When a competitor obtains a patent that covers a technology you were already using before they filed, are you automatically blocked from continuing? Not necessarily. Most patent systems provide a “prior use right” (also called prior user right or prior commercial use defense) that protects parties who were independently practicing an invention before the relevant patent application was filed. This article explains the scope, requirements, and limitations of prior use rights under Japanese law, and why relying on them as a substitute for patent filing carries significant risk.
Statutory Basis and Rationale
Article 79 of Japan’s Patent Act provides: “A person who, at the time of filing the patent application, has been working the invention in Japan as a business, or has been making preparations to do so, shall have a non-exclusive license for that patent right, within the scope of the invention being worked or prepared for, and the business purpose.”
The policy rationale is fairness. Japan operates a first-to-file system—the first person to file a patent application receives the right, not necessarily the first to invent. Without a prior use right, a company that developed and invested in a technology could be expelled from its own market by a competitor who filed a patent application before them. The prior use right limits this inequity by allowing existing practitioners to continue, even after a patent is granted.
Japan is not alone. The United States provides a prior commercial use defense under 35 U.S.C. § 273, introduced by the America Invents Act (AIA, 2011), covering “commercial use” that occurred at least one year before the patent’s effective filing date. Europe recognizes prior use rights under national patent laws of member states and Article 23 of the Community Patent Convention. However, the exact scope and requirements differ significantly across jurisdictions.
Requirements Under Article 79
Requirement 1: Before the Patent Filing Date
The working or preparation must have occurred before the filing date of the patent application (or the priority date if priority is claimed). Activity that began after the filing date—even if before publication—does not qualify. This makes the patent filing date, rather than the publication date, the critical cutoff for prior use rights.
Requirement 2: In Japan
Article 79 applies only to activities in Japan. Prior use of the invention in another country does not establish prior use rights under Japanese law, even if the same technology was practiced abroad and the Japanese patent derives from an international application. Each jurisdiction’s prior use rights are assessed independently.
Requirement 3: Working the Invention as a Business, or Making Preparations
“Working the invention as a business” means commercially practicing the patented invention at the time of the patent application—not merely experimenting or researching. The more contested requirement is “making preparations” to work the invention. Courts have developed a case-law standard for this phrase.
Requirement 4: Within the Scope of the Invention and Business Purpose
The prior use right is bounded by the scope of the invention and the business purpose at the time of the patent application. Expanding production volume, extending to different products, or changing the intended use may exceed the original scope of the prior use right and constitute infringement.
The “Business Preparation” Standard: Key Cases
The phrase “making preparations” is deliberately flexible, but courts have imposed meaningful limits on what qualifies.
The Intellectual Property High Court’s June 22, 2006 decision (Carbon Black case) articulated the standard: “business preparation” requires an immediate intention to work the invention and preparations that objectively demonstrate that immediate working is feasible. Pure research and development activity is insufficient. The court requires concrete, objective preparatory acts directed toward commercialization—such as capital investment, procurement of manufacturing equipment, preparation of business plans, or production of commercial prototypes.
Cases from the Osaka District Court (1990) found that completed design drawings and a manufactured prototype were sufficient evidence of business preparation. Conversely, activities limited to experimental or conceptual stages—even if technically successful—have routinely been held insufficient.
Practical evidence that prior use right claimants should maintain, with dated records:
- Technical documents (design drawings, test reports, research notebooks)
- Business and sales plans showing intended commercial use
- Manufacturing records for prototypes or pilot production
- Equipment procurement and installation records
- Internal meeting minutes and decision documents showing commercialization intent
Legal Effect: A Non-Exclusive, Royalty-Free License
A successful prior use right defense results in a non-exclusive license (通常実施権)—a right to continue working the invention without the patent owner’s permission and without paying royalties. The prior user cannot demand that the patentee cease asserting the patent against others; the right is purely defensive. The prior user also cannot license the prior use right to third parties independently—it can only be transferred as part of the underlying business to which it attaches (Article 79, second sentence).
This distinction from ownership of an actual patent is significant. A prior user can defend itself but cannot offensively prevent competitors who lack the prior use background from practicing the same technology (assuming they have or are licensed under the patent).
Limitations and the Risks of Relying on Prior Use Rights
Prior use rights appear to offer protection without the cost and complexity of patent filing. In practice, they carry substantial risks that make them a poor substitute for proactive patent protection.
Burden of proof. Prior use rights are an affirmative defense: the party asserting the right must prove it. In patent infringement litigation, the accused infringer bears the burden of demonstrating, with objective evidence, that the prior use requirements were met as of the patent filing date. Evidence collected years after the fact is often incomplete, contested, or insufficient to meet the legal standard.
Scope limitation. The prior use right extends only to the scope of the invention and business purpose at the time of filing. Business growth—new products, new applications, expanded production—may fall outside the original prior use scope, leaving the expanded activity exposed to infringement liability.
No offensive rights. A prior use right cannot be used to challenge the patent holder’s enforcement against others. If competitors—who lack a prior use background—begin practicing the same technology after the patent is granted, the prior user cannot stop them through the prior use right. Only the patentee has enforcement rights.
Competitive disadvantage. A company with a prior use right cannot license that right as an independent asset, cannot use it as a bargaining chip in cross-licensing negotiations, and cannot prevent a third-party patent holder from licensing others to compete directly in the same market.
Implications for SMEs
Small and medium-sized enterprises often forgo patent filing due to cost concerns, instead relying on trade secrets, first-mover advantages, or—implicitly—prior use rights. Japan’s Patent Office has published a Prior Use Rights Case Study (最終改訂2021年) documenting cases where prior use rights were recognized or denied, and offering practical guidance for preserving evidence.
A more robust strategy combines: (1) proactive patent filing for core technologies where patent protection is feasible; (2) trade secret management under the Unfair Competition Prevention Act (不正競争防止法) for innovations not suited to public disclosure; and (3) systematic document management to preserve evidence of development timelines for potential prior use claims. Document management systems with trusted timestamping (タイムスタンプサービス) can establish reliable evidence of the dates on which technical information was created.
The next article examines PCT applications—the mechanism by which a single international filing can preserve the option to seek patent protection in more than 150 countries, buying valuable time before committing to the cost of multi-country prosecution.
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