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Third Party Observation, Opposition, and Invalidation of Japanese Patents

April 2, 2014


Post grant opposition will be enacted in 2015. Then, there will be below three stages at which prior art can be submitted to the JPO.
- Prior art submission to a pending application ("Third party observation")
- Opposition after a patent registration
- Invalidation of a patent


Third Party Observation

Any person may anonymously submit prior art references to the JPO for preventing or limiting the competitors' patents. However, there are negative consequences of the third party observation.

1. Red Flag for the Applicant

It indicates that some competitor considers the application important or dangerous. In response, the applicant can:
a. Request accelerated examination and zealously prosecute the application,
b. Obtain divisional patents that cover different aspects of the invention,
c. Investigate competitors' products and amend the claims to cover the products, and
d. Keep a divisional application pending for preserving the opportunity to amend the claims.

Those are avoided, if the references are submitted after the patent is issued.

2. Benefit of a Competitor's Patent

Competitors' patents exclude other competitors as well. When there are many competitors, as long as it is possible to obtain a license, it is actually preferable for a competitor's patent to issue.

3. Lost Bargaining Chip

If a prior art references invalidate the patent, the patent owner cannot exclude any or obtain any license fees. Therefore, un-submitted prior art references can be a negotiation tool for obtaining a license, especially when there are many other competitors. By submitting the prior art references to the patent office, this bargaining power is lost.

For those reasons, we generally do not suggest third party observations, especially when there can be many other competitors in the future.

On the other hand, if a challenger decides not to submit prior art to the JPO, but rather move to the negotiation table with the owner of the patent rights, disadvantages also exist. This approach would be slow and may be expensive in terms of compensation payments. A favorable conclusion cannot be assured, so a high degree of uncertainty exists regarding the outcome.

Please feel free to contact us, for consultations specific to different business circumstances.


Opposition after Patent Registration (Likely Enacted in 2015)

Anyone may file the opposition within six months of the publication of the issued patent (Article 113). Your patent attorney in Japan may file the opposition under its name as well.

The patent owner can refute the opposition and narrow the claim, correct the error or translation, clarify expressions, and rewrite dependent claims to independent (Article 120-5 Section 2). If any amendment is filed, the opposing party will be notified and given an opportunity to file a supplemental argument (Article 120-5 Section 5).

If a divisional application coexists, the patent owner can amend the claims of the divisional application and further divide the patent applications. Therefore, the negative consequences 1 to 3 explained in the above “Third Party Observation” section still exists. Before filing an opposition, divisional applications should be searched. If it is found, the above negative consequences must be evaluated before proceeding with the opposition.

If a divisional application does not coexist, an opposition can be more safely filed, as no more divisional application can be made and amendment is limited. The opposition is more cost effective than invalidation as well.


Invalidation of Patent

A party in interest may request an invalidation of a patent to the Japan patent office anytime after the patent is issued (Article . 123). The invalidation is typically initiated after the party receives a warning letter of patent infringement.

Prior to submission of prior art to the JPO and possible invalidation of a patent, negotiations with the patent owner should be considered in order to obtain licensing. Ideally, the patent in questions would be licensed to the challenger and kept alive, thereby providing some protection for the licensee from other parties wishing to utilize the invention.

Negotiations, however, have a large degree of uncertainty and risk regarding the outcome. If the scale of a challengers business expands, the value of the patent also increases. If the challenger believes that the business will expand more than it is generally expected, then, it might be beneficial to obtain the license earlier.


Counter Patent

It is also recommended that a challenger apply for counter patents related to common business areas or for any improvements the challenger will make to the invention. If the patent examination is accelerated, Japanese patent typically issues within six months from the filing of the application. Because of its speed, filing counter patents is practically effective in Japan. The counter patent provides the basis for a cross licensing negotiation.


Summary

In summary, the safer option is to file prior art as Opposition, after the registration of a patent. Negotiation for licensing is also a good option to consider because of the benefits in excluding other competitors. In addition, a counter patent should be filed by a challenger as soon as possible, covering other novel aspects of the invention and ideally a cross licensing agreement should be made based on this. For details, please feel free to contact us.



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