Newsletter

Law Practice: “Workplace Harassment Comes in Many Forms: How Can You Help Your Company Prevent and Deal with Harassment in the Workplace”

Newsletter (August 2018) │ Law Practice

The #MeToo movement has spread like wildfire in the US, and thanks to social media, the hashtag has brought increased awareness of sexual harassment in the workplace.  The #MeToo movement has also gained footing in Japan, with increased media coverage as a few male politicians and officials have found themselves in the spotlight for alleged sexual harassment acts.  Indeed, the Government of Japan has recognized that power harassment in the workplace is one of the issues to be reviewed as part of Prime Minister Abe’s 2017 Plan for the Implementation of Workstyle Reforms.   On March 30, 2018, a report was issued by Ministry of Health, Labour and Welfare’s (MHLW) Investigative Commission on Measures to Prevent Power Harassment in the Workplace and further discussions will be held in the Labor Policy Council.  Harassment has been a long-standing issue in Japan, but given the government’s renewed focus on harassment, we believe that companies should be aware of the definitions and descriptions of the various forms of harassment and implement certain measures to prevent harassment within its workplace.

Workplace harassment can come in many forms, and the three forms which have often been disputed between the employer and employee are: 1) power harassment; 2) sexual harassment; and 3) maternity harassment.

Power harassment is defined by the “Proposals for Prevention/Settlement of Workplace Power Harassment” (dated March 15, 2012) issued by the Roundtable Conference Regarding Workplace Bullying and Harassment of the MHLW as “an act by an employee using his/her position of seniority or relationship with a co-worker which causes such co-worker mental or physical stress or a degradation of the working environment beyond the appropriate scope of the company’s business.”  It listed six categories of harassment including (i) assault, (ii) intimidation, (iii) isolation or neglect – e.g., where the employee is purposely not invited to company events or when an employee is positioned “near the window” (madogiwa) (iv) forcing an employee to perform unnecessary or impossible jobs, (v) ordering an employee to perform menial tasks which are far below the employee’s ability or experience, and (vi) excessively inquiring into private affairs of the employee.

Sexual harassment in the workplace under the Equal Employment Opportunity Law (EEOL) and MHLW 2006 Guidelines on sexual harassment is described as a non-consensual sexual act in the workplace which causes an unfavorable treatment of an employee or a degradation of the working environment and companies must take necessary measures to prevent such sexual harassment pursuant to the EEOL and MHLW Guidelines.   Sexual harassment has two different categories: 1) Reward/penalty type – where a quid pro quo or penalty is connected to a sexual act in the workplace against the employee’s will such as if an employee is fired for refusing a sexual relationship with his/her boss; and 2) environmental type – where sexual acts related to the work environment have a serious negative impact on the employee’s ability to perform his/her job such as where an employee cannot concentrate on her work due to nude female posters being posted at the office.

Maternity harassment is also described by the EEOL and MHLW 2016 Guidelines on maternity harassment as being “an act in a workplace which causes a degradation of the work environment of a female employee due to her pregnancy or childbirth.”  Further, the company should have internal work rules which provide for certain periods of leave for a pregnant employee based on the Labor Standards Act and the Child and Family Care Leave Act – e.g., allowing for maternity leave for a period of six weeks before the due date and eight weeks after childbirth and for childcare leave.

Indeed, the impact of harassment in the workplace for companies can be profound, as affected employees can suffer from physical and mental health issues, reduced productivity and morale, and job turnover.  Of course the company can be exposed to reputational risk from employee lawsuits as well as potential investigations and warnings from the Labor Standards Supervision Office if such harassment affects the mental health of employees.

What should your company do to help your company prevent and deal with workplace harassment?  The first step would be to have a strong message from top management that expressly states all forms of harassment will not be tolerated within the company.  Next, the company should review its internal work rules (shuugyou kisoku), harassment prevention rules (harassment boushi kitei) and labor-management contract (roushi kyouyaku) and strengthen such rules with respect to the prevention of and disciplining sexual harassment acts.  Prompt announcement of the rules is necessary and thorough implementation through distributing emails, intranet messages, and holding explanation town hall-styled meetings would be recommended.  Companies should also use as a reference, the manual released by MHLW on the introduction of power harassment measures which lists seven basic measures and the MHLW’s Guidelines on Sexual Harassment and Maternity Harassment.

The company should also conduct periodic and anonymous questionnaires to all employees to assess its current employment conditions and implement training on its internal work rules and policies on harassment for new employees as well as periodic training for current officers and employees.  Training should be done company-wide and include training for part-time and temporary employees as well as specific training focused on executives and managers – as many harassment cases involve acts against temporary workers as employees may sometimes believe temporary workers have less “rights” than a full-time employee.  Training can be done internally by an HR department or by outside advisors including lawyers or “industrial counselors” (sangyou counselor).

Finally, a very important measure is to implement a consultation hotline or point of contact within the company.  Employees must be informed where they can go and who they can contact if they are being harassed or have witnessed a harassment incident.  The company can hire an outside law firm or advisor to monitor the hotline.  If the company doesn’t implement a hotline, the harassed employee will have the limited choices of either reporting the incident to the authority or consulting with an outside lawyer, both of which the company would clearly like to avoid.

With the increased awareness of harassment issues by the government, employees, and the media, companies can no longer take an indifferent approach to harassment and must be proactive in implementing the necessary measures to prevent and deal with the many forms of harassment in the workplace.

*************************

Sonderhoff & Einsel provides legal advice for employers on harassment issues including advising on internal work rules, harassment training, harassment investigations, dispute resolution, and negotiations with the labor authority as well as serving as an external hotline for employee inquiries on harassment.  The information in this letter is provided as general information and is not meant to be provided as specific professional advice.  If you have any specific questions, please contact Grant Tanabe () or Ayuko Nemoto ().

Continue Reading

Tax Practice:“Some important amendments of the domestic tax laws under the Government of Japan’s 2018 Tax Reform with regard to corporate tax, income tax, and gift and inheritance tax”

Newsletter (July 2018) │ Tax Practice

1. Corporate Tax

 

Key points under the 2018 Tax Reform

  • Revision of salary increase tax credit which should benefit corporations
  • Disallowance of tax credits for large-sized corporations
  • Introduction of tax incentives for investment in data collaboration assets
  • Filling tax returns by the e-Tax online filing system

a. Revision of salary increase tax credit which should benefit corporations

 

Before the tax reform, if corporations satisfied the below three requirements, 10% of the increased salary amount from the base period (2013 in case of fiscal year ended December 31) was credited from the corporate tax liabilities with a limitation of 10% of corporate tax liabilities (20% in case of small and medium sized corporations (SMCs)).

 

  1. Total amount of salaries were increased 5% (3% for SMCs) or more from the base period,
  2. Total amount of salaries were increased from the previous year, and
  3. Average salary payments were increased 2% or more (more than the previous year for  SMCs) from the previous year

 

Under the 2018 Tax Reform, the tax credit has increased while the requirements to obtain such tax credit have become more relaxed (the new salary increase tax credit has been applied for the fiscal year starting from April 1, 2018 to March 31, 2021). Under the new regulations, the requirements for the tax credit are separately regulated for large-size corporations and SMCs as follows:

RequirementsLarge-size corporationsSMCs(*)
Salary increaseAverage salary payments are increased 3% or more from the previous yearAverage salary payments are increased 1.5% or more from the previous year
Equipment investmentInvestment for domestic equipment accounts for 90% or more of depreciation expenses in the current yearNot necessary
Tax credit15% of the increased salary amount from the previous year with a limitation of 20% of corporate tax liabilities15% of the increased salary amount from the previous year with a limitation of 20% of corporate tax liabilities

(*)SMCs  are corporations with capital of JPY 100 million or less, excluding corporations with where 50% or more of its shares are held by a large-size corporation  (corporations with capital of more than JPY 100 million or corporations) or 2/3 or more of its shares are held by a number of large-size corporations.

 

Also, for corporations which have invested in their human resources and satisfied the following conditions, the tax credit will be increased as follows:

Large-Size corporationsSMCs
RequirementsEducation and training costs have on average increased 20% or more for the past 2 yearsAverage salary payment was increased 2.5% or more from the previous year and satisfied one of following conditions:

1. Education and training costs have increased 10% or more from the previous year, or

2. The competent minister approved the business plan regarding improvement of management capability and certified the efficiency of the plan.

Tax credit20% of the increased salary amount from the previous year with a limitation of 20% of corporate tax liabilities25% of the increased salary amount from the previous year with a limitation of 20% of corporate tax liabilities

b. Disallowance of tax credits for large-sized corporations

 

If large-sized corporations fall under the below conditions, certain tax credits will be disallowed (this will be applied for the fiscal year starting from April 1, 2018 to March 31, 2021).

 

  1. Taxable income increased compared with the previous year,
  2. But, average salary payment was lower than or equal to the previous year, and
  3. Investment for domestic equipment accounts for 10% or less of depreciation expenses in the previous year

 

The following tax credits will not be allowed:

  • Tax credits for research and development,
  • Tax credits for local future investments, and
  • Tax credits for investment in data collaboration assets

c. Introduction of tax incentives for investment in data collaboration assets

 

“Blue form” tax return corporations, which obtained an approval from the competent minister in connection with an “innovative data use plan” under the Special Measures Act for the Improvement of Productivity, and which invested in certain data collaboration assets (i.e.,  software, and machines or equipment used with the software, except used for research and development purposes) which the total acquisition cost is 50 million yen or more based on the plan, a tax credit or a special depreciation (IoT tax incentive) were introduced.

 

The IoT tax incentive was applicable for the acquisition of assets from the effective date of the Act to March 31, 2021. Corporations which are eligible to receive the IoT tax incentive are able to choose from following tax credit or special depreciation:

Tax creditSpecial depreciation
Average salary payment was increased less than 3%Acquisition cost x 3% with a limitation of 15% of corporate tax liabilitiesAcquisition cost x 30%
Average salary payment was increased 3% or moreAcquisition cost x 5% with a limitation of 20% of corporate tax liabilities

d. Filling tax returns by the e-Tax online filing system

 

Starting from the April 1, 2018 fiscal period, large-sized corporations (except foreign corporations) with capital of more than JPY 100 million must file their corporate and consumption tax returns including interim tax returns by the e-Tax online filing system.  Except for cases where there are unavoidable reasons, filing tax returns by paper will be treated as a non-filing.

2. Income Tax

Key points under the 2018 Tax Reform

  • Reduce 100,000 yen of salary income deduction, and limited 1,950,000 yen
  • Increase 100,000 yen of basic deduction, and exempted total income exceed 25 million yen or more
  • Reduce 100,000 yen of pension income deduction (200,000 yen in case total income exceed 10 million yen, 300,000 yen in case total income exceed 20 million yen), and introduced limitations
  • New income adjustment deduction was introduced

a. Decrease of salary income deduction

 

From the calendar year 2020 (2021 for local inhabitant tax purposes), the salary income deduction will be reduced by 100,000 yen for each salary range with reduced capture of 1,950,000 yen. The salary income deduction before and after the tax reform are as follows:

(Before tax reform, national tax and local inhabitant tax)

Gross salarySalary income deduction
≤ 1,800,000 yenGross salary x 40% (minimum 650,000 yen)
1,800,001 – 3,600,000 yenGross salary x 30% + 180,000 yen
3,600,001 – 6,600,000 yenGross salary x 20% + 540,000 yen
6,600,001 – 10,000,000 yenGross salary x 10% + 1,200,000 yen
≥ 10,000,001 yen2,200,000 yen

 

(After tax reform, national tax and local inhabitant tax)

Gross salarySalary income deduction
≤ 1,625,000 yen550,000 yen
1,625,001 – 1,800,000 yenGross salary x 40% – 100,000 yen
1,800,001  – 3,600,000 yenGross Salary x 30% + 80,000 yen
3,600,001 – 6,600,000 yenGross Salary x 20% + 440,000 yen
6,600,001 – 8,500,000 yenGross Salary x 10% + 1,100,000 yen
≥ 8,500,001 yen1,950,000 yen

b. Increase of basic deduction

 

From the calendar year 2020 (2021 for local inhabitant tax purposes), the basic deduction will be increased 100,000 yen for each gross income range with new capture based on the gross income. The basic deduction before and after the tax reform are as follows:

(National income tax)

Gross incomeBasic deduction   (Before tax reform)Basic deduction

(After tax reform)

≤ 24,000,000 yen380,000 yen480,000 yen
24,000,001 – 24,500,000 yen380,000 yen320,000 yen
24,500,001 – 25,000,000 yen380,000 yen160,000 yen
≥ 25,000,001 yen380,000 yen0 yen

(Local inhabitant tax)

Gross incomeBasic deduction   (Before tax reform)Basic deduction   (After tax reform)
≤ 24,000,000 yen330,000 yen430,000 yen
24,000,001 – 24,500,000 yen330,000 yen290,000 yen
24,500,001 – 25,000,000 yen330,000 yen150,000 yen
≥ 25,000,001 yen330,000 yen0 yen

c. Decrease of pension income deduction

 

From the calendar year 2020 (2021 for local inhabitant tax purposes), the pension income deduction will be reduced by 100,000 yen for each gross pension range with a new capture of 1,955,000 yen. The pension income deduction before and after the tax reform are as follows:

(Age less than 65, national tax and local inhabitant tax)

Gross pension                            (A)Pension income deduction (Before tax reform)Pension income deduction (After tax reform) (*)
≤ 1,300,000 yen700,000 yen600,000 yen
1,300,001 – 4,400,000 yen(A)x25% + 375,000 yen(A)x25% + 275,000 yen
4,100,001 – 7,700,000 yen(A)x15% + 785,000 yen(A)x15% + 685,000 yen
7,700,001 – 10,000,000 yen(A)x5% + 1,555,000 yen(A)x5% + 1,455,000 yen
≥ 10,000,001 yen1,955,000 yen

(*) In the case where gross income (not including pension income) exceeds 10,000,000 yen, the amount of the pension income deduction will be reduced by 100,000 yen as referenced in the above table, and where gross income (not including pension income) exceeds 20,000,000 yen, the amount of the pension income deduction will be reduced by 200,000 yen for each gross pension range.

(Age 65 or more, national tax and local inhabitant tax)

Gross Pension                            (A)Pension income deduction (Before tax reform)Pension income deduction (After tax reform) (*)
≤ 3,300,000 yen1,200,000 yen1,100,000 yen
3,300,001 – 4,100,000 yen(A)x25% + 375,000 yen(A)x25% + 275,000 yen
4,100,001 – 7,700,000 yen(A)x15% + 785,000 yen(A)x15% + 685,000 yen
7,700,001 – 10,000,000 yen(A)x5% + 1,555,000 yen(A)x5% + 1,455,000 yen
≤10,000,001 yen 1,955,000 yen

(*) In the case where the gross income (not including pension income) exceeds 10,000,000 yen, the amount of the pension income deduction will be reduced by 100,000 yen for each gross pension range, and where gross income (not including pension income) exceeds 20,000,000 yen, the amount of the pension income deduction will be reduced by 200,000 yen for each gross pension range.

d. New income adjustment deduction

 

From the calendar year 2020 (2021 for local inhabitant tax purposes), if a taxpayer falls under one of the below categories and his/her current year’s gross salary exceeds 8,500,000 yen, a new income adjustment deduction will be applied.

 

  • A special handicapped taxpayer,
  • A taxpayer who has dependents aged less than 23, or
  • A taxpayer who has special handicapped dependents or special handicapped spouse

 

The new income adjustment deduction will be calculated as follows with a capture of 150,000 yen: (Gross salary – 8,500,000 yen) x 10%

3. Gift and Inheritance tax

Key point of tax reform

  • Revision of gift and inheritance tax obligation for long-term stay foreigners

a. Revision of gift and inheritance tax obligation for long-term stay foreigners

 

Before the tax reform, long-term stay foreigners (foreigners who have kept their domicile in Japan for more than 10 years for the past 15 years) were imposed a gift and an inheritance tax on their worldwide assets within 5 years after their departure from Japan.

 

After April 1, 2018, long-term stay foreigners who have not kept their domicile in Japan are imposed gift and inheritance tax on their assets only located in Japan. But, if they gift assets located outside Japan to a beneficiary after their leave from Japan, and if they return to Japan within 2 years, such gifts will be imposed a gift tax.

Continue Reading

IP Practice: “Present Status of the Practice of Swiss-type Claims in China”

We are pleased to announce the May 2018 issue of Sonderhoff & Einsel China IP Newsletter.

In the Chinese pharmaceutical industry, claims written in the form “the use of substance X in preventing or treating Y disease” are not protected under Chinese patent law. Therefore, in order to protect these types of medical use inventions, the strategy of changing the above to Swiss-type claims is used in practice. (A Swiss-type claim is a formerly used claim format intended to cover the second or subsequent medical use of a known substance.) However, the question remains as to whether drug administration features can be used as technical features when defining a Swiss-type claim. This article outlines the examination criteria and practice and also provides our opinions on what should be noted when drafting a Swiss-type claim.

For details, please check the following PDF.

Download PDF

Continue Reading

IP Practice: “Update of Patent Linkage System for Pharmaceutical Products in Taiwan”

We are pleased to announce the February 2018 issue of Sonderhoff & Einsel Taiwan IP Newsletter.

The Legislative Yuan (equivalent to the Japanese national Diet) passed a proposal for the partial revision of the Pharmaceutical Affairs Law on December 29, 2017. The revision and newly established articles are 26 in all, and data protection for new indications and a patent linkage system were introduced in accordance with this revision proposal. Patent linkage is a system whereby a country links drug marketing approval of a generic drug to the status of the patents related to the originator’s product.
The newly established patent linkage system in Taiwan is positioned to be a part of Taiwan’s Trade and Investment Framework Agreement (TIFA) and the Trans-Pacific Partnership (TPP), and involves the disclosure and registration of patent information on new drugs, declaration and announcement by generic drug applicants, challenges to patent rights and related correspondence, temporary suspension of the issuance of generic drug licences, and market exclusivity of generic drug manufacturers who first obtained a drug license.

For details, please check the following PDF.

Download PDF

Continue Reading

IP Practice: “Update of Patent Linkage System for Pharmaceutical Products in China”

We are pleased to announce the December 2017 issue of Sonderhoff & Einsel China IP Newsletter.

 

Patent linkage is a system where a country links drug marketing approval of a generic drug to the status of the patents related to the originator’s product. In China, there have been a series of regulations that have been released for public comment which indicate that China will soon be introducing a patent linkage system: on May 12,2017, the China Food and Drug Administration (CFDA) announced for public comment “Policies regarding the Promotion and Protection of Innovators’ Rights in Pharmaceutical Products and Medical Devices” (“Announcement No. 55”); 2) on October 8, the General Office of the CPC (Central Committee) and the General Office of the State Council of the People’s Republic of China published an “Opinion on the Promotion of Reformation regarding Examination and Approval System as well as Innovation of Pharmaceutical Products and Medical Devices” (“Opinion”) for extensive implementation of reforms; and 3) on October 23, the CFDA released for public comment “Administration Regulations for Registered Pharmaceutical Products” (“Proposal for Revision”).
This system hopes to ensure a stable supply of pharmaceutical products by taking the patent term of an original drug into consideration by, for example, negotiating with the original drug manufacturers prior to the approval of generic drugs. Since 2007, generic drug applicants are obliged to declare that their generic drug products do not infringe the patent right of the original drug. However, there is no mention of the punishment or penalty for non-conformance with this obligation. Since the CFDA is not capable of examining whether the generic drug infringes a patent right in response to the approval application for generic drugs, it is highly probable that the CFDA will approve the generic drug without clarifying the possibility of patent infringement. The linkage system will attempt to resolve these issues, but as commented below, the new set of regulations will still be insufficient and advantageous for generics as a whole. Therefore, generic drug manufacturers are expected to mount a more vigorous challenge to original drug manufacturers’ patent rights and original drug manufacturers are expected to file lawsuits in response to these challenges. Thus, disputes regarding patent rights are likely to increase further after introduction of the patent linkage system.

 

For details, please check the following PDF.

Download PDF

 

 

Continue Reading

IP Practice: “Revision of Administrative Regulations of Prioritized Examination”

We are pleased to announce the October 2017 issue of Sonderhoff & Einsel China IP Newsletter.

 

The average time period for a patent examination is currently 22 months in China, which is not necessarily long. However, considering the serious risk of patent infringement by copied products, there is a stronger need to ensure that patents are granted quickly. In addition to the PPH (Patent Prosecution Highway), the “Administrative Regulations of Prioritized Examination”, which was revised in 2017, has been used, mainly by Chinese applicants.

 

For details, please check the following PDF.

Download PDF

 

 

Continue Reading

IP Practice: “Announces White Paper on Judicial Protection of IP Rights in 2016”

We are pleased to announce the August 2017 issue of Sonderhoff & Einsel China IP Newsletter.

 

On April 27, 2017, the China Supreme People’s Court announced in the “Current Situation of Judicial Protection of IP Rights by the Supreme People’s Court (2016)” (“White Paper”), ten court decisions and 50 other representative court decisions regarding the judicial protection of IP rights. The Court’s White Paper provides an overview of the current judicial protection of IP rights in China, and hints at how such protection will be apportioned in the future.
Our newsletter focuses on four key Court decisions which deals with the patent production process, product manuals and instructions for maintenance as publication of prior art, disclosure of use and/or effect for chemical product patent applications, and specifications for gene sequence inventions.

 

For details, please check the following PDF.

Download PDF

Continue Reading

[IP Newsletter] New Types of Trademarks – First Registration of a Color Mark in Japan

We are pleased to announce the March 2017 issue of Sonderhoff & Einsel IP Newsletter.

 

New types of trademarks involving sound, movement, position, holograms, and color have been eligible for registration in Japan since the revision of the Trademark Law in 2015. As of February 20, 2017 a total of 1494 applications have been made, resulting in the registration of 207 of these new types of trademarks. On the other hand, none of the applications for color marks consisting solely of colors had been registered so far.
The Japan Patent Office (JPO), however, recently granted registration of two color marks on March 1, 2017 for the first time.

 

For details, please check the following PDF.

Download PDF

Continue Reading

[IP Newsletter] Decision by the IP High Court regarding average molecular weight and the clarity of claims requirement

We are pleased to announce the February 2017 issue of Sonderhoff & Einsel IP Newsletter.

 

The plaintiff, X, filed an invalidation trial against a patent held by defendant ROHTO Pharmaceutical
Co. Ltd. which claimed a violation of the clarity of claims requirement based on the lack of clarity of
the “average molecular weight” in the claims. The JPO, however, made a decision to maintain the
patent.
The plaintiff was not satisfied with the decision by the JPO and appealed to the Intellectual Property
High Court, which led to the JPO’s decision being denied.
The subject matter of the present patent was a “refreshing composition for ophthalmology”
containing chondroitin sulfate or a salt thereof which has a specific average molecular weight. The
defendant filed a patent application in 2005, and the establishment of the patent right was
registered in 2013.

 

For details, please check the following PDF.

Download PDF

Continue Reading

[IP Newsletter] Decision by the Grand Panel of Intellectual Property High Court (January 20, 2017) Regarding Scope of Extended Patent Right

We are pleased to announce the January 2017 issue of Sonderhoff & Einsel IP Newsletter.

 

The plaintiff, a Swiss pharmaceutical company called Debiopharm, requested an injunction against defendant Towa Pharmaceutical Co. Ltd. (a generic pharmaceutical drug manufacturer) and removal from the market of Towa’s alleged infringing product based on Debiopharm’s extended patent right.
The Tokyo District Court rejected the request for an injunction by the plaintiff, and the plaintiff appealed the court’s decision to the Intellectual Property High Court. The High Court affirmed the District Court’s decision that the effect of the patent right does not extend to the alleged product.
The subject matter of the dispute was “oxaliplatin,” an infusion drug used to fight colon cancer and other related cancers. The plaintiff filed a patent application in 1995 for the drug, and the production and distribution of the drug was started by a Japanese company, Yakult, in 2005. Later, more than ten companies including Towa started selling the generic drug after they had obtained approval from the Ministry of Health, Labor and Welfare. The plaintiff filed a lawsuit against Towa because the extended patent term had not expired at the time Towa began selling the product.

 

For details, please check the following PDF.

Download PDF

Please click here for the judgment of Grand Panel Case announced on the website by the Intellectual Property High Court.

Continue Reading