Comparative Perspectives on Specialised Intellectual Property Courts: Understanding Japan's Intellectual Property High Court Through the Lens of the US Federal Circuit

Abstract

This article develops a comparative analysis of specialised courts in intellectual property across both Japan and the US. This article considers the IPHC through the lens of the CAFC to investigate the differing institutional impact and illuminate the most pressing issues in Japanese patent law that have emerged as a result of transplanting this specialised court. Rather than a more conventional analysis of the implementation of these institutions, this article focuses instead on a comparative investigation of the soft law elements that have significantly influenced their effectiveness, providing a different insight on the relationship between these institutions and their broader contextual impact.

The main findings of the comparative analysis are found in two primary areas – the impact of specialised courts on the consistency and reliability of patent law; and secondly, recommendations regarding the potential reform of Japanese patent law as it relates to the role of the IPHC. In terms of reform, this article analyzes the double-track problem in Japanese patent law and the key role that, with some modification to the court/patent office relationship, the IPHC could play in addressing this issue with a more fundamental realignment of patent law with its Continental history.

Economic Recovery and Intellectual Property

Japan and the US are particularly important jurisdictions in international intellectual property because of the policy shifts that occurred as a direct response to economic challenges – as well as their increasingly complex trade relationship through the 1980s¹ – that eventually led both countries to establish specialised courts to deal with intellectual property disputes. The US, through the reforms initiated under the Reagan administration, became strongly aligned with a ‘pro-patent’ approach to intellectual property, while Japan in the early 2000s underwent a transformation to become an ‘IP-based nation’ to empower its innovative communities and promote the patenting of technology.² These shifts in national policy occurred in an international legal climate that was increasingly promoting harmonisation initiatives, many of which for Japan and the US in particular, were built on a complex web of bilateral projects that originally emerged as a response to trade tensions between the two countries in the 1990s.³

While the intellectual property-focused reforms enacted by the Japanese Koizumi government were an explicit attempt at emulating the success of the US, the differences in soft law dynamics resulted in a substantial disconnect between the two regimes. It is from this perspective that the US provides an important model for developing increasingly specialised dispute resolution fora in a global context, demonstrating that an institutional transplant is not enough to provide a framework that realises a strengthened system of intellectual property rights.

Countries across the world are incorporating specialised courts for intellectual property rights – and, even within this, sometimes narrowing this to just the consideration of patent rights – in a manner that follows a broader trend of specialisation in many legal disciplines. As such, an analysis of the US and Japan experiences of specialisation in intellectual property provides an excellent example of how to address or moderate not just the hierarchical institutional dynamics, but also how changes and trends in legal education can be used to increase the effectiveness of legal reform, and provide guidance for jurisdictions that are looking to introduce their own specialisation.

This paper presents a comparative analysis of the development and implementation of the Court of Appeals for the Federal Circuit (CAFC) in the US with the Intellectual Property High Court (IPHC) in Japan, focusing first on the political and economic context of both countries that led to the national emphasis on intellectual property rights. Analyzing the relationship between Japan and the US also provides a broader lesson for the international development of intellectual property rights, given the sometimes-difficult interactions that shaped their trade dynamic in the 20^th century and eventual reconciliation.

It highlights some potential courses of action in realising a smoother dynamic with China that could bring a greater degree of integration between China and the US. China's development in terms of intellectual property rights has seen remarkable growth in the last decade and bears similarity to the trade-focused disputes between Japan and the US in the 1980s, presenting a potential model for bilateral negotiations moving forward as a way of deescalating the increasing tension between the two countries.

Part II analyzes the legal reforms in intellectual property that were implemented by the Koizumi government and elements of the Japanese-specific legal environment that distinguished the reforms from the original US ones. Part III considers the development and implementation of the CAFC, with the second half focusing on the interactions between the US Supreme Court and the CAFC.

Japan and the birth of an ‘IP-Based Nation’

Creating the Intellectual Property High Court in Japan

Prime Minister Koizumi and legal reform

The national shift in policy towards intellectual property began, in its modern sense,⁴ with Prime Minister Koizumi's address to the Diet and subsequent policy outline in 2002.⁵ This emphasis on intellectual property rights as intangible assets presented a stark contrast with the areas in which Japan had typically held a significant international advantage such as manufacturing and production.⁶ Prime Minister Koizumi's project of reorienting Japan towards intellectual and informational products instead of traditional manufacturing was a strong response to both the economic struggles of Japan in the 1990s and the rapid development of nearby East Asian economies⁷ – in particular, the rapid growth and expansion of China and the technological advancement that has come to define South Korea's international contributions.⁸ Japan had already struggled with manufacturing competitiveness in relation to China, particularly in the context of displays, where the higher wages of Japanese workers meant that Chinese manufacturers could be more competitive in their pricing.⁹ The biggest shift during the Koizumi government was one that reflected the broader economic reality of a globalised marketplace and a mirroring of the Chinese manufacturing concerns of the 1980s – instead of a strategy that focused on creating innovations that could not be easily replicated in a low-wage environment to retain competitiveness against a single, geographically proximate country, Japan was beginning to contend with a range of countries in which manufacturing could be outsourced to. This, coupled with the successful economic recovery in the US and reversal of the 1980s decline, meant that Japan faced pressure from multiple macroeconomic perspectives.

The shift towards Japan as a nation built on intellectual property was an attempt at reversing the economic decline that came to define the 1990s in Japan,¹⁰ contrasting significantly with the post-war ‘economic miracle’ of Japan that culminated in the stagflation of the 1990s post-economic bubble.¹¹ The bursting of the economic bubble in 1990s Japan had a serious negative impact on its businesses and industries specifically because it restricted the ability of companies to invest in manufacturing facilities and production.¹² The sharp economic deterioration was particularly acute in the Japanese experience because of the remarkable growth that it had consistently shown from the 1940s and onwards.¹³

The economic development of that period was also tightly integrated with a strong focus on manufacturing precisely because of the legal environment that the post-war years created – with restrictions on the types of technologies that could be developed,¹⁴ Japanese manufacturers and their closely linked supply networks were able to expand production and development of light machinery and consumer electronics.¹⁵ All of this came together to create an economic environment in which the historical strengths of Japanese industry, when considered from a global perspective, were suddenly undermined by an economic depression that made sustainability extremely difficult for Japanese businesses and started the search for some way of jump-starting economic recovery.

Introducing the Intellectual Property High Court

Before considering the success (or indeed, failure) of the IPHC, it is important to analyze its construction in terms of its introduction and legal foundation. While the IPHC was clearly influenced by the development of the CAFC in the US, certain factors that stem directly from the unique Japanese intellectual property context affected its implementation. Patent law had long been recognised in Japanese intellectual property law as an area particularly sensitive to diverging approaches to the same issue, leading to the de facto (and later, de jure) centralisation of patent disputes in Osaka and Tokyo – and while Japan had never suffered from the starkly different approaches as seen in the US circuit splits, a single court that ensures the harmonisation of patent law was a clear next step in this process of improving the stability of intellectual property rights.

The jurisdiction of the IPHC is the first in which an exclusive subject-matter jurisdiction has been given to a court in Japan,¹⁶ contrasting with the traditional geographic jurisdiction of the other courts.¹⁷ While the subject-matter jurisdiction is a novel development, particularly for patent law, in promoting harmonisation, the legal diversity in patent law decisions specifically had already been significantly reduced because of the reliance on the Osaka and Tokyo District Courts.¹⁸ Osaka and Tokyo have long been important economic centres in Japan, something that impacted not only the centralisation of technology-producing businesses but also the population drain away from smaller towns across Japan.¹⁹ This type of population centralisation has been somewhat reshaped by the shift towards industries that rely more on intangible innovation and less on physical manufacturing that allows individuals in particular industries (like software engineering or design) to work outside of the traditional hubs of Tokyo and Osaka.

Indeed, the IPHC was essentially constructed from the intellectual property divisions of the Tokyo High Court rather than as a court of independent origin. The support of business and industry appears to have been a particularly prominent element in establishing the IPHC. While industry supported the idea of a specialised court that dealt with intellectual property disputes to provide increased harmonisation and stability,²⁰ there was opposition to the creation of a ninth High Court with subject-matter jurisdiction - the compromise in the implementation being that the IPHC would be created from the existing IP divisions of the Tokyo High Court (which already had significant expertise in intellectual property disputes).

This integration and role in harmonisation go further than simply considering the personnel of these institutions and is fundamentally linked to the jurisdiction of the IPHC itself. The IPHC is important in a patent context because it combines an exclusive subject-matter jurisdiction for patent disputes while also serving as a first-instance court for challenges to decisions made by the JPO.²¹ To minimise any potential discrepancies and to promote the harmonisation of these two different tracks of validity and infringement, the same judicial panel will typically hear both.²²

It is important to note that this tight integration of technically-skilled professionals with the judges of the IP High Court is an essential element in offsetting the technical difficulty of intellectual property and supplementing the general training background typical of judges.²³ While JPO examiners have scientific backgrounds, as well as specific training for building expertise with new examiners, the judges of the IPHC are simply required to have qualified as a judge.²⁴ One of the organisational hurdles in establishing the IPHC was ensuring that the court would be adequately staffed by appropriately-qualified judges.²⁵ The extensive use of technical advisors in the Japanese system is a feature that distinguishes the IPHC from other international examples of specialised intellectual property courts and is one of the important ways that the IPHC promotes harmonisation – by introducing technical experts who are there to advise the judge on the technology under discussion, and not advocating on behalf of a party or party's interest.

Distinguishing Japanese Intellectual Property

Japan, transplants, and the East Asian context

Since the Meiji Restoration,²⁶ Japan has consistently employed legal transplants, of both law and institutions, as a way of developing intellectual property policy and bringing a degree of de facto harmonisation internationally. The Meiji approach to intellectual property involved gathering information about other legal systems that appear to be functioning well and then implementing their best practices domestically.²⁷ Unfortunately, the IP-based national policy that was promoted by Prime Minister Koizumi follows an almost identical trajectory. In this modern context, where the TRIPs Agreement has already substantially harmonised patent law at a global level, the domestic implementation of institutions found abroad must be contextualised to understand their impact when transplanted. It is by following this older style of legal transplant in a modern and globalised context that the IPHC fails to achieve its objectives in harmonisation.

The technical advisor system is one of the mechanisms that differentiate the IPHC internationally and contribute significantly to the legitimacy of the proceedings from a technical and legal perspective. Rather than adopting the US system of expert witnesses,²⁸ the IPHC instead uses technical advisors²⁹ – while the technical advisors are expected to have a similar background of expert knowledge in a specific field as expert witnesses in the US system, they are instead paid from court funds and are there primarily to assist the judge in understanding the technology under discussion. This differs significantly from the US system, where the parties pay their own expert witnesses to testify and essentially advocate on their behalf.³⁰

Korea has also taken a similar approach to that of the Japanese IPHC with the recent reform of its specialised intellectual property court. The Korean approach, until the reform in 2016, was indicative of the type of institutional variation that is found in the specialisation of intellectual property courts as it essentially functioned as a centralised venue for administrative disputes from the Korean Patent Office (rather than sitting in an appellate criminal or civil capacity).³¹ This was modified in 2016 and recast the function of the court to be much closer to the IPHC and to a more traditional understanding of a ‘court’ more generally, introducing technical advisors for cases that are exceptional in terms of their technical difficulty rather than the more general usage in the Japanese context.³²

While the role of the technical advisors is crucial to the institutional function of the IPHC, they are part-time and not involved with every case. Consequently, judicial research officials are the foundation of not just research support in the IPHC but the Japanese court system as a whole. The role of research official in Japan differs from that of their American counterparts, since unlike the recent graduates that make up clerks in the US courts, research officials in Japan are judges who typically have extensive experience.³³ Though a considerable amount of a judicial research official's time is spent in assessing whether a case involves the legal issues of significance that would warrant in-depth assessment by research officials, they are an important resource for judges in both understanding the legal problem under consideration and sometimes functioning as a substantial force in the shaping of the final judgment.³⁴

The role of technical advisors, while functionally quite similar to that of research officials, is particularly important for intellectual property in at least two regards – the first of which pertaining to their capacity to act as technical experts for the benefit of the judge. In the shift towards a national intellectual property policy that encourages the creation and exploitation of patent rights for economic growth, there are industries that generate innovations that are both legally and technologically challenging.

This is not, of course, unique to Japan. Precisely because the judicial research officials tend to be full-time judges with significant legal experience, their experience of these issues that occur at the intersection of law and technology are necessarily based on second-hand accounts – they emerge in the context of a dispute that has since been appealed and deemed significant enough by a research official to devote appropriate resources to investigating. Technical advisors, on the other hand, come from a much wider pool of experts that have a greater likelihood of having first-hand experience with industry and therefore have at least some practical perspectives on the cutting-edge technology under dispute.

It is in this context that the second important role of the technical advisor emerges, though it extends beyond just their competence in frontier technologies of an industry. The technical advisor role, and particularly because they are drawn from outside the court and JPO, function as a signal of the institutional identity of the specialised court. Introducing technical advisors from a broad pool of experts that are not full-time employees of the court demonstrates not only an openness in terms of stakeholder engagement but the commitment to assessing the dispute with an emphasis on the correct technical understanding of the patented invention.

By ensuring that technical advisors are brought in to help the court understand technologically challenging inventions, the court is demonstrating that it recognises that intellectual property rights do not exist in a vacuum and their decisions have a profound impact at a practical level for the users of those rights. Even the willingness to not solely rely on the (significant) expertise of the research officials contributes to, at least somewhat, a perception that the IPHC is responsive to industry needs and committed to establishing a legally ‘neutral’ forum in which the technology itself is of central importance.³⁵

This experimentation in the form of a specialised intellectual property court highlights the speed with which jurisdictions have adopted these institutions in recent years and how the US CAFC was a landmark model in creating what is essentially an international standard. It is also a testament to how recent this wave of specialisation in intellectual property is, as an opportunity for jurisdictions to engage in institutional experimentation even though the long-term effects are still unsettled. It is still uncertain to as to the actual effect of patents in promoting economic recovery and how much of the US or Japanese economic growth of the 1980s and 1990s can instead be attributed to the broader political and economic conditions.

While the Japanese development was explicitly informed by the economic and political context in which the CAFC was developed because of its particular relevance to the Japanese economic slowdown, it is difficult to see how contemporary specialisation in other jurisdictions could be developed without first looking to most successful global example that is the CAFC. Part of this prominence is a result of the CAFC being an extremely early example of specialisation in intellectual property, as well as the global prominence of the US in technology and research output.

Considered from the perspective of industry and a system that promotes harmonisation, the development of the technical advisor system is of great benefit. Rather than having cases supported by technical experts in the context of a specific party and their legal claim, the technology is assessed on a more objective basis and is in line with the origins of Japanese patent law.³⁶ The importance is firmly on the technology itself and whether the technology has been infringed – elements that all focus on the contribution to industry and promote stability and harmonisation over legal persuasiveness in counsel. The value of this kind of harmonisation in patent law, which emphasises the contribution of innovators and inventions to national economic growth, can be seen throughout the East Asian context with China joining the WTO and Japan agreeing to participate in the Belt and Road Initiative.³⁷

The break from the more German style of patent-specific institutions in an important one,³⁸ especially for Japan and specifically in the context of promoting harmonisation, given the continued influence of German law in patent law and patent law disputes.³⁹ This is significant because the German approach of constructing the patent grant as an administrative act (that should be only reviewed in an administrative context) has contributed to one of the most significant challenges that face Japanese patent law and the promotion of stability and harmonisation domestically, in the form of the ‘double-track’ problem.

The issue here is not one of strict dogmatic adherence to either common law or Continental tradition, in which any variation should be constructed as a problem to be corrected. Instead, the objective is to evaluate these institutional modulations from the perspective of national intellectual property policy and its objectives. Does the mixing of legal approaches, as occurs in Japan in its gradual shifts away from its Meiji-era German legal heritage, support the national objective of promoting the effective creation and exploitation of intellectual property rights? Introducing elements from a different legal tradition is not, in itself, a negative feature of an institutional framework. It is when those legal developments run counter to the very objectives that were the basis of introducing a specialised court that an evaluation must be made as to their appropriateness in the broader legal context.

The innovation of civil court practice

Three landmark cases illustrate the innovative approaches of not just the IPHC, but also the Japanese judiciary more broadly and how these elements are key to understanding the broader impact of an institution beyond its official functions and capacity. It is also important to note that these creative approaches to difficult legal problems are not restricted to intellectual property – the Japanese judiciary has a strong history of addressing important legal (and social) problems with innovative solutions.⁴⁰ However, in considering intellectual property law and patent law specifically from the perspective of the promotion of harmonisation that contributes to the development of industry, only two of these cases will be discussed.

Recognising the institutional character of Japanese courts is important because of the general perceptions that exist around both civil law courts and Japanese courts specifically, often characterising them as passive voices of the legal texts.⁴¹ The reality is that Japanese courts, like many other civil law jurisdictions, are complex systems of interaction that involve hierarchical and social dynamics that create a judicial system that is altogether less homogenous than it would first appear to be. This is important specifically for contextualising the introduction of a specialised court for intellectual property because of the often-technical nature of patent disputes and the fact that these disputes can involve nascent technologies that are difficult to frame legally. A specialised court requires, perhaps more than just flexibility, a responsiveness to be able to adequately deal with these disputes that stretch or strain the legislative patent framework.

The first of the significant cases is Ball Spline Bearing which was the explicit recognition by the Japanese Supreme Court on the applicability of the doctrine of equivalents.⁴² While the decision represents a turning point in the development of the doctrine of equivalents in Japan on the basis that it was formally introduced, it followed what had been a lengthy period in which the lower courts had variously approached the issue of indirect infringement but had stopped short of using the language to equivalency to frame the dispute.⁴³

From a more institutional perspective, it is clear that the decision of the Japanese Supreme Court to formally recognise a mode of infringement, which had previously, and still for some, been a tacit acceptance that the dispute lacked any direct infringement and was thus a weak claim⁴⁴, was aimed at reconciling differences in an increasingly globalised context of patent law and, particularly given the historical relationship between Japan and the US, suggests an explicit consideration of the common law principles that permit a degree of legal flexibility that has helped develop a responsive institutional response to the specialisation of intellectual property seen in the US. The development of the doctrine of equivalents also demonstrates broader responsiveness of the judiciary in importing or otherwise developing legal approaches that do not rely solely on legislative intervention to address the legal problems of users of the intellectual property system, and contribute to a more informal convergence of patent law at the international level.

The second of the significant cases represented a more explicit break from the construction of a patent grant as an administrative act is the Kilby patent under dispute in Fujitsu v Texas Instruments,⁴⁵ concluded in April 2000 with the Japanese Supreme Court essentially reversing an established precedent that had been set by the Japanese Supreme Court previously⁴⁶ – one that had indirectly affirmed the provisions in the Japanese Patent Act in construing the invalidation of a patent as an exclusive power of the JPO.⁴⁷ However, the Japanese Supreme Court stated that a patent can be considered invalid by the court hearing the case when grounds for invalidity clearly exist.⁴⁸ The Japanese Patent Act was then amended in 2004 to incorporate this change in position, though the requirement that the invalidity be ‘obvious’ was dropped.⁴⁹

The decision and subsequent codification are particularly indicative of the relationship between the National Diet and the courts of Japan because the process was one of muted dialogue rather than explicit exchange. While the outcome – the codification of a legal development – was the same regardless of the method of communication, the muted dialogue phenomenon raises concerns about institutional transparency from the perspective of users of the intellectual property system. For a specialised court to function properly and address the needs of the users that justify the existence of a specific forum, there needs to be more explicit forms of communication between the main institutions. The US and the CAFC are a key example of this discussed in Part III, though this less implicit communication has often manifested as a quite contentious relationship that nevertheless demonstrates a more open approach to institutional communication that is less apparent in the Japanese context.

The Kilby patent decision is the origin of the ‘double-track’ issue in patent law,⁵⁰ describing the situation by which parallel proceedings on the same patent can be conducted in both the context of a trial for invalidity with the JPO and an infringement lawsuit with the courts.⁵¹ This problem is avoided in jurisdictions with stricter bifurcation and those where the judge is competent to hear both validity and infringement.⁵² The potential issues in the double-track system come, particularly in the Japanese context, from the ability of the court to consider an invalidation claim against a patent in infringement proceedings where the decision is only effective inter partes and is therefore of a much more limited scope than going through the JPO trial for invalidity.⁵³

There are two principal reasons as to why, in the Japanese context at least, the double-track problem is correctly perceived as a problem and not as a feature. The first aspect relates to the potential for separate venues that consider validity and infringement to unduly extend the time from initial filing to resolution. While judicial backlogs and long cases are problems that emerge in most legal systems around the world,⁵⁴ it stands out especially in Japan because the issue of long cases in intellectual property disputes was one of the drivers of tension between the US and Japan in the 1980s and 1990s.⁵⁵

With bifurcated validity and infringement (and particularly in the absence of a legally-mandated automatic stay when proceedings concerning the same patent are filed),⁵⁶ the final judgment of an infringement case can be undermined by a challenge to the validity of the patent under consideration, drawing out the dispute even further.⁵⁷ Challenging both infringement and attacking the validity of the underlying patent are ordinary legal strategies in common law countries,⁵⁸ but since these concerns are raised in a context in which the judge has the power to redraw the patent boundaries (in addition to the power to issue a more fundamental ruling as to the validity of the patent), both validity and infringement are dealt with in the same forum and proceedings are not restarted when a new counterclaim is raised.

The second element that suggests this institutional arrangement is more properly characterised as a problem rather than a feature is the legal reach of a determination as to the validity of the patent in Japanese courts. As noted earlier, invalidity can be raised in the context of infringement – though the decision as to the validity of the patent only extends inter partes. The effectiveness of a validity decision reached in this way relies, again, on the muted dialogue between parties and institutions – the structure of the underlying patent remains intact and there is no guarantee that any subsequent disputes concerning the same patent, but with different parties, would result in a similar conclusion by the court. This approach maximises the autonomy of the court and permits the court to intervene with particularly dubious patents but does little for the broader interests of the industry. The patent itself remains legally intact. While the dispute between those specific parties may be resolved, considered from the perspective of industry more broadly, there is no significant benefit to this intervention because that patent right still exists as it did before validity was raised in the dispute.

The IPHC and the issue of bifurcation highlight one of the institutional problems that can occur with the introduction of a specialised court. The reality is that in the broader institutional landscape there are now two actors who have significant intellectual property expertise and carry legitimacy in their perspectives, namely the IPHC and the JPO. While the capacity of the IPHC to consider both infringement appeals and validity disputes is important in that it brings them within the same legal forum, this occurs relatively late in the lifecycle of a dispute. Instead, rearranging the Japanese framework so that validity returns as a sole function of the JPO means that, with a more comprehensive system for identifying validity and infringement disputes that concern the same patent, the end-users can benefit from earlier intervention instead of waiting for a convergence at the level of the IPHC.

This multipolarity in terms of legitimate expertise was somewhat incorporated in the recent decision of Apple v Samsung in Japan, whereby an informal, court-originated process that approximates the amicus curiae system of the US was used and indicates the important potential of the IPHC as a dispute resolution forum.⁵⁹ In this case, the IPHC had instructed both parties to obtain perspectives on the legal issue of the case and to file these with the court, which then rendered the documents part of the official court record and a part of the trial.⁶⁰ Beyond the trial focus on issues around standard-essential patents and their licensing, this IPHC innovation represents an important, if conservative, approach to maximising the range of perspectives that are heard in particularly important disputes.

Such an ‘amicus-lite’ process, in which parties are instructed to cross-file solicited opinions from other stakeholders, would be an important way of strengthening disputes that concern technologically or legally significant points of law.⁶¹ The lack of communication or a suitable avenue through which to communicate in the process of a dispute has been a recurring feature of patent law, albeit specifically in earlier disputes between businesses in the US and Japan,⁶² with the IPHC providing an important way of improving methods of communication between the parties of a dispute and the broader industry perspective or response without the administrative burden that a more fully-realised amicus system faces.

The Origin of the Court of Appeals for the Federal Circuit

The Joining of Two Courts

United States Court of Customs and Patent Appeals / Court of Claims

The development of the jurisdiction of the CAFC, in its shift away from geographic jurisdiction and towards subject matter, had to contend with the issue of how the intersection of patent law and competition law or bankruptcy should look and the extent to which the CAFC can legitimately incorporate these disciplines in accepting appeals or deciding cases.⁶³ The jurisdiction of the IPHC has created a less complex dynamic, primarily because the court was established as a new entity that did not have to reconcile two already existing legacies of precedent. In terms of jurisdictional reach, the IPHC already deals with issues beyond patent law but that are still broadly within intellectual property, while the CAFC manages more complex interactions between different legal fields. The CAFC is a symbol of a commitment to the development of intangible assets and technology, but more directly as an institutional representation of a commitment towards intellectual property as a national priority and becoming a ‘pro-patent’ nation.⁶⁴ The introduction of the IPHC and the CAFC had a similar impact in terms of patent applications,⁶⁵ generating a surge of applications that can be seen as the result of the increased legal certainty for patent owners that their rights would be properly enforced, as well as the stability that this centralised system offers in contrast to the preceding fragmentation.⁶⁶

This legal context of fragmentation before the introduction of the CAFC had come to define the patent enforcement dynamic of the US, and the circuit diversity in terms of their appeal outcomes was a primary reason for the introduction of the CAFC.⁶⁷ While Japan had, and still retains, a degree of variance in the outcomes of the courts that consider intellectual property, it never reached the degree at which forum shopping became a substantial problem that undermined the enforcement of patents.⁶⁸ The geographic allocation of jurisdiction for the circuit appeal courts that had created an institutional context in which experimentation could lead to innovative legal technique in the adjudication of patent disputes, yet had also provided a forum for courts that appeared highly cynical towards the interests of patent owners.⁶⁹ Japan lacked these more obvious splits between courts that would be sympathetic or unresponsive to patent owners’ interests, though this is also linked to the geographic distribution of courts, since technological development and output are highly heterogenous in Japan.⁷⁰ This meant that patent disputes progressed exclusively through the two technological centres of Japan and presented a legal forum that was familiar with, if not explicitly supportive of, the current issues in technology and patenting.

The introduction of the CAFC also shifted the dynamic in terms of the international enforcement of patent rights, something that Japan had benefited from substantially through the 1980s and 1990s, to the more modern approach of aggressive enforcement.⁷¹ Before this, the economic growth that Japan had shown in the post-war period had afforded the economic conditions in which patent rights could be overlooked – something that had characterised the difficult relationship between Japanese and American businesses in which patents were considered as a tool for companies who were not competitive enough in the market with their products.⁷² The choice of Japan to create a specialised court that was modelled on the CAFC is particularly clear when considered in the broader economic context of that period, in which Japanese growth had slowed dramatically and the US economy experienced a strong recovery. The Japanese government had been given a prominent and successful example of the type of growth that a focus on intellectual property could bring in the returning economic strength of the US post-CAFC.

Opposition to specialisation

The specialisation of an institution in respect of intellectual property was debated throughout the implementation of the CAFC and the IPHC, generally focusing on the trade-off between extremely specialised judicial staff who would, therefore, be competent to hear disputes but potentially disconnected from broader legal trends outside their field. ⁷³ The concerns over the isolation of intellectual property, specifically patent law, are particularly acute for the CAFC rather than the IPHC because of the strong system of precedent in the US system, and the distinctly more informal sense of precedent in the Japanese system that makes the development of a federal strand of patent law that somehow diverges from the broader legal climate more difficult to combat.⁷⁴

Rather than the focus on the institution itself, however, one of the most important considerations when implementing a specialised institution – whether in intellectual property or another discipline – is the demographic of the legal profession that supports it. For both the CAFC and the IPHC, the legal professionals who support the functioning of the courts are an overlooked, yet fundamental, component of how effective this specialisation would be over simply hearing issues of intellectual property in a generalised court. Indeed, as seen in the international development of arbitration, the makeup of the community of legal professionals is fundamentally connected to the legitimacy of the specialisation. This is apparent when selecting arbitrators who would have the commercial or legal skills to deal more appropriately with the issue under arbitration rather than in a general court, but the technical and scientific complexity of patent law means there is a particularly important relationship between legal personnel, legitimacy, and the specialised forum.

The major difference between the Japanese and US systems from a judicial perspective is the training of judges, which is particularly significant for the legal development of intellectual property and intellectual property disputes. Judges in the US typically have a broader disciplinary background because law is positioned as a postgraduate discipline and therefore requires additional previous (and generally non-legal) study,⁷⁵ with judicial appointment coming only after a significant period of practice that results in a judiciary that has a different dynamic to that of the Japanese judiciary.⁷⁶ Even from the perspective of practicing lawyers, the structure of legal education has resulted in a system in which Japanese patent attorneys specifically are considered to have a narrower technical background that necessarily has an impact how intellectual property disputes are approached.⁷⁷

Beyond the historical and technical dimensions of the term ‘patent attorney’ which contributed somewhat to the difficulties in the trade relationship of the US and Japan, there is some element of caution that should apply when comparing the technical proficiency of US attorneys with Japanese lawyers. While any discipline would necessarily broaden the technical background of an attorney, the rate of advancement in science and technology means that, though a scientific undergraduate degree and professional legal experience may help with an attorney's initial orientation on what exactly is under dispute in a case, it is unlikely that this knowledge would extend to a technically sufficient working of the patent and would therefore still rely on the expertise of third parties. The Japanese reforms of 2004 that require a postgraduate law degree also go some way to offsetting the potentially narrower scope of an undergraduate legal education, though the distinct role of the Japanese Bar Exam and its time limits for qualification do little to promote non-legal education.⁷⁸

The use of third parties in patent disputes is also one of the major differences between the US and Japanese approaches to intellectual property law disputes. The extensive use of expert witnesses in intellectual property law trials in the US is a way of offsetting the subject matter complexity, though these experts are fundamentally witnesses – which is significant in that it subjects them to court procedural rules and have been criticised, through their expert testimony, as essentially functioning as a way of strengthening a specific party's legal argument.⁷⁹ The Japanese use of technical advisors fulfil a similar overall role to expert witnesses but their positioning within the trial framework is very different.

The technical advisors contribute significantly to the legitimacy of the trial because not only are they court-appointed rather than party-appointed, their role is to investigate the nature of the technology under consideration with the aim of more accurately assisting the judge in understanding the technology rather than supporting a specific party's perspective.⁸⁰ This also promotes a more ‘neutral’ construction of patent law, whereby a trial is predicated on a comprehensive understanding of the technology and allowing the judge to receive technical assistance that is not biased towards either party. As discussed earlier, while the technical advisors are a prominent and important aspect of the support system for judges, it is the law clerks and the judicial research officials that are the actual foundation of this system in the day-to-day operation of the court.

The judges of these specialised courts in Japan and the US are also significant because they are shaped by their legal education and the variety of their caseload. The Japanese system, though there have been important shifts towards a more US-style approach to legal education in the 2004 reforms,⁸¹ still retains a more close-knit career judiciary and raises concerns about the scope of judicial innovation and autonomy. ⁸² The Japanese legal education system is gradually beginning to place more emphasis on stronger science and technology knowledge which will improve over time, though it is important to recognise that this reframing of legal education for patent attorneys is happening in a context in which professional boundaries can be redrawn and the role of patent professionals appears to be expanding (without a corresponding shift in the requirements for additional professional accreditation or qualification).⁸³

Dynamics and Institutions of a Hierarchy

Reliability and consistency in patent law

Patent law has an exceptionally important relationship with consistency and reliability that impacts not only the rights-holders and users of the intellectual property systems, but also the perception of the courts themselves in a way that a specialised court amplifies. While obviously clarity and reasonable expectations of the law are important in all fields, intellectual property and patent law within that are particularly nuanced because of the broader economic role that intellectual property rights play – nowhere is this clearer than in both the reality of the economic recovery of US and Japan through their respective economic slumps, and the expectation. For both countries, patent law and the patents that it grants and protects are beyond private property rights and are instead pieces of a broader macroeconomic recovery that places a significant emphasis on consistency that is not as apparent in other areas of law.

The CAFC and the IPHC have had their problems with maintaining consistency in patent law and have generally originated in both jurisdictions from a focus on the appropriate scope of inventive step and how the perspective of the patent office can differ from that of a specialised court. Within patent law, inventive step is particularly important for technologies that are in emerging industries or represent challenging forms of invention – of which an early example would be biotechnology and the patentability of gene sequences and more recently, the patentability of algorithmic inventions and how inventive step should be construed in that context.

The Japanese context has seen a gradual reconciliation between the approaches of the patent office and IPHC on the issue of inventive step, though the US provides an example of when the divergence is between two courts rather than a court and an administrative agency - highlighting how the difference in approach was instead between the CAFC and the US Supreme Court, in which the CAFC was deemed to have applied the standard for inventive step too liberally.⁸⁴ This shift in institutional context highlights two dimensions that are particularly relevant for the development of specialised courts, the first of which is the potential for a power struggle between administrative and judicial functions in which each institution takes a broad construction of their legitimate scope of action.⁸⁵

The second relates to the hierarchical arrangement and shows that, despite the significant expertise of the specialised court and its staff, the court above it in the hierarchy (including the institution that reviews the validity of the patent in the Japanese example) will not automatically show deference to the decisions of the specialised court. For an area of law like patent law that is specifically used with the intent of stimulating economic growth and promoting a strong innovation ecosystem,⁸⁶ the tension between fundamental institutions of the system like a terminal court of appeal and a specialised court can undermine the broader stability of patents as a legal instrument and the legitimacy of the specialised court.

The relationship between the CAFC and the US Supreme Court has been impacted by what appears to be a clear idea of how patent law should develop from the CAFC's perspective that has occasionally been met with vigorous disagreement from the US Supreme Court. Again, an area of intense activity in this regard has been computer-implemented inventions, but even the jurisdictional reach of the CAFC has been shaped by the US Supreme Court. Holmes Group, Inc. from 2002 was an attempt at limiting the jurisdiction of the CAFC by ruling that the CAFC did not have jurisdiction when the dispute was created through a counterclaim or when the original dispute was not in patent law.⁸⁷

This was eventually corrected by the America Invents Act of 2011 and returned exclusive jurisdiction to the CAFC when the case is a patent appeal⁸⁸ – regardless of whether it originated as a counterclaim or from another field of law.⁸⁹ The tension here demonstrates the expansive nature of patent law and the difficulty in balancing interests when the direction of intellectual property law becomes a national objective. The US example presents an overt reallocation or rebalancing of the role of the specialised court that emerges from explicit conflicts and provides solid resolutions, whereas Japan and the National Diet are engaged in a typically more muted process of affirmation or rejection.⁹⁰

However, it is not simply the terminal court of appeal in an institutional capacity that impacts the functioning of the specialised court, but the broader legal context and how defined or explicit principles such as precedent are in that legal system. With the revision to the Japanese Code of Civil Procedure in 1996, Japan adopted a certiorari system for appeals to the Japanese Supreme Court that aligns both Japanese and US practices and allows a much more manageable caseload for the terminal court of appeal.⁹¹ In the Japanese context, despite lacking a strict system of precedent, the lasting impact of judicial decisions on the broader legal system can still be observed even when these judgments are either never incorporated officially through codification or never explicitly overruled.⁹²

This approach of muted dialogue that stands in contrast to the more overt tone of the US institutions suggests that not only are explicit judgments or pieces of legislation important in understanding the role and function of the specialised court, but the dialogue between institutions – itself a combination of direct and implied communication between the Japanese Supreme Court, the IPHC, and the National Diet – is also a fundamental component in moderating the stability and consistency of Japanese patent law.

Institutions of the hierarchy

The CAFC and the US Supreme Court have a particularly interesting connection because of the way that it extends beyond a strict understanding of the roles of the specialised court and apex court in a way that impacts the broader patent system. This has been especially clear in cases involving software or computer-implemented inventions and is one of the strongest indicators of the importance of stability in patent law, particularly from the perspective of industry users. Coming first to the broader dynamic of the two courts, the CAFC has a reputation, however inaccurate this statistically is⁹³, that its decisions are overwhelmingly overruled by the US Supreme Court.⁹⁴ This not only contributes to a sense of uncertainty or a lack of faith in the specialised court itself, but also suggests that the issues of over-specialisation or ‘tunnel vision’ that were discussed in the implementation of the CAFC may have manifested in a way that is outside the strict confines of disputes and appeals and instead speaks to the broader institutional dynamic between the US Supreme Court and the CAFC.

Even considering the type of language that the CAFC has used in judgments, there appears to be a difference in attitude between the CAFC and the US Supreme Court, cementing the perception that the CAFC is a broadly pro-patent court.⁹⁵ It is within this function, of modulating or filtering the severity with which the US Supreme Court can approach patent dispute, that the CAFC provides substantial value as a specialised court that sits directly below the apex court. It is also from this perspective that we can see the CAFC and its understanding of the broader industry impact a decision, most evidently in the Alice decisions.⁹⁶ The subsequent cases that were heard by the CAFC post-Alice not only had the effect of minimising or modulating the impact of Alice but also in limiting the practical impact of the case for industry more broadly.

The US Supreme Court decided the landmark case of Alice in 2014 and caused what amounted to a crisis of faith in the software industry.⁹⁷ Academics and practitioners were quick to declare that patents for computer-implemented inventions had been ended and that the approach set out by the US Supreme Court in Alice presented an extremely high bar to patentability.⁹⁸ The tension between the CAFC and the US Supreme Court, as well as the underlying dialogue happening in Alice, comes from the interpretation and application of subject matter eligibility and inventive step.⁹⁹ The US Supreme Court had set out a more critical vision for the approach to whether abstract ideas could be patented than that which was seen in the test for inventive step in the earlier case of Mayo Collaborative Services, but it took until Alice for the US Supreme Court to make a more definitive application specifically in terms of software inventions.¹⁰⁰

While the US Supreme Court outlined a particularly strict approach in Alice through the application of the Mayo Collaborative Services framework, the CAFC did not simply accept this narrower standard.¹⁰¹ Instead, while in the initial aftermath of the Alice decision there were certainly much fewer cases that met the standards outlined by the US Supreme Court, the CAFC gradually expanded this approach in subsequent cases to rework the Mayo Collaborative Services framework into its present, much more liberal, form.¹⁰² The four subsequent cases that the CAFC dealt with in the same area came to define the now-accepted standard for computer-implemented inventions,¹⁰³ but it also had the effect of calming tensions in industry which had increased significantly in the post-Alice context.¹⁰⁴

This emergence of a strong institutional identity of the CAFC can also be found in the IPHC, which had its own struggles in developing an identifiable and separate strong identity, though the process was slightly different to that of the CAFC. Beyond the legal impact of the decisions, the process by which these cases are decided is a significant element of the institutional trajectory of the IPHC. For the IPHC, the Grand Panel system – which itself is reminiscent of the en banc hearings of the CAFC – involves cases that are chosen for their technical difficulty or other characteristics to be heard by a panel with the maximum number of judges.¹⁰⁵

This is an important mechanism for reconciling strands of jurisprudence that are in conflict or are beginning to diverge in some way, though this of course occurs in a context in which there is generally limited variety given the centralised nature of patent appeals in Japan. A dimension of the Grand Panel system that speaks to the institutional identity of the IPHC is that it effectively functions in the same way as in a common law system, endowing a decision with an intangible weight that distinguishes it from other decisions. This effect is especially prominent because of the lack of an explicit precedent system in Japan, and creates a pressure to follow such a case decided by a Grand Panel without a formal framework to deal with how diverging perspectives that emerge can be navigated.

Conclusion

The implementation of the IPHC is one of the most significant developments in Japanese intellectual property, not only because of the specialised court it introduced, but also because of the national shift towards the exploitation and protection of intellectual property that it represented. The legal impact in Japan that comes from the IPHC has remained generally limited to supporting the stability of patent rights and creating a space whereby decisions and appeals from other courts and the JPO can be brought together.

This is perhaps more indicative of a legal system in which, particularly for intellectual property rights, there has been a strong current of centralisation that, with the implementation of the IPHC, became more explicit. The soft law contributions of the IPHC have, however, been significant and involve activities that are outside of a dispute context, such as the extensive outreach and educational events that the IPHC is responsible for. The IPHC is a central institution in maintaining the stability of Japanese intellectual property and is fundamental in communicating to both domestic and international businesses a commitment to the robust protection of intellectual property rights.

The CAFC is essential in understanding not only why the impact of the IPHC tends to skew towards a more soft-law dynamic, but also how the intra-court relationships can support or undermine the development of patent law generally. The recent cases of the IPHC present an institution that is ready to respond to the needs of technically challenging cases and a sense of judicial innovation – something that extends beyond a strictly constructed patent dispute, highlighted most recently in the Apple v Samsung dispute and the creation of a process that is essentially an interpretation of an amicus curiae system seen in the US. The developments in court procedure also suggest a push towards the type of broader stakeholder engagement that is typical of the US context, encouraging actors from outside the legal profession to broaden the perspectives in the development of intellectual property policy. This becomes increasingly necessary as patent law continues to be of significant national importance and seen as a crucial element of economic development.

The broader stakeholder engagement also has a positive impact on the legitimacy of the decisions rendered by the IPHC, because it can show that decisions are from a more well-rounded process that incorporates the views of the actual users of the intellectual property framework. An explicit approach to the amicus process would also reduce some of the difficulties in the Grand Panel process, which in itself is an important way of ensuring there are no significant divergences between divisions of the court, but suffers from the lack of an explicit framework that outlines criteria for when a Grand Panel should be convened. In the absence of such criteria, there remain concerns over the necessity and effectiveness of these Grand Panels – whether they represent a clarification or are simply a manifestation of internal court politics.

The double-track problem is the last remaining significant threat to further harmonisation in Japanese patent law and its impact extends far beyond the existence of multiple disputes concerning the same patent. The fact that invalidity can now be raised as a consideration in the context of infringement proceedings but only with inter partes effect means that the Japanese system now, from a macro perspective, occupies an awkward position that lies between the traditional Continental European tradition of a patent as an administrative function and the more recent influence of US common law and education.

Either approach presents a suitable alternative to the current state of the law and it is simply important that a choice is made. Germany is a clear example of a system that functions well with an exclusive competence for the patent granting authority in considering validity, and the US is perhaps the most prominent jurisdiction in which the judge can redraw the boundaries of the patent as well as invalidate specific elements of a patent claim. The technical expertise of the JPO suggests that a return to the exclusive competence to rule on the validity of the patent with a more developed system of communication between the courts and the JPO would provide the most stability with the minimum of legal upheaval.

The CAFC, as one of the original specialised patent courts, highlights some of the important considerations for the IPHC in its future development. The difference in approach between the IPHC and the JPO regarding inventive step was a close mirror of the US context, where it again highlighted the soft law dynamics that are essential in supporting a functioning patent system. While inventive step appears to be settled in both jurisdictions currently, the most obvious example of institutional tension in the Japanese context is between the JPO and the IPHC in terms of being able to consider the validity of a patent.

The relationship between the CAFC and the US Supreme Court is a clear indication of the importance of maintaining the relationships between institutions because of the negative impact that significant divergences can create. The lessons of the CAFC extend beyond just the Japanese context. The historical, economic, and institutional contexts in which the CAFC was introduced are important for any jurisdiction considering a specialised intellectual property court because simply introducing the court does not ensure that the users of the system will benefit from increased stability or a more technically experienced judiciary. Instead, it is the relationships and dynamics between the institutions, as well as the staff that sustain them, that have the greatest potential in justifying the implementation of a specialised court in terms of legitimacy and effectiveness.