What about Third party litigation funding for patents, in Japan? This topic is warming up in Japan, so here is some background information for you.
Third Party Litigation Funding?
Some may be well familiar with third party litigation funding (TPLF), and others not so much. This is a practice of investing by agreeing to pay a portion of legal costs of a legal case and receive a portion of the proceeds if the case ends in victory. This has seen great growth in intellectual property litigation in some countries in the past decade or so.
Although some voice concerns about the practice, others see it as an opportunity for, say, a small enterprise facing a giant (alleged) infringer to get the cash it needs to get the just damages over its (allegedly) infringed patent.
TPLF in Japan?
Well, is this something one might be able to use–either as an investor or as someone bringing up a patent (or other intellectual property) infringement case–in Japan? Daniel Allen and Yuko Kanamaru have recently contributed an article to the 5th edition of The Third Party Litigation Funding Law Review to bring us up to speed on this topic. The article in its entirety is worth a read for those considering an attempt in Japan
Allen and Kanamaru doubt that the current Japanese laws will lead to a banning of third party litigation funding. Rather, since an investor would not acquire assignment of the patent rights, it would not violate Article 73 of the Attorneys Act (bengosi-hoh). Yet caution may be needed to avoid the appearance of assignment of any rights by the actual patent holder to the investor.
As for Article 72 of the Attorney Act, it seems that while an investor must avoid the appearance of providing “legal services” in the investment, there is no substantial hindrance to third party litigation investment for intellectual property.
Allen and Kanamaru note possible pitfalls such as making the third party appear as if beneficiary of legal fees in their section “Structuring the agreement.” In closing, they comment that “Recent developments have demonstrated that third party funding is becoming a serious option for Japanese companies that are considering potential claims.” It may take time for bureaucrats and courts to clarify the state’s stance, but it TPLF may be a new wave to bolster IP litigation in the future.[1]
If you have further questions about possibly defending patent rights in Japan with funding from investors, please refer to a Japanese intellectual property infringement litigator and/or Japanese attorney.
* The information provided on this website is for informational purposes only and is not intended as legal advice.
** For questions or consultation, please contact us for more information.
Contact: Taro Yaguchi
Sources
[1] Allen, Daniel and Yuko Kanamaru. “The Third Party Litigation Funding Law Review: Japan.” In The Third Party Litigation Funding Law Review, 5th ed., edited by Simon Latham. https://thelawreviews.co.uk/title/the-third-party-litigation-funding-law-review/japan The Law Reviews. November 22, 2021. Accessed November 25, 2021.
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