted, it would cause significant changes in the
U.S. and Japanese patent systems, and, to a lesser extent, in the European
system. (See ch. 6 for more information on patent harmonization efforts.)
THE PATENT EXAMINATION PROCESS IN THE THREE SYSTEMS
While there are major variations among the patent systems in the United
States, Europe, and Japan, the patent examination process is fairly similar
in the three jurisdictions. The merits of a patent application are decided
during the examination. After an application is submitted to the patent
offices in these regimes (and after an examination is requested in Europe
and Japan), it is assigned to an examiner with expertise in the subject area
of the application. The examiner reviews the application and compares it
with the "prior art", the body of relevant information, including patent and
nonpatent literature. The examiner then reaches a preliminary decision on
the patentability of the proposed invention.
An "office action" notifies the applicant of the examiner's decision.
It states reasons for any adverse decision, objection, or requirement and
provides information that may assist the applicant in judging whether to
pursue the application. If the invention is not considered patentable, the
claims will be rejected. (The claims define the scope of protection requested
by the inventor.) Some or all of the claims may be rejected on the first
action by the examiner;8 relatively few applications result in patents as
originally filed. In all three jurisdictions, applicants have the right to
appeal the rejected claims.
CULTURAL DIFFERENCES BETWEEN THE U.S. AND JAPANESE PATENT SYSTEMS
According to U.S. and Japanese patent attorneys, there are significant
differences in the way patents are perceived and used in the United States
and Japan, with the European system being somewhere between the two.
The United States, many patent experts assert, seeks to foster technology
development by protecting individual patentees and granting them exclusive
rights to their inventions. The policy of U.S. patent law is that anyone who
has invested time and labor in developing a patentable product or process
should have the right to exclude others completely from the enjoyment of his
or her invention. This belief is apparent from several features of the U.S.
system. For example, U.S. applicants do not have to disclose their inventions
to the public until a patent is granted; if they do not receive a patent, they
can choose to keep their inventions secret. The first-to-invent principle
also reflects the U.S. attitude that the first inventor is entitled to the
patent, not the inventor who is the most expeditious filer of an application.
By contrast, patent experts contend that the Japanese patent system seeks
to promote technology development by disseminating technology, rather than
rewarding inventors with exclusive rights. Various features of the Japanese
system, such as the provisions for 18-month publication, 7-year deferred
examination, and pre-grant oppositions, foster this goal. These provisions
serve to make innovations available to industry before exclusive rights are
granted, enabling industry to learn from the technology and make further
innovations. Another feature of the Japanese system that reflects its
promotion of industrial development is that Japan provides for compulsory
licensing of patented inventions if a second patent improves on the original
patented invention.
CURRENT CONCERNS ABOUT JAPAN'S PATENT SYSTEM
In recent years, some U.S. companies have expressed concern about
difficulties in obtaining and enforcing patents in Japan. For example, at
Senate hearings on the Japanese patent system in 1988 and 1989, several U.S.
companies identified aspects of the Japanese patent system that were
problematic for them, particularly delays in obtaining patents and the narrow
scope of patent protection granted. They also complained about "patent
flooding" by Japanese industry (filing excessive numbers of applications
claiming minor technical improvements) resulting in pressure on U.S. companies
to license their technology to Japanese competitors. Since 1989, USTR has
placed Japan on a watch list of countries with inadequate protection for
intellectual property, partly because of the reported problems with its patent
system.
OBJECTIVES, SCOPE, AND METHODOLOGY
At the request of Senators John D. Rockefeller IV and Dennis DeConcini,
and former Senator Lloyd Bentsen, we reviewed patent protection for U.S.
products in Japan as compared with that in the United States and Europe.
Specifically, we examined (1) U.S. companies' experiences in obtaining patents
in Japan as compared with those in the United States and Europe; (2) the
sources of U.S. companies' patent problems in Japan and recent changes in the
Japanese patent system; (3) practices that may affect U.S. companies' patent
experiences in Japan; (4) U.S. companies' experiences in enforcing patents in
Japan as compared with those in the two other jurisdictions; and (5) progress
toward greater international patent harmonization and U.S. firms' views on
whether harmonization would improve their patent experience in Japan.
To obtain information on U.S. firms' patent experience in the United States,
Europe, and Japan and their views on international patent harmonization
efforts, we sent a mail survey to 346 U.S.-based companies. The survey was
sent out in late August 1992, and follow-up mailings were made through
December 1992. We received responses from 300 of the companies, for an
87-percent response rate. (A copy of the mail questionnaire and the overall
responses for each question is in app. I). We subsequently telephoned more
than 20 of the companies surveyed to obtain additional information on or
clarification of their responses.
We surveyed companies that were top U.S. patent holders (in terms of the
number of patents held) in three sectors--chemicals, semiconductors, and
biotechnology. These sectors were selected because they (1) are considered
ones in which U.S. and Japanese companies have a strong presence; (2) are ones
to which patents are considered important; and (3) are inclusive of one mature
industry--chemicals; one of intermediate maturity--semiconductors; and one
emerging industry--biotechnology.
Since there was no information available on leading patent holders in
Japan, we surveyed top U.S. patent holders, a universe that included over 90
percent of U.S. companies that were among the top 200 patent holders in the
United States in 1991. The universe included only companies with U.S.
addresses; however, it included several U.S. subsidiaries of foreign
companies. We did not include universities or other nonprofit organizations
in the survey universe. The survey results are based on responses from
companies that had filed for patents in Japan in the past 10 years--a group
that included 92 percent of the survey respondents.
In addition to the mail survey, we conducted interviews with 58 U.S.
companies that were patent holders in the selected sectors to obtain detailed
information about their patent strategy and experience in Japan as compared
with that in the United States and Europe. Thirty-five of these companies
were among the top 20 U.S. patent holders in at least one of the three
sectors, accounting for about two-thirds of top patent holders in these three
sectors. These interviews were conducted between June and September 1992.
To obtain information on the U.S., European, and Japanese patent systems,
we interviewed more than 40 patent attorneys in private practice as well as
several academics and of ficials from various trade and intellectual property
associations. In addition, we obtained information on the three patent systems
and on negotiations over international patent harmonization from officials at
the U.S. Patent and Trademark Office, the Department of Commerce, and the
Office of the U.S. Trade Representative. We also reviewed numerous academic
and legal articles on patents and comparative patent systems. Information in
this report concerning European and Japanese law does not reflect original
analysis on our part but is based on discussions with patent attorneys and
other secondary sources.
In Europe, we discussed the ongoing multilateral negotiations on
intellectual property rights with officials from the World Intellectual
Property Organization (WIPO); the Permanent Missions of Japan, Canada, and
the European Community to the International Organizations in Geneva; and
the General Agreement on Tariffs and Trade (GAIT). We also discussed these
negotiations with offcials at the Commission of the European Communities and
the German Ministry of Justice. In addition, we met with officials from six
European industry and intellectual property associations to obtain their
views on multilateral patent negotiations and on patent protection in the
United States, Europe, and Japan.
In Germany, we also met with officials from the European Patent Office
and the German Patent Of fice to discuss patent procedures in these regimes
and to obtain their views on patent harmonization efforts. To obtain
information on European firms' patent experience in Japan as compared with
that in the United States and Europe, we met with patent attorneys from nine
European companies and obtained written information from two others. All of
these companies were among the top eight European patent holders in the
United States in the selected sectors.
In Japan, we met with officials from the Japanese Patent Office to discuss
Japanese patent procedures and proposed changes in their system as well as
changes that have recently been adopted. We also discussed U.S. company
complaints about the Japanese patent system and obtained JPO views on the
reasons why U.S. companies may be experiencing problems. In addition, we met
with representatives from six Japanese patent firms that file patents for U.S.
companies in Japan. Our purpose was to discuss their U.S. clients' patent
strategy and experiences in Japan and the possible reasons for any problems
encountered. To discuss patent enforcement issues, we met with two Japanese
attorneys who have been involved in representing U.S. and Japanese companies
in patent infringement suits in Japan and with several academics and former
judges.
Further, in Japan, we met with representatives from several associations,
including the Japanese Patent Association and the Japanese Patent Attorneys
Association, to discuss their views on the Japanese patent system as compared
with the U.S. and European systems, and on multilateral efforts to achieve
patent harmonization. We also met with patent counsel from two Japanese
companies and one U.S. company with operations in Japan to discuss their
patent strategy and experience in Japan as compared with that in the United
States and Europe. Finally, we met with officials of the Japanese Ministry
of Foreign Affairs to discuss their views on patent harmonization.
We performed our review from December 1991 to May 1993 in accordance
with generally accepted government auditing standards.
U.S. PTO, EPO, and JPO provided comments on portions of the draft report.
U.S. PTO and EPO generally agreed with the information presented. JPO provided
some technical comments that we considered in preparing this report. Private
U.S. and Japanese patent attorneys also reviewed relevant sections, and
appropriate companies verified that specific examples presented in this report
accurately represent their views of their experiences.
=============================================================================
CHAPTER 2
U.S. FIRMS' EXPERIENCES IN
OBTAINING PATENTS IN JAPAN
To develop an understanding of U.S. firms' patent experiences in Japan,
we surveyed companies that were top U.S. patent holders (in terms of the
number of patents held) in three sectors--chemicals, semiconductors, and
biotechnology. Ninety-two percent of the 300 U.S. firms that responded to
our survey had filed patent applications in Japan in the past 10 years.
(All subsequent survey results are based on responses from companies that
had filed patent applications in Japan in the past ten years). Sixty-eight
percent held 10 or more Japanese patents. The majority of the responding
firms were large. Almost 60 percent had annual sales of over $1 billion.
Ninety percent were either U.S. companies or subsidiaries of U.S. companies;
10 percent were subsidiaries of foreign firms.
According to the survey results, the patent problems companies reported
in Japan were generally more widespread than those they experienced in the
United States or Europe. Of the responding companies, more than three times
as many were dissatisfied with their overall patent experience in Japan as
compared with that in the United States and Europe. Thirty-nine percent
expressed dissatisfaction with their patent experience through JPO, while
13 percent were dissatisfied with U.S. PTO and 3 percent with EPO. These
results indicate that U.S. companies were not necessarily partial to U.S.
PTO since the responding companies were generally more satisfied with their
overall patent experience with EPO than with U.S. PTO.
Sixty-five percent of the responding companies reported at least one major
problem in obtaining patents in Japan. In contrast, 25 percent reported at
least one major problem in Europe, and 17 percent in the United States. In
obtaining Japanese patents, the companies frequently cited problems with the
length of time involved, the cost, the scope of patent protection granted,
and the ability to obtain patents for pioneering inventions. However, only
6 percent of the companies reported that patent problems in Japan had had
a serious adverse effect on their company. Some companies that reported
significant patent problems in Japan told us that these problems had not yet
caused adverse effects because they currently had few sales in Japan. Some
corporate patent counsel noted that it is difficult to isolate the effect of
patent problems in Japan from other problems their companies face in trying
to penetrate the Japanese market.
The European company officials we interviewed expressed similar views on
the length of time involved and the more limited scope of protection granted
in Japan. However, European company of ficials expressed overall satisfaction
with the patent protection their firms have received in Japan, as well as in
Europe and the United States.
PROFILE OF U.S. FIRMS RESPONDING TO GAO SURVEY
Figure 2.1: Size of Responding Firms, by 1991 Sales
56% Over $1 billion in sales
21% $100 million - $1 billion in sales
20% Less than $100 million in sales
3% Unable to estimate
The responding firms had the following other characteristics:
- Almost half (49 percent) had over 10,000 employees worldwide. Thirty-two
percent had between 500 and 10,000 employees, and 19 percent had 500 or
fewer employees.
- Seventy percent were established before 1971, and 21 percent were
established in 1980 or later.
- Ninety percent were either U.S. firms or subsidiaries of U.S. firms.
Nine percent were subsidiaries of European firms, and 1 percent were
subsidiaries of Japanese firms.
Figure 2.2 shows the filing activity of the responding firms, by sector.
Figure 2.2: Current Flllng Actlvity of Responding Firms, by Sector
50% Chemical
41% Biotechnology
35% Semiconductor
Almost half of the responding companies were either diversified or not
primarily involved in these three sectors. Sixteen percent described
themselves as primarily chemical companies, 15 percent as primarily biotech
companies, and 14 percent as primarily semiconductor companies.
Small firms made up about one-third of firms filing for biotechnology
patents, while large firms formed the majority of companies filing for
chemical patents. Almost half of the firms filing for semiconductor patents
were large. (We defined "small" firms as those with 1991 worldwide sales of
less than $100 rnillion. We defined "large" firms as those with 1991 worldwide
sales of at least $1 billion.
U.S. FIRMS' PATENT ACTIVITY IN THE THREE SYSTEMS
During the past 5 years, the patent filing activity of the responding firms in
the United States, Europe, and Japan was as follows:
- One hundred percent had filed patent applications in the United States,
and 95 percent had 10 or more active U.S. patents.
- Ninety-nine percent had filed applications in Europe. Ninety-two percent
had filed most or all of their European patent applications through EPO.
Seventy-nine percent held 10 or more active patents in Europe.
- Ninety-two percent had filed in Japan, and 68 percent had 10 or more
active Japanese patents.
U.S. FIRMS' BUSINESS ACTIVITY IN JAPAN
A majority of the responding firms have extensive business ties in Japan.
In the past 5 years, 90 percent of the firms said they had conducted business
arrangements with Japanese companies, including licensing arrangements and
joint ventures. Currently, 52 percent of the firms wholly or partly own
subsidiaries or manufacturing facilities in Japan, a majority of which have
been established for at least 10 years.
The responding U.S. firms considered the Japanese market to be less
important than the U.S. and European markets. Of the responding films, 98
percent said the U.S. market was of "great" or "very great" importance, while
58 percent said the Japanese market was of similar importance to their firm.
Seventy-eight percent believed that the European market was of great or very
great importance.
SURVEY RESULTS:
U.S. COMPANIES' OVERALL EXPERIENCE IN OBTAINING PATENTS IN JAPAN
Of the U.S. firms responding to our survey, 39 percent reported that they
were dissatisfied with their overall experience prosecuting patents through
JPO, while 21 percent said that they were satisfied. In contrast, most
companies were satisfied with U.S. PTO and EPO. Figure 2.3 shows the U.S.
companies' overall level of satisfaction with prosecution through JPO, U.S.
PTO, and EPO. As shown in the figure, the responding firms were not
necessarily partial to U.S. PTO since they were generally more satisfied with
their overall experience with EPO than with U.S. PTO.
(The preparation of a patent application and the process of obtaining a patent
is known as "patent prosecution".)
Figure 2.3: Percent of Firms That Are Satisfied/Dissatisfied With Their
Overall Patent Prosecution Experience in Japan, the United States, and Europe
Japan: 21% Satisfied 39% Dissatisfied
United States: 62% Satisfied 13% Dissatisfied
Europe: 74% Satisfied 2% Dissatisfied
To compare U.S. companies' patent experience in Japan with that in the United
States and Europe, we asked companies to consider four aspects of the patent
prosecution process that may have been problematic for them in these
jurisdictions in the past 5 years:
- the length of time needed to obtain a patent,
- the cost of obtaining a patent,
- the scope of patent protection granted, and
- the ability to obtain protection for pioneering inventions.
(Pioneering inventions are those that involve substantially new,
or breakthrough, technologies).
As shown in figure 2.4, 65 percent of the companies reported experiencing
problems in at least one of the above areas in Japan and indicated on the
survey that it was a "great" or "very great" problem to their firm.
Twenty-five percent reported at least one major problem of this magnitude
in Europe and 17 percent in the United States.
Figure 2.4: Percent of Firms with Great Patent Problems in Japan, Europe,
and the United States
UNITED
JAPAN STATES EUROPE
Length of time to obtain patent 42% 6% 5%
Cost of obtaining patent 42% 20% 12%
Scope of claims granted 41% 6% 5%
Ability to obtain patents for 39% 9% 7%
pioneering inventions
Experienced at least one of 65% 25% 17%
these problems
JAPAN'S PATENT APPROVAL PROCESS IS LENGTHY
Forty-two percent of the responding companies said that "patent pendency"
in Japan, or the length of time needed to obtain a patent, was a "great" or
"very great" problem, compared with 5 percent that had similar problems with
pendency in the United States and 6 percent in Europe. One clear result of the
long pendency period in Japan is a shorter patent life, which begins at the
time an application is filed in Japan. Several company of ficials noted that
excessive delays in obtaining patents "eat into the effective patent life."
As discussed in chapter 3, patents usually take 6 to 7 years to be issued in
Japan.
Another common complaint from the companies we interviewed was that it
takes too long for JPO to begin an examination of the patent after the
applicant requests one. Several corporate patent counsel said that it takes
at least 3 years for an examination to begin after it is requested. Many
company representatives complained that the combination of publishing patent
applications after 18 months in Japan and the long delays in the start of an
examination allows competitors to "produce around" their products, making
only minimal changes without infringing on the patent.
JPO GRANTS NARROWER SCOPE OF PROTECTION
The scope of patent protection outlines the boundaries of the invention for
which the inventor holds exclusive rights. Under Japanese patent practice,
patent claims are construed as narrowly as possible. Forty-one percent of the
companies reported that the scope of patent protection they received for their
inventions from JPO was a "great" or "very great" problem. In contrast, 5
percent said that the scope of protection granted by U.S. PTO was a major
problem, and 6 percent said that the scope granted by EPO was a major problem.
To further address the issue of patent scope, we asked companies to rate
the scope of patent protection they received in Japan, Europe, and the United
States, using a scale from "much too broad" to "much too narrow." As shown in
figure 2.5, about six times as many of the responding companies indicated that
the scope of protection granted in Japan was too narrow, as compared with
companies that said the scope granted in the United States was too narrow.
Figure 2.5: Percent ot Firms That View the Scope of Patent Protection as Too
Narrow in Japan, Europe, and the United States
71% Japan
25% Europe
12% United States
The patent counsel at a major U.S. chemical company said that in Japan,
the scope of his firm's claims was "narrowed by 85 percent of what it is
granted in the United States or Europe." A patent attorney at another large
U.S. firm said that in two cases, where his firm's U.S. patents were
successfully enforced in the United States, the scope of the corresponding
Japanese patents for these products was too narrow to bring an infringement
action in Japan.
PIONEERING INVENTIONS FACE PARTICULAR DIFFICULTIES
More than four times as many companies viewed their ability to obtain a
patent for a pioneering invention as a problem in Japan as compared with
that in Europe or the United States. As shown in figure 2.4, 39 percent
found obtaining protection for pioneering inventions from JPO to be a "great"
or "very great" problem, while 9 percent indicated similar problems with EPO
and 7 percent with U.S. PTO.
In comparing their experience in obtaining patents for pioneering
inventions in Japan with that in the United States and Europe, 44 percent
of the responding companies said that they experienced Umuch more" or
"somewhat more" difficulty in Japan. In addition, many company officials told
us that it is particularly difficult to obtain patents on broad, commercially
valuable technologies in Japan or on those that involve important new
technologies. Several U.S. patent attorneys told us that JPO does not provide
broad protection for emerging technologies until Japanese industry is well
established in the field or unless there are no Japanese competitors. For
example, U.S. companies experienced the following difficulties:
- The patent counsel at a U.S. electronics company said that in the early and
mid-1980s, his firm had encountered no problems in Japan in obtaining the
first 10 patents related to an important new telecommunications technology.
In his view, at that time Uno one understood the technology's importance."
Since then, however, he said that the technology has become the U.S.
standard in its field, and Japanese companies have become interested in
developing it. During the past 5 years, the firm suddenly stopped receiving
additional Japanese patents on this technology although the corresponding
patents have been issued "all around the world."
- The patent counsel at a biotechnology firm said a significant problem with
the Japanese patent system is that applicants are granted equally narrow
patent protection regardless of their product's level of innovation, or
the amount of time and money invested in developing it. He said that in
the United States, pioneers in a field are generally given broad patent
protection.
ALLIED-SIGNAL'S EXPERIENCE WITH A PIONEERING TECHNOLOGY
A case that is often cited as an example of the (lifflculty in obtaining a
patent for a pioneering invention in Japan is Allied-Signal's experience with
its breakthrough amorphous metal technology, known as "Metglas", in the 1980s.
Officials from Allied-Signal told us that their overall experience in securing
patent protection in Japan has been favorable. However, based on their
experience with Metglas, they believe that pioneering inventions that are
targeted as "critical technologies" by the Japanese government face
particularly long delays at JPO.
In 1973, Allied-Signal filed an application in Japan for a composition
patent related to amorphous metals. In 1977, it filed an application to
protect a new process for casting the material and also requested examination
of the composition patent. In the late 1970s, Allied-Signal officials said
Japan's Ministry of International Trade and Industry organized and subsidized
a consortium of Japanese companies to develop amorphous metal technology.
Six companies and individuals opposed Allied-Signal's application on the
composition patent after it was published for opposition in 1980, and in 1982,
JPO rejected the application. However, Allied-Signal appealed the decision,
and the patent was eventually granted in 1984.
Allied-Signal requested examination of the process patent in 1979. After it
was published for opposition in 1986, seven companies and individuals filed
oppositions to it. After almost 3-1/2 years, JPO decided in Allied-Signal's
favor in 1989. While JPO granted the respective patents in 1984 and 1989,
they were due to expire in 1993 and 1997 (20 years after the initial filing
date). Thus, less than 10 years of patent life remained as a result of the
delays in issuance.
Allied-Signal had several complaints about JPO'S handling of its patent
applications. For example, company officials told us that JPO intentionally
reassigned examiners to their cases several times to delay patent prosecution.
Company officials also contend that JPO purposely delayed patent issuance to
allow Japanese competitors time to catch up in developing amorphous metal
technology and to lock out Allied-Signal from the Japanese market. (By 1987,
one Japanese company had developed a similar technology). According to company
estimates, the value of the Japanese market during this time frame totalled
$90 million annually for electric utility transformers, the major product from
amorphous metals.
In the spring of 1990, Allied-Signal filed a complaint with USTR for an
investigation under section 301 of the 1974 Trade Act. However, the case
was settled when the Japanese government agreed to protect Allied-Signal's
manufacturing rights until 1997 and to purchase a specified amount of the
material.
(Section 301 of the Trade Act of 1974, as amended, 19 U.S.C. 2411, provides a
procedure under which affected enterprises or individuals may petition USTR to
initiate actions to enforce U.S. rights under trade agreements. It may also be
used to respond to unreasonable, uruustifiable, or discriminatory foreign
government practices that burden or restrict U.S. commerce.)
PATENT FLOODING IS NOT RAMPANT, BUT MAY BE TARGETED
"Patent flooding"-the practice of filing many patent applications claiming
minor, incremental changes surrounding another patentee's core technology--has
been publicized as a widespread problem in Japan. Of our survey respondents,
12 percent said patent flooding was a "very great" or "great" problem in
Japan. Five percent reported that it was a very great or great problem in
the United States, and 3 percent in Europe. Both U.S. and Japanese patent
attorneys agreed that pioneering inventions and/or technology that promise
high commercial returns are usually the targets of patent flooding in Japan
when it occurs. Some examples of the problems U.S. firms have reported with
patent flooding are as follows:
- The patent counsel at a major U.S. semiconductor manufacturer told
us that it is very common for Japanese competitors to surround his
company's core patents with patent applications that contain no
substantive improvements. Usually, his company will negotiate with its
competitors to abandon these minor patent applications. The problem, the
attorney noted, is that the company does not have the money to monitor
all its competitors' patent applications in Japan. Therefore, in cases
where JPO grants minor patents that border on its own invention, the
company must negotiate a cross-licensing agreement, exchanging its
technology for the competitor's.
- A patent counsel for a chemical company described a case involving a
breakthrough synthetic fiber, for which it had filed several patent
applications in Japan in the 1970s. Within 10 years, a major Japanese
competitor had filed 150 patents directed at making incremental changes
in the U.S. company's claimed inventions. In the company official's view,
the competitor's objective was to limit the U.S. inventor's use of its own
technology. He noted that the Japanese company attempted to pressure
the company into cross-licensing its technology, but the U.S. company
refused.
- The patent counsel for a large U.S. company told us that after his firm
had filed an application for a patent on a specialized light bulb, a
Japanese firm notified his firm that it had filed 200 applications on a
related technology and was interested in a crosslicense from his firm.
The patent counsel said that his firm was unable to use a similar filing
strategy in Japan because the costs, particularly for translation, would
be prohibitive. In addition, he noted that his firm could never build a
"blanket" portfolio of patents around its own inventions to protect a
technological area because of the high filing and translation costs in
Japan.
PRE-GRANT OPPOSITIONS ADD TO DELAYS
Forty-five percent of the U.S. companies responding to our survey said that
at least one of their patent applications was opposed in Japan in the last
5 years. Of these, 71 percent said that their opposed patent application had
1 to 5 opponents, 15 percent had 6 to 10 opponents, 9 percent had 11 to 50
opponents, and 2 percent had more than 50 opponents. Of the companies that
reported receiving at least one opposition, 10 percent said that it had
adversely affected their companies to a "great" or "very great" extent. U.S.
and Japanese patent attorneys told us that pre-grant oppositions in Japan
can delay patent issuance anywhere from 2 to 5 years, and, in some cases,
extend the process of obtaining a patent beyond its useful life.
U.S. and Japanese patent attomeys also told us that applications for
pioneering inventions are commonly the target of oppositions because of their
high technological and commercial value. Moreover, several U.S. attorneys said
they had firsthand knowledge of Japanese companies working together to oppose
certain applications, both domestic and foreign. Some of the specific problems\encountered included the following:
- One U.S. attomey described his company's experience with a patent
application for an advanced material generally acknowledged to be a
pioneering invention. When the application, which was initially rejected
by JPO but allowed on appeal, was published for opposition, it was opposed
by 18 competitors, 17 of which were Japanese firms. The U.S. attomey told
us that none of the 17 Japanese oppositions offered any new references for
pending or existing patents, and all 17 oppositions contained attachments
bearing the same photocopier marks, suggesting to the attorney that the
Japanese firms collaborated on an opposition strategy against the U.S.
company.
- The patent counsel at a major chemical company told us that one of his
firm's applications for a pigment encountered six opponents, and the
opposition period lasted 11 years. The patent was issued with 1 month of
its term remaining. He noted that the process can take so long because JPO
examiners do not review oppositions concurrently; rather, they are
decided upon consecutively.
- The patent counsel for a biotechnology firm told us that oppositions
in Japan posed a very great problem for his company. In one important
case involving a breakthrough drug, his company's application faced
28 Japanese opponents and 7 European opponents.
FILING FOR PATENTS IN JAPAN IS MORE COSTLY
Processing a patent application in Japan involves costs similar to those
incurred in other jurisdictions: filing fees paid to the govemment patent
office; fees paid to the patent attomey preparing and prosecuting the
application; and fees paid for translation incurred when filing in foreign
countries. Forty-two percent of the respondents said that the cost of
processing an application in Japan was a "very great" or "great" problem,
while 20 percent stated that this cost was a similar problem in Europe, and
12 percent in the United States.
According to a 1993 survey on patent-filing costs in 32 countries, the cost
of filing in Japan for foreign applicants was the highest in the world, due to
translation costs and fees charged by "benrishi" (Japanese patent attorneys.)
For example, in comparing the total costs of filing in Japan to those in the
United States, the survey found that the average cost of filing a 25-page
patent application in Japan was $4,772, while in the United States the same
case was $1,390.
PATENT ATTORNEY FEES
Patent attomey fees in Japan were the highest of any of the countries
surveyed. For example, in comparing attorney fees for prosecuting a 25-page
application, the survey found that Japanese benrishi charged about three times
more than U.S. patent attomeys.
In addition, in Japan, patent attomeys are members of an association that
establishes a standard fee schedule with separate schedules for domestic and
foreign clients. A few U.S. patent attomeys said that Japanese patent
attorneys have told them that large Japanese companies are able to negotiate
special deals that exempt them from the benrishi's fixed schedule. One
corporate patent counsel noted that the fixed fee schedule for benrishi allows
Japanese patent firms to charge the same fees for all the services they
perform as if they were done by an attorney, although many of them may
actually be performed by a paralegal or a secretary.
TRANSLATION FEES
Fees paid to Japanese patent attomeys by foreign clients include the cost
of translating the application into Japanese. In addition, in many cases,
Japanese patent attomeys must have office actions, prior art references,
and oppositions translated. The cost of translating English into Japanese
is calculated on a per-word basis and is considerably more expensive than
translating into a European language. For example, according to the survey
on patent filing costs, the average per-word cost for English/Japanese
translation is 43 cents, while translation into German and French is about
32 cents per word, a difference of 34 percent. This expense can be significant
since patent applications usually range from 15 to 125 pages. [A typical
patent application ranges from 15 to 40 pages. However, applications in the
computer and biotechnology sectors tend to be longer, up to 100 to 125 pages
in some cases.
U.S. FIRMS' VIEWS OF THE JAPANESE PATENT OFFICE
As shown in figure 2.6, companies were least satisfied with the quality of
patent examinations conducted by JPO, and most satisfied with those conducted
by EPO.
Figure 2.6: Percent of Firms That Are Satisfied/Dissatisfied With the Quality
of Patent Examination in Japan, the United States, and Europe
Japan: 37% satisfied 23% dissatisfied
United States: 61% satisfied 19% dissatisfied
Europe: 84% satisfied 2% dissatisfied
JPO'S OFFICE ACTIONS VIEWED AS UNCLEAR
Nineteen percent of the responding companies said they were satisfied
with the clarity of of fice actions issued by JPO, while 44 percent were
dissatisfied. In comparison, a majority (55 percent) of the companies were
satisfied with the office actions issued by U.S. PTO, and 15 percent expressed
dissatisfaction. EPO received the highest rating for the clarity of its office
actions, with 71 percent of the companies reporting satisfaction and 5 percent
dissatisfaction. A common complaint that U.S. patent attorneys made was that
JPO of fice actions were overly brief and vague, to the point of being
cryptic. However, other U.S. patent attorneys we interviewed told us that
in the past 5 years JPO office actions have been getting longer and more
detailed. Problems some U.S. firms have had with JPO office actions include
the following:
- Company officials at a major U.S. firm told us that JPO examiners will
not clarify the basis for rejecting patent claims and will not discuss
problems with individual claims within a group of claims. The examiners'
"boilerplate" rejections do not help the applicant determine what the basis
for the rejection was. Therefore, the applicant will attempt to limit the
scope of the protection they are seeking in an effort to eliminate the
specific claim to which the examiner is objecting.
- Another corporate patent counsel said that his firm has received vague
and ambiguous rejections, citing unrelated and irrelevant Japanese
references for prior art without any explanation of how the references
make his application unpatentable. He added that such terse office actions
force his firm to study the entire reference and construct a possible
rejection to which it can respond, which requires extensive effort and
expense.
JPO'S REQUIREMENTS FOR EVIDENCE TO SUPPORT CLAIMED INVENTIONS
Thirty-four percent of the companies expressed satisfaction with the
extent of disclosure, or the supporting evidence required to describe
their claimed invention at JPO. An equal number (34 percent) expressed
dissatisfaction with the extent of disclosure required by JPO. In contrast,
almost three-fourths of the responding companies were satisfied with the
extent of disclosure required to support their claims by both U.S. PTO
(74 percent) and EPO (71 percent). The patent counsel at a pharmaceutical
company told us that JPO requires applicants to support all its claims with
a full range of data. To satisfy the JPO'S requirements, he said applicants
must pursue additional development of the product or process in question,
which he believes is unnecessary and draws money away from other projects.
JPO TREATMENT OF U.S. APPLICANTS
Twenty-one percent of the responding companies reported that they perceived
they had been treated differently by JPO than Japanese applicants. Nineteen
percent responded that they were "probably" treated differently, and 3 percent
answered that they were "definitely" treated differently. A majority (63
percent) indicated that they were uncertain. The following are examples
illustrating why some U.S. firms felt they were treated differently by JPO:
- One corporate patent counsel said that his firm has filed several
Japanese applications that it co-owned with a Japanese company. The
co-owned applications were examined much more quickly than those the
U.S. firm filed only in its own name.
- Another patent attomey we interviewed from a medium-sized biotech
company described a situation in which he had filed patent applications in
Japan. At a much later date, a Japanese competitor filed applications with
similar claims. The Japanese competitor was successful in obtaining
patent protection within the scope of the U.S. company's disclosure, and
also in narrowing the U.S. firm's claims. The attorney noted that his
company had received broad coverage for this invention in the United
States and in Europe.
- The patent counsel for a major U.S. company said he had experienced
difficulty prosecuting an application for a medical device, which he later
learned was related to a product that a Japanese company produced. The
JPO examiner repeatedly requested additional experimental data and detail
on the specifications, which the attorney felt were excessive (the same
device was patented in Europe without such questioning). In his view, the
examiner sought to narrow the scope of the claim so as not to interfere
with the Japanese company's product.
Asked whether the JPO'S treatment of their company has changed in the
past 5 years, the maJority (56 percent) of responding companies said that it
has remained the same. Fourteen percent responded that it has improved
"greatly" or "somewhat," and 6 percent said that it has worsened "greatly"
or "somewhat". Several companies noted that within the last 5 years, JPO
has become more willing to hold interviews with applicants regarding patent
applications.
U.S. FIRMS OF ALL TYPES EXPERIENCED PATENT PROBLEMS IN JAPAN
In our analysis of the survey results, we found that regardless of the
sector (semiconductors, chemicals, and biotechnology) in which they were
involved,9 companies reported having "very great" or agreat" problems in
Japan with patent pendency, the scope of protection granted, the costs of
obtaining patents, and the ability to secure protection for pioneering
inventions. For example, 46 percent of the biotech firms responding to our
survey reported that they had very great or great problems with the length
of time required to obtain a patent, as did 49 percent of the semiconductor
firms and 38 percent of the chemical companies.
[Many of the firms in our survey file patent applications in more than one
sector. They may experience problems in multiple sectors.]
Additionally, our survey results indicated that U.S. companies of varying
size and age were experiencing patent problems in Japan. For example, of the
firms with 1991 sales of less than $100 million, 40 percent said that they had
had very great or great problems with the scope of protection they received in
Japan compared to the 40 percent of firms that had 1991 sales of over $1
billion who responded similarly. Moreover, 41 percent of the firms that were
established before 1971 said that they had had very great or great problems
with patent pendency in Japan, while 45 percent of firms established between
1971 and 1979 and 44 percent of companies established after 1979 reported
similar problems with the pendency period.
Finally, there was not a great difference in the severity of problems
perceived among companies that file frequently and thus have more experience
filing in Japan and those companies that file less frequently. For example,
48 percent of the companies that held fewer than 10 Japanese patents reported
very great or great problems with patent pendency, while 40 percent that held
10 or more Japanese patents reported similar problems with pendency. Of the
companies that filed 20 or fewer applications per year in Japan, 38 percent
had very great or great problems in obtaining protection for pioneering
inventions, compared with 41 percent that filed more than 20 applications
per year.
HIGH-TECHNOLOGY FIRMS REPORTED MORE PROBLEMS IN JAPAN
Our analysis of the survey results did, however, show that high-technology
companies reported "very great" or "great" problems with patent pendency in
Japan more frequently than companies not defined as "high-tech". For example,
50 percent of the high-tech companies reported very great or great problems
with the pendency period, while 32 percent of the other companies viewed
pendency as a very great or great problem. Forty-three percent of the
high-tech companies indicated that obtaining patent protection for their
pioneering inventions was a very great or great problem in Japan, compared
with 35 percent of the other companies that reported a similar level of
problems.
OPPOSITIONS IN JAPAN ARE RELATED TO OTHER PATENT PROBLEMS
If a company indicated that it had received pre-grant oppositions on its
patent applications, it was more likely to report experiencing very great or
great problems in Japan with other aspects of the Japanese patent process.
For example, 48 percent of the companies that reported receiving one or more
oppositions said that they had had "very great" or Ugreat" problems with the
pendency period in Japan, compared with 32 percent of those that had never
received an opposition. Additionally, 43 percent of companies that had
received oppositions viewed the scope of protection they had obtained as a
very great or great problem, compared with 36 percent of companies that had
not received them.
THE IMPACT OF PROBLEMS IN OBTAINING PATENTS IN JAPAN
Several U.S. companies told us that as a result of the patent problems they
have experienced in Japan, they have decided to reduce their patent filing
there. For example, one U.S. patent attorney told us that his firm has almost
given up on patenting anything but the most crucial inventions in Japan due
to the costs, difficulties, delays, and inability to monitor or enforce its
patents. The patent counsel at a large chemical company said that because of
the delays in obtaining patents in Japan and the limited scope of protection
granted, his company plans to file fewer applications in Japan in the future
and to invest less in Japan.
SOME U.S. FIRMS TRANSFERRED TECHNOLOGY TO AVOID PATENT PROBLEMS
Thirty-four percent of the companies responding to our survey reported
that they file for patents in Japan in order to enter into licensing
arrangements involving technology transfer to other companies "always or
almost always," "very often," or "often." In comparison, 33 percent said that
they "sometimes" file for patents in Japan to negotiate licensing agreements
involving technology transfer; 29 percent said they "seldom if ever" do so.
In the past 5 years, 8 percent of the responding companies said that they
"definitely" or aprobably" had transferred technology to Japanese firms solely
to avoid patent problems in Japan. The great majority (83 percent) indicated
that they "definitely" or "probably" did not enter into technology transfer
agreements in Japan solely to avoid patent problems. However, in cases where
firms responded that they definitely did transfer technology to avoid patent
problems, significant technologies were generally involved. The following are
examples of such transfers:
- The patent counsel at a chemical firm told us that about 10 years ago,
his company filed an application at JPO for a breakthrough plastic
material. Soon after, a Japanese competitor filed applications
surrounding his firm's invention with minimal, alleged improvements on
the material. After the application was published for opposition, the
Japanese company began to submit oppositions aggressively. The case is
still pending due to these opposition proceedings. When the Japanese
firm began to sell a product using technology in the U.S. firm's pending
patent, the company officials felt compelled to negotiate a licensing
agreement and earn royalty income or face losing its technology without
gaining compensation. The company decided to license its technology. The
U.S. attorney told us that when a problematic patent case arises, he feels
that he is forced to "make peace with the Japanese on their terms" with
such an arrangement.
-Another corporate patent counsel told us that his company generally seeks
to license technology to a Japanese partner because the Japanese firm will
help it in prosecuting the patent through JPO. He explained that his firm
has had little success in obtaining patents on its own in Japan in the
past, and in general, his firm does not anticipate receiving broad
Japanese patents on its own. Based on his experience, he said that a
U.S. company is much more likely to receive a broad Japanese patent if
it has a Japanese partner.
PATENT PROBLEMS IN JAPAN HAVE LITTLE ADVERSE EFFECT ON U.S. FIRMS
Responding to whether patent problems in Japan have had an adverse effect
on their company, 6 percent said that patent problems had a "very great" or
"great" adverse effect, and 12 percent indicated a "moderate" adverse effect.
Sixty-five percent responded that these problems had adversely affected their
company to "some" or "little/no extent".
Many companies that reported great or very great patent problems in Japan
said that these problems did not have a serious adverse effect on their firm.
Some corporate patent counsel noted that it is difficult to isolate the effect
of patent problems in Japan from other problems their companies face in trying
to penetrate the Japanese market. They indicated that they currently had few
sales in Japan, and therefore, patent problems had not yet had any severe
consequences. Several companies explained that they were filing in Japan
mainly for defensive purposes.
Some companies that reported they were adversely affected by patent
problems in Japan told us that these problems contributed to their difficulty
in establishing market share in Japan. The following are examples:
A U.S. patent attorney for a medium-sized electronics firm told us that
there is a distinct difference between the number of patents that his firm
has obtained worldwide and the number it holds in Japan. This situation is
problematic because his company is involved in negotiating many licensing
arrangements with Japanese companies. He explained that the low number of
patents that his firm holds in Japan puts his company in a weak bargaining
position when it comes to negotiating these agreements. He believes that
his weakened position effectively prevents companies like his from gaining
a dominant position in Japan and allows Japanese companies to monopolize
the field.
- The patent counsel of a small U.S. biotech company said that start-up
firms face particular problems in Japan. He told us that the narrow scope
of patent rights his firm has received in Japan allows competitors to
enter the market and produce similar products without incurring the
substantial research and development expenses that firms like his have
incurred. As a result, the value of his patents is diminished.
- The patent counsel of a large U.S. chemical company believed that patent
problems in Japan have had a great adverse effect on his company. In his
view, diffficulties in obtaining patents in Japan affect his company's
ability to expand in certain business areas there, hindering its capacity
to penetrate the market successfully.
DOES THE JAPANESE PATENT SYSTEM GIVE JAPANESE FIRMS AN EDGE?
Asked whether they believe the Japanese patent system gives a competitive
advantage to Japanese companies over their firms, 23 percent of the companies
responded that it did to a "very great" or "great" extent, 19 percent said to
a "moderate" extent, and 28 percent said to "some" or "little/no extent".
Thirty percent said that they had no opinion or no basis to judge. The
following are examples cited by some U.S. patent attorneys who felt that the
Japanese patent system gives Japanese firms a competitive advantage:
- One U.S. patent attorney felt that Japanese companies have easier access
to and are better able to communicate with JPo examiners about their
competitors' pending applications.
-Several corporate patent attorneys complained that U.S. and other foreign
applicants face extensive delays and other difficulties in obtaining
Japanese patents, whereas Japanese applicants do not face similar
obstacles in the United States. One attorney commented that "the Japanese
take great advantage of the U.S. patent system, while U.S. companies are
de facto prevented from obtaining patents in Japan. This is out of balance
and hurts competitiveness."
EUROPEAN FIRMS' PATENT EXPERIENCE IN JAPAN
Regarding patent pendency and the scope of protection granted by JPO, the
patent counsel of the European firms we interviewed largely echoed the views
of their U.S. counterparts. For example, some European company officials said
that patent pendency for certain technologies was longer in Japan than in the
United States or Europe. One European company official noted that in the
biotechnology field, JPO usually requires 6 years from the time that a request
for examination is submitted, to the time of patent grant if there are no
oppositions; with oppositions, the average delay is an additional 3 to 4
years. In his view, U.S. Pro would grant a patent on the same case within
3 years. European company officials also said that Japanese firms commonly
use patent flooding as a strategy to gain access to the technology of other
patent holders, who must then consider cross-licensing arrangements. The
company officials said the narrow scope of protection JPO grants allows this
practice to occur.
Overall, however, the European company officials that we interviewed were
satisfied with the patent protection their firms received in Japan, Europe,
and the United States. Several European company officials said that the longer
pendency period and narrower scope of patent protection they received in Japan
did not impede their firms' competitiveness. Some company officials said that
some reasons why European firms may be generally satisfied with their
experience in Japan are that they have (1) historically relied on foreign
markets and patents for economic survival; and (2) focused their efforts on
mastering foreign patent practices, including the Japanese system.
CHAPTER 3
CAUSES FOR U.S. COMPANIES' PATENT
PROBLEMS IN JAPAN AND RECENT CHANGES
IN THE JAPANESE PATENT SYSTEM
U.S. firms have reported a number of patent problems in Japan; however,
most of these relate to the long pendency period and the limited scope of
protection that their inventions have received. The pendency period is the
amount of time required to obtain a patent. While it is difficult to compare
the pendency period in Japan and the United States because of fundamental
differences in the two systems, it is clear that the pendency period in Japan
is longer than that in the United States. In Japan, the typical patent takes
an average of 6 to 7 years to be issued, compared with about 19 months in the
United States. Among the reasons for the longer pendency period in Japan are
the pre-grant opposition system and the fact that JPO receives more than twice
as many patent applications per year as U.S. PTO, while employing far fewer
examiners. Further, several Japanese patent attorneys said that a narrower
scope of patent protection is granted in Japan as compared with that in the
United States.
Recently, JPO has begun implementing measures to improve Japan's patent
system, including introducing accelerated examination procedures, allowing
multiple claims within one patent application, and encouraging Japanese
industries to file fewer applications. Under the U.S.-Japan Structural
Impediments Initiative (SII), the Japanese government has agreed to reduce
patent pendency time and to increase the number of patent examiners. It has
made some progress in honoring these pledges.
SYSTEMIC DIFFERENCES AND ADMINISTRATION OF THE JAPANESE PATENT PROCESS
POSE PROBLEMS
Many U.S. patent attorneys and other patent experts do not believe that
the Japanese patent system inherently discriminates against foreign
applicants. However, they agree that certain cultural and structural
aspects work together to make it difficult for non-Japanese firms to obtain
effective patent protection in Japan. As discussed in chapter 2, over 40
percent of the U.S. companies responding to the GAO survey indicated that
they had experienced problems with the long patent pendency period in Japan
and the narrow scope of protection granted, while less than 6 percent reported
having these problems in Europe and the United States. Moreover, many other
patent problems in Japan, such as patent flooding and the difficulty of
obtaining broad coverage for pioneering inventions, are related to the
pendency period and the limited protection granted.
DELAYS IN PATENT PENDENCY
Fundamental differences in the U.S. and Japanese patent systems make it
difficult to directly compare specific aspects of the systems, including
patent pendency. Calculating pendency in Japan is difficult for two reasons:
(1) unlike in the United States, an applicant has the option of deferring the
request for an examination in Japan for up to 7 years; and (2) as of 1991,
JPO had a backlog of about 350,762 pending patent applications (for which
requests for examination had already been made).
Despite the difficulties in calculating the pendency period in Japan, the
time required to obtain a patent in Japan is clearly longer than in the United
States. Currently, the average amount of time for a typical Japanese patent
to be issued appears to be about 6 to 7 years. Further, it may take up to 10
years for patents to be issued in active technological areas at JPO, such as
organic chemicals and electronics. In the United States, by contrast, the
average amount of time that elapsed for patents to be issued or rejected in
1991 was 19 months. However, in some technology areas, such as biotechnology,
the average pendency period was 25 months in 1991.
According to JPO statistics, the average pendency period in Japan in 1991
was 30 months, or 2.5 years. However, this figure is misleading because it
does not take into account the time that elapses before an examination
actually begins in Japan. [ JPO calculated this figure by dividing 596,470
(the backlog of patent and utility model examination requests) by 243,267
(the number of examinations completed in 1991). The result, 2.46 years, or
30 months, represents the time it would take JPO to dispose of the current
backlog of applications. Therefore, this figure, taken alone, should not
be interpreted as the total average pendency for patent applications. ]
According to leading U.S. and Japanese patent experts, due to the backlog
of applications in Japan, there is an average minimum delay of 3 to 4 years
before JPO will begin an examination even if a request for examination is
made at the time the application is filed. In the view of several Japanese
patent attorneys, due to this 3- to 4-year delay, it is generally advisable
for applicants to wait at least 3 years before requesting examination. This
waiting period allows them additional time to assess the viability of the
invention and to defer examination fees.
It is possible to view the Japanese patent application process as involving
three phases. Table 3.1 outlines the average amount of time that elapses in
each phase.
Table 3.1: Three Japanese Patent Processing Phases, as of 1992
PHASE 1
Processing Phase: Date of patent filing to date of request for examination
Average Time: 36-48 months, due to backlog of applications
PHASE 2
Processing Phase: Date of examination request to date first office action is
received
Average Time: 18 months
PHASE 3
Processing Phase: Date of first office action to date of patent issuance
Average Time: 21-24 months, if no oppositions are lodged
The final phase of the Japanese patent process includes the time allowed
for the applicant to amend the application and for competitors to file
oppositions to the proposed patent (see discussion in the following section.)
As shown in table 3.1, if no oppositions are submitted, this period is
approximately 21 to 24 months.
RECENT DECLINE IN THE NUMBER OF PATENTS ISSUED BY JPO
In 1991, JPO issued 36,100 patents, down from 59,401 issued in 1990 and
63,301 issued in 1989. This decline represents a 39-percent drop from the
number issued in 1990 and a 43-percent drop from the 1989 level.
REASONS FOR DELAYS
FEWER PATENT EXAMINERS AT JPO THAN U.S. PTO
One key problem that U.S. patent experts frequently cite as contributing
the long delays in obtaining patents in Japan is the relatively low number of
JPO patent examiners. While the number of patent applications filed annually
in Japan has almost doubled over the past 10 years, the number of examiners
has remained steady. As shown in figure 3.1, the ratio of patent applications
filed to patent examiners is about 4 times higher in Japan than in the United
States. In 1991, JPO had 955 patent examiners to handle 369,396 patent
applications filed that year. U.S. PTO, in comparison, had 1,890 patent
examiners in 1991 to review 178,083 applications filed.
Figure 3.1: Number of Patent Applications Per Patent Examiner in
the United States and Japan, 1991
Japan: 387
U.S. : 94
Some patent experts point out, however, that increasing the number of
examiners alone cannot address the current backlog of applications. Further,
according to Japanese patent attorneys, the Japanese government is constrained
by a law that restricts the number of civil servants in Japan. Therefore,
the government is not likely to dramatically increase the number of patent
examiners.
PRE-GRANT OPPOSITION SYSTEM ADDS TO DELAYS
As discussed in chapter 1, Japan has a pre-grant opposition system. This
system allows a third party to lodge an opposition against another application
before JPO grants a patent. In 1991, 6.5 percent of all applications were
opposed, and each opposed application had an average of 1.8 opponents.
Pre-grant opposition procedures in Japan follow a prescribed time frame.
- After JPO has completed an examination and has found no reason to reject
the application, it is published "for opposition."
- Within 3 months from the publication date, an opponent may lodge an
opposition. Oppositions may cite objections regarding the substance of
the invention, such as prior art against the claimed invention, or a
procedural problem involving prosecution.
- Applicant is then given an opportunity to respond to the opposition(s)
by filing amendments to the specification, claims, or drawings. A domestic
applicant must respond to an opposition within 60 days (foreign applicants
must respond within 6 months) from the date of the opposition statement
sent by JPO.
- An opposition case is closed when the patent examiner issues a
determination, accepting or rejecting an opposition, which will result in
the issuance or rejection of the patent application. According to JPO
officials, a patent examiner has no time limits to decide on the validity
of an opposition or to evaluate an applicant's response.
As noted in chapter 2, pre-grant oppositions can further delay patent
issuance. Particularly long delays occur for applications that encounter
multiple oppositions. The delays are compounded by the fact that JPO examiners
are not required to review oppositions concurrently, but may assess them
individually. Patent applicants must prepare and submit a response to JPO for
each opposition filed. Foreign applicants usually must have each opposition,
as well as the JPO response, translated into their native language.
According to some patent attorneys, in addition to causing protracted
delays, the pre-grant opposition process also serves to narrow the scope of
the claims in a patent application beyond JPO'S own examination process.
An applicant will usually attempt to overcome a competitor's opposition
by restricting or dropping claims within the patent.
U.S. patent attorneys said that Japanese firms will frequently oppose their
competitors' applications in order to delay or prevent a patent from being
issued. Often their intent is to obtain a cross-license. [ Conversely, the
patent counsel of some U.S. firms that are generally willing to license their
technology told us that they have had few problems with pre-grant oppositions
in Japan because Japanese firms know that they will eventually obtain a
license]. While Japanese firms will lodge oppositions against other Japanese
firms' applications, they generally "settle amicably," that is, they will
negotiate a licensing agreement. On the other hand, Japanese firms will
oppose foreign competitors' applications because they believe that foreign
firms will be unwilling to license their technology since they generally
seek exclusive rights to it. Additionally, according to U.S. patent attorneys,
the number of oppositions lodged is related to the importance of the
technology in question and the level of maturity of Japanese industry in
that field.
JAPANESE INDUSTRIES' PATENT PRACTICES CONTRIBUTE TO BACKLOG AND DELAYS
Japanese firms have traditionally filed many more patent applications than
U.S. and European firms. Some major Japarlese firms file approximately 10,000
patent applications per year at JPO; in peak years, they have filed more than
20,000 applications. In comparison, the top U.S. patent holders we interviewed
filed about 1,300 applications per year at U.S. PTO. Numerous factors lead
Japanese industry to file in such great numbers, including the following:
- The first-to-file system, coupled with the 7-year deferral option,
allows Japanese firms to file applications for inventions of questionable
merit and those that may not be fully developed. Frequently, applicants
file without intending to request an examination. In 1989 and 1990, for
example, about 40 percent of the applications filed at JPO were abandoned
(i.e., after the full 7-year deferral period had elapsed).
- Until 1988, as a general rule, Japanese patent applications could claim
only one invention per application. (U.S. Pro, by contrast, has allowed
the use of multiple claims since the 1800s.)
- The type of research and development in which Japanese firms have
historically been involved focuses on incremental improvements, which
lends itself to numerous, narrow patents.
- In Japan, the number of patent filings has traditionally been used to
measure a firm's level of innovation and to reward its engineers'
productivity. Further, since fees for filing applications at JPO have been
relatively low (approximately $100), firms have had little incentive to
limit the number of applications they file. (Higher costs are incurred
when a request for examination is submitted.)
- Strategically, Japanese firms believe that owning a large volume of
narrow patents is more prudent than holding a handful of broad patents.
The rationale is that if an action, such as an infringement suit, is
taken against the firm, an unfavorable decision exposes a company with
one or two broad patents to risk "losing it all" if the patent is
invalidated.
THE NARROW SCOPE OF PROTECTION GRANTED IN JAPAN, AND RELATED PROBLEMS
In both the United States and Japan, the scope of patent protection that an
applicant is seeking is described in the ~claims," which serve to distinguish
the invention from the prior art. The claims also serve to outline the
boundaries of the invention, or the area for which the inventor is seeking
exclusive rights. The "specification" section of the application describes
the technical details of the invention; it is used to help the examiner
interpret the breadth of the claim. According to many patent experts, JPO
examiners are guided by Japanese patent practice to restrict patent claim
scope as much as possible, including limiting the scope of protection to
the specific examples provided in the application. For example, JPO generally
requires the applicant to include specific working examples and the results
thereof to support the claims. The examples are supposed to demonstrate a
one-to-one correspondence with the claims, and the claims are to be supported
by the specific results provided. In contrast, U.S. patent applications
generally include broad claims, which U.S. PTO will usually allow even if
they are not based on working examples. The scope of the claims in the
United States is limited only by the information provided in the
specification and the prior art.
Providing strong working examples in Japan is particularly important for
applications in the chemical, biotechnology, and pharmaceutical fields
because JPO examiners are very strict about requiring actual physical data
for all compounds covered by a claim. JPO examiners, unlike those in U.S.
PTO, will not accept theoretical or "paper" examples. According to a patent
counsel at a U.S. biotechnology firm, this requirement makes it virtually
impossible for pioneering inventions in the chemical, biotechnology, and
pharmaceutical areas to be adequately protected. In contrast, an invention
in the mechanical and electrical fields does not require such strict
disclosure of working examples because drawings generally serve to disclose
the invention. Therefore, according to some U.S. and Japanese patent
attorneys, applications in these areas seem to face fewer prosecution
problems in Japan.
PATENT FLOODING
Many U.S. patent experts have criticized the Japanese patent system for
enabling large firms to force small firms or those without a large patent
portfolio into licensing or cross-licensing arrangements. One U.S. patent
attorney asserted that Japanese companies use patent flooding as a tactic
to force cross-licensing by obtaining patents on numerous and insignificant
variations, holding another inventor's basic patent "hostage" with the threat
of bringing an infringement action based on the variations.
Several U.S. patent attomeys noted that most U.S. firms would not engage
in patent flooding in Japan because (1) they generally do not file improvement
patents on other companies' patents, (2) they file for patents in Japan and in
other foreign countries only on their most important inventions, and (3) they
feel the cost of monitoring competitors' filings and submitting large numbers
of applications would be prohibitive due to the need for translation.
JPO HAS IMPLEMENTED CHANGES
In the 1980s, JPO implemented a number of changes in the Japanese patent
system. JPO officials say these changes have improved the system. The changes
were primarily aimed at reducing the length of time it takes JPO to process
patent applications. In addition, JPO has made efforts to alter the way in
which the Japanese business community uses the patent system.
RECENT ALTERATIONS
In 1988, legislation was enacted in Japan allowing applicants to file more
than one claim in each patent application for the same invention. Under the
revised law, it is now possible for applicants to file several different
claims defining substantially the same inventive concept. Before 1988,
Japanese applicants could generally file only one claim for one invention.
As previously noted, this practice resulted in the high volume of patent
filings by Japanese industry and the large backlog of pending applications
at JPO. In the view of one Japanese patent attorney, the new system of
multiple claims should enable applicants to seek the broadest possible patent
protection.
Due to the delays in processing patent applications at JPO and Japan's
deferred examination system, many patent attorneys told us that it is too
early to determine how beneficial the multiple-claim system will be in
broadening the scope of patent protection granted. According to JPO officials,
many Japanese and foreign applicants are already making use of the
multiple-claim system. They noted that there was an average of 3.1 claims
per application in 1991, compared with 2.7 claims in 1988.
In 1986, JPO introduced procedures to provide accelerated examination of
patent applications that meet certain conditions. [ While JPO does not charge
any additional fees for an accelerated examination, Japanese patent attorneys
charge higher fees for preparing and filing such an application. ] The main
criterion is that the invention is already being "worked," or manufactured in
Japan, or is scheduled to be manufactured within 6 months. According to JPO,
the accelerated examination system was introduced to "minimize the adverse
effects that could accompany a delay in patent examination". If an application
is deemed eligible for accelerated examination, JPO is supposed to begin
examination immediately and to issue an office action within 4 to 8 months.
JPO officials told us that the accelerated examination system has not been
widely used to date. In 1991, for example, 343 requests for accelerated
examination were submitted, 20 of which were made by U.S. applicants.
In 1984, JPO implemented a 10-year plan to establish an electronic
application and examination system ("a paperless system"), which was the
first of its kind in the world. JPO began operating the electronic application
system in late 1990, when it first accepted electronic filing of patent
applications. (U.S. PTO is also working to establish an electronic filing
system, but it is not expected to begin operating until 1995). Although JPO
maintains that the "paperless" system will eventually reduce patent pendency,
several Japanese benrishi we interviewed said that the system has not yet
had much impact.
JPO'S CAMPAIGN TO REDUCE PATENT FILING
In addition to instituting these formal changes in the patent system,
several years ago JPO launched a campaign to encourage Japanese companies to
reduce the overall number of patent applications they file. As part of this
effort, JPO has requested the top management of companies that are the most
active Japanese patent filers to improve their oversight of their patent
filing. To do so, they are being encouraged to conduct more thorough searches
of the prior art and to evaluate the quality of their firm's inventions more
stringently, screening out applications of marginal value. JPO has also
encouraged applicants to utilize the multiple-claim system to consolidate
the applications they file.
JPO officials told us that they believe the campaign to reduce patent
filing has been fairly successful; they pointed out that the number of patent
and utility model applications filed in Japan decreased from a peak of about
543,000 in 1987 to about 484,000 in 1991. However, this decline mainly
reflects a drop in the number of applications filed for utility models and
not for patents. As noted earlier, the number of patent applications filed
during this time frame actually increased from about 341,000 in 1987 to about
369,000 in 1991. The number of utility model applications filed decreased
from about 202,000 in 1987 to about 115,000 in 1991.
[ Utility model patents are those involving the shape or construction of
articles or a combination of articles. The term of a utility model patent
is 10 years from the date of publication of the examined application, but
not more than 16 years from the filing date. ]
OTHER MEASURES TO REDUCE PATENT PENDENCY
As an additional measure to reduce patent pendency, JPO is considering
eliminating the requirement for examination of utility model applications.
Under the new system, utility model applications would be published without
substantive examination. Implementing this measure would significantly reduce
the workload of JPO examiners and the backlog of pending applications. In
1991, utility model applications accounted for 24 percent of the total number
of patent and utility model applications filed.
Finally, to further expedite patent processing, JPO has also begun to
employ a private, nonprofit agency on a contract basis to conduct patent
searches (searches of the prior art conducted during the patent examination).
In 1990, the private a~ency did about 50,000 such searches.
JAPAN'S COMMITMENTS UNDER THE STRUCTURAL IMPEDIMENTS INITIATIVE
The Structural Impediments Initiative was an effort begun in 1989 by the
governments of the United States and Japan to identify and solve structural
problems in both countries that hinder trade and balance of payments
adjustments. In addressing the issue of patent protection, included in SII's
discussions on intellectual property rights, the primary U.S. concern was
the amount of time it takes to obtain a Japanese patent. In 1990, the
Government of Japan made a commitment to "use its best efforts" to reduce
the average patent examination period to 24 months by 1995. According to JPO,
the average examination period was 30 months in 1991, down from 37 months
in 1988. (As discussed earlier, however, the examination period does not
account for the total pendency period in Japan.)
In the SII talks, the United States also raised the issue of increasing
the number of patent examiners in Japan. As previously discussed, in 1991 U.S.
PTO employed 935 more examiners than JPO, which had more than double the
number of applications to examine. In 1989, as a result of SII, the Japanese
government increased the number of positions for examiners by 30, representing
a 4-percent increase. In 1990, JPO increased its staff by about 5 percent,
for a net increase of 42 patent and utility model examiners. According to
USTR, however, despite these increases in personnel, JPO iS still inadequately
staffed.
=============================================================================
CHAPTER 4
PATENT PRACTICES OF U.S. FIRMS CAN AFFECT
THEIR PATENT EXPERIENCE IN JAPAN
While some patent problems U.S. firms are experiencing in Japan stem from
aspects of the Japanese patent system, others result from U.S. firms' patent
practices in Japan. Both U.S. and Japanese patent attorneys told us that a
number of the problems encountered by U.S. firms are due to their limited
knowledge of the Japanese patent system, translation difficulties, and poor
communication between U.S. patent counsel and their Japanese patent
representatives.
To address these problems, some U.S. firms have adopted practices that
have improved their patent experience in Japan. These strategies include
establishing patent offices in Japan, translating their Japanese applications
back into English to ensure their accuracy, and tailoring their applications
to better conform to the Japanese application style.
U. S. FIRMS PATENT PRACTICES IN JAPAN
As noted in chapter 1, foreign applicants must have a Japanese patent
representative to prosecute their patents at JPO.
- The majority (56 percent) of firms responding to our survey said they
generally filed patent applications in Japan directly through a Japanese
patent attorney, or "benrishi". Most of these firms were large, with 1991
annual sales of over $1 billion.
- Thirty-five percent said they generally file indirectly through U.S.
law firms (the U.S. patent attorney deals directly with the "benrishi").
Most of these firms had annual sales of less than $1 billion in 1991.
- Nine percent of the respondents said their firm maintained its own
patent office or department in Japan. Officials from several of these
patent offices told us they employ both American and Japanese staff
who are responsible for filing their firm's applications and monitoring
patent prosecution at JPO. Most of the U.S. firms with patent offlces
in Japan were large, with 1991 sales of over $1 billion.
The U.S. firms responding to our survey reported that they employed the
following patent practices and strategies in Japan:
- Eighty-seven percent said they file applications in Japan that are
virtually the same as their U.S. applications "always" or "most" of the
time.
- As a quality check, 28 percent said that their company had the claims
portion of their application translated back into English always or most
of the time. 31 percent said they never or almost never retranslate
their claims back into English or have someone fluent in Japanese review
their applications.
- Nineteen percent reported that in the last 5 years, a company official
had held an interview with a JPO examiner to discuss an application, while
81 percent said that no one from their company has met with an examiner.
- Seventy-five percent of the responding firms said they had not requested
an accelerated examination in the last 5 years. A large majority of these
firms said they did not need an accelerated examination, and about
one-fourth said that cost was a factor. In general, the firms that
requested an accelerated examination were large firms.
The majority of the 58 firms we interviewed said they deferred examination
in Japan for about 5 years. (As noted in ch. 1, in Japan applicants have the
option of deferring examination of their applications for up to 7 years).
Twenty-seven of the 58 firms said they defer for the full 7 years. The firms
cited several reasons for deferring examination, including the desire to
(1) further evaluate the commercial value of their product, (2) defer costs,
and (3) see how their original applications fare in the United States and
other countries.
U.S. FIRMS' PATENT PRACTICES IN JAPAN CAN CAUSE PROBLEMS
Many U.S. and Japanese private and corporate patent attorneys attributed
some U.S. companies' patent problems in Japan to their own filing practices.
For example, they noted that many U.S. firms do not
- allow adequate time for their Japanese patent attorney, or benrishi, to
prepare the Japanese application properly and have it translated
accurately;
- tailor their applications to conform to the Japanese application style;
- provide clear guidance to the benrishi prosecuting the application;
- commit adequate time and staff to learning about the Japanese patent
system.
U.S. FIRMS OFTEN SUBMIT LATE APPLICATIONS TO JAPANESE PATENT ATTORNEYS
A JPO of ficial and most of the benrishi we interviewed told us that U.S.
applicants often submit applications for filing at JPO only a week or 2 before
their priority year deadline.l Several benrishi told us that in some cases
their U.S. clients have submitted applications only days before the deadline.
The limited amount of time permitted between submission and filing at JPO
is problematic because applications generally have to be translated into
Japanese, and the average length of a U.S. application is 15 to 125 pages.
In such cases, the benrishi will divide the application among a number of
translators and consolidate the application just before filing it by the
deadline. They acknowledge that this practice often results in applications
with numerous translation errors and poor overall coherence.
Many Japanese and U.S. patent attomeys said that foreign clients should
decide early in the priority year whether they will file for foreign patents.
For Japanese filings, they should submit their applications to their benrishi
at least 1 to 2 months before the priority year deadline, thus allowing
adequate time for translating and preparing the application. In this way,
the benrishi would have time to discuss and clarify technical points and
translation questions with the client.
U.S. APPLICATIONS DO NOT ALWAYS CONFORM TO JAPANESE APPLICATION STYLE
JPO officials told us that U.S. applicants tend to draft their Japanese
applications based on U.S. patent law and format, rather than on Japanese
patent laws. As a result, JPO examiners frequently have difficulty
understanding the claimed scope of the invention as it is presented. According
to the benrishi we interviewed, foreign patent applications generally do not
require detailed revision to conform to the Japanese patent application style.
However, Japanese patent law does contain certain stipulations regarding the
manner and content of the specification that differ significantly from U.S.
patent practice. Many benrishi told us that the most important differences
are that the Japanese application must clearly describe
(1) the "effect of the invention", that is, how the applicant's claimed
invention resolves technical problems posed by previously claimed
inventions (the prior art), which should be presented in a "problem and
solution" approach; and
(2) the "meritorious or advantageous effects" that are obtained by the
applicant's claimed invention as compared with previously claimed
inventions.
According to JPO of ficials and benrishi, some U.S. patent applications
fail to adhere to Japanese procedure. Common problems they cited include the
following:
- The description of the "advantageous effect," or how the disclosed
invention is superior to the prior art cited in the application, is
missing or unclear.
- The "problem/solution" approach is not used to describe the advantageous
effect over the prior art.
- The features of the invention defined in the claims do not demonstrate a
clear one-to-one correspondence with the working examples provided.
- The number of working examples provided is insufficient given the
number of claims.
- The background, including the description of the prior art, is
excessively long and detailed.
U.S. and Japanese patent attorneys told us that foreign applicants are much
more likely than domestic applicants to receive office actions or rejections
for "insufficient disclosure." A JPO examiner will issue such an office
action when the applicant fails to discuss the invention's "advantageous
effect" or to use the "problem/solution" method, or when aspects of the
disclosure are unclear. One benrishi told us that he will revise U.S.
applications to conform to the Japanese application style only if the
applicant submits it 3 months before its deadline. He said that only a few
U.S. firms submit their applications to the benrishi already in the Japanese
format.
As noted earlier, almost 90 percent of the responding companies indicated
that most of the applications they file in Japan are virtually identical to
their U.S. applications. Several benrishi told us that most of their U.S.
clients do not want them to modify their applications to include the
"problem/solution" approach before filing them at JPO because of the cost
and time involved. Rather, U.S. applicants want them to wait to do so after
they receive the first office action from JPO. While this modification can be
done, it serves to increase the pendency period.
Poor Communication Between US Firms and Their Japanese Patent Representatives
Poor communication between U.S. applicants and their Japanese patent
representatives appears to be a widespread problem. [ This section focuses
mainly on the practice of U.S. firms that file directly through a Japanese
patent attorney ("benrishi") and not those that file through pnvate U.S.
patent attorneys. ]
Many U.S. companies complained that their benrishi were not aggressive
enough in representing their companies' interests, especially in their
attempts to gain broad patent coverage from JPO. Some U.S. corporate patent
counsel also complained that their benrishi did not advise them on how to
better tailor their applications to fit the Japanese application style.
On the other hand, several benrishi told us that their U.S. clients fail to
clarify their expectations and the amount of work the clients expect the
benrishi to do. For example, one benrishi said he will translate and interpret
office actions and prior art citations if the client is willing to pay for
the additional translation costs. He added that many of his U.S. clients are
unwilling to incur these costs. Moreover, some benrishi noted that their U.S.
clients rarely tell them which of their applications they consider to be the
most important or give them any guidance on the scope of claims they expect
to receive from JPO.
According to many U.S. and Japanese patent attorneys we interviewed, a
number of U.S. firms do not actively participate in the prosecution of their
Japanese patents. They sometimes delegate too much to their Japanese patent
firms, expecting them to devise a filing strategy, produce accurate
translations of their applications, and prosecute their cases aggressively at
JPO. However, in many instances, they do not appear to give their benrishi
clear instructions or guidance on how they would like their applications to
be filed. A representative from a Japanese patent firm told us that "too
many U.S. applicants leave it all in the hands of their benrishi."
Conversely, the Japanese benrishi we interviewed did not appear to take a
proactive role in filing applications for their U.S. clients. Benrishi told us
that they will give advice to their clients only when specifically asked. For
example, one benrishi said that his firm's strategy for having JPO begin an
examination as quickly as possible is to request an examination about 3
years after filing (due to the backlog of applications at JPO). However, he
will offer this advice only if the client asks. If, for example, a U.S. client
asks that an examination be requested at the time the application is filed,
the benrishi will comply. Further, a Japanese patent attorney practicing in
the United States acknowledged that some benrishi do not attempt to interpret
vague or cryptic JPO office actions for their U.S. clients.
Some U.S. patent attorneys noted that the roles and duties of benrishi
differ significantly from those of U.S. patent attorneys. The former will
usually only translate and file an application in Japan, whereas the latter
will generally take a more proactive role, rewriting an application to conform
to the U.S. style and actively advising the client about filing.
A factor that may contribute to the perceived passivity of some benrishi is
that in Japan, a civil servant, such as a JPO examiner, holds an esteemed
position in society. Accordingly, a benrishi will tend to defer to the
examiner and not to challenge or aggressively press him, leading some U.S.
clients to question whether the benrishi is truly representing their
interests. Another factor may be that benrishi have a fixed fee schedule,
which may discourage them from performing additional, unsolicited services.
TRANSLATION PROBLEMS
Many U.S. patent attorneys identified the translation of a U.S. application
into Japanese as another key area in which U.S. patent counsel should
provide greater oversight. Under Japanese patent law, translation errors
cannot be corrected if such a correction is deemed to change the gist of
the invention. According to JPO officials, U.S. applications frequently
contain translation errors. In fact, some U.S. patent attorneys identified
language as "the biggest barrier" in the Japanese patent system. One patent
attorney admitted that his company was not aware of translation errors in its
Japanese applications until the company entered into licensing negotiations
in Japan.
One corporate patent counsel described a patent infringement case
involving a chemical patent that contained a translation error in the patent
application. The translator had misunderstood the element "boron" and
translated it as "bromine". The patent holder lost the case because of this
translation error. Although the patent holder appealed the ruling, the
attorney said that the appeal was denied because under Japanese patent law,
a patent examiner must recognize from the invention's description that the
language used is clearly in error in light of the rest of the application.
A Japanese patent attomey had the following suggestions for minimizing
the chances for such translation errors: (1) use English terminology in
brackets after the Japanese translation of important terms so that corrections
can later be made relying on the English word and (2) disclose the invention
fully in drawings where appropriate.
A U.S. patent attomey who is fluent in Japanese told us that he sees
translation errors in most U.S. applications he reviews, regardless of the
size of the firm or the patent's importance to the firm. He gave an example
of how the language difference has presented difficulty:
- There is no singular or plural form in Japanese. To properly translate
"a pencil with an eraser" into Japanese, a benrishi suggested that the
word "singular" be added to modify "eraser". However, the U.S. patent
attorney thought that this addition narrowed the claim and refused to
make the change. As a result, the JPO examiner found the description
ambiguous and rejected the claim.
This U.S. patent attomey's recommendation to his clients is to have their
applications translated into Japanese in the United States, which he will
review before sending the applications to Japan. While he admits this solution
is costly, he believes it is important that the U.S. attorney have greater
control of the translation. As previously noted, some U.S. companies do see
a need for verifying the quality of their benrishi's translation of their
applications. Among the responding companies, 28 percent reported that they
had at least the claims portion of their Japanese application translated back
into English by a translation service outside their benrishi's fimm always
or most of the time. Another 6 percent reported that they had someone fluent
in Japanese (outside their benrishi's firm) review their application always
or most of the time.
U.S. Firms Do Not Emphasize Mastering the Japanese Patent System
While not discounting the structural and cultural factors that hinder
foreign patent applicants in Japan, some U.S. patent experts acknowledged
that U.S. firms have been slow in making foreign patent filing a priority.
In their opinion, since the United States has been the dominant world market
for decades, most U.S. firms have tended to focus on domestic patent filing:
foreign filing has been treated as secondary. As a result, until recently
many U.S. companies have placed little emphasis on foreign patent filing.
Some U.S. patent counsel acknowledged that they are not very familiar with
patent prosecution in Japan or with the Japanese judicial system.
In contrast, because Japanese firms have always looked to overseas markets,
especially the United States, they have invested heavily in learning about
foreign patent practices, particularly the U.S. patent system. U.S. patent
attomeys noted that Japanese companies take a very active role in pursuing
U.S. patents and in monitoring patent activity worldwide. As a result, they
have committed significant time to understanding U.S. patent law and U.S.
patent prosecution and enforcement matters. For example, large Japanese
companies generally send one or two benrishi or other patent department
staff to the United States each year to serve as apprentices in intellectual
property law firms for an average of 6 months to 2 years. These Japanese
apprentices will usually work on preparing their own companies' applications
for filing at U.S. PTO. In contrast, the U.S. firms we interviewed generally
had not sent patent attomeys to Japanese patent law firms to learn about the
Japanese patent system.
SOME U.S. FIRMS HAVE ADOPTED STRATEGIES THAT IMPROVED THEIR PATENT
EXPERIENCE IN JAPAN
Table 4.1, an analysis of survey responses, shows the number and
percentage of U.S. firms that asserted that certain strategies or practices
had improved their patent experience in Japan.
Table 4.1: Firms' Views Regarding Actions That Improved Their Patent
Experience in Japan
Number of Percent of
Number of firms reporting firms reporting
responding action improved action improved
firms taking patent patent
Action Taken action experience experience
Maintain a company patent office 26 19 73
in Japan
File patent applications directly 155 89 57
through a Japanese patent attorney
Own subsidiaries or manufacturing 144 54 38
facilities in Japan
Have most applications reviewed 19 7 37
by someone fluent in Japanese
Have great/very great activity 104 35 34
conducting business arrangements
with Japanese firms in the last 5 years
Translate most patent applications 77 24 31
or claims back into English
( These percentages include only the firms that responded that they
utilize these particular practices in Japan. )
SPECIFIC FIRMS' STRATEGIES
Officials at a maJor U.S. computer firm described their company as
successful in its efforts to secure patent protection in Japan. They
attributed the firm's success to a number of factors, including establishing
a large presence in the Japanese market and maintaining a network of
business ties with Japanese companies with whom it licenses and cross-licenses
technology. In addition, company officials identified several strategies they
believe have improved their experience in obtaining patents in Japan. These
actions included establishing a company patent office in Japan about 25 years
ago, staffed with 50 Japanese nationals who regularly hold interviews with
JPO patent examiners. According to company officials, prosecuting their
patents in-house allows the inventing group to explain the technology to
their patent attomeys and to work closely with them. The firm also tailored
all its applications to conform to Japanese practice, including modifying
or deleting claims when necessary.
In 1989, JPO recognized this U.S. firm with an award for excellence in the
quality of its Japanese patent applications. The award was given for the first
time to a non-Japanese company.
The corporate patent counsel at another U.S. firm, which maintains a patent
office in Japan staffed by six Japanese nationals, told us that his firm
performs an annual management review of this office. In addition, to oversee
the firm it employs for translations, the company administers a standard exam
to all translators before they are assigned to work on the company's
applications. According to the company official, taking these actions ensures
that their translators understand the "vocabulary of their technology." The
official believes these actions have improved the overall quality of
translations.
WORKING WITH JAPANESE BUSINESS PARTNERS HAS HELPED SOME COMPANIES
Of the companies that had great business activity in Japan, 34 percent
reported that these business ties improved their patent experience.
Thirty-eight percent that reported having a direct business presence in Japan
said it had improved their patent experience. Some U.S. patent attorneys told
us that U.S. firms that have business ties with Japanese firms generally have
a better patent experience in Japan. Further, one U.S. patent attorney
explained that the quickest way to achieve priority status in the backlog of
cases at JPO is to work an invention in Japan through a Japanese joint venture
partner or a licensee. However, based on interviews with U.S. firms that have
ties with Japanese firms, it appears that the majority do not seek advice or
assistance from their Japanese business partners. Companies that did seek
assistance from their business partners said they received advice on patent
strategy and on selecting benrishi to prosecute applications. They also
received other benefits, such as having the Japanese partner hold interviews
with JPO examiners. For example, one corporate patent counsel told us his
firm's Japanese business partners have helped them m Japan in many ways,
including selecting Japanese patent attorneys for enforcing patents, providing
advice on prosecuting patents, and monitoring Japanese competitors'
applications and research activities. Also, the patent counsel at a major
U.S. chemical firm said his firm's joint venture partners and licensees played
a big role in helping them to secure patent protection. For example, their
partners have helped them identify and address prior art citations, have
suggested terminology to be used in applications, have explained where their
applications are in the prosecution process, and have offered interpretation
of JPO office actions when needed.
INTERVIEWS WITH JPO EXAMINERS HAVE IMPROVED SOME FIRMS' EXPERIENCE
According to some benrishi and U.S. patent counsel, it is beneficial for
U.S. company officials to hold interviews with JPO examiners, particularly for
important or problematic patent applications. Many U.S. patent counsel
indicated that the interviews they have had with JPO examiners have helped
their cases significantly, giving the U.S. inventor or attorney the
opportunity to refine their responses to examiners' questions and to explain
their inventions further. Moreover, JPO officials told us that their examiners
feel honored when a U.S. company representative has gone to the effort of
meeting with them and discussing his or her invention.
In the 1980s, JPO began encouraging intelviews between examiners and
applicants. However, according to JPO officials, few U.S. applicants meet
with JPO examiners. As noted earlier, 81 percent of the firms responding to
our survey said that no one from their company had met with a JPO examiner
in the past 5 years.
=============================================================================
CHAPTER 5
U.S. FIRMS' EXPERIENCE IN
ENFORCING PATENTS IN JAPAN
According to several Japanese patent attorneys, the Japanese legal system
poses more difficulties for a plaintiff in an infringement case than does the
U.S. legal system. The difficulties in bringing infringement actions in Japan
include the lack of discovery, the length of court proceedings, the narrow
interpretation of patent claims, the difficulty in obtaining preliminary
injunctions, business risks associated with the Japanese aversion to
litigation, and the logistics of pursuing a suit in Japan. According to U.S.
corporate and private patent attorneys, patent holders have a harder time
enforcing patents in Japan than in the United States due to these
difficulties. This partly explains why the number of patent infringement
suits brought in Japan is significantly lower than the number of suits
brought in the United States. Some of the U.S. company officials we
interviewed said that the problems they experienced in enforcing their
patents in Japan had adversely affected their companies.
SPECIFIC DIFFICULTIES ENCOUNTERED
Some of the difficulties U.S. firms have experienced in enforcing their
patents in Japan stem from the differences in U.S. and Japanese substantive
law and in civil procedure. For example, Japan has virtually no discovery
procedures, compared with the discovery permitted in the United States.
Further, court proceedings in infringement suits in Japan are generally more
lengthy than those in the United States. In addition, the Japanese courts
interpret the scope of patent claims more narrowly than courts in the United
States. Other problems in bringing infringement actions in Japan include the
difficulty in obtaining preliminary iIuunctions, the inadequate damages
awarded, the fact that litigation is viewed with disfavor in Japan, and the
logistics problems.
LACK OF DISCOVERY
Like some European countries, Japanese law does not provide for discovery.
While almost all the attorneys we spoke with, both in the United States and
Japan, agree that discovery procedures dramatically increase the cost of
litigation, they acknowledge that discovery is helpful and often necessary
to prove that infringement has occurred. It is particularly difficult to
prove infringement without discovery in the case of a "process" patent (a
patent concerning the mode of treatment of certain materials to produce a
certain result; it applies to a new method of making an article). Without
access to the alleged infringer's plant or documents, demonstrating that a
certain process is being used to produce a product is hard.
Fourteen of the 58 U.S. firms we interviewed had filed patent infringement
cases in Japan. Of these, six said the lack of discovery was a "great" or
"very great" problem. One Japanese patent attorney told us that his U.S.
clients are reluctant to file infringement suits in Japan because of the lack
of discovery. Furthermore, representatives from one large chemical company
and one semiconductor company said the lack of discovery had affected their
firms' decisions not to bring infringement suits involving processes in
Japan. One pharmaceutical company representative told us his firm was only
able to prove infringement in a process patent case in Japan because it had
developed a technology that allowed the firm to analyze the infringer's final
product to identify the process that was used.
LENGTHY COURT PROCEEDINGS
Patent infringement proceedings in Japan generally take longer than those
in the United States. According to several patent attorneys, infringement
cases usually take 3 to 9 years to conclude in Japan as compared with 2 to
3 years in the United States. Of the U.S. firms we interviewed, 11 out of 14
that had tried to enforce their patents in Japan said that the Japanese legal
system for infringement suits was slower than the U.S. legal system. Two
U.S. corporate patent attorneys said their firms have recently been involved
in infringement cases in Japan that have gone on for more than 10 years.
Moreover, several company representatives told us they were reluctant to
file infringement suits in Japan because of the lengthy court proceedings.
A major reason for the lengthy patent infringement suits in Japan is the
manner in which such suits are conducted. Typically, an infringement suit
in Japan consists of a series of hearings held once a month lasting only a
few minutes each. During that time, written arguments are submitted to the
court, and a date for the next hearing is determined. Occasionally, some oral
arguments are presented, but most of the evidence is submitted in writing.
Further, unlike in the United States, Japanese courts do not have the
authority to rule on patent validity. If this validity is challenged, the
case is reviewed by JPo in a separate proceeding. In addition, according to
a Japanese attorney, judges assigned to patent cases in Japan may be
transferred before a decision is reached, thus further delaying the
proceedings.
JAPANESE COURTS INTERPRET CLAIMS NARROWLY
Japanese courts generally give a more narrow interpretation of a patent's
claims than do courts in the United States. One Japanese patent attorney
commented that Japan has in practice the strictest system of claim
interpretation of any of the leading industrial countries. Patent infringement
litigation often focuses on the scope of the patent's claim in order to
determine whether the defendant's product or process falls within that scope.
Thus, the court's interpretation of the scope of a claim is often critical
in a patent infringement case. According to several U.S. patent attorneys,
the Japanese courts' narrow interpretation of claims enables companies to
make minor changes to other companies' patented products or processes without
being found to infringe on them.
Related to the narrow interpretation of claims is the fact that Japan has
virtually no "doctrine of equivalents" as that term is used in the United
States. In the United States, the doctrine of equivalents is used to broaden
the interpretation of the scope of the claimed invention to cover allegedly
infringing products or processes outside the wording of the claim, if those
products or processes perform substantially the same function in substantially
the same way to obtain the same result. In contrast, Japanese courts tend
to adhere more strictly to the literal interpretation of a claim.
According to many U.S. patent attorneys, moreover, patent enforcement in
the United States has been strengthened by the 1982 establishment of the
U.S. Court of Appeals for the Federal Circuit (CAFC). This court hears
patent-related appeals. In its rulings, CAFC has been viewed as broadly
interpreting patent claims and as generally favoring the rights of patent
holders.
DIFFICULTY OBTAINING PRELIMINARY INJUNCTIONS
Infringement actions often involve requests by the plaintiffs for a
"preliminary injunction" -- a court order granted at the beginning of a
lawsuit to prevent the defendant from doing or continuing some act, the
right to which is in dispute. The injunction may be discharged or made
perpetual as soon as the rights of the parties are determined when the case
is resolved. In general, U.S. firms have not had much success in obtaining
preliminary injunctions in Japan. While permanent injunctive relief is
available as part of the "main infringement" action, preliminary injunctions
in Japan can only be obtained through a separate, specialized legal action.
This separate case can run "parallel" to the main action. Preliminary
injunction cases typically include numerous hearings spaced out every 3-4
weeks until the judge feels sufficient arguments have been made. This
process usually takes 18 to 24 months.
Of the 14 US firms we interviewed that had filed patent infringement suits
in Japan, nine said that obtaining a preliminary iluunction in Japan was more
difficult than in the United States. One U.S. patent attorney told us that
preliminary iruunctions are rarely used in Japan and could take up to 3 years
to obtain. He also said that, because of the cultural proclivity toward
settlement in Japan, these injunctive hearings are often spread out to
intervals of 8-16 weeks, giving the parties time to reach an agreement before
a preliminary injunction is granted. Another U.S. patent attomey said it is
virtually impossible to get a preliminary iluunction; without one, it is
difficult to stop the infringement. One U.S. patent attorney gave an example
of a U.S. drug company that dropped a 6-year infringement suit in Japan. He
said that by the time the company had received an injunction, it had lost so
much of its market that it decided to abandon the product. One U.S. firm,
however, recently received a preliminary iIuunction in Japan 3 years after
filing.
INADEQUATE DAMAGES
The amount of damages awarded in Japan is generally less than that awarded
in the United States. Damages in Japan can be awarded on the basis of either
lost profits or a reasonable royalty, i.e., the value of a license in Japan.
However, in practice, damages awarded in Japan are usually based on a
reasonable royalty because of the difficulty in determining lost profits
without using discovery procedures. As a result, one patent counsel noted
that a company would be better off settling with an infringer in Japan and
negotiating a license than pursuing litigation. Further, there are no treble
damages or attorney fees awarded in Japan as are sometimes available in the
United States in patent infringement actions. Several patent attorneys told
us that the damages awarded in Japan are so low that the suits are often not
worth the associated costs.
LITIGATION VIEWED WITH DISFAVOR IN JAPAN
According to Japanese patent attorneys, litigation of any sort is viewed
as an extreme action in Japan. In general, Japanese companies rarely sue one
another. Infringement suits are usually a matter of last resort and are
viewed as damaging to business relations. When infringement occurs, the
parties will almost always negotiate a settlement rather than enter into
litigation.
Litigation, however, is more common in the United States; many U.S. firms are
regularly involved in litigation as a plaintiff or defendant. Thus, little
business risk is associated with bringing an infringement action in the
United States.
LOGISTICAL PROBLEMS OF BRINGING A SUIT IN JAPAN
Logistical factors complicate bringing a suit in Japan, as the time and
costs associated with travelling to Japan are significant. In addition, the
distance, language, and cultural differences can thwart communications, as
can the dissimilarities in U.S. and Japanese civil procedures. Further, U.S.
firms seeking to litigate in Japan must retain a Japanese general attorney,
or "bengoshi" [benrishi is a 'patent' attorney]. According to some Japanese
patent attorneys, it is more difficult to find a good attorney in Japan than
in the United States because there are far fewer Japanese bengoshi than there
are U.S. attomey -- 15,000 bengoshi compared with more than 700,000 U.S.
attorneys.
MORE INFRINGEMENT SUITS IN THE UNITED STATES THAN JAPAN
Litigation is pursued in the United States more frequently than in Japan.
For example, in 1990, there were 1,236 patent infringement suits filed in
the United States as compared with 141 filed in Japan.
Overall, the US firms responding to our survey had filed more infringement
suits in the United States than in Japan or Europe. In each of the three
jurisdictions, the majority of the responding firms had filed fewer than two
suits in the past 5 years. Fifty-six percent of the films had filed a patent
infringement suit in the United States in the last 5 years. In comparison,
within the same time frame, 7 percent had filed an infringement suit in Japan,
and 24 percent in Europe. Further, 29 percent had filed three or more suits
in the U.S. courts compared with 2 percent that had filed three or more suits
in Japan.
EFFECT OF ENFORCEMENT PROBLEMS ON COMPANIES
The difficulties associated with enforcing patents in Japan have adversely
affected some of the U.S. firms we interviewed. Approximately 20 percent of
the responding firms indicated they had experienced infringement problems in
Japan but had not filed infringement suits in the Japanese courts. The most
common reasons they cited for avoiding litigation in Japan were (1) the amount
of time it takes to conclude cases, (2) the cost and difficulty of managing
a suit in Japan, and (3) the lack of familiarity with the Japanese legal
system.
Of the 14 firms we interviewed that had filed infringement suits in Japan,
several corporate patent counsel told us their firms had suffered from some
of the of following problems associated with enforcing patents in Japan:
- A representative from a large chemical company said his firm had filed a
patent infringement suit in Japan in 1980. After 10 years of litigation
involving 30 hearings, there appeared to be no prospect of receiving a
decision. The company representative said that the judge pressured his
firm to settle the case for a very low royalty. The U.S. firm subsequently
decided to drop the suit in exchange for a 0.5-percent royalty. According
to the company official, another licensee was paying a 25-percent royalty
for use of this patent.
- An official from another company told us that his firm had filed an
infringement suit on a chemical process patent in Japan in the early 1980s.
He said that three sets ofjudges and three sets of appeal examiners have
been assigned to the case since it began. However, the biggest problem his
firm has had in proving infringement has been the lack of discovery
procedures. The suit is still ongoing.
- A representative from another company said his firm was forced to settle
an infringement suit in Japan because by the time it reached trial, the
patent term in Japan had expired.
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CHAPTER 6
PROGRESS IN WORKING TOWARD INTERNATIONAL
PATENT HARMONIZATION
The United States is currently involved in two sets of multilateral
negotiations on intellectual property rights: the Uruguay Round of GATT,
which includes negotiations on intellectual property issues; and a patent
harmonization treaty through WIPo, a United Nations agency based in Geneva.
The proposed GATT agreement would require some changes in the U.S., European,
and Japanese patent systems, but the current GATT negotiations were at a
stalemate as of mid-1993. A harmonization treaty, by contrast, would require
fundamental changes in the patent laws governing the U.S. and Japanese patent
offices, and to a lesser extent in the patent laws governing EPO. U.S. PTO
officials view the multilateral efforts in GATT and WIPO as instrumental in
achieving strengthened patent protection worldwide.
Currently, Japan is considering major revisions in its patent system
within the context of ongoing multilateral negotiations to harmonize patent
systems. The changes being contemplated include allowing filing in a language
other than Japanese, eliminating the pre-grant opposition system, and applying
a doctrine of equivalents in patent infringement suits. A majority of the U.S.
companies responding to our survey indicated that most of these changes would
improve their patent experience in Japan.
The United States is also considering a number of changes in its patent
system within the context of international patent harmonization, most notably
the adoption of a first-to-file system and publication of all patent
applications after 18 to 24 months. About two-thirds of the U.S. companies
responding to our survey supported these changes in the U.S. patent system in
the context of a harmonization treaty. Many companies said, however, that they
would not approve of changes in the U.S. patent system without agreement from
Japan to make significant alterations in its patent system as part of a
harmonization effort.
GATT NEGOTIATIONS SEEK TO ESTABLISH A MINIMUM LEVEL OF PATENT PROTECTION
WORLDWIDE
At the urging of the United States, standards to protect intellectual
property were introduced into the ongoing Uruguay Round negotiations of
GATT that began in September 1986. Negotiations among GATT members on
intellectual property issues resulted in a proposed agreement in 1991,
called the agreement on Trade-Related Aspects of Intellectual Property
Rights--commonly referred to as "TRIPS". If a final GATT accord is reached
that includes the current draft TRIPS proposal, it would establish minimum
standards of patent protection and enforcement worldwide.
According to GATT officials, the proposed GATT TRIPS accord is primarily
aimed at getting developing countries to strengthen their protection of
intellectual propertLy. However, if a final agreement is reached, the TRIPS
accord would also require some changes in U.S., European, and Japanese patent
laws and procedures. Some of the most significant changes called for in the
three systems are shown in table 6.1.
Table 6.1: Fundamental Changes Required in European, Japanese, and
U.S. Patent Procedures Upon Ratification GATT TRIPS Accord
EPO change JPO change USPTO change
Proposed GATT TRIPS article required? required? required?
Allow for limited discovery a YES NO
procedures in patent
infringement cases
Prohibit discrimination in NO NO YES
awarding patents based on
where inventions were made
Grant parent protection for NO YES YES
20 years from filing date
(Note: (a) = As noted in Chapter 1, EPO grants a bundle of individual
patents, each of which is valid in countries designated by the applicant.
Thus, procedures used in infringement suits vary according to national
laws. According to GATT officials, while the United Kingdom has some
discovery procedures, some European countries, such as France and Germany,
currently have no provisions for discovery in their national patent laws.
Therefore, these countries may have to allow for limited discovery upon
the ratification of GATT TRIPS.)
According to several US patent attorneys, the provision in the draft TRIPS
proposal that relates most specifically to Japan is that involving discovery
procedures in patent infringement suits. As noted in chapter 5, discovery
procedures are currently not available to plaintiffs in infringement actions
in Japan. According to a U.S. PTO official, however, the draft TRIPS proposal
calls for countries to permit plaintiffs to have limited evidence-gathering
ability in infringement actions, rather than the extensive discovery
procedures that are available in the United States. Some Japanese patent
attorneys told us that it is unclear what type of discovery procedures would
be permitted in Japan if the TRIPS proposal were adopted.
[ Under the TRIPS discovery provision, "[J]udicial authorities shall have
the authority, where a party has presented reasonably available evidence
sufficient to support its clairns and has specified evidence relevant to
substantiation of its claims which lies in the control of the opposing party,
to order that this evidence be produced by the opposing party, subject in
appropriate cases to conditions which ensure the protection of confidential
information."]
Another proposed TRIPS article prohibits discrimination in patent rights
regarding the place of the invention. This provision may require the United
States to modify section 104 of title 35 of the United States Code; under
section 104, foreign inventive activity is disregarded in determining which
of several inventors is the first to invent. (This requirement would no longer
be an issue if the United States moves to a first-to-file system). All of
the European firms we interviewed stated that section 104 is discriminatory
toward foreign filers. Another TRIPS provision would require both JPO and
U.S. PTO to change their terms of patent protection to 20 years from the
filing date.
The Uruguay Round of GATT is currently in a stalemate pending the
resolution of certain issues between the European Community and the United
States. If these issues are resolved, GATT Secretariat offlcials anticipate
that the TRIPS text will not be revised.
WIPO PATENT HARMONIZATION NEGOTIATIONS
WIPO'S efforts to harmonize the world's patent laws began in the 1980s. The
purpose of the harmonization effort is to develop a treaty that will simplify
and expedite the process of obtaining patent protection around the world and
to strengthen protection once granted. According to WIPO'S Deputy Director
General, a harmonized world patent system is essential because companies
around the world are increasingly turning toward global markets; thus, in
his view, the differences between national or regional patent systems may
increasingly act as a trade barrier as well as an impediment to inventors.
Unlike the GATT TRIPS negotiations, WIPO'S harmonization negotiations are
viewed primarily as a forum to resolve differences among the patent systems
of the developed countries. In fact, WIPO officials anticipate that the only
countries that would be signatories to the WIPO treaty would be the United
States, Japan, and most European countries.
HISTORY OF WIPO HARMONIZATION EFFORTS
Between 1984 and 1990, WIPO sponsored a series of meetings to discuss
eliminating differences among national and regional patent laws. The initial
purpose of the harmonization effort was to study the establishment of a grace
period in Europe. However, WIPO offlcials subsequently determined that they
could not address the issue of the grace period alone because it involved
related issues such as whether the first-to-file principle should prevail
over the first-to-invent principle.
During the 6 years of deliberations, the scope of the proposed harmonization
treaty expanded to address many patent procedures, which diverged greatly
among regional and national patent laws. WIPO established a committee to
study patent harmonization. The committee completed its preparatory work in
November 1990 and drafted a proposed treaty in December. In June 1991, a
diplomatic conference on patent law harmonization was held in The Hague to
review and refine the draft treaty. However, formal decisions on finalizing
the treaty's text were put off until the second session of the diplomatic
conference. The second session, scheduled for July 1993, has been postponed
indefinitely, primarily because of the change in administrations in the
United States.
MAJOR PROVISIONS IN THE DRAFT WIPO TREATY
The draft WIPO treaty would require fundamental changes in U.S. and
Japanese patent laws and procedures, and to a lesser extent in the patent
laws governing EPO. The proposed treaty calls for patent procedures that
generally are closest to existing procedures used by EPO. For example, it
seeks the adoption of a worldwide first-to-file system, publication of all
patent applications, and a post-grant rather than a pre-grant opposition
system. Table 6.2 shows the most significant changes that the draft treaty
would require in the three patent regimes.
Table 6.2: Articles in Draft WIPO Treaty Requiring Significant Changes in the
European, Japanese, and U.S. Patent Systems
EPO change JPO change USPTO change
ARTICLES IN DRAFT WIPO TREATY required? required? required?
Accept filing in any YES YES NO
language (original
language version would
be the ruling document)
Change from pre-grant to NO YES NO
post- grant opposition system
Adopt a 12-month grace period YES YES NO
Adopt a 3-year maximum NO YES NO
deferral of examination
Complete patent examinations NO YES NO
within 2 years
Apply a doctrine of NO YES NO
equivalents in patent
infringement suits
Adopt a first-to-file syste NO NO YES
Publish applications NO NO YES
after 18-24 months
Thus, the treaty would require two fundamental changes in the U.S. patent
system: the abandonment of the first-to-invent approach and publication of all
patent applications after 18 to 24 months.
JAPAN SUPPORTS ADOPTION OF SOME PROVISIONS IN GATT PROPOSAL AND
DRAFT WIPO TREATY
Within the context of ongoing multilateral patent harmonization
negotiations, Japan is considering several major revisions in its patent
system. In 1991, the Ministry of International Trade and Industry's Industrial
Property Council began reviewing Japanese patent law and practices. It also
started considering provisions included in WIPO'S draft harmonization treaty
and the proposed GATT TRIPS agreement. In a report issued in July 1992, the
council stated that the Japanese patent system "should respond to the
globalization of economic activities and should provide comprehensive
protection to advanced technologies". The council recognized the need for
internationally harmonized patent systems and practices in light of the
wider dissemination of advanced technology worldwide and shorter product
life cycles.
The council report recommended consideration of several changes in the
Japanese patent system, including (1) the allowance of filing in any language,
(2) the elimination of the pre-grant opposition system, and (3) the allowance
of a 20-year patent term from the filing date. The report stated that some of
these changes would be contingent on the u.s adopting such provisions included
in WIPO'S draft harmonization treaty as (1) instituting a first-to-file
system, (2) publishing patent applications, and (3) adopting a 20-year patent
term from the filing date.
JPO officials told us that they support most of the changes in the draft
WIPO treaty and the proposed GATT agreement. However, they said that they did
not believe that the proposed WIPO treaty should include the provision
regarding the time limit for completion of a patent examination. JPO officials
said that there is no need to impose the 24-month cap on the examination
period since Japan has already pledged to accomplish this goal by 1995 under
SII.
The JPO officials reiterated that they would not make the changes called
for in the harmonization treaty, such as eliminating the pre-grant opposition
system, unless the United States agrees to (1) adopt a first-to-file system,
(2) publish applications before they are granted, and (3) institute a 20-year
patent term.
U.S. GOVERNMENT VIEWS OF CHANGES IN JAPANESE PATENT SYSTEM UNDER HARMONIZATION
According to U.S. government officials, the changes in the Japanese patent
system brought about by a harmonization treaty would benefit U.S. industry.
Such changes include (1) the ability to file initial applications in English
and to rely on the Englishlanguage original when errors are found in the
translations, (2) the completion of patent examinations within 2 years, (3)
the elimination of pre-grant oppositions, (4) the establishment of a 12-month
grace period, and (5) the application of a doctrine of equivalents in patent
infringement suits. In the WIPO negotiations, the U.S. government has urged
the Japanese government to address these issues expeditiously.
U.S. COMPANIES' VIEWS ON CHANGES IN JAPANESE PATENT
SYSTEM UNDER HARMONIZATION
We asked the U.S. companies we surveyed for their views on whether
certain changes in the Japanese patent system under harmonization would
improve their patent experience in Japan. As shown in figure 6.1, the largest
number of companies (70 percent) said that the allowance of initial filing in
English (and the ability to rely on the English-language original when errors
are later found in the translations) would improve their patent experience in
Japan to a "great" or "very great" extent. Conversely, less than a third of
the companies said that eliminating pre-grant oppositions in Japan or adopting
a 3-year maximum deferred examination system would improve their Patent
experience to a great or very great extent.
Figure 6.1: Percent of Firms Viewing Potential Changes to Japanese Patent
System Under Harmonization as Improving Their Patent Experience
70% Allow native language filing
52% Complete examination by JPO within 2 years
49% Adopt 12-month grace period
42% Apply a doctrine of equivalents
29% Change to post-grant opposition system
29% Adopt 3-year maximum deferral of examination
CHANGES IN THE U.S. PATENT SYSTEM UNDER A HARMONIZATION TREATY
In 1990, the Secretary of Commerce established a commission, known as the
Advisory Commission on Patent Law Reform, to study ways to strengthen the U.S.
patent system to foster U.S. competitiveness. In addition to studying aspects
of the U.S. patent system, the commission examined harmonization issues
addressed in the GATT TRIPS proposal and the draft WIPO treaty. In September
1992, the commission issued a report to the Secretary of Commerce recommending
several changes in the U.S. patent system in the context of a harmonization
treaty, including (1) adoption of a first-to-file system, (2) publication of
patent applications after 24 months, and (3) adoption of a 20-year patent
term measured from the filing date.
We asked the U.S. companies we surveyed whether they would support or
oppose having the United States adopt a first-to-file system in the context
of a patent harmonization treaty. As shown in figure 6.2, 66 percent of all
the responding companies either "strongly" or "generally" supported adoption
of such a system, while 22 percent strongly or generally opposed it. Although
companies with more than 10,000 employees were most supportive of a move to
the first-to-file system, a majority of companies of all sizes supported the
adoption of such a system.
The issue of moving to a first-to-file system has generated considerable
controversy in the United States. Many individual inventors and small
companies are vigorously opposed to the first-to-file system because they
believe it would limit their ability to obtain patents and increase their
costs. Resistance to the United States' adopting a first-to-file system may
hinder patent harmonization efforts, as other WIPO member countries have said
that they would not be willing to make changes in their patent systems under
harmonization unless the United States agrees to move to the first-to-file
system.
Figure 6.2: Percent of Firms Supporting Adoption of First-To-File System
Strongly/ Strongly/
generally generally
support oppose Neutral
--------- --------- -------
All firms in survey 66% 22% 7%
< 500 employee firms 51% 25% 8%
501 - 10000 employees 63% 28% 7%
> 10000 employees 75% 16% 7%
Sixty-four percent of the responding companies also either strongly or
generally supported the United States' publishing patent applications after
18 to 24 months, while 21 percent were generally or strongly opposed.
Many companies told us that they would not support changes in the U.S.
patent system unless Japan agreed to make significant changes in its patent
system as part of a harmonization effort.
SUCCESS OF DRAFT HARMONIZATION TREATY MAY HINGE ON OUTCOME OF
GATT TRIPS PROPOSAL
GATT'S proposed TRIPS agreement and WIPO'S draft harmonization treaty are
complementary. Both accords share similar objectives--to strengthen protection
and improve enforcement of intellectual property rights, such as patents,
through multilateral mechanisms. The proposals are also mutually dependent.
According to GATT Secretariat officials, while TRIPS is not necessarily a
prerequisite for a ratffled WIPO treaty, a ratified GATT TRIPS would
strengthen WIPO'S draft treaty. However, according to several U.S. patent
attorneys, the success of WIPO'S harmonization treaty is highly dependent
upon the successful outcome of GATT TRIPS because if the latter fails there
would most likely be pressure to include some of the TRIPS' provisions in
the WIPO treaty. In the view of some attorneys and U.S. PTO officials, TRIPS'
failure could ultimately compromise the WIPO effort because, unlike GATT, the
WIPO negotiation has no concessions to offer developing countries. Moreover,
WIPO officials told us that they may not resume the harmonization treaty
negotiations until the Uruguay Round is concluded.
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Greg Aharonian
[email protected]
Source Translation & Optimization 617-489-3727
P.O. Box 404, Belmont, MA 02178
