Protection of Trade Secret in Future Japanese Patent Litigation AIPLA 2004 Mid-Winter Institute IP Practice in Japan Committee Meeting January 27, 2004 Shinichi Murata Kaneko & Iwamatsu murata@kanekoiwamatsu.com

Contents Measures to Collect Evidence Current Measures to Protect Trade Secret Protective Order Suspension of Open Court Prospects

Measures to Collect Evidence (1) Measures to Collect Evidence in Patent Litigation Party Inquiries (Tojisha Shokai) A party may directly request the other party to produce information needed to prepare for its claim or prove the claim in writing No involvement of the court No duty to disclose trade secret

Measures to Collect Evidence (2) Measures to Collect Evidence in Patent Litigation Order to Produce Documents (Bunsho Teishutsu Meirei) The court may order the other party to produce documents necessary to prove infringement or to assess damages caused by the infringement If the other party has a legitimate reason for refusing to produce them, the request is denied The court may decide whether you have a legitimate reason through an in-camera procedure

Measures to Collect Evidence (3) Measures to Collect Evidence in Patent Litigation Inspection (Kensho) If a process patent is at issue and the other party is unlikely to agree on the accused process, the court may conduct an inspection at the defendant’s factory You can refuse inspection if you have a legitimate reason The court may decide whether you have a legitimate reason through an in-camera procedure

Current Measures to Protect Trade Secret (1) Restriction of Reference or Copying of Evidence (Etsuran Seigen) The court can limit the persons who have access to particular documents to only the parties if the documents includes trade secret This cannot restrict persons who have access to the documents to specific party members like a protective order in the U.S. Preparatory Hearing This hearing is held in a conference room and not open to the public. Party members can attend this hearing.

Current Measures to Protect Trade Secret (2) In-Camera Procedure The court weighs 1) the disadvantages the owner of the documents would suffer from the disclosure and 2) the disadvantages the parties in the case would suffer from the nondisclosure

Current Measures to Protect Trade Secret (3) In-Camera Procedure If the court finds that the accused device is different from the claim of the patent, the court is likely to deny the order or order the party to produce only a part that is different from an element of the claim

Current Measures to Protect Trade Secret (4) In-Camera Procedure If the court finds that the accused device is within the scope of the claim, the court is likely to order the defendant to produce the document the defendant does not have a legitimate reason to refuse to submit such information related to the infringing device

Current Measures to Protect Trade Secret (5) Problems It’s often burdensome for Plaintiff to prove infringement without evidence that includes trade secret. Plaintiff cannot participate in in-camera procedure. There is no provision which imposes an obligation to keep information submitted for in-camera procedure in confidence on specific persons. According to the current practice, it could be decided through in-camera procedure whether Defendant infringes a patent. When the court investigates evidence that includes trade secret, open court is inappropriate.

Protective Order (1) Consultation Group on IP Litigation　（a section of the Office for Promotion of Justice Reform System) Purpose - Improvement and speeding up of IP litigation Matters under consideration Relationship between decisions about validity of patents at courts and those at the JPO Improvement of court systems for experts to support judges - Expansion and clarification of the role of Chosa-kan (technical experts) Measures to make it easier for plaintiffs to demonstrate infringement – protection of trade secret

Protective Order (2) 4 Proposals on Order to Produce Documents (Proposal A) To stipulate that “Legitimate Reason” does not include trade secret. A document that includes trade secret is unlikely to be submitted for in-camera procedure. If the document include trade secret, the court can impose obligation to use the document only for the litigation and not to disclose it to a third party. Violators will be punished. The name of the specific persons who can have access to the document will be submitted to the court.

Protective Order (3) 4 Proposals (Proposal B) Make it possible to produce trade secret more easily by clarifying factors to be considered in deciding whether a party has “Legitimate Reason,” or using suspension of open court. A party requesting an order to produce document or others can have access to the documents submitted for in-camera procedure with court’s permission. The court can impose obligation to use the document only for the litigation and not to disclose the document to a third party on the above persons. Violators will be punished.

Protective Order (4) 4 Proposals (Proposal C) Make it possible to produce trade secret more easily by clarifying factors to be considered in deciding whether a party has “Legitimate Reason,” or using suspension of open court - same as Proposal B The lawyer of the party can have access to the document submitted for in-camera procedure with court’s permission. The court can impose obligation to use the document only for the litigation and not to disclose the document to a third party on the above persons. Violators will be punished. – same as Proposal B.

Protective Order (5) 4 Proposals (Proposal D) Make it possible to produce trade secret more easily by clarifying factors to be considered in deciding whether a party has “Legitimate Reason,” or using suspension of open court - same as Proposal B A technical expert can review the documents submitted to in-camera procedure. The obligation not to disclose the trade secret will be imposed on the technical expert.

Protective Order (6) Proposed Protective Order The court shall issue a protective order that imposes obligation to use the document only for the litigation and not to disclose it to a third party on the parties or the like, the attorneys, or the assistants, if the court decides that (1) the document includes trade secret and (2) it is necessary to impose the above obligation, upon the request of a party. Violators will be punished. The party who requested the protective order or the persons who bear the obligation can apply for the cancellation of the order on the ground that there is no necessary conditions for the order. The order will be valid until it is cancelled.

Protective Order (7) Proposed Protective Order The court can disclose the document to the applicant, the attorneys, or the assistants to hear their opinions, if it is necessary for deciding whether the other party has legitimate reason for refusal in in-camera procedure. In such a case, the court can issue a protective order.

Suspension of Open Court (1) Requirements for Permission of Suspension In patent or unfair competition litigation, if a party or the like is examined on subjects relating to trade secret owned by the party and the following requirements are satisfied, the court can suspend the open court by unanimous consent of the judges it is obvious that the statement on the subject at the open court will cause the detrimental damages to the party’s business based on the trade secret the court cannot decide properly without the statement

Suspension of Open Court (2) Requirements for Permission of Suspension Procedure The court has to hear the opinions of the parties or the like To establish a procedure similar to an in-camera procedure to decide whether the above requirements are satisfied The court has to declare the order to suspend open court with the reason before making the gallery leave the court The court have to allow the gallery to reenter the court after the end of the examination

Prospects It is still not so clear in what cases trade secret will be presented as evidence. However, an order to produce a document that includes trade secret might be issued more easily in the near future because of a protective order. Also, it is expected that Plaintiff’s participation in in-camera procedure will reduce the dissatisfaction with the denial of the order to produce documents.