Minutes of 2nd Meeting of Study Group
Concerning Patent in New Area and Competition Policy
- Time/Date: 2:00-4:00 p.m., Friday, April 26, 2002
- Place: Conference Room 1 of Secretariat Division of JFTC
- Topic: Conceivable issues related to business method patents and biotech patents
- Summaries: As follows:
- If we conceive, too broadly, the possibility of antimonopoly violation in connection with exercise of patent, we make too much interference with business. Especially, more attention is required in applying "abuse of dominant bargaining position" clause because the violation of this clause tends to be interpreted broadly.(1)
Regarding an excessive issue of patent infringement warning notices
- In the case where a patent holder issues warnings of patent infringement without positive proof, the problem gets more serious when the infringement warning notices are issued against not only the alleged infringer but also third parties who have transactions with the alleged infringer.
Regarding technology transfer organization
- What is Technology transfer organizations to universities is just as what is patent divisions to corporations. Technology transfer organizations do not enclose the technology transfer business relating research results created by universities or do not exclude other entities from transferring technologies produced by universities. [Therefore,] the case would be extremely rare where the business activities of technology transfer organization raise issues from competition policy perspective.
Regarding compulsory license system
- In order to facilitate active R&D in genome pharmaceutical area and link it to the creation of new medicine, it is important to have prior patent licensed to junior applicant [applicant who filed related patent later] under reasonable conditions when the later patent is a dependent invention. It is essential to invoke compulsory license system for the dependent invention, under section 92 of [Japanese] Patent Law, as a remedy, if the negotiation between prior [senior] patent holders and posterior [junior] patent holder breaks down.(2)
- Since invocation of compulsory license system has tremendous effect on incentive of innovation, it should be limited to the case where substantial issue exists in connection with competition policy.
- Under the Japan-US agreement in 1994, the compulsory license system is not supposed to be invoked except for redressing the practice determined to be anticompetitive.(3) It is difficult to say that a refusal to license is problematic from Antimonopoly Law perspective merely because [the junior patent] is dependent invention.
- Though the compulsory license system has never been invoked, the existence of compulsory license system itself can be a big weapon for potential licensee for negotiations.
- The actual situation of pharmaceutical manufacturers is that they hesitate to enter into areas where the issue of dependent relationship between prior invention and posterior invention tends to arise. It has some meaning to sort out the thoughts [on this issue] from competition policy standpoint before problems actually occur.
Regarding exercise of patent which has ground for invalidation
- With respect to the exercise of the patent which has an obvious ground for invalidation, it is possible to apply Antimonopoly Law and treat it as an abuse of right without having trial for invalidation [at JPO]. However, I doubt if this kind of case actually occurs.
- When an injunction of [patent] infringement is filed, [the defendant usually] files a trial for invalidation [with JPO]. However, ground for invalidation is "gray" [not obvious] in most cases. [Accordingly,] in ordinary license business, parties negotiate on the premise [that the ground for invalidation is not obvious] and settle the case.
- In many cases, the parties are driven by the desire to resolve the dispute without bearing costs, rather than the desire to treat the invalid patent as valid one. At the stage where invalidity [of the patent] has not yet determined, the cases are very limited to which Antimonopoly Law applies.
(Note): Brackets and footnotes are remarks of translator (Toshiaki Tada)
1. JFTC designates "Abuse of Dominant Bargaining Position" as one of the unfair trade practices. JFTC Notificaiton No.15 provides that; "Taking any act specified in one of the following items, unjustly in the light of the normal business practices, by making use of one's dominant bargaining position over the other party [would constitutes unfair trade practice]: (i) Causing the said party in continuous transaction to purchase a commodity or service other than the one involved in the said transaction; (ii) Causing the said party in continuous transaction to provide for oneself money, service or other economics benefits; (iii) Setting or changing transaction terms in a way disadvantageous to the said party; (iv) Other than any act coming under the preceding three items, imposing disadvantage on the said party regarding terms or execution of transaction; or (v) Causing a company which is one's other transacting party to follow one's officers of the said company…."
2. Section 92 of Japanese Patent Law provides that a non-exclusive license may be compulsorily established by statutory procedure and that arbitration decision of the Commissioner of the JPO as to compulsory license may be granted in the case that a patented invention is a dependent invention.
3. After the U.S. revived the Super 301 of the Trade Act in 1994, the U.S. criticized Japan that its IP protection was insufficient. One of the specific critics was against the compulsory license system for dependent inventions. In the same year, Japan and the U.S. entered into an agreement, Section 3 of which provided that, on and after July 1, 1995, JPO and USPTO would not grant arbitration decision of compulsory license for dependent inventions except for the correction of conduct determined to be anticompetitive under judicial/administrative procedure or the permission for public, non-commercial use.