In Parts 1 and 2 I introduced the usefulness of Japan’s utility model system, especially for small and medium-sized enterprises (SME’s). I believe that there is broad misunderstanding and underestimation of the value of the Japanese Utility Model. In this Part 3, I will explain and answer the question: “why can a company’s market can be effectively protected by the Japanese utility model system, which is an unexamined system”?
“Although the patent system is designed to protect an invention which involves highly advanced and sophisticated technologies, the utility model system is, on the other hand, designed to protect a device related to the shape or construction of articles or combination of articles. The words “invention” (i.e., reflecting “high creativity”) and “device” (i.e., reflecting “creativity”) are used for ideas involving different levels of creativity.”
Since 1993, Japan’s utility model system has adopted a non-examination system for registering utility models – specifically, without novelty and inventive step examinations. Before that time, it was similar to the patent examination system, but it was revised to a non-examination system because there was criticism from the industry that it took too long to register.
At present a utility model can be registered even if there is no novelty or inventive step. However, there is underestimation of the value of the Japanese Utility Model. The utility model registration system is mixture of good and bad – there are some registrations that are, in reality, worthless. Therefore, we have established a “technical opinion system” that examines novelty, inventive step, etc. when necessary (Article 29-2 of the Utility Model Law). The legal system of such a non-examination system is not unique to Japan, and is similar to that of China, Taiwan and Thailand.
In fact, we view the utility model registration system is a very powerful and user-friendly system. However, it can be very annoying to a third party when utility model rights are exercised, given the potentially unclear rights for devices whose novelty and inventive step are unknown. Therefore, the system is one of trying to balance the interests of the parties.
“Technical Opinion” means that the applicant or the right holder applies to the JPO for a value evaluation of utility model registration. When this technical opinion application is applied for, the JPO will examine the novelty, inventive step and prior registration of the utility model – after the utility model registration. The examination hurdles (especially inventive step) in this case are the same as in the case of patents. Therefore, the utility model examination is not at a lower level than for patents, and the perception that utility model rights are weaker than patents in terms of rights is incorrect.
The technical evaluation report is basically a “utility model report card”. “Evaluation” is indicated by points levels: Level 1 is “no novelty”, Level 2 is “novelty but no inventive step”, Levels 3 to 5 are “no prior registration”, Level 6 is “presumed to be novel and inventive step”. Therefore, Level 6 is a perfect score, and the JPO has determined that it has the same effect as the case of a patent. At present, it takes about three months for the right holder to apply for a “Technical Evaluation Report”.
Therefore, if a Level 6 evaluation is given, it is possible to send a warning letter to the suspected infringer, file a lawsuit and file a claim for damages. In fact, at the request of an SME client, a lawsuit for damages against a large enterprise due to infringement based on a utility model registration is currently underway at our office.
It should be noted that if the utility model right is exercised or warned, and if the utility model registration then becomes invalid after that, liability for damages caused by such exercise or warning will arise. (Article 29-3 of the same law). Therefore, a utility model right holder cannot, or should not, exercise the right unnecessarily. In particular, if you exercise your rights such as with warnings to the suspected infringer in the case of “Level 1” or “Level 2” (above), it is highly likely that you will fall under the above provisions and have to compensate for damages, so be careful.
Then, on this premise, is it meaningless to have a Utility Model registration unless you receive an Opinion of Level 6 ? The answer is no. Here are some tips on how to use the utility model system.
Initially, an “Level 6” is very unlikely to be established. This corresponds to a case where a patent application is filed and no notice of reasons for refusal are sent and the patent is granted. At present, such cases are extremely rare in the examination of Japanese patents. “Level 2” results are by far the majority – that is, a case where “inventive step is questionable”. However, the utility model registration of “Level 2” can still protect the right holder and the company’s market.
The reason for the above conclusion is as follows. Since the utility model registration is established even if it is “Level 2”, the right holder can attach the notation “utility model registered” to the product tag, post it on the company’s web page, etc. for advertising. This is a perfectly legal act. In such a case, even if a third party sees the product or advertisement and thinks “I want to make it because it is a very attractive idea”, the existence of the utility model right must be recognized.
The question is what a third party thinks at that point: if they are an aggressive business, they’ll spend money and time to determine the value of the utility model registration. They may also seek a Technical Opinion Report. If, in the unlikely case it received a “Level 3- 6” opinion, their imitation of the product will surely be stopped.
It is important however, to consider the potential dilemma of a “Level 2” situation carefully. In this case, the third party may perceive “Level 2” as weak and justifying proceeding with an imitation. an example, in other words, of the underestimation of the value of the Japanese Utility Model.They may question a Patent Attorney’s judgement and advise that the imitation not be produced / introduced to the market. The reason is that while a “Level 2″ is an evaluation that “there is no inventive step”, skilled Patent Attorneys understand that the judgment of “whether or not there is an inventive step” is a very delicate judgment. Challenging a “Level 2” could require proceeding up to the Supreme Court for a different, final decision. This is usually not advisable.
The criteria for judgment are determined by the JPO’s, examination guidelines, but the actual judgment will differ depending on the individual case. In general, judgments may differ: depending on the judging entity (examiner in charge, examiner, judge, etc.), due to the judgment between the examination and the trial differing, and the judgment between the JPO and the court may also differ. That is, there are many situations where it may be judged either way – except when there is a clear inventive step and when there is no clear inventive step. The same is true for foreign patent offices, so there are many such gray zones in Japan and in other jurisdictions as well.
“Novelty” is a concept that allows objective and rational judgment, but “Inventive Step” is a subjective concept (technical view, invention view, industrial view) compared to “Novelty”. It is a concept about which there are many mixed views. In that sense it is an industrial policy concept with many variable factors, and in Japan is seen from the viewpoint of “what kind of invention can contribute to the development of Japanese industry”. Therefore, the judgment of “evaluation 2” is also a judgment of the JPO, and in some cases, a different evaluation may be made in the court. So it is not an absolute evaluation as the reader must appreciate.
Therefore, if a dispute arises by imitating a utility model of “Points2”, the suspected infringer can claim the invalidity of the utility model registration and file for a trial or litigation for invalidation of the utility model. In general, it takes more than 1 million yen (USD $10,000) and more than a year to reach a conclusion.
People who want to copy a utility model-registered device or item will have to make risk judgments and evaluate the cost-effectiveness of such a business decision as to whether or not to spend so much money and time to enter the market controlled by utility model owners. In most cases, it seems that the rational judgment of experienced business people is to conclude that it’s best to “avoid” doing so. At least that’s the case in my last 20 years of supporting SME’s, and nothing contrary to this or my clients has happened so far.
Therefore, the utility model system is clearly on the side of SME and individual businesses. We must work to eradicate the underestimation of the value of the Japanese Utility Model