Report Details Success of Japan's New Patent Opposition System

In April 2015, Japan started using a new opposition system that allows challenges to the validity of newly issued patents at the Japan Patent Office ("JPO"). This opposition system operates in parallel with the JPO's existing invalidation system. The key differences between the two procedures are: (i) a request for an opposition must be filed within six months of the patent's publication; (ii) anyone, and not just an interested party, can file an opposition; (iii) oppositions do not have an oral hearing and are usually faster and cheaper; and (iv) the opposing party cannot appeal an adverse decision of validity to the IP High Court. Both procedures allow the patent owner to amend the claims, including after the JPO issues an Advance Notice of Decision.

The JPO recently published a detailed report containing the latest statistics on the use and outcomes of the new opposition system. With about two years' worth of data, it allows one to assess how useful the new system is to those who want to challenge a patent and how much risk and burden it presents to patent owners, especially in comparison to the invalidation system, as well as its impact on the patent system.

The Number of Oppositions

From April 2015 through June 2017, 2,240 oppositions were filed (the JPO counts multiple filings against the same patent as one filing). There were hardly any for the first 5 months but the number quickly increased starting in September 2015. This was because oppositions are available only for patents that are published in the Patent Gazette on or after April 1, 2015. For the first six months of 2017, slightly more than 100 new oppositions were filed each month. The total number of filings in 2016, when oppositions could be filed throughout the year for the first time, was 1,214. In 2017, the number for the first half was 659, which is slightly more than for 2016 on an annualized basis.

By comparison, the number of patent invalidation trials in 2016 decreased to 140, from 230 in 2015 (a drop of 90 cases or approximately 40 percent), after the number had remained over 200 for each year from 2006 to 2015. It is therefore reasonable to infer that the new opposition system caused a 30 percent to 40 percent decline in the number of invalidation trials. Furthermore, because the total number of oppositions filed in 2016 (1,214) is more than five times greater than the annual number of invalidation trials from 2006 to 2015 (over 200), it is clear that the new opposition system also created more incentive and opportunities to challenge the validity of patents to a significant number of persons who otherwise would not have tried to invalidate (or narrow the claims of) a patent.

It is likely that the popularity of the opposition procedure compared to invalidation trials is due to the lack of an oral hearing and the rule that "any person" may file an opposition, both of which make it easier to invalidate a patent. First, unlike an invalidation trial, an opposition is conducted based only on submission and examination of briefs and documentary exhibits. Although the rules allow the opposition examiners in some cases to conduct an "interrogation" (shinjin) wherein they can ask the parties about their contentions, such occurrences are rare. The lack of an oral hearing reduces the burden of time and cost, especially for individuals, small businesses, research institutes and universities that do not manufacture products, and persons who reside far from Tokyo where the JPO is located.

Second, anyone can file an opposition, whereas only an "interested person"—typically a party to a litigation or someone who is at risk for being sued for infringement—is authorized to file for an invalidation trial. Previously, anyone could file a request for an invalidation trial before the 2014 revisions in the Patent Act that created the new opposition system. This not only increases the number of people eligible to challenge a patent, it also enables someone to file an opposition anonymously through a straw man to avoid unwanted attention from the patent owner.

The Length of Time to a Decision

The average time to a decision for an opposition in 2016 was 5.8 months, and 10.5 months for an invalidation trial. According to the JPO, this notably shorter duration may be due to the large proportion of decisions in which the patent was maintained without any amendment to the claims, which tend to be decided more quickly. This difference may decrease in the future if the proportion of cases resulting in revocation rises. However, because of the lack of an oral hearing, one would expect the duration of oppositions to always be shorter to some extent.

Success Rate for Challengers

352 oppositions filed in 2015 reached a conclusion. Of those, 44—or 12.5 percent—resulted in revocation of all or some of the challenged claims of the patent. 159—or 45.2 percent—resulted in the patent being maintained but only after the claims underwent an amendment. Consequently, for oppositions filed in 2015, the challenger succeeded in revoking or narrowing one or more claims in 57.7 percent of the cases.

The success rate for challengers decreased for oppositions filed in 2016. Of the 857 that reached a conclusion, 72—or 8.4 percent—resulted in revocation of all or some of the challenged claims, and 359—or 41.9 percent—resulted in the patent being maintained after claim amendment. The challenger succeeded in revoking or narrowing one or more claims in 50.3 percent of the cases. We believe this success rate of slightly more than half became another incentive for filing an opposition. For oppositions filed so far in 2017, 85.5 percent are still pending, but their success rate should be closer to that of 2016.

By comparison, in invalidation trials, 39 of 183 trials (21.3 percent) for 2015, and 56 of 181 trials (30.9 percent) for 2016 resulted in invalidation of one or more claims. These rates do not factor in cases in which the parties settled before a decision, and the JPO's statistics for invalidation trials do not provide the number of cases in which the claims were narrowed. Thus it is difficult to make a direct comparison, but it can be seen that the revocation rate in oppositions is less than the percentage of instances in which entire claims were found invalid in an invalidation trial. However, if we factor in the number of oppositions in which the claims were narrowed, the success rate for oppositions become the same or even better than for invalidation trials.

Looking at the numbers in the aggregate, it is evident that the new opposition system has more than doubled the number of issued patents that get invalidated or narrowed in scope. Thus the new opposition system has helped reduce the number of invalid or low-quality patents. In the past, a significant proportion of invalidation trials were initiated by parties that had already been sued in court or accused of patent infringement. Since an opposition takes place soon after issuance, the new opposition system may have had an impact on the number of patent infringement litigation and patent disputes as well.

Variations Among Industrial Sectors

The JPO Report also provides breakdowns according to the International Patent Classification ("IPC") of the opposed patents. Chemical and metallurgical patents have been opposed the most by far, followed by patents classified in the "Human Necessities" sector, "Performing Operations; Transporting" sector, "Electricity" sector, and "Physics" sector.

Although the absolute number of oppositions against patents in the "Textiles; Paper" sector is the lowest among the eight listed sectors, in terms of the number per 10,000 patents (in 2015), they come first at approximately 420 per 10,000. The "Chemistry; Metallurgy" sector comes in second at approximately 253, and the "Human Necessities" sector third at approximately 152. Therefore, owners of patents belonging to these classifications should be relatively more careful of the risk of an opposition being filed against their newly-issued patents.

Conclusion

According to the JPO's statistics, the new opposition system has gotten off to a robust start with significant level of usage. It does not seem to be particularly pro-opponent or pro-patentee. Oppositions should be considered along with invalidation trials as options for invalidating or narrowing patents that may affect your business.