Japan Fair Trade Commission Publishes Amended Antitrust/IP Guidelines

Kaori Minami published a short post on the IPKat yesterday about the JFTC's release of its amended Guidelines for the Use of Intellectual Property under the Antimonopoly Act.  Readers may recall that I blogged about the draft amendments in a post last July.  Comparing the draft version to the final version, it appears that the final version includes the very same language found in the draft  in what is now subpart (e) to Part 3 ("Viewpoints from Private Monopolization and Unreasonable Restraint of Trade"), paragraph (1) ("Viewpoints from Private Monopolization"), subparagraph (1) ("Inhibiting the Use of Technology"):

The standard setting organization or trade association (hereinafter referred to as the "SSO") generally makes the document (IPR Policy) describing principles for license of patents (including the other intellectual property rights) essential for implementation of the standards (hereinafter referred to as the “Standard Essential Patent”). It is specified in IPR Policy that, in order to prevent exercise of right in respect of Standard Essential Patents from impeding research & development, production or sale of the products adopting the standards and to broadly diffuse the standards, it makes the participants in standard setting clearly show whether they hold any Standard Essential Patents and their intention for licensing for fair, reasonable and non-discriminatory conditions (such conditions are generally called “FRAND conditions”). A Standard Essential Patent holder’s declaration in writing to show that it is willing to grant licenses under FRAND conditions to the SSO is generally referred to as the “FRAND Declaration”. According to the IPR policy, the SSO will study change of the standards to exclude the technology protected by such if such declaration is not made. Since FRAND Declaration makes it possible for the Standard Essential Patent holders to receive reasonable compensation for the use of the Standard Essential Patent and also makes it possible for those who research & develop, produce or sell the  products adopting the standards to access Standard Essential Patents under FRAND conditions, FRAND Declarations promote research and development investment of the technologies concerning the standards and also promote positive investments required for research & development, production or sale of the products adopting the standards.

Refusal to license or bringing an action for injunction against a party who is willing to take a license by a FRAND-encumbered Standard Essential Patent holder, or refusal to license or bringing an action for injunction against a party who is willing to take a license by a FRAND-encumbered Standard Essential Patent holder after the withdrawal of the FRAND Declaration for that Standard Essential Patent may fall under the exclusion of business activities of other entrepreneurs by making it difficult to research & develop, produce or sell the products adopting the standards.

The description above shall be applied no matter whether the act is taken by the party which made the FRAND Declaration or by the party which took over FRAND-encumbered Standard Essential Patent or is entrusted to manage the FRAND-encumbered Standard Essential Patent. (The same holds for the case described in Part4-(2), (iv).)

Whether a party is a “willing licensee (who willing to take a license on FRAND terms)” or not should be judged based on the situation of each case in light of the behavior of the both sides in licensing negotiations etc. (For example, the presence or absence of the presentation of the infringement designating the patent and specifying the way in which it has been infringed, the presence or absence of the offer for a license on the conditions specifying its reasonable base, the correspondence attitude to the offers such as prompt and reasonable counter offers and whether or not the parties undertake licensing negotiations in good faith in light of the normal business practices.) Even if a party which intends to be licensed challenges dispute validity, essentiality or possible infringement of the Standard Essential Patent, the fact itself should not be considered as grounds to deny that the party is a “willing licensee” as long as the party undertakes licensing negotiations in good faith in light of the normal business practices (pp. 10-11).

Second, however, the final version does make a few changes to the draft version of subparagraph (iv) to Part 4 ("Viewpoints from Unfair Trade Practices"), paragraph 2 ("Inhibiting the Use of Technology").  The final version reads as follows.  I have highlighted what I perceive to be the only substantive differences between the translations of the final and the draft versions.  In particular, the language in the first paragraph now appears more tentative (the word "may", as opposed to the draft's "generally makes it difficult," "will be deprived . . . or impeded," "such acts adversely affect," and "tend to impede"); and the highlighted portions in paragraphs 2 and 3 are new:

The acts described in Part3-(1), (i), (e), such as refusal to license or bringing an action for injunction against a party who is willing to take a license by a FRAND-encumbered Standard Essential Patent holder, or refusal to license or bringing an action for injunction against a party who is willing to take a license by a FRAND-encumbered Standard Essential Patent holder after the withdrawal of the FRAND declaration for that Standard Essential Patent may deprive the entrepreneurs who research & develop, produce or sell the products adopting the standards of trading opportunities or impede the ability of the entrepreneurs to compete by making it difficult to research & develop, produce or sell the products adopting the standards.

Such acts are considered to be Unfair Trade Practices (Paragraph (2) and (14) of the General Designation) if they tend to impede fair competition, even if the acts do not substantially restrict competition in the product market and are not considered to be Private Monopolization.

The judgement whether a party is a “willing licensee” or not is described in Part3-(1), (i), (e) (pp. 17-18).

As Ms. Minami states, "Although the JFTC’s investigation Guidelines do not have any binding effect on courts' decisions, it will be interesting to see how the future FRAND disputes in Japan will be resolved at court and if the new Guidelines will have any impact."  As she also notes, the 2014 Japanese IP High Court judgments in Apple v. Samsung denied Samsung an injunction on the ground of abuse of right, not on competition law grounds; for link to my previous blog posts on this case, see here.