Article Summary:

• In two lawsuits filed by Dwango (Japan), the operator of the video-sharing platform "Niconico", against FC2 (U.S.), the key issue was whether FC2’s use of servers located outside Japan constituted infringement of Dwango’s Japanese patents. On March 3, 2025, the Supreme Court of Japan dismissed FC2’s appeals in both cases.
• In these decisions, the Supreme Court presented its view that Japanese patent rights may extend to cross-border acts involving network-related inventions and set forth the criteria for such cases. This judgment is extremely significant in the contemporary digital era, where it has become commonplace to provide services via networks across national borders.
• A brief overview of the decisions in the two cases is provided below.

Case 1
Case Numbers:
2023 (Ju) No. 14 and No. 15 (Patent Infringement and Injunction Claim)
Original text→https://www.courts.go.jp/app/files/hanrei_jp/838/093838_hanrei.pdf
 
Patent Number:
Japanese Patent No. 4734471 (owned by the appellee)
 
Summary of the Ruling:
The Supreme Court determined that the appellant's act of distributing a program via the Internet to Japan from abroad constitutes, in substance, a "provision via telecommunication lines" as stipulated under Article 2(3)(i) of the Patent Act, which defines the "working" of an invention, and a "transfer, or the like" of a product that is used solely for the production of the patented product under Article 101(i), which constitutes an act of indirect infringement.
 
Brief Explanation of the Reasoning:

• It is inconsistent with the purpose of the Patent Act—to contribute to the development of industry through the protection and encouragement of inventions—to categorically deny the applicability of Japanese patent rights solely because a program or the like is transmitted from outside Japan.
• If the entire act is, in substance, regarded as a "provision via telecommunication lines" within Japan, Japanese patent rights may apply to that act.
• In the present case, when users access a webpage to watch videos and install a program onto their devices, a device falling within the technical scope of the invention is effectively produced within Japan.
• Even if the program is transmitted from a server located outside Japan, the distribution of the program is executed as part of the information processing required to provide a service within Japan.
• The fact that the server is located outside Japan is of no particular relevance if the effect of the invention is manifested on terminals located in Japan.
• There are no grounds to presume that the distribution of the program does not economically impact the appellee.

Case 2
Case Number:
2023 (Ju) No. 2028 (Patent Infringement and Injunction Claim)
Original text→https://www.courts.go.jp/app/files/hanrei_jp/839/093839_hanrei.pdf
 
Patent Number:
Japanese Patent No. 6526304 (held by the appellee)
 
Summary of the Ruling:
The Supreme Court found that the appellant, who manages web servers and comment-distribution servers in the United States and provides a video-sharing service, constructed a system falling within the technical scope of the invention by delivering files from these servers over the Internet to user terminals located in Japan, and that this act constitutes "production" as stipulated under Article 2(3)(i) of the Patent Act, which defines the "working" of an invention.
 
Brief Explanation of the Reasoning:

• It is inconsistent with the purpose of the Patent Act—to contribute to the development of industry through the protection and encouragement of inventions—to categorically deny the applicability of Japanese patent rights solely because some of the acts or components exist outside Japan.
• If the act of constructing the overall system is, in substance, considered to correspond to "production" within Japan, Japanese patent rights may apply.
• In the present case, the system is constructed as part of the information processing required to provide services within Japan.
• The location of the server being outside Japan is not of particular significance if the effect of the invention is manifested on terminals located in Japan.
• There are no grounds to presume that the construction of the system by the appellant has no economic impact on the appellee.

 
This article was provided by the International Information Group
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