Supreme Court Decision on Enforceability of a US Court Decision Dr. Shoichi Okuyama AIPPI Japan AIPLA Pre-meeting on October 22, 2014

FACT Five JP individuals used to work for a JP corporation A, which had an exclusive license from a CA corporation, X, in Japan and two of them quit A to establish a JP corporation, Y, in Japan (three others followed) Trade secret violation on the proprietary process of X for treating eyebrows under CA laws X obtained a US court decision (default judgment) against the JP individuals and Y for both damages and injunction X asked for enforcement in Japan of the decision

Lower Court Decisions Tokyo District Court, April 15, 2012 Tokyo High Court, May 11, 2013 All defendants are in Japan, and proof of damages having occurred in the US to support the US decision does not exist Rejected X’s claim for enforcement X appealed before the Supreme Court

Relevant provisions in Code of Civil Procedure (1) Article 118 (enforceability of final judgment of a foreign court) A final and binding judgment rendered by a foreign court shall be effective only if it meets all of the following requirements: ▫(i) The jurisdiction of the foreign court is recognized under laws or regulations or conventions or treaties. ▫(ii) The defeated defendant has received a service (excluding a service by publication or any other service similar thereto) of a summons or order necessary for the commencement of the suit, or has appeared without receiving such service. ▫(iii) The content of the judgment and the court proceedings are not contrary to public policy in Japan. ▫(iv) A mutual guarantee exists.

Relevant provisions in Code of Civil Procedure (2) New provisions added in 2011 Article 3-3 Actions listed in the following items may be filed with a court of Japan in the cases in respective items: (viii) An action relating to a tort: If the place where the tort took place is located in Japan (excluding the case in which the result of a wrongful act committed in a foreign country occurred in Japan, and the occurrence of such result in Japan was ordinarily unforeseeable).

Holdings – April 24, 2014 With respect to the injunction, the lower court erred in not considering the future possibility of a tort carried out by the defendants in the U.S. With respect to the damages, as a result of the above consideration, jurisdiction on the damages may be recognized for the CA court because it is closely related to the injunction and may be considered as a joint claim (Article 3-6) The first petty bench of the Sup. Ct. remanded the case to the Tokyo High Court

Take-away message Generally speaking, including this decision and other decisions, Japanese courts tend to recognize international jurisdiction broadly In this case, the Sup. Ct. suggested that the CA court might have jurisdiction over defendants residing in Japan and committed torts only in Japan This goes vice versa with torts committed in a foreign country

Current Status of Discussions on Employee Inventions (Article 35) Dr. Shoichi Okuyama AIPPI Japan AIPLA Pre-meeting on October 22, 2014

Governmental Committee Meetings March 24, 2014 April 4, 2014 April 14, 2014 April 30, 2014 May 14, 2014 May 29, 2014 June 18, 2014 (June 30, 2014 cancelled) September 3, 2014 October 17, 2014

On June 18, 2014 A proposal was made: ▫Make inventions belong to the employer if certain conditions for remunerations or rewards are met ▫Otherwise, inventions belong to inventors Planned June 30 meeting was cancelled “Certain conditions” would be studied in the meantime until September

On September 3, 2014 New person became in charge at the JPO Four points raised for further discussions ▫Are there sufficient grounds for taking away the statutory rights for claiming remunerations on the value of an invention? ▫If the statutory rights are abolished, then general provisions in the Civil Code would have to be applicable. Does this result in reduced legal predictability? ▫Are certain incentives necessary for inventors in view of the basic purpose of the Patent Act – to encourage inventions? ▫If the ownership goes to corporations, what about universities or other research institutions? Any possibility of complications?

On October 17, 2014 New proposal Guarantee employees current statutory rights for claiming remunerations or equivalent rights The government will publish guidelines for incentive policies Corporations, not employee-inventors, will have original rights to obtain patents ▫Exceptions possible for universities and institutes ▫Inventors belonging to a corporation which does no have employee invention rules should not treated unfairly

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