On March 3, 2025, Japan’s Supreme Court issued a landmark ruling in favor of Dwango Co., Ltd. in a patent infringement lawsuit against FC2, Inc. and Homepage System Co., Ltd. The ruling clarifies the extraterritorial reach of Japanese patent law, setting a significant precedent for intellectual property protection in the digital era.
Background of the Case
Dwango, the patent holder of a video comment display system, alleged that FC2’s services infringed its patent by providing software programs from overseas servers that enabled video comments to be displayed in Japan. The defendants argued that their activities occurred outside Japan, claiming that patent rights should not extend beyond national borders.
The case involved two Supreme Court decisions:
- Case No. 2025 (Ju) 14, 15 – related to the distribution of patented programs via telecommunication lines.
- Case No. 2025 (Ju) 2028 – concerning the construction of a patented system using overseas servers.
Supreme Court’s Decision
The court ruled that even if a server is located outside Japan, providing programs or systems that function within Japan constitutes patent infringement under the Japanese Patent Act. Specifically, it determined that:
- Transmitting patented software via the internet to Japanese users qualifies as a “provision via telecommunication lines” under Article 2(3)(i) of the Patent Act (Case No. 2025 (Ju) 14, 15).
- This transmission also constitutes “production” of an invention in Japan if it enables the creation of a system that performs the patented function domestically (Case No. 2025 (Ju) 2028).
Implications for Global Digital Services
This decision significantly impacts foreign companies providing digital services to Japan. It clarifies that the location of servers alone does not exempt businesses from Japanese patent law if their technology delivers patented effects within the country.
For technology companies, particularly those in software, streaming, and cloud-based services, this ruling underscores the importance of comprehensive patent strategy when operating across borders. Companies must carefully evaluate whether their digital services interact with Japanese users in ways that could trigger patent liability.
Conclusion
Japan’s Supreme Court has taken a progressive stance on patent enforcement, ensuring that intellectual property rights remain protected in an increasingly globalized digital economy. This ruling strengthens patent holders’ rights and signals that cross-border digital activities will be closely scrutinized under Japanese law.
For businesses and innovators, understanding and adapting to these evolving legal standards is essential in today’s interconnected world.
