[Pharm-policy] Experimental Use and Compulsory licenses in Japan

[James Love]

Patent Infringement Litigation in Japan
December 1997
Dr. Shoichi Okuyama
Okuyama & Co.


http://www.okuyama.com/liti.html


    3. Experimental Use

    Under Section 69(1), Patent Law, acts done for experimental or
research purposes are excluded from the patent protection. So, if you
are making a product or using a method for scientific test purposes, you
basically cannot infringe any patent. The purpose of Section 69(1) is to
promote scientific or technological developments. Therefore,
experimental manufacturing and sale for testing market or carrying out
experiments for the sole purpose of obtaining governmental approvals may
not be exempted. Currently, two sets of clearly contradicting court
decisions have been made concerning experimental use of patented drugs
by generic drug makers during patent terms solely for obtaining
governmental approvals for sale after the expiry of patents.

    On July 18, 1997, the Tokyo District Court rendered three decisions
in actions brought by Otsuka Pharmaceutical Co., Ltd. against several
generic drug makers. In those decisions, the 29th civil division of the
Court found no patent infringement for experiments done by generic drug
makers during the patent term. This is a complete reversal of earlier
decisions made by various courts. For example, in the Synthelabo case,
the Nagoya District Court had found patent infringement because the
experimental use exemption (Section 69, Patent Law) was not applicable
to the experiments which were done for the sole purpose of obtaining
governmental approval for future sale of old patented drugs and which
did not lead to scientific advances. The line of reasoning set out in
the Synthelabo cases has also been followed by the Kanazawa branch of
the Nagoya High Court and Osaka District Court. This issue is
interesting also in view of two recent decisions by the German Supreme
Court.

    Also, in this connection, preparation of drugs under prescriptions
given by medical doctors would not constitute a patent infringement as
provided in Section 69(2), Patent Law. 



    4. Compulsory Licenses


    4. Compulsory Licenses

    The Patent Law allows the granting of compulsory licenses for
implementing dependent, i.e., related inventions.(19) It also provides
for compulsory licenses for the use of inventions that have not been
used for an extended period of time(20) as well as compulsory licenses
on patented inventions in the interest of the general public.(21)

    When a patent invention is implemented, such use may result in the
implementation of another patented invention which has a prior filing
date and which is owned by another party. This type of situation occurs
when a patent is granted on an improvement on another patented invention
with an earlier filing date. The later filed invention is called a
dependent invention. The implementation of the dependent invention would
constitute an infringement on the basic patent. In order to use the
dependent invention the patentee has to obtain a license on the basic
patent. When such license is not available, however, the dependent
invention cannot be utilized,(22) impeding further development of
technology and industry. Therefore, the Law provides procedures for
granting compulsory licenses on the basic invention by going through a
prescribed arbitration process. 

    The Law also provides for the granting of similar licenses when a
patented invention has not been utilized over an extended period of
time, so as to encourage patentees to utilize their patents. Compulsory
licenses may also be granted when it is clear that the public will enjoy
large benefits if an unused patent is implemented.

    Several applications have been filed to initiate the arbitration
process; however, no compulsory licenses of any kind have been granted
thus far. Also,     under one of the two bilateral agreements between
Japan and the U.S. respectively concluded in January and August 1994, it
has now become practically impossible to obtain a compulsory license to
use a patented dependent invention if a basic patent exists.(23)



19. Section 92, Patent Law. 

20. Section 83, Patent Law. 

21. Section 93, Patent Law. 

22. Section 72, Patent Law. 

23. The August 1994 agreement stipulates that: "Other than to remedy a
practice determined after judicial or administrative process to be
anti-competitive or to permit public non-commercial use, after July
1995, the JPO is not to render an arbitration decision ordering a
dependent patent compulsory license to be granted." 

-- 
James Love, Consumer Project on Technology
v. 1.202.387.8030, fax 1.202.234.5176
love@cptech.org, http://www.cptech.org