MARKET FAQ

These four fall into two categories. Technology, your name and logo, and your product's appearance become rights only after the Japan Patent Office registers them. In Japan they are called a patent right, a trademark right and a design right. Code you wrote yourself needs no filing. Copyright arises the moment you write it. What Taiwan calls a patent, Japan calls a patent right (特許権). A design right (意匠権) protects the appearance of a product, and Taiwan calls the same thing a design patent. For technology, alongside a patent right, Japan also has a utility model registration system. A utility model right (実用新案権) covers small improvements to the shape, structure or combination of an article, and the Japan Patent Office does not conduct a substantive examination, so it takes less time to obtain. Besides code, one more thing needs no filing: the know-how you keep confidential inside the company, which Japan protects as a trade secret under the Unfair Competition Prevention Act. Two further points to keep in mind. First, Japan does not automatically recognize the patents and trademarks you obtained in Taiwan. Because rights are territorial, you have to apply separately in Japan. Second, the same subject matter can be covered by two rights at once. Code you wrote yourself is protected mainly by copyright, and if it also qualifies as an invention, it may also qualify for a patent right. You do not have to choose one of the two.

For rights that require registration, the Japan Patent Office, the authority in charge, decides which came first by the date the application was filed. This is the first-to-file principle: the party that files first obtains the right. Who created it first and who used it first in the market do not, in principle, determine who the right holder is. If you put off filing, someone else may file an application for the same subject matter before you do. That said, being first to create or first to use still counts for something. Where someone else has registered what is yours, you can argue that the person is not the true inventor and seek to overturn that registration. You may also have a prior use right (先使用権), which means that if you were already doing the same thing in Japan before the other party filed, you can carry on. Both routes take more work than filing at the outset, but they remain options worth considering.

1. Lay out what you hold and sort it item by item: technology, your name and logo, your product's appearance, code, and know-how you keep confidential inside the company. The first three belong in the "must file" category and the last two in the "no filing" category. If a single item looks like it belongs in both, it may fall into both categories. 2. File everything in the "must file" category before you enter Japan. If your technology is only a small improvement to the shape or structure of an article, the utility model registration route is faster. 3. If you have already built something and already used it in Japan but have not filed, check two things. How long have you used it in Japan? Has anyone else already registered it? Only then can you tell whether to file or to try to overturn the other party's registration. If your use in Japan came first, you may be able to claim a prior use right.

Case: Across several video-posting communities in Japan, many contributors had long been freely using the name of a particular video genre. One day an individual from outside those communities registered that name as a trademark and asked contributors for a licensing fee of 100,000 yen a year. Although the contributors had used the name long before that, they were left unsure whether they could go on using it. The incident triggered intense criticism online. The trademark holder later announced an intention to relinquish the right, and the company operating the video site requested a trial for invalidation. The name was ultimately found to indicate a type of video genre or category and to lack distinctiveness, so the trademark right was deemed never to have existed.

Treat code and inventions separately. If the applicable requirements are met, the company is the author of the code from the moment it is created. Inventions are different. An invention initially belongs to the employee who made it, and the company acquires the right to obtain a patent only if it has put the necessary rules or contractual provisions in place beforehand. The first category is a work made in the course of duty (職務著作). The company is the author from the outset and holds the copyright. The second is an employee invention (職務発明). Here the default runs the other way. The employee is the inventor, and the right to obtain a patent sits with the employee as well. Even if no agreement or company rules are in place, however, there is one thing the company still obtains: the right to work that invention. You can turn the invention into a product yourself, but the right to obtain a patent remains with the employee.

For inventions, Japanese law requires the company to provide the inventor with "reasonable benefits" (相当の利益), a form of compensation commensurate with the invention. These benefits are not limited to cash. They may take the form of stock options, opportunities to study abroad, promotion, or other non-cash economic benefits. A startup that cannot afford a large cash award for an invention may combine several of these instead. What actually determines your exposure is not how much you paid but how you arrived at that figure. If a dispute arises, a Japanese court will look back at three things. Did you discuss the standard with your employees when you set it? Did you disclose the standard to them? Did you seek the employee's views when determining the individual amount? If you have set no rule on reasonable benefits, or the way you fixed the amount was unreasonable, a court will set the figure, and the company may have to pay far more than expected. The blue LED case illustrates this risk. After leaving a Japanese company where they had developed a blue LED, an engineer sought compensation for the employee invention. The trial court ordered the company to pay 20 billion yen, and the case later settled on appeal for approximately 843 million yen. (This case arose before the relevant amendment to the Patent Act.)

1. First, keep the two categories separate. Code written by an engineer is governed by the rules on works made in the course of duty, under which the company is the author from the outset. An invention made by the engineer falls under the employee-invention framework, and the company must separately obtain the relevant rights. The two frameworks start from opposite defaults and should not be treated as one. 2. For inventions, adopt an employee-invention policy before the person joins. There are three points. First, set it in advance. You cannot add it after the invention has been made. Second, state that the right vests in the company from the moment the invention arises. Third, clearly define the meaning and scope of an employee invention, and write out what falls inside and what does not. The policy should also set out how the reasonable benefits are decided. The Japan Patent Office has published guidelines, and in practice companies often follow them to reduce risk. 3. For code, check whether the person who wrote it worked under the company's direction and supervision. This is the requirement most often missing for a work made in the course of duty. The assessment considers the working arrangement, whether the company actually exercised direction and supervision, and the amount and method of payment.

Not in full. If a contract states only that the copyright belongs to the client, current Japanese law presumes that the rights under Articles 27 and 28 of the Copyright Act remain with the contractor. When development is outsourced to an external vendor or freelancer, the copyright in the resulting work initially belongs to its creator, not to the client paying for the work. A company may acquire copyright automatically under the rules for a "work made in the course of duty", which presuppose an employment relationship involving direction and supervision. Outsourced or commissioned development does not meet that requirement. For that reason, a commissioned-development contract must clearly state who owns the rights. Article 27 of the Copyright Act covers adaptation rights. Article 28 concerns the original author's rights in connection with the exploitation of a derivative work. Expressly referring to both articles in the contract is necessary to avoid restrictions on later revisions, follow-on development, and maintenance.

1. The Copyright Act establishes a presumption on this point. Even if a contract states that the copyright is assigned in full, if it makes no particular reference to the rights under Articles 27 and 28, the law presumes that those rights were not assigned. In Japan, expressly identifying the relevant provisions in the contract is referred to as making an express reference (特掲). This is the default rule, so without that express reference, the assignment does not include those two rights. 2. There is one more thing that has to be handled separately from copyright: the author's moral rights. These rights belong exclusively to the person who created the work and are inalienable under Japanese law. They therefore cannot be acquired through a clause assigning the copyright in full. Instead, the contract must include a separate undertaking that the other party will not exercise them. Like Articles 27 and 28, without this undertaking you will be unable to revise, build on, or maintain the work.

1. Pull out your commissioned-development contract, find the assignment clause, and check whether it expressly refers to "Article 27" and "Article 28" of the Copyright Act. If it says only that "the copyright is assigned in full" or that "the copyright belongs to the client", those two rights have not been transferred to you. 2. Check two further points in the same contract. First, the timing of the transfer must be stated clearly. Second, the contract must require the other party not to exercise the author's moral rights. Japanese content-development contracts commonly include a clause along these lines: 「受託者は、本件成果物に関する著作権（著作権法第27条および第28条の権利を含む。）を引渡時に委託者に移転する。」This means that, upon delivery, the contractor transfers the copyright in the deliverables to the client, including the rights under Articles 27 and 28. 3. If you have already signed the contract and the wording was omitted, do not assume that the situation is beyond repair. Because the rule is a presumption, it can be rebutted with evidence. Gather objective evidence of the negotiations, such as emails and specifications. In practice, Japanese courts consider this evidence together with the parties' intentions and industry custom, so it may be possible to rebut the presumption. Even so, including the express-reference clause in your next contract is the safer approach.

Joint ownership does not mean that every decision needs your partner's consent. Japanese patent law treats three types of action differently when a patent is jointly owned. 1. If your partner works the patented invention itself, for example by manufacturing and selling products that embody the invention, it needs neither your consent nor any payment to you. 2. If your partner transfers its share, or establishes a right of pledge over it, it needs your consent. 3. If your partner grants a license to a third party, it also needs your consent. The same rules apply when your company carries out any of these three actions. So the real risk in jointly owning a patent through joint R&D in Japan is that your own operations get tied up. A large Japanese company has its own production lines and can manufacture and sell on its own, turning the jointly owned invention into a product and profiting from it without your consent and without paying you. If you have no production base in Japan, you cannot manufacture the invention in-house and have to engage a third party in Japan to manufacture products using the invention, and in law that is a license to a third party, which needs your partner's consent. If your partner withholds that consent to protect its own market, the risk is that your partner trades and profits freely while you cannot license the invention out and cannot earn from it.

1. The default position under joint ownership works against the side that has no production capacity. Your partner can turn the invention into a product and sell it without paying you, so if you cannot make a product, the default gives you nothing. The tool Japanese practice uses to fill that gap is compensation for a co-owner that does not work the invention, meaning compensation paid to a co-owner that does not itself manufacture or sell products embodying the invention. Between companies the baseline is that both sides can work the invention themselves, each works it freely, and neither pays the other. Where there is a clear gap in the ability to work the invention, however, the treatment may change. If you do not and cannot manufacture in Japan, position yourself at the negotiating table as the side that does not work the invention, and ask for compensation on that basis. 2. Even under joint ownership, there is something you can do without waiting for your partner's consent. When the patent is infringed, you may worry that you cannot move until your partner agrees. There is a view in Japanese law that an act of preservation involving co-owned property may be carried out by each co-owner alone. Preservation means keeping things as they are so that the co-owned property is not damaged. Seeking an injunction against infringement of the patent right can be treated as such an act of preservation. On this view, you can act against the infringer on your own even if your partner does not cooperate.

1. When you negotiate the joint R&D, first see whether you can avoid making the patent jointly owned. A structure in which one party holds the patent right on its own and grants the other an (exclusive) license makes the rights and obligations clearer than joint ownership does. 2. If joint ownership is unavoidable, put two things in the contract. (1) Make sure you receive compensation when your partner works the invention itself. Restricting the other co-owner's working may meet resistance, so a practical approach is to let your partner work the invention and to take payment for it. (2) Obtain your partner's blanket prior consent to your licensing to third parties. Blanket means one consent covers them all, so you do not have to ask again for each license. 3. When you negotiate the compensation, identify the period, the territory, the field of use, the products and the manner of working that your partner plans, and then calculate the amount. One design used in practice is a running royalty, calculated by reference to the revenue generated through your partner's working of the invention and paid on a continuing basis. It is not a single lump sum. Do not let the negotiation get stuck on the label itself. There are many forms the arrangement can take, so negotiate across a broad range of possible arrangements.

Decide first whether the arrangement is a transfer or a license. These are fundamentally different. A transfer changes who owns the right, with the right passing entirely to one party. A license leaves ownership unchanged and merely permits the other party to use it. This question assumes that both parties have rights in the same intellectual property. Which party receives ownership depends on which party has the greater need for the technology. If it is more important to your company, for example because it will form part of your core product and you want the freedom both to exclude others and to license it to third parties, state in the contract that your partner transfers the right to you and that you grant your partner a license back. If the technology is more important to your partner and permission to use it is sufficient for you, transfer the right to your partner and receive a license from your partner. Once ownership has been consolidated in one party, what the other party receives so that it can use the technology is a license. In Japan a license comes in three forms, differing in their degree of exclusivity. 1. An exclusive license gives your partner the highest degree of exclusivity. Within its scope, even the patent owner may no longer work the invention, that is, manufacture and sell products embodying it. It takes effect only when its grant is registered. It is suitable where the partner is making a substantial investment and requires market exclusivity and the ability to act against infringers. 2. A non-exclusive license made exclusive by contract (dokusenteki tsūjō jisshiken, 独占的通常実施権) gives the licensee contractual exclusivity. Unlike an exclusive license, it does not require registration. Because the arrangement is contractual, it binds only the contracting parties, not third-party infringers. The licensee's ability to seek an injunction against an infringer is therefore weaker than that of an exclusive licensee. It is the middle option when the deal needs exclusivity but neither party wants to go through registration. 3. A non-exclusive license allows you to license multiple parties, continue working the invention yourself, or grant your partner a license limited to a particular field of use.

1. Writing into the contract that the intellectual property belongs to both parties, or that both parties may use it, carries a risk either way. If you write that it belongs to both parties, it may be treated as jointly owned, creating a risk that neither party will be free to license it. Writing that both parties may use it is vaguer still, because it does not even show whether you meant a transfer or a license. This may prevent you from excluding a competitor, or from monetizing the intellectual property through an exclusive license to a third party. 2. Writing it clearly into the contract is not always enough. Registration can have two different functions. (1) Some rights or transfers do not take effect without registration. A transfer of a patent right and the grant of an exclusive license take effect only upon registration. (2) In other cases, registration determines whether the right can be asserted against third parties. A non-exclusive patent license and a license to exploit a copyrighted work can be asserted against third parties without registration. This means that if the underlying right is transferred, the license remains enforceable against the new owner. A non-exclusive trademark license is the exception: it cannot be asserted against third parties unless registered.

1. State in the contract whether this is a transfer or a license. Do not write that the intellectual property belongs to both parties, and do not write that both parties may use it. 2. Once the contract wording is settled, check whether registration is needed. A transfer needs registration of the transfer and an exclusive license needs registration of the grant, and without that they do not take effect. 3. Set out the right to sublicense expressly in the contract. Receiving a license does not mean you may let others use it too, and unless the right to sublicense is stated, it does not come with the license. A non-exclusive licensee cannot sublicense without the licensor's consent. An exclusive licensee needs the patent holder's consent before it can grant a non-exclusive license to anyone. A right to exploit a copyright work cannot be transferred without the copyright holder's consent.

A: File your trademark application first, and file it now. If you have already filed patent and trademark applications in Taiwan, you may claim priority based on your Taiwanese filing dates by filing the corresponding applications in Japan within the applicable priority periods. Why is the trademark application the most urgent? Japan follows the first-to-file principle for trademarks, meaning the party that files first obtains the right, and the risk of a third party registering your mark ahead of you is high. Waiting to see how the Japanese market responds, or waiting until your brand becomes well known, is too late on both counts. If someone else has already registered your name, you are not necessarily out of options. There are two main procedures for challenging the trademark registration itself, and which one is open to you depends on the relevant publication and registration dates. A separate route may also be available if your brand is already well known in Taiwan.

1. Priority addresses the gap between having already filed in Taiwan and not yet having filed in Japan. If you file in Japan within the applicable period after filing in Taiwan, you may claim priority based on the Taiwanese filing date. Priority may be claimed for both patent and trademark applications. 2. If a third party registers your trademark in Japan first, the dividing line between the two forms of relief is the date on which the registration was published in the Trademark Gazette. (1) Within two months of that publication date, you may file an opposition to trademark registration (toroku igi moshitate, 登録異議申立て). (2) Once that period has passed, you may, in principle, request a trial for invalidation (muko shinpan, 無効審判) within five years of the registration date. These two are the names of the Japanese procedures, and you can use them directly when you instruct Japanese counsel. Separately, if your brand is already well known in Taiwan, you may be able to argue that the mark is well known in a foreign country and that the other party is using it for unfair purposes.

1. File your trademark application in Japan now. Do not wait to see how the Japanese market responds, and do not wait until your brand becomes well known. 2. For the patent and trademark applications already filed in Taiwan, check whether you are still within the applicable priority periods. If you are, claim priority when you file the corresponding applications in Japan, and your Taiwanese filing dates will be the relevant dates. If the periods have expired, your position is determined by the dates on which you actually file in Japan. 3. If someone else has already registered your name, first find out when that registration was published in the Trademark Gazette, then decide which route to take. If you are within two months of publication, file an opposition to trademark registration. If more than two months have passed but you are still within five years of the registration date, request a trial for invalidation. If your brand is already well known in Taiwan, prepare the evidence of that as well, because it is the precondition for that separate route.

Case: A public-road go-kart operator registered "MariCar" as a trademark. Nintendo first filed an opposition to trademark registration, which was unsuccessful, and later brought claims for copyright infringement and under the Unfair Competition Prevention Act. That Act may protect what Japanese law calls an "indication of goods or business" when it is well known or famous, which gave Nintendo a possible basis. This route, however, may not be available to a Taiwanese startup that has only recently entered Japan, because the requirement of being already well known or famous is not easy to meet.