Intellectual Property
Responding to patent infringement allegations concerning testing and manufacturing for clinical trials or approval applications
When patent infringement is alleged in relation to testing for clinical trials or approval applications, or manufacturing for such testing, the first step is to identify the acts being challenged. There is a provision under which patent rights do not extend to working a patented invention for experimental or research purposes, but its application is not determined solely by organizational affiliation or a description of the purpose.
The questions to check are which patented invention is being worked, by whom, through which acts, and whether those acts remain within the scope necessary for the testing. The assessment includes the quantity manufactured, its uses, and the handling of any remaining material.
This article sets out the matters to check and the records to retain for companies facing patent infringement allegations concerning drugs under development, and for companies that undertake testing or manufacturing under contract.
Reviewed by Keishi Yoshikawa, Attorney at Law and Patent Attorney (Dai-Ichi Tokyo Bar Association)
Matters to check immediately after receiving an allegation
- The number and claims of the patent identified, and the alleged manner of infringement
- The acts at issue: what was manufactured or used, by whom, where, in what quantities, and for what purpose
- The purpose and type of testing, including whether it is for an approval application or another purpose, and the correspondence between the testing plan and the application materials
- The quantities and uses of the batches manufactured, and records of shipment and disposal
- The relationships between commissioning companies and contractors, and the acts each company actually performs
- The response deadline and the impact on the development schedule
How we can helpIdentifying the acts challenged and organizing their correspondence with the acts each company actually performs / Assessing whether each act qualifies as working a patented invention for experimental or research purposes / Organizing the correspondence between testing plans, application materials, and manufacturing records / Structuring arguments concerning the technical scope of the patented invention and grounds for invalidity / Preparing a written response and conducting subsequent negotiations / Reviewing the allocation of responsibility and notification obligations between commissioning companies and contractors
Contact FormContents
1 Identifying the acts at issue
What organizational affiliation or a description alone cannot determine
The Patent Act provides that patent rights do not extend to working a patented invention for experimental or research purposes. The wording of this provision does not limit it to universities or nonprofit research. At the same time, its application is not determined merely by organizational affiliation or descriptions such as "the research department performed the work" or "it relates to a clinical trial."
The starting point is to identify which patented invention is being worked and through which acts. Producing, using, transferring, and importing a product are considered as separate acts.
The order of review
When an allegation is received, organizing the issues in the following order can help the parties address the same questions.
First, the purpose of the testing. Which tests are being conducted, and which approval are they intended to obtain? A distinction is drawn between tests conducted to obtain materials to accompany an approval application and tests conducted for internal assessment.
Second, the entity performing the acts. Identify whether the acts are actually performed by the company developing the drug, a testing contractor, a manufacturing contractor, or a supplier of active pharmaceutical ingredients (APIs).
Third, the quantity manufactured. Check the basis on which the quantity needed for testing was calculated.
Fourth, the actual uses. Check which tests the manufactured material was actually used in and the quantities used in each.
Fifth, the handling of remaining material. Check what was planned for material remaining after testing and how it was actually handled.
Without information on all five points, it is difficult to structure a response to the allegation. Conversely, if the records can establish these five points, the framework for an explanation is in place.
Distinguishing between the entities performing the acts
The company developing the drug, the testing contractor, the manufacturing contractor, and the API supplier are separate entities. The acts each company actually performs are identified and assessed separately.
A conclusion that patent rights do not extend to the commissioning company's acts does not automatically mean that the same conclusion applies to the acts of a contractor or API supplier. Each contractor's and supplier's acts need to be considered in relation to the scope necessary for the testing.
However, this does not rule out considering the application of the provision to a person that supplies products for another company's tests. In a case involving the manufacture and transfer of drugs so that another company could conduct specification testing required for an application for approval for repackaging, the court held that the manufacturer's own acts of manufacture and transfer also qualified as working a patented invention for experimental or research purposes (Osaka District Court, judgment of September 2, 1999, Case No. 1998 (Wa) 2175).
The court's assessment proceeded in two stages. First, it held that the recipient's acts constituted testing, taking into account that the recipient needed to conduct specification testing for its approval application and used the drugs it received solely for that testing. It then held that the supplier's manufacture and transfer of the drugs also qualified as working a patented invention for experimental or research purposes because those acts were undertaken to enable that testing. The court also cited the fact that these acts did not impair the patent holder's interest in exclusively working the invention during the patent term.
The court did not hold that the provision automatically applied to the supplier because it applied to the recipient. It assessed the supplier's own acts after examining how the recipient actually used the drugs.
The products transferred in that case were capsules and fine granules. The judgment did not address the supply of APIs.
The matters to examine are the work covered by the contract fee, the correspondence between manufacture and transfer and the testing, and the quantities manufactured and their actual uses.
2 Treatment of testing for approval applications
The scope of the Supreme Court's holding
The Supreme Court has held that conducting tests during the patent term that are necessary to obtain materials to accompany an approval application, and producing and using patented products for those tests, qualify as working a patented invention for experimental or research purposes where the aim is to manufacture and sell generic drugs after the patent expires.
In the reasoning of the same judgment, the Court also stated that, during the patent term, a company must not go beyond the scope necessary for approval testing by producing generic drugs for transfer after expiration, or by producing or using patented chemical substances as ingredients of those drugs, because those acts infringe the patent.
Accordingly, both the statement that "the exemption does not apply because there is an intention to sell in the future" and the statement that "inventory may be built before expiration because it will be sold after expiration" are incorrect.
Treatment of clinical trials for new drugs
A court has also held that clinical trials necessary to obtain approval for a new drug in Japan qualify as working a patented invention for experimental or research purposes. However, the nature of the acts and the scope necessary for testing need to be assessed in each case.
Records to retain
Organize the correspondence between the testing plan and the application materials, the basis for calculating the required quantities, and records of manufacture, use, shipment, and disposal for each batch. Maintaining these records is not, in itself, a separate legal requirement for qualifying as working a patented invention for experimental or research purposes. Nevertheless, the records are useful as materials explaining that the acts performed remained within the necessary scope.
It is important to maintain a distinction between batches used for testing and commercial inventory. Matters to check include the testing plan in place when manufacturing occurred, the basis for calculating the required quantity, whether quantities intended for sale were included, and the planned disposal of remaining material.
The use of the same batch for both testing and commercial purposes, and the handling of material remaining after testing, cannot be assessed uniformly and require individual consideration. The fact that material was used for testing does not, by itself, establish that the remainder may be sold.
Conversely, the fact that material was used for testing does not mean that it cannot be sold after the patent expires. The question of whether manufacturing before expiration remained within the scope necessary for testing needs to be considered separately from the question of when the remaining material is to be transferred and the status of the relevant rights at that time.
Matters to check for different types of batches
The matters to check differ according to the nature of the batch. The following table shows differences in the matters to check, rather than differences in conclusions.
| Nature of the batch | Matters to check |
|---|---|
| A batch manufactured solely for testing | The corresponding testing plan, the basis for calculating the required quantity, the quantity actually used, and whether any material remained and how it was handled |
| A batch manufactured in a form suitable for both testing and commercial use | The plans in place when manufacturing occurred, whether quantities intended for sale were included, and how the distinction between testing and commercial use is maintained in the records |
| A batch manufactured as commercial inventory | The timing of manufacture, its relationship to approval and drug price listing, and whether manufacture occurred before or after the patent's expiration date |
These three descriptions are used to organize the issues; they are not statutory categories. Labels do not determine the conclusion, such as "it is acceptable because it is a testing batch" or "it is unacceptable because it is commercial inventory."
This distinction also concerns how records are maintained. If manufacturing instructions, testing plans, shipment records, and destruction records correspond with one another, they can support a later explanation. If they do not, it becomes necessary to reconstruct what was decided and when from communications at the time.
3 The distinction from use as a research tool
Different matters need to be checked when a company is asked to stop using, or obtain an additional license for, technology or materials used as research tools, such as reagents, cells, antibodies, or equipment. This situation falls outside the scope of this article and requires separate consideration, including the patent claims, the actual methods of use, and the terms of any material transfer agreement.
The distinction depends on what use is being challenged, rather than the stage of research. The order of assessment differs depending on whether the company has been asked to stop testing or manufacturing the investigational drug itself, or to stop using a tool employed in the research.
This distinction concerns how the articles divide their subject matter. It does not, by itself, establish that the experimental or research use exemption applies to the former and does not apply to the latter. The application of the statutory provision and the contractual conditions of use need to be considered separately.
4 The response and decisions on continuing development
Matters to include in the response
In responding to an allegation, the acts at issue are first identified. The arguments that the acts qualify as working a patented invention for experimental or research purposes, that they fall outside the technical scope of the patented invention, and that there are grounds for invalidating the patent are then considered separately. How much to state at the response stage is determined in light of the development schedule and the prospects for negotiations.
The correspondence between arguments and supporting materials is as follows.
| Argument | Supporting materials |
|---|---|
| The acts qualify as working a patented invention for experimental or research purposes | Testing plans, a table showing their correspondence with the approval application materials, the basis for calculating the required quantities, and records of manufacture, use, shipment, and disposal for each batch |
| The acts fall outside the technical scope of the patented invention | An analysis of the company's products or processes against the wording of the claims, and the prosecution history |
| There are grounds for invalidating the patent | Prior art documents, the prosecution history, examination records, and records of adjudicative proceedings before the Japan Patent Office (JPO) |
| The company's acts are the acts of a separate entity | Outsourcing agreements, records showing the allocation of work, and records of the manufacturing and testing actually performed |
Views may differ on how much of the company's position to disclose at the response stage. However, without a specific explanation based on records, the other party may regard an argument that the acts qualify as working a patented invention for experimental or research purposes as a mere assertion. If the company seeks to resolve the matter on this basis, the records need to be organized at an early stage.
Deciding which development activities to continue
Whether to stop testing directly affects the development schedule. In making that decision, the acts challenged are considered in three groups.
First, activities that can be explained using the records. Second, activities for which structuring an explanation takes time. Third, activities that may have exceeded the necessary scope in the first place.
Stopping even the first group of activities is not necessarily required. For the third group, the significance of continuing is weighed against the potential liability arising from continuation. Stopping all activities without making this distinction may cause delays that cannot be recovered.
Depending on that assessment, possible responses may include adjusting manufacturing quantities or timing, clarifying the distinction between testing and commercial use, or switching to process steps that are not at issue. In each case, however, the implications for approval procedures need to be checked. For changes to matters covered by a marketing approval, the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the "PMD Act") provides for cases where approval for a partial change is required and cases where notification of a minor change is sufficient. Which procedure applies depends on the nature of the change, so the company needs to check this separately from the patent issues.
Changing a process during development may also raise questions about continuity with the data obtained up to that point. A decision on whether to make a change for patent reasons also needs to take account of its impact on the structure of the approval application.
Relationships with contractors and commissioning companies
If a contractor receives an allegation, the contract is reviewed for obligations to notify the commissioning company, responsibility for the defense, and the allocation of costs. The allocation of responsibility between commissioning companies and contractors is addressed in a separate article, Responding to patent infringement allegations concerning API supply and contract manufacturing. The following points should be checked immediately after an allegation is received.
- Whether the contract requires notification to the commissioning company or contractor upon receiving an infringement allegation, and the deadline for that notification
- Which party is to respond to the rights holder and what procedure it is to follow
- Which party is to lead the defense and how the other party is to cooperate
- Which party bears the costs of investigations, expert opinions, and litigation, and to what extent
- The consequences of suspending testing or manufacturing, including delivery deadlines, contractual penalties, and termination
- The scope and limits of any indemnity clause
The notification obligations discussed here are contractual. The deadlines are not imposed by legislation. Because a contract may set a short deadline, the company should at least check this point on the day it receives the allegation. Failure to give notice may later affect the scope of indemnification.
How we can assist
- We check which acts are challenged and how they correspond to the acts each company actually performs.
- We consider, for each act, whether it qualifies as working a patented invention for experimental or research purposes.
- We review the correspondence between testing plans, application materials, and manufacturing records, and consider how to structure an explanation.
- We consider how to structure arguments concerning the technical scope of the patented invention and grounds for invalidity.
- We assist with preparing a written response and subsequent negotiations.
- We review the allocation of responsibility between commissioning companies and contractors in light of the contract.
- We check notification deadlines and review the content and timing of communications to commissioning companies and contractors.
- We consider which activities to continue and which to suspend, taking account of the impact on the development schedule.
Key legislation and official sources
English translations of legislation are provided for reference. The Japanese texts are authoritative.
| Article topic | Legislation or official source | Source type and English version reviewed |
|---|---|---|
| Acts constituting working of a patented invention; experimental or research use; technical scope; grounds for invalidity | Patent Act— Japanese text on e-Gov | Legislation. English translation (earlier version). The translation's version labels differ (Act No. 48 of 2022 in the Japanese label; Act No. 48 of 2024 in the English label). |
| Testing for generic drug approval applications and production beyond the scope necessary for testing | Supreme Court, Second Petty Bench, judgment of April 16, 1999, 1998 (Ju) No. 153 | Court judgment. |
| Manufacture and transfer of drugs for another company's specification testing | Osaka District Court, judgment of September 2, 1999, 1998 (Wa) No. 2175 | Court judgment. |
| Approval for partial changes and notification of minor changes to approved matters | Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices— Japanese text on e-Gov | Legislation. English translation (earlier version). The translation identifies its last version as Act No. 50 of 2015. |
Legal information reviewed: September 27, 2026
Frequently asked questions
Q1 Does the fact that testing is for an approval application mean there is no patent infringement?
Describing testing as being "for approval" does not determine the conclusion. The Supreme Court has held that production and use for tests necessary to obtain materials to accompany an approval application qualify as working a patented invention for experimental or research purposes. However, in the reasoning of the same judgment, the Court also stated that a company must not, for example, produce generic drugs for transfer after expiration beyond the scope necessary for testing. The acts that were necessary, and their necessary extent, need to be checked.
Q2 Can a company manufacture inventory before the patent expires if it plans to sell it after expiration?
No. The Supreme Court has held that a company must not, for example, produce generic drugs for transfer after expiration beyond the scope necessary for testing. The extent of what is necessary for testing needs to be assessed against the testing plan and the basis for calculating the required quantity.
Q3 Our company only undertakes contract manufacturing. If the exemption applies to the commissioning company, is our company also exempt from liability?
The same conclusion does not apply automatically. The contractor's own acts, such as manufacture, use, and supply, need to be identified, and whether patent rights extend to those acts needs to be considered in relation to the necessary testing.
Conversely, a company does not automatically incur liability merely because it is a contractor. In a case involving a person that manufactured and transferred drugs for specification testing necessary for another company's approval application, the court took into account that the recipient used the drugs solely for that testing and held that the supplier's own manufacture and transfer also qualified as working a patented invention for experimental or research purposes.
The matters to check are the work covered by the contract fee, the correspondence between manufacture and transfer and the testing, and the quantities manufactured and their actual uses. These matters should be checked together with the contractual allocation of responsibility.
Q4 Does the same approach apply to clinical trials for new drugs?
A court has held that clinical trials necessary to obtain approval for a new drug in Japan qualify as working a patented invention for experimental or research purposes. However, the nature of the acts and the necessary scope are assessed case by case, so the same conclusion does not apply automatically.
Q5 Our company is a contract research organization (CRO) that conducts testing under contract. Can allegations also be made against our company?
Where testing is conducted under contract, whether the acts constitute working a patented invention is also assessed in relation to the contractor. A conclusion concerning the commissioning company does not automatically extend to the contractor.
However, the fact that the work is performed under contract does not, by itself, establish either liability or the absence of liability. In a case involving a person that manufactured and transferred drugs for specification testing necessary for another company's approval application, the court took into account that the recipient used the drugs solely for that testing and held that the supplier's own acts also qualified as working a patented invention for experimental or research purposes. That judgment, however, concerned a person that manufactured and transferred products. In our research, we have not found a published judgment deciding whether the performance of testing under contract itself qualifies as working a patented invention for experimental or research purposes.
The acts actually performed and the scope of the corresponding testing need to be checked.
Q6 There is material left over from a batch manufactured for testing. How should it be handled?
There is no uniform answer. The first matters to check are the testing plan in place when the material was manufactured, the basis for calculating the required quantity, whether quantities intended for sale were included, and what was planned for the disposal of remaining material.
The question of whether manufacturing before expiration remained within the scope necessary for testing is then considered separately from the question of when the remaining material is to be transferred and the status of the relevant rights at that time. The fact that material was used for testing does not automatically mean either that it may be sold or that it may not be sold.
Contact
Making an inquiry
You can consult us about identifying the acts at issue, organizing records, structuring a response, and deciding which development activities to continue when patent infringement is alleged in relation to testing and manufacturing for clinical trials or approval applications. If you bring the warning letter and documents showing the testing plan and manufacturing records, we can begin considering the specific issues at the initial consultation.
Contact FormLegislation and case law reviewed: September 27, 2026. Whether acts qualify as working a patented invention for experimental or research purposes depends on the nature of those acts. Please consult us individually about a specific matter.
This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.