Intellectual Property and Competition Policy in Japan

Intellectual Property and Competition Policy in Japan

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Description: When restriction concerning the use of technologies results in excluding or controlling other firmsí business, this may be Private Monopolization (Article 2, Paragraph 5 of the AMA). Inhibiting the use of technology, limiting the scope of use of technology, imposing conditions for the use of technology, etc. When right holderís conduct is likely to impede fair competition, even if it does not match the requirements of Private Monopolization, the conduct may be Unfair Trade Practices (Article 2, Paragraph 9 of the AMA).

 
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Contents:
NO COMPETITION, NO GROWTH

Tuesday, 14 March,2017, : BRUEGEL
Intellectual Property and Competition Policy in Europe and Japan

Intellectual Property and
Competition Policy
in Japan
Japan Fair Trade Commission
Commissioner
Reiko AOKI
1

NO COMPETITION, NO GROWTH

Anti-Monopoly Act (AMA)
- 1947 (69years old)
- The 3rd competition law in the world
(after US and Canada)

- PURPOSE: “…..to promote the democratic and wholesome development of the national

economy as well as to assure the interests of general consumers.”

Japan Fair Trade Commission (JFTC)
- 1947 (69years old)
- 1 chairman + 4 commissioners
- about 800 staffs in the general secretariat

2

NO COMPETITION, NO GROWTH

Comparison of Substantive Provisions: US-EU-Japan
Competition law structure
Afterthe-fact
regulation

Concerted
practices

Horizontal
restriction

US

EU

Unreasonable restraint
of trade (Sherman Act,
Section 1)

Concerted practices (EU
Treaty, Article 101)

Vertical
restriction
Monopolization /
Abuse of dominant
position

Japan
Unreasonable restraint of
trade (Article 3 (latter part),
Article 8)
Unfair trade practices (Article
19)

Monopolization
(Sherman Act, Section
2)

Abuse of dominant
position (EU Treaty,
Article 102)

Private monopolization
(Section 3 (former part))
Unfair trade practices (Article
19)

Ex-ante
regulation

Merger regulation

Unique regulation

Clayton Act, Section 7,
Section 7A

Council Regulation (EC)
No 139/2004

Chapter IV of the law
(Articles 10-18)

Robinson-Patman Act
(Price discrimination)

State aids (EU Treaty,
Article 107)

Subcontract Act

(Note) In addition to the above, the prohibition of “unfair methods competition” is stipulated in Article 5 of the Federal
Trade Commission Act in the U.S.A.

3

NO COMPETITION, NO GROWTH

Intellectual Property Rights and Competition Policy (1)

○ IP has positive effect on competition
 Stimulates R&D activities of enterprises
 Serves as the driving force in creating new technologies
 Activates competition in the existing and newly created market
 Makes transaction of technologies possible = further positive impcat
of competition
• Combination of new technologies further Increases firm
efficiency
• Enhances competition among firms with newly acquainted
technologies

4

NO COMPETITION, NO GROWTH

Complimentary Relationship between Competition Law and IP Law

 The Anti-Monopoly Act (Article 1: purpose)
“…to promote fair and free competition, stimulate the creative initiative of enterprises,
encourage business activity…and thereby promote the democratic and wholesome
development of the national economy…”

 The Patent Act (Article 1: purpose)
“…to encourage inventions, and thereby to contribute to the development of industry.”

 Intellectual Property Basic Act (Article 10: Consideration for promoting competition)
“In promoting measures for the creation, protection and exploitation of intellectual
property, consideration shall be paid to secure the fair exploitation of intellectual property
and public interests and to promote fair and free competition.”

5

NO COMPETITION, NO GROWTH

Intellectual Property Rights and Competition Policy (2)
However, IP may have negative effect on competition if IP holder
• Refuses to license its technology, or
• Imposes strictly restrictive conditions

Competition Law can
• Protect competition from negative effect of restrictions inconsistent
with IP protections systems
• Promote competition through by enhancing IP protection systems

6

NO COMPETITION, NO GROWTH

General Principles of Competition Law and IP in Japan

○ Japanese competition law gives an exemption on the
exercise of IP rights


Article 21 of the Anti-Monopoly Act
“The provisions of this Act do not apply to acts found to
constitute an exercise of rights under the Copyright Act,
Patent Act, Utility Model Act, Design Act or Trademark Act.”

7

NO COMPETITION, NO GROWTH

Exercise of IP rights (1)

 In case where the conducts in question deviate from IP rights
protection system, it cannot be regarded as the “exercise of IP rights”.
 Determining conduct that deviate from IP rights protection
 Does conduct may stimulate the firms’ efforts for creativity and
practice of new technologies ?
 Taking into account
• Firm’s intention and manner of the conduct

• Impact on competition

8

NO COMPETITION, NO GROWTH

Exercise of IP rights (2)

 When restriction* concerning use of technologies results in
excluding or controlling other firms’ business, this may be Private
Monopolization (Article 2, Paragraph 5 of the AMA)
* Inhibiting the use of technology, limiting the scope of use of technology,
imposing conditions for the use of technology, etc.

 When right holder’s conduct is likely to impede fair competition,
even if it does not match the requirements of Private Monopolization,
the conduct may be Unfair Trade Practices (Article 2, Paragraph 9 of
the AMA)

9

NO COMPETITION, NO GROWTH

Revision of IP Guidelines in 2016: Background

 JFTC published Guidelines for the Use of Intellectual Property under
the Anti-Monopoly Act in 2007
 Clarified application of Antimonopoly Act on the issues related to the SEP
(Standard Essential Patent)
 IP related cases judged based on the guidelines.

 It became unsatisfactory
 Some conducts not included (e.g., injunction by SEP holder) or limited
guidance

 New cases and issues related to the SEP (e.g., Apple –
Samsung case in Japan )
 Therefore, the JFTC reviewed the Guidelines and added description
on SEP holder’s behavior.

10

NO COMPETITION, NO GROWTH

Apple - Samsung case (civil litigation) in Japan

 Main issue
• Is it illegal to demand an injunction relating to a FRAND-encumbered
standard-essential patent for the communication by Samsung
 Summary of judgment by the Intellectual Property High Court
(May 16, 2014)
• The execution of the right to demand an injunction based on the
FRAND-encumbered patent is an abuse of rights (paragraph 3, article 1
of the Civil Code) if the other party is willing to take a license under
FRAND conditions.

11

NO COMPETITION, NO GROWTH

Revision of IP Guidelines in 2016: Points of revision (1)

 Conducts by a FRAND-encumbered essential patent holder not
regarded as exercise of rights under the patent laws as follows;
• Refusal to license or claim for injunction to a party who is willing to
take a license on FRAND terms, or
• Withdrawal of FRAND Declaration for Essential Patent and refusal
to license or claim for injunction to a party who is willing to take a
license of the Essential Patent on FRAND terms
 Implication:
The conducts mentioned above are subject to Anti-Monopoly Act
(Private Monopolization or Unfair Trade Practice).

12

NO COMPETITION, NO GROWTH

Revision of IP Guidelines in 2016: Points of revision (2)

 Whether or not a party is the one who is willing to take a license on
FRAND terms (willing licensee) should be decided on case-by-case
basis, taking into account the behavior of both sides in licensing
negotiations process, etc.
 For example,
• What is the infringement ?
• How is it infringed ?
• What are the conditions offered for license and is it reasonable ?
• Have parties responded promptly to the offers and reasonably ?
• Are the responses in good faith in light of the normal business
practices ?

13

NO COMPETITION, NO GROWTH

Recent case on IP right: One - Blue case (1) Overview of One-Blue

One-Blue is a patent pool that manages Blu-ray Disc (BD) SEPs
• Acts as licensor under contracts with certain holders of the BD SEPs (SEP Owners).

SEP Owners have declared that they will license the BD SEPs on FRAND terms.
• Some One-Blue Licensors engage in the manufacturing and sales of recordable BDs.

A person or entity that wishes to be granted a license may enter into an
agreement with One-Blue.
• Agreement grants the person or entity right to negotiate a license to manufacture and sell BD
standard products .
• Person or entity may also negotiate a license with each of the SEP Owners.

14

NO COMPETITION, NO GROWTH

Recent case on IP right: One - Blue case (2) Backgrounds of the case

Imation is manufacturer and seller of recordable BDs.
Imation and One-Blue engaged in negotiation to license SEPs since 2012 but
unable to agree on the fee.
Imation presented to One-Blue
• Willingness to pay One-Blue a fair and reasonable license fee
• Proposed a license fee.
• Asked One-Blue to explain the rational for license fee proposed by One-Blue.

One-Blue gave no explanation
• Refuses to negotiate the license fee in order to provide non-discriminatory terms.

15

NO COMPETITION, NO GROWTH

Recent case on IP right: One - Blue case (3) Conduct in Violation of the AMA

June 2013, One-Blue sent notice to three of major customers of Imation in Japan
(= retails Imation recordable BDs).
• Informed them that One-Blue Licensors could seek injunction against them for SEP
infringement.

One of the three suspended the sale of Imation recordable BDs from mid-June
2013 through March 2015.

16

NO COMPETITION, NO GROWTH

Recent case on IP right: One - Blue case (4) Conduct in Violation of the AMA (cont’d)

August 2013, Imation filed a lawsuit to the Tokyo District Court seeking injunction
against One-Blue conduct (threaten to file injunction)
February 18, 2015 Tokyo District Court ruled that
• One Blue were not allowed to exercise the right to seek injunction because it constituted an
“abuse of rights.”
• Therefore, notifying the retailers that One-Blue was entitled to exercise such right deemed making
false allegation
• Falls under unfair competition in Unfair Competition Prevention Act (became final judgment).

Subsequent to the final and binding judgment, the customer resumed the sales of
Imation BDs ( April 2015).
December 2015, Imation withdrew from the manufacture and sales of recordable
BDs ( not expecting future growth ).

17

NO COMPETITION, NO GROWTH

Recent case on IP right: One - Blue case (5) Decision by the JFTC

• JFTC found One-Blue unjustly interfered with Imation’s transaction
• Imation was willing to obtain a license BD SEP on FRAND terms
• Imation is a competitor for SEP Owners

• Paragraph 14 of the Designation of Unfair Trade Practices (Interference with a
Competitor's Transactions) and consequently is in violation of Article 19 of the
Antimonopoly Act.
• Imation customer resumed sales of such BDs around April 2015. Therefore, the JFTC
found One-Blue has not been engaged in the conduct of violation at issue since the
said month at latest.
• JFTC found there to be no necessity to issue a cease and desist order and case was
closed.

18

NO COMPETITION, NO GROWTH

JFTC’s character :
DOKKIN

Thank you very much
for your kind attention.
JFTC Website: http://www.jftc.go.jp/en/index.html
JFTC Video: http://youtu.be/QcXKTU3s480

*The contents of this presentation do not necessarily reflect the views of the JFTC.

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