Publication of “Guidelines for Standard Essential Patents Judicial Mediation (SEPJM)” by the Intellectual Property Divisions of the Tokyo District Court

I. Presumed progression of SEP Judicial Mediation proceedings in light of the Guidelines

The Guidelines do not provide details on the procedure for implementing SEP Judicial Mediations. However, based on the information provided, the following progression of proceedings appears to be contemplated.

II. Notable points regarding the Guidelines

Special attention should be paid to the following points regarding the Guidelines:

• Expedited Proceedings: Under the Guidelines, a SEP-related dispute is to be resolved expeditiously, in principle, within three mediation sessions (or four mediation sessions if a brief technical explanatory session is scheduled). In a case where there are disputed issues concerning patent infringement or validity, the Guidelines indicate that, in some cases, there will be only one round of briefs and evidence submissions. Given such expedited procedure for SEP Judicial Mediation, parties may need to identify and analyze the relevant issues and prepare and submit their proposals within a shorter timeframe than in a SEP Lawsuit.
• Use of Mediation Record for Abuse of Rights Defense consideration in a subsequent lawsuit or preliminary injunction proceeding: As mentioned in the flowchart above, the Guidelines state that both parties may submit the mediation record in a subsequent lawsuit or preliminary injunction proceeding as evidence to support their arguments relating to an abuse of rights defense. This is significant because the contents of the mediation record may have a significant impact on the court’s determination on whether or not a SEP implementer (normally, the respondent) has a willingness to obtain a license from the SEP holder under FRAND terms, in the subsequent lawsuit or preliminary injunction proceeding. In light of this, and taking into account, among others, features of SEP Judicial Mediation (for example, that it is a non‑public procedure), parties should carefully consider whether to proceed with SEP Judicial Mediation. If they decide to proceed with SEP Judicial Mediation, both parties (especially the respondent) need to carefully consider the arguments and evidence to be submitted, as well as the settlement proposals made, in the course of the mediation (including their responses to proposals from the mediation panel and to requests for disclosure of materials), which may be reflected in the mediation record prepared in cases where settlement is not reached.

The Guidelines have similarities with the SEP Lawsuit Guidelines in the following two respects:

• The Global FRAND Royalty: As with the SEP Lawsuit Guidelines, the Guidelines provide that the parties are to make proposals for the Global FRAND Royalty and provide the concrete calculation basis for their respective proposals, in the SEP Judicial Mediation. This is to occur in the early stage of the mediation proceedings.
• Calculation Methods: As with the SEP Lawsuit Guidelines, the Guidelines provide that as long as the basis for the petitioner’s calculation of its proposed Global FRAND Royalty is provided, the petitioner may use either the top-down approach, the comparable approach, or a combination of the two as its calculation method.

III. Comments

As with the SEP Lawsuit Guidelines, the Guidelines highlight the TDC IP Division’s proactive and expedited approach to resolving SEP-related disputes. Introduction of SEP Judicial Mediation under the Guidelines may make resolving SEP-related disputes in Japan more attractive, particularly where a comprehensive resolution of the Global FRAND Royalty and related issues is sought. In particular, SEP Judicial Mediation under the Guidelines offers an expedited procedure for resolving SEP-related disputes which is contemplated to be faster than the litigation procedure under the SEP Lawsuit Guidelines. In this respect, the Guidelines are expected to significantly impact decisions on the choice of procedures for resolving future SEP-related disputes. Having said that, since the Guidelines were just recently published, their practical application and impact will need to be carefully considered.

We will continue to provide updates on related developments.