I. Introduction
While extraterritorial jurisdiction by itself has been widely
discussed, the topic of how to deal with extraterritoriality of foreign
law in a foreign state has not been debated very much. Recently a
dispute arose in Japan involving the problem of the extraterritorial
application of United States Patent Law, and the lawsuit is still
pending before the Supreme Court of Japan. In addition to the aspect of
extraterritorial jurisdiction, this case seems to show how a court of
one country can deal with a foreign patent, which is one of the most
controversial problems raised by the Preliminary Draft Convention on
Jurisdiction and Foreign Judgments in Civil and Commercial Matters made
on October 30, 1999 by the Special Commission of the Hague Conference on
Private International Law. Therefore, it would be of interest to
present and analyze the Japanese case not only to show how a court of
one state responds to foreign extraterritorial jurisdiction but also
suggest what rule should be in a new international jurisdiction
convention.
In this paper, judgments of the Tokyo District Court and the Tokyo
High Court on this case will be introduced. Some points will be
addressed in order to highlight the problem here. Next, Article 12 (4)
of the Hague Draft Convention will be discussed. And finally, the
problem of how to deal with foreign patent will be analyzed in light of
the act of state doctrine, as this doctrine should play a necessary role
to resolve the problem here.
II. A Japanese Case
1. Summary of the Case
The plaintiff, Akira Fujimoto, who is Japanese, is an owner of the
patent registered in the United States with regard to a certain kind of
electronic device. The defendant, Neuron Corporation, which is a
Japanese company, is producing card readers in Japan in which the
electronic devices are incorporated. The plaintiff filed a suit against
the defendant for, among others, the prohibition of production in Japan
and exportation of such products from Japan, the destruction of them in
Japan, and damages to compensate for the loss caused by the exportation
of them to the United States in the past in the amount of 180 million
yen (= 1.6 million dollars).
The plaintiff alleged that the defendant's activities were deemed to
be active inducement or contributory inducement of indirect infringement
of the plaintiff's patent under Section 271 (b) or (c) of the United
States Patent Law1 and that such provisions
were to be applied as if such activities were done in the United States,
irrespective of where such activities were actually done2. The defendant responded that the patent law of
each country should be applied within its territory, or, in other words,
the territorial principle should be observed in the field of patent law.
The Tokyo District Court3 held on 22
April 1999 that, although the United States Patent Law should be the
applied with regard to the plaintiff's claims for the prohibition of
production and exportation and for destruction, the extraterritorial
application of the United States Patent Law was irreconcilable with the
basic system of Japanese Patent Law because the territorial principle
was widely recognized among states including Japan. Accordingly, the
Court held that it was against the public order of Japan as provided for
in Article 33 of the Horei (Japanese Code of Private
International Law)4 to apply the United
States Patent Law to activities in Japan. On the other hand, with
regard to the claim for damages, the court applied Japanese law as the
governing law on torts because the place of the fact causing damage,
i.e. lex loci delicti, as provided for in Article 11 of the
Horei 5is Japan and because the
defendant's activities were all done in Japan. It was held that the
claim for damages should be dismissed for the defendant's activities
were not to be blamed in accordance with Japanese law.
On appeal, the Tokyo High Court6 held on
27 January 2000, with regard to the plaintiff's claims for the
prohibition of production and exportation and for destruction, it was
not the United States Patent Law but Japanese Patent Law that should be
applied to such claims arising from activities in Japan in accordance
with the territorial principle. Since Japanese Patent Law has no
provisions to prohibit activities that would result in violation of a
foreign patent law, such claims were dismissed. On the other hand, the
Tokyo High Court, adopting the same position of the Tokyo District
Court, dismissed the plaintiff's claim for damages under Japanese law
designated as applicable law by Article 11 of the Horei.
2. Some Points
There seems to be several points in the above judgments that need to
be discussed further.
The first point is that the Japanese courts admitted their
jurisdiction to adjudicate claims based upon foreign patent law.
Although the defendant in that case did not raise the defense of
invalidity of the foreign patent, the courts, not mentioning any word on
the jurisdictional problem, went into the consideration of the merits of
the case. As this problem has been one of the serious points of
conflict within the Hague Draft Convention, it would be better to
discuss this matter in the next section of this paper dealing with
Article 12 of the Draft Convention.
The second point is that there is one important difference between
the judgment of the Tokyo District Court and that of the Tokyo High
Court in the determination of the claims for the prohibition of
production and exportation and for destruction. The former court held
that the applicable law should be the foreign patent law but in that
case it would be against the public order of Japan to apply it to the
activities in Japan. The latter held that the only Japanese patent law
should be applied to the activities in Japan with regard to such claims.
It seems illogical for the Tokyo District Court to reject the
applicable law on the grounds of its extraterritorial scope of
application, because the geographical scope of application is the matter
of the conflict of law rules and such a foreign conflict of law rule is
not applicable in Japan unless such a special rule as renvoi, as
provided for in Article 32 of the Horei7, allows it. Such a foreign conflict of law rule
as extraterritoriality in this case should not be considered. In so far
as the Japanese patent law system adopts the territorial principle, it
seems natural to apply Japanese Patent Law to activities in Japan as the
Tokyo High Court did. This means that, if the defendant's activities
were done in the United States, then the Japanese court should apply the
United States Patent Law to such activities and order appropriate
remedies under such law8.
The third point is that both courts dealt with claim for damages as
an ordinary tort claim. Both courts distinguished the claim for damages
from the claims for the prohibition of production and exportation and
for destruction. In the patent laws of many countries, including Japan
and the United States, there are no distinctions between damages and
other remedies such as the prohibition of production. Therefore, some
commentators criticized the distinction made by the courts9. Other commentators, on the contrary, support
such a distinction on the level of the conflict of law rules because of
the public law nature of the patent law itself and such remedies as
injunctions under the patent law10. As
will be discussed in section IV, the patent is thought to be the product
of a sovereign act of state. From this position, such special remedies
to protect public products such as injunctions should be distinguished
from such remedies under private law nature such as damages.
The fourth point is that both courts applied Japanese tort law to the
claim for damages in this case. With regard to cross-border torts in
which the alleged wrong-doer and the victim are situated in different
jurisdictions such as transnational product liability11 or libel by mass media12, the lex loci delicti under very
simple rules13 of Article 11 of Horei
is ordinarily interpreted to be the law of the place where the
victim suffered the damage, because torts occur when the damage happens
and the central issue in torts is to enable the victim to recover his
loss. Applying this interpretation to the above case, contrary to the
above holdings of the courts, the law of the United States should be
applied.
From the framework of extraterritorial jurisdiction, it is important
to note that the extraterritoriality of the United States Patent Law is
rejected in Japan as mentioned in the above second point.
III. Article 12 of the Hague Draft
Convention
In October 1996, the Hague Conference on Private International Law
decided to include in the agenda of the Nineteenth Session the question
of jurisdiction, and the recognition and enforcement of foreign
judgments in civil and commercial matters14. After several meetings of Special Commission,
the Preliminary Draft Convention on Jurisdiction and Foreign Judgments
in Civil and Commercial Matters was made on 30 October 1999 (hereinafter
referred to the Hague Draft Convention). This draft is to be submitted
to the Diplomatic Conference (Nineteenth Session) to be held in
2001/2002.
The Hague Draft Convention provides for the exclusive jurisdictions
of particular States' courts in certain kinds of proceedings as
follows:
"Article 12 Exclusive jurisdiction
1. In proceedings which have as their object rights
in rem in immovable property or tenancies of immovable property, the
courts of the Contracting State in which the property is situated have
exclusive jurisdiction, unless in proceedings which have as their object
tenancies of immovable property, the tenant is habitually resident in a
different State.
2. In proceedings which have as their object the
validity, nullity, or dissolution of a legal person, or the validity or
nullity of the decisions of its organs, the courts of a Contracting
State whose law governs the legal person have exclusive jurisdiction.
3. In proceedings which have as their object the
validity or nullity of entries in public registers, the courts of the
Contracting State in which the register is kept have exclusive
jurisdiction.
4. In proceedings which have as their object the
registration, validity, [or] nullity [, or revocation or infringement,]
of patents, trade marks, designs or other similar rights required to be
deposited or registered, the courts of the Contracting State in which
the deposit or registration has been applied for, has taken place or,
under the terms of an international convention, is deemed to have taken
place, have exclusive jurisdiction. This shall not apply to copyright or
any neighboring rights, even though registration or deposit of such
rights is possible.
[5. In relation to proceedings which have as their
object the infringement of patents, the preceding paragraph does not
exclude the jurisdiction of any other court under the Convention or
under the national law of a Contracting State.]
[6. he previous paragraphs shall not apply when the
matters referred to therein arise as incidental questions.]"
Among many points to be resolved by the Diplomatic Conference,
Article 12 (4), (5) and (6) are considered the most controversial
provisions. The problem is whether or not the courts of the Contracting
State in which the deposit or registration has taken place have
exclusive jurisdiction in the proceedings concerning infringement of
industrial property rights.15 Such
proceedings often involve the question of the validity of the rights
themselves as an incidental question. If one takes a position that such
provision of exclusive jurisdiction should encompass infringement
proceedings, then all proceedings concerning industrial property rights
registered in one country should be filed to the courts of that country.
One who wants to file lawsuits with regard to infringements of
industrial property rights done in many countries by the same competitor
should file an individual claim in each of the many countries involving
the infringement. On the contrary, if one takes a view that such a
provision on exclusive jurisdiction should not encompass infringement
proceedings, then the plaintiff could file a single lawsuit in a court
of the country where the defendant is habitually residing, claiming
remedies with regard to every infringement done in many countries.
Although it would be necessary to discuss this issue more deeply in
order to decide the position of the Japanese Government, experts in
Japan seem to support the latter position in principle16. One of the critical points would be how the
courts of a country should deal with a foreign patent as a matter of the
merits in such infringement proceedings. In this respect, the act of
state doctrine seems to play an important role to solve the problem as
will be discussed in the next section.
IV. The Act of State Doctrine
The Act of State Doctrine under the law of the United States is
defined as follows: "In the absence of a treaty or other unambiguous
agreement regarding controlling legal principles, courts in the United
States will generally refrain from examining the validity of a taking by
a foreign state of property within its territory, or from sitting in
judgment on other acts of a governmental character done by a foreign
state within its own territory and applicable there."17 As indicated, this doctrine has been
predominantly applied to expropriation of private property by a foreign
government.18 However, this doctrine has
also been applied to other types of cases where the validity or effect
of a governmental act of foreign state in its territory is in
question.19
Similar theories as this doctrine can be found in other countries.
In Japan, the Tokyo High Court applied in 1953 a very similar doctrine
to the question of the validity of the Iranian Government's
expropriation of crude oil situated in Iran20. The plaintiff in this case was an English
company, the Anglo-Iranian Oil Company, and the defendant was a Japanese
oil-refining company, Idemitsu Kosan Co. Ltd. The defendant bought
crude oil in Iran and brought it to Japan after the expropriation was
made by Iranian Government. The plaintiff attached the crude oil
claiming that it belonged to the plaintiff. The court held that, with
regard to such an expropriation within the territory of Iran, "there is
no established principle under international law for a court of a state
to hold invalid the effect of the law legislated properly by a foreign
state." Although there has been no other case concerning the act of
state doctrine in Japan, it is considered to be possible for this
doctrine to encompass other kinds of public activities of a foreign
state.
As patents are considered to be artificial fruits created by a public
act of state, it seems to be possible for the act of state doctrine to
apply to the question of the validity of a foreign patent. This idea
could resolve the controversy over the exclusiveness or
non-exclusiveness of the jurisdiction over the proceedings concerning
patent infringements. It would be hard for a registering state to
recognize effects of a foreign judgment, which holds invalid the effect
of the patent of the registering state, even between parties to the
foreign litigation. According to the act of state doctrine, foreign
courts must decide the case of the infringement of a foreign patent on
the condition that they cannot invalidate the patent validly registered
in the foreign state. As far as this condition is met, the state where
the patent is registered would find no difficulty to recognize such a
foreign judgment.
