New Intellectual Property Policy for Pro-Innovation

Transcription

1 Provisional English Version Draft Report of Policy Committee on Innovation and Intellectual Property New Intellectual Property Policy for Pro-Innovation Intellectual Property System as Global Infrastructure June, 2008 Policy Committee on Innovation and Intellectual Property Japan Patent Office

2 INTRODUCTION...3 I. REALIZATION OF A SUSTAINABLE GLOBAL PATENT SYSTEM - TOWARD CONSTRUCTION OF A VIRTUAL GLOBAL PATENT OFFICE Rapid increase in the number of patent applications throughout the world and the international work sharing... 6 (1) Rapid increase in the number of patent applications throughout the world... 8 (2) Circumstances at the Japan Patent Office (3-1) Circumstances in foreign countries (the United States of America) (3-2) Circumstances in foreign countries (China) (4) Enlargement of an international cooperation - toward realization of "Virtual Global Patent Office" Current Status of the Japan Patent Office and Future Efforts ~Building of an Examination System Corresponding to Various Needs ~ (1) Future outlook for Application Trends (2) In order to realize an Examination System Corresponding to Diversifying Needs of Applicants (3) The division of roles between the Public and Private sectors Necessity of patent harmonization (1) Background and current state of discussion concerning harmonization of patent systems. 56 (2) Promotion of international patent harmonization Partnerships with Developing Countries for Establishment of Global Intellectual Property Infrastructure (1) Circumstances in developing countries (2) Diversified views on intellectual property among countries (3) Towards the establishment of the intellectual creation cycle in developing countries - from the viewpoint of linkage between intellectual property and business II. REDUCING THE AMOUNT OF UNCERTAINTY IN THE PATENT SYSTEM Establishment of a patent examination mechanism emphasizing quality and having higher predictability and transparency (1) Arms race for patents (2) Trends in intellectual property in the U.S (3) Correspondence to different types of innovation structures in different industries (4). Revisions of the patent system and practices (5) Need for international harmonization (6) Status of examination, appeals and trials, and litigation (7) Aiming at a patent examination mechanism emphasizing quality and having higher predictability and transparency (Reference.1) Argument of patent quality Quality from various points of view (Reference 2) Proper examination (Reference 3) Measures for quality management in patent examination PCIIP MEMBERS LIST SCHEDULE OF PCIIP MEETINGS

3 Introduction Changes in the Environment Surrounding Intellectual Property In 1997, the Japan Patent Office (JPO) set up the Commission on Intellectual Property in the Twenty-first Century and set out a pro-patent policy. Following this, Japan has been actively promoting the pro-patent policy to make Japan a country built on intellectual property. Its promotion efforts include the adoption of Intellectual Property Policy Outline and enactment of the Intellectual Property Basic Act in 2002, setting up of the Intellectual Property Policy Headquarters in 2003, and the establishment of the Intellectual Property High Court in Recent years have witnessed, however, drastic changes in the environment surrounding the intellectual property (IP) system such as economic globalization, sophistication of high-technology, and development of open-innovation. Against this backdrop, active discussions have been held on a desirable IP policy all around the world. In the U.S., for instance, various discussions have been held in industrial and academic circles about enhancement of patent quality, upsurge in filings, and increase in litigation costs. These discussions have led to a report issued by the Federal Trade Commission (FTC) in October 2002 and a report published by the National Research Council (NRC) in April In addition, the U.S. Supreme Court has issued a series of epoch-making decisions. And the Congress is considering Patent Reform Act of In Europe, the European Patent Office (EPO) published the ideas of the future IP system in the world. Also, the World Intellectual Property Organization (WIPO) and other international fora have been having animated discussions about roles expected of IP for the growth of developing nations. Establishment of the Policy Committee on Innovation and Intellectual Property (PCIIP) Japan has been working to encourage innovations based on its pro-patent policy. A discussion from a global perspective on a new IP policy that can keep up with the recent changes is essential to further promote innovations in the drastically changing environment surrounding the IP system. For this purpose, the Policy Committee on Innovation and Intellectual Property (PCIIP) was set up on December 18, 2007 lead by Mr. Tamotsu NOMAKUCHI, Chairman, MITSUBISHI ELECTRIC CORPORATION. The Policy Committee discussed Japan s desirable IP policies from different angles. Then, in accordance with the basic concept of the pro-patent policy to encourage innovations and with the aim of developing a new pro-innovation IP system responsive to changes in the environment surrounding the IP system, the Policy Committee published a study report containing the following goals. I. Realization of a Sustainable Global Patent System II. Reducing the Amount of Uncertainty in the Patent System III. Development of an Infrastructure for the Promotion of Innovation I. Realization of a Sustainable Global Patent System In 2005, the number of patent filings in the world reached about as many as 1.66 million per year. Under such circumstances, to efficiently protect one 3

4 invention as global IP has become increasingly important. Therefore, it is necessary to construct a framework of international collaboration that can serve as a sort of virtual global patent Office from the viewpoint of applicants. Today, more and more economic activities have come to be carried out on a global scale. With Japan s efforts alone, the demand of IP-system users cooperation among Patent Offices around the world, it is necessary that they should not only make continuous efforts to enhance patent quality but also share the goal of higher quality patents. Therefore, lowering uncertainty at the stages of acquisition and protection of patents as much as possible and for reducing more business risks than ever, the maintenance and enhancement of patent cannot be satisfied. Instead, international quality are required. For this purpose, in the patent collaboration among IP Offices by which users can efficiently protect one invention as global IP has become increasingly important. It is an objective of the PCIIP to develop recommendations of IP policies from a global perspective not closed IP policies within Japan. Under its policy objective, the JPO is also required to more expeditiously and efficiently examine patent examination system, it is necessary to provide a more highly transparent and predictable patent examination system by enhancing the transparency of the establishing process of the Examination Guidelines and by conducting productive discussion through the processes. Chapter II sets forth policy recommendations paying attention to what policies should be adopted to applications while flexibly responding to the ensure a highly transparent and predictable patent diversifying needs of applicants. Chapter I of the PCIIP report sets forth some system for those who work in the field of IP covering the stages from a patent filing to a litigation. The policy proposals formulated from a global keys to a stable patent system are: a) harmonization perspective concerning a desirable global IP policy, how IP Offices in the world should collaborate to of international systems and practices thereof, and b) appropriate response to ever-changing innovations. implement that policy, what contributions the JPO can make, and possible measures to satisfy diversifying demands of applicants. III. Development of an Infrastructure for the Promotion of Innovation The environment for creating innovations has been II. Reducing the Amount of Uncertainty in changed by advanced technologies and the the Patent System The patent system is a necessary infrastructure for development of information technology (IT) in diverse ways. Responding to such a change in the encouraging innovations. However, there are some environment surrounding innovation, the open who express their concern that a lower quality patent might lead to an increase in the number of patent disputes and thereby can be a factor to increase business risks. Lower quality patents are regarded as a factor to cause such problems as those named as patent thickets or patent trolls. Some view such patents as disincentive discouraging innovations. On the other hand, to deepen international innovation, in which profit is pursued by licensing technologies to outside entities or productivity is promoted by utilizing outside technologies, is spreading in place of conventional perpendicularly vertical-integrated type innovation model. In an open-innovation environment, IP has served a role as a measure to enhance smooth circulation of knowledge and technology. It is also essential to 4

5 efficiently acquire the useful knowledge/information that exists in different parts of the world. Chapter III in this report sets forth some policy recommendations on how an infrastructure for promoting innovations that correspond to the open-innovation environment should be developed. Discussion Process in the PCIIP In its study meeting and working-group meeting, the PCIIP asked for public comments in Japanese and English with the view to learning the most advanced ideas from around the world to conduct discussions in an interactive manner. Shortly after they were established, the PCIIP widely gathered public comments for the first time on the analysis of recent surroundings of the IP system as well as challenges to be tackled to develop a new IP system that can keep up with these surroundings. It received various comments not only from Japan but also from abroad including foreign IP Offices, IP-related organs, and overseas companies. The PCIIP has also conducted an in-depth study on the relationship between innovation and IP policies through opinion exchanges with more than 100 Japanese and foreign enterprises. Based on these comments, the PCIIP has been conducting multifaceted discussions. The PCIIP plans to gather public comments for the second time when it comes to the stage to compile a set of policy recommendations. Opinions expressed by the Policy Committee, its working group members, the public, and experts are utilized as described below. Comments of PCIIP members Public Comments Experts Opinions Citation from Publications From Pro-Patent to Pro-Innovation From a historical viewpoint, the agricultural society grew into industrial society, which is followed by knowledge society. Intellectual property policies in the industrial society have been swinging between anti-patent and pro-patent policies. Today, we are evolving to the knowledge society, which are changing the intellectual property value in terms of quality compared to that in the industrial society. Therefore, it is necessary to promote the pro-patent policy with emphasis on quality much more and address intellectual property policy for pro-innovation. (Mr. Hisamitsu Arai, former Secretariat-General of IP Strategy Headquarters/former Commissioner of the JPO) 5

6 I. Realization of a sustainable global patent system - Toward construction of a Virtual Global Patent Office 1. Rapid increase in the number of patent applications throughout the world and the international work sharing Where one invention efficiently becomes global intellectual property Efforts toward construction of a Virtual Global Patent Office A. The rapid increase in patent applications caused by globalization and the needs of applicants responding to globalization Recently, economic globalization is advancing and technology is becoming more sophisticated and complex. Because of the growth of open innovation, an innovation environment where R&D and product development are performed with external resources is becoming common. Against this background, the number of patent applications globally increased to 1.66 million a year in 2005 and the rapid increases of patent applications is occurring especially in the U.S. and China. In order to deal with increasing applications, examiners have been increasing in the U.S. While patent applications are increasing continuously, candidates in the presidential elections are addressing patent reform issues. The increases of patent applications are seen in developing countries, as well, indeed, the rapid increase in the number of patent applications rapidly increases is a global occurrence. It is getting important to enable applicants to efficiently protect one invention as global intellectual property. B. Necessity of promotion of work sharing ~ In order to respond to User Needs to protect one invention as global intellectual property When applicants want early protection as a global intellectual property, it is desirable that an expeditious examination be performed according to a simple procedure. This can be achieved by promoting work sharing. In the framework of work sharing, the examination results of the Office of First Filing become available in the Office of Second Filing. This leads to an expeditious examination in the Office of Second Filing. Therefore, it is effective to deepen international cooperation and promote work sharing in order to give applicants the benefits of efficient protection. Work sharing is an effective way to deal with the increasing workload accompanying the increase of applications from foreign countries in Japan. C. Challenges to promoting work sharing corresponding to User Needs Since patent law and patent guidelines have not been sufficiently harmonized internationally, patent examination quality including examination judgment is not consistent and examination timing is not uniform. Therefore, the effectiveness of utilization of examination results of other offices is limited. In order to make work sharing function effectively, it is necessary to enhance international consistency in patent examination quality including examination judgment at a high level and to improve the examination system to ensure timeliness of examinations corresponding to User Needs. Enhancing the effectiveness of work sharing like this is a task. Work sharing is performed or considered among trilateral offices and other major offices. In order to enable applicants to be more efficiently protected globally it is important to encourage more countries to participate on a voluntary basis. In this regard, the role of WIPO is important. D. Toward construction of a Virtual Global Patent Office To make work sharing function effectively, (a) Harmonization of patent systems, (b) Harmonization of examination guidelines, (c) Consistency in examination quality including examination judgment, and (d) Consistency in the search environment should be promoted. With regard to (b) and (c) above, it can be expected that mutual trust will be built, which will lead to a virtuous cycle between the further enhancement of consistency in patent quality at a high level and the enhancement of efficiency in the work sharing by actually accumulating a store of examination practices of work sharing. By promotion of the above harmonization and the above consistency, an improvement in predictability for patent acquisition and a reduction in procedure costs can be achieved. Work sharing is currently mainly performed or considered among Trilateral Offices 1 and five offices 2. It is important to encourage more countries capable of performing work sharing to voluntarily participate on the premise of the building of trust. The more countries participate, the more globally applicants will protect inventions efficiently. It is necessary to construct such a more substantial framework of international cooperation which can be referred to as a Virtual Global Patent Office as a result of these efforts. 1: The Trilateral Offices of the Japan Patent Office, the US Patent and Trademark Office (USPTO) and the European Patent Office (EPO) has held the Trilateral Conference every year since : The Five Offices of the Japan Patent Office, the US Patent and Trademark Office (USPTO), the European Patent Office (EPO), the Korean Industrial Property Office (KIPO) and State Intellectual Property Office of the People s Republic of China (SIPO) held the five offices conference in May 2007 for the first time. The Trilateral Conference was held among JPO, USPTO and EPO or among JPO, SIPO and KIPO, respectively, before that. However, the five offices conference was a first time event. 6

7 Toward Virtual Global Patent Office Where one invention efficiently becomes global intellectual property <Outline> With the progression of economic globalization, it is becoming more important for applicants to efficiently protect one invention as global intellectual property. Therefore, we need (a) to promote the international harmonization of patent law and examination guidelines and global consistency in patent quality and search environment in order to improve patent predictability for applicants, (b) to promote the work sharing for examinations among patent offices in order to respond to the needs of applicants who desire to efficiently protect their invention as global intellectual property. By pursuing the above efforts, patent offices in each country are expected to function as a "Virtual Global Patent Office for applicants. Toward a Virtual Global Patent Office where one invention efficiently becomes global intellectual property By (a) improving patent predictability globally and (b)acceleration of examination in each countries, electronicallyconnected patent offices in each different countries can play the role of a Virtual Global Patent Office.. (a) For applicants, patent predictability before filing of a patent application improves. For applicants who desire to acquire patents globally, patent predictability before filing of a patent application will improve, and costs for searches before filing will decrease, as well. (b) For applicants, more efficiency can be achieved in patent prosecution, which is carried out after filing of a patent application. With respect to patent prosecution, which is carried out after filing, since examination results of the Office of First Filing can be utilized in the Office of Second Filing, simplification of patent prosecution and acceleration of examination is expected. International patent harmonization (to be described later) Harmonization of Patent Law in different countries, such as a change from a first-to-invent principle to a first-to-file principle in the US., is necessary. International harmonization of patent examination standards Harmonization of patent examination standards for judgment of patentability in different countries is necessary in this era of highly-developed technology. Global consistency in patent quality (to be described later) Mutual trust among patent offices is to be developed where each application is appropriately examined under examination standards and the result of such an examination is mutually utilized among countries. Global consistency in the search environment Further enhancement of the connection by using IT between patent offices in different countries is necessary. Virtuous cycle of international patent and promotion of the work sharing harmonization which is promoted by which is accelerated by accumulation of an examination experiment harmonization. through work sharing Promoting the work sharing for examination among the Patent Offices in the world It is necessary to expand the network of examination cooperation among countries around the world on a voluntary basis by deepening the work sharing at various levels of the examination stage with WIPO playing a main role. (i) Use the final examination results of the Office of First Filing in the Office of Second Filing. Further expansion of the Patent Prosecution Highway among developed countries. (ii) Use the judgment in the first office action of the Office of First Filing JP-FIRST(JP-Fast Information Release Strategy), in which results in the first office action in Japan are released more quickly. SHARE proposal by the U.S. Quicker release of the national phase examination results of a PCT application under the current PCT system to the rest of the world corresponding to the needs of applicants. (iii) Utilize the search results of prior art made in the Office of First Filing Utilize a PCT international search report under the current PCT system. (iv) Electronic exchange of documents with the information system Utilize an electronic exchange of priority documents among developed countries Global electronic exchange of documents under a framework of WIPO 7

8 (1) Rapid increase in the number of patent applications throughout the world In the backdrop of globally expanding investment on R&D and the globalization of world economies, the number of patent applications in the world has been rapidly increasing. In 2005, it reached approximately 1.66 million a year. This reveals a growing awareness of intellectual property and a rise in the level of protection as well as the expansion and globalization of innovation. In accordance with a growing demand for global protection of intellectual property, there was a demand for a more substantial framework of international cooperation - a Virtual Global Patent Office - which would provide global protection for an invention efficiently by (a) Harmonization of Patent Systems, (b) Harmonization of Examination Guidelines, (c) Consistency in Examination quality including that of examination judgments, and (d) Consistency in the search environment. Number of world patent applications The number of world patent applications has been rapidly increasing. The year 1995 recorded an annual total of approximately 1 million applications, but in just 10 years, the number reached approximately 1.66 million, in About 40% of the applications throughout the world are filed by nonresidents. (See Reference I-1) from developing countries will increase. Causes for the rapid increase (b): Appreciation of patents as financial assets 1 Such as being considered as an investment choice, patents are gaining value as financial assets, 2 which has caused an increase in the number of patent applications. Causes of the rapid increase (a): Expansion of R&D and globalization of economies 1 Due to an expansion of investment on R&D, the number of domestic applications by residents is increasing rapidly. In addition, an increasing number of patent applications are being filed from outside of the country by nonresidents, with the globalization of economies. Since 1995, when TRIPS was enacted, applications to developing countries have been on the rise, as well. It is expected that the number will increase even more as the economies of those countries develop in the years to come. It is also expected that the number of applications to developed countries by applicants 1 Referring to the report, A European perspective on global patent workload, by Ciaran McGinley (Head of the President s Office) 8 Causes for the rapid increase (c) Change of the Game -Patents for defense purposes- Further, a rapid increase in the number of patent applications may be attributed to the fact that companies acquire patents only to protect themselves from their competitors (will be mentioned later), and holding more and a wider variety of patents has become one of the rules of the game, which is said to lead to a kind of arms race 3. Column: IT enterprises in Europe and the US and their acquisition of 2 Financial assets here refer to properties that can be invested on R&D. In this respect, there is a public comment, Patents, in particular, serve as the currency of open innovation, by Microsoft. They have come to be treated as financial assets as we acquire investment money for R&D by use thereof. 3 SURVEYS: PATENTS AND TECHNOLOGY. The arms race. The Economist, Oct. 20, 2005

9 patents We are in the middle of an explosion in the use of IP to try to protect market positions, says Intel s Mr Sewell. Pressed on why his company is pushing to obtain more and wider patents, Henning Kagermann, the boss of SAP, a large German software firm, exclaims in exasperation: These are the rules of the game! There is certainly a level of mutually assured destruction among the big companies. If you build up your patent portfolio, I build up mine nukes pointing at each other, says Mr Papadopoulos at Sun Microsystems. But he sees it as an advantage rather than a problem. Nokia has over 12,000 existing patents globally, and 10,000 innovations in the process of being patented. It files around 1,500 applications a year. IBM has around 40,000 patents and is granted 3,000 more every year, which has made it the number one recipient at America s patent office for the past 12 years. HP last year ranked fourth 4 in America, with 1,783 patents; worldwide, it holds around 25,000. Microsoft has recently sprinted into the market, with around 10,000 applications pending. (Source: SURVEY: Patents and technology. The arms race. The Economist Oct 20th 2005) A European perspective on global patent workload For first filings the main driving forces are R&D investment, me-too behaviour and education. Globally, ever increasing resources in R&D are being dedicated by both governments and businesses. We also see a very significant global increase in the number of qualified scientists and engineers, particularly from the mega-populous China and India. For second filings, globalization is the main driving force. Viewed another way, one might be tempted to say that TRIPs is working, For both types of filings, the emergence of patents as a financial asset is a significant driver. US courts (under the Hilmer doctrine) refuse to acknowledge unpublished prior art in foreign languages. This encourages foreign applicants to file as quickly as possible directly at the USPTO. another encouragement for early foreign filings to the USPTO is the US first to invent system Another driving force is the extraterritorial impact the USPTO has when it grants software and business method patents. In an interconnected internet world, software patents granted in one key jurisdiction will have a global impact. (Source: Ciaran McGinley A European perspective on global patent workload 4 The HP ranked fourth in FY 2004 and tenth in the latest FY Intellectual Asset Management April/May 2007). Mr. Ciaran McGinley is Head of the President s Office at the European Patent Office in Munich World trends of sectoral applications The number of applications is outstanding, especially in the fields of information technology and electronics. In particular, the field of information technology had the highest number of applications (a total of 141,357) filed in The fields of electronic components, electric engineering and electrical energy (a total of 127,969) had the second highest number of applications in the same year. On the other hand, in regards to the rate of growth, the field of medical care, as well as that of electronics and information technology, was outstanding. In statistics, the highest rate of growth in world patent applications in recent years has been seen in the field of medical devices (a 32.2% increase). The field of audio-visual technology showed the second highest rate of growth (a 28.3% increase), followed by that of information technology (a 27.7% increase). The number of applications filed in the field of semiconductors in 2004 increased by 22.5% from that of Further, the numbers of applications in the field of telecommunications and audio/visual devices remained high at 115,494 and 112,197, respectively. On the other hand, the number of applications filed in recent years decreased in the field of material processing, fibers, and paper (a 11.2% decrease) and the field of polymers (a 9.5% decrease). It can be said that the rise in the number of global applications was led by the technical field, such as the biotechnology and electronics and information technology fields, where technological innovation is active. (See Reference

10 I-2) Framework of global cooperation required due to the increase in the number of applications The growing number of patent applications worldwide mentioned above reveals a growing awareness of intellectual property and a rise in the level of protection, indicating steady success for the intellectual property policy so far. Under such circumstances, it becomes necessary for applicants to efficiently protect one invention as global intellectual property. It is also necessary for patent offices to enhance patent examination efficiency to deal with the increase of examination workload of applications from foreign countries. Therefore, deepening of the international examination cooperation and construction of a more substantial framework of international collaboration - a Virtual Global Patent Office - which would efficiently provide global protection for an invention by (a)harmonization of Patent systems, (b) Harmonization of Examination Guidelines, (c) Consistency in Examination Quality including that of examination judgments, and (d) Consistency in the search environment are required. Viewpoint of global governance in the field of intellectual property A perspective of global governance needs to be introduced into the field of intellectual property, as well. If Japan is to take an active role, it needs to present principles. However, considering reactions from some countries to pro-patent policy, it would be better to use expressions such as construction of a sustainable global patent system. Principles need to be made so that they can be shared with countries in the world. (Comment of PCIIP member) The meaning of Globalization in the discussion of intellectual property The meaning of globalization in the field where goods are transferred across borders is different from that in the field where technology is transferred across borders. Though it is easy to comprehensively understand various kind of globalization from a single viewpoint, a comprehensive understanding of globalization may cause a misunderstanding of the essential meaning of globalization. Focusing on each globalization independently makes for an interesting discussion. It seems to be meaningful to study the influence of globalization in the field of patents in the light of the difference from the influence of globalization in the field of trade. (Comment of PCIIP member) Users Viewpoint JPO should make efforts, useful for users business and R&D, from the viewpoint of users and should play an active role in world discussions of intellectual property. (Comment of PCIIP member) Philosophy of patents and world standards Clarifying the philosophy of patents and that the patent system is an official mechanism for humans to share information and promoting it as a world standard are required. (Comment of PCIIP member) Pro-patent policy corresponding to globalization Now that the Japanese market has matured with its decreasing population, it has become necessary for Japan to make forays into oversea markets. A pro-patent policy corresponding to globalization plays an important role for this purpose. (Comment of PCIIP member) 10

11 Reference I-1 (million) Worldwide Patent Filings by Year of Filing Patent applications filed by non-residents Patent applications filed by residents Non-residentnt approx.40% Reference I (Source) WIPO Patent Report: Statistics on Worldwide Patent Activity (2007 Edition) Technical Field Change compared with 2000 Ⅰ Electricity Electronics Electrical devices, electrical 1 engineering, electrical energy 113, , , , , % 2 Audio-visual technology 87,479 94,220 89,349 94, , % 3 Telecommunications 102, , , , , % 4 Information technology 110, , , , , % 5 Semiconductors 64,049 71,367 68,082 67,271 78, % Ⅱ Instruments 6 Optics 71,697 80,569 78,809 79,411 89, % Analysis, measurement, control 7 technology 102, , , , , % 8 Medical technology 55,813 59,415 61,569 72,229 73, % 9 Nuclear engineering 5,920 5,922 5,820 6,029 6, % Ⅲ Chemistry Pharmaceuticals 10 Organic fine chemistry 36,625 36,137 37,447 37,547 34, % 11 Macromolecular chemistry, polymers 46,698 46,728 43,918 44,073 42, % 12 Pharmaceuticals, cosmetics 64,704 69,223 73,673 78,772 75, % 13 Biotechnology 41,063 42,580 47,208 48,065 40, % 14 Agriculture and food 19,857 20,822 22,873 24,187 22, % Chemical and petrol industry, basic 15 materials chemistry 36,893 36,841 36,389 35,353 33, % 16 Surface technology, coating 35,215 37,917 37,343 38,490 40, % 17 Materials, metallurgy 38,087 39,985 36,625 37,100 35, % Ⅳ Process engineering 18 Chemical engineering 50,339 50,347 48,810 49,362 46, % 19 Materials processing, textiles, paper 54,826 55,865 52,651 50,082 48, % 20 Handling, printing 77,756 77,910 75,529 77,089 84, % Agricultural and food processing, 21 machinery and apparatus 20,740 20,587 21,093 21,059 21, % 22 Environmental technology 20,016 20,218 19,248 18,773 18, % Ⅴ Machinery Mechanics Transport 23 Machine tools 38,454 39,563 35,664 34,834 36, % 24 Engines, pumps, turbines 38,682 41,554 40,733 42,488 46, % 25 Thermal processes and apparatus 27,005 27,382 26,196 26,066 26, % 26 Mechanical Components 52,608 53,708 51,479 52,764 56, % 27 Transport 68,833 70,112 67,185 72,146 79, % 28 Space technology and weapons 5,418 5,414 5,370 5,811 5, % Ⅵ Consumer goods Civil engineering 29 Consumer goods and equipment 30 Civil engineering, building, mining 84,889 87,505 85,395 88,112 95,193 59,601 59,056 56,412 57,319 59, % -0.6% (Source) WIPO Patent Report: Statistics on Worldwide Patent Activity (2007 Edition) 11

12 (2) Circumstances at the Japan Patent Office The number of patent applications in Japan has been declining slightly in recent years. Since industry reorganization has advanced in recent years, the number of applications is being controlled and suppressed, despite accelerated investment in R&D under the influence of M&A. In addition, more than a few enterprises have been adopting the patent strategy of valuing quality above quantity. However, after such industrial reorganization settles down, there is a possibility that the number of applications will once again change from being on the decline to being on the rise due to the expansion of R&D, depending on the patent strategies of Japanese enterprises in the years to come. Besides, while the number of applications itself is slightly decreasing, the workload for examiners (the number of requests for examination x number of claims) is on the rise. Considering that the workload of foreign patent applications, in particular, has been increasing remarkably, how to make examination for foreign applications more efficient is becoming important. The number of patent applications in Japan As to the number of applications in Japan, it increased from approximately 370,000 in1995, hit a peak of approximately 440,000 in 2001, and then declined to approximately 430,000 in Recently it tends to slightly decline. Burgeoning like in the US is not seen. Further, although it has been declining slightly in recent years, the workload, in reality at JPO, tends to rise as we will mention later. (See Reference I-4) Background of application trends and what is to come In Japan, we have seen that a reorganization of industries has been advancing mainly in fields such as the electrical and electronics industries, where selection and concentration of business have proceeded. In addition, in the process of catching up with conventional European and American enterprises, many Japanese companies are changing their strategy for intellectual property from aiming at acquisition of a large volume of patents, mainly for the purpose of the protection of improved manufacturing technology and support of product development to follow competitors, to the acquisition of beneficial and high-quality patents when carrying on their core business. These can be the reason why the number of applications has been prevented from increasing, resulting in a slight decrease thereof. Besides, along with the globalization of the economy, in the midst of a growing trend to promote establishing rights in countries overseas, each of the enterprises seems to be shifting emphasis from domestic applications to overseas applications, from the viewpoint of their distribution of a limited budget for intellectual property. All of these may be reasons why the number of applications tends to decline. The current trend is revealing a slight decrease. However, because Japanese investment on R&D is still expanding, it may be possible that the number of applications will shift from being decreasing to being increasing once again after the reorganization mentioned above and changes of the patent strategies of Japanese enterprises comes to be completed, although it will depend on the patent strategy of Japanese enterprises in the days to come. Analysis based on workload Further, in Japan, it is not until a request for examination is made by applicants that patent examination is conducted. Therefore, in order to grasp the actual picture on the size of the 12

13 workload placed on examiners, it is necessary, for example, to make an analysis based on the number of requests for examination. In addition, it is observed that, as to the applications from overseas, the number of claims per application tends to be rather high. When we convert the number of patent applications made to Japan to the number of requests for examination x number of claims, it is found that the workload for applications filed to Japan from overseas applicants has increased sharply. (See Reference I-5) Based on this, it can be said that it is also important to make the examination process of applications from overseas more efficient by international examination cooperation. Past efforts of the Japan Patent Office The Japan Patent Office has been tackling a progressive approach, which we have never seen at abroad or in another field in Japan, for the purpose of accelerating the patent examination process. For example, we have been the first in the world to introduce the outsourcing system of the prior-art search, achieved management of a more efficient operations system through the promotion of paperlessness based on the advanced information system, and adopted fixed-term examiners. As a result of the development of outsourcing and introduction of the advanced information system, the number of examinations processed per capita is more than twice that of the United States Patent and Trademark Office and more than four times that of the European Patent Office. However, considering the increasing number of requests for examination in recent years, further streamlining is being expected. In particular, since Oct, 2001, when the period of request for examination was shortened from 7 years to 3 years, there has been unevenness in the number of requests for examination, which resulted in a sharp increase of the number of requests for examination. (See Reference I-3) So as to correspond to this increase, we have hired about 500 additional 5-year, fixed-term examiners since From now on, it will be necessary not only to strengthen our past efforts and to further enhance the efficiency by introducing a new information system, but also to promote the efforts such as the international work sharing in order to accelerate the examination of foreign applications. Considering the increasing number of foreign applications, it is important to answer to the needs of applicants who require the immediate protection of patents at home and abroad through such international work sharing. 13

14 Reference I-3 Number of first examinations and requests for examination 50.0 Ten thousand applications forecast year Number of first examinations Number of requests for examination Sharp increase in the number of requests for examination due to the length of the period needed for request of examination being shortened Number of requests when the request period is 3 years Number of requests when the request period is 7 years Oct,

15 Reference I-4 (3) Application from one of trilateral countries to Japan (*) (4) Domestic application Japan (1) Application from one of non-pentalateral countries to Japan (2) Application from South Korea or China to Japan T en thous and applic ations (7) Application from Japan to one of trilateral countries (*) -10 (6) Application from Japan to South Korea or China (5) Application from Japan to one of non-pentalateral countries (1) From one of non-pentalateral countries (2) From South Korea or China (3) From one of trilateral countries (*) (4) Domestic application (5) To one of non-pentalateral countries (6) To South Korea or China (7) To one of trilateral countries (*) (Source )Prepared by the JPO based on WIPO Statistics. Correction was made on applications in Japan from applicants from offices other than the pentalateral offices (up to 2003) due to the incompleteness of data on PCT applications. Trilateral countries are Japan, the U.S. and EPC states. Pentalateral countries are Japan, the U.S., EPC states, South Korea and China. * Regarding above (3), (7), domestic application in Japan is not included. Reference I-5 Transition of workload (Number of requests for examination x Average number of claims) (Ten thousand) 250 Number of claims Year of filing Period required for requests for examination was not terminated as to the years 2000 and 2001 (period of 7 years applies to requests made before Sep. 30, 2001) (1) Applications from overseas (2) Domestic applications only (3) Applications from Japan Based on data collected by the system within the JPO 15

16 (3-1) Circumstances in foreign countries (the United States of America) Under such circumstances that the number of patent applications has increased globally, in the U.S., as well, the number of patent applications has rapidly increased. Besides an increase in R&D investment, there continued to be reasons unique to the U.S. In order to efficiently examine the rapidly increasing number of applications, the Unite States Patent and Trademark Office also makes efforts for strengthening the examination system. The number of patent applications in the U.S. The number of patent applications in the U.S. both by residents and by nonresidents is rapidly increasing. The number of applications, which was around about 200,000 per year in 1995, has increased by about twice as much within only 10 years and has become about 400,000 per year in (See Reference I-6) Further, according to the most recent data 5, the number of applications has become about 440,000 6 per year in Cause of the rapid increase In the U.S., investment in R&D has increased year by year and this intensive investment in R&D is considered to be a driving force in the increase of patent applications. Further, as the U.S. occupies a large portion of the world economy and leads world economic development, it has an important position as a market and a production base. This is considered to increase the needs for protection and enforcement of intellectual property in the U.S. Further, in the above-described report of the head of the President s Office at the European Patent Office, the following factors were suggested as reasons for this increase in the number of applications in the U.S.: (a) Unique elements 7 of the U.S. patent system cause enterprises to file applications in the U.S., (b) Compared with other offices, the USPTO grants patents for a wider range of subject matter, including those for software or business models. (c) U.S. enterprises put themselves in a more advantageous position than that of competitors by having a large patent portfolio. Further, patents coming to possess a "financial asset"-like value such as an investment object not only in the U.S. can also be suggested as a factor in the increase in the number of applications. Further, there is a perception that since a patentee is more likely to prevail in some district courts of the U.S., the U.S. tends to be selected as a place for lawsuits. Such a perception might be considered to increase the number of patent applications in the U.S. However, with respect to such a point, the patent system in the U.S. is being changed, and in the presidential election, as well, each of the candidates refers to improvement of patent quality and transformation of the patent system. For example, Barack Obama of the U.S. Senate has stated, Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to 5 United States Patent and Trademark Office Performance and Accountability Report Fiscal Year The number of applications is only for Utility Patents 7 For example, since the exclusion of subsequent applications under Section 102(e) of the US Patent Law does not enter into effect until the filing date of corresponding US application (Hilmer 16 Doctrine), foreign applicants wish to file quickly, even if making a Second Filing. When the effect of priority is not limited, during the period (within one year from the filing date in the Office of First Filing) in which priority can be claimed, applicants can sufficiently consider whether foreign filing is necessary or not.

17 citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. 8 Further, John McCain of the U.S. Senate has stated, [T]he U.S. patent system should change to improve patent quality and reduce litigation. 9 (See Reference I-9) Countermeasures by the USPTO This rapid increase in the number of applications in the U.S. has prolonged the "total pendency " (See Reference I-7), and efforts for reducing the total pendency and providing a secure patent system have been continued. For example, the USPTO takes measures to hire examiners on a mass scale and to provide them with specialist training. Further, in the USPTO Strategic Plan, the expansion of telework and establishment of regional USPTO offices are listed to provide high quality examination of patent applications. However, it is said that a considerable number of the newly hired examiners leave the job within a short time. (See Reference I-8) production goal as one of the primary reason why examiners may choose to leave USPTO. (See Reference I-8) This issue has also been taken up in Congress; a subcommittee of the U.S. House Committee on Judiciary (public hearing on February 28, 2008), a backlog of 760,000 applications (at the end of the 2007 fiscal year) and delay in patent prosecution and the issue of so many examiners leaving the USPTO in such a short time were discussed. Further, in a subcommittee of the U.S. Senate Committee on Appropriations (a public hearing on March 6, 2008), as well, with respect to the issue of the backlog, it was pointed out that only the hiring efforts are not enough to reduce the backlogs and but also applicant quality submission and expansion of the telework is necessary. As described above, even under such circumstances that the number of applications has been rapidly increasing; "patent quality" has become more important for both the applicant and the USPTO to promote innovation. Discussion concerning the backlog at the USPTO The U.S. Government Accountability Office pointed out in October 2007 that hiring efforts are not sufficient to reduce the patent application backlog and the USPTO should cope with the issue that so many examiners leave the job in such a short time. Specifically, USPTO hired 3,672 patent examiners between 2002 and 2006, and 1,643 patent examiners left the office during that time. The GAO identified the USPTO s 8 (Source) Connecting and Empowering All Americans Through Technology and Innovation., 9 (Source) Election 08: Seeking a Tech President BusinessWeek (2007/09/19) _079427_page_3.htm 17

18 Reference I-6 The U.S. 50 (1) Application from one of non-pentalateral countries to the U.S. (2) Application from South Korea or China to the U.S. 40 (3) Application from one of trilateral countries to the U.S. (*) (4) Domestic application 30 Ten thousand applications (7) Application from the U.S. to one of trilateral countries (*) -10 (6) Application from the U.S. to South Korea or China (5) Application from the U.S. to one of non-pentalateral countries (1) From one of non-pentalateral countries (2) From South Korea or China (3) From one of trilateral countries (*) (4) Domestic application (5) To one of non-pentalateral countries (6) To South Korea or China (7) To one of trilateral countries (*) (Source) Prepared by the JPO based on WIPO Statistics Trilateral countries are Japan, the U.S. and EPC states. Pentalateral countries are Japan, the U.S., EPC states, South Korea and China. * Regarding above (3), (7), domestic application in the U.S. is not included. Reference I-7 (months) First Action Pendency and Total Pendency at the Trilateral Offices JPO First Action Pendency JPO Total Pendency USPTO First Action Pendency USPTO Total Pendency EPO First Action Pendency EPO Total Pendency (Persons) ,000 5,000 4,000 3,000 2,000 1, (year) JPO EPO USPTO 4,779 4,177 3,449 1,358 1,468 (196) (294) (year) (Source) Trilateral statistical report Change in the number of examiners in the Trilateral Offices (Source) Japan Patent Office Annual Report, 2007 fiscal year edition (Remark) Numbers in parenthesis are of fixedterm examiners at the JPO in 2005 and (Source) Trilateral statistical report, the USPTO Performance and Accountability Report 18

19 Reference I-8 Current State of the USPTO The United States Government Accountability Office, Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog, (GAO , 2007). Although USPTO hired 3,672 patent examiners from the beginning of fiscal year 2002 through fiscal year 2006, the patent examination workforce increased by only 1,644 because 2,028 patent examiners either left the agency or moved to other positions. More specifically, during this time, 1,643 patent examiners left the agency, and 385 patent examiners were either transferred or promoted out of the position of patent examiner. Bruce A. Lehman (Former Director of the USPTO), Innovation, the Global Patent Crisis and a Common Patent System, (paper presented at WIPO Inter-Regional Forum On Leveraging Intellectual Property For Knowledge- Based Development And National Wealth Creation, New Delhi, India, Nov 14-16, 2007).... the global patent system is entering a period of crisis, characterized by escalating pendency of applications, declining quality of examination, duplication of work by multiple patent offices and increasing costs of patent prosecution. For example, in the United States Patent and Trademark Office (USPTO), both the number of patent applications filed and the average pendency of applications has been steadily increasing. (See Chart 1.) Currently, there are approximately 475,000 patent applications that are backlogged at USPTO and if this trend continues, number of patents waiting to be examined will reach over 1,000,000 by A U.S. intellectual property expert (2007, the U.S.) With respect to current circumstances at the USPTO, 1,200 examiners per year are employed; however, the employment and maintenance of an examiner has become difficult, and it is the condition that an inexperienced examiner is regarded as a senior. The USPTO has politely dealt with patent attorneys and has performed relatively expeditious examinations; however, the USPTO has entered into a period in which such an expeditious examination is difficult. United States Patent and Trademark Office Strategic Plan In their objective, Provide high quality examination of patent applications, a initiative, Expand telework and explore establishing regional USPTO offices, is listed. Reference I-9 The 2008 Presidential election In the Presidential election, an enhancement of patent quality and a reformation of the patent system have become topics for discussion. It is worthy of attention that a candidate of the Democratic Party and a candidate of the Republic Party have made comments to the same effect. Senator Barack Obama (Democratic) CONNECTING AND EMPOWERING ALL AMERICANS THROUGH TECHNOLOGY AND INNOVATION Reform the Patent System: A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. With better informational resources, the Patent and Trademark Office could offer patent applicants who know they have significant inventions the option of a rigorous and public peer review that would produce a "gold-plated" patent much less vulnerable to court challenge. Where dubious patents are being asserted, the PTO could conduct low-cost, timely administrative proceedings to determine patent validity. As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration. (Source: Connecting and Empowering All Americans Through Technology and Innovation., Senator John McCain (Republic) McCain's campaign says the U.S. patent system should change to improve patent quality and reduce litigation. (Source: Election 08: Seeking a Tech President BusinessWeek (2007/09/19) I am a free trader. I will do everything in my power as president of the United States to protect intellectual property, but, far more important, to open every market in the world through free trade. Interview with Mr. Michael Arrington (Source: Michael Arrington, McCain Embarrassed by Yahoo s Actions in China; Also Calls Google To The Mat, TechCrunch (2007/11/12) * Contents in parentheses are quotations from articles and source of quotation owns copyright. 19

20 (3-2) Circumstances in foreign countries (China) Under such circumstances that the number of patent applications has increased in the world, the number of the patent applications has also rapidly increased in China. The component percentage ratio of the number of patent applications in China to the one in the world has already reached at 10.5% in 2005, promoting consistency in the quality of a patent among the major countries including China is required. Accordingly, cooperating with China is also necessary in various frameworks of international cooperation. Further, in order to avoid patent disputes, etc. in China, which could involve overseas enterprises, upgrading the search environment for accessing the patent documents or technical documents in the Chinese language has become an issue. Patent application in China Accompanying the growth of the Chinese economy, the number of patent applications in China both by residents and by nonresidents has rapidly increased (those by residents: from about 10,000 in 1995 to about 93,000 in 2005 and those by nonresidents: from about 9,000 in 1995 to about 80,000 in 2005; thus, in a decade, the numbers have increased by about ten times.). According to updated statistical data in 2007, the number of patent applications by residents is 153,000, those by nonresidents is 92,000. (See Reference I-11) It is thought that the rapid increase in applications from abroad, particularly from the Japan, the U.S., and Europe, accompanies such big changes as an increase in production by overseas enterprises in China and an increase in the number of products flowing into China, which is a production base and a giant market. On the other hand, concerning the applications from China to overseas, most of the applications are to the Trilateral Offices. The number of the applications in 2006 is only about 5,000, which has not yet led to a burden on examination in the Trilateral Offices. However, it is thought that, in the future, accompanying the growth of the Chinese economy, patent applications out of China will come to require patent protection in the rest of the world, and there is also such a probability that the burden on examination for each Patent Office of the world including the JPO may greatly increase. Importance of consistency in the quality of examination Accompanying a large increase in the number of patent applications in China, an increase in the number of patent disputes is also expected. Recently, Not only the number of cases of patent disputes among Chinese enterprises but also the number of cases where overseas enterprises were sued on grounds of infringement of patent rights, etc. has been increasing, and it is expected that, over time, the number of disputed cases involving overseas enterprises would increase. Thus, promoting consistency in the quality of examination among major countries including China is required, and it is important that we expand the circle of the international cooperation to China, etc. Cases where overseas enterprises were sued for patent infringement In 2005, Motorola Inc. was sued for infringement of patent right concerning a mobile phone by a Chinese individual applicant. Motorola Inc. requested invalidation of the patent right; however, the company lost the lawsuit. Though the company appealed, it has withdrew the appeal so that, in 2007, the lost lawsuit of Motorola Inc. became final and binding. In 2006, an affiliate of Schneider Electric SA 20

21 group, which is a major French electric equipment manufacturer, has been sued by a Chinese enterprise for infringement of a utility model right concerning a breaker, and, it has been ordered to compensate for damages for an amount of 330,000,000 Yuan in 2007 by the intermediate people s court. In 2007, the Korean company Samsung Electronics was sued for infringement of patent right concerning a telecommunications device by a Chinese mobile phone maker. (based on press reports) Importance of patent documents in Chinese In the case where enterprises operate business globally and establish a production basis in China, access to patent information of China becomes important; however, there are applications which are filed only in China (about 42% of the total applications in China), as for such patent documents in China, the State Intellectual Property Office of the People s Republic of China (SIPO) is making an effort to improve access to patent documents in China, such as by providing patent documents in English by machine translation (will be described later). Cases where overseas enterprises are sued for patent infringement are pointed out as being cases showing the growth of the importance of the Chinese documents. From the viewpoint of preventing patent disputes in China more certainly for Japanese enterprises, upgrading the search environment for easy access to patent documents or technical documents in Chinese, such as access to those in Japanese using machine translation, has become an issue. Problems of counterfeiting and piracy in China The ratio 10 of damage to Japanese enterprises 10 (Source) "FY2007 Survey Report on loses caused by counterfeiting": The ratio of damage due to counterfeiting means the number of companies having answered "we have been damaged due to counterfeiting " to a questionnaire about damage 21 due to counterfeiting in the world in the 2006 fiscal year is 23.0%, and many of the damaged enterprises answered that they were damaged because of counterfeiting in China. Further, it is in such circumstances that, regarding countries producing or countries transporting counterfeit goods distributed throughout the world, many counterfeit goods have been produced in China or have gone through China. Under such circumstances, the Chinese government is making efforts to take countermeasures against counterfeiting and piracy, and Japan also supports such efforts of the Chinese government and not only provides a variety of information and exchanges opinions therewith but also encourages the reinforcement of such enforcement in China. Problems caused by counterfeiting and piracy, and the early rights acquisition Many counterfeiting and piracy in China infringe design rights or trademark rights, and thus, as a countermeasure against the counterfeiting, an early rights acquisition of a design right or a trademark right is important. This is the same as the case for a patent in terms of the early rights acquisition is important. Patent rights have characteristics whose contents are rarely judged by appearance in comparison with cases of design rights and trademark rights. Therefore, it is thought that there are many cases where judging whether one s own invention has patentability or not is difficult for a person desiring protection or judging whether the alleged right is truly valid or not is difficult for a alleged infringer. Therefore, to avoid patent dispute, in addition to reinforcement of the enforcement, it is particularly important that, during the examination stage, an due to counterfeiting relative to the number of companies having answered effectively thereto.

22 appropriate grant of rights is conducted. Toward enhancement of cooperation with China For coping with a recent increase in the number of applications, China is working on the reinforcement of the examination system including the development of human resources; for example, China has rapidly increased the number of examiners in the SIPO. For supporting or cooperating with such work, meetings between the Japan Patent Office (JPO) and the SIPO or among the JPO, the SIPO, and the Korean Intellectual Property Office (KIPO) or the pentalateral meeting of the JPO, the SIPO, the KIPO, the United States Patent and Trademark Office (USPTO), and the European Patent Office (EPO) have been held. It is important that, through these meetings, the cooperation is continuously retained and reinforced to promote global consistency in examination quality. For aiming at implementation of the work sharing with China in the future, it is important that the progression of cooperation is continued to promote consistency in examination quality among major countries including China. Further, although the Chinese government is working toward improving access of various foreign countries to documents in Chinese, on the Japan side, it is also important that the JPO upgrades the search environment for reference to the Chinese patent documents from the viewpoint of preventing the patent disputes in China or for the promotion of the work sharing in the future. Circumstances and challenges in applications & examinations of trademark In China, the number of trademark applications has been rapidly increased from about 170,000 in 1995 to about 670,000 in 2005, and the response 22 for such a large increase in the number of the applications, such as the upgrade of the examination system is a task. (See Reference I-12) Further, there are some cases wherein the names of famous brands, characters and agricultural products or the place names in Japan are registered by Chinese enterprises in China, which has led to a dispute. Therefore, for Japanese companies, earlier filing of the trademark application has become important. Under such circumstances, at the Trademark Trilateral Cooperation Meeting (the latest one was held in October in 2007.) and the Heads Meeting between the JPO and the China Trade Mark Office (CTMO) (the latest one was held in October 2007.), discussion of acceleration of examination and progress of IT in China took place. Revision of Patent Law (Senrihou) 11 in China In China, at present, during the working of the third revision of the Patent Law (Senrihou) and in July 2006, the SIPO has published a draft revision thereof. Thereafter, the SIPO submitted the draft revision to the State Council, and at present, it is being reviewed in the State Council. Further, China has performed legislative procedures for the legislation process while carrying out careful procedures such as listening to the opinions of people of various countries. However, in the contents of the draft revision, while there are many points that are to be welcomed by Japanese enterprises, such as the introduction of a system of publicly-known / publicly used elsewhere in the world in the novelty judging process, there is a concern about some revisions such as the introduction of a duty to disclose genetic resource origins. As it is 11 The law for regulating patents, utility models, and designs in China

23 expected that the details will be regulated in the implementing regulation of the Patent Law (Senrihou) over time, it is important that the conditions of the revision be considered. (See Reference I-10) Innovations and utilization of patents in China In China, the growth rate of GDP has been increasing as rapidly as about 10% on a year-to-year basis; for example, the growth rate was 10.4% in 2005 and was 11.4% in Further, there is a possibility that the component percentage ratio of R&D expenses to GDP will increase from about 1.3% in the 2005 fiscal year up to about 2% in 2010; thus, the growth thereof is thought to be remarkable. Therefore, the number of patent applications is also expected to increase continuously. (Based on a published data by the National Bureau of Statistics of China) Further, although the number of patent applications has been increasing rapidly, it is said that, in China, the utilization ratio of the patents is not higher comparing to Japan, etc. Reference I-10 Summary of the draft of the third revision of the Chinese Patent Law (Senrihou) Introduction of the system of publicly-known / publicly-used elsewhere in the world in the novelty judging process Under the current Patent Law, publicly-known elsewhere in the world / publicly-used in China (even inventions / designs which have been used publicly in other countries can be protected even if they have not been used publicly within China.) Compulsory licensing for medicines In the provisions relating to compulsory licensing, the statement that the treatment of an epidemic disease, etc. is included in the deeds for the sake of the public interest, which is a requirement for compulsory licensing, is clearly described. Further, the statement that, when a developing country having no ability to manufacture therapeutic drugs for an epidemic disease desires the import thereof, it being possible for the country to afford the compulsory licensing for the export thereof out of China is also clearly described. Introduction of a non-easily creatable requirement for design registration Under the current Patent Law (Senrihou), non-easily creatable requirement is not included for registration, and a design formed by slight change of a publicly known design can be registered. Introduction of a related-design (similar-design) system By introduction of this, two or more similar designs (a group of variations of a design) can be protected. Obligation to present a search report in enforcement of design rights A search report is a material for showing the validity of the right. Currently, design registration is registered only by an elemental examination (a formality check or a check on grounds of unregisterability), and by introduction of this system, when a lawsuit based on the design right is held, the right holder or interested persons can request the formulation of a search report for the SIPO. This system has already been introduced in the utility model system. Addition of offering-for-sale to working deed of design By addition of this, the deed of exhibiting any infringing goods in an exhibition or any other events will be prohibited. Duty for disclosing origins of a genetic resource Under the draft revision, the statement that, with respect to an invention utilizing a genetic resource, the disclosure of the origins of a genetic resource in the patent application is required, and when a person has acted against this duty, the application is rejected or the patent is defeated, or when the obtainment and the utilization of the genetic resource have acted against other related regulations, the patent cannot be granted, is regulated. The draft revision submitted in December 2006 from the State Intellectual Property Office of the P.R.C. to the State Council. The draft is now under review in the State Council. The draft revision is expected to be enacted at a National People s Congress session by the end of

24 Reference I-11 China (Patent) T e n t h ou s a nd a pp lic a t ions 25 (1) Application from one of non-pentalateral countries to China (2) Application from one of trilateral countries to China (3) Application from South Korea to China (4) Domestic application 0 (7) Application from China to one of non-pentalateral countries (6) Application from China to one of trilateral countries (5) Application from China to South Korea (1) From one of non-pentalateral countries (2) From one of trilateral countries (3) From South Korea (4) Domestic application (5) To South Korea (6) To one of trilateral countries (7) To one of non-pentalateral countries (Source) Prepared by the JPO based on WIPO Statistics and the statistics on the website of SIPO < Trilateral countries are Japan, the U.S. and EPC states. Pentalateral countries are Japan, the U.S., EPC states, South Korea and China. Reference I China (Trademark) (1) Application from one of non-pentalateral countries to China (2) Application from one of trilateral countries to China (3) Application from South Korea to China (4) Domestic application T en t hou s and a pp lic a t ions (7) Application from China to one of non-pentalateral countries -10 (6) Application from China to one of trilateral countries (1) From one of non-pentalateral countries (2) From one of trilateral countries (3) From South Korea (4) Domestic application (5) To South Korea (6) To one of trilateral countries (7) To one of non-pentalateral countries (Source) Prepared by the JPO based on WIPO Statistics and an annual report of China Trade Mark Office (CTMO) Trilateral countries are Japan, the U.S. and EPC states. Pentalateral countries are Japan, the U.S., EPC states, South Korea and China. 24

25 (4) Enlargement of an international cooperation - toward realization of "Virtual Global Patent Office" - Importance of harmonization of patent quality at a high level With the progression of economic globalization, for applicants, global protection of intellectual property rights becomes important. Further, essentially, for promoting the innovation, one invention should be granted desirably under the same examination standard across the world to simplify patent procedures or to enable applicants to acquire high quality patent rights, which are unlikely to become invalid. Particularly, nowadays, with the progression of globalization or the growth of open innovation, an innovation environment in which research and development or productization is conducted with external resources is expanded and becomes important. Therefore, to support global economic activities, it becomes a task to ensure the consistency in the patent quality at a high level globally. For various applicants needs With regard to the timing of the examination of applications, applicants needs thereof become diversified, namely some applicants need early examination of their applications, e.g., applications filed globally or in the field of advanced technology; while others do not, for some reason. As the economic globalization progresse as explained above, there exist strong needs to protect one invention efficiently, rapidly and globally as intellectual property rights. As a consequence, for smoothly acquiring patent rights abroad, it is effective to promote work sharing globally so that foreign Patent Offices can utilize the examination results of the Japan Patent Office (JPO) in their examination process, which would represent the importance of establishing a system for work sharing within Patent Offices. Necessity for international cooperation Under circumstances of a global increase in the number of patent applications under the background of globalization, the number of duplicate applications for which one identical invention is filed at a plurality of Patent Offices also increases and for Patent Offices, the burden on examination accompanying the increase thereof has been enlarged globally. Thus, for an enhancement in efficiency of examination of duplicate applications, it is important to enhance international cooperation and promote the work sharing globally. Further, for the JPO receiving a number of applications at an internationally top rank and having a large influence on the field of patents throughout the world, it is necessary not only to contribute to the establishment of international cooperation but also to cope with the enlargement of the workload for applications from foreign countries within the JPO itself. For promoting international cooperation However, under present circumstances, the patent system and the examination standards are not sufficiently harmonized internationally and examination quality including thinking process, etc. and the timing of examination are not uniform so that utilization of the examination results of other Offices is limited to certain extent. Thus, in order to activate the work sharing more effectively, it is a task to internationally harmonize the quality of examination including thinking process, etc. at a high level, establish a system for corresponding to applicants needs for examination timing in each Patent Office, and promote the 25

26 effectiveness of the work sharing accordingly. Toward a virtuous cycle between the work sharing and the promotion of consistency in patent quality Therefore, it is important that the harmonization of patent systems is promoted and the practical experiences of the work sharing by which understanding of examiners thinking processes of other Offices is deepened accumulate. These lead to the building of mutual trust and enhance consistency in examination quality including thinking process, etc. at a high level. These measures can be made to work more effectively by an examiner exchange program being conducted in addition to the practice of the work sharing. It is thought that, by such an enhancement of the consistency in examination quality including thinking process, etc. at a high level, the work sharing can be made to work more efficiently so that the work sharing is promoted even more, which is expected to lead to a virtuous cycle between the further enhancement of consistency in patent quality at a high level and the enhancement of efficiency of the work sharing. Establishment of a global network of the work sharing that consists of the Trilateral Offices and more Offices Although currently major Patent Offices mainly including the Trilateral Offices are tackling a issue of the work sharing, to build a framework to be easily participated by more countries capable of conducting the work sharing, can lead to an enhancement of international cooperation and international consistency in examination quality including thinking process, etc. at a high level on the condition of trust-building. Further, with respect to Patent Offices that are not equipped with sufficient examination resources, it becomes important to ensure consistency in patent quality at a high level by making examination results available to those Offices. Importance of the WIPO and establishment of the global network of the work sharing By building the global infrastructure as a basis for the work sharing through the effort of the WIPO, such as promotion of the utilization of international search reports of PCT in the framework of the WIPO and the efforts to implement an electronic exchange of priority documents in the WIPO, it becomes possible to extend the work sharing much more effectively. Toward realization of "Virtual Global Patent Office" Next, although the work sharing is mainly being conducted or deliberated among the Trilateral Offices or the five Offices (the Trilateral Offices plus China (SIPO) and Republic of Korea (KIPO)), in order to enable applicants to efficiently protect one invention more globally, it is necessary to encourage more Offices to join in the work sharing framework and to enhance the cooperation network in the WIPO including a PCT framework. To make the work sharing effectively work, it is necessary to promote (a) Harmonization of patent systems, (b) Harmonization of examination standards, (c) Consistency in examination quality including thinking process, etc. and (d) Consistency in the search environment. With regard to the above (b) and (c), it can be expected that mutual trust is built, which leads to a virtuous cycle between the further enhancement of consistency in patent quality at a high level and the enhancement of efficiency in the work 26

27 sharing by actually accumulating the practical experiences on the work sharing. By promotion of the work sharing and the above harmonization and the above consistency, an improvement in predictability for patent acquisition and a reduction in procedure costs can be achieved. This leads to an enhancement of efficiency of patent acquisition overseas. In addition to the promotion of the above harmonization and the above consistency, establishment of the global network of the work sharing will enable applicants to protect one invention efficiently and globally as intellectual property rights It is necessary to construct such a more substantial framework of international cooperation which can be referred to as a "Virtual Global Patent Office." Importance of global and efficient patent protection challenges raised by globalization In accordance with economic globalization, it has become important to protect one invention efficiently and globally as intellectual property rights. In the JPO, for responding to the applicants needs for early patent protection, an accelerated examination system was introduced, however, in addition thereto, in order to enable applicants to efficiently acquire patent rights in the Office of Second Filing, it is necessary to promote international cooperation. Thus, it is important to promote the work sharing in order to accelerate patent examination in foreign Offices by making the examination results of the JPO available to the Patent Office overseas when early patent protection is desired. Importance of harmonization of patent quality at a high level -a task for the promotion of innovation- Substantially, for promoting innovation, one invention should be granted desirably under the same examination standard across the world to simplify patent procedures or to enable applicants to acquire high quality patent rights, which are unlikely to become invalid. Particularly, nowadays, according to the progression of globalization and the growth of open innovation, an innovation environment in which research and development or productization are conducted with external resources is extended. Therefore, global protection of intellectual property rights granted under the same standard has become much more important. Therefore, to support global economic activities, it becomes a task to ensure the consistency in the patent quality at a high level globally. Necessity of an international cooperation reflecting applicants needs The number of patent applications increases internationally in accordance with economic globalization, the upgrading of technology, and the growth of open innovation. In the JPO, the workload for foreign applications, which are filed by foreign applicants, is increasing remarkably, as well. Under such circumstances, since a plurality of patent applications are filed redundantly in different Offices throughout the world, it is becoming much more important to enhance examination efficiency by deepening international cooperation, such as the work sharing regarding global applications. For the JPO receiving a number of applications at an internationally top rank and having a great influence on the field of patents in the world, it is necessary not only to contribute to the establishment of the international cooperation but also to cope with the enlargement of the workload for applications from foreign countries within the 27

28 JPO itself. Work sharing at various levels of examination The principle of the work sharing in examination is that the Office at which the application was first filed (Office of First Filing) releases the results of the search and examination first and the other Offices utilize the results in their examination. Therefore, it becomes important that the work sharing in which the Office of First Filing provides the search and examination results and the other Offices can make best use of the results be established bidirectionally. In other words, the work sharing for making use of the search and examination results includes those at various levels such as (a) that making use of only the search results of prior art, (b) that making use of the logic of the judgment for patentability in addition to the search results, and (c) that making use of all examination results including the final judgment. The quality and efficiency gain by utilization of work results at each level in the examination differs from that at the others. However, it is possible to make the examination results be more appropriate by considering the validity of the examination results of the Office of First Filing at any one level of (a) to (c). Using a valid part of the examination results of the Office of First Filing can eliminate the need for duplicate work. Complementing an invalid part can improve the examination quality. Therefore, utilization of work results at each level is effective for improvement of patent quality and enhancement of examination efficiency. Thus, it is important for promoting the work sharing to promote mutual utilization of the search and examination results at various levels. However, from the viewpoint of making examination quality be consistent throughout the world, the work sharing making use of the results whose level is nearer to the final judgment, desirably, the result including the final judgment, is more effective, furthermore also from the viewpoint of efficiency of working sharing, the above (c), the above (b) and the above (a) are more useful in this order. Additionally, from the viewpoint of the applicants, it becomes important that one invention be protected efficiently and globally as intellectual property rights by simplification of patent prosecution, which can be achieved by the examination results of the Office of First Filing being made available to the Office of Second Filing. Also seen in that light, the work sharing at the above level (c) in which the usability of the search and examination results is considered to be high may be most useful. For promoting international cooperation - A task for enhancing the effectiveness of the work sharing - Under the present circumstances, the patent system and examination standards are not sufficiently harmonized internationally, and the quality of examination including thinking process, etc. and the timing of examination are not uniform so that utilization of the examination results of other Offices is limited and the work sharing does not necessarily work effectively. Thus, it is important to ensure that international consistency in the quality of examination including thinking process, etc. at a high level and to improve the examination system for conducting a timely examination corresponding to the applicants needs in each Office. And it is a task how the effectiveness of the work sharing can be enhanced and finally how the applicants needs 28

29 can be satisfied by these efforts. Quality and timing of rights acquisition between the Trilateral Offices Taking into consideration the "utilization" of intellectual property rights, it is extremely important that, between the Trilateral Offices, at least, the "qualities" of one of the Offices accord with those of each of the others and the "timing" of rights acquisition of one of the Offices accord with that of the others. When one Office doesn t examine corresponding application, the utilization of the patent rights might be limited. For example, it is troublesome that timing in the JPO be accelerated or delayed on one sided only (Comment of PCIIP member). Specific efforts toward enhancing the effectiveness of the work sharing In Japan, in order to enable applicants to be able to protect one invention efficiently, appropriately and globally as intellectual property rights, the accelerated examination system or the effort of the work sharing is performed. As specific efforts, which enable the Office of Second Filing to make use of the search and examination results of the Office of First Filing, such as matching the timing of the examination, there are the Patent Prosecution Highway (PPH) 12 at level (c), early release of the examination results in the Office of First Filing (JP-Fast Information Release STrategy (JP-FIRST)) at level (b), and the New Route (NR). Further, as the work sharing at level (a), there is the International Search Report (ISR) of the PCT international search (See Reference I-16). Since under the PPH, in particular, an accelerated examination can be provided under a simpler procedure in the Office of Second Filing which can utilize the search and examination results in the Office of First Filing, an invention 12 The PPH has been performed heretofore between the JPO and the USPTO (fully implemented starting from January ), the KIPO, the UK-IPO, and the GPTO. JP-FIRST has been performed starting from April 1, granted in the JPO can also receive early protection overseas. Thus, while responding to the needs of applicants, the efficiency of examination is enhanced. PCT system The PCT system is a framework which utilizes the results of international search at level (a) above. The PCT system has been used for about 30 years and is expected to be further developed in the future as a measure to obtain a patent worldwide, which is already seen as an increase in the number of PCT applications. Further, in order to respond to the needs of an applicant who desires efficient protection of an invention as a global intellectual property, in Japan, the effort of parallel processing of an international search and a national phase examination is performed (See the column Effort with respect to a PCT application ). Through such an effort, the examination judgment at the above level (b) or level (c) also becomes utilizable in addition to the search results at the above level (a) by parallel processing of the international search and the national phase examination. That is expected to contribute to expeditious examination overseas. In case where the results of an international search as well as a national phase examination in the Office of First Filing is utilized in the Office of Second Filing, the effect of an early provision of examination results, such as that of the JP-FIRST, and the utilization of the examination judgment, such as that of the New Route, are achieved even in the PCT system. Therefore the work sharing is promoted even further. From such a view point, the PCT system is expected to be sophisticated. Accordingly, it is thought that such a measure leads to the needs of the applicant who desires

30 efficient protection of one invention as a global intellectual property being addressed. Hitherto track record and future direction of the Patent Prosecution Highway (the PPH) (a) the JPO-the USPTO.: In July 2006, a pilot program has begun. In January 2008, both Offices implemented on a full-time basis. Number of requests for PPH : JP US 343 (as of march, 2008) US JP 239 (as of April, 2008) (b) the JPO-the USPTO: In April 2007, both Offices implemented on a full-time basis. Number of requests for PPH : JP KR 82 (as of February, 2008) KR JP 26 (as of March, 2008) The PPH with Canada, Australia and Denmark etc., is now under consideration. (Source: Japan Patent Office) Efforts with respect to PCT applications (a) Efforts to improve the system Since the PCT Reform meeting in 2001, various improvements have been achieved to make the PCT system useful and efficient for users, for example: improvement of coordination between international search and international preliminary examination, which requires the international search authority to prepare a written opinion when preparing international search report. revision of the concept and operation of the designation system, which all applicants filing a PCT application are deemed to designate all member states. (b) Parallel processing of international search and examination in national phase At present, when an invention identical to the invention of a PCT application is filed as a domestic application in advance of the filing of the PCT application, the JPO is making an effort to begin an international search of the PCT application and the domestic application simultaneously. Since the efficiency of examination is enhanced by this effort, the JPO makes a partial refund of the international search fee, which contributes to a reduction in the applicants cost. Further, even if there is no corresponding domestic application in advance of the filing of the PCT application, the PCT application can enter into the national phase early on request of the applicant (Patent Cooperation Treaty: Article 30 23). If the applicant requests accelerated examination for the application in the national phase, it becomes possible to proceed a national phase examination and an international search for the PCT application simultaneously. Thus, it is also necessary to consider to promote the utilization of the examination judgment internationally, in addition to utilization of the search results through the PCT system. Infrastructure supporting the work sharing Information system and search environment In order to efficiently conduct international cooperation, it is necessary to improve the information infrastructure that is supporting the work sharing. Thus, an upgrading of the system for the provision of examination results or the exchange of priority documents is performed. With respect to the former, the advanced industrial property network (AIPN) is upgraded and the examination results are transmitted to as many as 31 foreign Patent Offices via internet Further, with respect to the latter, the exchange of priority documents, which are the basis of global applications (PCT applications and foreign applications) is performed among the JPO, the USPTO and the EPO (Trilateral Offices) and between the JPO and the KIPO, and extending this effort to encompass the entire world is under consideration (Digital Access Service (DAS) for priority documents at the WIPO). This is a system by which a priority document computerized in a Patent Office becomes electronically available to Patent Offices all over the world, and it is expected that the paperwork load for computerization of priority documents will be alleviated thereby. In this system, the fact that an application has been filed with the Office of Second Filing can be known instantaneously by request for a priority document from another Office. Therefore, it becomes easy to match the timing of examination

31 in each country and to mutually utilize the search and examination results. Further, it is thought that the search environment should be improved so that a search can be made for domestic and foreign patent information and technical information such as papers and books seamlessly, in addition to provision of the above information infrastructure (See part III 3. (2) and (3)). Increasing the number of Patent Offices between which priority documents can be exchanged electronically to include other Offices Revision of patent law / utility model law (revised in 2008) For the purpose of improvement in convenience for an applicant and of the promotion of efficiency of administrative treatment, the number of patent Offices between which the priority documents can be electronically exchanged is increased to include other Offices in order to achieve an electronic exchange of priority documents worldwide. Although the JPO can currently accept computerized data from the Office of First Filing (the Office having issued the priority document), after revision of patent law, in addition to those documents, computerized data from an Office other than the Office of First Filing or from an international organization (the WIPO, etc.) becomes acceptable, as well. Toward a virtuous cycle between the work sharing and the promotion of consistency in patent quality It is important that the harmonization of patent systems is promoted and the practical experiences of the work sharing by which understanding of examiners thinking processes of other Offices is deepened accumulate. This will lead to a building of mutual trust and will enhance the consistency in examination quality including thinking process, etc. at a high level. These measures can work much more effectively if the examiner exchange is conducted in addition to the accumulation of practical experiences of the work sharing. Further, in 31 order to enable applicants to globally protect high quality patents rights, which are unlikely to become invalid, the work sharing that makes use of results whose level is nearer that of the final judgment, and desirably making use of the results, including the final judgment, is effective. For example, as the work sharing making use of a final judgment, the patent prosecution highway is now performed, and it is thought that, by promotion of such a work sharing, consistency in patent quality at a high level of which patent is unlikely to become invalid will be enhanced further and an efficiency of the work sharing will be promoted further. Thus, it is expected that the work sharing will be promoted even further, which leads to creation of a virtuous cycle between the further enhancement of consistency in patent quality and an enhancement of efficiency in the work sharing. Establishment of a global network of the work sharing that consists of the Trilateral Offices and more Offices Specifically, although efforts such as use of the PPH and an early release of examination results by the Office of First Filing is mainly performed among the Trilateral Offices, by encouraging more Offices such as the five Offices (the Trilateral Offices plus SIPO and KIPO) to join in with this framework on the premise of the trust-building, it can lead to an enhancement in international cooperation and international consistency in examination quality including examination judgment, etc. at a high level. With respect to Patent Offices that are not equipped with sufficient examination resources, it becomes important to ensure consistency in patent quality at a high level by making examination results in key countries available to those Offices.(See Reference I-14, I-15)

32 Importance of the WIPO and establishment of the global network of the work sharing As a framework of examination cooperation by Offices other than the Trilateral Offices, conventionally, the PCT international search of the WIPO has been utilized as a framework for mutual utilization of search results, etc. Further, as described above, in the WIPO, as a framework for electronic exchange of priority documents, a service referred to as DAS (Digital Access Service for Priority Documents ) is under consideration. By establishing the global infrastructure being fundamental to the work sharing through these frameworks or efforts of the WIPO, it enables the work sharing to become more efficient global network. (See Reference I-14, I-15) Toward realization of Virtual Global Patent Office Although the work sharing is mainly being conducted or deliberated among the Trilateral Offices or the five Offices (the Trilateral Offices plus SIPO, and KIPO), while responding to applicants needs to enable applicants to efficiently protect one invention more globally and effectively, it is necessary to encourage more Patent Offices to join in the work sharing and to enhance the cooperation network in the WIPO, including the PCT framework. Further, with respect to ASEAN or BRICs, further, VISTA (South Africa, etc.), it is expected that the examination cooperation including the work sharing will be established worldwide by binding of many of the examination cooperation relationships among countries while each country respects mutual differences in the legal system. Next, to make the work sharing effectively work, (a)harmonization of patent systems, (b)harmonization of examination standards, (c) Consistency in examination quality including thinking process, etc. at a high level, and (d) Consistency in the search environment should be promoted. With respect to the above (b) and (c), by accumulation of practical experience of the work sharing, understanding of the examiners thinking process of other Offices is deepened and mutual trust is built. Therefore, it is considered that by accumulation of practical experience of the work sharing, consistency in patent quality at a high level is enhanced and the efficiency in the work sharing is promoted further. Thus, it is expected that the work sharing will be promoted even further, which will lead to a further virtuous cycle between a further enhancement of consistency in patent quality and an enhancement in efficiency of the work sharing. Thus, it is considered that, by promotion of the above (a) to (d), patent predictability will be improved and procedure costs will be reduced. Further, making the examination results of the Office of First Filing be available to the Office of second Filing through the work sharing leads to an enhancement in the efficiency of patent acquisition overseas. Accordingly, it is important to promote the above (a) to (d), while promoting the participation of more Patent Offices in the work sharing. Consistency in patent quality at a high level is enhanced by promotion of the above (a) to (d). This leads to an enhancement in the effectiveness of the work sharing. Therefore, it becomes possible to protect one invention efficiently and globally as intellectual property rights. It is necessary to construct such a more substantial framework of international cooperation which can be referred to as Virtual Global Patent Office. (See Reference I-13, I-14, I-15) 32

33 Innovation, the Global Patent Crisis and a Common Patent System. the global patent system is entering a period of crisis, characterized by escalating pendancy of applications, declining quality of examination, duplication of work by multiple patent offices and increasing costs of patent prosecution. The Solution: Work Sharing; Substantive Harmonization and a Global or Regional Patent Office Given the fact that most of the increase in patent applications comes from duplicative filings in multiple countries, it is clear much of the stress on the international system could be relieved by concentrating examination in a few regional patent offices along the model of the EPO. However, probably a more ideal solution to the patent crisis would be the creation of new regional patent offices or such as an Asia Pacific Patent Office or better yet a Global Patent Office. Under this scheme, most of East Asia, Southeast Asia, North America and South America would be serviced. Such an office would offer a one-stop alternative to country-by-country examination that would be far more efficient and provide better quality examinations at less cost than is currently the case if you were to purse each country in the region individually. A Public-Private Partnership is Needed For substantive harmonization to be successful, industry must play an active and indeed, a leading role. (Source: Bruce A. Lehman Innovation, the Global Patent Crisis and a Common Patent System. paper presented at WIPO Inter-Regional Forum On Leveraging Intellectual Property For Knowledge-Based Development And National Wealth Creation, New Delhi, India, Nov 14-16, 2007.) Bruce A. Lehman is a former Commissioner of the U.S. Patent and Trademark Office. Virtual Global Patent Office A vision called Virtual Global Patent Office is extremely magnificent. (Comment of PCIIP member) Merit for applicants Due to the work sharing between the Patent Offices in each country or region, also for the applicants, the merit of reducing the workload and costs consumed for the acquisition of patent rights in each country or region is expected, and it is thought that the work sharing should be 33 promoted as a step for the achievement of the real harmonization in the future. (Japan Intellectual Property Association) Work sharing and the cost for applicants [I]nitiatives that have as a goal the reduction of workload on patent offices and the consequent reduction of complexity and costs for patent applicants are welcomed by Microsoft. (Microsoft) Virtual Patent Office While the grant of a patent is jurisdictionally bounded, that does not mean that the patent application and review process must be similarly bounded. The virtual patent office would be a networked community of qualified patent examiners and professionals, one in which any patent office willing and able to meet certain basic criteria and obligations could participate. An environment of common search tools, ability to read and understand prior art documents regardless of published language, and a collaborative examination environment. (Microsoft) Promotion of the work sharing Due to the work sharing between each Office, not only is a merit of a reduction in the examination workload in each Office, but also a reduction in the workload consumed for rights acquisition for the applicants, as well, is expected. Further, it is thought that, as the first step toward the achievement of harmonization in the future, the following cooperative effort among the Offices should be appreciated and promoted: Further multilateral Patent Prosecution Highway Further multilateral New Route Exchange of examiners among Offices Virtual Global Patent Office: a mechanism in which the Patent Office examiners of several countries examine object patent applications using a Web 2.0 tool cooperatively and simultaneously. (IBM) Expectation for the work sharing AIPLA applauds the JPO s leadership in implementing and promoting programs such as Patent Prosecution Highway (PPH) to streamline the patent examination process and optimize the use of limited resources. (AIPLA)

34 Reference I-13 Promotion of the work sharing Harmonization of systems - toward realization of a Virtual Global Patent Office aiming at international consistency in patent quality at a high level- (a) Enhancement of patent predictability, and reduction of procedure costs Harmonization of examination standards Consistency in examination quality The building of trust is a task Performance of examiner exchange Performance of the work sharing Consistency in the search environment IT-binding among Patent Offices is developed even more closely Promotion of efficiency / promotion of the work sharing Benevolent cycle between the improvement of consistency in patent quality by performing the work sharing and the enhancement of efficiency of the work sharing Substantial framework of international cooperation which can be referred to as a Virtual Global Patent Office (b) By utilizing examination results of the Office of First Filing in the Office of Second Filing by promotion of the work sharing, promotion of efficiency of rights acquisition in overseas is promoted Corresponding to the needs of an applicant Framework in which an applicant can protect one invention as intellectual property rights all over the world timely and efficiently by utilizing accelerated examination and the work sharing is constructed. International contribution and promotion of efficiency of examination Corresponding to the needs of an applicant, early release of examination results to an overseas office is performed. This contributes internationally to the framework of international cooperation. By promotion of the work sharing, promotion of efficiency of examination is achieved to correspond to an increase in the number of global applications. 34

35 Reference I-14 Virtual Global Patent Office as a global infrastructure In support of private enterprises in developed and developing countries for their business activities and possible global partnerships toward a Virtual Global Patent Office ~ Sharing the concepts ~ Advocate concepts toward construction of a Virtual Global Patent Office in various international conferences to encourage more countries to understand the concepts Cooperation in such as Trilateral offices 1 and Five Construction of a cooperation framework in offices 2 to a framework where more countries WIPO voluntarily participate. (a) Global cooperation for efficient protection of patents Work sharing corresponding to User Needs Work sharing in the framework of PCT Encourage more countries capable of performing work sharing to Advance the PCT reform by which parallel processing of an participate in PPH, Patent Prosecution Highway, on a voluntary basis international search and a national phase examination is promoted, such Advance implementation of the work sharing, such as JP-FIRST, JPcountries including developing countries to utilize examination as the effort of parallel processing in Japan in order to encourage many Fast Information Release STrategy judgments in the national phase examination of a PCT application for These efforts enable applicants to efficiently protect one enhancing the efficiency of the patent systems in the world. invention as a global intellectual property. Because oversea offices can utilize the examination result of Japan in the framework, such as that of PPH. This can lead to early examination in oversea offices. Therefore, applicants can efficiently protect one invention for which early patent protection is desired as a global intellectual property. With respect to PPH, it is important to encourage more countries to participate on a voluntary basis in addition to the U.S., the U.K., South Korea, Germany. (b) Patent harmonization ~ In order to enhance the efficiency of work sharing ~ Promotion of patent harmonization among major Continue to discuss patent harmonization in WIPO countries Activate the discussion of patent harmonization in WIPO Advance substantive patent law harmonization in the meeting of developed countries (c) High quality patent examination ~ Toward establishment of virtuous cycle between the which is internationally consistent enhancement of efficiency of work sharing and the Promotion of harmonization of or consistency in various further enhancement of consistency in patent quality ~ quality Promote consistency in patent examination quality by accumulation of examination practice experience of work sharing (i) Harmonization of examination guidelines and (ii) Consistency in examination quality including examination judgment at a high level should be promoted. In concrete terms, in Encourage growing examination addition to examination practice, an examiner exchange program is conducted. These, by cooperation which understanding of examination judgments of other Offices is deepened, lead to building mutual trust and enhancement of consistency in examination quality including the Encourage more countries capable of quality of examination judgment at a high level. Work sharing enables working more performing work sharing to participate effectively by harmonization or enhancement of consistency. Therefore, a virtuous cycle in on the premise of the building of trust which enhancement of consistency in examination quality leads to enhancement of efficiency of work sharing via which enhancement of consistency in examination quality is expected. (d) IT infrastructure supporting for Work Sharing The efforts for construction or improvement of IT The efforts for construction or improvement of IT infrastructure among Trilateral Offices. infrastructure in WIPO Continuously consider and review the efforts to release the Promote efforts to improve the system called DAS, Digital Access examination results through AIPN, Advanced Industrial Property Service, to exchange electronic priority documents in WIPO in order to Network, and to exchange examination documents through the upgrade and expand the infrastructure supporting international Work Dossier Access System (DAS) in order to enhance and promote the Sharing efforts. The efforts among the trilateral offices and in WIPO should be promoted in order to improve the infrastructure supporting Work Sharing. This seems to effectively encourage more countries around the world to participate in the efforts of work sharing. 1: The Trilateral Offices of the Japan Patent Office, the US Patent and Trademark Office (USPTO) and the European Patent Office (EPO) have held the Trilateral Conference every year since : The Five Offices of the Japan Patent Office, the US Patent and Trademark Office (USPTO), the European Patent Office (EPO), the Korean Industrial Property Office (KIPO) and State Intellectual Property Office of the People s Republic of China (SIPO) held the five offices conference in May 2007 for the first time. Trilateral Conference had been held among JPO, USPTO and EPO or among JPO, SIPO and KIPO, respectively, before that. However, the five offices conference was a first attempt. 35

36 Reference I-15 Ring of international examination cooperation Trilateral Five Offices JPO USPTO EPO KIPO CIPO ASEAN BRICs VISTA Level of object examination (patentability) results of the work sharing Examination results level First examination level Search level JP-FIRST Participation of other Patent Offices that are capable of conducting the work sharing is promoted. (UK-IPO) (GPTO) (UK-IPO) Patent Prosecution Highway Improvement of availability by the building of trust is a task It is important to enhance the availability of mutual examination results by harmonization of patent systems or enhancement of consistency in examination quality. Early release of examination results by other Patent Offices on a voluntary basis is expected SHARE PCT International research report (WIPO) System improving Participation of other countries through the efforts by WIPO, etc Electronic exchange of is promoted. priority documents (bilateral) Electronic exchange of priority documents (under consideration at WIPO) Seamless search environment for various literatures should be globally upgraded. 36

37 Reference I-16 Various forms and efforts of the work sharing Application: efforts toward mutual utilization of priority document electronic data (information infrastructure supporting the work sharing) Electronic exchange system of priority documents between bilateral Offices (performed between the JPO-the USPTO- the EPO trilateral Offices, between the JPO-the KIPO) System in which priority documents published by one Office (the Office of First Filing) are directly accepted by another Office (the Office of Second Filing) Digital access service for priority documents (DAS) (under consideration in WIPO (the World Intellectual Property Organization)) System in which priority documents computerized in an Office which is not limited to being the Office of First Filing are electronically available in other Offices throughout the world. OFF OSF (a) Search: Efforts toward mutual utilization of search results Utilization of basis for judgement Search Util ilizing Search Judge Examination Judge Make final judge dgement Make final judge udgement [Utilization to search] The Office of Second Filing can Complement of search results or grasp of state of the art, etc. [ Efforts] Utilization of an International Search Report (ISR) in a PCT application Europe: The European Patent Office has introduced a mechanism in which an application filed at it as the Office of First Filing is preferentially provided with the search results. [Evaluation] Quality and efficiency gain Number of available applications In a PCT international search, examiners detailed thinking process is not presented in comparison with normal examination, so that the quality and efficiency gain for the Office of Second Filing is not so high. (b) Judge: Efforts toward mutual utilization of first action results Examination Search Search Utilization of judgement Judge Judge Make final judgement Utilizing Make final judgement [Utilization to judge] Careful consideration of various reasoning for the inventive step or prediction of foregoing examination procedure including final action results, etc. [Efforts] Japan : The JPO has performed a policy (JP-FIRST) from April 2008 in which the JPO gives an examination priority to basic patent applications claiming priority under the Paris Convention and transmits the examination results instantaneously to the rest of the world. The USPTO has proposed a similar framework (SHARE). The New Route is a framework under which, with respect to an application under the Paris route, it is deemed that an application has been filed on the same date both in the Office of First Filing and in the Office of Second Filing and the examination results in the Office of First Filing are transmitted to the Office of Second Filing within a certain period, as well as the applicant being provided with sufficient time for judging whether to undergo an examination in the Office of Second Filing or not. In January 2008, the JPO and the USPTO started an analogous pilot project. Quality and efficiency gain [Evaluation] Number of available applications This is a scheme in which a global application is provided preferentially with the examination results. It is anticipated that the number of applications whose examination results are utilized in the OSF will is larger than that of the above (a) search or that of the below (c) final judgment. (c) Make Final Judgment: Efforts toward mutual utilization of final action results Search Examination Search Utilization of Examination Conclusions Judge Judge Make final judgment Utilizing Make final judgment [ utilization to judge, make final judgment] Grasp of patentable technical scope or assessment of examination results, etc. [Efforts] Patent Prosecution Highway: A framework in which an application whose claims have been determined to be patentable in the Office of First Filing can be preferentially examined in the Office of Second Filing by utilizing the examination results of the Office of First Filing Quality and efficiency gain [Evaluation] Principle for promoting examination cooperation among Patent Offices and the work sharing activation cycle Number of available applications The eligible application for the PPH has claims which have been determined to be patentable in the Office of First Filing, so that it is assumed that the final judgment is available for the Office of Second Filing. Therefore, Quality and efficiency gain for it is high. Since the Office of First Filing has the potential to provide the examination results most efficiently and appropriately, it is preferable that the Office of First Filing provides the search / examination results at the very first and other Offices utilize the results. By establishing various bidirectional work sharing frameworks in which the Office of First Filing provides the search / examination results at the very first and the Office of Second Filing makes the most use thereof, the examination workload of the duplicate application among Patent Offices is alleviated so that a promotion of efficiency of examination is promoted all over the world. 37

38 2. Current Status of the Japan Patent Office and Future Efforts ~Building of an Examination System Corresponding to Various Needs ~ Construction of a Patent Examination System meeting the various needs of applicants, by expanding accelerated examination at the JPO A. Current status of Examination ~ Outlook for Application Trends ~ In Japan, the number of patent applications has, in itself, been on a slight decline in recent years. However, the number of applications from foreign countries to Japan and from Japan to foreign countries is expected to increase. With respect to domestic applications in Japan, since investment in R&D is increasing, the number of applications may turn from being on a decline to being on an increase, depending on the patent strategy of Japanese companies. As for overall applications, the rate of applications from overseas is estimated to increase annually. This may be because the needs of applicants to protect one invention as global intellectual property is becoming more widespread with the advance of economic globalization. Considering that the workload for a foreign application is greater than that for a domestic application, the workload is expected to further increase in accordance with the increasing ratio of foreign applications. B. Challenges to construct an examination system corresponding to User Needs ~ diversified needs of applicants ~ Regarding timing when examinations are performed, some applications, such as applications in the field of leading-edge technology, need to be examined early and some applications do not. There are Japanese applicants who need early patent protection in foreign countries. In order to correspond to the needs of global patent protection and needs regarding examination timing, it is necessary to construct an examination system where examinations are performed according to the timing corresponding to User Needs. Responding the needs for early patent protection in foreign countries, it is also necessary to deepen international examination cooperation to facilitate examinations in foreign countries. C. Toward construction of an examination system corresponding to User Needs ~ Establishing a super accelerated examination system ~ (STEP1) Establishment of a super accelerated examination system in which examination will be performed within two weeks or one month is being considered. This accelerated examination system is more expeditious than the current one in which it takes two or three months to perform an examination. Target applications can be in the field of leading-edge technology, such as biotechnology, nanotechnology, and environment technology and can be limited to applications for which international work sharing is performed (the Patent Examination Highway Program, JP-FIRST, etc.) D. Toward construction of a flexible examination system ~ Fee/Prior art search ~ (STEP2) With establishment of a super accelerated examination system, there will be three type of examination systems, super accelerated examination, accelerated examination, and ordinary examination. If applicants know the expected examination timing when an examination is performed on every option of examination systems, they can freely select an option of examination. Therefore, ensuring the transparency of the examination process, as applicants can predict the examination timing by, leads to realization of an examination system corresponding to the diverse needs of applicants. Introduction of the super accelerated examination system may cause a delay of another examination. Such impacts and the whole concept of a desirable examination system should be considered. Specific requirements for applicants, for example additional cost and attachment of prior art search, should be considered from a viewpoint such as fairness between Super Accelerated Examination and Ordinary Examination. E. In order to more flexibly respond to User Needs ~ Necessity of evaluation of user satisfaction in terms of examination timeliness ~ (STEP3) Toward realization of an examination system corresponding to User Needs, it is important to evaluate the examination system based on user satisfaction. That is to say, a new index which indicates not average tendency period, but the timeliness of examination in the light of User Needs is considered and developed. In order to enhance the User Satisfaction, the option of time frames during one of which an office action is made can be increased in addition to the above three options of examination, if needed. Since there will be various applications with different examination deadlines due to the introduction of an examination system having multiple time frames, an efficient progress management system of examination will be needed. Therefore, it is necessary to enhance and improve the information system currently being developed in order to ensure creation of an information system with an efficient progress management system. 38

39 <Outline> Patent Examination meeting the various needs of applicants, by expanding the accelerated examination at the JPO By further expanding and providing a variety of the accelerated examination system which has already been implemented at the Patent Office, it s necessary to promote further acceleration of patent examination while flexibly meeting various needs of applicants. <STEP 1 (in the immediate future)> Establishing a super accelerated examination system Target Application (Draft) For applicants who want a more accelerated examination compared to the current one (which normally takes two or three months), examination will be done within two weeks or in one month. leading-edge technology, such as biotechnology, nanotechnology, and environment technology Targets are limited to applications for which international work sharing is performed (the Patent Examination Highway Program, JP-FIRST, etc.) <STEP 2> Toward realization of an examination system providing multiple time frames, during one of which an office action is made corresponding to the needs of applicants (a) Super accelerated examination Examination is done within period of two weeks to one month (b) Accelerated examination Examination is done within period of two months to six months (c) Ordinary examination Examination is done within ordinary time frame Concept of Examination System (Draft) Prepare various time frames during one of which an office action is made, similar to these three time frames Ensure the transparency of the examination process, so that applicants know when the examination will be performed. By these efforts the various needs of applicants will be realized. Super accelerated examination may causes delay of another examination. The influence like this which is caused by introduction of the examination system should be considered. Plan to draw up a concept aiming at an examination system corresponding to the User Needs by Oct 2008 based on the evaluation. (i) Requirements in the super accelerated examination system Set specific requirements for applicants from the point of view of fairness between Super Accelerated Examination and Ordinary Examination (For example, additional cost and attachment of prior art search, etc.) (ii) Develop concrete measures to ensure the transparency of the examination process, by which applicants know when the examination will be performed. <STEP 3> Toward construction of an examination system in which an examination is performed at a time that corresponds to User needs Try to develop a new index which indicates the timeliness of examinations in the light of User Needs In order to enhance applicant satisfaction, increase the option of time frames during one of which an office action is made in addition to above three type of examination, if needed Since there will be various applications with different examination deadlines due to the introduction of an examination system having multiple time frames, efficient progress management system of examination will be needed. Therefore, enhance and improve the information system currently being developed in order to equip the information system with the efficient progress management system <Reference: current accelerated examination system (since 1986)> In this current system, when applicants file a patent application Presently, it takes normally about two or three months until applicants receive corresponding to the following, the application will be subject to accelerated examination. the results of examination after filing a request for accelerated examination. (a) When it is planned to be implemented in business. The accelerated examination system was used for 8,500 cases annually. (b) When the application has already been filed in a foreign country. This accounts for approximately 3% of the total number of cases (more than (c) Applications filed by small and medium-sized companies, individuals, 300,000) examined. or universities. (Number of cases) The number of cases filed a request for the accelerated examination system 8,549 9,000 6,000 3,000 (a) The target of the system are inventions planned to be implemented in business (b) Addition of applications filed in foreign countries to the target (c) Addition of applications filed by small and medium-sized companies, individuals, and universities to the target

40 (1) Future outlook for Application Trends In Japan, the number of patent applications is, in itself, on a slight decline in recent years; however application trends vary, depending on the industry sector and field. The number of patent applications from foreign countries is expected to increase in the future in the medical field where many applications are submitted from foreign countries to Japan. In the agricultural and civil engineering fields, which are deemed to be mature, the number of global applications is low and the number of applications within Japan is declining. In the electric and electronics fields where many applications are submitted from Japan to foreign countries, as many applications as ever are expected to be submitted to foreign countries. In Japan, the number of applications is, in itself, slightly decreasing. This is partly because the reorganization of industries in recent years and the effect of M&A, etc. suppress the number of applications despite active investment in R&D. However, if this reorganization levels off, the number of applications may turn from being on the decrease to being on the increase, depending on the patent strategy of Japanese companies, because investment in R&D is increasing. Meanwhile, the number of applications from foreign countries to Japan and from Japan to foreign countries is expected to increase. As for overall applications, the rate of applications from overseas is estimated to increase annually. Increasing number of patent applications from foreign countries and patent applications submitted from Japan to foreign countries In Japan, the number of patent applications is, in itself, on a slight decline in recent years. As mentioned previously, selection and consolidation occurred mainly in the electric and electronics industries, etc., reorganizing those industries. Accordingly, a growing number of companies are shifting their intellectual property strategy from large-scale application and acquisition of patents focusing on defense to the acquisition of high-quality patents which are useful in developing a core business. As a result, the trend is thought to restrain the number of applications despite active investment in R&D, resulting in a slight decrease in the number. Additionally, the Japan Patent Office has been making various efforts to accelerate the examination of patents by establishing a world-leading efficient business system and increasing the number of fixed-term examiners. While the number of applications is increasing throughout the world, the number of applications from foreign countries to Japan and from Japan to foreign countries is also expected to increase in Japan. Therefore, how to cope with the increase in the number of foreign applications remains an issue. Additionally, more efforts such as international partnership will be required to ensure a smooth examination process at foreign patent offices for applicants from Japan to foreign countries. Transition in the number of applications by industry sector and field Application trends differ by industry sector and field. In the medical field where many applications are submitted from foreign countries to Japan, the number of patent applications is expected to increase in the future. On the other hand, the number of applications internationally is on the decline in the biological field because the items to be covered by a patent became more predictable and analysis of the human genome 40

41 was completed in In the agriculture and civil engineering fields, which are deemed to be mature, the number of applications from Japan to foreign countries and from foreign countries to Japan is leveling off, and the number of domestic applications is decreasing. Additionally, in the electric and electronics fields where many applications are submitted from Japan to foreign countries, the ratio of the number of global applications to purely domestic applications is presently about 1:3. In the relevant fields, investment in R&D investment remains as active as ever, and many applications are expected in the future. (See Reference I-17) However, in every field, the number of applications may fluctuate considerably due to trends in the development of technology. For example, in November 2007, Professor Yamanaka at Kyoto University announced the successful creation of induced pluripotent stem cells (ips cells) (See below). While Japan is making nation-wide efforts to create an environment that facilitates the research of ips cells, research and development are expected to be more competitive throughout the rest of the world. It is highly likely that such innovation will affect the trend of applications in the biological field. investment in R&D is increasing. Meanwhile, the number of applications from foreign countries to Japan and from Japan to foreign countries is expected to increase. As for overall applications, the rate of the number of applications from foreign countries is estimated to increase annually. (See Reference I-18) Considering that the workload for a foreign application is greater than that for a domestic application, the workload is expected to further increase in accordance with the ever-increasing ratio of foreign applications. Diversifying Needs of Applicants When a look at corporate patent strategy is actually taken, it can be seen that many companies are dedicated to foreign applications by shifting the focus from domestic to foreign applications. (See Reference I-19) Therefore, there will be a greater need in the future to protect one invention as global intellectual property and to provide early protection for global intellectual property. Ongoing Acceleration of Globalization of Patent Applications As mentioned previously, the number of applications is, in itself, slightly decreasing. This is partly because the reorganization of industries in recent years and the effect of M&A, etc. suppress the number of applications despite active investment in R&D. However, if this reorganization levels off, the number of applications may turn from being on the decrease to being on the increase, depending on the patent strategy of Japanese companies, because 41

42 Reference I-17 Trends in Applications by Industry Sector and Forecast for Applications 30,000, ,000, Medical devices Actual Measurement Forecast Total number of applications Global Application ratio for Japanese applications 100% 80% 8,000 6,000 Japan Overseas Biotechnology Actual Measurement Overseas Japan(PCT) Overseas Japan Domestic Applications Forecast 100% 75% 18,000, 60% 4,000 50% 12,000, 40% 2,000 25% 6,000 20% 0 0% % ,000-20%- 2,000-25% (a) Group for applications from overseas 10,000, 000 9,000 8,000 7,000 6,000 5,000 4,000 Agriculture Actual Measurement Forecast 100% 90% 80% 70% 60% 50% 40% 20,000, ,000, 16,000, 14,000, 12,000, 10,000, 000 8,000 Civil Engineering & Construction Actual Measurement Forecast 100% 90% 80% 70% 60% 50% 40% 3,000 30% 6,000 30% (b) Group for applications from within the country only (domestic application group) 2,000 20% 1,000 10% 0 0% ,000-10%- 50, , Automobiles Forecast Actual Measurement 100% 80% 4,000 20% 2,000 10% 0 0% ,000-10% 80, , Electronics Parts & Semiconductors Actual Measurement Forecast 100% 75% 30, % (c) Group for applications from Japan to overseas 20, % 10, % 0 0% , % 40, % 20, % 0 0% , % 20, % The number of applications in 2005 and 2006 (in the left and above figures) still remains to be specified since some applications have not reached the deadline for entering the national phase of PCT as of the collection (November, 2007). No applications which are to enter the national phase from the point of collection until the deadline for entering the national phase (30 months from the priority date) are included in the data. The number of applications after 2007 is estimated from a trend function based on actual values after 2000 for each route. The number of applications in the 6 representative industry sectors above accounts for approximately 1/3 of the total number of applications, and the analysis of these industries enables one to grasp the trends of all applications to a certain extent. Reference I , ,000 Overall Total number of applications Global Application ratio for Japanese applications Actual measurement Forecast Overseas Japan (PCT) Overseas Japan Domestic Applications Japan Overseas 100% 80% 300,000 60% 200,000 40% 100,000 20% % 100,000-20% Both Reference I-17 and Reference I-18 were created based on data collected by the system of the Japan Patent Office 42

43 Reference I-19 Overseas Patent Strategy of Japanese Companies Omron (Source :2007 Annual Report) Patent acquisition is in progress in China, an important strategic area. Even in India where Intellectual Property Law is not fully established, we have started not only research on legal trends but also patent applications with due consideration of the future. Sumitomo Heavy Industries (Source :2007 Annual Report) Based on internationalization of business, we have been encouraging respective business divisions and related departments to actively promote patent applications overseas. Among a total of 3,512 patents owned by Sumitomo Heavy Industries Group, the percentage of those acquired overseas increased to 39%, namely, 1,376 as of May During the last four years, the number of foreign applications utilizing PCT (the Patent Cooperation Treaty) have increased. Takeda Pharmaceutical Company (Source :2007 Annual Report) The target is to become a Japanese world-wide pharmaceutical company. An Intellectual Property Center was established in the U.S. (in Chicago and San Diego) which accounts for a little less than 50% of the medical goods market and in Europe (in London) which accounts for a little less than 30% of the market. The number of patents owned at the end of FY2006 was 2,988, with an overseas ratio of 92%. Hitachi (Source :2007 R&D and Intellectual Property Report) We have been trying to increase the number of foreign applications in response to the globalization of Hitachi Group businesses. We intend to promote intellectual property activities so that the total number of foreign applications will exceed that of domestic applications in 2010 across Hitachi Group. Fujitsu (Source :2007 Intellectual Property Report) We will make efforts to acquire powerful patents not only in Europe and the U.S. but also in Asia under a global promotion system with a focus on Japan. The number of foreign applications is steadily increasing year by year. In recent years, we have been increasing the number of applications in Europe and Asia. Currently, the ratio of foreign applications exceeds 60% in the information communication industry, which is extremely high. JSR (Source :2007 Intellectual Property Report) In response to global business development, we will focus on the acquisition of intellectual property rights in Asian countries such as Korea, Taiwan and China in addition to Europe and the U.S. and will try to establish and extend the range of an intellectual property network. * The statements in the quotation marks are extracts from reports from each company, and copyrights thereof belong to the respective companies. 43

44 (2) In order to realize an Examination System Corresponding to Diversifying Needs of Applicants As for the start of the examination process, some applicants want accelerated examination. And there is the need to expect a super early stage in needs to expect an early stage, so it can be said that the needs of applicants are diversifying. On the other hand, others do not always expect early examination for example when it takes a lot of time for commercialization. It is necessary to develop a flexible examination system which starts an examination at a timing corresponding to the various needs of applicants as well as responds to the request of the international work sharing. Also, as globalization advances, it is essential to enable one invention to be protected efficiently and at an accelerated pace as global intellectual property. In particular, as the number of applications from Japan to foreign countries is on the increase, it is necessary to coordinate international cooperation so that applicants in Japan can acquire patents in foreign countries efficiently. Moreover, with the increase in the number of applications globally, the workload for foreign applications in Japan is expanding. It is important for the Japanese Patent Office to promote the international work sharing for the streamlining of examination. This is a necessity for Japan, which is a major player in the global patent field, to make a contribution to the world. In the promotion of international cooperation, acceleration of the examination of duplicated applications where an application is made in foreign countries based on an application made in Japan and the rapid release of examination results to overseas while examination of a foreign application is being performed efficiently using the results of the foreign examination are required. As Japan adopts a Request for Examination System, one of the major issues is how to manage a flexible start of an examination and how to accelerate the examination of such a duplicated application by making use of this advantage. With the increase in the workload, the number of examinations available for accelerated examination is limited. Therefore, how to operate examination in accordance with user needs in terms of the timing to start examination may become an issue. Diversifying needs of applicants Applicants have various needs for the timing at which the examination is to start depending on diversified elements including the contents of an invention, circumstances particular to the industry and field, and a business plan to use said invention, etc. Currently, in order to meet the needs of applicants, an accelerated examination system is offered for an application for which the applicant, who is planning to exploit an invention, desires a more accelerated examination. (See Reference I-20) This system enables a more prioritized start of examination for an application requested from the applicant than for other applications. As for the appeals and trials, a similar accelerated appeals examination system is offered. It is necessary to meet the needs of applicants in terms of the promotion of innovation through more practical use of systems and improvement of systems. However, as the needs of applicants vary ranging from those who are requesting accelerated examination to those who are not. And there are the needs to expect the super early stage in the needs to expect the early stage, so it can be said that needs of applicants is diversifying. It is necessary to expand the 44

45 accelerated examination system and to discuss an examination system corresponding to further user needs. For example, as for inventions aiming at rapid commercialization, inventions with a shorter life-cycle, inventions for which quick finding of a sponsor is desired based on the patent rights, and inventions for which accelerated examination in foreign countries is required based on the examination results in Japan, showing the results of the examination in a short amount of time from the filing of the application is a strict requirement. And there are various needs about examination timing in the needs to expect the early stage. On the other hand, as for inventions that require a great deal of time until commercialization can be realized, basic inventions for which the pursuit of a patent is recommended after various applications development is conducted and inventions which are closely related to the establishment of international standards which require a great deal of time, there is not merely a few applicants who do not want accelerated examination because a long time is required to determine the necessity of obtainment of a patent and the contents of patent claims. Thus, the needs of applicants is diversifying. Also, with the advance of globalization and the need to efficiently protect one invention as global intellectual property quickly is strong. So, the building of a work-sharing system among the offices shall be important. To respond to the needs of applicants for expeditious procuring patents in foreign countries, accelerated examination needs to be expanded. In other words, it is necessary to develop a flexible examination system to meet the need to protect one invention efficiently as global intellectual property as well as to start examination at a timing corresponding to the various needs of applications. As the number of applications from Japan to foreign countries increases, in order to meet Japanese applicants needs to protect an invention as global intellectual property efficiently and to ensure expeditious examination in foreign countries, it is necessary to promote international cooperation. Accelerated Examination System of different countries Countr y/instit ution Subject fe e Prior Art Search Applications related to Working inventions Applications filed internationally Japan Applications related to Academic institutions Applications related to small and medium-sized enterprises (Provision: Guidelines) - P Applications for which preferential examination, examination

46 performed in preference to other patent applications, is allowed as necessary where a third party works on the invention of the application after publication of the application (Provision: Article 48sexies of the Patent Act) Applications to which the Patent Prosecution Highway is applied The U.S. Applications in particular fields Applications which are to work in the U.S. P P (*1) and so on (Provision: 37CFR1.102(c) / (d), MPEP ) The EPO Repub lic of Korea China All applications (Provision: Notification by the EPO President( )) Applications on which a third party works after publication thereof Applications in particular fields Applications from a venture company Patent applications which are the basis for priority Applications for working inventions Applications to which the Patent Prosecution Highway is applied and so on ( Provision : Article 61 of the Patent Act, Patent Regulations, the Patent Act Enforcement Decree and Guidelines, etc.) Applications which have significant importance to the national or public interest Applications for which the State Intellectual Property Office of the People s Republic of China starts substantive examinations itself (Provision: Examination Guidelines in China) * 9 : Required, P : Required (Partially not required), - : Not required *1 Partially not required for the Patent Examination Highway, etc. 46

47 Changes in the Circumstances Surrounding Examination As previously mentioned, the number of patent applications is increasing globally because of economic globalization, sophistication of technology, and the growth of open innovation. In Japan, the workload for foreign applications is apparently increasing. Therefore, it is important for the Japan Patent Office to promote streamlining the examination process and the international work sharing. It is important that it has to be promoted on the basis of the various needs of the applicants on this occasion. Perspectives for Responding to Diversifying Needs In other words, it is necessary to consider the situation from the view of the needs of applicants rather than promotion of acceleration in a single uniform way. Specifically speaking, by improving and diversifying the already-implemented Accelerated Examination System, it is needed to promote further acceleration of patent examination flexibly, corresponding to the various needs of applicants. It is important that it has to be promoted on the basis of the various needs of the applicants on this occasion. On the occasion of the realization of the examination system which responds to such a various needs, it is necessary to build a system with a phased approach based on the trend in applicant needs and the development status of the system. And, for example, it is considered to build a future examination system through three phases of the next. could be established so that examination could be processed more quickly than in the current accelerated examination system. In this system, an examination would be completed in approximately two weeks to one month in cases in which the applicant wants quicker examination than that of the current accelerated examination system (2-3 months). Therefore, JPO decided to try this system from October of this year (2008). On the occasion of enforcement of a Super Accelerated Examination System, target applications can be in the field of leading-edge technology, such as biotechnology, nanotechnology, and environment technology and can be limited to applications for which international work sharing is performed (the Patent Examination Highway, JP-FIRST). Accelerated Examination System and Work Sharing It is necessary to promote the efforts of the work sharing and to deepen partnerships with the patent offices of various countries in order to enable the rapid release of examination results by the framework of Accelerated Examination as well as to enable users to efficiently protect one invention as global intellectual property. Specifically, by examination results of Japan being made to be available in examinations in foreign countries, examination in foreign countries is expected to be facilitated. It is expected that the work sharing will be accelerated through this, and Japan, which plays an important role in the global patent field, may make contributions to the world. Establishment of a Super Accelerated Examination System (STEP1) For example, a Super Examination System For Flexible Examination System ~ Fee/Prior Art Search~(STEP2) The goal of making patent examination be 47

48 accelerated is to reduce the length of the waiting time for examination to 11 months by 2013, but with the establishment of a Super Accelerated Examination System, retarded examination occurs, in comparison with the average examination starting time. Therefore, it will be necessary to examine the adequateness of the occurrence of retarded Examination and the Examination System itself. Also, in order to realize an accelerated examination system such as the Super Accelerated Examination System, it will be necessary to examine on the institutional side to demand attachment of the prior art investigation and to demand additional charges from the standpoint of fairness between such examination and regular examination. Furthermore, to start examination at a timing corresponding to the needs of applicants, it is necessary that the examination process (a prospect of the examination start time) become transparent. For More Flexible Response ~ The Necessity to Evaluate Examination Time in terms of User Satisfaction (STEP3) To build an examination system which responds to the needs of applicants, it becomes important to evaluate the examination system in terms of user satisfaction. In other words, it will be necessary to examine an index evaluating whether the examination starts at a timing corresponding to the needs of applicants and not the average examination start time. In addition, when the Super Accelerated Examination System is established, there will be three phases with a current accelerated examination and normal examination. Furthermore, it is considered necessary to prepare for a system of examination which has smoother and wider phases than three phases and corresponds to the needs of applicants more flexibly, if necessary, to promote applicant satisfaction. And because there will be various examinations with different examination timing through multiplying the phases of examination, further enhancement of examination systems being developed now must be performed to correspond to the needs of applicants and manage the progress of examinations efficiency. In order to manage the progress of examinations with different examination timings such as examination with an early start and examination with a late start,, improvement of the system for examination will be needed. In this way, to build the examination system which flexibly responds to the needs of users, improvement of the system for examination becomes important issue, so we have to aim at the realization which matches introduction timing of the new system, and it is necessary to examine an ideal method of the whole system. Various Needs of Applicants Although we use the Accelerated Examination System, some applications are made without any prospect of commercialization. A system which enables applicants to select the timing of examination in accordance with the needs of the applicants or a system in which the examination fees are lowered if the examination can be delayed is also expected. (Comment of PCIIP member) Efforts for a Reduced Examination Period We appreciate that various efforts are being made for a reduction in the length of the examination period for patent rights, and we believe the it is necessary to accelerate those efforts even further. ( Nippon Keidanren (the Japan Business Federation)) 48

49 Diversity in Timing when an Applicant wants to procure Patents In the work sharing between different countries and regional patent offices, the timing of examination among countries and regional patent offices needs to be adjusted. However, the timing at which an applicant wants to procure rights for each invention varies by applicant depending on the area of technology in which the invention belongs and the research and development stage at which the invention is created. (the Japan Intellectual Property Association) Reference I-20 (Number of cases) The number of cases filed a request for the accelerated examination system 8,549 9,000 6,000 3,000 <Reference: current accelerated examination system (since 1986)> In this current system, when applicants file a patent application Presently, it takes normally about two or three months until applicants corresponding to the following, the application will be subject to receive the results of examination after filing a request for accelerated accelerated examination. examination. (a) When it is planned to be implemented in business. The accelerated examination system was used for 8,500 cases annually. (b) When the application has already been filed in a foreign country. This accounts for approximately 3% of the total number of cases (more (c) Applications filed by small and medium-sized companies, than 300,000) examined. individuals, or universities. (a) The target of the system are inventions planned to be implemented in business (b) Addition of applications filed in foreign countries to the target (c) Addition of applications filed by small and medium-sized companies, individuals, and universities to the target

50 (3) The division of roles between the Public and Private sectors With the increase in the number of applications throughout the world, the workload in Japan is increasing, as well. In addition, the environment of examination is also changing. Specifically speaking, with the advance of globalization and the growth of open innovation, the importance of general technical documents and foreign documents in examination is increasing, in addition to patent literature in Japan. Moreover, IT technology is making progress. Under these circumstances, it is necessary to address the expansion of the workload and respond to the needs of applications while streamlining prior art searches. In the U.S., they are making efforts to utilize the knowledge of the private sector for the prior art searches. In Japan, we also need to discuss the role of the public and the private sectors for the streamlining of prior art searches. Changes in the Environment of Examination Because of the advance of economic globalization, changes in the environment for innovation, and the progress of IT technology, the environment for patent examination is changing. Changes in the Environment (a): Increase in the number of Patent Applications There is an increase in the number of domestic applications in each country due to the global expansion of investment in R&D and the increase in the number of foreign applications due to economic globalization. Thus, the number of patent applications is increasing throughout the world. Changes in the Environment (b) : Diversification of the documents used for examination ( Importance of non-patent literature) With the growth of Open Innovation, the horizontal division of work advances. The environment for innovation which promotes research and development and commercialization taking advantage of external technical capabilities is expanding. Therefore, the importance of academic literature in the industrial world as well as the importance of patent literature at universities is enhanced. Also, because of the globalization of R&D activities, the importance of documents in foreign languages is increasing, and the kinds of documents used for examination are becoming diversified. Changes in the Environment (c) : the Advancement of IT Technology With the advancement of IT technology, accessibility to various documents and the search environment in the private sector are improving, and global sharing of knowledge and information is advancing. Trends in the U.S. In the U.S., as mentioned above, various arguments and actions are accomplished to maintain the stability of the patent system because of a rapid increase in patent applications. In the argument of the American patent reform bill, promotion of efficiency of the examination becomes the point at issue. As a framework in which advantage is taken of the knowledge in the private sector, a framework called the Community Patent Review (to be described later) was proposed by the private sector in the U.S. and implemented in a trial run as a joint initiative with the US Patent and Trademark Office. 50

51 (i) The Patent Reform Act in the U.S.(The 110 th Session of Congress S1145/HR1908) Submissions of prior art by applicants or third parties is one of the major topics in the U.S. Patent Reform Act which is currently under deliberation in the U.S Congress. Under the current law, an applicant has a duty to disclose all information known to him/her to material for patentability in an Information Disclosure Statement (an IDS). However, issuing a requirement for the mandatory filing of a search report on prior art (a Search Report), etc. like the Examination Support Document (ESD) which is now requested for Accelerated Examination is being discussed. This is a provision called AQS (Applicant Quality Submission), and the issue at hand is the requirement for the submission of a Search Report as well as other information on patentability, an analysis of patentability, and other information. (ii) Community Patent Review Community Patent Review is a system that will promote the submission of prior art utilizing an open network, and it is expected that it will enable the collection of information on prior art from private engineers at large. In the argument of the patent reform bill of above (i), a prior art submission system by third parties becomes the point at issue and the system is being reviewed for improvements such as enabling the addition of a concise description of the asserted relevance of each submitted document, which was not possible before, and became acceptable. As it enables the provision of comments (explanation) in addition to document information, it is thought that a mechanism such as the Community Patent Review will work smoothly. (See Part III 3. (4)) Efforts expected by the Industrial World Because of the increase in the number of patent applications, in order to accelerate patent examination, the streamlining of prior art searches is an important issue. However, it seems that intellectual property stakeholders and engineers in the private sector, including applicants, have a great deal of expertise on prior art. Moreover, recently, with the development of IT technology, searches for prior art by the private sector were facilitated. Thus, further streamlining of examination is expected by utilization of prior art knowledge held by the private sector. In particular, since the kinds of documents used for examination are being diversified, it will become effective to take advantage of the knowledge of the private sector. Also, considering the fact that cases in which domestic applications are more likely to be abandoned without any amendment after a First Action than global ones, we think that there is some room to review requests for examination by close examination of an application by the applicants themselves. The Work Sharing between the Public and Private Sectors In Japan, in order for the examination process to be streamlined, a disclosure system of documents on prior art was introduced with the revision of the Patent Law in 2002 as a part of the efforts to utilize the knowledge of applicants. In addition, other efforts and considerations are being made to utilize the knowledge of the private sector in addition to this for further streamlining of examination. (i) Going online for Submission of Prior Art by Third Parties The submission of prior art under the current system is limited to documents. However, in order 51

52 to promote the utilization of a prior art submission system, the submission of information via PC as well as anonymous submission will be enabled by FY2008. (ii) Community Patent Review In the future, this system may be disseminated to countries all throughout the world and moved into the position of one of the global infrastructures of the intellectual property system. In preparation for such a case, Japan intends to implement the Community Patent Review on a trial basis (See Part III 3. (4)) (iii) Accelerated Examination System and Self-Search Accelerated examination, during which an application is examined prior to other applications in order to respond to the needs of applicants, requires the applicant to make prior art searches and is designed to realize an examination corresponding to the needs of the application and streamlining of examination. To build an examination system which flexibly responds to the diversifying needs of users, we draw up the concept for the realization of the system for examination corresponding to various needs, for example establishment of a Super Accelerated Examination System. (See Part I 2. (2)) In other words, in particular, in order to realize a system which correspond to the various needs of applicants mentioned above, we may have to require the applicants to perform prior art searches by themselves or attach the results of a prior art search by a specified registered search organization. Disclosure of information on prior art documents system Disclosure of information on prior art documents system was introduced to require an applicant to disclose information on prior art which is related to an invention for which a patent is sought with the aim of timely examination (effective in September, 2002). Further, it contributes to stabilizing the patent right because it facilitates accurate evaluation between the invention for which a patent is sought and the prior art. With regard to provision of information system by a third party, it is also introduced in order to improve the accuracy and timeliness of examination. The number is growing over time and 76 percent of information provided is used in the notice of reason for refusal. These systems are expected to be fully utilized by applicants and the third parties because they are beneficial for both improving efficiency of examination and setting a stable right. Necessity of a Global Common Search Environment through the Public and Private Sectors In order to promote the work sharing between the public and private sectors, it is important to develop an environment in which a sufficient prior art search by the private sector can be performed. Thus, it is necessary to discuss the realization of a system with which a seamless search of technological information of universities and private companies, etc., in addition to patent information as well as the documents in the foreign language, can be made. This is an environment necessary not only for applicants but also for the Patent Office in conducting an efficient search. Also, this becomes the important base for the current status of research and development at enterprises and universities. (See Part III 3. (2), (3)) 52

53 The Public and Private Work Sharing The Community Patent Review, which was put into practice on a trial basis in the U.S., is expected to be a system that will take advantage of the wisdom of the open community for patent examination. However, even though we have an information provision system to utilize the knowledge of a third party in patent examination in Japan, we believe that we should discuss the coexistence of the two systems after completion of a review of the information provision system and a consideration of the merits and demerits of the Community Patent Review and the information provision system. (the Japan Intellectual Property Association) 53

54 3. Necessity of patent harmonization Promotion of international patent harmonization in which Japan plays an active role A. Need to promote international patent harmonization -As one pillar to support a virtual Global Patent Office, it is necessary to achieve international patent harmonization of the substantive patent laws. With its realization, predictability of the obtainment of a patent would be enhanced and the procedure costs of protecting intellectual property globally would be lower. -Patent harmonization, which functions as an infrastructure of work sharing, is also important from the viewpoint of coping with rapidly increasing global applications. B. Present status of patent harmonization - International substantive patent harmonization has been discussed for 20 years or more since the initiation of discussion at WIPO in However, at a diplomatic conference thereof in 1991, the U.S. rejected the shift to the First-to-File principle and, thus, no agreement has been achieved. - Further, in 2004, at WIPO, the Japan, the U.S., and European trilateral offices proposed to limit the items of discussion to four main items (novelty, inventive steps, definition of prior art (the first-to-file system, etc.), and grace periods) in order to accelerate discussion, and the proposal was objected to by developing countries for such reasons that genetic resources, etc. were resultantly not discussed and, thereafter, the discussion s have not progressed. - Since 2005, at meetings of the developed countries including Japan, the U.S., and European countries, the above four items have been discussed. However, while the U.S. pays more attention to the profits of inventors, Europe pays more attention to the legal stability of a third party. Thus, discussion is still continuing regarding issues such as grace periods and 18 months publication. C. For the promotion of patent harmonization - For Japan, playing an active role in the discussion of patent harmonization by making the best use of the characteristic of having a system intermediate between that of the U.S. and that of Europe is required in order to complement the movement of the shift to the first-to-file system in the U.S. and to continue to encourage Europe to take a flexible stance. - In addition to the harmonization of substantive patent laws (provisions on patentability, etc.) discussed in advanced countries, it is also important to encourage WIPO to contribute to global patent harmonization, such as through improvement of the intellectual property systems of developing countries. - In the advancement of patent harmonization, it is important to pay attention to the opinions and the needs of the industrial sector and to advance patent harmonization so that opinions can become unified. D. Adjustment of the domestic system in Japan - Although Japan has a patent law system that is intermediate between that of the U.S. and that of European countries, for achievement of an agreement on patent harmonization between developed countries, in Japan, as well, a required law amendment may become necessary according to the progression of negotiations. The provisions which may need to be amended are, for example, (1) grace periods, (2) a PCT secret prior art (in this section, secret means the circumstance where the prior application is not disclosed at the filing date of a later application) and (3) third party rights (prior user rights), etc., according to the progression of negotiations, in any case, a flexible stance is required to move the harmonization forward. 54

55 <Outline> Promotion of international patent harmonization in which Japan plays an active role As one factor to support the Virtual Global Patent Office, harmonization of substantive patent law among different countries is required. However, as substantive harmonization among Japan, the U.S., and Europe has not been realized, efficiency in seeking the protection of one invention as global intellectual property is not maximized yet. Japan has a patent law system intermediate between that of the U.S. and that of Europe. By taking advantage of this, Japan should play an active role in discussion on international patent harmonization and seek to overcome the difference between the U.S. and Europe toward harmonization of the system of the U.S. and that of Europe. <The Present Structure> The U.S. is under deliberation for revision of the Patent Law Historical conversion from a first-to-invent principle to a first-to-file principle. However, this is contingent on expansion of the grace period by Europe and Japan. Now, both sides are going to wait and see. In Europe, there are differences in opinion. Some countries are reluctant to expand the grace period. Promotion of international patent harmonization By Japan playing an active role as a country having a system intermediate between the U.S. system and the European system. (a) Harmonization toward a first-to-file principle Japan encourages European countries to form a common opinion in Europe and take a flexible attitude toward the expansion of the grace period. This will encourage the conversion of the U.S. patent system to a first-to-file principle.. (b) Consideration of other issues Japan has a patent law system intermediate between that of the U.S. and that of Europe, regarding the given three points to be discussed for patent harmonization. Taking advantage of this, Japan will play an active role in the discussion for patent harmonization( ). In order to timely amend the Japanese Patent Law in response to the development of the negotiations, it is necessary to consider following issues in domestic law in advance. (i) Object and Duration of the grace period lasting from the publication of an invention to its filing date U.S. Within 12 months before the filing date, no matter what kind of publication, inventions can be protected. (It does not require a declaration.) Japan Within 6 months before the filing date, which is limited to the publication such as those in academia and academic journals, inventions can be protected. (In this case, it requires a declaration.) Europe Within 6 months before the filing date, which is limited to publications for international exposition, inventions can be protected. (In this case, it requires a declaration.) (ii) Adoption of a PCT secret prior art (Whether PCT applications not published in the official language, should be considered as a secret prior art for the later filing applications in the country or the region) U.S., Japan & Europe PCT applications which are not published in the official language are not considered as a secret prior art in the country or the region. Consequently, patent can be granted even for the later filing applications. (Ideal situation) Even if PCT applications are not published in the language of a country should be considered as a secret prior art for the later filing applications in the country. (iii) Prior user rights of a third party other than the patent holder U.S. As a principle, the patent holder can take out an injunction. However, if the invention is related to a business method, prior user rights may be given to a third party who made an invention by oneself and commercially used it. Japan A third party who made an invention by oneself and has been working the invention, no matter what kind of invention, has prior user rights. Europe In addition to a third party who made an invention by oneself, those who derived the invention from the original inventor and has been working it, have prior user rights. 55

56 (1) Background and current state of discussion concerning harmonization of patent systems Because of globalization, it is necessary for applicants to efficiently protect one invention as global intellectual property. Therefore, the harmonization of systems becomes necessary from the viewpoints of enhancing predictability for patent acquisition and of lowering procedure costs. Since making the work sharing progress between each Office comes to be an urgent task in dealing with the rapid increase in the number of global applications and duplicated examinations, the early realization of the harmonization of substantive patent law systems of each Office which becomes the infrastructure for the promotion of the work sharing becomes an important task. For the early realization of patent harmonization, it is an ideal time to accelerate discussion under such timing that the U.S. is taking a positive line for the shift to the first-to-file system in relation with revision of its domestic patent law. For Japan, playing an active role in discussions about patent harmonization by making the most use of the characteristic of having a system intermediate between that of the U.S. and that of Europe is expected. Harmonization in the Paris Convention - Substantive harmonization remains to be achieved- In the 18th century before an international agreement related to intellectual property was introduced, it was difficult to obtain rights in various countries due to the differences in the Law of each country. Particularly, with respect to patents, for prevention of the loss of novelty in another country by a publication of an application in a country, it was necessary that application be filed in every country nearly simultaneously. For avoiding such a burden, in the Paris Convention that was established in 1883, a mechanism for enabling the obtainment of patents worldwide, such as claiming of priority and national treatment, were introduced. However, since few substantive regulations that put the domestic law under control were incorporated, currently, as well, a framework in which patent filing, examination, and grant of rights are regulated under laws differing from one country to another is fundamentally maintained. Among developed countries, such as Japan, the U.S., and Europe, as well, there are large differences in the substantive patent law. Differences in patent systems between the U.S. and Europe The U.S. adopted the first-to-invent system from an initial period in which the patent law was put in place and is now maintaining this system as the only country in the world doing so. Further, the U.S. possesses least conditional and one of the longest grace period in relation with the first-to-invention system. On the other hand, Europe possessed systems different from one country to another until the middle of the 20th Century; however, for fitting together with the European Patent Convention which entered into force in 1977, the patent law of each country was amended. In the European Patent Convention, in order to prevent a patent that was granted legitimately from becoming invalid after a certain amount of time in a contracting state, an absolute novelty was adopted and the limited grace period was also adopted. Therefore, countries such as (the former) West Germany in which, formerly, a grace period was accepted to a certain extent, had amended the law to adopt a limited grace period, which has been continued up to the present date. Up-to-date discussion regarding the harmonization of patent systems (WIPO / 56

57 Meeting of developed countries) Thus, patent systems different from one country to another have been maintained for a long time. However, in the present age in which globalization is further advanced, international rulemaking for supporting cross-border activities of enterprises, etc. is required. International substantive patent harmonization has been discussed for over 20 years or more since the initiation of discussion at WIPO in However, at a diplomatic conference thereof in 1991, the U.S. rejected the shift to the First-to-File principle, which thus no agreement has achieved Further, in 2004, at WIPO, Japan, the U.S., and Europe Trilateral offices proposed to limit the items of discussion to four main items (novelty, inventive steps, definition of prior art (the first-to-file system, etc.), and grace periods) in order to accelerate discussion, and the proposal was objected to by developing countries for such reasons that genetic resource, etc. came not to be discussed, and thereafter, the discussion has not progressed. Since 2005, at meetings of developed countries including Japan, the U.S., and Europe, the above 4 items have been discussed. In this discussion, while the U.S. tends to be attentive to benefits of inventors, Europe tends to be attentive to the legal stability for a third party. Thus, discussion is still continuing regarding issues such as grace periods and 18 months publication. (See Reference I-22) Necessity for patent harmonization Because of globalization, it is becoming necessary for applicants to efficiently protect one invention as global intellectual property. Therefore, patent harmonization becomes necessary from the viewpoints of enhancing predictability for the obtainment of patents and of lowering procedure costs. 57 Further, needs for patent right acquisition in various countries are growing with the advance of economic globalization. The number of patent applications in the world has rapidly increased and has reached about 1,660,000 in The fact that about 40% of the applications in the world are filed by nonresidents of the country in which they are filed shows such a tendency that the same applications have been filed duplicatively in Offices throughout the world, and it is thought that this tendency will continue in the future. Since it has become an urgent task to promote the work sharing between different Offices to deal with the aforementioned rapid increase in the number of global applications and duplicated examinations, and to respond to various user needs, early realization of international harmonization of substantive patent laws becomes an important task, which becomes an infrastructure for the promotion of the work sharing. (See Reference I-21) Patent predictability in global exercising of rights Since the field of pharmaceutical products is a field in which patents are most likely to function, the obtainment of rights in this field should be global. For the enhancement of patent predictability in global exercising of rights, it is desired that Japan play an active role in the making of world standards. (Comment of PCIIP member) Japan s Active role in patent harmonization It is considered that, toward the early realization of patent harmonization, it is necessary to accelerate discussions taking hold of such timing that the U.S. is taking flexibility for the shift to the First-to-File principle in relation with the revision of the domestic patent law. For Japan, playing an active role in the discussion of patent harmonization by making the most use of the characteristic of having a system

58 intermediate between that of the U.S. and that of Europe is required in order to encourage the movement of the shift to the first-to-file system in the U.S. and to continue to encourage Europe to take a flexible stance (details to be described later). System harmonization It is thought that it is important that patent harmonization be tackled based on such a conception that, fundamentally, international harmonization is promoted by the advancement of harmonization, to the extent feasible, at each level of bilateral offices; Japan, the U.S., and Europe; developed countries; Japan, the U.S., Europe, China, and Republic of Korea; WIPO, etc. Actually, based on proposals from the industrial sector, the efforts of the Japan, the U.S., and Europe Trilateral Offices toward common application format have been conducted. Further, the industrial sector expects the efforts of the Trilateral Offices to assist in the achievement of "One Search, One Examination" and also will make a specific proposal. Further, active efforts, such as the extension of these systems to other countries, by other regions will be appreciated. (Japan Intellectual Property Association) U.S. draft revision of patent law, 2007 On September 7, 2007, it passed through the Lower House and was waiting for deliberation in full Senate (as of April 2008) The shift to "First-to-File" (there are partially exceptional articles) The shift to "First-to-File " is a trigger article on condition of adoption of a U.S.-style grace period by Japan and Europe. Publication at 18 months (there is easing of a measure thereof) Elimination of the Hilmer Doctrine Introduction of Post-Grant Opposition Revision of damages Applicant Quality Submission, etc. * There is conflict between the IT industry and the pharmaceutical industry with a central focus on damages. 58

59 Reference I-21 Relationship between promotion of the international patent harmonization and work sharing in the concept of the Virtual Global patent office Patent law harmonization Harmonization of examination standards Enhancement of consistency in examination quality - Toward construction of a Virtual Global Patent Office aiming at global harmonization of patent quality at a high level - Promotion of efficiency / promotion of the work sharing (a) Improvement of predictability for obtainment of patents and reduction of procedural costs. (b) By promoting the work sharing to utilize examination results from the Office of First Filing in the Office of Second Filing, efficiency of obtainment of patents overseas is promoted. Developing mutual trust is a key point. Hold meetings between examiner of different offices Implement the work sharing Enhancement of consistency in the search environment Enhancement of existing IT network among Offices is needed. Virtuous cycle between improvement of consistency in patent quality by performance of the work sharing and promotion of efficiency in the work sharing Construct a more substantive international patent collaboration as Virtual Global patent office Corresponding to the needs of applicants Construct a framework in which applicants can protect one invention as global intellectual property timely and efficiently by using an accelerated examination system or the work sharing. International contribution and promotion of efficiency of examination By providing examination results at an early stage to overseas corresponding to the needs of applicants, international contribution is made in the framework of international cooperation. Promoting the work sharing leads to an enhancement in examination efficiency and results in a solution to deal with global increase of patent. Reference I-22 Patent harmonization discussion at WIPO and establishment of a B+ meeting 1985: Initial discussion of patent harmonization at WIPO 1991: The U.S. refused to shift to First-to-File from First-to-Invent 2004: Blocked at WIPO by developing countries Since 2005, Developed countries focused efforts on major issues(*). (*) Novelty, Inventive steps, First-to-File, Grace period, (#) etc. September 2006 B+ Plenary meeting: Agreement on drafting treaty language based on compromise package The U.S. took flexibility toward a shift to a First-to-File in return for the expanded grace period by EU & JP. Some European countries were reluctant to expand the grace period. June 2007 G8 Heiligendam Summit / Japan-EU Summit: Importance of international patent harmonization and having an efficient patent system (Press Statement) September 2007 Meeting of developed countries: With regard to a list of items proposed by the WG1chairman, including First-to-File and Grace Peri iod, a certain amount of understanding was reached, and further discussion will be continued. 59 (#) The public disclosure of the invention before the filing date does not affect the patentability of the invention.

60 (2) Promotion of international patent harmonization Because of globalization, it is necessary to efficiently protect one invention in a plurality of countries. Therefore, patent harmonization becomes necessary from the viewpoints of enhancing the predictability of the obtainment of a patent and of lowering procedure costs. Further, in order to deal with the rapid increase in the number of global applications and the resultant increase of duplicated applications in each country, the early realization of international harmonization of the substantive patent laws of all countries involved has become important, which is necessary for the promotion of work sharing. For Japan, making the most use of such characteristics that Japan has a patent law system intermediate between that of the U.S. and that of Europe is necessary, to encourage the movement of the shift to the first-to-file principle in the U.S., to continue to encourage Europe to take a more flexible stance, and to play an active role in the discussion for patent harmonization. Although the Japanese patent law system is a system intermediate between that of the U.S. and that of Europe, it is expected that, for achievement of an agreement on patent harmonization between developed countries, it may become necessary for Japan to amend the system (amendment of the law) with respect to (a) grace periods, (b) PCT secret prior art, (c) third party rights (prior user rights), etc., according to the progression of negotiations. In any case, a flexible stance is required to move the harmonization forward. State and need for accelerating discussion regarding patent harmonization Because of globalization, it is necessary to efficiently protect one invention in a plurality of countries. Therefore, patent harmonization becomes necessary from the viewpoints of enhancing predictability of the obtainment of a patent and of lowering procedure costs. Further, since the promotion of the work sharing between different Patent Offices has become more important in order to deal with the rapid increase in the number of global applications and the resultant increase in the number of duplicated applications in each country. For promotion of such a work sharing and for the construction of a more substantial framework of international patent collaboration, which can be referred to as a Virtual Global Patent Office in the sense that applicants can efficiently protect one invention as a global intellectual property, it is important to realize international patent harmonization of the substantive patent laws at an early stage, which becomes the infrastructure of the above framework. Since the U.S. demonstrates flexibility regarding a shift to the first-to-file system in the amendment of domestic law, it is necessary to make use of the opportunity to accelerate discussion. Future promotion of discussion for patent harmonization at multilateral level For Japan, making the most use of such Japanese characteristics that Japan has a patent law system intermediate between that of the U.S. and that of Europe is necessary. In concrete terms, encouraging the movement of the shift to the first-to-file system in the U.S., continuing to encourage Europe to take a more flexible stance, and playing an active role in the discussion for patent harmonization are needed. In particular, in Europe, it is expected that the opinions of various Patent Offices in Europe will be gathered together, the EC (the European Commission) and the EPO (the European Patent Office) will assume a more active role as the representatives of Europe in the global discussion, 60

61 and opinions within Europe will become unified. Toward patent harmonization based on the needs of the industrial sector Patent harmonization affords such benefits as an enhancement in predictability for the obtainment of a patent and a lowering of procedure costs, etc. to users who desire to efficiently protect one invention as global intellectual property. Thus, in the advancement of patent harmonization, it is important to pay attention to the opinions and the needs of the industrial sector and to advance patent harmonization so that opinions can become uniform. On the other hand, the industrial sector itself needs to hold discussions toward realization of patent harmonization world wide and to request reflection of its opinions. Adjustment of the domestic system in Japan Although Japan has a patent law system intermediate between that of the U.S. and that of Europe, for achievement of an agreement on patent harmonization between developed countries, in Japan, as well, a required law amendment may become necessary according to the progression of negotiations. The provisions which may need to be amended are, for example, (a) grace periods, (b) a PCT secret prior art (in this section, secret means the circumstance where the prior application is not disclosed at the filing date of a later application) and (c) third party rights (prior user rights), etc., according to the progression of negotiations; in any case, a flexible stance is required to move the harmonization forward. (See Reference I-23) Importance of the role of WIPO Under such circumstances that intellectual property policies throughout the entire world are complicated, the economies of different countries are becoming globalized, and the number of patent applications is increasing rapidly. For coping appropriately with the rapid increase in the number of patent applications by combining the resources of all of the offices, efforts by the entire world need to be made by advancement of the discussion for patent harmonization between developed countries and by revitalization of the discussion at WIPO. Therefore, in addition to the harmonization of substantive patent laws (provisions on patentability, etc.) discussed in advanced countries, it is also important to encourage WIPO to contribute to global patent harmonization, such as through improvement of the intellectual property systems of developing countries. (a) Grace periods Under the first-to-file principle, when an invention has become publicly known before the filing date of the same invention, the invention loses novelty, in principle. Therefore, for example, in cases where an invention is filed after publication thereof in a paper, there is such a probability that the patentability of the invention may be lost by the publication thereof. However, such exceptions that the patentability of an invention is not lost by publication thereof may be granted, if certain requirements are satisfied. The applicable period for exceptions is so called the grace period. The requirements for the exceptions (length, condition of disclosure, and necessity of declaration) vary depending on the country. If agreement on the content which is now being discussed among developed countries 61

62 is achieved, such amendments to the law as abolishing the requirements for declaration, extending the period from 6 months to 12 months, and enlarging the applicable type of disclosure seem to be needed. (b) PCT applications apply as a secret prior art It is an issue whether any PCT application is given a status of secret prior art in designated countries/regions, although it has not been filed with official language(s) and not entered into national phase of those countries/regions (in this section, secret means the circumstance where the prior application is not disclosed at the filing date of a later application.). Even if a PCT application that has been internationally published does not enter the national phase in Japan and enters that of another country, there is a need to regard the PCT application as secret prior art for other Japanese applications. In this case, even a PCT application that has been published in a language other than Japanese becomes secret prior art in Japan. (c) Third party rights (prior user rights) At the time of the filing of an application for an invention, if a third party has been working an invention identical to the said invention, the third party can continue working the invention, and this is a third party right. If an agreement is achieved in such a direction that the third party rights are optional in each country, which is now under consideration, an amendment to the law seems to be unnecessary (However, if the rights for a third party, working an invention which was derived from the inventor, is mandatory, which Europe asserts, such a requirement is not enforceable under current Japanese patent law. ). For patent harmonization Although it is difficult to promote international patent harmonization all at once, Japan is now in a position where it could actively promote patent harmonization. Therefore, we desire Japan to firmly promote patent harmonization. (Comment of PCIIP member). Role of WIPO Norm development exercises, such as substantive patent harmonization, have proven problematic for WIPO in recent years. WIPO has been challenged recently due to debates about the Development Agenda. The Development Agenda raises some legitimate concerns of developing and least-developed countries as to how intellectual property would best serve their interests in economic and social development. We believe that WIPO and its Member States, including Japan, can ensure these interests can be fully pursued while ensuring that WIPO does not stray from its core mission to promote the protection of intellectual property. (Microsoft) 62

63 Reference I-23 Circumstances of discussion for patent harmonization among developed countries Legal stability of a third party Profits for inventor is Main items which could be issues is emphasized. in B+ meeting emphasized. Europe ( ) Japan The U.S. First-to-File Elimination of the Hilmer Doctrine 12 month grace period (GP) with no formal declaration Third party rights (Prior user rights) The abstract does not form part of the whole contents GP covers only erroneously published patent applications PCT secret prior art 18 month Publication Declaration / 6 months (limited (e.g. Expo)) Derivation from inventor Limited Declaration / 6 months (publication, etc) Independent only Limited First-Inventor-to-File The Hilmer Doctrine Business method only Abstracts prepared by applicant form Whole content (court precedent). All published applications Limited Exception for domestic applications (Note) Agreed with direction of patent harmonization There is a possibility that adjustment with national patent system will become necessary. ( ) Various European countries participating in the B+ meeting for patent harmonization are the EU members and European Patent Convention members (including countries planning such affiliation). The European Commission and the European Patent Office also participate therein. Background of stance of Japan, the U.S. and Europe with regard to patent harmonization Europe: Some countries are reluctant to expand Grace period and claiming mandatory 18 month publication EC (European Commission): Considering an unified patent system in the European Community EPO (European Patent Office): Administrating the European Patent Convention, which unifies the patent prosecution procedure in Europe London Agreement (took effect on May 2008): Reducing the applicant s burden on interpretation Each EU nation has its own mandate for the negotiation of patent harmonization. (Main Players) Administrating the patent law of each: The stance for the negotiation differs from country to country. Interests of the chemical industry may lie behind their stance. Political mechanism to strike a balance between profit and loss in Europe is necessary. Japan continues to encourage Europe to take a flexible stance. Japan has a patent law system intermediate between that of the U.S. and that of Europe. Leaders in politics and economics are urging the early realization of patent harmonization. e.g.g8 Summit, Japan EU Summit & Japan EU BDRT (June 2007), US EU Summit (April 2007) The U.S. demonstrates flexibility regarding a shift to the First to File system. (This is contingent on expansion of the grace period by Europe and Japan.) The progress of the globalization brings a movement to change the U.S. patent system to go along with world best Practice. A countermeasure for Patent Trolls is also behind this case. Patent Reform Act 2007 It passed the U.S. House on September 7 th, 2007 and is yet to be deliberated by the U.S. senate. The shift to "First-to-File" (there are partially exceptional articles) The shift to "First-to-File " is a trigger article on the condition of adoption of a U.S.-style grace period by Japan and Europe. 18 month Publication (there is easing of a measure thereof) Elimination of the Hilmer Doctrine Introduction of Post-Grant Opposition Revision of damages Applicant Quality Submission, etc. There is conflict between the IT industry and the pharmaceutical industry with a central focus on damages. Future Perspective and Strategy for the early realization of the patent harmonization Though the discussion is limited to main items, a fundamental change in principle of Patent Law of Europe and the U.S. may be needed. The discussion may continue and any result is difficult to foresee. It is important to advance patent harmonization under such timing that the U.S. patent law is going to be amended. 63

64 4. Partnerships with Developing Countries for Establishment of Global Intellectual Property Infrastructure Assistance in Launching Intellectual Creation Cycle in Developing Countries for Establishment of Global Intellectual Property Infrastructure: A New Initiative of Japan Information Sharing on Best Practices of Utilization of Intellectual Property in Business A. Need of Developed and Developing Countries for Global Infrastructure of Intellectual Property Systems With economic globalization, the number of patent applications filed in developing countries has been increasing. The vast majority of those patent applications, however, continue to be filed by applicants in developed countries, constituting a background for a north-south conflict regarding intellectual property policy. In order for developing countries to change such a situation and achieve economic advancement through the utilization of intellectual property systems based on creative activities in those developing countries, improvement of their own intellectual property systems is essential. The robust global infrastructure of intellectual property needs effective law enforcement. The increase in patent applications may result in more intellectual property disputes. It is therefore important to enhance the patent quality of both developed and developing countries so as to reduce needless disputes owing to the poor quality of patents. The effective enforcement of intellectual property laws should also ensure fair competition free from free-riding activities, including counterfeiting and piracy. Counterfeiting and piracy activities not only prevent global players from partnering with local players in developing countries, but also destroy national infant industries in developing countries. The global intellectual property infrastructure includes soft elements such as human capital skilled in intellectual property management, and global human and business networks. It should allow both worldwide players and their local partners to work on a level playing field of business for global business collaboration, leading to helping players of developing countries in increasing their ownership of intellectual property, through global partnerships, for enhancing their competitiveness and brands in the global market. Therefore, not only from the viewpoint of developed countries keen on anti-counterfeiting and anti-piracy measures but also from that of developing countries seeking the aforementioned business collaboration opportunities, the establishment of a global intellectual property infrastructure is desired. B. For Economic Development in Developing Countries Importance of Establishment of the Intellectual Creation Cycle The intellectual property system is an effective tool for the economic development of developing countries and thus is an indispensable infrastructure for those countries. Importance should be attached to the establishment of the intellectual creation cycle in developing countries, with a view to promoting their self-sustaining economic development. This, in turn, is expected to lead to the advancement of local industries including indigenous industries. Intellectual property protection forms a basis for direct investment and technology transfer from developed countries, through business collaboration (as mentioned under Item A), etc., and is therefore indispensable for the self-sustaining development of developing countries in this context as well. C. Tasks Ahead Sharing Best Practices of Utilization of Intellectual Property in Business With a view to promoting the intellectual creation cycle and facilitating the self-sustaining economic development of developing countries, it is considered necessary to share information with developing countries regarding the successful linkage of intellectual property and business in Japan and other countries. Specifically, proposals should be made at WIPO including the following: (a) Both developed and developing countries continuously share information worldwide on (i) the successful linkage of intellectual property and business and (ii) government assistance of small and medium-sized enterprises (SMEs) in the intellectual property field. It would be useful to include examples of the successful utilization of intellectual property in the context of measures for local industry promotion such as the One Village One Product program; (b) Developed countries, in particular, play an active role in collecting examples of successful linkage of intellectual property and business, and cooperate with WIPO to share such information; (c) Both developed and developing countries collaborate in the dissemination of knowledge regarding cases of successfully linking intellectual property and business as well as measures to support SME activities, in view of contextualizing such knowledge in the economy of developing countries; and (d) WIPO organizes meetings and seminars in which the participants include relevant authorities such as the World Bank and UNCTAD and experts in the areas concerned. The Japan Patent Office has been assisting Asian countries, including those in the ASEAN region, in the use of information technology, the development of human resources, and the introduction of work-sharing schemes in examination, taking into account the stage of development of each country. It is considered important, hereafter, to embark upon assistance to African countries, among others, having the above in mind, while strengthening ties with ASEAN member nations. 64

65 Assistance in Launching Intellectual Creation Cycle in Developing Countries for Establishment of Global Intellectual Property Infrastructure: A New Initiative of Japan Information Sharing on Best Practices of Utilization of Intellectual Property in Business <Outline> With the globalization of the world economy, the number of patent applications filed in developing countries has been increasing. The vast majority of those patent applications, however, continue to be filed by applicants in developed countries, constituting a background for a north-south conflict regarding intellectual property policy. In order for developing countries to change such a situation and achieve economic advancement through the utilization of the intellectual property systems based on creative activities in those developing countries, improvement of their own intellectual property systems is essential. Due attention should be paid to ensure that such improvement leads to the establishment of the global intellectual property infrastructure so that both worldwide players and their local partners enjoy a level playing field of business for their better collaboration, thereby benefiting developing countries as well as developed. Japan has experience in the advancement of its economy through, among other measures, the enhancement of its intellectual property systems in order to promote the intellectual creation cycle including the creation, protection, and utilization of intellectual property. On the basis of this experience, effective assistance to developing countries is considered to include: - encouraging the improvement of their intellectual property systems; - sharing with developing countries best practices of utilization of intellectual property in business to promote the intellectual creation cycle; and - thereby facilitating the self-sustaining economic development of developing countries. Carrying out assistance taking advantage of Japan s own experience of achieving advancement through the promotion of the intellectual creation cycle For the economic development of developing countries (b) Significance of intellectual property protection as a basis for technology transfer, etc. Intellectual property protection forms a basis for direct investment and technology transfer from developed countries, and is therefore indispensable for the self- sustaining development of developing countries in this context as well. (a) Importance of promoting the intellectual creation cycle Importance should be attached to the establishment of the intellectual creation cycle in developing countries, with a view to promoting their self-sustaining economic development. This, in turn, is expected to lead to the advancement of regional industries including local industries. Sharing Best Practices of Utilization of Intellectual Property in Business (i) Promotion of the intellectual creation cycle Sharing information regarding the successful linkage of intellectual property with business With a view to promoting the intellectual creation cycle and facilitating the self-sustaining economic development of developing countries, it is considered necessary to share information with developing countries regarding the successful linkage of intellectual property and business in Japan and other countries. Specifically, proposals should be made at WIPO including the following: a) Both developed and developing countries continuously share information worldwide on (I) the successful linkage of intellectual property and business and (II) government assistance of small and medium-sized enterprises (SMEs) in the intellectual property field. It would be useful to include examples of the successful utilization of intellectual property in the context of measures for regional industry promotion such as the One Village One Product program; b) Developed countries, in particular, play an active role in collecting examples of successful linkage of intellectual property and business, and cooperate with WIPO to share such information; c) Both developed and developing countries collaborate in the dissemination of knowledge regarding cases of successfully linking intellectual property and business as well as measures to support SME activities, in view of contextualizing such knowledge in the economy of developing countries; and d) WIPO organizes meetings and seminars in which the participants include relevant authorities such as the World Bank and UNCTAD and experts in the areas concerned. (ii) Assistance in the use of information technology and the development of human resources With a view to facilitating the improvement of the intellectual property systems of developing countries, the Japan Patent Office has been assisting Asian countries in the use of information technology, the development of human resources, and the introduction of work-sharing schemes in examination, taking into account the development stage of each country. It is considered important, hereafter, to embark upon assistance to African countries, among others, having the above in mind. 65

66 (1) Circumstances in developing countries With the globalization of patent applications, the number of patent applications has been increasing in developing countries as well. Most of those applications are filed by non-residents or industries in developed countries, which has caused political confrontation between the north and the south concerning intellectual property policies. For effective strategy and policies for development to be prepared and implemented, developing countries need to be convinced that the intellectual property system is an effective tool for business development for developing countries themselves, and indeed is a necessary social infrastructure for them. Therefore, for the encouragement of self-sustaining economic development of each country, it is necessary to assist the effort by which the intellectual creation cycle is established in developing countries. This assistance is expected to lead to the development of regional industries including local industries. In addition, intellectual property protection is the basis for direct investment or the transfer of technology from developed countries and is essential for self-sustaining development of developing countries. Further, since the global intellectual property infrastructure has been gaining importance in accordance with economic globalization, global consistency in patent quality is necessary so as to ensure that even in developing countries the patent quality is at the level equivalent to that of Japan, the U.S., and Europe. Further, due to economic globalization, a country not providing sufficient protection of intellectual property could be a loophole, where technologies could be appropriated and, the counterfeit and pirated goods would be produced and circulated from there to the rest of the world. From these viewpoints, importance is attached to the global improvement of the intellectual property system. It is on this basis that we have been providing assistance to developing countries in the improvement of their intellectual property infrastructure. Patent applications in developing countries With the globalization of patent applications, the number of patent applications has been increasing in developing countries as well. In developing countries, most of the applications are filed by applicants in developed countries. Needless to say, the intellectual property system is indispensable for investment promotion and economic development. However, for developing countries, the matter of fact is seemingly that developing countries have been maintaining the patent system for the protection of patent rights filed by applicants in the other countries. This forms a background factor causing a serious confrontation between the north and the south concerning intellectual property policies. (See Reference I-24, I-25) Towards the establishment of the intellectual creation cycle in developing countries Not only in developed countries but also in developing countries, gaining importance in their economic development is the expansion of intellectual creation activities resulting in intellectual property, such as technological innovations and the creation of designs and brands. Then, for encouraging self-sustaining economic development of developing countries, it is important to assist efforts for the establishment of the intellectual creation cycle, with a view to promoting activities for intellectual creation and the exploitation of intellectual property. Such 66

67 assistance is expected to lead to the development of regional industries including local industries. Further, intellectual property protection forms the basis for direct investment or technology transfer from developed countries. Under such circumstances where rights are not appropriately protected, it is difficult to attract investment or promote technology transfer from developed countries. Therefore, intellectual property protection is essential for the self-sustaining development of developing countries. Creation (Development of new technology, etc) Capital Intellectual creation cycle Intellectual property such as Technology Utilization (License agreement, etc) Protection (obtainment of rights, etc) Intellectual property rights Towards the establishment of the global intellectual property infrastructure Due to globalization, in order to ensure legal predictability and stability in the context of global economic activities, it has become important to improve the intellectual property infrastructure globally, in developing countries as well. The increase in the number of patent applications in developing countries may result in more disputes related to the patent rights in those countries. Thus, global consistency in the patent quality is necessary for ensuring the patent quality in developing countries equivalent to that in Japan, the U.S., and Europe. Therefore, in each developing country, it is necessary to improve the prosecution system, in accordance with its development stage, through such measures as the introduction of the work-haring schemes to utilize the examination results of other countries for better examination performance. Globalization and countermeasures against counterfeiting and piracy / Early conclusion of the ACTA desired Now that the production bases of enterprises are located globally, in any single country in the world their technologies may be stolen and counterfeited or pirated products for the rest of the world may be originated. Therefore, the global intellectual property infrastructure is important from the viewpoint of countermeasures against counterfeiting and piracy as well. Particularly in the field of patents, as the content of rights is not easily identified based on appearances unlike trademarks and industrial designs, proper judgments on infringement require appropriate examination of patent specifications as an important factor. Therefore, from the viewpoint of countermeasures against counterfeiting and piracy as well, the global improvement of the intellectual property system, including the improvement of the prosecution system, is necessary for global industries having business activities in developing countries. Furthermore, with a view to strengthening the enforcement of intellectual property rights, Japan has been making international efforts for the early conclusion of the Anti-Counterfeiting Trade Agreement (ACTA), having in mind the necessity for an international legal framework. Efforts for encouraging the improvement 67

68 of the intellectual property infrastructure in developing countries From the viewpoints above, Japan considers that it is necessary to assist the improvement of the intellectual property infrastructure in developing countries including those in Asia and Africa. More specifically, Japan considers that there is a necessity for providing assistance in computerization, human resource development, etc. and for promoting the introduction of schemes for work-sharing in the prosecution process, in accordance with the development stage of each country (the specific description is to be given later). Above all, most pressingly needed is the establishment of the intellectual creation cycle in developing countries for the creation, protection, and utilization of innovations, designs, and brands of developing countries. Since Japan has the experience of achieving economic development through the promotion of the intellectual creation cycle, it is important to share with developing countries successful experience of linking intellectual property and business. Improving the intellectual property system in developing countries is also important Business is extended throughout the world to developing countries. In anticipation of future business, the improvement of the intellectual property system in developing countries is also important. (Comment of PCIIP member) Manufacturing and the intellectual property system in developing countries Manufacturing capability has rapidly been growing in developing countries. Nonetheless, unclearness or uncertainty in their systems prevents us from enforcing intellectual property rights. For this reason, lawsuits are sometimes brought to the courts of developed countries. (Comment of PCIIP member) Counterfeiting problem With respect to the counterfeiting problem in developing countries, imitation techniques in developing countries are already at an extremely high level and products can easily be imitated. This poses our challenge. (Comment of PCIIP member) Sophisticated patent policy I agree with the conclusion of the background document that the pro-patent policy should be redefined as the sophisticated patent policy. This takes into account not only the usefulness of patents but also potential discouragement of research activities by patent enforcement and potential discriminatory negative impact on developing countries. It is therefore wise to develop patent policies with the involvement of a number of patent offices in the world, and would lead to the situation in which the patent offices of both developed and developing countries learn the best practices and policies. ( Opinion of a faculty member at the McGill University) 68

69 Reference I-24 Non-resident Filings as a Percentage of Total Filings by Office (2005) Mexico Singapore 96% 93% Thailand and India Brazil EPO 51% U.S. 47% China 46% 86% 82% 76% Most applications are filed by non- residents. World average 38% Korea 24% Japan 14% 0% 20% 40% 60% 80% 100% (source) WIPO Patent Report 2007 *The rate of non-resident filings with ARIPO/OAPI is reported to be about 97%. Reference I-25 Mexico India Filed by non-residents Filed by residents Ratio of applications filed by non-residents [%] 100 Filed by non-residents Filed by residents Ratio of applications filed by non-residents [%] Applications Applications Year (Source) Prepared by the JPO based on WIPO statistics Indonesia Filed by non-residents Filed by residents Ratio of applications filed by non-residents [%] Year (Source) Prepared by the JPO based on Annual Reports of the Office of the Controller General of Patents, Designs, Trademarks, Geographical Indications, Intellectual Property Training Institute and Patent Information System Vietnam Filed by non-residents Filed by residents Ratio of applications filed by non-residents [%] Applications Applications Year (Source) Prepared by the JPO based on the statistics on the website of Indonesian Directorate General of Intellectual Property Rights Year (Source) Prepared by the JPO based on Annual Report 2005 by national office of intellectual property of Vietnam. 69

70 (2) Diversified views on intellectual property among countries Between developed and developing countries, there are serious gaps in technologies and patents. In the 1960s, developing countries raised a question, Does the patent system contribute to the development of developing countries at all? Thereafter, at WIPO, etc., discussions in this regard have been carried out. Since the Development Goals were agreed upon in the UN Millennium Declaration (2000), developing countries have argued, at proceedings of international rulemaking in the field of intellectual property, that such rulemaking efforts should be reviewed from the viewpoint of development, and have proposed at WIPO the Development Agenda instituting an action plan concerning development issues. Subsequently, on the occasions of discussions regarding the development issues, the north-south confrontation has been intensified at WIPO, resulting in the stagnation of discussions for patent harmonization at WIPO, and thereby in hindrance to international rulemaking. Under such circumstances, developing countries have been raising the development issues in various fora for achieving their own objectives. Developed countries, on the other hand, seem to have shifted their focus from multilateral discussions to plurilateral or bilateral discussions, as shown, for example, in: (i) the establishment, outside WIPO, of an informal discussion forum of developed countries for patent harmonization called the B+ meeting to make progress in this regard, and (ii) the incorporation of provisions concerning intellectual property into bilateral arrangements such as Free Trade Agreements (FTAs) / Economic Partnership Agreements (EPAs). However, since the north-south issues concerning intellectual property include those requiring intellectual property expertise and coherent approaches to the issues reconciling the confrontation, it is now necessary that such issues be discussed thoroughly at WIPO, which is a specialized agency of intellectual property. With respect to the Development Agenda proposed at WIPO, following the adoption of the Agenda recommendations at the Assemblies of the Member States of WIPO in 2007 by consensus, discussions for the implementation of the agreed-upon items have been started. Such momentum should be maintained, and consideration should be given to the contributions to development that can be made at WIPO from the intellectual property perspective. In light of the fact that the establishment of the intellectual property system leads to the development of local industries through the promotion of innovation and the creation of original brands, etc. as well as to the improvement of the R&D and investment environment for foreign capital, importance should be attached to the support for capacity building activities including human resource development, which has been agreed upon in the Development Agenda. Furthermore, with respect to the issue of access to genetic resources, compliance with the Bonn Guidelines is effective for the fair and equitable benefit sharing to achieve the objectives of the Convention on Biological Diversity (CBD). Japan has been carrying out cooperative activities in partnerships with the authorities of various countries based upon the Bonn Guidelines, including the organization of workshops on access to genetic resources in cooperation with Asian countries. It is important to disseminate knowledge about, and promote understanding of, access to the genetic resources and thereby enhance cooperative ties with developing countries through the continuation of such efforts. North-south issues emerging in the intellectual property field in the 1970s 70

71 Between developed and developing countries, there are serious gaps in technologies and patents. In the 1960s, developing countries raised a question, Does the patent system contribute to the development of developing countries at all? Thereafter, circumstances for international consideration have been improved, as seen in the establishment of UNCTAD. To solve such north-south problem, the revision of the Paris Convention was attempted at WIPO and the formulation of the code of conduct concerning technology transfer was carried out at UNCTAD. Both of the efforts, however, resulted in failure. Transference of discussions concerning the north-south issues to the WTO Thus, for aiming at an agreement by placing intellectual property in a comprehensive balance from the aspect of trade negotiations the TRIPS agreement was accepted, on the occasion of the GATT Uruguay Round, as a new rule by both of the north and the south in the entire package of trade negotiations. By the agreement reached, a certain progress was made in the protection of intellectual property, such as the establishment of the minimum standard of intellectual property protection, with a focus on the enforcement aspect. Growing awareness of development issues in developing countries and multiplication of fora for intellectual property debates (a) Discussion at WIPO on the Development Agenda Since development goals were agreed upon in the UN Millennium Declaration (2000), developing countries have argued, at proceedings of international rulemaking in the intellectual property field, that such 71 rulemaking efforts should be reviewed from the viewpoint of development. In the WTO Doha Ministerial Declaration (2001), development issues were covered and the issues of public health, access to medicine, and the relationship with the CBD, etc. were incorporated into the Declaration. Furthermore, developing countries also proposed at WIPO the Development Agenda instituting an action plan concerning development issues (2004). Subsequently, on the occasions of discussions regarding the development issues, the north-south confrontation has been intensified at WIPO, resulting in the stagnation of discussions for patent harmonization at WIPO, and thereby in hindrance to international rulemaking. However, with respect to the Development Agenda, discussions towards its implementation have begun following the adoption of the Agenda recommendations at WIPO Assemblies in In this way, significant progress seems to have been made. (b) Discussion over genetic resources/traditional knowledge/folklore (GRTKF) 13 Developing countries have requested that developed countries establish an international framework for the protection of genetic resources/traditional knowledge/folklore (GRTKF) which are 13 GRTKF: The clarification itself of the definitions of GRTKF has become an essential issue because GRTKF definitions will have a direct impact on the scope of protectable subject matters. Particularly, for traditional knowledge and folklore, it would be very difficult to establish clear definitions. In general, traditional knowledge is considered as pieces of knowledge that have been handed down in indigenous and local communities for generations, while folklore is believed to be comprising such traditional cultural expressions as seen in ceramics and dances.

72 present in abundance in those developing countries, no less than in developed countries. Taking advantage of the conclusion of the Convention on Biological Diversity, developing countries have requested a political settlement with developed countries aiming at the enjoyment of benefits by the protection of the GRTKF from the aspect of intellectual property and have raised the issues in various fora, including WIPO and the WTO, making it increasingly difficult to solve the north-south issues. Furthermore, the issue of access to medicine has also come to be discussed in relation to intellectual property, and although, at the WTO, a certain achievement such as the adoption of a decision on the amendment of the TRIPS Agreement concerning access to medicine (2005) has been obtained, developing countries have made claims for more rights. Consequently, the discussion has spread to fora other than the specialized agency of intellectual property, such as the WHO, resulting in increasingly wide-ranged north-south confrontation. (See Reference I-26) Issues of development and intellectual property Thailand: Domestically, various discussions have taken place since November 2006, such as the exercise of a compulsory license for AIDS drugs. Indonesia: While reacting sharply to insufficient access to a vaccine against avian influenza, Indonesia refused to send the virus specimens to the WHO. In the context of this issue, intellectual property rights for the specimen of the virus were discussed (July, 2007). Challenges concerning the north-south issues With the globalization of the intellectual 72 property system, the compatibility between such globalization and calls for the system tailored for the development stage of each country has become a challenge. Furthermore, the claim of rights based on genetic resources, etc. needing no innovation has a partly mutual contradiction with the existing intellectual property system. The possible expansion of compulsory licensing or imposition of restriction on related intellectual property rights may affect the creation of innovation internationally, including that of Japan. Under such circumstances, discussions concerning intellectual property on the north-south issues have been conglutinated at WIPO, which is a specialized agency of intellectual property. In the meantime, developing countries have been raising the development issues in various fora in order to achieve their own objectives. Developed countries, on the other hand, seem to have shifted their focus from multilateral discussions to plurilateral or bilateral discussions, as shown, for example, in: (i) the establishment, outside WIPO, of an informal discussion forum of developed countries for patent harmonization called the B+ meeting 14 to make progress in this regard, and (ii) the incorporation of provisions concerning intellectual property into bilateral arrangements such as FTAs/EPAs. (See Reference I-26) 14 B+ meeting: The developed-country meeting originates in a preliminary meeting on patent harmonization organized by the United States Patent and Trademark Office (USPTO) in 2005 to share a view among developed countries on how to proceed with discussions on patent harmonization. The meeting consists of 42 countries and two organizations, namely, the members of Group B (group of developed countries) of WIPO, the European Union, and the European Patent Convention (EPC) as well as the European Patent Office (EPO) and the European Commission (EC). This means that the members of the meeting include the WIPO Group B members and some others, which is the reason the meeting is called the B+ meeting.

73 Importance of WIPO in the south-north issues - towards the establishment of the intellectual creation cycle - (a) The importance of WIPO Nonetheless, in order to find solutions to the north-south issues concerning intellectual property, it is necessary that such issues be discussed thoroughly at WIPO, which is a specialized agency of intellectual property, from the following reasons: (i) due consideration should be given to the implications of globalizing intellectual property systems upon the north-south issues; and (ii) some questions regarding GRTKF or access to medicine, etc., require intellectual property expertise. Importance of the establishment of the intellectual creation cycle (a) Efforts concerning the Development Agenda - further responses - Discussions of the Development Agenda proposed at WIPO have started towards specific implementation of the agreed-upon items following the adoption of Agenda recommendations at the Assemblies of the Member States of WIPO in In this way, signs of progress can be seen. This momentum should be maintained, and specific and individual consideration should be given at WIPO as to what contributions can be made from the intellectual property side. (b) Towards the establishment of the intellectual creation cycle Furthermore, for the fundamental solution of the north-south issues, intellectual creation activities such as innovation and design or brand creation are important not only in developed countries but also in developing countries. It is necessary to establish the intellectual creation cycle in developing countries, sharing with those countries the recognition that the establishment of the intellectual creation cycle, in which intellectual creation activities are encouraged and intellectual property is utilized, is beneficial to the local industries of developing countries themselves. Moreover, in light of the importance of improving the intellectual property systems to facilitate technology transfer and direct foreign investment as well as of capacity building in this regard, the role of WIPO, being capable of contributing to improving the intellectual property infrastructure while reducing the confrontation between the north and the south, has become further significant. (b) Ability of the Japan Patent Office to contribute to the establishment of the intellectual creation cycle In particular, Japan is one of the countries having achieved economic development through the utilization of its intellectual property systems, and thus, has a number of areas in which Japan can make contributions. The importance of intellectual creation activities is also applies to developing countries, as those activities afford developing countries opportunities for self-sustaining development of local economies. Japan attaches significance to the relationship between industrial development and intellectual property. In this context, Japan has been making efforts in, for example, the support of small and medium- sized enterprises (SMEs) in the intellectual property field, and can thus contribute in such an area. Furthermore, recently, by advancing collaboration with the field of agriculture, forestry, and fisheries, Japan puts the utilization of intellectual property in the context of the enhancement of international competitiveness and the improvement of profitability in the 73

74 agriculture, forestry, and fisheries industry and in the food industry. The establishment of the improved intellectual property system and the strengthening, thereby, of the link between intellectual property and business will lead to the development of local industries, on the one hand, through the promotion of innovation and the creation of original brands, etc. under appropriate protection of rights, as well as to the betterment of the R&D and investment environment for foreign capital. From the aforementioned viewpoints as well, it is specifically important to support capacity building, such as cooperation in human resource development, as concurred in the Development Agenda. (c) Response to the issue of resources owned by developing countries With respect to the issue of access to genetic resources, compliance with the Bonn Guidelines is effective for achieving fair and equitable benefit sharing as seen in the objectives of the Convention on Biological Diversity (CBD). Japan has been carrying out cooperative activities in partnerships with the authorities of various countries based upon the Bonn Guidelines, including the organization of workshops on access to genetic resources in cooperation with Asian countries. It is important to disseminate knowledge about, and promote understanding of, access to genetic resources and thereby enhance cooperative ties with developing countries, aiming at a WIN-WIN relationship for both sides. WIPO Development Agenda Discussions on the Development Agenda aimed at formulating at WIPO an action plan concerning the development issues, namely, issues related to the economic development of developing countries. During the Assemblies of the Member States of WIPO in 2004, the Friends of Development (a group consisting of a total of countries including Brazil and Argentina) proposed the Development Agenda, and discussions started. Their background considerations include the recognition that WIPO should actively engage itself in the development issues as a specialized agency of the United Nations having set the Millennium Development Goals. The number of specific proposals went up to 111 items, covering not only those regarding technical assistance or capacity building for developing countries, which WIPO has already been carrying out, but also proposals concerning the formulation of a treaty taking into consideration the economic development of developing countries as well as those concerning technology transfer. Hitherto, meetings were held three times in 2005, twice in 2006, and twice in 2007 (in 2006 and 2007, discussions took place at the Provisional Committee on Proposals related to a WIPO Development Agenda (PCDA) ). In 2007, the Assemblies of the Member States of WIPO adopted as its recommendations a total of 45 items having obtained consensus in the above meetings, including 19 items which could be carried out immediately. The following are some of the 19 proposals: WIPO technical assistance shall be, inter alia, development-oriented, demand-driven and transparent, taking into account the priorities and the special needs of developing countries, especially LDCs, as well as the different levels of development of Member States, and activities should include time frames for completion; In its activities, including norm-setting, WIPO should take into account the flexibilities in international IP agreements, especially those which are of interest to developing countries and LDCs; and Upon request and as directed by Member States, WIPO may conduct studies on the protection of intellectual property, to identify the possible links and impacts between IP and development. Patent system and innovation Although developing countries may take a negative stance with respect to the patent system, in consideration of such issues as the public health, it is desired that the message be communicated to the world that the patent system is actually an important system facilitating innovation. (Comment of PCIIP member)

75 Conflicts over Environmental Problems It is anticipated that conflicts between the north and the south will be exacerbated in the area of environmental problems. While developed countries have contributed to developing countries by providing the latter with financial and various other assistance, solution of the north-south conflicts requires a comprehensive approach going beyond the framework of intellectual property policy. Further discussions are necessary in this regard. (Comment of PCIIP member) Approaches to be Taken in the International Political Framework as a whole The issue of anti-aids drugs should be considered in the larger framework of international politics rather than within the perspective of the patent system alone. The technological development stage differs by country, and there are countries without the capability to manufacture anti-aids drugs. Furthermore, while India may be able to manufacture such drugs, it would be very difficult to deliver the drugs produced there to every corner of the African countries, due to the lack of an established delivery system. Proper prescriptions may also be difficult. This means that the problem cannot be solved simply by the suspension of patent enforcement against African countries. Instead, solutions should be sought in the international political framework as a whole, taking into account various measures including the provision of international assistance. (Comment of PCIIP member) Playing a Leading Role in Debates on the North-South Issues Desired Discussions on the fundamental concept of IPRs have been brought up at such fora as WHO. Japan should take the initiative in leading such discussions from, among others, the legal point of view. Nonetheless, I feel that Japanese representatives participating therein are fewer than they should be. It is, therefore, desired that Japan be properly represented at those discussion fora and play a leading role in the worldwide debates. (Comment of PCIIP member) 75

76 of Reference I-26 World's discussions are taking plac ace in multiple fora UNCTAD(United Nations Congress for Trade And Development) UNCTAD Resolution "Technology transference (1972)" In the 1970s, a question "Does the patent system contribute to the development of developing countries at all?" was raised by the group of developing countries. WIPO movement of developed developed Movement of developed countries EPA/FTA Movement for seeking intellectual property protection beyond the TRIPS obligations (TRIPSplus) from developing countries The U.S. has incorporated provisions aimed at strengthening intellectual property protection (protection of patent rights concerning animals and plants, limitations on compulsory licenses) into FTAs with Morocco, Jordan, Bahrain, Singapore, and Peru. Japan has incorporated provisions aimed at strengthening intellectual property protection (protection of foreign well-known trademarks and expansion of categories of intellectual property rights subject to criminal procedures) together with Singapore, Malaysia, Thailand, and Indonesia. countries countries 2003 Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH) was established Report of CIPIH concerning incentive measures for development of new medicines for developing countries UNEP/SCBD (United Nations Environmental Programme / Secretariat of the Convention on Biological Diversity) 1992 Convention on Biological Diversity (CBD) was adopted. The central issue was access to genetic resources and benefit-sharing The 8 th meeting of the Conference of the Parties adopted resolutions including: organization of a meeting of technical experts on the certificate of origin/source/legal provenance continuation of discussion in a working group regarding the issue of the disclosure of origin/source/legal provenance of genetic resources in applications for intellectual property rights. FAO (UN Food and Agriculture Organization) 2001 International treaty on plant genetic resources for foods and agriculture was adopted (entry into force in 2004). UNESCO (UN Educational Scientific and Cultural Organization) 2003 Convention for the Safeguarding of Intangible Cultural Heritage 2005 Convention on the Protection and Promotion of Diversity of Cultural Expression Further, discussions concerning intellectual property have taken place in UNFII, UPOV, UNCSD, UNDP, UNU, OHCHR, WB, IFAD, etc. Framework of the PCT system for the filing of international applications There were 138 member countries of the PCT as of November Many of developing countries were members. The international i search system incorporates a work-sharing mechanism under which the International Search Authorities (patent offices meeting certain criteria including that in size i are eligible) i are in charge of preparing International Search Reports and Written Opinions i of the International Searching Authority ty while other offices refer to the reports and opnions. opinions. The filing date can be secured in each member country by filing a single international i application in accordance with uniformed formality requirements. Utilization of results B+ meeting of developed countries for patent harmonization 2005 February Since WIPO/SCP has come to a deadlock, a meeting was organized following a proposal of the U.S. for the purpose of sharing common views among developed countries towards patent harmonization (B+ group consists of 42 countries and 2 organizations). Japan U.S. Europe trilateral Discussion on work sharing, harmonization both in formality (adoption of a common application format) and in substance (harmonization of examination practices), and the use of information technology Japan - U.S. South Korea - Europe - China Examination cooperation such as the Patent -South Korea Prosecution on Highway 2007: Cooperation in computerization The first meeting of the pentalateral patent offices was held. Concurrence was reached as to the necessty necessity for cooperation on to deal with wth such challenges as work sharing, procedural streamlining, and mantaining maintaining and improving the quality of examination in order to properly respond to increase in the number of patent applications. Utilization Africa/LDCs: Concern that intellectual property does not contribute to development. Utilization and results So-called South in the north-south issues Aggravation of problems concerning public health and the protection of genetic resources, etc. in the intellectual property field Development issues Emergence of the north-south issues 1974 Joint report of UN, WIPO, and UNCTAD The role of the patent system in the transfer of technology to developing countries" 2000 UN: Millennium Declaration, Development Goals Extension of assistance by the WIPO Japan Funds-in-Trust to include Africa/LDCs International cooperation for the self-sustaining economic growth of Africa/the LDCs Improvement of the investment environment for Japanese affiliated companies by ensuring intellectual property protection the 19th Century Paris Convention (1883) Berne Convention (1886) 1967 Convention establishing WIPO 1970 PCT was adopted (entry into force in 1978) Economic development of developing countries is specified in the preamble and a provision of technical assistance to developing countries is incorporated into the text to 1984 Diplomatic conference for the revision of the Paris Convention Provision on compulsory license was negotiated; however, the negotiation did not reach conclusion. Movement for solving the north-south issues by the reinforcement of the WIPO system including the enhancement of its financial assistance to, and technical cooperation with, developing countries 2000 WIPO/IGC (Intergovernmental committee on intellectual property and GRTKF) 2004 WIPO Development Agenda (proposed by Argentine and Brazil, etc.) Review of the mandate and governance of WIPO from the viewpoint of promoting development September 2007 Assemblies of the Member States of WIPO Adoption of recommendations concerning the Development Agenda Patent Harmonization 1970 Adoption of t the PCT (entry into force in 1978) Discussion for patent harmonization started (deadlock in 1991) The PLT (Treaty for patent formality harmonization) 2000 Restart of discussions was agreed upon for the harmonization of the substantive aspect of patent laws (Substantive Patent Law Treaty (SPLT) negotiations) Assemblies of the Member States of WIPO The trilateral patent offices proposed that the discussions be focused on four items (novelty, inventive step/non-obviousness, definition of prior art (first-to-file system, etc.), and grace period). However, this proposal was not accepted due to opposition by developing countries desiring discussions on genetic resources, etc. ASEAN: Seeking the utilization of intellectual property for economic development Supporting human resource development: By utilizing the WIPO Japan Funds-in-Trust, - Japan has received more than 2,500 trainees in the past 11 years, mainly from Asia and the Pacific. Comprehensive intellectual property cooperation program with ASEAN transmittance of results Change in the position of developed countries: from multilateral discussions to plurilateral or bilateral discussions Patent harmonization: The B+ meeting has been established on an informal basis, outside WIPO, in order to achieve harmonization at least among developed countries. Further, in the framework of the Japan-U.S.-Europe Trilateral Office cooperation, efforts have been made in formality harmonization through the adoption of a common application format on the one hand and in harmonization in examination practices on the other. Enforcement: The U.S. and Japan have been incorporating into their FTA/EPA negotiations intellectual property-related provisions, namely, so-called TRIPS plus provisions. In this way, the enhancement of the intellectual property systems of developing countries is being sought in the context of bilateral relations. (Europe is rather negative in this regard.) Extension to fora other than WIPO Movement for aiming at an international agreement by placing intellectual property in a comprehensive package in the context of trade WTO/TRIPS negotiations WHO (the World Health Organization) 1986 The intellectual ectua l property issues were introduced into the GATT Uruguay Round. Movement 1994 The WTO/TRIPS Agreement was concluded, which is an agreement for protecting various intellectual ectua l property rights (copyright, trademarks, geographical indications, designs, patents, layouts of of integrated circuits, and undisclosed undscosed informaton). information). i developing Minimum i standard for protection on of the Paris / Berne-plus level, Provision of the Most-Favoured-Nation (MFN) treatment, Enforcement provisions, Dispute settlement ement provisions, Exclusion from protection on countries for the sake of public interest (Article 27, etc.), Provisions related to development (Article 7: objectives (promotion on of technology transfer), Article 8: principles iples (promotion of public interest), etc.) 2001 The Doha Ministerial Declaration (Doha Development Agenda) Strengthening of the WTO system for stable development of the world economy / Recognition of the urgent necessity to integrate developing countries into the world trade system / Intellectual property: public health, CBD-related matters and transmittance of results Perception that intellectual property protection beyond the TRIPS obligations can hardly be achieved at WIPO or at the WTO China Human resource development / support for the improvement of the intellectual property systems / cooperation on in computerization ion Others, in particular BRICs Anti-counterfeit measures May 2007 MOU on Discussion on examination cooperation has started. cooperation between Japan and India Recently in India, there has been a shift in policy towards the appreciation of intellectual property, and the modernization of intellectual property administration and a significant increase in the number of examiners have been promoted. Cooperation is being pursued based on the MOU for the betterment of circumstances, from the aspect of intellectual property, for India, which has been drawing attention as an emerging economic power. Europe (EU / EPO): The European Patent Office (EPO) has established the European Patent Academy and has been carrying out cooperative activities, focusing mainly on assistance related to search tools, for ARIPO, South Africa, Brazil, Mexico, India, etc. Further, the EU has been performing intellectual property cooperation under its own framework for China, Mongolia, CIS countries, ASEAN, India, Pakistan, Sri Lanka, Balkan countries, countries in Central Asia and Central America, etc. U.S. (USPTO): The U.S. has received trainees from Brazil, China, Egypt, India, Mexico, and the Philippines, etc. at its Global IP Academy. Further, the U.S. has intellectual property attachés in Brazil, China, Egypt, India, Russia, and Thailand and has been carrying out cooperative activities such as training. - i i i - - l - i i i i i i - 76

77 (3) Towards the establishment of the intellectual creation cycle in developing countries - from the viewpoint of linkage between intellectual property and business - With the advancement of economic globalization, the improvement of the intellectual property systems on a global scale involving developing countries, in other words, the establishment of a global network for the intellectual property systems, has gained more importance than ever (as described above). This naturally requires the improvement in the intellectual property system in developing countries. In rendering assistance to developing countries to this end, it is important to make such assistance conductive to intellectual property awareness building in those countries and the proactive improvement of their own intellectual property systems, through the encouragement of self-sustaining economic development. In Japan, a program called One Village One Product campaign is widely known as collective efforts for the encouragement of self-sustaining economic development in developing countries. The program assists activities to find local products taking root in specific regions, such as specialties utilizing the characteristics of the regions concerned, and to build them into competitive products, based on self-helping efforts in each country. In order to achieve sustainable advancement of local infant industries, it is imperative to support the promotion of innovations or specific brands that have originated in a region through the development and utilization of intellectual property. Japan has the experience of raising its international competitiveness through, among others, the enhancement of its intellectual property systems to promote the intellectual creation cycle including the creation, protection, and utilization of intellectual property. In light of the experience, it is considered effective, in assistance to developing countries, to promote the intellectual creation cycle and lead it to their self-sustaining economic development by encouraging the improvement of their intellectual property systems and by sharing with developing countries successful experiences in the utilization of intellectual property. Based on the above considerations, it is deemed significant to embark upon assistance to African countries, among others, while further strengthening ties with ASEAN member nations. Current circumstances in developing countries As described above, between developed and developing countries, there are serious problems of the technology gap and the patent gap, and in the 1960s, the question Does the patent system contribute to the development of developing countries at all? was raised by developing countries. Since the Development Goals were agreed upon in the UN Millennium Declaration (2000), awareness of issues regarding development has been raised in developing countries, and consequently, the north-south issues in intellectual property have become increasingly evident. Under such circumstances, in developing countries as well, the number of patent applications has been increasing. In some developing countries, however, most of the applications are filed by applicants in developed countries. While the intellectual property system is, needless to say, indispensable for the promotion of investment and the advancement of economy, those developing countries may conceive that they are administrating their patent systems predominantly to protect the patent rights owned by the other countries. At WIPO, discussions have been going on 77

78 concerning the Development Agenda for the formulation of an action plan to address issues regarding economic development of developing countries. Following the adoption of recommendations at the Assemblies of the Member States of WIPO in 2007, discussions towards specific implementation of the agreed-upon items have been continuing. The discussions cover a wide range of issues including, not only those concerning technical assistance and capacity building, but also those concerning technology transfer. Challenges for self-sustaining economic development of developing countries - towards establishment of the intellectual creation cycle in developing countries - In developing countries as well, further enhancement of intellectual creation activities for technological innovation and design or brand creation is important for their economic development. In light of this, a challenge is to promote the improvement of the intellectual property systems from the viewpoint of the industrial development of developing countries, through, for example, assistance for the establishment of the intellectual creation cycle that encourages intellectual creation activities and intellectual property utilization, towards the self-sustaining economic development of those countries. Further, in view of the importance of the achievement of smooth technology transfer and the promotion of direct investment from foreign companies or foreign research organizations, it is necessary to improve the intellectual property systems so as to ensure that the technologies so transferred or developed with such investment, etc. is protected from imitation. Necessity of a global intellectual property infrastructure It is anticipated that the increase in patent applications in developing countries will result in more dispute cases in which companies overseas are sued for the infringement of patent rights in those countries. It is therefore necessary to harmonize the patent quality globally so as to ensure that the level of the patent quality in developing countries is equivalent to that of Japan, the United States, and Europe. To this end, the appropriate improvement of the prosecution processes in developing countries is needed, possibly including the introduction of work-sharing schemes to utilize the results of examination in other countries. Globalization and countermeasures against counterfeiting and piracy Under such circumstances that the production basis is built globally, there is a possibility that in one country technologies are stolen and counterfeit and pirated products are distributed throughout the world from that country. Therefore, from the viewpoint of anti-counterfeiting and anti-piracy as well, the establishment of a global intellectual property infrastructure is desired. Efforts towards the self-sustaining development of developing countries Japan has been supporting developing countries to encourage the self-sustaining economic development of developing countries from the viewpoint of stable development of the world economy. For example, a program called One Village One Product campaign is widely known. The program assists activities to find local products taking root in specific regions, such as 78

79 specialties utilizing the characteristics of the regions concerned, and to build them into competitive products, based on self-helping efforts in each country. In order to maintain and develop a newly created industry, it is also important to invigorate intellectual creation activities concerning the innovation of technologies and the creation of designs and brands generated in that industry, so as to protect production techniques or brands, etc. from being imitated by others, based upon patent or trademark rights resulting from the intellectual creation activities. Where the industry concerned is the one taking root in a region, protection of the product in question with a regional brand would also be necessary. Thus, it is considered that assistance efforts in the intellectual property field should be made from the viewpoint of promoting innovation or brand creation originated in local regions. Once a unique brand has been established with international competitiveness, it is expected not only to benefit the domestic industry but also to lead to the development of the export industry concerned. Sustainable development of the economy of developing countries and improvement of their intellectual property systems The improvement of intellectual property systems is expected to lead to, through the intellectual creation cycle, the proper protection and utilization of technologies originated and developed in the locality or those transferred from developed countries, and thereby to further development of the local economy. If this, in turn, leads to building of the R&D basis in the local region or investment into the economy of the region, thereby facilitating the sustainable growth of the local economy, a request will get stronger for the intellectual property protection of innovation in the region. Provided that this results in the enhancement and expansion of the infrastructure of the intellectual property system, such as improvement in the examination system at the patent office, a virtuous cycle between economic development and intellectual property system enhancement would follow. The importance of assistance in the intellectual property field should be highlighted from the viewpoint of encouraging the self-sustaining economic development of developing countries. Sharing best practices of utilization of intellectual property in business Japan, in the process of its economic development, has the experience of enhancing its international competitiveness through effective utilization of intellectual property to grow into an economic power. That experience in intellectual property utilization, including the promotion of the intellectual creation cycle with the creation, protection, and utilization of intellectual property, is considered to be valuable also for developing countries currently in the process of economic development. At WIPO as well, it is important to consider what contribution should be made from the intellectual property aspect, in the discussions on the Development Agenda. In this regard, it should be considered to render support to developing countries for their self-sustaining development by sharing, for example, the experience of Japan in intellectual property utilization. Specifically, possible steps would include information sharing regarding Japanese Government s support measures for small and medium-sized enterprises (SMEs) as well as the intellectual property activities of SMEs having 79

80 unique technologies or brands. As an initial effort, the Japan Patent Office co-organized with its counterparts in China and the Republic of Korea in March 2008 a Seminar on Support for Small and Medium-sized Enterprises. Further, the Japan Patent Office envisages carrying out support activities through training programs held in Japan on a continuous basis or seminars organized in cooperation with WIPO. Collaboration with WIPO for the sharing of successful experience As described above, it is important to share experience of linking business and intellectual property, including such experience in the context of the support of SMEs in the field of intellectual property. Developed countries having abundant experience in this field should share their experience with developing countries and further facilitate the sharing of successful experience among developing countries, and thereby contribute to the self-sustaining development of the economy of developing countries. In order to collect successful experience and best practices of linking business with intellectual property in various countries and disseminate information thereof worldwide, it is important to utilize the capacity of international organizations such as WIPO with the potential of becoming an international hub for experience sharing regarding intellectual property, as well as to promote cooperation with related organizations including development assistance organizations. In view of the above, it is considered necessary to pursue the following: (a) Both developed and developing countries continuously share information worldwide on the successful linkage of intellectual property with business and on government assistance of SMEs in the intellectual property field; (b) Developed countries, in particular, collect examples of successful linkage of intellectual property with business and cooperate with WIPO to share such information; (c) Developed countries contribute to the dissemination of knowledge regarding cases of successfully linking intellectual property and business as well as measures to support SME activities; and (d) Further, WIPO organizes meetings and seminars in which the participants include relevant authorities such as the World Bank and UNCTAD and experts in the areas concerned. Support from the viewpoint of establishing a global infrastructure of intellectual property systems It is important to establish a global intellectual property infrastructure, consisting of legal, institutional, and human networks related to intellectual property systems, with appropriate prosecution processes, involving those of developing countries, and thereby to support the global economic activities of private enterprises, etc. in the global economy. Importance should also be attached to the provision of assistance that is tailored for the stage of development of each country, with a view to self-sustaining economic development, as discussed in relation to the WIPO Development Agenda. The recipients of such assistance should not be limited to countries in which the distribution of counterfeit goods has actually been a problem, and should include countries such as African countries. From the above viewpoints, it is considered important to establish a global infrastructure of intellectual property systems including those of 80

81 developing countries. The global intellectual property infrastructure both in developing and developed countries would provide global players and their local partners with a level playing field of business collaboration including intellectual property-related ones, which should promote cross-border investment and technology transfer that most developing countries need as a critical component of the national strategy for development. The Japan Patent Office has been assisting Asian countries, including those in the ASEAN region, in the use of information technology, the development of human resources, and the introduction of work-sharing schemes in examination, taking into account the development stage of each country. Hereafter, it is deemed significant that, while further strengthening ties with ASEAN member nations, Japan extend such assistance to cover African countries, among others. (See Reference I-27) 81

82 Reference I-27 Japan s Initiatives in Dealing with the North-South Issues Enhancemen ent t of o Supp pport for ASEAN Japan is in the position to continue to provide strong support for ASEAN s integration efforts in the interest of ASEAN s further development and prosperity. Having in mind this position as well as strengthened economic ties between ASEAN members and Japan symbolized in the conclusions of the negotiations over the Japan-ASEAN Comprehensive Economic Partnership Agreement (AJCEP), the Japan Patent Office (JPO) conceives that its long-standing close cooperative relationships with ASEAN Intellectual Property Offices should be further enhanced with a view to the betterment and the harmonization of the intellectual property (IP) infrastructure in the region. Prop oposal of o the e Japan J ASEAN Comprehensiveen Intellectual ec PropP operty Cooperation Program ram (JACIP) I. Background The JPO suggests that its varied bilateral and regional cooperation programs with ASEAN IP Offices be reorganized in a systematic manner, without prejudice to the JPO s tradition of tailor-made cooperation approach, under the name of the Japan ASEAN Comprehensive Intellectual Property Cooperation Program (JACIP). In its planning of JACIP, the JPO will attach importance to the following basic considerations: Respect and support of ASEAN s efforts under the ASEAN Intellectual Property Right Action Plan ; Provision of fair and equal opportunities; and Flexibility and responsiveness to the cooperation needs perceived by each IP Office, as well as the suggestion, where appropriate, of a range of cooperation activity options. II. Highlights of the Cooperative Initiatives Considered under JACIP as well as those Taken to Date by the JPO Utilization of Information Technology (IT) (In the future) Emphasis will be placed upon assistance with a view to keeping ASEAN IP Offices computer systems fully working. Support to Mutual Collaboration in, and the Streamlining of, the Registration Processes of Intellectual Property Rights (IPRs) Based on its achievements in terms of cooperation with ASEAN IP Offices and on its own experiences of cooperation with Patent Offices around the world, the JPO is ready to further support mutual collaboration among ASEAN IP Offices in their IPR registration processes including the patent and trademark examination procedures. Human Resources Development (HRD) (In the Future) The JPO will endeavor to achieve even stronger synergetic effects between the HRD programs and the initiatives in the field of IT utilization. The JPO will also place more emphasis on experience sharing among ASEAN IP Offices as well as on awareness building among non-ip experts including the general public. Sharing Best Practices of Utilization of Intellectual Property in Business With a view to facilitating the self-sustaining economic development of ASEAN members, the JPO will share information regarding examples in Japan of successful utilization of intellectual property in business towards economic development, in order to promote the establishment of the intellectual creation cycle in ASEAN. Establishment of a More Solid Cooperative Framework The JPO is ready to organize a high level meeting to listen to the cooperation needs of ASEAN IP Offices. JACIP will be implemented in concert with relevant institutions and cooperative frameworks, including the World Intellectual Property Organization (WIPO), in particular its programs under the Japan Funds-in-Trust arrangement, cooperative framework between ASEAN and Japan such as AEM-METI, and JICA technical assistance programs. Enhancement of Support for Africa Japan attaches importance to the improvement of the intellectual property system, and to capacity building in this regard, in order to promote technology transfer and foreign direct investment and, thereby, to facilitate the self-sustaining economic development of LDCs including those in Africa. Thus, Japan will reorganize the WIPO Japan Funds-in-Trust projects with reinforced contributions to WIPO, to cover African countries and LDCs, and promote the improvement of the intellectual property-related legal systems and their enforcement aspects as well as the better use of information technology in intellectual property-related administration. Japan Paten tent WIPO (World Intellectual Property Office Organization) Assessed contribution WIPO Japan Funds-in in-trust Support for human resources development (acceptance of Asia trainees, dispatch of experts, etc.) Voluntary contribution Pacific Support for modernization in Intellectual Property Offices (computerization, etc.) Assistance for the improvement of the intellectual property systems and their enforcement aspects Studies and research related to the development of developing Africa countries utilizing intellectual property (Opening of the WIPO Japan Office in September 2006) LDCs (least developed Volunt untary contc ntribution countries) 110 million m JapaneseJ Yen In Fiscal Year 2008, WIPO International collaboration towards self-sustaining economic development of African countries and LDCs (Proposal of Africa/LDC support at the G8 Hokkaido Toyako Summit and TICAD (Tokyo International Conference on African Japan Funds-in-Trust Development)) activities will be extended to Resolution of the north-south problems in the intellectual property field, including the genetic resource protection issue cover countries in Africa and the least developed countries. Improvement of investment circumstances for Japanese-affiliated companies through proper intellectual property protection, under the situation in which the inflow of counterfeit products from Asia, etc. continues. 82

83 83

84 II. Reducing the Amount of Uncertainty in the Patent System 1. Establishment of a patent examination mechanism emphasizing quality and having higher predictability and transparency For checking up on the Examination Guidelines periodically and enhancing the stability of the patent examination system, Build a Highly Transparent and Predictable Patent Examination Mechanism A. Due to intensified competition in the business environment regarding patents, increasing uncertainty and business risk Costs for intellectual property litigation have been increasing because of an increase in the number of patent disputes due to globalization and highly advanced technology. In the U.S., a study shows that in industries other than the chemical and pharmaceutical industries, litigation costs exceeded the benefit from patents. Due to an increase in the number of patent disputes, in particular, many companies in information technologies and electronics field have been racing to obtain patents in order to warn off competitors, and thus, costs to acquire patents have increased for each applicant. Additionally, in some industries such as semiconductors, electronics, software, etc, where related technologies tend to overlap, there are other disputes regarding claim construction of patent rights, resulting in additional costs. High demand for patents could result in an increase in the granting of low quality patents, which plays a role in causing patent thickets and patent trolls and leads to more business risk. Therefore, for lowering uncertainty at the stages of acquisition and protection of patent rights as much as possible and also for reducing more business risk than ever, the enhancement of patent quality and the construction of a highly transparent and predictable patent examination mechanism are needed. B. Needs for a Highly Transparent and Predictable Patent Examination System In Japan, the patent system and its practices have been reconsidered from the following viewpoints: (i) study of the system and practices based on the trends of technology, industry and society; (ii) harmonization based on the international trends; and, (iii) consistency of the judgment in examination, appeals/trials and litigation. However, trends of technology, actual conditions of industries, and international trends constantly change. Therefore, in order to reduce the business risk due to the uncertain patents more than ever, it is important to enhance the predictability in patent acquisition and ensure the stability of the patent right by quickly taking measures for these changes to improve the practices regarding examination and appeals/trials which generate a stable right. To achieve the above goals, it is necessary to attempt to improve the communication channel of the patent system with the Examination Guidelines as its core to enhance stability in patent system operations and the quality of a patent by increasing transparency in the planning and revision process of the Examination Guidelines and by actively delivering minutes about discussions during the revision process. C. Establishment of a new Committee in the Industrial Structure Council A wide range of members including those related to patent application, examination, appeals/trials, litigation as well as the specialists in law, economics and technology should participate in the study on identifying the ideal practices of patent examination, including the Examination Guidelines. As a stage of the studies, the JPO should plan to establish a new organization under the Patent System Subcommittee in the Intellectual Property Policy Subcommittee of the Industrial Structure Council. Hereafter, the JPO intends to consult this study organization for recommendations about practices concerning the patent examination, including the Examination Guidelines. In order to enhance the transparency, the Committee will be held periodically several times a year, disseminate the results of studies and information about measures both at home and abroad, and invite opinions through public comments not only in Japanese but also in English. D. Improve the communication channel of patent system with the Examination Guidelines as its core The Examination Guidelines should indicate the optimal principles for application and practice of law as an important pillar that ensures the stability of intellectual property and patent quality during a series of patent-related processes including application, examination, appeals and trials, and litigation, and the Examination Guideline should also reflect the judgment and opinion at each level of the processes. In addition, The Examination Guidelines are tools that reflect trends in technology, industry, and society on the examination system and practices, and that clarify the application thereof. Furthermore, the Examination Guidelines are one of tools for comparing and harmonizing the systems and practices in each country when creating measures for international harmonization. Ensure the stability of intellectual property and the quality of a patent based on the Examination Guidelines which bears the role of its core of communication channels when proceeding with harmonization in patent judgment at various levels and when striving to reflect various trends of domestic and overseas domains in the patent system and its practices. Make the Examination Guidelines, etc. more understandable for inventors, applicants, representatives, legal professional, etc. by visualizing and structuring them based on hypertext technology, etc. Specifically, make the Examination Guidelines and related matters more accessible through a hypertext system. 84

85 <Outline> For checking up on the Examination Guidelines periodically and enhancing the stability of the patent examination system, Build a Highly Transparent and Predictable Patent Examination Mechanism For lowering uncertainty at the stages of acquisition and protection of patent rights as much as possible and also for reducing more business risk than ever, the enhancement of patent quality and a highly transparent and predictable patent examination mechanism are needed. To achieve the above goals, we attempt to improve the communication channel of the patent system with the Examination Guidelines as its core to enhance stability in operation of the patent system and the quality of a patent by increasing transparency in the planning and revising process of the Examination Guidelines and by actively delivering minutes about the discussions during the revision process. <Concrete measures > 1.Increasing transparency in the planning and revision process of the Examination Guidelines / Establishment of a new organization in the Industrial Structure Council In order to enhance stability in operation of the patent system and the quality of a patent, we attempt to improve the communication channel of the patent system with the Examination Guidelines as its core by increasing transparency in the process of planning and revising the Examination Guidelines and by actively delivering minutes about discussions during the revision process and by inviting public comments not only in Japanese but also in English. For this purpose, the following organization will be established under the Patent System Subcommittee of the Intellectual Property Policy Committee. <Establishment of a new Committee in the Industrial Structure Council > Investigate how patent examination should be conducted including establishing Examination Guidelines Members: Legal scholars Patent attorneys Scientists Industry Economists Legal profession The Committee will be meet periodically several times a year. The Committee will deliver reports about discussions during the revision process both at home and abroad to enhance the transparency. The JPO invites opinions through public comments by presenting the draft of the Examination Guidelines etc. not only in Japanese but also in English. < The communication channel of the patent system with the Examination Guidelines as its core> A important pillar to ensure stability of intellectual property and patent quality during a series of patent-related Litigation processes including application, examination, appeals and trials, and Appeals litigation and trials The Examination Guidelines indicate the optimal principles for the application and Examination practice of law and also reflect judgments and opinions at each level of the processes. Tools that reflect trends in technology, industry, and society on the examination system and practices and that clarify the application thereof Review of the judgment standards of patentability when a new technology comes out. Review of judgment standards in response to changes in industry and in society due to open innovation and to changes in the competitive business environment. Examination Guidelines Application One of tools for comparing and harmonizing the systems and practices in each country when creating measures for international harmonization 2. Visualization and structuring of Examination Guidelines, etc. (based on hypertext) Make the Examination Guidelines, etc. more understandable for inventors, applicants, representatives, legal professionals, etc. by visualizing and structuring them based on hypertext technology, etc. Specifically, make the Examination Guidelines and related matters more accessible through a hypertext system. PatentSystem 85

86 (1) Arms race for patents Due to intensified competition in the business environment regarding patents, increasing uncertainty and business risk are concerned. For instance, costs for intellectual property litigation have been increasing because of an increase in the number of patent disputes due to globalization and highly advanced technology. In the U.S., a study shows that in industries other than the chemical and pharmaceutical industries, litigation costs exceeded the benefit from patents. In addition, in the U.S., due to an increase in the number of patent disputes, in particular, many companies in information technology and electronics fields have been racing to obtain patents in order to warn off competitors, and thus, costs to acquire patents have increased for each applicant. Additionally, in some industries such as semiconductors, electronics, software, etc. where related technologies tend to overlap, there are other disputes regarding claim construction of patent rights, resulting in additional costs. Furthermore, a high demand for patents could result in an increase in the granting of low quality patents, which plays a role in causing patent thickets and patent trolls and leads to more business risks. Therefore, for lowering uncertainty at the stages of acquisition and protection of patent rights as much as possible and also for reducing more business risk than ever, the maintenance and enhancement of patent quality are required. For this purpose, in the patent system and its practices, it is necessary to provide a more highly transparent and predictable patent examination mechanism by enhancing the transparency of establishing processes in the Examination Guidelines and by conducting productive discussions through the processes. Change of the game application for patent in order to warn off competitors Companies that treat intellectual properties as business assets similar to their products are increasing. That is, they invest in research and development, then file patent applications for the developed inventions, they do business or license inventions based on the obtained patents, and they file patent infringement lawsuits, if necessary. In the U.S., due to the increase in the number of patent disputes, in particular, many companies in information technology and electronics fields have been racing to obtain patents in order to warn off competitors. The biggest reason for this is that other companies are doing the same, and to hold more and a wider variety of patents is one of the rules of the game, which is said to lead to a kind of arms race. 15 Increase in costs and risks for patents Costs for intellectual property litigation have been increasing because of an increase in the number of patent disputes due to globalization and highly advanced technology. For example, in the U.S., it is said that challenging a patent s validity can be costly and time-consuming, and it is estimated that median litigation costs average $4 million each for the plaintiff and defendant when more than $25 million is at stake in a patent suit. 16 In addition, research shows that it takes about three and a half years on average to challenge a patent through litigation and that a patent challenge starts after the patent has been in force for about eight and half years, which means that an unwarranted patent could be in force for more than twelve years of a twenty-year patent term SURVEYS: PATENTS AND TECHNOLOGY. The arms race. The Economist, Oct. 20, Annual Report of the Council of Economic Advisers, Id.

87 Comparison of the number of patent applications with R&D investment in the U.S. Number of applications filed with the USPTO In contrast, in the U.S., since the 1990s, the number of patent applications has rapidly increased in comparison with the transition toward R&D investment, and the relationship between the two which was previously present before the 1990s has collapsed. (See Reference II-1) One of the causes therefor is that, as stated above, due to an increase in the number of patent disputes, in particular, many companies in information technology and electronics fields have been racing Reference II-1 Billions Billions Since the mid 1990s, there can be seen large dissociation between the two. Number of patent application R&D investment (Number of continued application) Source: Bessen and Meurer, Patent Failure: How Judges, Bureaucrats and Lawyers Put Innovators at Risk, (Princeton University Press, 2008). Reference II-2 Comparison of profits from patents with costs of lawsuits for U.S. enterprises R&D investment (in millions of U.S. dollars in 1992) to obtain patents in order to warn off competitors. Also worthy of mention is the increase in the number of applications in every industry, such as electric machinery, electronics, computers, communications equipment, etc., in the 1990s and, further, it may be pointed out that this may also be associated with an expansion in patentable subject matter for software-related inventions. In this way, a kind of arms race causes an increase in the cost of obtaining patents. What the divergence of applications from R&D expenditure reflects One study found that 75% of software patents were obtained by companies in manufacturing industries, primarily by applicants in the machinery and electronics categories (which have a high propensity to obtain non-software patents as well). Other studies indicate that based on traditional indicia of quality the patents obtained by software companies are of about the same or better quality as the patents in other areas. This suggests that, even if the divergence of applications from R&D expenditure does reflect an underlying problem, it does not appear to be a problem relating specifically to software patents or the software industry. Rather, it seems to relate to the high propensity to patent in specific non-software industries, perhaps combined with lower standards for assessing novelty and nonobviousness. (Microsoft) Reference II-3 Summary of Patent Failure - While patents do provide incentives to invest in research, development, and commercialization,... - for most businesses today, patents fail to provide predictable property rights. Instead, they produce costly disputes and excessive litigation that outweigh positive incentives. - Only in some sectors, such as the pharmaceutical industry, do patents act as advertised, with their benefits outweighing the related costs. - during the late 1990s, the American patent system failed as a system of property rights for public firms. It did so because it failed to provide clear and efficient notice of the boundaries of the rights granted. - Over the last two decades, the courts have made patent boundaries less certain, most notably by permitting increasingly abstract patent claims and tolerating patents on a growing number of obvious invention. Source: Bessen and Meurer, Patent Failure, (2008). Source: Bessen and Meurer, Patent Failure, (2008). It should be understood that a graph of firms in other industries is said to have fallen into a state of a prisoner s dilemma, in terminology from game theory. In other words, costs lawsuits increase due to others patents. Income can be obtained from one s own patent. Accordingly, it has come to be such a game that, in relationships with others, one should always continue to acquire 87 patents. As a result of the game, irrational results have been generated completely. (The state has fallen into Nash Equilibrium.) Source: From a statement by Mr. Bessen at the RIETI International workshop on software innovation (March 11, 2008).

88 In addition, when the amount of profits obtained from patent rights is compared with the costs for disputes, although in the chemical and pharmaceutical industries, the acquisition of a patent finds an account therein, in other fields, costs exceed profits. (See Reference II-2) As one cause therefor, there can be mentioned such a point that, in the chemical and pharmaceutical industries, the boundaries of patent rights are apparent, while in complicated technology fields such as semiconductors, electronics, and software, the boundaries of the rights are poorly defined, and the function of public notice of the rights can be lowered. There can also be pointed out that this lowering of the public notice function is not only due to use of vague terminology or the content being excessively abstract but is also related to the lowering of examination quality regarding the judgment of novelty or non-obviousness. (See Reference II-2, 3) In addition, in technology fields such as semiconductors, electronics, and software, the problem of so-called patent thickets (to be described later in Part II 1.(3)) is involved, and a harmful effect caused by multiple patents covering the same technology and therefore overlapping each other is pointed out, and such a problem also causes an increase in risks. (See Reference II-4) Reference II-4 The theory of patent thickets and the importance of limiting the issuance overlapping patents Patent thickets, by contrast, occur when multiple intellectual property rights cover the same technology and therefore overlap. The theory of patent thickets emphasizes the importance both of limiting the issuance and the scope of such overlapping patents and the need for bargaining mechanisms that permit the efficient clearance of patent rights. Source: Burk and Lemley Policy Levers in Patent Law, Public Law & Legal Theory Research Paper Series Research Paper No. 135 and University of Minnesota Law School Public Law & Legal Theory Research Paper Series Research Paper No (2003) 88 Concern about the increase in granting of low quality patents due to a high demand for patents The number of patent applications in the world has rapidly increased in recent years (see Part I). Relative to such an increase of the demand for patents, there is a concern that the patent system cannot constitute a high quality examination system, and as a result, there will be an increase in the number of low quality patents that are granted. (See Reference II-5) The granting of low quality patents is one of the causes for the occurrence of patent thickets and patent trolls, and increases more business risks. Even in Europe where the quality of European patents is generally perceived to be high, there is also concern that there will be an increase in the number of low quality patents being granted due to the high demand for patents, and it is pointed out that a high quality patent system is an essential one to avoid the hampering of innovation and destructive behavior. (See Reference II-5) Reference II-5 High quality patent regime. Whereas the quality of European patents is generally perceived to be high compared to other regions of the world participants in the 2006 consultation have stressed the importance of rigorous examination, prior art search and strict application of patentability criteria. However, concerns have been raised that a spiraling demand for patents could result in increased granting of low quality patents. This is one of the reasons that could lead to the emergence of "patent thickets" and "patent trolls" in Europe. A high quality patent regime in the EU is an essential instrument to prevent such innovation hampering and destructive behaviour in Europe. S o u r c e : Commission of the European Communities, Communication from the Commission to the Parliament and the Council - Enhancing the patent system in Europe -, (April 3, 2007).

89 Business risks caused by uncertainty in patent rights Thus, although the patent system should essentially be valuable for business, it is a concern that uncertainty in patent rights increases business risks. Costs for intellectual property litigation have been increasing because of an increase in the number of patent disputes due to globalization and highly advanced technology. In the U.S., a study shows that in industries other than the chemical and pharmaceutical industries, litigation costs exceed the benefit from patents. In addition, the increase in the number of patent disputes forces applicants to try to obtain a large number of patents in order to prevent themselves from being disadvantaged against other competitors, and it also causes an increase in the cost for obtaining patents. In fields where the technology is complicated, such as semiconductors, electronics, and software, disputes regarding claim construction of the patent rights occur, and therefore, the level of such business risks as increases in the cost of lawsuits also increases. Furthermore, with respect to the problem of patent thickets, as the result of the fact that multiple enterprises redundantly possess a plurality of similar patents, those enterprises use the patents they possess defensively to conclude agreements with each other on a wide range of cross licenses to thereby avoid lawsuits. However, when the holder of the patent produces nothing, he need not enter into a cross license so that the probability of a lawsuit occurring is elevated. Additionally, in Japan, although the number of applications itself has not increased as rapidly as compared with those of the U.S. or the rest of the world (see Part I), since the influence of the length of the period for request for examination was shortened in 2001 caused a temporary surge, or bump, in the number of requests for examination, the number has increased remarkably in recent years, and also, the workload calculated by conversion of the number of patent applications into the number of requests for examination the number of claims has increased remarkably. (See Reference I-11) When the above increase in the workload for patent examination is not prevented from causing granting of low quality patents, it will also lead to causing the pointed-out patent thickets and patent trolls to discourage innovation and to increase the level of business risk. For reducing the level of business risk due to such uncertain patent rights, the maintenance and enhancement of a high quality patent system is important. Therefore, for lowering uncertainty at the stages of acquisition and protection of patent rights as much as possible and also for reducing more business risk than ever, the maintenance and enhancement of patent quality are required. For this purpose, in the patent system and its practices, it is necessary to provide a more highly transparent and predictable patent examination mechanism by enhancing the transparency of establishing processes in the Examination Guidelines and by conducting productive discussions through the processes. 89

90 (2) Trends in intellectual property in the U.S. After the year 2000, some have taken a critical eye at the quality of patent, high lawsuit costs, etc., which affects innovation, and further, the patent system of the U.S. has started to make significant changes to "emphasis on quality of patent," such as judicial precedents in which patent quality is emphasized and strong patent rights are adjusted. In the U.S., the balance between patent protection policy and competition strengthening policy by the Antitrust law is said to have been changed historically. (See Reference II-6) Establishment of Federal Constitution and Federal Patent Law, and pro-patent era Since its establishment, the U.S. Constitution has granted to the U.S. Congress the power to secure an exclusive right for an inventor for a limited time. 18 In 1790, the Federal Patent Law was established. From the latter half of the 19th century to the World Crisis, great inventors such as Thomas Edison, the Wright brothers, etc. were active, and industry was developed under pro-patent policy. (See Reference II-6) Antitrust law and anti-patent era Thereafter, monopolization of the market by large enterprises was pointed out as being one cause of the Depression, and an anti-patent era in which crackdowns on antitrust violations were carried out had continued. During a certain period in this era, 70% of patents were found to be invalid in patent litigations. The U.S. Supreme Court stated "the only patent that is valid is one which this Court has not been able to get its hands on" in dissenting opinion in Jungersen. 18 "The Congress shall have power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries" (U.S. Constitution, Article I, Section 8). 90 The Young Report and pro-patent era However, during the 1970s, the U.S. trade balance plunged into the red due to the influence of the Oil Crisis and the rise of Japanese industry, and the U.S. economy slowed down. Thus, as a countermeasure for enhancing the international competitiveness of U.S. industry in the latter half of the 1970s, in the 1980s, the strengthening of patent protection was strongly proposed (e.g. the Young Report), and a pro-patent era proceeded through many measures to strengthen patent protection such as the establishment of the Court of Appeals for the Federal Circuit (CAFC), which treats exclusively decisions by the USPTO s Board of Patent Appeals and Interferences and appeals of patent infringement litigation, etc. In this era, the scope of patentable subject matter had been increased. For example, the U.S. Supreme Court in Chakrabarty (1980) held that a live, human-made micro-organism was patentable subject matter, and stated that the statutory subject matter "include[s] anything under the sun that is made by man." In addition, the U.S. Supreme Court in Diehr (1981) held that a device using computer software, which was an integral part of the device, was patentable subject matter, etc. New movement for emphasizing quality after entering the 21st Century However, after the year 2000, some have taken a critical eye at the quality of patent granted under the current patent system which affects innovation. For instance, a report by the Federal Trade

91 Commission (FTC) in 2003 pointed out that questionable patents block competition and harm innovation, and recommended improving patent quality, etc. Additionally, a report by the National Academy of Sciences (NAS) in 2004 said that degrading the quality of the USPTO s work or creating a huge backlog of pending cases, or both are problems. Moreover, the Palmisano Report Innovate America, which is compared to the Young Report, stated that innovation will be the single most important factor in determining America s success, and recommended building quality into the patent process to improve the innovation infrastructure. Furthermore, judicial precedents adjusting strong rights of a patent have started to appear. For example, the U.S. Supreme Court decision in ebay (2006) rejected the Federal Circuit's general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances and held that, according to well-established principles of equity, courts must apply a four-factor test for determining whether a permanent injunction should be issued or not. This decision made it clear that a permanent injunction is decided more carefully than ever before, so it is said that as patent trolls don t manufacture products by themselves and therefore cannot obtain a permanent injunction, product manufacturers can easily negotiate with patent trolls over the alleged infringement of the product manufacturers. Additionally, the U.S. Supreme Court decision in KSR (2007) rejected the rigid approach of the CAFC s TSM test (teaching, suggestion, or motivation test) and refined analysis of obviousness. Before this decision, it was said that the rigid application of the TSM test made it very difficult to prove obviousness of combined inventions and, as a result, generated a patent granted with a low level of nonobviousness (inventive step). It is expected that after this decision, a trivial invention, which had recently been a problem in the U.S., will easily be rejected or proved invalid for its obviousness and that we can deal with the problem of patents for trivial inventions as such patents discourage innovation. Also, during the U.S. presidential election in 2008, candidates from the Democratic Party and from the Republican Party mentioned improvement of patent quality and reform of the patent system. As stated above, the patent system of the U.S. has started to make changes to emphasize patent quality. 91

92 Reference II History of U.S. patent policy and judicial precedent Policy Judicial precedent Pro-patent era Under patent strengthening policy, electric machines, the automobile, the railway, aircraft etc. were developed, which continued up until the World Crisis First Federal Patent Law 1802 The U.S. Patent Office was established Lincoln speech 1865 End of the Civil War 1880 Edison s electric lamp patent (Electric lamp market toward monopoly) 1906 Wright brothers patent (Aim for monopoly of aircraft) World War I 1929 The World Crisis Anti-patent era Market monopolies by large enterprises were one cause of the World Crisis. Crackdowns on antitrust violations were carried out. Large influence on patent system granting monopoly. The 1940s Strict enforcement of Antitrust law World War II 1958 The Machlup Report The Vietnam War Antitrust policy was emphasized. (era of Nixon, Ford who were both Presidents) The 1973, 1979 Oil Crisis 1979 The trade balance plunged into the red. (Loss of competitiveness in U.S. industry. Perception of Japan as a threat.) Pro-patent era 1979 Carter s Address on Industrial Innovation Initiatives 1980 Bayh-Dole Act 1982 Establishment of the CAFC 1984 Hatch-Waxman Act 1985 The Young Report (President s Commission On Industrial Competitiveness, "Global Competition: The New Reality" Vol. 1.) 1986 TRIPS negotiation started in the GATT Uruguay Round The Omnibus Trade and Competitiveness Act 1994 Agreement on GATT TRIPS The American Inventors Protection Act Movement for emphasizing quality 2003 Federal Trade Commission (FTC) report To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (It stated that questionable patents are a significant competitive concern and can harm innovation, and made a recommendation to improve patent quality. ) 2004 National Academy of Sciences (NAS) report A Patent System for the 21st Century (It pointed out that the quality of issued patents has come under frequent sharp attack, and that the elapsed time between the filing of a patent application and the patent examiner s first action on it are lengthening. ) Council on Competitiveness report Innovate America (It made a recommendation to build quality into all phases of the patent process. ) The U.S. Supreme Court decision in Hotchkiss (For the first time, patent requirement of nonobviousness has been established by case law.) 1941 The U.S. Supreme Court decision in Cuno (Requirement for nonobviousness was tightened. Spark of genius was required.) 1966 The U.S. Supreme Court decision in Graham (The Court articulated the test for obviousness including 4 factors for determining whether a claimed subject matter was obvious.) 1966 The U.S. Supreme Court in Brenner (A process to produce a compound with no known utility was not patentable.) 1972 The U.S. Supreme Court decision in Benson (A mathematical algorithm itself was not patenteligible subject matter.) 1980 The U.S. Supreme Court decision in Chakrabarty (A live, human-made micro-organism was patentable subject matter.) 1981 The U.S. Supreme Court decision in Diehr (Software-related technology was patentable subject matter.) 1998 CAFC Decision in State Street Bank (Patent eligibility was determined by whether a useful, concrete, and tangible results were produced or not. The business method exception was denied.) 2003 The U.S. Supreme Court decision in Festo (Applying doctrine of equivalents was tightened by a prosecution history estoppel.) 2006 The U.S. Supreme Court decision in ebay (The Federal Circuit's general rule that courts would issue permanent injunction was rejected.) 2007 The U.S. Supreme Court decision in KSR (The rigid approach of the CAFC s TSM test was rejected, and the analysis of obviousness was refined.)

93 Major Patent Policies, Reports, etc. Constitution of the United States (1787) "The Congress shall have power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries" (U.S. Constitution, Article I, Section 8). Lincoln s Lecture (1859) Abraham Lincoln said [t]he patent system added the fuel of interest to the fire of genius. He delivered these words at Illinois College, any man might instantly use what another had invented; so that the inventor had no special advantage from his own invention. The patent system changed this; secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things These words carved above the entrance to the Department of Commerce building (former Patent Office building). Strict enforcement of Antitrust law (the 1940s) Regulations on monopoly begun seriously in the 1940th. Because monopoly power per se tended to be illegal, widespread corrections of action were ordered. Machlup Report (1958) This report was a review of the economic aspects of the patent system and revealed a negative opinions regarding the patent system in 1958 in the antipatent era. Carter s Address on Industrial Innovation Initiatives (1979/1) This Address proposed the strengthening of intellectual property protection to promote technical innovation in industry. Especially, it also proposed: (i) the establishment of the Court of Appeals for the Federal Circuit (CAFC) to eliminate inconsistencies in the application and interpretation of patent law across federal courts; (ii) the Bayh-Dole Act; and, (iii) the establishment of reexamination proceedings to enhance patent examination quality. Bayh-Dole Act (1980) This Act allowed universities, non-profit organizations, and small-and-medium-sized enterprises possess intellectual property of their inventions which resulted from federally supported research. It was said to promote the commercialization of new technologies after the Act. Then, several technology transfer acts were established to reinforce incentives for public and private technology transfers. Establishment of the CAFC (Court of Appeals for the Federal Circuit) (1982) The CAFC was created to exclusively treat USPTO s appeal decisions and appeal trials of patent litigations for consistency on the application of patent law in judgment and for rapid and low-cost proceedings of patent litigations. Hatch-Waxman Act (1984) Drag Price Competition and Patent Term Restoration Act (generally called the Hatch- Waxman Act) was enacted to add provisions that the testing for FDA approval of a generic drug was not patent infringement. The Young Report (Report of the President Reagan s Commission on Industrial Competitiveness) (1985) It s a report to enforce the U.S. competitiveness in the world market. It recommended the strengthening of intellectual property protection and had a major impact on emphasizing its protection later. It contained a recommendation of law reforms to strengthen intellectual property protection and a recommendation of improvement for international intellectual property protection through multinational negotiations such as GATT or through bilateral negotiations. Omnibus Trade and Competitiveness Act (1988) Pursuant to Section 301 provisions of the Trade Act, it created Special 301 provisions to conduct comprehensive investigation on issues of intellectual properties in trading partners and to impose sanctions. The provisions are used as effective means of bilateral negotiations and lead to the protection of medicinal inventions and computer program works in many countries. Agreement on TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) The GATT Uruguay Round (1995) Agreement was reached clarification of the minimum standards of intellectual property rights protection that member states, not only developed countries but also developing countries, must comply with, etc., and the Agreement on TRIPS was concluded. The TRIPS Agreement was enacted to coincide with the establishment of the World Trade Organization (WTO). American Inventors Protection Act (Revision of the Patent Act) (1999) In four agreements of the US-Japan Framework Talks on bilateral trade in 1994, prior user rights regarding a business method patent, patent term adjustment system, etc. were introduced in addition to a system for publication of a patent application, and the reform of the reexamination system (creation of inter parte reexamination). The Federal Trade Commission (FTC), To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (2003/10) The FTC made recommendations for the patent system after hearings with more than 300 panelists and an independent survey. It said questionable patents block competition and harm innovation, and recommended: (i) improving patent quality by creation of postgrant review of and opposition to patents; (ii) adequate funding for the PTO; (iii) limiting treble damages for willful infringement; and, (iv) requiring publication of all patent applications 18 months after filing. National Academy of Sciences (NAS), A Patent System for the 21st Century (2004/4) Eminent persons from industry, government, and academia investigated for four years how the patent system should be. The reports said degrading the quality of the USPTO s work or creating a huge backlog of pending cases, or both are problems, and recommended in addition to recommendations by the FTC: (i) change to a first-to-file system; (ii) retaining and seeking to persuade other countries to adopt a grace period for filing an application after publication; and (iii) removing the Hilmer doctrine. The Palmisano Report (Council on Competitiveness, Innovate America: Thriving in a World of Challenge and Change ) (2004/12) The report said innovation will be the single most important factor in determining America s success, and recommended: (i) talent; (ii) R&D investments; and (iii) an innovation infrastructure for intellectual property. The above innovation infrastructure contained building quality into the patent process (giving patent applicants the option of presenting an expanded information disclosure statement and of submitting of relevant materials electronically to the USPTO), leveraging patent databases as innovation tools, creating global collaborative standard-setting, etc. 93

94 Presidential election in 2008: Improvement of patent quality and reform of the patent system has become a topic for discussion. Barack Obama, United States Senator, Democrats. Reform the Patent System: A system that produces timely, high-quality patents is essential for global competitiveness in the 21st century. By improving predictability and clarity in our patent system, we will help foster an environment that encourages innovation. Giving the Patent and Trademark Office (PTO) the resources to improve patent quality and opening up the patent process to citizen review will reduce the uncertainty and wasteful litigation that is currently a significant drag on innovation. With better informational resources, the Patent and Trademark Office could offer patent applicants who know they have significant inventions the option of a rigorous and public peer review that would produce a "goldplated" patent much less vulnerable to court challenge. Where dubious patents are being asserted, the PTO could conduct low-cost, timely administrative proceedings to determine patent validity. As president, Barack Obama will ensure that our patent laws protect legitimate rights while not stifling innovation and collaboration. (Source: Connecting and Empowering All Americans Through Technology and Innovation. ) John McCain, United States Senator, Republicans. McCain s campaign says the U.S. patent system should change to improve patent quality and reduce litigation. (Source: Election 08: Seeking a Tech President BusinessWeek (2007/09/19) I am a free trader. I will do everything in my power as president of the United States to protect intellectual property, but, far more important, to open every market in the world through free trade. (Source: Michael Arrington, McCain Embarrassed by Yahoo s Actions in China; Also Calls Google To The Mat, TechCrunch (2007/11/12) * Contents in parentheses are quotations from articles and source of quotation owns copyright. The judicial process in the U.S. has already begun to correct some of these excesses (e.g., the Supreme Court s decisions in ebay and KSR which are referred to in the JPO/PCIIP Document and the Federal Circuit s decision in Seagate.) We believe that many of the issues that have led to rapid increases in litigation are already being resolved by U.S. courts, and there is little reason to predict that the current increases in litigation reflect a trend that will continue in the long-term or that will expand to other industrialized countries. (Microsoft) Current State of the USPTO The United States Government Accountability Office, Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog, (GAO , 2007). Although USPTO hired 3,672 patent examiners from the beginning of fiscal year 2002 through fiscal year 2006, the patent examination workforce increased by only 1,644 because 2,028 patent examiners either left the agency or moved to other positions. More specifically, during this time, 1,643 patent examiners left the agency, and 385 patent examiners were either transferred or promoted out of the position of patent examiner. Bruce A. Lehman, Innovation, the Global Patent Crisis and a Common Patent System, (paper presented at WIPO Inter-Regional Forum On Leveraging Intellectual Property For Knowledge-Based Development And National Wealth Creation, New Delhi, India, Nov 14-16, 2007).... the global patent system is entering a period of crisis, characterized by escalating pendency of applications, declining quality of examination, duplication of work by multiple patent offices and increasing costs of patent prosecution. For example, in the United States Patent and Trademark Office (USPTO), both the number of patent applications filed and the average pendency of applications has been steadily increasing. (See Chart 1.) Currently, there are approximately 475,000 patent applications that are backlogged at USPTO and if this trend continues, number of patents waiting to be examined will reach over 1,000,000 by By that time, it will take over five years for the USPTO to issue patents in many technologies of critical importance. This example is being repeated in patent offices around the world. 94

95 (3) Correspondence to different types of innovation structures in different industries The view of different innovation structures by industry is spreading. It is said that, in the U.S., the discretion to tailor the general provisions of the Patent Law to circumstances is afforded to courts by policy levers. How should the policy levers of the patent in Japan be controlled? Changes in the role that intellectual property fulfills to create innovation In accordance with the rapid advance in sophisticated technology, a new problem has arisen. That is, with respect to the role that the intellectual property system fulfills to create innovation, and various explanations have been considered, from the theoretical aspects, about different innovation structures in different industries and roles fulfilled by intellectual property. For example, such theories have been advocated as a prospect theory applied to the pharmaceutical industry, a competitive innovation theory applied to business models, a cumulative innovation theory applied to the software industry, an anti-commons theory applied to the biotechnology industry, and a patent thicket theory applied to the semiconductor industry. In this way, there are discussions on different innovation structures by industry. (See Reference II-7) The creation and promotion of innovation depends on patent judgment. Additionally, having an uncertain patent has greatly impacted business strategy, and it can discourage innovation conversely. For reducing the amount of business risk due to there being such an uncertain patent, the patent system and its practices should be reconsidered according to trends of constant changes in technology, actual conditions of industry, circumstances of international harmonization, and consistency on the judgment in examination, appeals/trials and litigation. In addition, through these reconsiderations, not only an appropriate patent system should be realized, but also it is necessary to make efforts to clarify the practices of patent examination and to ensure the predictability of patent acquisition and stability of an acquired patent right. Customization of patent law and patent policy - policy levers - Although, as described above, the creation structure of innovation and the role fulfilled by intellectual property differ according to industry, the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) prohibits a member thereof from discrimination in the granting of a patent depending on the field of technology (Section 27(1)). There is an opinion that, so as not to violate this TRIPS Agreement, in the U.S., for example, the discretion to tailor the general provisions of the Patent Law according to the characteristics of each industry and several circumstances is afforded to courts by doctrinal policy levers. (See Reference II-7) Specific examples of policy levers include the technical level of those skilled in the art, the requirements for the description of the specification, patentable subject matter, etc. On the other hand, in Japan, as well, repeated law amendments and revisions of the Examination Guidelines have been carried out responding to the demands of the times (details to be described later in Part II 1.(4)). Under such circumstances, how should the policy levers of the patent in Japan be controlled? In the JPO, patent examiners with specialized knowledge in each of the technical fields operate a patent system, and the JPO, in the Examination 95

96 Guidelines, clarified the optimal principles to apply the Patent Law and other related laws to examination. Therefore, because the JPO is an organization that has both technical expertise and legal expertise, it could be expected that the JPO plays at least a part of the role of the policy levers in Japan. In such case, when how the practices Reference II-7 Theories concerning roles fulfilled by intellectual property in the creation of innovation In accordance with a rapid advance in sophisticated technology, various explanations have been considered, from the theoretical aspect, about roles fulfilled by the intellectual property. Prospect theory [Medicinal products] which is a theory that, by granting of a patent in an early stage of the invention process, a researcher will expect a patent to be granted and innovation will be promoted. Competitive innovation theory [Business models] which is a theory that, without protection by patents, innovation is promoted by a competitive environment. Cumulative innovation theory [Software] which is a theory that, because the patent is not carried out by itself but carried out by the accumulation of technologies of the past, innovation is promoted by incentives being afforded for both basic inventions and improved inventions. Anti-commons theory [Biotechnology] which is a theory that, although the scope of a single patent is small, because the technology is segmentalized by such patents, such as patents of DNA, innovation is discouraged by the elevation of licensing costs. Patent thickets theory [Semiconductors] which is a theory that, because many enterprises attempt to achieve the same technology simultaneously, a plurality of similar patents exist redundantly. As a result, because existing enterprises agree with each other on wide-ranging cross licenses and block newcomers effectively, innovation is discouraged. (Source) Summarized by the JPO, referring to Burk and Lemley Policy Levers in Patent Law (2003) Next, we review the contents of pro-patent policies. So far, only strengthening intellectual property rights is said to be a pro-patent policy. However, now, we should review the contents of propatent policies. It is especially important to open up each others technologies in the current innovation structure. The concept of Commons is one of the key attractions of open innovation. It s also necessary to open them to save time and money. The trend of opening them should be promoted. (Comment of a PCIIP member) 96 of patent examination including the Examination Guidelines should be is studied, a highly transparent and predictable patent examination mechanism is needed. Part II 1. (7) will describe the specifics of the patent examination system. Reference II-8 Tailoring Patent Law and Patent Policy If different industries acquire, value and use patents differently, and if the optimal number, scope and division of patent rights differ by industry, then it is easy to conclude that we need different patent statutes for each industry. We resist that conclusion in Section A. In Section B, we argue that the unitary patent statute already gives substantial discretion to courts to build industry-sensitive policy analysis into their decisions, and that courts have latitude to create other such opportunities. These policy levers permit patent law to take account of the technology-specific nature of the patent system without inviting the rent-seeking and balkanization that specialized statutes would engender. Source: Burk and Lemley Policy Levers in Patent Law (2003) Policy levers in Japan There are such problems with the legislation that a bias is likely to be applied in the policy formulation process. On the other hand, it is thought that the courts recommended by Burk and Lemley are indeed relatively strong against lobbying. However, the courts have limited ability to collect sufficient information to formulate policies and taking into consideration that democratic correctness alternating the ability to collect information is also relatively weak, as in at least the system of Japan, a certain expectation will be placed on the steering of administration as a third option that is a policy lever of the Japan Patent Office. Actually, as a matter of fact, in the Japan Patent Office, a patent system is operated in each technical field under examiners specialized in each of those fields. Furthermore, with respect to a specific field, practices thereof are sometimes clarified in the Examination Guidelines. As described already, such a concept as a model of traditional constitutionalism, that is, a full review of the Examination Guidelines by the courts, should be revised by expectation of the above role of the Japan Patent Office. Source: Translated by the JPO, referring to Yoshiyuki Tamura, Attempts of Intellectual Property Law and Policy, Intellectual Property Law and Policy Journal Vol. 20 (2008).

97 Trends in the study of Soft IP In Europe, some propose that an IP system be divided into two groups: one is Soft IP ( soft (weak) IP, Soft patent ) system for complex technical fields such as information communication technology; and, the other is the classic patent system for areas such as the pharmaceutical sector, etc. (See Reference II-9) Regarding the former, Soft IP with license of right (LOR, Declare a readiness to grant licenses) is also suggested, and it is said that the Soft IP system is advanced from the LOR system. (See Reference II-10) However, Soft IP should be discussed continuously because there are several issues: what technical fields should be granted Soft IP; whether fields granted Soft IP are clearly distinguishable from other fields; whether or not Soft IP violates the TRIPS Agreement, etc. Reference II-10 License of right or Declare a readiness to grant licenses (Declaration of willingness to license) Under the license of right (LOR) system, when a patent right holder declares or registers his intention that licenses under the patent are to be available to third parties, his maintenance fee is reduced by a certain percentage. This system promotes the use of patented inventions that are not intended to be exercised exclusively and that are open to the public, where users of LOR can enjoy the benefit of renewal fees reduction. This system exists in the U.K., Germany, and France. Source: Institute of Intellectual Property, Overseas Fee Systems and Finance Policy regarding Industrial Property Rights, March, Reference II-9 Soft IP The Soft IP rule is a soft (weak) protection of intellectual property right with no injunctions available to patent owners and with claim for damages. It s mentioned in the Blue Skies Scenarios of the EPO s Scenarios for the Future (2007). The Blue Skies Scenario explains that protection of complex energy technologies are weakened and protected as Soft IP for rapid technological developments to clean energy and to reduce greenhouse gases. Such success expands towards other technologies, and then, the IP system divides into two groups: one is a Soft patent system for complex technical fields, such as information communications technology; and, the other is the classic patent system for areas such as the pharmaceutical sector, etc. In Europe, Soft IP has been discussed in the way of a Community Patent, and a system is proposed whereby applicants can select ordinary patent or Community patent (Soft IP) endorsed licenses of right (LOR). Benefits of the Soft IP system are no translations required in the EU and low patent renewal fees. On the other hand, benefits of the ordinary patent system are injunctions available, etc. A big benefit for third parties is license availability under certain conditions and royalties. One of the issues is that it is difficult to determine what technical areas are protected by Soft IP when a Soft patent is granted for complex technical fields only like the EPO s Blue Skies Scenarios. In addition, there is worry that thirdparty intentional infringement against Soft IP would increase with no license agreement which annoys third parties. Furthermore, in case Soft IP is used to create standards, the standards have no power when an outsider alleges infringement of his ordinary patent whose technology is contained in the standards, which is similar to using LOR, OSS (Open Source Software), and GPL (General Public License) to make standards. Source: Summarized by the JPO, based on the European Patent Office, Scenarios for the Future, (2007), Jonathan Sage, Soft IP, (Presentation at EPO conference, Brussels, July5, 2007). 97

98 (4). Revisions of the patent system and practices The Patent Act etc. and the Examination Guidelines have been revised corresponding to trends in technology, industry, and society in the past. Such a patent system and practices should be flexibly adapted to those trends and need to be reviewed constantly. Meanwhile, is the current framework an appropriate one in which to discuss what the present system and practices should be? The Patent Act etc. and the Examination Guidelines have been revised corresponding to trends in technology, industry, and society. (See Reference II-11) Revisions in the past The patent system and practices have been specifically revised in recent years on the content given below. Before the Examination Guidelines are formally revised, there is an open invitation for public comments to provide opportunities to hear opinions and to increase transparency. Patentable subject matter The Examination Guidelines have been revised to protect cutting-edge medical technology, to protect biological inventions, to clarify the scope of protection for inventions with limitations by use, and to add concrete examples. In addition, with respect to changes in the definition of invention as well as the protection of pure business method-related inventions and software-related inventions, the Examination Guidelines have also been revised to clarify the scope of such protections, and the Patent Act has been revised to contain "a computer program etc." in the wording of "a product" of the Act. Specification and claims In order to clarify the requirement for having a substantial correspondence between the claimed invention and the matter disclosed in the specification, the Examination Guidelines have been revised and has been made to contain concrete examples related to this requirement. Moreover, the Patent Act and the Examination Guidelines have been revised to create new requirements for the disclosure of information on prior art documents. Further, with respect to the requirement for the unity of an invention, the Patent Act has been amended, and the Examination Guidelines have been revised. In addition, Examination Guidelines for priority have been formulated. Amendments and special applications, etc. The Examination Guidelines have been revised to clarify the scope in which an amendment is accepted. Also, the Patent Act has been amended, and the Examination Guidelines have been formulated for limiting of amendments to the claims to being ones that satisfy the requirement for unity of invention. Furthermore, with respect to the division of an application and conversion of an application, the Patent Act and the Utility Model Act have been amended, and Examination Guidelines have been formulated. (See Reference II-11) Current issues of revision Also, currently, discussions regarding various issues with respect to revisions of the patent system and practices are being raised. For example, such a discussion has been raised that it be necessary to investigate the changes in the definition of invention, patent protection for pure business method inventions, patent protection for computer software, patent protection for medical methods, the reconsideration of extensions of patent terms, the requirement for description, inventive steps, etc. (See Reference II-11) With respect to a comparison of the protection 98

99 for computer software and business method in Japan with that in the U.S. and Europe, see Reference II-12. The scope of protection is the same in Europe, Japan and the United States except that the pure business method is protected in the United States. In this regard, the CAFC en banc reviews protection of the business method (In Re Bilski). With respect to the history of investigation of the patent protection for activity related to the medical field and the scope of protection in Japan, the U.S., and Europe, see Reference II-13. As to protection of medical-related activity, this is almost the same among the Trilateral Offices, too. However, only U.S. allows patent protection for medical method activity. Even so, due to disclaimer provisions, the medical method patents are not enforceable to physician with some exceptions. (As to the exceptions, see Reference II-13 footnote.) What the patent system and practices should be Such a patent system and practices should be flexibly adapted to trends in technology, industry, and society, and it is necessary to discuss consistently what the system should be. When discussing how the system and practices should be adjusted in line with the trends of technology, industry, and society, the promotion of innovation, international harmonization, viewpoints of balance between consistency of decision among examination, appeals and trials, and litigation and the stability of patent right, etc. should be taken into consideration, and ensuring the transparency of procedure will further be required (See Part II 1. (7).). 99

100 Reference II-11 Revision of the patent system and practices The Patent Act and Examination Guidelines have been revised corresponding to trends in technology, industry, and society, etc. Revisions in the past (since 2001) Protection of cutting-edge medical technology (The Examination Guidelines were revised in 2003 and 2005.) Protection of biological inventions (The Examination Guidelines were revised in 2001 and 2003.) Clarified the scope of protection for inventions with limitations by use (The Examination Guidelines were revised in 2006.) Change in the definition of invention as well as protection of pure business method-related inventions and software-related inventions (The Examination Guidelines were revised in The Patent Act was amended in 2002.) Requirements for description (The Examination Guidelines were revised with respect to the specification and claims in 2001 and The Patent Act was amended to add a requirement for the disclosure of information on prior art documents in The Examination Guidelines were formulated in 2002.) Requirement for unity of invention (The Patent Act was amended in The Examination Guidelines were revised in 2003 and 2007.) Priority (The Examination Guidelines were formulated in 2004.) Amendment (The Examination Guidelines were revised in The Patent Act was amended, and the Examination Guidelines were formulated for limiting amendments of claims in 2007.) Division of applications and Conversion of applications (The Patent Act and Utility model Act were amended with respect to changes to an application in The Examination Guidelines for the above amendment to the Act were formulated in Amendment to the Patent Act for relaxing periodical requirements for division of applications was carried out in The Examination Guidelines for the above amendment to the Act were formulated in 2007.) Current issues Changes in the definition of invention and patent protection for pure business methods (Discussion regarding whether pure business methods should become patentable subject matter or not, by changing the definition of invention in Article 2 of the Patent Act with respect to the protection of pure business methods) Patent protection for computer software (Discussion regarding whether such present Examination Guidelines that, when information processing by software is concretely realized by using hardware resources, the software is deemed to be a creation of technical ideas utilizing a law of nature, should be changed or not, with respect to the revision of requirements for utilization of hardware by software) Patent protection for medical methods (Discussion regarding whether a disclaimer for a physician is incorporated into Article 69 of the Patent Act or not, with respect to patent protection for medical methods such as protection of medicinal methods, or whether circumstances related to patent protection for medical methods is changed or not) Reconsideration of extensions of patent terms (Discussion regarding whether dosage forms in addition to products and usage are caused to be subject to Article 68(2) of the Patent Act or not with respect to modality of systems such as extension of subjects (for example, genetically-engineered organisms) and protection of dosage forms (such as DDS), and whether subjects in Article 3 of Cabinet order should be extended or not) Requirements for description (Discussion regarding whether current Examination Guidelines or practices of requirements for description, which are pointed out as being too rigorous in comparison with that applied in the U.S. and Europe, is necessary to be changed or not, with respect to the suitability of Examination Guidelines and practices of requirements for description) Inventive step (Discussion regarding whether the Examination Guidelines for inventive steps should be revised or not) Discussion in which judiciary, administrative, and private participate Inventive steps of an invention are such problems affecting the basis of the patent system as an industrial policy that they determines how much progress is needed for a patent to be granted. Thus, it can be thought that the judiciary, the administrative, and the private side participate and hold vigorous discussions and do research with respect to problems of inventive steps, through which a judgment having consistency or a judgment having predictability throughout an entire country is caused to be performed. Should the establishment of a committee or a research organization for the above discussion or research be considered in a serious manner? (the Japan Patent Attorney Association) Discussion for enhancing predictability It is thought that, through investigation and discussion at a review meeting for inventive steps which were performed for 2 years hitherto, as a result, consistency in judgment levels on the applicant side, the patent attorney and lawyer side, and the Patent Office side, and the enhancement of predictability has increased. Accordingly, we desire that such a review meeting be continuously performed in the future, as well, even by reduction of the number of applications to be investigated. Here, since we consider that, when the court officials also participate in such a review meeting, it is much more beneficial from the viewpoints of the stability of rights and predictability, we will hope for a positive approach therefor. (the Japan Intellectual Property Association) Voices of users Here are results of hearings on judgment for inventive steps. In particular, many opinions were expressed about expressions or descriptions in the notice of reasons for refusal or in decisions for refusal. Specifically, remarkable opinions were that descriptions in the notice of reasons for refusal are too short or insufficient. Additionally, in terms of the evaluation of substantive judgment, while many evaluated that judgments were slightly too strict, many also pointed out, from a viewpoint other than that of the strictness of judgments, that a problem is that the width of a judgment depends on the technical field or on the examiner. With respect to recent changes in the judgment method or results of inventive steps, while, as a general tendency, many evaluated that judgments on the inventive steps had recently become stricter, quite a few indicated that judgments had not become particularly stricter, so the answers were not so consolidated that a certain direction of answers became apparent. As an evaluation for differences in the judgment method or results of the inventive step between Japan and the U.S. and Europe, many recognized that judgments for inventive steps in Japan are stiffer than those in the U.S. or Europe. With respect to this point, quite a few pointed out that it was desired that the level of judgments for the inventive steps in Japan be raised; on the other hand, few indicated that the level of judgment on inventive steps in Japan should be lower. Furthermore, many evaluated that inventive steps were denied because of the high level of prior art searches in Japan. Source: Edited by the JPO from the International Association for the Protection of Intellectual Property, Japan, Study and Research on Operations of Patent Systems for Harmonization of Inventive Step Requirements (March, 2007). 100

101 Reference II-12 Patent Protection for Computer Software-Related Inventions Outline of comparison between Trilateral Offices Except pure business method is patentable subject matter in the U.S., patentable subject matter for computer software-related invention is almost the same between Trilaterals. (note) In the U.S., in the CAFC en banc, the revision of protection for the business method patents is now being performed (the above Bilski Case). Recently, as not limited thereto, there has been a swingover from excessive patent protections, and requirements for patents have been revised. Japan Europe the U.S. Product Method Medium P P P Computer Program Program P (When information processing by software is concretely reali alized by using hardwa ware resources, it is patentable subject matter.) P (Programs having technicalcal effects are patentable subj bject matter in practice.) P Business method Pure business method Business method realized by computer N N P (note) P P (When information (When a business processing by software is concretely reali alized method itself has a by using hardwa ware technical resources, it is characteristic, it is patentable subject patentable subj bject matter.) matter.) Symbols: P indicates patentable subject matter; and, N indicates non-patentable subject matter. P (note) (Regardless of the presence of computer technology, when an actual application (useful, concrete, and tangible result) is present, it is patentable subject matter.) Comparison with History of Japan and U.S. Japan 1993 Revision of Examination Guidelines When hardware resource is utilized in a claimed invention, the invention can be deemed to be one utilizing a law of nature Revision of Examination Guidelines A recording medium in which a computer program is recorded is patentable subject matter Revision of Examination Guidelines A computer program which is not recorded in a medium medium is also patentable subject matter Amendment of the Patent Act It has been provided that a computer program itself is patentable subject matter. U.S Court decision in Benson An algorithm itself is not patentable subject matter Court decision in Alappat The actual application of a mathematical algorithm generating a useful, concrete and tangible result is patentable subject matter Court decision in State Street Bank A business method exception about patentable subject matter is denied Court decision in Comiskey An invention formed by human mental activity without any calculation by computer is not patentable subject matter Court decision in Bilski In February 2008, the Court of Appeals for the Federal Circuit ordered an en banc rehearing of the In re Bilski case about whether inventions of a managing method of consuming risk is patentable subject matter or not. 101

102 Reference II-13 Patent Protection for Medical-Related Activity Outline of comparison between Trilateral Offices Patentable subject matter for medical-related activity is almost the same between the Trilateral Offices, except for the following two facts. (1) Only in the U.S., the medical activity is patentable subject matter. However, since in the U.S., there is disclaimer provisions for a physicians, even if a medical method is patented, the rights cannot be enforced except in some exceptional cases (*). (2) In the U.S., a known substance which is specified by its use is not protected as an invention of product because, as a substance specified by its use, it is recognized as not being different from the known substance. On the other hand, such a substance can be protected as an invention of process when a new use is discovered. Also in Japan, a considerable part of medical-related activity can be protected with patents by claiming the medical-related activity as an invention of product or as an invention of method for manufacturing. On the other hand, it is a fact that there are such parts that methods for surgical operations or methods for implantations of medical materials can be protected in the U.S. but cannot be substantially protected in Japan. Phar armaceuti cal product The second or further use Japan History of Review Europe U.S. P (1) Medical method N N P (1) New substance P P P N (2) The first use P P N (2) P P N (2) Medical device P P P Symbols: P indicates patentable subject matter; and, N indicates non-patentable subject matter. (*) Exceptions of disclaimer provisions for a physician: In the case of an action infringing a patent of a methods of giving medicine, there is a probability that not even a physicians would be privileged, and there is also a probability that such an action that the pharmaceutical industry offers medicine to a physician falls under the indirect infringement. Additionally, in the case of an action infringing a patent from the field of biotechnology, not even the physicians would be privileged. Medical activity WG, Patent system subcommittee, Intellectual property policy committee, Industrial Structure Council (From the First meeting: Oct. 16, 2002 to the Fourth meeting: Apr. 2, 2003) Report about handling of medical-related activity in Patent Act, June 3, It was thought that, with respect to the right or wrong of general activities related to the medical field being regarded as being patentable subject matter, the political necessity, actual influence, etc. thereof need to be discussed repeatedly many times so that no agreement could be formulated. In the current patent Examination Guidelines, it is thought that rapid revision of the Examination Guidelines as appropriate to define that a method for manufacturing a medicinal product or medical material (e.g., a cultured skin sheet, an artificial bone) utilizing raw material collected from a human being are patentable subject matter. Specialized investigation committee for modality of protection of patents of medical-related activity, Intellectual property strategy headquarters (From the First meeting: Oct. 31, 2003 to the Eleventh meeting: Nov. 22, 2004) Report about modality of patent protection of medical-related activity in the Patent Act (final report), Nov. 22, Since, with respect to technology related to activities of a physician, meticulous attention is necessary taking into consideration characteristics of medical treatment, it is excluded from the object of the investigation. With respect to technologies related to a method for controlling the operation of a medical device and a method for developing a new effect or efficacy of a medicine for production or sales of the medicine, by providing incentives for inventions thereof, it can be expected that development is being promoted as never before, and that the embodiment and dissemination of advanced medical technology will be achieved. On the occasion of these technologies being caused to be patentable subject matter, it is necessary to be continuously thoughtful consideration such as follow-up activities so as not to adversely affect medical treatment taking into consideration that there may be an influence or a concern which can hardly be predicted at present. Specialized investigation committee for enhancement of competitiveness by intellectual property, Intellectual property strategy headquarters (the First meeting: Aug. 30, 2007; the Second meeting: Oct. 30, 2007; the Third meeting: Nov. 21, 2007) Report for the development of an intellectual property frontier (Sectoral intellectual property strategy), Nov. 21, 2007 With respect to the modality of patentable subject matter, while the development of medical technology needs to be contemplated, since the field concerned has an affect on the life and health of citizens and is an important problem socioeconomically, meticulous attention is needed. Aug. 7, 2003 Revision of Patent Examination Guidelines It was defined that a method for manufacturing medicinal products such as genetically modified preparations and medical materials such as a cultured skin sheet are patentable subject matter even if the method is based on a presupposition that the material will be returned to the same human being from which it was taken. Apr. 15, 2005 Revision of Patent Examination Guidelines i) A method for controlling the operation of a medical device is represented as a method of a function of the medical device and is defined to be patentable subject matter. ii) It is expressly defined that a medicinal invention defined by combination of a plurality of medicines or defined by a mode of medical treatment such as a dosing interval, a given dose, or the like is handled as being an industrially applicable invention because it is also an invention of a product, and principles of method of determining patentability such as novelty or inventive steps, etc. are clarified. 102