Japan

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495

Chapter XVI

JAPAN

A. Introduction

Japan’s intellectual property laws are designed to grant exclusive

rights so as to facilitate activities that create intellectual property, thereby

permitting right holders to enjoin unauthorized exploitation of their

intellectual property. On the other hand, the purpose of the

Antimonopoly Law is to regulate, or even prohibit, the exercise or

enjoyment of an exclusive position. Accordingly, the underlying policies

appear on the surface to conflict. It is generally understood in Japan,

however, that intellectual property laws and the Antimonopoly Law are

both designed to establish the foundation of fair competition and that

those laws should be interpreted harmoniously. The Japan Fair Trade

Commission (JFTC) takes the position that intellectual property rights

may not be exercised in a way that impedes fair competition as protected

under the Antimonopoly Law. 1 Leading commentaries support the

JFTC’s position, arguing that the intellectual property rights are subject

to their built-in limitations so as to protect fair competition.2 Notably,

however, no judicial decision has ever conclusively addressed this

question.

B. The Sources and Basics of Japan’s Antitrust Law

1. Basic Statutory Scheme

The Act Concerning Prohibition of Private Monopolization and

Maintenance of Fair Trade (Antimonopoly Law)3 is the primary antitrust

1. JFTC, GUIDELINES FOR THE USE OF INTELLECTUAL PROPERTY UNDER

THE ANTIMONOPOLY ACT (2007) [hereinafter INTELLECTUAL PROPERTY

GUIDELINES], available at http://www.jftc.go.jp/e-page/legislation/

ama/070928_IP_Guideline.pdf.

2. Akira Negishi & Masayuki Funada, Japanese Antitrust Law 416-18 (4th

ed. 2010).

3. Law No. 54 of April 14, 1947, as amended. An English translation of the

Antimonopoly Law is available at http://www.jftc.go.jp/e-

page/legislation/ama/amended_ama09.pdf.

496 Antitrust Issues in International IP Licensing Transactions

law in Japan. The Antimonopoly Law is modeled after the United States

antitrust laws, primarily the Sherman, Clayton and Federal Trade

Commission Acts. The Antimonopoly Law prohibits, among other

things, (i) agreements or other concerted actions between companies that

unreasonably restrain trade, (ii) single-firm or joint monopolization, and

(iii) unfair trade practices.

In the 2009 amendment to the Antimonopoly Law (2009

Amendment),4 certain categories of “unfair trade practices,” including

joint boycotts, unjust discriminatory pricing, predatory pricing,

restrictions on pricing, and abuse of a dominant bargaining position, are

proscribed by the Antimonopoly Law. In addition, the JFTC is

empowered to designate certain other conduct as unfair trade practices.5

Effective as of January 1, 2010, the JFTC issued a revised set of general

designations that describe practices that amount to unfair trade practices

(New General Designations).6

The JFTC also has announced several antitrust guidelines, including

guidelines for the licensing of intellectual property, 7 distribution

systems,8 joint research and development activities,9 and patent pools.10

2. The Basics of the Antimonopoly Law

The Antimonopoly Law not only identifies prohibited and regulated

acts, but also provides reporting requirements for businesses, 11

determines the powers and authority of the JFTC, 12 and outlines

4. Law No. 51 of June 10, 2009 (2009 Amendment), which became

effective on January 1, 2010.

5. Antimonopoly Law, art. 2 (9).

6. JFTC Public Notice No. 18 of October 28, 2009.

7. INTELLECTUAL PROPERTY GUIDELINES,supra note 1.

8. JFTC, GUIDELINES CONCERNING DISTRIBUTION SYSTEMS AND BUSINESS

PRACTICES UNDER THE ANTIMONOPOLY ACT (July 11, 1991), available at

http://www.jftc.go.jp/e-page/legislation/ama/distribution.pdf.

9. JFTC, GUIDELINES CONCERNING JOINT RESEARCH AND DEVELOPMENT

UNDER THE ANTIMONOPOLY ACT (Apr. 20, 1993), available at

http://www.jftc.go.jp/e-page/legislation/ama/jointresearch.pdf.

10. JFTC, GUIDELINES ON STANDARDIZATION AND PATENT POOL

ARRANGEMENTS (June 29, 2005) [hereinafter PATENT POOL GUIDELINES],

available at http://www.jftc.go.jp/e-page/legislation/ama/Patent_Pool.pdf.

11. Antimonopoly Law, arts. 9-18.

12. Id. arts. 27-44.

Japan 497

procedures to initiate and proceed with antitrust actions. 13 The

Antimonopoly Law also entitles private parties to seek injunctive relief

against unfair trade practices 14 as well as damages arising from

violations of the Antimonopoly Law.15

a. Agreements or Other Concerted Actions That Unreasonably

Restrain Trade

Article 2(6) of the Antimonopoly Law prohibits “unreasonable

restraint[s] of trade,” defined as:

business activities, by which any entrepreneur, by

contract, agreement or any other concerted actions, . . .

with other entrepreneurs, mutually restrict or conduct

their business activities in such a manner as to fix,

maintain, or increase prices, or to limit production,

technology, products, facilities, or transaction

counterparties, thereby causing, contrary to the public

interest, a substantial restraint of competition in any

particular field of trade.16

As the definition suggests, “unreasonable restraint of trade”

generally means concerted actions by two or more competitors, together

having market power, to preclude competition. The concept of

“unreasonable restraint of trade” is thus roughly comparable to Section 1

of the Sherman Act in the United States and Article 101 of the Treaty on

the Functioning of the European Union (formerly Article 81 of the EC

Treaty).

Price fixing, collusive bidding and other objectively anticompetitive

concerted actions that lack justification are sometimes called “hard core

cartels,” and joint ventures, standardization and other activities that may

accomplish legitimate objectives are sometimes called “non-hard core

cartels.”17 Those actions classified as “hard core cartels” are presumed

to constitute “a substantial restraint of competition,” while those actions

13. Id. arts. 45 to 70-22.

14. Id. art. 24.

15. Id. art. 25.

16. Id. art. 2(6).

17. TAKAJI KANAI,ET AL., ANTIMONOPOLY LAW 62-64 (3d ed. 2010).